Commentary on Sections Section 2
63.Subsection (2) amends section 206(1) of FA 2004 to provide that where a lump sum death benefit is subject to the special lump sum death benefit charge, the charge only applies where the member had reached age 75 at their death. The amended section 206(1) needs to be read alongside the new section 206(1ZA) inserted by paragraph 17 of Schedule 2 to the Act.
64.Subsection (3) amends section 206(4) of FA 2004 to provide that the special lump sum death benefit charge is reduced from 55% to 45%. This charge applies where certain prescribed lump sum death benefits are paid on the death of a member.
65.Subsection (4) amends section 205A(4) of FA 2004 to provide that the serious ill-health lump sum charge is reduced from 55% to 45%. This charge applies where a serious ill-health lump sum is paid to a member after they have reached age 75. All an individual’s uncrystallised rights can be paid as a serious ill-health lump sum where the scheme administrator has received medical evidence that the member has less than 12 months to live.