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Pension schemes ― unauthorised payments

Produced by a Tolley Personal Tax expert
Personal Tax
Guidance

Pension schemes ― unauthorised payments

Produced by a Tolley Personal Tax expert
Personal Tax
Guidance
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Registered pension schemes are permitted by law to make certain payments to members, known as β€˜authorised’ member payments.

Any payments to members other than those set out in the legislation are β€˜unauthorised’.

Subject to conditions, the following payments are likely to be authorised payments:

  1. β€’

    all forms of pensions, including lump sum and income withdrawals permitted under the pensions freedom rules introduced from 6 April 2015 (see FA 2004, Sch 28)

  2. β€’

    pension commencement lump sums (a lump sum which a member becomes entitled to when a pension comes into payment), or a pension commencement excess lump sum

  3. β€’

    serious ill-health lump sums (a lump sum paid by commuting the whole of a member’s pension because of serious ill-health)

  4. β€’

    short-service refund lump sums (a lump sum refunding a member’s contributions because the member has only a short period of service ― that is, less than two years for defined benefit schemes and 30 days for money purchase schemes)

  5. β€’

    refund of excess contributions lump sums (lump sums refunding a member of contributions which did

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