Finance Act 2011

Unsecured and alternatively secured pension to be replaced by drawdown pension

1 (1) In Part 4 of FA 2004 (pension schemes etc), section 165 (pension rules) is amended as follows.

(2) In subsection (1)—

(a) in pension rule 4—

(i) for “If the member has not reached the age of 75, no payment of pension” substitute “No payment of pension”, and

(ii) for paragraph (c) substitute—

“(c) drawdown pension,”;

(b) for pension rule 5 substitute—

• “Pension rule 5

  The total amount of drawdown pension paid in each drawdown pension year in respect of a money purchase arrangement must not exceed 100% of the basis amount for the drawdown pension year.”;

(c) omit pension rules 6 and 7.

(3) After subsection (3) insert—

“(3A) This subsection applies to an arrangement if—

(a) the member meets the flexible drawdown conditions,

(b) the member makes a valid declaration to the scheme administrator to that effect, and

(c) the declaration is accepted by the scheme administrator.

(3B) The member meets the flexible drawdown conditions if—

(a) the member satisfied the minimum income requirement on the relevant day,

(b) no relevant contributions are paid under any money purchase arrangement (other than a cash balance arrangement) relating to the member under a registered pension scheme in the tax year in which the declaration is made, and

(c) at the time of the declaration the member is not an active member of any registered pension scheme under which there is a defined benefits or cash balance arrangement relating to the member.”