Regulation 109 Option for members in serious ill health to exchange pension for lump sum

(1)

An active member, a deferred member or a pension credit member may opt to exchange a relevant pension for a lump sum if the scheme manager is satisfied that the conditions for the lump sum to be a serious ill-health lump sum for the purposes of the 2004 Act will be met (see paragraph 4 of Schedule 29 to that Act M1).

(2)

For the purposes of paragraph (1), a “relevant pension” is a pension payable to that member under regulation 73, 76, 90 or 94.

(3)

The option may only be exercised—

(a)

in the case of a pension payable under regulation 73 or 76, before or at the time when the pension becomes payable;

(b)

in the case of a pension payable under regulation 90 or 94, before the pension becomes payable to the member.

(4)

An active member who has reached normal pension age who exercises the option is to be paid, as soon as is reasonably practicable, an amount equal to the sum of—

(a)

the maximum lump sum to which the member could have become entitled on exercising the option under regulation 77 if at the appropriate time the member had become entitled to a pension under regulation 73; and

(b)

the annual rate of the pension to which the member would have been entitled under regulation 73 after exercising that option, multiplied by 5.

(5)

An active member entitled to a pension under regulation 90 who exercises the option is to be paid, as soon as is reasonably practicable, an amount equal to the sum of—

(a)

the maximum lump sum to which the member could have become entitled on exercising the option under regulation 77 at the appropriate time; and

(b)

the annual rate of the pension to which the member is entitled under regulation 90 after exercising that option, multiplied by 5.

(6)

A pension credit member entitled to a pension under regulation 76 who exercises the option is to be paid as soon as reasonably practicable, amount equal to the sum of—

(a)

the maximum lump sum (if any) to which the pension credit member could have become entitled on exercising the option under regulation 77 at the appropriate time; and

(b)

the total annual amount of the pension to which the pension credit member is entitled under regulation 76 after exercising the option multiplied by 5.

(7)

A deferred member entitled to a pension under regulation 94 who exercises the option is to be paid, as soon as is reasonably practicable, an amount equal to the sum of—

(a)

the maximum lump sum to which the member could have become entitled on exercising the option under regulation 77 at the appropriate time; and

(b)

the annual rate of the pension to which the member is entitled under regulation 94 after exercising that option, multiplied by 5.

(8)

“The appropriate time” means—

(a)

for the purposes of paragraphs (4) and (6), the time when the option under this regulation is exercised; and

(b)

for the purposes of paragraphs (5) and (7), the time payment of the pension under regulation 90 or, as the case may be, 94 would otherwise first be due.

(9)

References to the annual rate of a pension are to the amount of the annual pension to which the member would be entitled, together with any increases payable under the Pensions (Increase) Act 1971 M2, calculated as at the appropriate time.

(10)

The option under this regulation may only be exercised by notice in writing to the scheme manager in such form as the scheme manager requires.

Annotations

Marginal citations

M1: Paragraph 4 of Schedule 29 has been amended by section 65 of, and paragraphs 23 and 28 of Schedule 16 to, the Finance Act 2011 (c.11).
M2: 1971 c.56.