PART 3ADDITIONAL REQUIREMENTS IN RELATION TO RIGHTS ATTRIBUTABLE TO CONTRACTED-OUT EMPLOYMENT ON AND AFTER 6TH APRIL 1997

Payment of a lump sum instead of a pension18

1

A relevant scheme49 may not provide for the payment of a lump sum instead of a pension that is attributable to section 9(2B) rights, unless the payment to be made is authorised under section 164 of the Finance Act50 (authorised member payments) and the payment is—

a

permitted by the lump sum rule in section 166 of the Finance Act51 and qualifies as—

i

a pension commencement lump sum for the purposes of paragraph 1 of Schedule 2952 to that Act;

ii

a serious ill-health lump sum for the purposes of paragraph 4 of that Schedule53;

iii

an uncrystallised funds pension lump sum for the purposes of paragraph 4A of that Schedule54;

iv

a trivial commutation lump sum for the purposes of paragraph 7 of that Schedule55; or

v

a winding-up lump sum for the purposes of paragraph 10 of that Schedule56;

b

permitted by the lump sum death benefit rule in section 168 of the Finance Act57 and qualifies as a trivial commutation lump sum death benefit for the purposes of paragraph 20 of Schedule 2958 to that Act; or

c

made by a registered pension scheme (within the meaning of section 150(2) of the Finance Act), is a payment that is described in Part 2 of the Registered Pension Schemes (Authorised Payments) Regulations 200959 (commutation payments), and is made to or in respect of a member.

2

Where, under the scheme—

a

an earner qualifies for a lump sum payment on the ground of serious ill-health; and

b

the earner’s widow, widower or surviving civil partner qualifies for a pension (“a survivor’s pension”),

the scheme is to continue to provide for a survivor’s pension notwithstanding the payment of a lump sum to the earner.