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.