18.—(1) This article applies to an ordinary, short service, ill-health or deferred pension under this Part; in relation to a deferred pension, it has effect as if references to retirement and to the date of retirement were references respectively to the pension becoming payable and to the date of its coming into payment.
(2) Subject to paragraph (3), a person entitled or prospectively entitled to a pension to which this article applies may commute for a lump sum a portion of the pension (“the commuted portion”).
(3) A person who retires with an ill-health award may not commute any portion of a higher-tier ill-health pension.
(4) The lump sum is the actuarial equivalent of the commuted portion at the date of retirement, calculated from tables prepared by the Government Actuary.
(5) The commuted portion must not in any case exceed a quarter of the full amount of the pension.
(6) In the case of an ordinary pension, unless—
(a)when the person retires he is entitled to reckon at least 30 years’ pensionable service; or
(b)he retires at normal pension age (see article 9 (normal pension age);
the commuted portion must not be such that the lump sum exceeds two and a quarter times the full amount of the pension.
(7) The full amount of a pension is its amount as calculated under Part I, II, III or V of Schedule 2, disregarding any reduction under any other provision of this Scheme.
(8) In order to commute a portion of a pension a person must, not earlier than 4 months before his intended retirement nor later than the day before the pension comes into payment, give the Board written notice of commutation specifying the portion.
(9) Notice of commutation takes effect on the date of the person’s retirement.
(10) When a person’s notice of commutation takes effect the Board shall—
(a)reduce the pension, as from the effective date, by the commuted portion; and
(b)within three months of the date of his retirement, pay him the lump sum; but where payment of the pension had commenced before commutation, that sum shall be reduced by the difference between the aggregate payments made in respect of the pension and the aggregate payments that would have been made in respect of it if it had been reduced from the date of retirement.
(11) Where—
(a)notice of commutation relating to an ill-health pension has taken effect; and
(b)the pension is terminated under article 81; and
(c)the person later becomes entitled to another pension, other than an injury pension, for the purposes of which he is entitled to reckon the period of pensionable service that was reckonable for the purposes of the ill-health pension;
the other pension shall be reduced by the amount by which the ill-health pension would have been reduced if it had not been terminated.
(12) Where paragraph (11)(c) applies and notice of commutation is given in respect of the other pension, the portion of it that may be commuted is reduced by the amount of the reduction under paragraph (11).
(13) For the purposes of this article no account shall be taken of any increase under article 69(3) or rule 2 or 3 or Part 7 of the Compensation Scheme in an award to a serviceman.
Commencement Information
I1ANNEX Scheme Pt. B art. 18 in operation at 1.4.2006, see art. 1(2)