(1)  A benefit or benefit entitlement payable under these regulations is to be reduced at the time of payment by the Board to the extent of the balance of the surchargeable contributions debt account.

(2)  For the purposes of subregulation (1)  –

(a) where a benefit entitlement payable under these regulations or substituted under regulation 124 is taken wholly as a lump sum, the lump sum benefit entitlement is to be reduced by an amount representing any part of the surchargeable contributions debt account attributable to that benefit entitlement; and

(b) where a person elects to commute part of his or her lump sum benefit entitlement payable under these regulations to a pension –

(i) calculated under regulations 79 and 80 ; or

(ii) calculated in accordance with Schedule 3 ; or

(iii) substituted under regulation 124  –

the part of the benefit remaining as a lump sum is to be sufficient to discharge the balance of his or her surchargeable contributions debt account and an amount representing any part of that account attributable to that benefit entitlement is to be deducted from the lump sum remaining; and

(c) where a person elects to commute all of his or her lump sum benefit entitlement payable under these regulations to a pension calculated under regulations 79 and 80 , part of the benefit must be taken as a lump sum sufficient to discharge the balance of his or her surchargeable contributions debt account and an amount representing any part of that account attributable to that benefit entitlement is to be deducted from the benefit entitlement before the commutation to a pension; and

(d) where a person elects to commute all of a benefit entitlement payable under the contributory scheme to a pension substituted under regulation 124 or a pension in accordance with Schedule 3 , the amount by which the annual pension is to be reduced is determined in accordance with the following formula:

where –

PR is the amount by which the annual pension payable to a pensioner is to be reduced;

SCDA is the balance of the surchargeable contributions debt account attributable to the benefit entitlement at the time when the surcharge liability is payable;

CF is the appropriate age, marital and gender factor specified for a pension determined by the Board in accordance with regulation 80(1) or (2) .

(3)  A person who receives an assessment notice in respect of a pension payable under these regulations may elect in writing to the Board to commute sufficient of his or her pension to a lump sum to discharge the balance of his or her surchargeable contributions debt account.

(4)  On receipt of an election under subregulation (3) , the Board must –

(a) reduce the pension as provided by subregulation (2) ; and

(b) pay the lump sum to that person to enable that person to discharge the balance of his or her surchargeable contributions debt account.