Taxation of Pensions Act 2014

Trivial commutation lump sum death benefits

74 (1) Paragraph 20 of Schedule 29 to FA 2004 (trivial commutation lump sum death benefit) is amended as follows.

(2) In sub-paragraph (1) (definition) for the words from “if” to the end substitute “if condition A or B is met.”

(3) After sub-paragraph (1) insert—

“(1A) Condition A is that the lump sum—

(a) is paid to a dependant entitled under the pension scheme to pension death benefit in respect of the member, and

(b) extinguishes the dependant’s entitlement under the pension scheme to pension death benefit and lump sum death benefit in respect of the member.

(1B) Condition B is that—

(a) the lump sum is paid after the member’s death to an individual entitled to be paid a pension under the scheme—

(i) which the member was entitled to be paid immediately before the member’s death, and

(ii) which is payable to the individual under pension rule 2 (see section 165),

(b) if the pension is an annuity or scheme pension payable by an insurance company, the lump sum extinguishes all entitlements in respect of the member under the contract concerned, and

(c) if the pension is a scheme pension payable by the scheme administrator, the lump sum extinguishes all entitlements to receive a scheme pension in respect of the member from the scheme administrator under pension rule 2.”

(4) In sub-paragraph (2) (excess over £18,000 not a trivial commutation lump sum death benefit) for “£18,000” substitute “£30,000”.

(5) In consequence of sub-paragraph (4), in Schedule 18 to FA 2011 omit paragraph 6(2).

(6) The amendments made by this paragraph have effect in relation to lump sum death benefits paid on or after 6 April 2015.