SCHEDULES
C6C5SCHEDULE 29Registered pension schemes: authorised lump sums—supplementary
Sch. 29 modified by The Taxation of Pension Schemes (Transitional Provisions) Order 2006 (S.I. 2006/572), art. 23C (as inserted (1.6.2009) by S.I. 2009/1172, arts. 1, 3 (as amended (with effect in accordance with s. 42(9) of the amending Act) by Finance Act 2014 (c. 26), s. 42(5); and as amended by Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 72(1) (with Sch. 1 para. 72(2)(b)))
C2C4Part 2Lump sum death benefit rule
Sch. 29 Pt. 2 applied (with modifications) (6.4.2006) by The Pension Protection Fund (Tax) Regulations 2006 (S.I. 2006/575), regs. 1, 14
Sch. 29 Pt. 2 modified (6.4.2006) by The Taxation of Pension Schemes (Transitional Provisions) Order 2006 (S.I. 2006/572), arts. 1(1), 6, 8(1)(3)
Money purchase arrangements
15
1
For the purposes of this Part a lump sum death benefit is an uncrystallised funds lump sum death benefit if—
F13a
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b
it is paid in respect of a money purchase arrangement,
F11c
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
d
it is paid in respect of relevant uncrystallised fundsF12, and
e
it is not a charity lump sum death benefit.
F25. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F261A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
“Relevant uncrystallised funds” means such of the sums and assets held for the purposes of the arrangement at the member’s death as—
a
had not been applied for purchasing a scheme pension, a lifetime annuity, F35a nominees' annuity, a dependants' scheme pension or a dependants' annuity, and
b
had not been designated under the arrangement as available for the payment of F14drawdown pension.
F362A
Where—
a
the arrangement is a cash balance arrangement,
b
under the arrangement, a dependant of the member is entitled to be paid after the member's death an amount by way of a lump sum,
c
the dependant's entitlement to a lump sum of that amount under the arrangement comes into being at a time no later than the member's death,
d
such of the sums and assets held for the purposes of the arrangement immediately after the member's death as are held for the purpose of meeting the liability to pay the lump sum are insufficient for that purpose (including where that is because none are held for that purpose), and
e
a person who was an employer in relation to the member pays a contribution to the scheme—
i
for or towards making good that insufficiency, and
ii
of no more than is needed for making good the insufficiency,
the sums and assets held for the purposes of the arrangement that represent the contribution are to be treated as “relevant uncrystallised funds” for the purposes of this paragraph.
3
But if an amount falling within sub-paragraph (1) exceeds the permitted maximum, the excess is not an uncrystallised funds lump sum death benefit.
4
The permitted maximum is the aggregate of—
a
the amount of the sums, and
b
the market value of the assets,
which constitute the relevant uncrystallised funds immediately before the payment is made.
16
1
For the purposes of this Part a lump sum death benefit is an annuity protection lump sum death benefit if—
F22a
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b
it is paid in respect of a money purchase arrangement, and
c
it is paid in respect of a scheme pension or lifetime annuity to which the member was entitled at the date of the member’s death.
2
But if the amount of a lump sum falling within sub-paragraph (1) exceeds the annuity protection limit, the excess is not an annuity protection lump sum death benefit.
C13
The annuity protection limit is—
where—
F21AC is—
- a
in a case where the member became entitled to the pension or annuity before reaching the age of 75, the amount crystallised by reason of the member becoming entitled to the pension or annuity, disregarding paragraphs 3 and 4 of Schedule 32, and
- b
in a case where the member became entitled to the pension or annuity after having reached that age, the amount that would have been so crystallised (disregarding those paragraphs) but for paragraph 2 of that Schedule,
AP is the amount of the pension paid in respect of the period between the member becoming entitled to the pension or annuity and the member’s death, and
TPLS is the total amount of annuity protection lump sum death benefit previously paid in respect of the pension or annuity under this paragraph.
C317
F151
For the purposes of this Part a lump sum death benefit is a drawdown pension fund lump sum death benefit if—
a
it is paid in respect of income withdrawal to which the member was entitled F27to be paid from the member's drawdown pension fund in respect of an arrangement at the date of the member's death, and
b
it is not a charity lump sum death benefit.
2
A lump sum death benefit is also F16a drawdown pension fund lump sum death benefit if—
a
it is paid on the death of a dependant of the member,
F18b
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
c
d
it is not a charity lump sum death benefit.
3
But if the amount of a lump sum falling within sub-paragraph (1) or (2) exceeds the permitted maximum, the excess is not F19a drawdown pension fund lump sum death benefit.
