PSI8.3.21 - Commutation for Triviality or Serious Ill Health: Interpretation of Serious Ill Health

(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)

[PN8.16]

We expect scheme administrators to interpret the term “exceptional circumstances of serious ill health” strictly and narrowly. It does not refer to the kind of ill health which prevents a person from working (where incapacity retirement (see Section 2 Part 10) may be appropriate) but to cases where life expectancy is unquestionably very short, that is, less than 1 year. Commutation on these grounds should not take place unless the scheme administrator is satisfied by adequate medical evidence that this is the case and that the expectation of life is measured in months rather than years and so short that a pension is not a reasonable provision.

Contact: | Date issued: | Next review: