RPSM09101280 - Technical Pages: Member benefits: A secured pension: Scheme pension: Overview: Guaranteeing a scheme pension

Guaranteeing a scheme pension

A scheme pension may be guaranteed for a term certain of no more than ten years. So if the member dies before that term has ended the scheme pension will continue to be paid until the end of the guarantee period, but to another person. These guarantee payments cannot be commuted and paid as a lump sum (although see last paragraph below in relation to a scheme pension in payment before 6 April 2006).

Guarantees are explained in more detail on RPSM10104050.

The ten year maximum term-certain period runs from the date the member first becomes entitled to the scheme pension.

A scheme pension entitlement may be guaranteed for up to ten years even if earlier pension entitlements under the arrangement were similarly provided with a guarantee. For example, if a scheme pension is provided under a money purchase arrangement, there may have been earlier guarantees under a short-term annuity contract, or attached to an alternatively secured pension entitlement.

The scheme may provide that any term-certain entitlement ends on the recipient of the continuing pension payments

• marrying,
• reaching the age of 18, or
• ceasing to be in full-time education.

RPSM09101320 deals with the taxation of those continuing term-certain payments.

A scheme pension in payment before 6 April 2006

Where a pension is already in payment under a registered pension scheme on 6 April 2006 then there are transitional provisions protecting any existing guarantee provision already provided for in connection with that pension. See RPSM03107020.