The Armed Forces Pension Regulations 2014

CHAPTER 5 Allocation

Election to allocate pension

61.—(1) An active member or deferred member may elect to allocate a part of the amount of the annual rate of any of the member’s pensions under this scheme to another person.

(2) No election may be made in respect of an ill-health pension payable under regulations 51, 52 or 56 (entitlement to ill-health pension: active member with permanent serious ill-health; entitlement to ill-health pension: active member with significant impairment of capacity for gainful employment; or entitlement to ill-health pension: deferred member with permanent serious ill-health) or an added pension (member).

(3) The member may not elect to allocate more than the permitted percentage of the member’s annual pension under this scheme.

(4) In paragraph (3) “the permitted percentage” means 37.5%, or such lower percentage as appears to the scheme manager, after consultation with the scheme actuary, to be capable of being allocated under this rule without risking that a part of the pension to which any person becomes entitled on the death of the member after age 75 does not qualify as a dependants’ scheme pension for the purpose of section 167 of the FA 2004 (the pension death benefit rules) (see paragraphs 16 to 16B of Schedule 28 to that Act).

(5) If a member wishes to allocate pension to more than one person—

(a) a separate election must be made in respect of each of them; and

(b) the limit under paragraph (4) applies to the total amount allocated.

(6) If—

(a) an election does not comply with paragraph (4), or

(b) taken together the member’s elections do not so comply,

the scheme administrator may treat the election or, as the case may be, each of the elections, as then allocating such smaller amount as would result in the election, or the elections taken together so complying.

Procedure for allocation election

62.—(1) An allocation election must be made not earlier than 6 months before the pension becoming payable or any other date advised to the member by the scheme administrator (“the closing date”).

(2) A member may at any time before the closing date—

(a) revoke an election; or

(b) amend an election by altering the amount allocated by it.

(3) An election and any revocation or amendment of an election must be made in writing in such form as the scheme manager requires and be lodged with the scheme administrator.

(4) Subject to paragraphs (5) and (7), an election takes effect on the closing date.

(5) An election has no effect if—

(a) the member dies before the closing date; or

(b) the person in whose favour it is made (“the beneficiary”) dies before that date; or

(c) the scheme manager is not satisfied that at the time the election is made the beneficiary is the member’s spouse or civil partner or a person who in the opinion of the scheme manager meets one of the conditions specified in paragraph (6).

(6) The conditions are—

(a) that the person is financially wholly or mainly dependent on the member; or

(b) that the member and the person are financially interdependent.

(7) An election has no effect unless—

(a) before the closing date, the member has—

(i) made a declaration about the member’s state of health in such form as the scheme manager may request; and

(ii) if requested by the scheme manager, provided evidence relating to the member’s health in accordance with that request; and

(b) the scheme manager is satisfied that at the date on which the member makes the declaration the member is in good health.

Effect of allocation

63.—(1) If an allocation election for the allocation of a member’s pension to another person (“the beneficiary”) has taken effect—

(a) the member’s pension is reduced accordingly (even if the beneficiary predeceases the member); and

(b) if the beneficiary survives the member, on the member’s death the beneficiary becomes entitled to the payment of a pension for life of such amount as the scheme manager may determine, after consultation with the scheme actuary, having regard to—

(i) the amount of the allocation to the beneficiary; and

(ii) the beneficiary’s and member’s age and gender.

(2) But the scheme manager may withhold payment from the beneficiary if—

(a) (i) the member dies before the expiry of the period of 2 years beginning with the date on which the election takes effect; and

(ii) the scheme manager is satisfied that the member made a false declaration about the member’s state of health in connection with making the election; or

(b) the scheme manager is of the opinion that—

(i) the member made the election under duress, or

(ii) the member was mentally impaired at the time when the member made the election and would not have made the election apart from the impairment.

(3) An allocation election is to be disregarded for the purpose of this regulation if it would result in a pension being paid under this regulation to a beneficiary who is neither—

(a) the member’s spouse or civil partner on—

(i) the date on which the member becomes entitled to the pension; or

(ii) when the member dies; nor

(b) a dependant of the member for the purposes of paragraph 15(2) or (3) of Schedule 28 to the FA 2004 when the member dies.

(4) If the scheme manager proposes to withhold payment under paragraph (3), the scheme manager must notify the person in writing that the scheme manager proposes to do so and include the reason for the scheme manager’s decision.

(5) Such a notification must give the person information about rights under—

(a) the arrangements established by the scheme manager for the resolution of disputes relating to this scheme that are in force at the time the notification is given; and

(b) Part 10 of the PSA 1993 (Investigations: the Pensions Ombudsman), in respect of any decision made under paragraph (3).

Adjustment of allocated benefits for the Finance Act 2004 where member dies over 75

64.—(1) This regulation applies if—

(a) a member dies after reaching the age of 75; and

(b) but for this regulation, any part of a pension to which a person otherwise becomes entitled under this Chapter on the member’s death would not qualify as a dependants’ scheme pension for the purposes of section 167 of the FA 2004 (the pension death benefit rules) (see paragraphs 16 to 16C of Schedule 28 to that Act).

(2) The benefit payable to the person may be adjusted in such manner as is determined by the scheme manager.