SCHEDULES
C15SCHEDULE 28Registered pension schemes: authorised pensions—supplementary
Part 2Pension death benefit rules
Defined benefits and money purchase arrangements
15
1
A person who was married to F83, or a civil partner of, the member at the date of the member’s death is a dependant of the member.
F781A
If the rules of the pension scheme so provide, a person who was married to F112, or a civil partner of, the member when the member first became entitled to a pension under the pension scheme is a dependant of the member.
C22
A child of the member is a dependant of the member if the child—
a
has not reached the age of 23, or
C5b
has reached that age and, in the opinion of the scheme administrator, was at the date of the member’s death dependant on the member because of physical or mental impairment.
F862A
A child of the member is a dependant of the member if the child—
a
has reached the age of 23, and
b
is not within sub-paragraph (2)(b).
2B
But this paragraph, so far as it has effect for the purpose of determining the meaning of “dependant”—
a
in paragraphs 16 to 17 and 27A, and
b
in paragraph 18 of Schedule 29,
has effect with the omission of sub-paragraph (2A).
C13
A person who was not married to F56, or a civil partner of, the member at the date of the member’s death and is not a child of the member is a dependant of the member if, in the opinion of the scheme administrator, at the date of the member’s death—
a
the person was financially dependant on the member,
b
the person’s financial relationship with the member was one of mutual dependence, or
c
the person was dependant on the member because of physical or mental impairment.
16
F571
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
F49A pension payable to a dependant is a dependants' scheme pension F71for the purposes of this Part if—
a
it is payable by the scheme administrator or by an insurance company selected by the scheme administrator, F87...
F87b
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F592A
The Board of Inland Revenue may by regulations make provision in relation to cases in which a dependants' scheme pension payable to a dependant of a member of a registered pension scheme by an insurance company (“the original dependants' scheme pension”) ceases to be payable and in consequence of that—
a
sums or assets (or both) are transferred from the insurance company to another insurance company and are applied towards the provision of either another dependants' scheme pension (a “new dependants' scheme pension”) or a scheme pension, lifetime annuity, short-term annuity, dependants' annuity or dependants' short-term annuity by the other insurance company, or
b
sums or assets are transferred to the relevant registered pension scheme.
2B
The regulations may provide that—
a
in a case where a new dependants' scheme pension becomes payable, the new dependants' scheme pension is to be treated, to such extent as is prescribed by the regulations and for such of the purposes of this Part as are so prescribed, as if it were the original dependants' scheme pension, and
b
in any other case, the relevant registered pension scheme is to be treated as making an unauthorised payment in respect of the member of an amount equal to the aggregate of the amount of the sums, and the market value of the assets, transferred.
2C
For the purposes of sub-paragraphs (2A) and (2B) a registered pension scheme is the relevant registered pension scheme if the original dependants' scheme pension was acquired using sums or assets held for the purposes of the pension scheme.
F1043
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1044
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1045
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1046
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
C19F4316A
1
Paragraphs 16B and 16C apply where—
a
the member dies after 5th April 2006,
b
he has reached the age of 75 before his death, and
c
at the time of his death he is actually or prospectively entitled to one or more scheme pensions under the pension scheme.
F1001A
Sub-paragraph (1) is subject to paragraphs 16AA and 16AB.
2
References in this paragraph and paragraph 16B to a scheme pension include a pension payable before 6th April 2006 which would be a scheme pension if payable after that date.
F1113
Where, immediately before the member’s death, the member is actually or prospectively entitled to CMP periodic income, any CMP periodic income that is at any later time payable to a dependant of the member is to be ignored for the purposes of paragraphs 16AA to 16B.
F9216AA
Paragraphs 16B and 16C do not apply if—
a
each benefit crystallisation event that has occurred in relation to the member by reference to arrangements relating to the member under the scheme is benefit crystallisation event 5B (having unused funds under a money purchase arrangement at age 75), or
b
paragraph 12 of Schedule 36 (enhanced protection by reference to pre-6 April 2006 rights) applies in the case of the member immediately before the member's death.
16AB
1
Paragraph 16B does not apply if, at all times in the post-death year (as defined in that paragraph), the payable annual rate is less than the limit.
2
Paragraph 16C does not apply in relation to a period of 12 months within paragraph (a) or (b) of paragraph 16C(1) if, at all times in that period of 12 months, the payable annual rate is less than the limit.
3
“The payable annual rate”, at any time, is arrived at as follows—
a
identify each dependants' scheme pension payable in respect of the member under the scheme to which a dependant of the member is actually entitled at that time, and
b
identify the annual rate at which each pension identified at paragraph (a) is payable at that time, and
c
if only one pension is identified at paragraph (a), the payable annual rate is the annual rate identified at paragraph (b), and
d
if two or more pensions are identified at paragraph (a), the payable annual rate is the total of the annual rates identified at paragraph (b).
4
“The limit”, at any time, is—
a
the general limit at that time (see paragraph 16AC), or,
b
if higher, the personal limit at that time (see paragraph 16AD).
16AC
1
This paragraph applies for the purposes of paragraph 16AB(4).
2
“The general limit” at a time in the tax year 2016-17 is £25,000.
3
“The general limit” at a time in a later tax year (“year T”)—
a
is given by—
where G is the general limit at times in the tax year (“year P”) that precedes year T, or
b
if the amount given by paragraph (a) is not a multiple of £100, is that amount rounded up to the nearest amount that is such a multiple.
4
See paragraph 16AE for the meaning of U%.
16AD
1
This paragraph applies for the purposes of paragraph 16AB(4).
