Nothing is certain but death and taxes…I always thought this was quite a good proverb before I became a pensions lawyer. But after helping various trustee clients through lump sum death benefits and children’s and dependants’ pensions, I now know that not much is less certain than the distribution of death benefits. Lump sums are the worst: the trustees have to pick who gets the benefit, within certain limits. How far do trustees need to dig to be sure they are picking the right person? Answer: much deeper than many trustees think…
Archive for the ‘Lump sums’ Category
I’ve been considering the impact of the abolition of protected rights since last summer and yet new issues keep coming out of the woodwork! The latest is the possibility that paying short service refund lump sums from a pension scheme where the member has ex-protected rights could be an unauthorised payment unless the scheme rules are amended. Do you need to amend your rules? (more…)
Quite a few of our clients have already cut scheme administration costs by cashing out low value benefits, including pensions in payment which in some cases cost more to pay out each year than the annual pension is actually worth. Other clients are still thinking about it – but change is in the wind and it would be sensible to act sooner rather than later.
Many of our clients have been waiting for some time for a relaxation in the rules on cashing out small pensions. We’ve finally got it – see our Pensions Prompt for the detail. The previous rules have been awkward to operate. Although in theory cash sums could be paid without member’s consents, in practice members had to be involved in the process. This was because their benefits under all their pension arrangements had to be aggregated and the total value had to be below 1 per cent of the standard lifetime allowance (i.e. £17,500).