Various restrictions on lump sum payments are imposed by the pension taxation regime and other relevant legislation. The scheme administrator should ensure that the payment of benefits is compliant with these as well as with the scheme regulations.

The annual pension amount payable in respect of conversion of a lump sum (in addition to any other pension in payment) should be determined as follows:

Pension amount payable = Lump sum amount / Factor

Where:

Lump sum amount is the amount that would otherwise be received by the member if the lump sum could be made under the scheme regulations.

Factor should be determined as applicable for the member's age (in completed years) as set out below. The factors apply to both male and female members.

Table A1 (table 504 in the Consolidated Factors Workbook) contains factors for ages 75 and above. These factors are to be used for the conversion of a lump sum for STSS members over age 75.

Table A2 (table 505 in the Consolidated Factors Workbook) contains factors below age 75. These factors are to be used for converting the repayment of contributions to an annuity where:

1. A STSS or STPS member has undertaken further employment but failed to complete the one year qualifying period for further benefits; or
2. A STSS member's automatic retirement lump sum exceeds the permitted maximum and the excess is to be converted into a pension.

The annual pension amount is payable to the member only. A pension will not be paid to any surviving dependant following a member's death.

For the avoidance of doubt, the factors should not be used for inverse commutation arising from a failure to sign a Lump Sum Declaration.