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Introduction

The purpose of a registered pension scheme is to provide retirement and death benefits for its members, and the financial dependants of members. The UK pensions taxation system is predicated upon tax privileges through relief on contributions when made, a tax-privileged pension fund which grows largely free of taxation and benefits on retirement which are subject to taxation with the exception of the pension commencement lump sum (PCLS) which is (currently) free from UK income tax.

For taxation of pensions lump sums generally, see the Pension income and lump sum allowances from 6 April 2024 guidance note.

Authorised and unauthorised benefits from registered pension schemes

A registered pension scheme is authorised to pay out benefits to or in respect of a member in two forms: as a pension or as a lump sum (or of course both).The legislation lists all the authorised forms of pensions and lump sum payments, the circumstances in which they can be paid, and sets out the conditions and restrictions that these payments