Finance Act 2011

Finance Act 2004 U.K.

62 U.K. Part 4 of FA 2004 (pension schemes etc) is amended as follows.

63 U.K. In section 164 (authorised member payments), in subsection (2)(b), after “the short service refund lump sum charge” insert “ , the serious ill-health lump sum charge ”.

64 U.K. In section 165 (pension rules), in subsection (3)(a), for “unsecured pension” substitute “ drawdown pension ”.

65 U.K. In section 168(1) (lump sum death benefit rule), for paragraph (e) substitute—

“(e) a drawdown pension fund lump sum death benefit,”.

66 U.K. In section 169 (recognised transfers), in subsection (1D)—

(a) in paragraph (a), for “person's unsecured pension fund or dependant's unsecured pension fund” substitute “ member's drawdown pension fund or dependant's drawdown pension fund ”;

(b) omit paragraph (b) (and the “or” before it).

67 (1) Section 172B (increase in rights of connected person on death) is amended as follows. U.K.

(2) In subsection (2)(b), for “member's unsecured pension fund or dependant's unsecured pension fund” substitute “ member's drawdown pension fund or dependant's drawdown pension fund ”.

(3) In subsection (7A)—

(a) in paragraph (a), for “dependants' unsecured pension fund or dependants' alternatively secured pension fund” substitute “ dependant's drawdown pension fund ”;

(b) in paragraph (b), for “dependants' unsecured pension fund” substitute “ dependant's drawdown pension fund ”.

(4) Omit subsection (8A).

68 U.K. Omit section 172BA (increase in rights on death arising from alternatively secured pension fund etc).

69 U.K. Omit section 181A (minimum level of payment of alternatively secured pensions).

70 (1) Section 182 (unauthorised borrowing: money purchase arrangements) is amended as follows. U.K.

(2) In subsection (3)—

(a) in paragraph (a), for “member's unsecured pension fund or alternatively secured pension fund” substitute “ member's drawdown pension fund ”;

(b) in paragraph (b), for “dependants' unsecured pension funds or alternatively secured pension funds” substitute “dependants' drawdown pension funds”.

(3) In subsection (5), for “unsecured pension fund or alternatively secured pension fund” substitute “ drawdown pension fund ”.

71 U.K. In section 211 (surchargeable unauthorised member payments: valuation of crystallised rights), in subsection (1)(b), for “member's unsecured pension fund or alternatively secured pension fund” substitute “ member's drawdown pension fund ”.

72 U.K. In section 212 (surchargeable unauthorised member payments: valuation of uncrystallised rights), in subsection (2), for “member's unsecured pension fund or alternatively secured pension fund” substitute “ member's drawdown pension fund ”.

73 (1) In section 216 (benefit crystallisation events and amounts crystallised), the table in subsection (1) is amended as follows. U.K.

(2) In the entry for benefit crystallisation event 1, for “unsecured pension” substitute “ drawdown pension ”.

(3) In the entry for benefit crystallisation event 5A—

(a) for “unsecured pension” substitute “ drawdown pension ”;

(b) for “individual's unsecured pension fund” substitute “ individual's drawdown pension fund ”.

74 U.K. In section 241(1) (scheme chargeable payment), omit paragraph (aa) (and the “and” after it).

75 U.K. In section 268 (unauthorised payments surcharge and scheme sanction charge), in subsection (6), omit—

(a) “172BA,”, and

(b) “or arises under section 181A”.

76 U.K. In section 273A (insurance company liable as scheme administrator), in subsection (1), for paragraph (c) substitute—

“(c) a drawdown pension fund lump sum death benefit,”.

77 (1) Section 280(2) (general index) is amended as follows. U.K.

(2) Omit the entries relating to “dependant's alternatively secured pension fund” and “member's alternatively secured pension fund”.

(3) Omit the entries relating to “dependant's unsecured pension fund” and “member's unsecured pension fund” and at the appropriate place insert—

“dependant's drawdown pension fund	paragraph 22 of Schedule 28”;
“member's drawdown pension fund	paragraph 8 of Schedule 28”.

(4) At the appropriate place insert—

“serious ill-health lump sum charge

section 205A(1)”.

(5) Omit the entry relating to “unsecured pension fund lump sum death benefit” and at the appropriate place insert—

“drawdown pension fund lump sum death benefit

paragraph 17 of Schedule 29”.

78 U.K. In Schedule 28 (pension rules), omit the following provisions—

(a) paragraph 5 (meaning of “alternatively secured pension”);

(b) paragraphs 11 to 13 (member's alternatively secured pension fund etc);

(c) paragraph 19 (meaning of “dependants' alternatively secured pension”);

(d) paragraphs 25 to 27 (dependant's alternatively secured pension fund etc).

79 (1) Schedule 29 (authorised lump sums) is amended as follows. U.K.

(2) In paragraph 1 (pension commencement lump sum), in sub-paragraph (3)(b), omit “, otherwise than by virtue of the operation of paragraph 8(2) of Schedule 28,”.

(3) In paragraph 3 (pension commencement lump sum: calculation of applicable amount)—

(a) in sub-paragraph (1)(a), for “unsecured pension” substitute “ drawdown pension ”;

(b) in sub-paragraph (5)(a), for “member's unsecured pension fund” substitute “ member's drawdown pension fund ”;

(c) in sub-paragraph (8)(a), for “member's unsecured pension fund” substitute “ member's drawdown pension fund ”.

(4) In paragraph 15 (uncrystallised funds lump sum death benefit), in sub-paragraph (2)(b), for “unsecured pension” substitute “ drawdown pension ”.

80 (1) Schedule 32 (benefit crystallisation events: supplementary) is amended as follows. U.K.

