RPSM10105310 - Technical Pages: Death benefits: Lump sums pre 6 April 2011: Member dies aged 75 or over: Charity lump sum death benefit

This guidance only covers the position where the member died before 6 April 2011. If the member died on or after 6 April 2011 see RPSM10106000.

A charity lump sum death benefit

A charity lump sum death benefit can only be paid

• from a money purchase arrangement,
• where a member or dependant has died and there are no remaining dependants of the member alive at the time of payment (see RPSM10105390),
• from either a member’s alternatively secured pension fund or a dependants’ alternatively secured pension fund (so where either the member or dependant concerned is age 75 or over when they die), and
• to a charity nominated by the member or dependant, or where no such nomination has been made a charity selected by the scheme administrator.

RPSM10105320 explains what is meant by charity, and RPSM10105400 to RPSM10105420explain what is meant by nominated and what happens if no nomination is made.

Maximum payment (the permitted maximum)

The maximum level of charity lump sum death benefit that may be paid is the amount of member’s alternatively secured pension fund or dependants’ alternatively secured pension fund held in the arrangement at the time of payment. Where an asset is held (rather than a sum) the maximum is calculated by reference to the market value of those assets.

Any amount paid above the permitted maximum will not be a charity lump sum death benefit, but an unauthorised member payment (if it is not another authorised member payment).

Taxation

A charity lump sum death benefit is paid tax-free.