| [s165(3)] |
A lump sum can only be treated for tax purposes as a pension
commencement lump sum in connection with an arising entitlement to
a relevant pension under the same registered pension scheme
(usually in the same arrangement). A pension commencement lump sum
cannot be paid in connection with a pension while it is deferred
(which is what the legislation refers to as a prospective right to
a pension).
The definition of scheme pension refers to an amount that is
payable rather than paid, which can cover situations where a person
cannot be traced. In such a case, if the scheme rules so provide, a
pension benefit can have become payable, as opposed to a deferred
pension which does not become payable during the period of
deferral.
There are transitional issues relating to certain pension entitlements in deferment on 5 April 2006, where a lump sum entitlement had already been drawn in connection to that pension benefit. The position here is explained in RPSM09104130.
| [para 1(1)(aa) Schedule 29] |
A lump sum payment may be treated as a pension commencement lump sum if it is paid within an 18-month period starting 6 months before and ending 12 months after the member’s entitlement to it arises. Entitlement to a pension commencement lump sum arises immediately before the entitlement to the relevant pension to which the lump sum is related. But if the member dies having received a lump sum, but before the entitlement to the pension has actually arisen, the legislation deems the entitlement to the lump sum to have arisen immediately before the member’s death. This makes the lump sum an authorised payment as long as the other conditions for a pension commencement lump sum are satisfied.
| Glossary ( RPSM20000000) |
