3. HMRC tax regime: benefits, reliefs and overseas schemes

Question 1

Early payment of benefits on ill-health grounds

Benefits may be taken before the normal minimum pension age on the grounds of ill-health (or serious ill-health) where:

Answer 1

the scheme administrator receives medical evidence that the member is, and will continue to be, medically incapable of continuing their current occupation as a result of injury, sickness, disease or disability; and
• as a result of the ill-health the member has ceased that occupation.

Question 2

Serious ill health lump sum:

Answer 2

Available when 1 year life expectancy.
Comes from uncrystallized pots if under 75.
Tested against lifetime allowance.

Question 3

Pre 2006 rights to take pension early

Answer 3

reduced annual allowance - reduces by 2.5% for each year below 55.

Question 4

Conditions for PCLS

Answer 4

1. Must be connected to the relevant pension
2. Need to have some lifetime allowance
3. Must be paid either 6 months before or 12 months after taking pension
4. Must be paid when reaching normal pension age
5. can’t be an excluded lump sum