There are two occasions when it may be paid:

• a survivor commutes a survivor’s lifetime annuity or scheme pension; or
• a member dies within the guarantee period of a lifetime annuity or scheme pension they are receiving and the recipient of the guarantee wishes to commute the remaining payments.

In both cases the maximum amount allowed is £30,000.

Any excess can be paid as some other type of authorised lump-sum death benefit, the excess over £30,000 will be an unauthorised member payment and taxed accordingly.

In all cases the payment is taxed as the recipient’s income via PAYE, regardless of when the member died.