Part 9Pension income

F1Chapter 5APENSIONS UNDER REGISTERED PENSION SCHEMES

F2579CZAExemption for beneficiaries' income withdrawal in some cases

(1)

Section 579A does not apply to dependants' income withdrawal or nominees' income withdrawal if it is paid—

(a)

in respect of a deceased member of a registered pension scheme who had not reached the age of 75 at the date of the member's death, and

(b)

to a person from the person's—

(i)

dependant's drawdown pension fund,

(ii)

dependant's flexi-access drawdown fund, or

(iii)

nominee's flexi-access drawdown fund,

in respect of a money purchase arrangement under a registered pension scheme.

(2)

Section 579A does not apply to successors' income withdrawal if it is paid—

(a)

in respect of a deceased beneficiary of a deceased member of a registered pension scheme where the beneficiary had not reached the age of 75 at the date of the beneficiary's death, and

(b)

to a person from the person's successor's flexi-access drawdown fund in respect of a money purchase arrangement under a registered pension scheme,

and here “beneficiary” means dependant, nominee or successor.

(3)

Subsection (1) is subject to the following provisions of this section.

(4)

Section 579A does apply to dependants' income withdrawal paid on or after 6 April 2015 to a person from the person's dependant's drawdown pension fund in respect of a money purchase arrangement under a registered pension scheme (“the drawdown fund”) if before 6 April 2015—

(a)

any payment of dependants' income withdrawal was made from—

(i)

the drawdown fund, or

(ii)

any fund represented (to any extent) by the drawdown fund, or

(b)

any payment was made of a dependants' short-term annuity purchased using sums or assets out of—

(i)

the drawdown fund, or

(ii)

any fund represented (to any extent) by the drawdown fund.

(5)

Section 579A does apply to dependants' income withdrawal paid in respect of a deceased member of a registered pension scheme to a person from the person's dependant's flexi-access drawdown fund in respect of a money purchase arrangement under a registered pension scheme (“the new fund”) if—

(a)

any of the sums or assets that make up the new fund—

(i)

became newly-designated dependant funds under paragraph 22A(2)(b) of Schedule 28 to FA 2004 or as a result of the operation of any of paragraphs 22B to 22D of that Schedule, or

(ii)

arise, or (directly or indirectly) derive, from any such newly-designated dependant funds or from sums or assets which so arise or derive,

F3(b)

before 6 April 2015—

(i)

any payment of dependants' income withdrawal in respect of the deceased member was made to the person from, or

(ii)

any payment in respect of the deceased member was made to the person of a dependants' short-term annuity purchased using sums or assets out of,

the person's dependant's drawdown pension fund in respect of a money purchase arrangement under a registered pension scheme, and

(c)

any of the sums or assets that made up that fund at the time of that payment to any extent make up, or are represented by sums or assets that to any extent make up, the new fund.

(6)

Where relevant unused uncrystallised funds—

(a)

are designated on or after 6 April 2015 as available for the payment of dependants' drawdown pension or nominees' drawdown pension, and

(b)

as a result of the designation make up (to any extent) a person's dependant's flexi-access drawdown fund or nominee's flexi-access drawdown fund in respect of a money purchase arrangement under a registered pension scheme, but

(c)

are not so designated before the end of the relevant two-year period,

section 579A does apply to dependants' income withdrawal or nominees' income withdrawal paid to the person from the fund so far as it is paid in respect of sums or assets for the time being representing the whole or any part of those relevant unused uncrystallised funds.

(7)

In this section—

  • “dependant”, “nominee” and “successor” have the meaning given (respectively) by paragraphs 15, 27A and 27F of Schedule 28 to FA 2004,

  • “dependant's drawdown pension fund”, “dependant's flexi-access drawdown fund”, “nominee's flexi-access drawdown fund” and “successor's flexi-access drawdown fund” have the meaning given (respectively) by paragraphs 22, 22A, 27E and 27K of Schedule 28 to FA 2004,

  • “money purchase arrangement” has the meaning given by section 152 of FA 2004, and

  • “the relevant two-year period”, in relation to relevant unused uncrystallised funds held for the purposes of a money purchase arrangement relating to a deceased individual under a registered pension scheme, means the period of two years beginning with the earlier of the day on which the scheme administrator of the scheme first knew of the individual's death and the day on which the scheme administrator could first reasonably have been expected to have known of it.

(8)

For the purposes of this section, sums or assets held after the death of a member of a registered pension scheme for the purposes of a money purchase arrangement relating to the member under the scheme are “relevant unused uncrystallised funds” if—

(a)

they are unused uncrystallised funds, and

(b)

the member had not reached the age of 75 at the date of the member's death.

(9)

Paragraph 27E(4) and (5) of Schedule 28 to FA 2004 (meaning of “unused uncrystallised funds”) apply for the purposes of subsection (8)(a).