Finance Act 2004

182 Unauthorised borrowing: money purchase arrangements U.K.

(1) A registered pension scheme is not authorised to borrow an amount in respect of a money purchase arrangement unless the arrangement borrowing condition is met.

(2) The arrangement borrowing condition is met if—

where—

APB is the aggregate of the amounts previously borrowed in respect of the arrangement (excluding any amounts which have been repaid),

PB is the amount proposed to be borrowed in respect of the arrangement, and

VA is the value of the arrangement.

(3) The value of the arrangement is the aggregate of—

(a) the amount of such of the sums and the market value of such of the assets as represent the member’s unsecured pension fund or alternatively secured pension fund in respect of the arrangement (if any),

(b) the amount of such of the sums and the market value of such of the assets as represent dependants' unsecured pension funds or alternatively secured pension funds in respect of the arrangement (if any),

(c) the aggregate of the value of each scheme pension or dependants' scheme pension payable in respect of the arrangement, and

(d) the value of the uncrystallised rights under the arrangement.

(4) The value of a scheme pension or dependants' scheme pension payable in respect of the arrangement is—

where—

RVF is the relevant valuation factor (see section 276), and

ARP is the annual rate at which the pension is payable.

(5) Rights are uncrystallised if no-one has become entitled to the present payment of benefits in respect of the rights; and a person is to be treated as entitled to the present payment of benefits in respect of the sums and assets representing the person’s unsecured pension fund or alternatively secured pension fund.

(6) If the arrangement is a cash balance arrangement, the value of the uncrystallised rights under the arrangement is the amount which would, on the valuation assumptions (see section 277), be available for the provision of benefits in respect of those rights if a person became entitled to benefits in respect of those rights.

(7) If the arrangement is a money purchase arrangement other than a cash balance arrangement, the value of the uncrystallised rights under the arrangement is the aggregate of the amount of such of the sums, and the market value of such of the assets, held for the purposes of the arrangement as represent those rights.

(8) If the arrangement is a hybrid arrangement under which either cash balance benefits or other money purchase benefits (but not defined benefits) may be provided, the value of the uncrystallised rights under the arrangement is the greater of—

(a) their value calculated under subsection (6) (on the assumption that cash balance benefits are provided), and

(b) their value calculated under subsection (7) (on the assumption that other money purchase benefits are provided).

Modifications etc. (not altering text)

C10 Ss. 182-185 excluded (6.4.2006) by The Pension Protection Fund (Tax) Regulations 2006 (S.I. 2006/575), regs. 1, 16

Commencement Information

I1 Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284