2
“The personal limit” at a time in the tax year in which the member dies is arrived at as follows—
a
identify each scheme pension under the scheme to which the member is actually or prospectively entitled immediately before the member's death, and
b
as regards each pension identified at paragraph (a)—
i
if it is one to which the member is actually entitled immediately before the member's death, identify the annual rate at which it is payable immediately before the member's death, or
ii
if it is one to which the member is prospectively entitled immediately before the member's death, identify the annual rate at which it would have been payable immediately before the member's death had the member been actually entitled to it immediately before the member's death, and
c
if only one pension is identified at paragraph (a), the personal limit is the annual rate identified at paragraph (b), and
d
if two or more pensions are identified at paragraph (a), the personal limit is the total of the annual rates identified at paragraph (b).
3
“The personal limit” at a time in a tax year (“year S”) later than the tax year in which the member dies—
a
is given by—
where L is the personal limit at times in the tax year (“year P”) that precedes year S, or
b
if the amount given by paragraph (a) is not a multiple of £100, is that amount rounded up to the nearest amount that is such a multiple.
4
See paragraph 16AE for the meaning of U%.
5
If the scheme is a public service pension scheme, ignore any abatement when identifying at sub-paragraph (2)(b) the annual rate of any scheme pension under the scheme.
16AE
1
In paragraphs 16AC(3) and 16AD(3), U% means the highest of—
a
5%,
b
CPI% (see sub-paragraph (2)), and
c
RPI% (see sub-paragraph (3)).
2
If the consumer prices index for September in year P is higher than the consumer prices index for September in the tax year preceding year P, CPI% is the percentage increase in the index (but is otherwise 0%).
3
If the retail prices index for September in year P is higher than the retail prices index for September in the tax year preceding year P, RPI% is the percentage increase in the index (but is otherwise 0%).
4
In this paragraph “year P” has the same meaning as in paragraph 16AC or (as the case may be) paragraph 16AD.
16B
1
Where a pension is payable under the pension scheme to a dependant of the member in the period of 12 months beginning with the date of the member's death (“the post-death year”), so much of the pension as exceeds the initial member pension limit is not a dependants' scheme pension.
2
But if—
a
more than one pension is so payable to one of the dependants of the member in the post-death year, or
b
pensions are so payable to more than one dependant of the member in the post-death year,
(or both), so much of any of the pensions as exceeds the appropriate portion of the initial member pension limit is not a dependants' scheme pension.
3
The “initial member pension limit” is (subject to sub-paragraph (4)) the sum of—
a
the aggregate of the amounts of the scheme pensions to which the member is actually entitled under the pension scheme immediately before his death payable to the member in the period of 12 months ending with the date of his death (“the pre-death year”),
b
the aggregate of the amounts of the scheme pensions to which the member is prospectively entitled under the pension scheme at that time which would have been so payable if he had been actually entitled to the pensions throughout the pre-death year, and
c
5% of the aggregate of the F70uprated amounts (see sub-paragraph (6)) of the lump sums on which there is no liability to income tax to which the member has become entitled in connection with scheme pensions under the pension scheme before his death.
4
But if the member became (actually) entitled to a scheme pension under the pension scheme during the pre-death year, sub-paragraph (3)(a) has effect as if the amount of that scheme pension which was payable to the member under the pension scheme in the pre-death year were the amount which would have been payable to him in the period of 12 months beginning with the date on which he became entitled to it had he not died.
5
The “appropriate portion” of the initial member pension limit, in relation to any pension payable under the pension scheme to a dependant of the member in the post-death year, is—
where—
P is the amount of that pension payable in the post-death year, and
AP is the aggregate of the amounts of each of the pensions payable under the pension scheme to dependants of the member in the post-death year.
F846
The “uprated amount” of a lump sum is the amount of the lump sum increased by the higher of C% and R%, where—
a
if the consumer prices index for the month in which the member dies is higher than it was for the month in which the member became entitled to the lump sum, C% is the percentage increase in the index (but is otherwise 0%), and
b
if the retail prices index for the month in which the member dies is higher than it was for the month in which the member became entitled to the lump sum, R% is the percentage increase in the index (but is otherwise 0%).
16C
1
Where a pension is payable under the pension scheme to a dependant of the member, otherwise than in excepted circumstances, in—
a
the period of 12 months beginning with the end of the post-death year, or
b
any succeeding period of 12 months,
(“the 12 months in question”), so much of the pension as exceeds the current member pension limit is not a dependants' scheme pension.
2
But if—
a
more than one pension is so payable to one of the dependants in the 12 months in question, or
b
pensions are so payable to more than one dependant of the member in the 12 months in question,
(or both), so much of any of the pensions as exceeds the appropriate portion of the current member pension limit is not a dependants' scheme pension.
3
“Excepted circumstances” means—
a
that at the beginning of the F99... 12 months in question there are at least 50 pensioner members of the pension scheme, and
b
that the condition in F16sub-paragraph (4) is met.
F264
The condition is that if the annual rate of a pension payable under the pension scheme to a dependant of the member is increased at any time in the period of 12 months in question—
a
the dependant is at that time one of a group of at least 20 pensioner members of the pension scheme, and
b
all the pensions being paid under the pension scheme to pensioner members of that group are at that time increased at the same rate.
6
7
The “permitted margin” is the amount by which the initial member pension limit would be greater if it had been increased by whichever of calculation A and calculation B gives the greater amount.
8
Calculation A involves increasing the initial member pension limit by the relevant annual percentage rate for the whole of the period—
a
beginning with the first month beginning after the F33member's death (“the opening month”), and
b
ending with the first month F17ending after the start of the 12 months in question (“the closing month”).
