PART 2Modifications of Part 4 of the Finance Act 2004

CHAPTER 3Benefits

Serious ill-health lump sum: additional lump sum paid for deceased memberI126

1

Paragraphs (2) to (6) apply where—

a

an individual (“P”) has been paid a serious ill-health lump sum in respect of an arrangement,

b

as a result of a relevant rectification provision P, or P’s personal representatives, have acquired rights under the arrangement (“the retrospective entitlement”),

c

P dies without having received benefits in respect of the retrospective entitlement,

d

a lump sum (“the top-up SIHLS”) is paid to P’s personal representatives at a time at which some of P’s lifetime allowance37 is available, and

e

the top-up SIHLS extinguishes the retrospective entitlement.

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The payment is to be treated as a serious ill-health lump sum paid to P under a registered pension scheme.

3

The making of the payment is to be treated as a benefit crystallisation event in relation to P for the purposes of the lifetime allowance charge.

4

The amount crystallised for the purposes of that benefit crystallisation event is the amount of the payment.

F25

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6

Regulation 3 of RPS(AP)R 2009 (commutation payments) does not apply in relation to the payment.