General principles: parties to a pension scheme: member
The tax rules do not restrict who can be a member of a registered pension scheme nor do they provide a minimum or maximum age for scheme members. Individual pension schemes may restrict membership, and the rules for each scheme will set out who may join it.
Registered pension schemes can be open to employees or non-employees to join and non-UK residents can also join registered schemes. However, to obtain tax relief on personal contributions to a registered scheme, a member must be a relevant UK individual.
As well as paying contributions, members have a responsibility to inform the scheme administrator or trustee about changes to their personal circumstances. For example, a change of address or marital status. They may also have to provide information to help the administrator calculate whether allowances such as the lifetime allowance have been exceeded.
Section 151 Finance Act 2004
Members are often referred to as active, deferred or pensioner. For the purposes of Part 4 of Finance Act 2004:
- an active member is an individual who has benefits building up in the pension scheme
- a deferred member is an individual who has rights under a pension scheme and who is neither an active member nor a pensioner member, and
- a pensioner member is an individual who is entitled to be paid benefits under the pension scheme and who is not an active member of that scheme.
Where an individual is being paid a pension under an annuity policy, whether or not the individual is a member of the scheme depends on how the annuity policy is set up.
- If the annuity policy is in the name of the pension scheme trustees then the pension is being paid under the pension scheme and so the individual may be a pensioner member.
- If the annuity policy is in the name of the individual and the policy was set up as a deferred annuity policy that automatically became a registered pension scheme (see PTM031300) then the individual may be a pensioner member as the annuity policy is itself a registered pension scheme.
- If the annuity policy is in the name of the individual and, when the contract was made, the annuity policy was not of such a type to be a registered pension scheme then the individual cannot be a pensioner member. The annuity policy is not an asset of the pension scheme so the pension cannot be paid under a pension scheme and the individual cannot be a pension scheme member. However the payment rules under chapter 3 Part 4 Finance Act 2004 still apply where the annuity policy was purchased using registered pension scheme funds – see PTM026000.