Payment by Secretary of State

16.—(1) Where pursuant to an election under regulation 12(5) or 13(3) the Secretary of State purchases a pension policy from an authorised provider specified by the elector other than the insurance company referred to in regulation 9, the Secretary of State shall not, except in the circumstances described in paragraph (2)(b), be liable for payment of any pension under that policy.

(2) Where—

(a)pursuant to an election under regulation 5(2) or 12(5) or pursuant to regulation 12(8) or 13(4) the Secretary of State purchases a pension policy from the insurance company referred to in regulation 9; or

(b)pursuant to—

(i)an election under regulation 5(3) or 11(5) of the 1989 Regulations; or

(ii)an election under regulation 5(2) or 12(5) made by a person who was employed in pensionable employment but ceased to be so employed before 12th December 1994,

the Secretary of State purchases a policy from a company listed in Schedule 1 to the 1989 regulations,

the Secretary of State shall be liable to make to the person entitled to it any payment of pension under the policy which has not been made by the company from which the policy was purchased.

(3) Lump sums payable—

(a)as mentioned in regulation 12(6); or 12(9); or

(b)under regulation 13(1) or 13(2)(b),

shall (subject to the following provisions of this regulation) be paid by the Secretary of State to the person or persons to whom any death grant is payable under regulation E19(7)(1) of the 1988 Regulations.

(4) If when a participator dies a lump sum would have been payable under regulation 13 but the whole or part of that sum cannot be paid under regulation 13 by reason of regulation 14 and paragraph 14 of the Schedule the Secretary of State shall pay to the participator’s personal representatives the amount which cannot be paid under regulation 13, so far as it does not exceed the prescribed amount, but subject to any deduction of tax under paragraph (7).

(5) If by reason of regulation 14 and the Schedule a pension provided under regulation 12 is not payable in full, the Secretary of State shall pay to the participator an amount, or aggregate of amounts, not exceeding the prescribed amount, out of the investments realised by virtue of regulation 12(7) which would otherwise have been applicable to the purchase of the pension but subject to any deduction of tax under paragraph (7).

(6) In paragraphs (4) and (5) the reference to the prescribed amount is to an amount calculated in accordance with the method for the time being specified in regulations made for the purposes of section 591 of the Taxes Act as the method to be used for calculating the amount of any surplus funds.

(7) The amount of any tax chargeable under the Taxes Act on payments made under these Regulations shall be deducted by the Secretary of State before payment.

(1)

Regulation E19(7) was amended by S.I. 1989/378, 1993/114 and 1994/1058.