9
The relevant annual percentage rate is—
a
if the relevant valuation factor in relation to the pension scheme is a number greater than 20, the annual rate agreed by the Inland Revenue and the scheme administrator, and
b
otherwise, 5% per annum.
10
Calculation B involves increasing the initial member pension limit by the relevant indexation percentage.
11
If the retail prices index for the closing month is higher than it was for the F20month in which the member died, the relevant indexation percentage is the percentage increase in the retail prices index.
12
If it is not, the relevant indexation percentage is 0%.
F7713
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F7714
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15
The “appropriate portion” of the current member pension limit, in relation to any pension payable under the pension scheme to a dependant of the member in the 12 months in question, is—
where—
P is the amount of that pension payable in the 12 months in question, and
AP is the aggregate of the amounts of each of the pensions payable under the pension scheme to one or more dependants of the member in the 12 months in question.
Money purchase arrangements
17
1
F101For the purposes of this Part an annuity payable to a dependant is a dependants' annuity if—
F103za
either—
i
it is purchased together with a lifetime annuity payable to the member and the member becomes entitled to that lifetime annuity before 6 April 2015, or
ii
it is purchased after the member's death and the dependant becomes entitled to it before 6 April 2015,
a
it is payable by an insurance company,
b
the member or dependant had an opportunity to select the insurance company,
F98c
its amount either cannot decrease or falls to be determined in any manner prescribed by regulations made by the Board of Inland Revenue,
d
where the dependant is not the member’s child, it is payable until the dependant’s death or until the earlier of the dependant’s marryingF25, entering into a civil partnership or dying, and
e
where the dependant is the member’s child, it is payable until the earlier of the dependant’s ceasing to be a dependant or dying, or until the earliest of the dependant’s marryingF52, entering into a civil partnership, ceasing to be a dependant or dying.
F601ZA
For the purposes of this Part, but subject to any provision made under sub-paragraph (4)(za), an annuity payable to a dependant is also a dependants' annuity if—
a
either—
i
it is purchased together with a lifetime annuity payable to the member and the member becomes entitled to that lifetime annuity on or after 6 April 2015, or
ii
it is purchased after the member's death and the dependant becomes entitled to it on or after 6 April 2015,
b
it is payable by an insurance company,
c
where the dependant is not the member's child, it is payable until the dependant's death or until the earliest of the dependant's marrying, entering into a civil partnership or dying, and
d
where the dependant is the member's child, it is payable until the earlier of the dependant's ceasing to be a dependant or dying, or until the earliest of the dependant's marrying, entering into a civil partnership, ceasing to be a dependant or dying.
F811A
For the purposes of F37sub-paragraphs (1)(za) and (1ZA)(a) a dependants' annuity is purchased together with a lifetime annuity if the dependant's annuity is related to the lifetime annuity.
F362
An annuity does not fail to satisfy sub-paragraph (1)(c) by reason of the operation of
F113b
an order under section 377A of the Financial Services and Markets Act 2000 (court order writing down liabilities of insurer).
3
The Board of Inland Revenue may by regulations make provision in relation to cases in which a dependants' annuity payable to a person (“the original dependants' annuity”) ceases to be payable and in consequence of that—
a
sums or assets (or both) are transferred from the insurance company to another insurance company and are applied towards the provision of either another dependants' annuity (a “new dependants' annuity”) or a scheme pension, lifetime annuity, short-term annuity, dependants' scheme pension or dependants' short-term annuity by the other insurance company, or
b
sums or assets are transferred to the relevant registered pension scheme.
4
The regulations may provide that—
F41za
in a case where—
i
a new annuity becomes payable,
ii
the dependant becomes entitled to it on or after 6 April 2015,
iii
it would be a dependants' annuity if any provision made under this paragraph were ignored,
iv
the terms of the contract for it are such that there will or could be decreases in its amount other than allowed decreases (see sub-paragraph (6)), and
v
any other conditions prescribed by the regulations are met,
the new annuity is not a dependants' annuity for the purposes of this Part,
a
in a case where a new dependants' annuity becomes payable, the new dependants' annuity is to be treated, to such extent as is prescribed by the regulations and for such of the purposes of this Part as are so prescribed, as if it were the original dependants' annuity, and
b
in F28a case other than one where a new dependants' annuity becomes payable, the relevant registered pension scheme is to be treated as making an unauthorised payment in respect of the member of an amount equal to the aggregate of the amount of the sums, and the market value of the assets, transferred.
F294A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5
For the purposes of sub-paragraphs (3) and (4) a registered pension scheme is the relevant registered pension scheme if the original dependants' annuity was acquired using sums or assets held for the purposes of the pension scheme.
F326
In sub-paragraph (4)(za)(iv) “allowed decreases” means decreases from time to time allowed by regulations under sub-paragraph (1)(c); and any such regulations are to be treated as having effect for this purpose.
18
F65“Dependants' drawdown pension” means—
a
a dependants' short-term annuity, or
b
dependants' income withdrawal.
F719
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
C2320
1
F102For the purposes of this Part an annuity payable to a dependant is a dependants' short-term annuity if—
a
it is purchased by the application of sums or assets representing the whole or any part of the F47dependant's drawdown pension fund in respect of an arrangement,
b
it is payable by an insurance company,
c
the dependant had an opportunity to select the insurance company,
F48ca
the dependant becomes entitled to it before 6 April 2015,
d
it is payable for a term which does not exceed five years and ends before the dependant F89... dies, and
F88e
its amount either cannot decrease or falls to be determined in any manner prescribed by regulations made by the Board of Inland Revenue.
