Finance Act 2004

Pension protection lump sum death benefit U.K.

14 (1) For the purposes of this Part a lump sum death benefit is a pension protection lump sum death benefit if— U.K.

F1 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) it is paid in respect of a defined benefits arrangement,

(c) it is paid in respect of a scheme pension to which the member was entitled at the date of the member’s death, and

(d) the member has specified that it is to be treated as a pension protection lump sum death benefit (instead of a defined benefits lump sum death benefit).

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

(3) The pension protection limit is—

where—

[F2 AC is—

a

in a case where the member became entitled to the pension before reaching the age of 75, the amount crystallised by reason of the member becoming entitled to the pension, and

b

in a case where the member became entitled to the pension after having reached that age, the amount that would have been so crystallised but for paragraph 2 of Schedule 32,]

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

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

Textual Amendments

F1 Sch. 29 para. 14(1)(a) omitted (with effect in accordance with Sch. 16 paras. 85, 103 of the amending Act) by virtue of Finance Act 2011 (c. 11), Sch. 16 para. 34(2)

F2 Words in Sch. 29 para. 14(3) substituted (with effect in accordance with Sch. 16 paras. 85, 103 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 34(3)

Modifications etc. (not altering text)

C5 Sch. 29 para. 14(3) modified (6.4.2006) by The Taxation of Pension Schemes (Transitional Provisions) Order 2006 (S.I. 2006/572), arts. 1(1), 33(1)(2)(4); (as amended (18.11.2024 for the tax year 2024-25 and subsequent tax years) by S.I. 2024/1012, regs. 1(2)(3), 25(21)(b))