Pension commencement lump sum

A member of a registered pension scheme (www.practicallaw.com/5-201-6474) may commute part of his pension benefits for a pension commencement lump sum at retirement. Generally, the lump sum can comprise up to 25% of the capital value of the member's pension entitlement. It must be paid after the member has reached normal minimum pension age (www.practicallaw.com/5-204-0445) and within a window starting six months before and ending one year after the member has become entitled to a scheme pension (www.practicallaw.com/9-422-1507), lifetime annuity (www.practicallaw.com/1-207-2099) or income withdrawal (www.practicallaw.com/3-207-2098) from the same scheme. A scheme may only pay a member a pension commencement lump sum if all or part of the member's lifetime allowance (www.practicallaw.com/8-201-6477) is available.

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