F191ZA
For the purposes of this Part, but subject to any provision made under sub-paragraph (1C)(za), an annuity payable to a dependant is also a dependants' short-term annuity if—
a
it is purchased by the application of sums or assets representing the whole or any part of the dependant's drawdown pension fund, or of the dependant's flexi-access drawdown fund, in respect of an arrangement,
b
it is payable by an insurance company,
c
the dependant becomes entitled to it on or after 6 April 2015, and
d
it is payable for a term which does not exceed five years and ends before the dependant dies.
F661A
An annuity does not fail to satisfy sub-paragraph (1)(e) by reason of the operation of a pension sharing order or provision.
1B
The Board of Inland Revenue may by regulations make provision in relation to cases in which a dependants' short-term annuity payable to a person (“the original dependants' short-term annuity”) ceases to be payable and in consequence of that—
a
sums or assets (or both) are transferred from the insurance company to another insurance company and are applied towards the provision of either another dependants' short-term annuity (a “new dependants' short-term annuity”) or a scheme pension, lifetime annuity, short-term annuity, dependants' scheme pension or dependants' annuity by the other insurance company, or
b
sums or assets are transferred to the relevant registered pension scheme.
1C
The regulations may provide that—
F11za
in a case where—
i
a new annuity becomes payable,
ii
the dependant becomes entitled to it on or after 6 April 2015,
iii
it would be a dependants' short-term annuity if any provision made under this paragraph were ignored,
iv
the terms of the contract for it are such that there will or could be decreases in its amount other than allowed decreases (see sub-paragraph (1E)), and
v
any other conditions prescribed by the regulations are met,
the new annuity is not a dependants' short-term annuity for the purposes of this Part,
a
in a case where a new dependants' short-term annuity becomes payable, the new dependants' short-term annuity is to be treated, to such extent as is prescribed by the regulations and for such of the purposes of this Part as are so prescribed, as if it were the original dependants' short-term annuity, and
b
in F109a case other than one where a new dependants' short-term annuity becomes payable, the relevant registered pension scheme is to be treated as making an unauthorised payment in respect of the member of an amount equal to the aggregate of the amount of the sums, and the market value of the assets, transferred.
1D
For the purposes of sub-paragraphs (1B) and (1C) a registered pension scheme is the relevant registered pension scheme if the original dependants' short-term annuity was acquired using sums or assets held for the purposes of the pension scheme.
F531E
In sub-paragraph (1C)(za)(iv) “allowed decreases” means decreases from time to time allowed by regulations under sub-paragraph (1)(e); and any such regulations are to be treated as having effect for this purpose.
F312
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F7921
Dependants' income withdrawal” means an amount (other than an annuity) which the dependant is entitled to be paid from the dependant's drawdown pension fund in respect of an arrangement F22or from the dependant's flexi-access drawdown fund in respect of an arrangement.
C622
1
For the purposes of this Part a F39dependant's drawdown pension fund in respect of an arrangement consists of such of the sums and assets held for the purposes of the arrangement—
F24a
as are dependant-designated funds, and
b
have not been applied towards the provision of a dependants' scheme pension.
C14F822
For the purposes of this Part sums or assets held for the purposes of an arrangement are dependant-designated funds if F62...—
a
F93aa
they have, at any time on or after 6 April 2015, been designated under the arrangement as available for the payment of dependants' drawdown pension F9..., and—
i
sums or assets held for the purposes of the arrangement have, at any time before 6 April 2015, been designated under the arrangement as so available, and
ii
section 167(2A) did not apply to the arrangement immediately before 6 April 2015, or
3
If any sums or assets representing a F38person'sF44dependant's drawdown pension fund in respect of an arrangement under the pension scheme would (apart from this sub-paragraph)—
a
b
are applied towards the provision of a scheme pension or a lifetime annuity,
they are to be treated as not doing so.
22A
1
For the purposes of this Part a dependant's flexi-access drawdown fund in respect of an arrangement consists of such of the sums or assets held for the purposes of the arrangement as are newly-designated dependant funds.
2
For the purposes of this Part sums or assets held for the purposes of an arrangement are newly-designated dependant funds if—
a
they—
i
have, at any time on or after 6 April 2015, been designated under the arrangement as available for the payment of dependants' drawdown pension, and
ii
are not dependant-designated funds, or
b
they were dependant-designated funds immediately before 6 April 2015 and section 167(2A) applied to the arrangement at that time, or
c
they have become newly-designated dependant funds by the operation of paragraph 22B, 22C or 22D, or
d
they arise, or (directly or indirectly) derive, from newly-designated dependant funds under paragraph (a), (b) or (c) or from sums or assets which so arise or derive.
3
Any sums or assets that become newly-designated dependant funds under sub-paragraph (2)(b) cease to be dependant-designated funds as from the start of 6 April 2015.
22B
1
Sub-paragraph (2) applies if—
a
a dependant's drawdown pension fund in respect of an arrangement came into being before 6 April 2015,
b
section 167(2A) did not apply to the arrangement immediately before 6 April 2015, and
c
at a time on or after 6 April 2015, a payment—
i
of dependants' income withdrawal from the fund, or
ii
of a dependants' short-term annuity purchased using sums or assets out of the fund,
is made that (apart from sub-paragraph (2)) would breach the cap.
2
The sums and assets that make up the fund immediately before the payment is made become newly-designated dependant funds immediately before the payment is made (so that the payment is made out of the dependant's flexi-access drawdown fund in respect of the arrangement and therefore is not part of the total capped by pension death benefit rule 4).
