Regulation 5 Amendments to the Registered Pension Schemes (Authorised Payments) Regulations 2009

After regulation 19 (commencement lump sums paid after death) insert—

“PART 5

Miscellaneous lump sums

Part refund payments relating to short service

20.

(1)

A payment of a lump sum by an occupational pension scheme if—

(a)

the member’s pensionable service was terminated before normal pension age but the member is not entitled to short service benefit by virtue of section 71 of the Pension Schemes Act 1993 (basic principle as to short service benefit)^f1;

(b)

there has been no previous benefit crystallisation event in relation to the member and the pension scheme;

(c)

it is paid when the member has not reached the age of 75;

(d)

it does not exceed an amount equal to the aggregate of the member’s contributions under the pension scheme;

(e)

the payment extinguishes the member’s entitlement to benefits under the scheme except to the extent that the entitlement is prohibited from being extinguished by rules of the pension scheme described in paragraph (2)(a); and

(f)

at the time that the lump sum is paid the condition in paragraph (2) is satisfied.

(2)

The condition in this paragraph is satisfied if—

(a)

rules of the pension scheme (“the prohibition rules”) have the effect of prohibiting a member’s entitlement to benefits under the scheme from being extinguished by the payment of a lump sum;

(b)

at the time that the prohibition rules took effect a provision (“the relevant provision”) made by or under any enactment—

(i)

was in force; and

(ii)

had the effect of prohibiting a member’s entitlement to benefits under the scheme from being extinguished by the payment of a lump sum; and

(c)

the relevant provision has been repealed or revoked or has otherwise ceased to apply.

(3)

A payment mentioned in paragraph (1) shall be subject to the charge specified in section 205 of the Finance Act 2004 (short service refund lump sum charge) and shall accordingly be treated as a short service refund lump sum for the purposes of the application of that section.

(4)

In this regulation “pensionable service”, “normal pension age” and “short service benefit” have the same meaning as in the Pension Schemes Act 1993 (see section 181(1) of that Act).”.