Finance Act 2004

Chapter 1 U.K. Introduction

Introductory U.K.

149 Overview of Part 4 U.K.

(1) This Part contains tax provision about pension schemes and other similar schemes.

(2) This Chapter defines some basic concepts.

(3) As for the rest of this Part—

• Chapter 2 is about the registration and de-registration of pension schemes,

• Chapter 3 is about the payments that may be made by registered pension schemes and related matters,

• Chapter 4 deals with tax reliefs and exemptions in connection with registered pension schemes,

• Chapter 5 imposes tax charges in connection with registered pension schemes,

• Chapter 6 is about some schemes that are not registered pension schemes,

• Chapter 7 makes provision about compliance,and

• Chapter 8 contains interpretation and other supplementary provisions.

Main concepts U.K.

150 Meaning of “pension scheme” U.K.

(1) In this Part “pension scheme” means a scheme or other arrangements, comprised in one or more instruments or agreements, having or capable of having effect so as to provide benefits to or in respect of persons—

(a) on retirement,

(b) on death,

(c) on having reached a particular age,

(d) on the onset of serious ill-health or incapacity, or

(e) in similar circumstances.

(2) A pension scheme is a registered pension scheme for the purposes of this Part at any time if it is at that time registered under Chapter 2.

(3) In this Part “public service pension scheme” means a pension scheme—

(a) established by or under any enactment,

(b) approved by a relevant governmental or Parliamentary person or body, or

(c) specified in an order made by the Treasury.

(4) In subsection (3) “a relevant governmental or Parliamentary person or body” means—

(a) a Minister of the Crown or a government department,

(b) the Scottish Parliament, the Scottish Parliamentary Corporate Body or a member of the Scottish Executive,

(c) the National Assembly for Wales[F1 , the National Assembly for Wales Commission or the Welsh Ministers], or

(d) the Northern Ireland Assembly, the Northern Ireland Assembly Commission, a Northern Ireland Minister, the head of a Northern Ireland department or a Northern Ireland department.

(5) In this Part “occupational pension scheme” means a pension scheme established by an employer or employers and having or capable of having effect so as to provide benefits to or in respect of any or all of the employees of—

(a) that employer or those employers, or

(b) any other employer,

(whether or not it also has or is capable of having effect so as to provide benefits to or in respect of other persons).

[F2 (5A) This Part applies in relation to certain pension schemes that are not occupational pension schemes as it applies in relation to occupational pension schemes (see section [F3 274ZA] and paragraph 1(4A) of Schedule 36).]

(6) In this Part “sponsoring employer”, in relation to an occupational pension scheme, means the employer, or any of the employers, to or in respect of any or all of whose employees the pension scheme has, or is capable of having, effect so as to provide benefits.

(7) In this Part “overseas pension scheme” means a pension scheme (other than a registered pension scheme) which—

(a) is established in a country or territory outside the United Kingdom, and

(b) satisfies any requirements prescribed for the purposes of this subsection by regulations made by the Board of Inland Revenue.

(8) In this Part “recognised overseas pension scheme” means an overseas pension scheme [F4 which satisfies any requirements prescribed for the purposes of this subsection by regulations made by the Commissioners for Her Majesty's Revenue and Customs.]

Textual Amendments

F1 Words in s. 150(4)(c) inserted (25.5.2007) by The Government of Wales Act 2006 (Consequential Modifications and Transitional Provisions) Order 2007 (S.I. 2007/1388), art. 1(2), Sch. 1 para. 108

F2 S. 150(5A) inserted (15.3.2018) by Finance Act 2018 (c. 3), Sch. 3 paras. 1(2), 2(3)

F3 Word in s. 150(5A) substituted (11.7.2023) by Finance (No. 2) Act 2023 (c. 30), s. 348(1)(a)(3)

F4 Words in s. 150(8) substituted (17.7.2013) by Finance Act 2013 (c. 29), s. 53(1)

151 Meaning of “member” U.K.

(1) In this Part “member” in relation to a pension scheme, means any active member, pensioner member, deferred member or pension credit member of the pension scheme.

(2) For the purposes of this Part a person is an active member of a pension scheme if there are presently arrangements made under the pension scheme for the accrual of benefits to or in respect of the person.

(3) For the purposes of this Part a person is a pensioner member of a pension scheme if the person is entitled to the present payment of benefits under the pension scheme and is not an active member.

(4) A person is a deferred member of a pension scheme if the person has accrued rights under the pension scheme and is neither an active member nor a pensioner member.

(5) A person is a pension credit member of a pension scheme if the person has rights under the pension scheme which are attributable (directly or indirectly) to pension credits[F5 ; and, if a person dies having become entitled to pension credits but without having rights attributable to them, the person is to be treated as having acquired, immediately before death, the rights by virtue of which the liability in respect of the pension credits is subsequently discharged].

Textual Amendments

F5 Words in s. 151(5) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 2

Modifications etc. (not altering text)

C1 S. 151 applied (with modifications) (6.4.2006) by The Pension Protection Fund (Tax) Regulations 2006 (S.I. 2006/575), regs. 1, 5

152 Meaning of “arrangement” U.K.

(1) In this Part “arrangement”, in relation to a member of a pension scheme, means an arrangement relating to the member under the pension scheme.

(2) For the purposes of this Part an arrangement is a “money purchase arrangement” at any time if, at that time, all the benefits that may be provided to or in respect of the member under the arrangement are cash balance benefits [F6 , collective money purchase benefits] or other money purchase benefits.

