SCHEDULES

SCHEDULE 29U.K.Registered pension schemes: authorised lump sums—supplementary

Modifications etc. (not altering text)

C2Sch. 29 modified by The Taxation of Pension Schemes (Transitional Provisions) Order 2006 (S.I. 2006/572), art. 23C (as inserted (1.6.2009) by S.I. 2009/1172, arts. 1, 3; and amended (with effect in accordance with art. 1(3) of the amending S.I.) by S.I. 2011/1782, arts. 1(1), 2(3))

Part 1U.K.Lump sum rule

Modifications etc. (not altering text)

C4Sch. 29 Pt. 1 applied (with modifications) (6.4.2006) by The Pension Protection Fund (Tax) Regulations 2006 (S.I. 2006/575), regs. 1, 11

Pension commencement lump sumU.K.

3(1)Where the member becomes entitled to income withdrawal, the applicable amount is one third of the aggregate of—U.K.

(a)the amount of the sums designated as available for the payment of [F1drawdown pension] on that occasion, and

(b)the market value of the assets so designated,

but subject to sub-paragraph (2).

(2)Any of the sums and assets so designated which represent rights attributable to a disqualifying pension credit are to be disregarded.

(3)Where the member becomes entitled to a lifetime annuity, the applicable amount is one third of the annuity purchase price.

(4)“The annuity purchase price” is the aggregate of—

(a)the amount of such of the sums held for the purposes of the pension scheme, and

(b)the market value of such of the assets held for the purposes of the pension scheme,

as are applied in (or in connection with) the purchase [F2of the lifetime annuity and any related dependants' annuity], but subject to sub-paragraph (5).

[F3(4A)For the purposes of this Part a dependants' annuity is related to a lifetime annuity payable to a member of a registered pension scheme—

(a)if they are purchased either in the form of a joint life annuity or separately in circumstances in which the day on which the one is purchased is no earlier than seven days before, and no later than seven days after, the day on which the other is purchased, and

(b)the dependant's annuity will be payable to a dependant of the member.]

[F4(5)There is to be deducted from that aggregate—

(a)if the sums or assets applied in (or in connection with) the purchase of the annuity or any related dependants' annuity consist of or include sums or assets representing the whole or part of the [F5member's drawdown pension fund], the aggregate of the amount of those sums and the market value of those assets, and

(b)in any case, so much (if any) of the sums or assets applied in (or in connection with) the purchase of the annuity or any related dependants' annuity as represents rights which are attributable to a disqualifying pension credit.]

(6)Where the member becomes entitled to a scheme pension [F6under a defined benefits arrangement], the applicable amount is—

but subject to sub-paragraph (8).

(7)In sub-paragraph (6)—

(a)in a case where the member becomes entitled to the pension before reaching the age of 75, the amount crystallised by reason of the member becoming entitled to the pension, disregarding paragraph 3 of Schedule 32, and

(b)in a case where the member becomes entitled to the pension after reaching that age, the amount that would have been so crystallised (disregarding that paragraph) but for paragraph 2 of that Schedule.]

[F8(7A)Where the member becomes entitled to a scheme pension under a money purchase arrangement, the applicable amount is one third of the scheme pension purchase price.

(7B)“The scheme pension purchase price” is the aggregate of—

(a)the amount of such of the sums held for the purposes of the pension scheme, and

(b)the market value of such of the assets held for the purposes of the pension scheme,

as are applied in (or in connection with) the purchase or provision of the scheme pension and any related dependants' scheme pension, but subject to sub-paragraph (8).

(7C)For the purposes of this Part a dependants' scheme pension is related to a scheme pension payable to a member of a registered pension scheme if—

(a)the day on which one is purchased or sums or assets are applied for its provision is no earlier than seven days before, and no later than seven days after, the day on which the other is purchased or sums or assets are applied for its provision, and

(b)the dependants' scheme pension will be payable to a dependant of the member.]

(8)There is to be deducted from the aggregate of the amount of the lump sum and the amount crystallised [F9or from the scheme pension purchase price]—

(a)if the scheme pension is funded (in whole or in part) by the [F10application] of sums or assets representing the whole or part of the [F11member's drawdown pension fund], the aggregate of the amount of those sums and the market value of those assets, and

(b)in any case, so much (if any) of the aggregate of the lump sum and the amount crystallised [F12or of the scheme pension purchase price] as represents rights which are attributable to a disqualifying pension credit.

[F13(9)Sub-paragraph (10) applies if—

(a)sums or assets held for the purposes of, or representing accrued rights under, a money purchase arrangement relating to the member under a registered pension scheme (“member money purchase funds”) are subject to a relevant surrender or a relevant transfer,

(b)the sole or main purpose of the relevant surrender or relevant transfer is to increase the applicable amount on the member becoming entitled to a scheme pension, and

(c)the member becomes entitled to a scheme pension under a relevant defined benefits arrangement.

(10)The pension scheme under which the relevant defined benefits arrangement is an arrangement is to be treated as making an unauthorised payment to the member of any amount by which—

(a)the applicable amount in relation to the scheme pension under sub-paragraph (6), exceeds

(b)the amount which would be that applicable amount under sub-paragraph (7A) if the arrangement were a money purchase arrangement.

(11)For the purposes of sub-paragraph (9)—

(a)member money purchase funds are subject to a relevant surrender if they are surrendered and, in consequence of the surrender, there is a corresponding increase in the sums or assets held for the purposes of, or representing rights under, a defined benefits arrangement relating to the member under the pension scheme (or such an arrangement is established), and

(b)member money purchase funds are subject to a relevant transfer if they are transferred so as to become held for the purposes of, or to represent rights under, a defined benefits arrangement relating to the member under any other registered pension scheme.

(12)In sub-paragraphs (9) and (10) “relevant defined benefits arrangement” means—

(a)the defined benefits arrangement mentioned in paragraph (a) or (b) of sub-paragraph (11), or

(b)any other defined benefits arrangement relating to the member (under the pension scheme or any other registered pension scheme) in the case of which any of the sums or assets held for the purposes of, or representing accrued rights under, the arrangement directly or indirectly represent sums or assets previously held for the purposes of, or representing accrued rights under, the defined benefits arrangement so mentioned.]

Textual Amendments

F1Words in Sch. 29 para. 3(1)(a) substituted (with effect in accordance with Sch. 16 paras. 85, 101 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 79(3)(a)

F2Words in Sch. 29 para. 3(4) substituted (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 30(2), 64(1)

F3Sch. 29 para. 3(4A) inserted (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 30(3), 64(1)

F4Sch. 29 para. 3(5) substituted (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 35(2), 64(1)

F5Words in Sch. 29 para. 3(5)(a) substituted (with effect in accordance with Sch. 16 paras. 85, 101 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 79(3)(b)

F6Words in Sch. 29 para. 3(6) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 22(2)

F7Words in Sch. 29 para. 3(7) substituted (with effect in accordance with Sch. 16 paras. 85, 101 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 26

F8Sch. 29 para. 3(7A)-(7C) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 22(3)

F9Words in Sch. 29 para. 3(8) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 22(4)(a)

F10Word in Sch. 29 para. 3(8) substituted (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 24, 64(1)

F11Words in Sch. 29 para. 3(8)(a) substituted (with effect in accordance with Sch. 16 paras. 85, 101 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 79(3)(c)

F12Words in Sch. 29 para. 3(8) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 22(4)(b)

F13Sch. 29 para. 3(9)-(12) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 22(5)