Refunds of member contributions
Refunds of member contributions

The following Pensions practice note provides comprehensive and up to date legal information covering:

  • Refunds of member contributions
  • In what circumstances can a refund of member contributions be made?
  • Authorised member payments
  • HMRC exceptions
  • Requirements for a short service refund lump sum
  • What are the requirements?
  • Condition 2—when will an early leaver be entitled to a short service benefit?
  • Change for DC members from 1 October 2015
  • When will a member have a right to a short service refund lump sum?
  • Occupational pension schemes
  • More...

THIS PRACTICE NOTE APPLIES ONLY IN RELATION TO REGISTERED PENSION SCHEMES

This Practice Note does not cover refunds of contributions paid on the death of a member. For more information on these, see Practice Notes: Death benefits—final salary schemes and Death benefits—money purchase schemes.

In this Practice Note, references to 'trustees' also refer to managers of a registered pension scheme.

In what circumstances can a refund of member contributions be made?

A scheme may permit refunds of member contributions in any number of circumstances. For instance, if the member has less than three months' pensionable service, then under current legislation, that member has no right to have their pension benefits preserved within an occupational pension scheme. It is usual for the scheme to offer that member a refund of their member contributions in such circumstances. Note however that this is subject to legislative change for members with money purchase benefits—for more information see Requirements for a short service refund lump sum, below

Authorised member payments

However, there are only two circumstance where a refund of member contributions will be an authorised member payment:

  1. where it qualifies as a short service refund lump sum—for more information, see Requirements for a short service refund lump sum, below, and

  2. where it qualifies as a refund of excess contribution lump sum—for more information on this, see Refund of excess contribution lump sums, below

Historically,

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