Unauthorised Pension Payment Charge Rates
Published / Last Updated on 10/07/2020
What are authorised payments?
- Member lump sum and income payments
- Member death benefits paid to beneficiaries
- Advice and administration cost payments
- Transfer payments to other approved pension schemes in UK and Overseas
- Pension sharing orders on divorce
- Payments to buy 'HMRC' permitted investments and assets
What are unauthorised payments?
- Payments to buy residential property
- Recycling pension payments back into pension schemes above the Money Purchase Annual Allowance (£4,000 pa as at July 2020)
- Benefits in kind from pension scheme assets e.g. buying non-permitted assets e.g. yachts, aeroplanes where a member benefit in kind could arise
- Loans to sponsoring employer unless it is a small self administered scheme (SSAS) and loan is secured against company assets
- Assigned or surrender of the pension and paid not the member (or beneficiaries on death) in order to ‘bust the trust’ or scheme
- Payments of benefits before age 55 unless in serious ill-health
Penalties and charges
- Unauthorised payments charge payable by member 40%
- Unauthorised payments surcharge payable by member 15%
- Scheme sanction charge payable by the pension fund 15-40%.
In summary, you, the pension scheme member could face 55% penalties and the scheme up to 40% meaning a maximum penalty charge of up to 95% of the value paid out.
DO NOT BREAK TAX LAW ON PENSIONS. DO NOT GO TO OBSCURE FIRMS OR LEGAL ADVISERS OVERSEAS WHO OFFER A PENSION BUSTING SERVICE. Take regulated advice in the UK.