RPSM10105150 - Technical Pages: Death benefits: Lump sums: Member dies aged under 75: Pension protection lump sum death benefit

Payment of a pension protection lump sum death benefit

Where a member becomes entitled to a scheme pension from a defined benefits arrangement the arising pension entitlement may be granted pension protection. This means that the scheme guarantees that they will pay the balance as a lump sum death benefit if

• the member dies before their 75th birthday, and
• the member has not received a certain total level of scheme pension by that time.

This is a pension protection lump sum death benefit.

A pension protection lump sum death benefit is a lump sum benefit paid following the death of a scheme member where

• the member died before they reached the age of 75,
• it is paid in respect of a defined benefits arrangement,
• it is paid in respect of an actual scheme pension entitlement the member had under the arrangement at the date they died, i.e. it is in payment at the time the member died, and
• the member has specified that the payment be treated as a pension protection lump sum death benefit (rather than a defined benefits lump sum death benefit).

The total amount of pension protection lump sum death benefit paid under an arrangement must be within the limit set out in RPSM10105170.

Where a payment is made that breaches this maximum, the excess payment will be an unauthorised member payment (unless it meets the definition of one of the other authorised lump sum death benefit payments).

A pension protection lump sum death benefit is not tested against the lifetime allowance.

RPSM10105190 explains how a pension protection lump sum death benefit is taxed.

RPSM10105155 explains the differences between a pension protection lump sum death benefit and a defined benefits lump sum death benefit.