The lump sum in this case refers to what is now described as the pension commencement lump sum. The general rule is that the maximum allowable is 25% of the total retirement benefits being crystallised, subject to a cap of 25% of the lifetime allowance. The lump sum is deemed to be taken at the same time as the member becomes entitled to the related pension although there is some flexibility as to when payment actually has to be made.
11.6.1 Rules before 6 April 2006
That was not always the case, however. Before 6 April 2006, the lump sum rules could be summarised thus:
•the maximum lump sum under a personal pension scheme was 25% of the value of benefits coming into payment;