Finance Act 2004 (c. 12)

SCHEDULES

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

Modifications etc. (not altering text)

C1 Sch. 29 modified (6.4.2006) by The Pensions Schemes (Application of UK Provisions to Relevant Non-UK Schemes) Regulations 2006 (S.I. 2006/207), regs. 1(1), 15

C2 Sch. 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 2 U.K. Lump sum death benefit rule

Modifications etc. (not altering text)

C3 Sch. 29 Pt. 2 applied (with modifications) (6.4.2006) by The Pension Protection Fund (Tax) Regulations 2006 (S.I. 2006/575), regs. 1, 14

C4 Sch. 29 Pt. 2 modified (6.4.2006) by The Taxation of Pension Schemes (Transitional Provisions) Order 2006 (S.I. 2006/572), arts. 1(1), 6, 8(1)(3)

Defined benefits arrangements U.K.

Defined benefits lump sum death benefit U.K.

13 U.K. For the purposes of this Part a lump sum death benefit is a defined benefits lump sum death benefit if—

(a) the member had not reached the age of 75 at the date of the member’s death,

(b) it is paid in respect of a defined benefits arrangement,

(c) it is paid before the end of the period of two years beginning with the [F1 earlier of the day on which the scheme administrator first knew of the member’s death and the day on which the scheme administrator could first reasonably be expected to have known of it,] and

(d) it is not a pension protection lump sum death benefit, trivial commutation lump sum death benefit or winding-up lump sum death benefit.

Textual Amendments

F1 Words in Sch. 29 para. 13(c) substituted (19.7.2007) (with effect in accordance with Sch. 20 para. 24(7) of the amending Act) by Finance Act 2007 (c. 11), Sch. 20 para. 13(2)

Pension protection lump sum death benefit U.K.

14 (1) For the purposes of this Part a lump sum death benefit is a pension protection lump sum death benefit if— U.K.

(a) the member had not reached the age of 75 at the date of the member’s death,

(b) it is paid in respect of a defined benefits arrangement,

(c) it is paid in respect of a scheme pension to which the member was entitled at the date of the member’s death, and

(d) the member has specified that it is to be treated as a pension protection lump sum death benefit (instead of a defined benefits lump sum death benefit).

(2) But if the amount of a lump sum falling within sub-paragraph (1) exceeds the pension protection limit, the excess is not a pension protection lump sum death benefit.

(3) The pension protection limit is—

where—

AC is the amount crystallised by reason of the member becoming entitled to the pension (see section 216),

AP is the amount of the pension paid in respect of the period between the member becoming entitled to the pension and the member’s death, and

TPLS is the total amount of pension protection lump sum death benefit previously paid in respect of the pension under this paragraph.

Modifications etc. (not altering text)

C5 Sch. 29 para. 14(3) modified (6.4.2006) by The Taxation of Pension Schemes (Transitional Provisions) Order 2006 (S.I. 2006/572), arts. 1(1), 33(1)(2)(4)

Money purchase arrangements U.K.

Uncrystallised funds lump sum death benefit U.K.

15 (1) For the purposes of this Part a lump sum death benefit is an uncrystallised funds lump sum death benefit if— U.K.

(a) the member had not reached the age of 75 at the date of the member’s death,

(b) it is paid in respect of a money purchase arrangement,

(c) it is paid before the end of the period of two years beginning with the [F2 earlier of the day on which the scheme administrator first knew of the member’s death and the day on which the scheme administrator could first reasonably be expected to have known of it,] and

(d) it is paid in respect of relevant uncrystallised funds.

(2) “Relevant uncrystallised funds” means such of the sums and assets held for the purposes of the arrangement at the member’s death as—

(a) had not been applied for purchasing a scheme pension, a lifetime annuity, a dependants' scheme pension or a dependants' annuity, and

(b) had not been designated under the arrangement as available for the payment of unsecured pension.

(3) But if an amount falling within sub-paragraph (1) exceeds the permitted maximum, the excess is not an uncrystallised funds lump sum death benefit.

