RPSM12309010 - Scheme Administrator Pages: Information requirements and Administration: Information the scheme member is required to give to the scheme administrator: Pension commencement lump sum

There is a cap on the total amount that a member can receive as tax-free lump sums from all registered pension schemes in their lifetime.

Because of this, when any benefits come into payment from a scheme, the scheme administrator of that scheme needs to know the available portion of the member's lump sum allowance so as to be able to calculate the amount that they may pay to a member tax-free as a pension commencement lump sum from that scheme.

So where on or after 11 August 2006 the following conditions apply, the scheme member must provide the scheme administrator with the information the scheme administrator needs to be able to work out the available portion of the member's lump sum allowance -

• the scheme intends to pay a pension commencement lump sum to the member,
• the scheme administrator needs to know the available portion of the member's lump sum allowance, because the amount of the pension commencement lump sum, together with previous pension commencement lump sums, potentially exceeds the member’s lifetime cap on tax-free lump sums, and
• the member has previously crystallised a scheme pension from a money purchase arrangement.

The member must inform the scheme administrator that they need to know the available portion of the member’s lump sum allowance before the lump sum is paid. The scheme administrator will ask the member for the information they need.