PSI8.1.10 - Lump Sum Benefits and Communication: Maximum Lump Sum Benefits - Commuted Lump Sum Must be Paid to Employee

(This archived guidance relates to HMRC discretionary practice before the 6th April 2006. For current guidance on Registered Pension Schemes see the Registered Pension Schemes Manual)

A lump sum derived from commutation of pension must be paid to the employee personally (but see PSI8.1.11-12). This requirement is based on section 590(3)(d) ICTA 1988 which refers to a scheme which "allows an employee on retirement to obtain, by commutation of his pension, a lump sum". We will not therefore accept a scheme rule which permits the lump sum to be diverted to someone other than the employee. Once paid, however, the lump sum is the member's personal property and can be used for whatever purposes he or she chooses.

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