(4) The permitted maximum is the aggregate of—

(a) the amount of the sums, and

(b) the market value of the assets,

which constitute the relevant uncrystallised funds immediately before the payment is made.

Textual Amendments

F2 Words in Sch. 29 para. 15(1)(c) substituted (19.7.2007) (with effect in accordance with Sch. 20 para. 24(7) of the amending Act) by Finance Act 2007 (c. 11), Sch. 20 para. 13(3)

Annuity protection lump sum death benefit U.K.

16 (1) For the purposes of this Part a lump sum death benefit is an annuity protection lump sum death benefit if— U.K.

(a) the member had not reached the age of 75 at the date of the member’s death,

(b) it is paid in respect of a money purchase arrangement, and

(c) it is paid in respect of a scheme pension or lifetime annuity to which the member was entitled at the date of the member’s death.

(2) But if the amount of a lump sum falling within sub-paragraph (1) exceeds the annuity protection limit, the excess is not an annuity protection lump sum death benefit.

(3) The annuity protection limit is—

where—

AC is the amount crystallised by reason of the member becoming entitled to the pension or annuity (see section 216) [F3 , but disregarding paragraphs 3 and 4 of Schedule 32],

AP is the amount of the pension paid in respect of the period between the member becoming entitled to the pension or annuity and the member’s death, and

TPLS is the total amount of annuity protection lump sum death benefit previously paid in respect of the pension or annuity under this paragraph.

Textual Amendments

F3 Words in Sch. 29 para. 16(3) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 29

Modifications etc. (not altering text)

C6 Sch. 29 para. 16(3) modified (6.4.2006) by The Taxation of Pension Schemes (Transitional Provisions) Order 2006 (S.I. 2006/572), arts. 1(1), 33(1)(2)(5)

Unsecured pension fund lump sum death benefit U.K.

17 (1) For the purposes of this Part a lump sum death benefit is an unsecured pension fund lump sum death benefit if— U.K.

(a) the member had not reached the age of 75 at the date of the member’s death, and

(b) it is paid in respect of income withdrawal to which the member was entitled under an arrangement at the date of the member’s death.

(2) A lump sum death benefit is also an unsecured pension fund lump sum death benefit if—

(a) it is paid on the death of a dependant of the member,

(b) the dependant had not reached the age of 75 at the date of the dependant’s death, and

(c) it is paid in respect of dependants' income withdrawal to which the dependant was entitled at the date of the dependant’s death in respect of an arrangement relating to the member.

(3) But if the amount of a lump sum falling within sub-paragraph (1) or (2) exceeds the permitted maximum, the excess is not an unsecured pension fund lump sum death benefit.

(4) The permitted maximum is the aggregate of—

(a) the amount of the sums, and

(b) the market value of the assets,

representing the member’s or dependant’s unsecured pension fund in respect of the arrangement immediately before the payment is made.

Modifications etc. (not altering text)

C7 Sch. 29 para. 17 modified (27.7.2010) by Finance (No. 2) Act 2010 (c. 31), Sch. 3 para. 2(1)(2)(e) (with Sch. 2 para. 2(1)

Charity lump sum death benefit U.K.

18 (1) A lump sum death benefit is a charity lump sum death benefit if— U.K.

(a) the member had reached the age of 75 at the date of the member’s death,

(b) there are no dependants of the member,

(c) it is paid in respect of [F4 the member's alternatively secured pension fund (or what would be the member's alternatively secured pension fund but for paragraph 11(6) and (7) of Schedule 28)] in respect of an arrangement at the date of the member’s death, and

(d) it is paid to a charity nominated by the member [F5 (or, if the member made no nomination, selected by the scheme administrator)].

(2) A lump sum death benefit is also a charity lump sum death benefit if—

(a) it is paid on the death of a dependant of the member,

(b) the dependant had reached the age of 75 at the date of the dependant’s death,

(c) there are no other dependants of the member,

(d) it is paid in respect of [F6 the dependant's alternatively secured pension fund] at the date of the dependant’s death in respect of an arrangement relating to the member, and

(e) it is paid to a charity nominated by the member [F7 or, if the member made no nomination, by the dependant (or, if neither the member nor the dependant made a nomination, selected by the scheme administrator).]

