RPSM09100070 - Technical Pages: Member benefits: Overview: Process for testing against the lifetime allowance

Process for testing against the lifetime allowance

[s217][s254][The Registered Pension Schemes (Provision of Information) Regulations 2006 - SI 2006 No 567][The Registered Pension Schemes (Accounting and Assessment) Regulations 2005 - SI 2005 No 3454] 

Where the BCE occurs whilst the member is alive

Whilst the member is alive, the process of establishing how much of that individual’s lifetime allowance has been used up at a BCE, and whether or not a chargeable amount has arisen, is guided by two factors. These are

• that the scheme administrator is separately and jointly liable (with the member) for any lifetime allowance charge that arises at a BCE on any chargeable amount that crystallises, and is required to account for that due charge to HMRC (see RPSM11105310 and RPSM11105320), and
• that certain reporting requirements are imposed through the Provision of Information Regulations on both the scheme administrator and the member - these reporting requirements cover not only circumstances where the scheme administrator or member must make a report to HMRC, but also circumstances where they must provide information to each other.

The implications of these two factors are discussed in RPSM11103100 onwards.

Where the BCE occurs following the individual’s death (BCE 7)

Where a BCE is triggered on payment of a relevant lump sum death benefit following the member’s death then liability for any lifetime allowance charge falls solely on the recipient of that payment. The member’s personal representatives, not the scheme administrator, have responsibility for establishing whether or not any lifetime allowance charge is due (after the payments have been made).

The levels of responsibility involved here are expressly laid out in the Provision of Information Regulations, and can be split up into a number of steps. These steps are discussed in RPSM11103600 onwards.