3
For the purposes of sub-paragraph (1)(c), a payment of dependants' drawdown pension in respect of an arrangement is one that would breach the cap if, when its amount is added to the amounts of any dependants' drawdown pension in respect of the arrangement—
a
paid—
i
before it is made, but
ii
in the same drawdown pension year in respect of the arrangement, or
b
paid at the time it is made,
the total is greater than the cap set by pension death benefit rule 4 for that drawdown pension year.
22C
1
Sub-paragraph (2) applies if—
a
a dependant's drawdown pension fund in respect of an arrangement came into being before 6 April 2015,
b
section 167(2A) did not apply to the arrangement immediately before 6 April 2015, and
c
the dependant notifies the F67scheme manager that the dependant wishes the fund to become the dependant's flexi-access drawdown fund in respect of the arrangement.
2
At—
a
the time the F67scheme manager accepts the notification, or
b
the start of 6 April 2015 if that is later,
the sums and assets that then make up that fund become newly-designated dependant funds, if they have not previously done so by the operation of paragraph 22B.
22D
1
Sub-paragraphs (2) and (3) apply if—
a
there is a recognised transfer from one registered pension scheme (“the old scheme”) to another registered pension scheme (“the new scheme”) of dependant-designated funds held for the purposes of an arrangement under the old scheme, and
b
the sums or assets transferred are, under the arrangement under the new scheme for whose purposes they are first held after the transfer, designated as available for the payment of drawdown pension.
2
If the dependant, when or before the designation is made, notifies the F67scheme manager of the new scheme that the dependant wishes the sums or assets to be newly-designated dependant funds, the sums or assets become newly-designated dependant funds and do so—
a
when the designation is made, or
b
if later, immediately after the transfer,
except that, if both the designation and transfer are made before 6 April 2015, the sums or assets become newly-designated dependant funds at the start of 6 April 2015.
3
If sub-paragraph (2) does not provide for the sums or assets to become newly-designated dependant funds, the sums or assets become dependant-designated funds and do so—
a
when the designation is made, or
b
if later, immediately after the transfer.
23
C101
F55“Drawdown pension year” means—
C3C8a
the period of 12 months beginning with the day on which the dependant first becomes entitled to F4dependants' drawdown pension in respect of the arrangement, and
b
each succeeding period of 12 months.
F69This is subject to paragraph 24B.
C17F582
The drawdown pension year in which the dependant dies is the last drawdown pension year and ends immediately before the dependant's death.
C7C1324
F72A1
This paragraph applies in relation to drawdown pension years beginning on or before the dependant's 75th birthday.
1
Subject as follows, the period of three drawdown pension years beginning with the first drawdown pension year, and each succeeding period of three drawdown pension years, is a “reference period”.
1ZA
But the reference period in which the dependant reaches the age of 75 ends with the drawdown pension year in which the dependant reaches that age.
F51A
Sub-paragraph (1B) applies if, at any time during a reference period (“the current reference period”), the dependant notifies the scheme administrator that the dependant wishes a new reference period to begin on the next day that is an anniversary of the reference date in relation to the current reference period.
1B
The scheme administrator may determine—
a
that the current reference period is to end immediately before that day (so that sub-paragraph (1) no longer applies), and
1C
The first day of each reference period is, in relation to that period, “the reference date”.
2
For the first F50drawdown pension year falling within a reference period, the basis amount is the annual amount of the relevant annuity which could have been purchased by the application of the sums and assets representing the F94dependant's drawdown pension fund on the nominated date (but subject to sub-paragraph (5)).
3
“The nominated date”—
a
in relation to the first reference period, is the reference date, and
b
in relation to any subsequent reference period, is such day, within the period of 60 days ending with the reference date, as is nominated by the scheme administrator (or if no day is nominated by the scheme administrator, is the reference date).
C124
For each other F54drawdown pension year falling within a reference period, the basis amount is the annual amount of the relevant annuity which could have been purchased by the application of the sums and assets representing the F110dependant's drawdown pension fund—
a
if there has been no recent annuity purchaseF63, recent additional fund designation or recent pension sharing event, on the nominated date, and
b
otherwise, immediately after the last annuity purchaseF95, additional fund designation or pension sharing event,
(but subject to sub-paragraph (5)).
5
6
F976A
But sub-paragraph (5) does not apply where the operation of that sub-paragraph in relation to an additional fund designation during a drawdown pension year would reduce the basis amount for that drawdown pension year.
C117
“Annuity purchase” means the purchase of a dependants' scheme pension or dependants' annuity by the application of sums or assets representing the whole or part of the F14dependant's drawdown pension fund.
C118
C11F128A
“Pension sharing event” means the coming into operation of a pension sharing order or provision relating to the sums and assets representing the F34dependant's drawdown pension fund.
9
An annuity purchaseF30, additional fund designation or pension sharing event is “recent” if it took place during the period—
a
beginning with the reference date, and
b
ending with the last day of the immediately preceding F90drawdown pension year.
10
Paragraph 14 defines “relevant annuity”.
F6411
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F824A
1
This paragraph applies in relation to drawdown pension years beginning after the dependant's 75th birthday.
2
For each drawdown pension year beginning after the dependant reached the age of 75, the basis amount is the annual amount of the relevant annuity which could have been purchased by the application of the sums and assets representing the dependant's drawdown pension fund on the nominated date.
3
“The nominated date” is such day within the period of 60 days ending with the first day of the drawdown pension year as is nominated by the scheme administrator (or, if no day is nominated by the scheme administrator, is the first day of that year).
4
On the occasion of each additional fund designation during a drawdown pension year, the basis amount of that drawdown pension year is to be recalculated in accordance with sub-paragraph (5).
