Regulation 5 Pension commencement lump sums

Regulation G1 of the Contributory Fund Regulations^f1 (commutation into lump sum) is amended as follows.

After paragraph (1) insert—

“(1A)

But a person may only give notice under paragraph (1) at least six months before he reaches the age of 75 or at such later time before he reaches that age as the Trustees allow, and the lump sum payable as a result of the notice must be paid to him before he reaches that age.”.

For paragraph (5) substitute—

“(5)

For the purposes of paragraph (4) above, subject to paragraph (6), the maximum commutable lump sum is—

(a)

in the case of a person who becomes a participant after 5th April 2006, the permitted maximum, as defined in paragraph 2 of Schedule 29 to the Finance Act 2004, (which is usually the applicable amount, as defined in paragraph 3(6) of that Schedule),

(b)

in the case of a person who was a participant before 6th April 2006 and has pension commencement lump sum protection (see paragraph (5A)), the higher of—

(i)

the permitted maximum referred to in sub-paragraph (a), and

(ii)

the sum of the appropriate amount in respect of the person’s service before 6th April 2006 (see paragraphs (5B) and (5C)) and the permitted maximum referred to in sub-paragraph (a) in respect of the person’s service on and after that date, and

(c)

in the case of a person who was a participant before 6th April 2006 and does not have pension commencement lump sum protection, the permitted maximum referred to in sub-paragraph (a).

(5A)

A person has pension commencement lump sum protection for the purposes of paragraph (5) if he is a person in relation to whom the provisions of Schedule 29 to the Finance Act 2004 relating to pension commencement lump sums apply with the modifications specified in paragraph 34 of Schedule 36 to that Act by virtue of paragraph 31 of Schedule 36 to that Act (entitlement to lumps sums exceeding 25% of uncrystallised rights).

(5B)

In the case of a person who became a participant before 1st June 1989, the appropriate amount in respect of the person’s service before 6th April 2006 is the higher of—

(a)

the permitted maximum referred to in paragraph (5)(a) in respect of that service, and

(b)

so much of the maximum commutable sum calculated in accordance with Schedule 3 as may be paid to the person in respect of that service as a pension commencement lump sum (see paragraph (5D)).

(5C)

In the case of a person who became a participant on or after 1st June 1989, the appropriate amount in respect of the person’s service before 6th April 2006 is the higher of—

(a)

the permitted maximum referred to in paragraph (5)(a) in respect of that service, and

(b)

the lower of—

(i)

so much of the maximum commutable sum calculated in accordance with Schedule 3 as may be paid to the person in respect of that service as a pension commencement lump sum, and

(ii)

one and a half times the permitted maximum in respect of that service, as defined in regulation A2(1).

(5D)

In this regulation “pension commencement lump sum” has the meaning given in paragraph 1 of Schedule 29 to the Finance Act 2004; and in determining for the purposes of paragraphs (5B)(b) and (5C)(b) the maximum sum that may be paid to a person in respect of his service before 6th April 2006 as a pension commencement lump sum, it is to be assumed that the whole of the permitted maximum referred to in paragraph (5)(a) in respect of his service on and after that date qualifies as a pension commencement lump sum.”.

Omit paragraph (7).

In Schedule 3 to those Regulations—