4
The permitted maximum is the aggregate of—
a
the amount of the sums, and
b
the market value of the assets,
representing the member’s or dependant’s F20drawdown pension fund in respect of the arrangement immediately before the payment is made.
17A
1
For the purposes of this Part a lump sum death benefit is a flexi-access drawdown fund lump sum death benefit if—
a
it is paid in respect of income withdrawal to which the member was entitled to be paid from the member's flexi-access drawdown fund in respect of an arrangement at the date of the member's death, and
b
it is not a charity lump sum death benefit.
2
A lump sum death benefit is also a flexi-access drawdown fund lump sum death benefit if—
a
it is paid on the death of a dependant of the member,
b
it is paid in respect of dependants' income withdrawal to which the dependant was at the date of the dependant's death entitled to be paid from the dependant's flexi-access drawdown fund in respect of an arrangement relating to the member, and
c
it is not a charity lump sum death benefit.
3
A lump sum death benefit is also a flexi-access drawdown fund lump sum death benefit if—
a
it is paid on the death of a nominee of the member,
b
it is paid in respect of nominees' income withdrawal to which the nominee was at the date of the nominee's death entitled to be paid from the nominee's flexi-access drawdown fund in respect of an arrangement relating to the member, and
c
it is not a charity lump sum death benefit.
4
A lump sum death benefit is also a flexi-access drawdown fund lump sum death benefit if—
a
it is paid on the death of a successor of the member,
b
it is paid in respect of successors' income withdrawal to which the successor was at the date of the successor's death entitled to be paid from the successor's flexi-access drawdown fund in respect of an arrangement relating to the member, and
c
it is not a charity lump sum death benefit.
5
But if the amount of a lump sum falling within sub-paragraph (1), (2), (3) or (4) exceeds the permitted maximum, the excess is not a flexi-access drawdown fund lump sum death benefit.
6
The permitted maximum is the aggregate of—
a
the amount of the sums, and
b
the market value of the assets,
representing the member's, dependant's, nominee's or successor's flexi-access drawdown fund in respect of the arrangement immediately before the payment is made.
18
1
A lump sum death benefit is a charity lump sum death benefit if—
F9a
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b
there are no dependants of the member,
c
d
it is paid to a charity nominated by the member F5...
F31A
A lump sum death benefit is also a charity lump sum death benefit if—
a
the member had reached the age of 75 at the date of the member's death,
b
there are no dependants of the member,
c
it is paid in respect of relevant uncrystallised funds in respect of a money purchase arrangement at the date of the member's death, and
d
it is paid to a charity nominated by the member.
1B
“Relevant uncrystallised funds” has the meaning given by paragraph 15(2).
2
A lump sum death benefit is also a charity lump sum death benefit if—
a
it is paid on the death of a dependant of the member,
F10b
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
c
there are no other dependants of the member,
d
F322A
A lump sum death benefit is also a charity lump sum death benefit if—
a
it is paid on the death of an individual who is—
i
a nominee of the member, or
ii
a successor of the member,
b
there are no dependants of the member,
c
it is paid in respect of the individual's nominee's flexi-access drawdown fund or successor's flexi-access drawdown fund at the date of the individual's death in respect of an arrangement relating to the individual in the capacity of a nominee or successor of the member, and
d
it is paid to a charity nominated by the member or, if the member made no nomination, by the individual.
3
But if the amount of a lump sum falling within sub-paragraph (1)F33, (2) or (2A) exceeds the permitted maximum, the amount of the excess is not a charity lump sum death benefit.
4
The permitted maximum is the aggregate of—
a
the amount of the sums, and
b
the market value of the assets,
F219
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 29 modified (6.4.2006) by The Pensions Schemes (Application of UK Provisions to Relevant Non-UK Schemes) Regulations 2006 (S.I. 2006/207), regs. 1(1), 15 (as amended: (13/8/2009) by S.I. 2009/2047, regs. 1(1), 2-10; (with effect in accordance with reg. 1(3) of the amending S.I.) by S.I. 2012/1795, regs. 1(1), 6; (with effect in accordance with Sch. 1 para. 96(16)(a) of the amending Act) by 2014 c. 30, Sch. 1 para. 96(3)-(14) (with Sch. 1 para. 96(16)(b)); and (for the tax year 2024-25 and subsequent tax years) by 2024 c. 3, Sch. 9 paras. 62(6), 124 (with Sch. 9 paras. 125-132A) (as amended by S.I. 2024/356, regs. 1, 4))