RPSM09300150 – Scheme
Administrator Pages: Member benefits: Lump sum payments
Short service refund lump sum
A lump sum payment which does not exceed the amount of member
contributions to the scheme may be treated for tax purposes as a
short service refund lump sum providing it
satisfies the following conditions
- 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,
and
- the lump sum is paid before the member
reaches their 75th birthday.
Where interest is paid in connection with the lump sum, please
see page
RPSM09104740.
