2(1)Section 635 (lump sum to member) shall be amended as follows.
(2)The following subsection shall be substituted for subsection (3) (lump sum not to exceed one quarter of value of benefits for member)—
“(3)The lump sum must not exceed one quarter of the difference between—
(a)the total value, at the time when the lump sum is paid, of the benefits provided for by the arrangements made by the member in accordance with the scheme, and
(b)the value, at that time, of such of the member’s rights under the scheme as are protected rights for the purposes of the [1986 c. 50.] Social Security Act 1986 or the [S.I. 1986/1888 (N.I. 18).] Social Security (Northern Ireland) Order 1986.”
(3)Subsection (4) (lump sum not to exceed £150,000 or sum specified by Treasury by order) shall cease to have effect.
(4)This paragraph shall have effect in relation to the approval of a scheme on or after the day on which this Act is passed; but if the scheme came into existence before that day sub-paragraph (2) above shall not have effect as regards arrangements made by a member in accordance with the scheme before that day.