Finance Act 2004

Annuity protection lump sum death benefit

16 (1) For the purposes of this Part a lump sum death benefit is an annuity protection lump sum death benefit if—

(a) the member had not reached the age of 75 at the date of the member’s death,

(b) it is paid in respect of a money purchase arrangement, and

(c) it is paid in respect of a scheme pension or lifetime annuity to which the member was entitled at the date of the member’s death.

(2) But if the amount of a lump sum falling within sub-paragraph (1) exceeds the annuity protection limit, the excess is not an annuity protection lump sum death benefit.

(3) The annuity protection limit is—

AC - AP - TPLS

where—

• AC is the amount crystallised by reason of the member becoming entitled to the pension or annuity (see section 216),

• AP is the amount of the pension paid in respect of the period between the member becoming entitled to the pension or annuity and the member’s death, and

• TPLS is the total amount of annuity protection lump sum death benefit previously paid in respect of the pension or annuity under this paragraph.