(3) For the purposes of this Part a money purchase arrangement is a “cash balance arrangement” at any time if, at that time, all the benefits that may be provided to or in respect of the member under the arrangement are cash balance benefits.

[F7 (3A) For the purposes of this Part a money purchase arrangement is a “collective money purchase arrangement” at any time if, at that time, all the benefits that may be provided to or in respect of the member under the arrangement are collective money purchase benefits.]

(4) In this Part “money purchase benefits”, in relation to a member of a pension scheme, means benefits the rate or amount of which is calculated by reference to an amount available for the provision of benefits to or in respect of the member (whether the amount so available is calculated by reference to payments made under the pension scheme by the member or any other person in respect of the member or any other factor).

[F8 (4A) The reference in subsection (4) to an amount available for the provision of benefits to or in respect of the member includes, in relation to a collective money purchase arrangement, an amount available for the provision of benefits to or in respect of members collectively.]

(5) In this Part “cash balance benefits” means benefits

[F9 (a)] the rate or amount of which is calculated by reference to an amount available for the provision of benefits to or in respect of the member calculated otherwise than wholly by reference to payments made under the arrangement by the member or by any other person in respect of the member (or transfers or other credits) [F10 , and]

[F11 (b) that are not collective money purchase benefits.]

[F12 (5A) In this Part “collective money purchase benefits” means benefits that are

[F13 (a)] collective money purchase benefits within the meaning of Part 1 or 2 of the Pension Schemes Act 2021 [F14 , or]

[F15 (b) payments of CMP periodic income.]]

(6) For the purposes of this Part an arrangement is a “defined benefits arrangement” at any time if, at that time, all the benefits that may be provided to or in respect of the member under the arrangement are defined benefits.

(7) In this Part “defined benefits”, in relation to a member of a pension scheme, means benefits which are not money purchase benefits (but which are calculated by reference to earnings or service of the member or any other factor other than an amount available for their provision).

(8) For the purposes of this Part an arrangement is a “hybrid arrangement” at any time if, at that time, all of the benefits that may be provided to or in respect of the member under the arrangement are, depending on the circumstances, to be of one of any [F16 two, three or four of the varieties specified in subsection (10)].

(9) Where not all of the benefits that may be provided under an arrangement to or in respect of the member are of the same one of [F17 the varieties of benefits specified in subsection (10)], the arrangement is to be treated for the purposes of this Part as being [F18 two, three or four] separate arrangements one of which relates to each of the [F18 two, three or four] varieties of benefits that may be so provided.

[F19 (10) The varieties of benefits mentioned in subsections (8) and (9) are—

(a) cash balance benefits,

(b) collective money purchase benefits,

(c) money purchase benefits that are neither cash balance benefits nor collective money purchase benefits, and

(d) defined benefits.]

Textual Amendments

F6 Words in s. 152(2) inserted (1.8.2022) by Finance Act 2021 (c. 26), Sch. 5 paras. 2(2), 25(1); S.I. 2022/874, reg. 2

F7 S. 152(3A) inserted (1.8.2022) by Finance Act 2021 (c. 26), Sch. 5 paras. 2(3), 25(1); S.I. 2022/874, reg. 2

F8 S. 152(4A) inserted (1.8.2022) by Finance Act 2021 (c. 26), Sch. 5 paras. 2(4), 25(1); S.I. 2022/874, reg. 2

F9 Words in s. 152(5) renumbered as s. 152(5)(a) (1.8.2022) by Finance Act 2021 (c. 26), Sch. 5 paras. 2(5)(a), 25(1); S.I. 2022/874, reg. 2

F10 Word in s. 152(5)(a) inserted (1.8.2022) by Finance Act 2021 (c. 26), Sch. 5 paras. 2(5)(b), 25(1); S.I. 2022/874, reg. 2

F11 S. 152(5)(b) inserted (1.8.2022) by Finance Act 2021 (c. 26), Sch. 5 paras. 2(5)(c), 25(1); S.I. 2022/874, reg. 2

F12 S. 152(5A) inserted (1.8.2022) by Finance Act 2021 (c. 26), Sch. 5 paras. 2(6), 25(1); S.I. 2022/874, reg. 2

F13 Words in s. 152(5A) renumbered as s. 152(5A)(a) (11.7.2023) by Finance (No. 2) Act 2023 (c. 30), s. 24(2)(a)

F14 Word in s. 152(5A)(a) inserted (11.7.2023) by Finance (No. 2) Act 2023 (c. 30), s. 24(2)(b)

F15 S. 152(5A)(b) inserted (11.7.2023) by Finance (No. 2) Act 2023 (c. 30), s. 24(2)(c)

F16 Words in s. 152(8) substituted (1.8.2022) by Finance Act 2021 (c. 26), Sch. 5 paras. 2(7), 25(1); S.I. 2022/874, reg. 2

F17 Words in s. 152(9) substituted (1.8.2022) by Finance Act 2021 (c. 26), Sch. 5 paras. 2(8)(a), 25(1); S.I. 2022/874, reg. 2

F18 Words in s. 152(9) substituted (1.8.2022) by Finance Act 2021 (c. 26), Sch. 5 paras. 2(8)(b), 25(1); S.I. 2022/874, reg. 2

F19 S. 152(10) inserted (1.8.2022) by Finance Act 2021 (c. 26), Sch. 5 paras. 2(9), 25(1); S.I. 2022/874, reg. 2

Modifications etc. (not altering text)

C2 S. 152 applied (with modifications) (6.4.2006) by The Pension Protection Fund (Tax) Regulations 2006 (S.I. 2006/575), regs. 1, 6