Glossary · UK
What is Deferred Pension Member?
A former employee who has left a pension scheme but not yet started drawing benefits -- their accrued rights remain preserved in the scheme.
Full Definition
A deferred pension member (or deferred member) is someone who has accrued benefits in an occupational pension scheme but has left that employer (and stopped contributing) without yet taking their pension. Their entitlements remain preserved -- "frozen" -- in the scheme and cannot be accessed until the Normal Pension Age (NPA) specified in the scheme rules, typically 65 (or lower for older schemes). Deferred benefits in defined benefit schemes are revalued each year to protect against inflation; for benefits accrued after 1 January 1985, revaluation is by the lesser of CPI and 5% (or sometimes 2.5% for different tranches of benefit). Deferred members retain all their accrued rights and are entitled to a Cash Equivalent Transfer Value (CETV) at least once per year, which they can use to transfer to another registered pension scheme or a personal pension. Transfers from a defined benefit scheme exceeding £30,000 require regulated financial advice before proceeding. On reaching NPA, the deferred member can take their preserved pension (usually increased by revaluation since leaving) and, depending on scheme rules, a tax-free lump sum by commutation.