The Occupational Pension Schemes (Discharge of Liability) Regulations 1997

Conditions on which policies of insurance and annuity contracts may be commuted

4.— [F1 (1) The requirements referred to in section 19(4)(c) of the 1993 Act (policy of insurance or annuity contract appropriate where commutation conditional on satisfying prescribed requirements) are that—

(a) the amount secured by the policy of insurance or annuity contract does not exceed the amount for the time being permitted for a lump sum payment by—

(i) the lump sum rule in section 166 of the Finance Act 2004 and qualifies as a trivial commutation lump sum for the purposes of paragraph 7 of Part 1 of Schedule 29 to that Act; or

(ii) the lump sum death benefit rule in section 168 of that Act and qualifies as a trivial commutation lump sum death benefit for the purposes of paragraph 20 of Part 2 of Schedule 29 to that Act; or

(b) subject to paragraph (2), the earner requests or consents to the amount secured by the policy of insurance or annuity contract being paid as a lump sum and that payment does not exceed the amount for the time being permitted for a lump sum payment by the lump sum rule in section 166 of that Act and qualifies as a serious ill-health lump sum for the purposes of paragraph 4 of Part 1 of Schedule 29 to that Act[F2 ; or]]

[F3 (c) subject to paragraph (2A)—

(i) the benefits secured by the policy of insurance or annuity contract have become payable;

(ii) the earner requests or consents to the amount secured by the policy of insurance or annuity contract being paid as a lump sum; and

(iii) that payment does not exceed the amount for the time being permitted for a lump sum payment by the lump sum rule in section 166 of the Finance Act 2004 and qualifies as a pension commencement lump sum for the purposes of paragraph 1 of Part 1 of Schedule 29 to that Act.]

(2) The commutation referred to in paragraph (1)(b) does not apply to that part of the benefits which consist of F4 ... the earner’s [F5 widow's, widower’s or surviving civil partner's] guaranteed minimum pensions.

[F6 (2A) The commutation referred to in paragraph (1)(c) does not apply to that part of the benefits which consist of the earner’s and the earner’s widow’s, widower’s or surviving civil partner’s guaranteed minimum pensions.]

(3) For the purposes of paragraph (1)(a)—

F7 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) any benefit secured by means of another policy of insurance or annuity contract which is appropriate for the purposes of section 19(4) of the 1993 Act shall be treated as payable or prospectively payable under the occupational pension scheme which was liable to provide it before it was so secured; and

(c) any guaranteed minimum pension which is prospectively payable shall be reckoned as having the value that it will have (in accordance with the provisions of the occupational pension scheme in question) when the earner reaches pensionable age.

F8 (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F1 Reg. 4(1) substituted (6.4.2006) by The Taxation of Pension Schemes (Consequential Amendments of Occupational and Personal Pension Schemes Legislation) Order 2006 (S.I. 2006/744), arts. 1, 13(2)(a)

F2 Word in reg. 4(1)(b) inserted (6.4.2014) by The Occupational Pension Schemes (Miscellaneous Amendments) Regulations 2014 (S.I. 2014/540), regs. 1, 3(2)(a)

F3 Reg. 4(1)(c) inserted (6.4.2014) by The Occupational Pension Schemes (Miscellaneous Amendments) Regulations 2014 (S.I. 2014/540), regs. 1, 3(2)(b)

F4 Words in reg. 4(2) omitted (6.4.2006) by virtue of The Taxation of Pension Schemes (Consequential Amendments of Occupational and Personal Pension Schemes Legislation) Order 2006 (S.I. 2006/744), arts. 1, 13(2)(b)

F5 Words in reg. 4(2) substituted (5.12.2005) by The Civil Partnership (Contracted-out Occupational and Appropriate Personal Pension Schemes) (Surviving Civil Partners) Order 2005 (S.I. 2005/2050), art. 1(3), Sch. 2 para. 40(b)

F6 Reg. 4(2A) inserted (6.4.2014) by The Occupational Pension Schemes (Miscellaneous Amendments) Regulations 2014 (S.I. 2014/540), regs. 1, 3(2)(c)

F7 Reg. 4(3)(a) omitted (6.4.2006) by virtue of The Taxation of Pension Schemes (Consequential Amendments of Occupational and Personal Pension Schemes Legislation) Order 2006 (S.I. 2006/744), arts. 1, 13(2)(c)

F8 Reg. 4(4) omitted (6.4.2006) by virtue of The Taxation of Pension Schemes (Consequential Amendments of Occupational and Personal Pension Schemes Legislation) Order 2006 (S.I. 2006/744), arts. 1, 13(2)(d)