The following Pensions guidance note provides comprehensive and up to date legal information covering:
Members of defined benefit occupational pension schemes may draw their benefits in a number of ways depending on the provisions of the scheme rules. The options may include:
benefits on normal retirement
exchanging pension for a tax-free cash lump sum (also known as a pension commencement lump sum)
early retirement benefits
ill-health retirement benefits
a serious ill-health retirement lump sum
late retirement benefits
commuting trivial pension for a cash lump sum
a bridging pension
For certain options (eg ill health retirement or trivial commutation), additional requirements must be met if the benefits paid are to be authorised payments under the pensions tax regime set out in the Finance Act 2004 (FA 2004). Otherwise, the payments will be unauthorised payments and subject to punitive tax charges on the member and the scheme.
Schemes generally provide for the payment of benefits on normal retirement ie when members reach the scheme's normal retirement date (NRD). Most schemes have an NRD of age 65, although some schemes may have an NRD that is higher or lower than this eg age 60. Schemes may also have different NRDs for different categories of member eg age 60 for senior executives and age 65 for all other members. NRD is normally the earliest date at which members
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