5
The basis amount for the drawdown pension year is the annual amount of the relevant annuity which could have been purchased by the application of the sums and assets representing the dependant's drawdown pension fund immediately after the additional fund designation.
6
But sub-paragraph (4) does not apply where the operation of that sub-paragraph in relation to an additional fund designation during a drawdown pension year would reduce the basis amount for that drawdown pension year.
7
“Additional fund designation” has the meaning given by paragraph 24(8).
8
Paragraph 14 defines “relevant annuity”.
F409
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
24B
1
This paragraph applies if the dependant has reached the age of 75.
2
Sub-paragraph (3) applies if, at any time during a drawdown pension year in respect of an arrangement (“the current drawdown pension year”), the dependant notifies the scheme administrator that the dependant wishes the drawdown pension year following the current drawdown pension year to begin on the day on which the next drawdown pension year in respect of another arrangement relating to the dependant under the pension scheme (including any arrangement relating to that person as a member of the scheme) will begin.
3
The scheme administrator may determine—
a
that the current drawdown pension year is to end immediately before that day, and
b
that the period of 12 months beginning with that day, and each succeeding period of 12 months, is a drawdown pension year in respect of the arrangement.
4
The scheme administrator may not make a determination under this paragraph more than once in relation to the same arrangement.
F1524C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1524D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1524E
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1524F
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1524G
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F8025
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F42Meaning of “nominee”
Sch. 28 paras. 27A-27K and cross-headings inserted (17.12.2014) (with effect in accordance with Sch. 2 para. 3(2) of the amending Act) by Taxation of Pensions Act 2014 (c. 30), Sch. 2 para. 3(1)
27A
1
“Nominee of the member” means an individual—
a
nominated by the member, or
b
nominated by the scheme administrator,
who is not a dependant of the member, but see sub-paragraph (2).
2
In relation to any particular benefits under an arrangement, no individual nominated by the scheme administrator counts as a nominee of the member at any time when there is—
a
a dependant of the member, or
b
an individual, or charity, nominated by the member in relation to the benefits.
3
The reference in sub-paragraph (2)(b) to being nominated in relation to particular benefits under an arrangement includes—
a
a reference to being nominated in relation to the scheme,
b
a reference to being nominated in relation to arrangements that include the arrangement,
c
a reference to being nominated in relation to the arrangement, and
d
a reference to being nominated in relation to benefits that include the particular benefits.
F1Nominees' annuity
Sch. 28 para. 27AA and cross-heading inserted (26.3.2015) by Finance Act 2015 (c. 11), Sch. 4 para. 3(2) (with Sch. 4 para. 3(4))
27AA
1
For the purposes of this Part an annuity payable to a nominee is a nominees' annuity if—
a
either—
i
it is purchased together with a lifetime annuity payable to the member and the member becomes entitled to that lifetime annuity on or after 6 April 2015, or
ii
it is purchased after the member's death, the member dies on or after 3 December 2014 and the nominee becomes entitled to the annuity on or after 6 April 2015,
b
it is payable by an insurance company, and
c
it is payable until the nominee's death or until the earliest of the nominee's marrying, entering into a civil partnership or dying.
2
For the purposes of sub-paragraph (1)(a) a nominees' annuity is purchased together with a lifetime annuity if the nominees' annuity is related to the lifetime annuity.
3
The Commissioners for Her Majesty's Revenue and Customs may by regulations make provision in relation to cases in which a nominees' annuity payable to a person (“the original nominees' annuity”) ceases to be payable and in consequence of that—
a
sums or assets (or both) are transferred from the insurance company to another insurance company and are applied—
i
towards the provision of another nominees' annuity (a “new nominees' annuity”) by the other insurance company, or
ii
otherwise, or
b
sums or assets are transferred to the relevant registered pension scheme.
4
The regulations may provide that—
a
in a case where a new nominees' annuity becomes payable, the new nominees' annuity is to be treated, to such extent as is prescribed by the regulations and for such of the purposes of this Part as are so prescribed, as if it were the original nominees' annuity, and
b
in any other case, the relevant registered pension scheme is to be treated as making an unauthorised payment in respect of the member of an amount equal to the aggregate of the sums, and the market value of the assets, transferred.
5
For the purposes of sub-paragraphs (3) and (4) a registered pension scheme is the relevant registered pension scheme if the original nominees' annuity was acquired using sums or assets held for the purposes of the pension scheme.
Nominees' drawdown pension
27B
“Nominees' drawdown pension” means—
a
a nominees' short-term annuity, or
b
nominees' income withdrawal.
Nominees' short-term annuity
27C
1
For the purposes of this Part an annuity payable to a nominee is a nominees' short-term annuity if—
a
it is purchased by the application of sums or assets representing the whole or any part of the nominee's flexi-access drawdown fund in respect of an arrangement,
b
it is payable by an insurance company,
c
the nominee becomes entitled to it on or after 6 April 2015, and
d
it is payable for a term which does not exceed five years and ends before the nominee dies.
2
The Commissioners for Her Majesty's Revenue and Customs may by regulations make provision in relation to cases in which a nominees' short-term annuity payable to a person (“the original nominees' short-term annuity”) ceases to be payable and in consequence of that—
a
sums or assets (or both) are transferred from the insurance company to another insurance company and are applied—
i
towards the provision of another nominees' short-term annuity (a “new nominees' short-term annuity”) by the other insurance company, or
ii
otherwise, or
b
sums or assets are transferred to the relevant registered pension scheme.
