RPSM09104720 - Technical Pages: Member benefits: Lump sums: Short service refund lump sum: Conditions for payment

Conditions that must be met for a short service refund lump sum to be paid

A short service refund lump sum may be paid if

• the registered pension scheme making the payment is an occupational pension scheme,
• the member’s ‘pensionable service’ under the scheme was terminated before ‘normal pension age’ and the member is not entitled to a ‘short service benefit’ by virtue of section 71 of the Pension Schemes Act 1993. ‘Pensionable service’, ‘normal pension age’ and ‘short service benefit’ are defined in section 181(1) of the Pension Schemes Act 1993,
• the member has not previously been subject to a lifetime allowance test in relation to that scheme (not just a particular arrangement). So there have been no previous benefit crystallisation events triggered under that scheme in relation to that individual,
• the payment of the lump sum extinguishes the member’s entitlement to benefits under the scheme, except where the scheme is required to retain liability to provide protected rights benefits and,
• the lump sum is paid before the member reaches their 75th birthday.

Transfers in

Where the member has transferred benefits into the scheme, under DWP legislation, they may be entitled to a short service benefit even if they have less than 2 years service in relation to the current employment being pensioned through the scheme.