(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)
[PN8.2]
Lump sum retirement benefits must normally be paid only once.
An employee can normally commute his or her pension for a lump sum
only when the pension first becomes payable. There are, however,
exceptions, such as:
a. where the employee (being subject to the pre Finance Act 1989 basis for late retirement) remains in service after NRD and takes the lump sum only before actual retirement (see PSI9.2.9);
[PN8.12 and 8.27]
b. where the pension is trivial (see Section 3 of this Part), or
c. where the employee is a member of 2 schemes of the employer (see PSI10.1.26);
[PN Glossary]
d. where final remuneration cannot be precisely established at the relevant date (see PSI6.4.46).
e. where the member chooses to take avc benefit before the employer funded benefits come into payment (see psi25.3.5) the avc benefit must be paid as a pension. It cannot be paid as a lump sum, even where the avcs could be commuted in their own right i.e. From a pre-8 april 1987 avc arrangement. When the member subsequently takes employer funded benefits, a lump sum may then be paid from the avc fund if it is a pre-8 april 1987 arrangement.
