Finance Act 2004

Transfer lump sum death benefit

19 (1) For the purposes of this Part a lump sum death benefit is a transfer 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 income withdrawal to which the member was entitled in respect of an arrangement at the date of the member’s death, and

(d) it is paid so as to become held for the purposes of, or to represent accrued rights under, arrangements under the pension scheme relating to one or more members of the pension scheme nominated by the deceased member (or if the member made no nomination, selected by the scheme administrator).

(2) A lump sum death benefit is also a transfer lump sum death benefit if—

(a) it is paid on the death of a dependant of the member,

(b) the dependant had reached the age of 75 at the date of the dependant’s death,

(c) there are no other dependants of the member,

(d) it is paid in respect of dependants' income withdrawal to which at the date of the dependant’s death the dependant was entitled in respect of an arrangement relating to the member under the pension scheme, and

(e) it is paid so as to become held for the purposes of, or to represent accrued rights under, arrangements under the pension scheme relating to one or more members of the pension scheme nominated by the relevant person (or if the relevant person made no nomination, selected by the scheme administrator).

(3) The relevant person is the member or, if no nomination is made by the member, the dependant.

(4) But if the amount of a lump sum falling within sub-paragraph (1) or (2) exceeds the permitted maximum, the amount of the excess is not a transfer lump sum death benefit.

(5) 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 alternatively secured pension fund in respect of the arrangement immediately before the payment is made.