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Paragraph 3 Commutation of part of pension credit benefits

Changes not yet applied. Later legislation changes this provision in ways not yet written into the text below:

(1)

Subject to paragraph (3), a pension credit member may commute for a lump sum a portion of the pension to which the pension credit member is entitled or prospectively entitled under rule 1 (“the commuted portion”).

(2)

The commuted portion must not exceed—

(a)

one quarter of the amount of the pension, or

(b)

the annual rate of the pension for the first year that it is payable, disregarding —

(i)

the reduction resulting from the application of this rule, and

(ii)

any reduction resulting from the application of any other provision of this Scheme.

(3)

Paragraph (1) does not apply if the pension debit member from whose rights the pension credit member’s pension credit is derived has received a lump sum under rule 9 of Part 3 (commutation: general) before the date on which the pension sharing order takes effect.

(4)

A person who wishes to commute a portion of a pension under paragraph (1) must give the authority written notice of commutation not later than the day before the pension comes into payment and not earlier than four months before—

(a)

the date on which the person attains normal benefit age, or

(b)

the date on which the pension sharing order takes effect,

whichever is the later.

(5)

Notice of commutation must specify the commuted portion.

(6)

A person’s notice of commutation takes effect on the date on which the pension under rule 1 becomes payable.

(7)

When a person’s notice of commutation takes effect, the authority must—

(a)

reduce the pension by the commuted portion,

(b)

calculate the lump sum by multiplying by twelve the amount of the person’s pension represented by the commuted portion at the date of retirement, and

(c)

pay the person the lump sum as soon as reasonably practicable after—

(i)

the date on which the person attains normal benefit age, or

(ii)

the date on which the pension sharing order takes effect,

whichever is the later.