(3) But if the amount of a lump sum falling within sub-paragraph (1) or (2) exceeds the permitted maximum, the amount of the excess is not a charity lump sum death benefit.

(4) The permitted maximum is the aggregate of—

(a) the amount of the sums, and

(b) the market value of the assets,

representing [F8 what is (or but for paragraph 11(6) and (7) of Schedule 28 would be)] the member’s or dependant’s alternatively secured pension fund in respect of the arrangement immediately before the payment is made.

Textual Amendments

F4 Words in Sch. 29 para. 18(1)(c) substituted (retrospective to 6.4.2006) by Finance Act 2007 (c. 11), Sch. 19 paras. 16(2), 29(4)

F5 Words in Sch. 29 para. 18(1)(d) inserted (19.7.2007) (with effect in accordance with Sch. 19 para. 29(6) of the amending Act) by Finance Act 2007 (c. 11), Sch. 19 para. 16(3)

F6 Words in Sch. 29 para. 18(2)(d) substituted (retrospective to 6.4.2006) by Finance Act 2007 (c. 11), Sch. 19 paras. 16(4), 29(4)

F7 Words in Sch. 29 para. 18(2)(e) substituted (19.7.2007 (with effect in accordance with Sch. 19 para. 29(6) of the amending Act) by Finance Act 2007 (c. 11), Sch. 19 para. 16(5)

F8 Words in Sch. 29 para. 18(4) inserted (retrospective to 6.4.2006) by Finance Act 2007 (c. 11), Sch. 19 paras. 16(6), 29(4)

Transfer lump sum death benefit U.K.

F9 19 U.K. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F9 Sch. 29 para. 19 repealed (19.7.2007) (with effect in accordance with Sch. 19 para. 29(3) of the amending Act) by Finance Act 2007 (c. 11), Sch. 19 para. 9, Sch. 27 Pt. 3(1)

Defined benefits and money purchase arrangements U.K.

Trivial commutation lump sum death benefit U.K.

20 (1) A lump sum death benefit is a trivial commutation lump sum death benefit if— U.K.

(a) the member had not reached the age of 75 at the date of the member’s death,

(b) it is paid to a dependant entitled under the pension scheme to pension death benefit in respect of the member,

(c) it is paid before the day on which the member would have reached the age of 75, and

(d) it extinguishes the dependant’s entitlement under the pension scheme to pension death benefit and lump sum death benefit in respect of the member.

(2) But if the amount of a lump sum falling within sub-paragraph (1) exceeds 1% of the standard lifetime allowance on the date the lump sum is paid, the excess is not a trivial commutation lump sum death benefit.

Winding-up lump sum death benefit U.K.

21 (1) For the purposes of this Part a lump sum death benefit is a winding-up lump sum death benefit if— U.K.

(a) the pension scheme is being wound-up,

(b) it is paid to a dependant entitled under the pension scheme to pension death benefit in respect of the member, and

(c) it extinguishes the dependant’s entitlement under the pension scheme to pension death benefit and lump sum death benefit in respect of the member.

(2) But if the amount of a lump sum falling within sub-paragraph (1) exceeds 1% of the standard lifetime allowance on the date the lump sum is paid, the excess is not a winding-up lump sum death benefit.

Interpretation U.K.

Interpretation of Part 2 U.K.

22 (1) Expressions used in this Part of this Schedule and in Schedule 28 have the same meaning in this Part of this Schedule as in Schedule 28. U.K.

(2) Where by virtue of paragraph 14(2), 20(2) or 21(2) an excess is not an authorised lump sum death benefit of one description, that does not prevent the excess being an authorised lump sum death benefit of another description.

(3) “Authorised lump sum death benefit” means a lump sum death benefit authorised to be paid by the lump sum death benefit rule.