3
The regulations may provide that—
a
in a case where a new nominees' short-term annuity becomes payable, the new nominees' short-term annuity is to be treated, to such extent as is prescribed by the regulations and for such of the purposes of this Part as are so prescribed, as if it were the original nominees' short-term annuity, and
b
in any other case, the relevant registered pension scheme is to be treated as making an unauthorised payment in respect of the member of an amount equal to the aggregate of the sums, and the market value of the assets, transferred.
4
For the purposes of sub-paragraphs (2) and (3) a registered pension scheme is the relevant registered pension scheme if the original nominees' short-term annuity was acquired using sums or assets held for the purposes of the pension scheme.
Nominees' income withdrawal
27D
“Nominees' income withdrawal” means an amount (other than an annuity) which the nominee is entitled to be paid from the nominee's flexi-access drawdown fund in respect of an arrangement.
Nominee's flexi-access drawdown fund
27E
1
For the purposes of this Part a nominee's flexi-access drawdown fund in respect of an arrangement consists of such of the sums or assets held for the purposes of the arrangement as are newly-designated nominee funds.
2
For the purposes of this Part sums or assets held for the purposes of an arrangement are newly-designated nominee funds if—
a
they—
i
have, at any time on or after 6 April 2015, been designated under the arrangement as available for the payment of nominees' drawdown pension, and
ii
were, immediately before being so designated, unused drawdown funds or unused uncrystallised funds, or
b
they arise, or (directly or indirectly) derive, from newly-designated nominee funds under paragraph (a) or from sums or assets which so arise or derive.
C9C163
Sums or assets held for the purposes of an arrangement after the member's death are unused drawdown funds if—
a
immediately before the member's death, they were held for the purposes of the arrangement and represented (whether alone or with other sums or assets) the member's flexi-access drawdown fund, or drawdown pension fund, in respect of the arrangement, or
b
they arise, or (directly or indirectly) derive, from unused drawdown funds under paragraph (a) or from sums or assets which so arise or F10derive,
F107and since the member's death they have not been designated as available for the payment of dependants' drawdown pension, not been designated as available for the payment of nominees' drawdown pension, not been applied towards the provision of a dependants' annuity, not been applied towards the provision of a nominees' annuity and not been applied towards the provision of a dependants' scheme pension.
C9C16C44
C22In the case of a cash balance arrangement, sums or assets held for the purposes of the arrangement after the member's death are unused uncrystallised funds if—
a
they represent the whole or any part of the sum that would have been available immediately before the member's death for the provision of benefits to or in respect of the member if entitlement had arisen immediately before the member's death to all benefits under the arrangement to which entitlement had not previously arisen, and
b
since the member's death they have not been designated as available for the payment of dependants' drawdown pension, not been designated as available for the payment of nominees' drawdown pension, not been applied towards the provision of a dependants' annuityF27, not been applied towards the provision of a nominees' annuity and not been applied towards the provision of a dependants' scheme pension.
C9C16C45
C18In the case of any other money purchase arrangement, sums or assets held for the purposes of the arrangement after the member's death are unused uncrystallised funds if—
a
immediately before the member's death they were held for the purposes of the arrangement and at that time—
i
were not member-designated funds,
ii
were not newly-designated funds,
iii
had not been applied towards the provision of a scheme pension, and
iv
had not been applied towards the provision of a dependants' scheme pension, or
b
they arise, or (directly or indirectly) derive, from unused uncrystallised funds under paragraph (a) or from sums or assets which so arise or derive,
and since the member's death they have not been designated as available for the payment of dependants' drawdown pension, not been designated as available for the payment of nominees' drawdown pension, not been applied toward the provision of a dependants' annuityF3, not been applied towards the provision of a nominees' annuity and not been applied toward the provision of a dependants' scheme pension.
Meaning of “successor”
27F
1
“Successor of the member” means an individual—
a
nominated by a dependant of the member,
b
nominated by a nominee of the member,
c
nominated by a successor of the member, or
d
nominated by the scheme administrator,
but see sub-paragraph (2).
2
In relation to any particular benefits under an arrangement relating to a dependant, nominee or successor of the member (“the beneficiary”) in that capacity, no individual nominated by the scheme administrator counts as a successor of the member at any time after the beneficiary's death when there is an individual, or charity, nominated by the beneficiary in relation to the benefits.
3
A reference in sub-paragraph (2) to being nominated in relation to particular benefits under an arrangement includes—
a
a reference to being nominated in relation to the scheme,
b
a reference to being nominated in relation to arrangements that include the arrangement,
c
a reference to being nominated in relation to the arrangement, and
d
a reference to being nominated in relation to benefits that include the particular benefits.
4
Where a successor of the member is an individual who is also a dependant of the member, the individual in the capacity of a successor of the member is to be treated as not also being a dependant of the member.
C21C20F51Successors' annuity
Sch. 28 para. 27FA and cross-heading inserted (26.3.2015) by Finance Act 2015 (c. 11), Sch. 4 para. 3(3) (with Sch. 4 para. 3(4))
Sch. 28 para. 27FA(2) applied by 2003 c. 1, s. 646D(6) (as inserted (with effect in accordance with Sch. 4 para. 17(2) of the amending Act) by Finance Act 2015 (c. 11), Sch. 4 para. 17(1))
Sch. 28 para. 27FA(2) applied by 2003 c. 1, s. 646B(6) (as inserted (with effect in accordance with Sch. 4 para. 17(2) of the amending Act) by Finance Act 2015 (c. 11), Sch. 4 para. 17(1))
27FA
1
For the purposes of this Part an annuity payable to a successor is a successors' annuity if—
a
the successor becomes entitled to it on or after 6 April 2015,
b
it is payable by an insurance company,
c
it is payable until the successor's death or until the earliest of the successor's marrying, entering into a civil partnership or dying,
d
it is purchased after the death of a dependant, nominee or successor of the member (“the beneficiary”),
e
it is purchased using undrawn funds, and
f
the beneficiary dies on or after 3 December 2014.
