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Finance Act 2004

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This is the original version (as it was originally enacted).

Defined benefits arrangements

Defined benefits lump sum death benefit

13For the purposes of this Part a lump sum death benefit is a defined benefits lump sum death benefit if—

(a)the member had not reached the age of 75 at the date of the member’s death,

(b)it is paid in respect of a defined benefits arrangement,

(c)it is paid before the end of the period of two years beginning with the day on which the member died, and

(d)it is not a pension protection lump sum death benefit, trivial commutation lump sum death benefit or winding-up lump sum death benefit.

Pension protection lump sum death benefit

14(1)For the purposes of this Part a lump sum death benefit is a pension protection lump sum death benefit if—

(a)the member had not reached the age of 75 at the date of the member’s death,

(b)it is paid in respect of a defined benefits arrangement,

(c)it is paid in respect of a scheme pension to which the member was entitled at the date of the member’s death, and

(d)the member has specified that it is to be treated as a pension protection lump sum death benefit (instead of a defined benefits lump sum death benefit).

(2)But if the amount of a lump sum falling within sub-paragraph (1) exceeds the pension protection limit, the excess is not a pension protection lump sum death benefit.

(3)The pension protection limit is—

AC - AP - TPLS

where—

  • AC is the amount crystallised by reason of the member becoming entitled to the pension (see section 216),

  • AP is the amount of the pension paid in respect of the period between the member becoming entitled to the pension and the member’s death, and

  • TPLS is the total amount of pension protection lump sum death benefit previously paid in respect of the pension under this paragraph.

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