(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)
Serious ill health commutation is permissible only when a
pension first becomes payable. A pension already in payment cannot
be commuted because of the pensioner’s serious ill health.
Any lump sum benefits payable following a pensioner’s death
are limited to any sum due under a pension guarantee (see
PSIPart12) and/or any sum
payable under permitted continued life cover (see Section 2
PSIPart6).
When a member subject to the pre-Finance Act 1989 basis for
late retirement has taken a lump sum retirement benefit in advance
of actual retirement and is in exceptional circumstances of serious
ill health at actual retirement, the remainder of the pension may
be commuted on those grounds (see
PSI9.2.11).
