RPSM12301090 - Scheme Administrator Pages: Information requirements and administration: Information the scheme administrator is required to provide to HMRC: The Event Report: Event number 7 - Pension commencement lump sum
[Reg. 3 The Registered Pension Schemes (Provision of Information) Regulations 2006 - SI 2006/567, Paras 1 - 3 Sch 29]
Reportable event
Reportable event 7 occurs when a pension commencement lump sum is paid to a member, and
- the value of this exceeds 25% of the total of the lump sum paid and the amount crystallised in connection with the associated pension or (where, there was no benefit crystallisation event in relation to the associated pension because the member was aged 75 or over when they became entitled to it) the amount that would have crystallised had the member been aged under 75 on the date the entitlement arose and
- the amount of the lump sum is more than 7.5% but less than 25% of the standard lifetime allowance for the tax year in which it is paid.
Where a lump sum payment is made before the member becomes entitled to it, the scheme administrator will not initially know whether the payment is a pension commencement lump sum or an unauthorised payment. Where the payment is a pension commencement lump sum (see RPSM09100340) it is reportable in relation to the tax year in which it was paid (which may be different from the tax year in which entitlement to it arose), where the bullet points above apply. Where the tax year of payment is different to the tax year of entitlement, the test (above) for whether the lump sum is reportable is made using the standard lifetime allowance for the tax year of payment.
Example
Colin is paid a £125,000 pension commencement lump sum on 1 February 2009. However the pension to which the lump sum is connected does not crystallise until 1 May 2009. A pension commencement lump sum can be paid up to 6 months before the attached pension crystallises - see RPSM09104130 - so the lump sum is an authorised payment. The lump sum is paid in 2008/09 but crystallises in 2009/10. The test for reporting is made in the year the lump sum was paid, so against the lifetime allowance for 2008/09 which was £1.65 million. £125,000 is more than 7.5% of £1.65 million so the payment must be reported on the event report for 2008/09.
Information required
The information that must be provided on the event report for reportable event 7 is
- the name of the member
- their National Insurance number
- the amount of the lump sum
- the date of the lump sum and
- the amount crystallised on the member becoming entitled to the pension with which the lump sum is associated. Only the crystallised amount of the pension is needed; do not include the amount crystallised by the lump sum.
See RPSM12301295 for what to do if the individual does not give the scheme administrator their National Insurance number.
Where a trivial lump sum is paid alongside the pension commencement lump sum because the conditions at RPSM03105516 are met you should enter the amount of the trivial lump sum in the field of the report that asks for the amount crystallised by the pension. If you do not do this Pensions Schemes Online will not allow you to submit the event report as there must be a positive monetary amount on this field.
What the event report looks like on Pension Schemes Online
Having brought the event report summary page up, click on ‘Go to reportable fund movements’ on the right hand side of the screen. This brings up the following screen.
Event report page for reportable fund movements
| Glossary (RPSM20000000) |
