Finance Act 2011

13 After section 236 insert—

“236A Post-entitlement enhancements

(1) This section applies in relation to the arrangement if, during the pension input period (“the affected pension input period”), the individual enters into a scheme for the making of an avoidance-inspired post-entitlement enhancement.

(2) A “post-entitlement enhancement” is an increase in the annual rate of a scheme pension under the arrangement, at a time after the member has become entitled to the scheme pension.

(3) A post-entitlement enhancement is “avoidance-inspired” if the main purpose, or one of the main purposes, of the individual in entering into the scheme was to avoid or reduce a liability to the annual allowance charge.

(4) This Part has effect in relation to the arrangement and the individual, as respects the affected pension input period and all subsequent pension input periods, as if—

(a) section 234 were modified in accordance with subsection (5), and

(b) sections 235 and 236 were omitted.

(5) The modifications of section 234 are that—

(a) in subsection (4), for the words after “the arrangement is” there are substituted “such amount as, applying normal actuarial practice, is the expected cost of giving effect to the individual’s rights under the arrangement at the end of the immediately preceding pension input period (or is nil if the pension input period is the first pension input period of the arrangement).”,

(b) in subsection (5), for the words after “the arrangement is” there are substituted “such amount as, applying normal actuarial practice, is the expected cost of giving effect to the individual’s rights under the arrangement at the end of the pension input period.”, and

(c) subsection (6) is omitted.

(6) In this section “scheme” includes any arrangements, agreement, understanding, transaction or series of transactions (whether or not legally enforceable).”