PART 5Retirement benefits

CHAPTER 5Payment of retirement benefits

Option to commute part of pension79.

(1)

A member who becomes entitled to the immediate payment of a retirement pension may opt under this regulation to exchange part of the pension for a lump sum.

(2)

The option may only be exercised—

(a)

by written notice to the scheme manager which sets out the amount to be commuted; and

(b)

before the first payment of the pension is made.

(3)

If a member exercises the option, for every £1 by which the amount of the member’s annual rate of pension is reduced, the member must be paid a lump sum of £12.

(4)

A member may not exchange more than the lesser of—

(a)

25% of the pension for a lump sum under this regulation; or

(b)

the proportion of the pension to the extent that it would result in a scheme chargeable payment43 for the purposes of Part 4 of the 2004 Act.

(5)

This regulation does not apply to a pension derived from pension credit rights if the pension debit member from whose rights the pension is derived has received a lump sum under this regulation before the date on which the pension sharing order takes effect.

(6)

This regulation does not apply to a higher tier ill-health pension.