RPSM10105340 - Technical Pages: Death benefits: Lump sums pre 6 April 2011: Member dies aged 75 or over: How a transfer lump sum death benefit is applied

How a transfer lump sum death benefit is applied in the receiving arrangement

The transfer lump sum death benefit payment will become either a fund value or ‘accrued rights’ under one or more arrangements within the same registered pension scheme held in respect of the benefiting scheme member.

As benefits from a money purchase arrangement are being distributed it is likely that the receiving arrangement will also be a money purchase arrangement. If the beneficiary is under age 75, the payment will become uncrystallised funds under the receiving member’s arrangement(s). However, this may not necessarily be the case. For example, a scheme may provide benefits on both a money purchase and defined benefit basis, or through a hybrid arrangement structure.

How the payment is applied depends on how old the benefiting member is.

Where the benefiting member is under the age of 75 and the receiving arrangement is a money purchase arrangement - see RPSM10105350.

Where the benefiting member is under the age of 75 and the receiving arrangement is not a money purchase arrangement - see RPSM10105360.

Where the benefiting member is age 75 or over - see RPSM10105370.

RPSM10105430 gives an example.