This section refers to the benefits payable to members in serious ill-health who exercise the option to exchange their entire pension for a lump sum.

For members retiring in serious ill-health, the £12 lump sum: £1 pa pension factor should be applied, subject to the modification set out below.

The lump sum payment from commuting the entire pension should be determined as follows:

1. Calculate the maximum [additional] amount of lump sum (total lump sum for 2008 Section members) the member would be entitled to commute tax free in normal health, which is the limit set by HMRC (see Exchange part of retirement pension for lump sum).
2. Commute this at the rate of £12 lump sum: £1 pension pa to give the residual pension as follows:
   Residual pension = Pension to be put into payment ignoring commutation - maximum [additional] lump sum / 12
3. The residual pension should then be converted to lump sum using a factor of £5 lump sum: £1 pension pa as follows:
   Lump sum from residual pension = Residual pension x 5
4. Total lump sum payable = main scheme benefit lump sum (if applicable) + maximum [additional] tax free lump sum allowed by commutation + lump sum from residual pension

Any member who has previously elected for Scheme Pays will have a reduction (debit) applied to their pension benefit (and lump sum where applicable) before exchange of the whole pension for a lump sum due to serious ill health is made. Please refer to the actuarial guidance on Scheme Pays for more details of the calculations required for this benefit reduction.