2
For the purposes of sub-paragraph (1)(e), sums or assets held for the purposes of an arrangement after the beneficiary's death are undrawn funds if—
a
immediately before the beneficiary's death, they were held for the purposes of the arrangement and, as the case may be, represented (alone or with other sums or assets) the beneficiary's—
i
dependant's flexi-access drawdown fund,
ii
dependant's drawdown pension fund,
iii
nominee's flexi-access drawdown fund, or
iv
successor's flexi-access drawdown fund,
in respect of the arrangement, or
b
they arise, or (directly or indirectly) derive, from undrawn funds under paragraph (a) or from sums or assets which so arise or derive.
3
The Commissioners for Her Majesty's Revenue and Customs may by regulations make provision in relation to cases in which a successors' annuity payable to a person (“the original successors' annuity”) ceases to be payable and in consequence of that—
a
sums or assets (or both) are transferred from the insurance company to another insurance company and are applied—
i
towards the provision of another successors' annuity (a “new successors' annuity”) by the other insurance company, or
ii
otherwise, or
b
sums or assets are transferred to the relevant registered pension scheme.
4
The regulations may provide that—
a
in a case where a new successors' annuity becomes payable, the new successors' annuity is to be treated, to such extent as is prescribed by the regulations and for such of the purposes of this Part as are so prescribed, as if it were the original successors' annuity, and
b
in any other case, the relevant registered pension scheme is to be treated as making an unauthorised payment in respect of the member of an amount equal to the aggregate of the sums, and the market value of the assets, transferred.
5
For the purposes of sub-paragraphs (3) and (4) a registered pension scheme is the relevant registered pension scheme if the original successors' annuity was acquired using sums or assets held for the purposes of the pension scheme.
Successors' drawdown pension
27G
“Successors' drawdown pension” means—
a
a successors' short-term annuity, or
b
successors' income withdrawal.
Successors' short-term annuity
27H
1
For the purposes of this Part an annuity payable to a successor is a successors' short-term annuity if—
a
it is purchased by the application of sums or assets representing the whole or any part of the successor's flexi-access drawdown fund in respect of an arrangement,
b
it is payable by an insurance company,
c
the successor becomes entitled to it on or after 6 April 2015, and
d
it is payable for a term which does not exceed five years and ends before the successor dies.
2
The Commissioners for Her Majesty's Revenue and Customs may by regulations make provision in relation to cases in which a successors' short-term annuity payable to a person (“the original successors' short-term annuity”) ceases to be payable and in consequence of that—
a
sums or assets (or both) are transferred from the insurance company to another insurance company and are applied—
i
towards the provision of another successors' short-term annuity (a “new successors' short-term annuity”) by the other insurance company, or
ii
otherwise, or
b
sums or assets are transferred to the relevant registered pension scheme.
3
The regulations may provide that—
a
in a case where a new successors' short-term annuity becomes payable, the new successors' short-term annuity is to be treated, to such extent as is prescribed by the regulations and for such of the purposes of this Part as are so prescribed, as if it were the original successors' short-term annuity, and
b
in any other case, the relevant registered pension scheme is to be treated as making an unauthorised payment in respect of the member of an amount equal to the aggregate of the sums, and the market value of the assets, transferred.
4
For the purposes of sub-paragraphs (2) and (3) a registered pension scheme is the relevant registered pension scheme if the original successors' short-term annuity was acquired using sums or assets held for the purposes of the pension scheme.
Successors' income withdrawal
27J
“Successors' income withdrawal” means an amount (other than an annuity) which the successor is entitled to be paid from the successor's flexi-access drawdown fund in respect of an arrangement.
Successor's flexi-access drawdown fund
27K
1
For the purposes of this Part a successor's flexi-access drawdown fund in respect of an arrangement consists of such of the sums or assets held for the purposes of the arrangement as are newly-designated successor funds.
2
For the purposes of this Part sums or assets held for the purposes of an arrangement are newly-designated successor funds if—
a
they—
i
have, at any time on or after 6 April 2015, been designated under the arrangement as available for the payment of successors' drawdown pension, and
ii
were, immediately before being so designated, unused drawdown funds of the same deceased dependant, nominee or successor of the member, or
b
they arise, or (directly or indirectly) derive, from newly-designated successor funds under paragraph (a) or from sums or assets which so arise or derive.
3
Sums or assets held for the purposes of an arrangement after the death of a dependant, nominee or successor (“the beneficiary”) are unused drawdown funds of the beneficiary's if—
a
immediately before the beneficiary's death, they were held for the purposes of the arrangement and represented (whether alone or with other sums or assets) the beneficiary's—
i
dependant's flexi-access drawdown fund,
ii
dependant's drawdown pension fund,
iii
nominee's flexi-access drawdown fund, or
iv
successor's flexi-access drawdown fund,
in respect of the arrangement, or
b
they arise, or (directly or indirectly) derive, from unused drawdown funds of the beneficiary's under paragraph (a) or from sums or assets which so arise or F6derive,
F106and since the beneficiary's death they have not been designated as available for the payment of successors' drawdown pension and not been applied towards the provision of a successors' annuity.
Sch. 28 modified by The Pensions Schemes (Application of UK Provisions to Relevant Non-UK Schemes) Regulations 2006 (S.I. 2006/207), regs. 1(1), 14 (as substituted (with effect in accordance with reg. 1(2) of the amending S.I.) by S.I. 2012/1795, regs. 1(1), 5)