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Finance Act 1989

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This is the original version (as it was originally enacted).

Accelerated accrual

23(1)This paragraph applies where the scheme allows a member to commute his pension or part of it for a lump sum or sums and—

(a)where the scheme came into existence before 14th March 1989, applies as regards an employee who became a member of the scheme on or after 1st June 1989, and

(b)where the scheme came into existence on or after 14th March 1989, applies as regards any employee who is a member of the scheme (whenever he became a member).

(2)The rules of the scheme shall have effect (notwithstanding anything in them to the contrary and notwithstanding the effect of paragraph 3 of Schedule 23 to the Taxes Act 1988) as if they did not allow the employee to obtain by way of commutation a lump sum or sums exceeding in all the greater of the following sums—

(a)a sum of three-eightieths of his relevant annual remuneration for each year of service up to a maximum of 40;

(b)a sum of the pension payable under the scheme to the employee for the first year in which it is payable multiplied by 2.25.

(3)The following rules shall apply in calculating, for the purposes of sub-paragraph (2) above, the pension payable under the scheme to the employee for the first year in which it is payable—

(a)if the pension payable for the year changes, the initial pension payable shall be taken;

(b)it shall be assumed that the employee will survive for the year;

(c)the effect of commutation, and of any allocation of pension to provide benefits for survivors, shall be ignored.

24(1)This paragraph applies where the scheme provides a lump sum or sums for a member otherwise than by commutation of his pension or part of it and—

(a)where the scheme came into existence before 14th March 1989, applies as regards an employee who became a member of the scheme on or after 1st June 1989, and

(b)where the scheme came into existence on or after 14th March 1989, applies as regards any employee who is a member of the scheme (whenever he became a member).

(2)The rules of the scheme shall have effect (notwithstanding anything in them to the contrary and notwithstanding the effect of paragraph 4 of Schedule 23 to the Taxes Act 1988) as if they did not allow the payment to the employee, otherwise than by way of commutation, of a lump sum or sums exceeding in all the greater of the following sums—

(a)a sum of three-eightieths of his relevant annual remuneration for each year of service up to a maximum of 40;

(b)a sum of the relevant number of eightieths of his relevant annual remuneration.

(3)For the purposes of sub-paragraph (2) above the relevant number shall be found by taking the number of eightieths (of relevant annual remuneration) by reference to which the pension payable under the scheme to the employee is calculated, multiplying that number by three, and treating the resulting number as 120 if it would otherwise exceed 120.

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