Finance Act 2004

Entitlement to lump sums exceeding 25% of uncrystallised rights

34 (1) Schedule 29 applies with the following modifications.

(2) Paragraph 2 applies as if the reference in sub-paragraph (2) to the arrangement under which the member becomes entitled to the relevant pension were to the pension scheme and for sub-paragraphs (5) to (8) there were substituted—

“(5) If paragraph 2(2) does not apply and relevant benefit accrual has occurred under the pension scheme in relation to the individual after 5th April 2006, the permitted maximum is—

(6) If paragraph 2(2) does not apply and relevant benefit accrual has not occurred under the pension scheme in relation to the individual after 5th April 2006, the permitted maximum is—

(7) In this paragraph—

• VULSR is the value of the individual’s uncrystallised lump sum rights under the pension scheme on 5th April 2006, calculated in accordance with paragraph 32 of Schedule 36,

• CSLA is the current standard lifetime allowance,

• FSLA is £1,500,000 (the standard lifetime allowance for the tax year 2006-07), and

• ALSA is the additional lump sum amount.

(7A) The additional lump sum amount is—

• where—

  • LS is the lump sum paid (but this is subject to sub-paragraph (7B)),

  • AC is the amount crystallised on the individual becoming entitled to the pension in connection with which the lump sum is paid (see section 216) (but this is subject to sub-paragraph (7B)), and

  • VUR is the value of the individual’s uncrystallised rights under the pension scheme on 5th April 2006, calculated in accordance with paragraph 33 of Schedule 36.

(7B) Any part of the lump sum and the amount crystallised which represents rights attributable to a disqualifying pension credit is to be disregarded.

(7C) Paragraph 13 of Schedule 36 specifies when relevant benefit accrual occurs in relation to an individual.”

(3) Omit paragraph 3 (applicable amount for pension commencement lump sums).