PSI24.1.4 - Pension Credit Benefits – Form of Benefits – restrictions

(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)

[PN6A.5]

An ex-spouse member can only receive a lump sum benefit if

• the scheme gave the same lump sum option to the employee member’s benefit rights from which the pension credit benefit derived, and
• the employee member had not taken a lump sum from the benefit rights from which the pension credit benefit derived before the pension sharing on divorce order took place.

Otherwise the ex-spouse must receive benefits in pension form only from the pension credit rights.

The lump sum options that can be available to an employee member and so be potentially available to the ex-spouse member include commutation when a pension commences or a separate lump sum in lump sum only or separate pension and lump sum schemes (see PSI8.1.2).

An employee member might not have a lump sum option in respect of benefits that arise from

• additional voluntary contribution arrangements entered into by the employee on or after 8 April 1987 (see PSI8.1.5), and
• a free-standing additional voluntary contribution scheme (see PSI8.1.5).

Only one lump sum can be paid to the ex-spouse member from the pension credit rights and the lump sum must be paid when the ex-spouse’s pension from the pension credit right first comes into payment.

There may be further restrictions on the lump sum options available to an ex-spouse member if the pension credit rights include safeguarded rights (see PSI24.1.10).

Different requirements apply in case of lump sums paid from pension credit rights on grounds of triviality or exceptional circumstances of ill helath (see PSI24.1.5).