RPSM10303030 - Scheme Administrator Pages: Death benefits: Payment of lump sums: Member dies aged 75 or over: How a transfer lump sum is applied in a receiving arrangement that is not a money purchase arrangement where the benefiting member is under age 75

Member dies aged 75 or over: How a transfer lump sum death benefit is applied in a receiving arrangement that is not a money purchase arrangement where the benefiting member is under age 75

Where the receiving arrangement is not a money purchase arrangement the payment of the transfer lump sum death benefit will be converted to accrued rights under the arrangement.

In a defined benefits arrangement the benefiting member will be given a prospective scheme pension/ lump sum entitlement based on the amount of lump sum benefit. The exact level of entitlement given will be determined by the scheme administrator or actuary. The member can draw those rights within normal benefit payment rules.

Where the benefiting member dies before drawing the uncrystallised rights, benefits can again be paid out within normal rules. See RPSM10102030 and RPSM10102040 for details of the benefits that can be paid from a defined benefits arrangement and RPSM10103010 for details of the benefits that can be paid from hybrid arrangements in these circumstances.

The crystallisation of the rights will be tested against the benefiting member’s available lifetime allowance in the normal way, through the relevant benefit crystallisation event(s). For example any resulting entitlements not drawn at age 75 under a defined benefits arrangement or hybrid arrangement will be tested for lifetime allowance purposes through BCE 5 or BCE 1 at that time (see RPSM11102070).

Payment of a transfer lump sum death benefit does not count against the receiving individual’s annual allowance.