Regulation 12 Retirement and dependants' pensions

The benefits that may be provided on retirement in accordance with this regulation under a pension policy purchased as described in paragraph (7) are a retirement pension and one or more dependants' pensions.

A retirement pension is a pension commencing not earlier than the date of retirement and is payable to the participator for life.

A dependants' pension is a pension which would become payable to a dependant on the death of the participator after his retirement and is payable for life, except that, in the case of a dependant who is a child as defined in the 1988 Regulations, it shall cease to be payable when that person ceases to be a child within the meaning of those Regulations.

A pension policy purchased as described in paragraph (7) shall not provide for any retirement pension or dependants' pension capable in whole or in part of surrender, commutation or assignment (except as provided by paragraphs (9) and (10)).

Not earlier than one month before retirement, a participator, by giving written notice to the Secretary of State, shall make a benefits election which shall specify—

In the case of a retirement pension, the notice may also specify that if the participator dies within the period of 5 years beginning when the retirement pension commences the balance that would have been payable during the remainder of that period if the pension had continued at the rate in force at the time of the participator’s death is to be paid as a lump sum.

Subject to paragraphs (9) and (10), upon receipt of the notice of election the Secretary of State shall, as soon as is reasonably practicable, realise the investments made under regulation 9(1) or 10(2) and apply the amount obtained to the purchase of a pension policy from an authorised provider chosen by the participator to provide the benefits specified in the notice of election.

Subject to paragraphs (9) and (10), if no benefits election under paragraph (5) has been made six months after retirement the Secretary of State may realise the investments made under regulation 9(1) or 10(2) and apply the amount obtained to the purchase of a pension policy from the insurance company referred to in regulation 9 to provide such benefits as appear to him to be suitable.

If the participator dies before retirement, or after retirement but before a policy such as is mentioned in paragraph (7) is entered into, the investments made under regulation 9(1) or 10(2) shall be realised and become payable as a lump sum.

In the case of a retirement pension, where there are exceptional circumstances of serious ill-health affecting the participator, the Secretary of State may realise the investments without purchasing any pension and in that event the amount becomes payable as a lump sum.

If the annual rate of the retirement pension purchased in accordance with paragraph (7) or (8), when aggregated with the annual rate of any pensions payable and the annual equivalent of any lump sums payable to the participator under the 1988 Regulations arising from the participator’s service, does not exceed any amount prescribed by regulations for the time being in force under section 21(1) of the Pension Schemes Act 1993^f1, the authorised provider may discharge the liability for payment of the benefits under the pension policy by payment of a lump sum representing their capital value.