79.—(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 payment(1) 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.
See section 241 of the Finance Act 2004.