RPSM10105330 - Technical Pages: Death benefits: Lump sums: Member dies aged 75 or over: Transfer lump sum death benefit

A transfer lump sum death benefit

A money purchase arrangement may have funds left when

• a member receiving a pension from an alternatively secured pension fund, or
• a dependant receiving a pension from a dependants’ alternatively secured pension fund

dies and there are no remaining dependants of the member alive.

By definition this can only happen where the member or dependant died aged 75 or more.

Where the member (or dependant entitled to an alternatively secured pension) died before 6 April 2007 the scheme may transfer the funds to another arrangement within the same registered pension scheme. This is called a transfer lump sum death benefit.

A transfer lump sum death benefit can only be paid for the benefit of a member of the scheme. It cannot create rights to a person who is receiving a benefit from the scheme purely as a dependant of another scheme member. The member or dependant should have nominated the arrangement receiving the transfer lump sum death benefit. RPSM10105400 to RPSM10105420 explain what is meant by member or dependant nomination and what happens if no nomination is made.

Maximum payment

The maximum level of transfer lump sum death benefit payable is the amount remaining in the member’s alternatively secured pension fund or dependants’ alternatively secured pension fund following their death.

Any amount paid above this level will be an unauthorised member payment (if not another authorised member payment).

Taxation

There is no income tax liability on a transfer lump sum death benefit payment.