(2) In paragraph 3 (benefit crystallisation events 1 and 2: prevention of overlap)—

(a) in sub-paragraph (1), for “unsecured pension fund” substitute “ drawdown pension fund ”;

(b) in sub-paragraph (2), for “unsecured pension” substitute “ drawdown pension ”.

(3) In paragraph 4 (benefit crystallisation events 1 and 4: prevention of overlap)—

(a) in sub-paragraph (1), for “unsecured pension fund” substitute “ drawdown pension fund ”;

(b) in sub-paragraph (2), for “unsecured pension” substitute “ drawdown pension ”.

(4) In paragraph 5 (benefit crystallisation events 1 and 5: hybrid arrangements), in sub-paragraph (2), omit the words from “(with the effect that” to the end.

(5) In paragraph 17 (benefit crystallisation event 8: prevention of overlap with other events), in sub-paragraph (2)—

(a) for “unsecured pension fund” substitute “ drawdown pension fund ”;

(b) for “unsecured pension” substitute “ drawdown pension ”.

81 (1) Schedule 34 (non-UK schemes: application of certain charges) is amended as follows. U.K.

(2) In paragraph 1(3) (member payment charges), after paragraph (c) insert—

“(ca) the serious ill-health lump sum charge,”.

(3) After paragraph 4 insert—

“4A (1) For the purposes of determining whether a person meets the flexible drawdown conditions in section 165(3A) or 167(2A)—

(a) any reference in paragraph 14A or 24C of Schedule 28 (minimum income requirement) to payments made to or in respect of a member of a registered pension scheme includes a reference to payments made to or in respect of a relieved member or transfer member of a relevant non-UK scheme,

(b) any tax-relieved contributions made under a relevant non-UK scheme by or on behalf of, or in respect of, a member of the scheme are to be treated as if they were relevant contributions paid under a registered pension scheme,

(c) any tax-exempt provision made under a relevant non-UK scheme in relation to a member of the scheme is to be treated as if it was a relevant contribution paid under a registered pension scheme, and

(d) a person who is an active member of a relevant non-UK scheme is to be treated as if the person were an active member of a registered pension scheme.

(2) In this paragraph—

• “relevant contributions” has the meaning given by paragraph 14D or 24F of Schedule 28;

• “tax-exempt contributions” and “tax-exempt provision” have the same meaning as in paragraph 3 of this Schedule.”

(4) In paragraph 5—

(a) for “Sections 205 and 206” substitute “ Sections 205 to 206 ”;

(b) after “short service refund lump sum charge” insert “ , serious ill-health lump sum charge ”.

(5) Omit paragraph 7ZA (unauthorised payment charge: alternatively secured pension etc).

82 (1) Schedule 36 (transitional provisions and savings) is amended as follows. U.K.

(2) In paragraph 20 (amount of lifetime allowance available to person who had right to payment of pension on 5 April 2006), for sub-paragraph (4) substitute—

“(4) In the case of drawdown pension, ARP is—

(a) the maximum amount that may be paid in the drawdown pension year in which the time falls in accordance with pension rule 5 (see section 165), or

(b) in the case of an arrangement to which subsection (3A) of section 165 applies, the maximum amount that could have been paid in accordance with that rule in the drawdown pension year in which that subsection first applied to the arrangement if it had not so applied.”

(3) In paragraph 28 (lump sum rights for members with enhanced protection), in sub-paragraph (3), for “sub-paragraphs (5) to (7)” substitute “ sub-paragraphs (5) to (7A) ”.

(4) In paragraph 29 (lump sum rights for members with enhanced protection)—

(a) in sub-paragraph (2), in the text treated as substituted for sub-paragraphs (1) to (3) of paragraph 3 of Schedule 29, for “ unsecured pension ” (in both places) substitute “ drawdown pension ”;

(b) in sub-paragraph (3), in the text treated as substituted for sub-paragraphs (5) to (7A) of that paragraph—

(i) for “member's unsecured pension fund” substitute “ member's drawdown pension fund ”, and

(ii) for the definition of “AC” substitute—

“AC is—

(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, 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 but for paragraph 2 of Schedule 32.”

(5) In paragraph 34 (entitlement to lump sums exceeding 25% of uncrystallised rights), in sub-paragraph (2), in the text treated as substituted for sub-paragraphs (5) to (8) of paragraph 2 of Schedule 29, for the definition of “ AC ” substitute— “AC is—

(a) in a case where the member becomes entitled to the pension in connection with which the lump sum is paid before reaching the age of 75, the amount crystallised by reason of the member becoming entitled to the pension, and

(b) in a case where the member becomes entitled to that pension after reaching that age, the amount that would have been so crystallised but for paragraph 2 of Schedule 32,

(but this is subject to sub-paragraphs (7AA) and (7B)), ”.

(6) In paragraph 36 (right to payment of lump sum death benefit)—

(a) in sub-paragraph (3)—

(i) after paragraph (a) insert “ and ”, and

(ii) omit paragraph (c) (and the “and” before it);

(b) omit sub-paragraphs (4) and (8);

(c) in sub-paragraph (9)—

(i) for “, annuity protection lump sum death benefit or unsecured pension fund lump sum death benefit” substitute “ or annuity protection lump sum death benefit ”, and

(ii) for “sub-paragraphs (3) to (8)” substitute “ sub-paragraphs (3) to (7) ”;

(d) in sub-paragraph (10)(a), for “, annuity protection lump sum death benefit or unsecured pension fund lump sum death benefit” substitute “ or annuity protection lump sum death benefit ”;

(e) in sub-paragraph (11), in the definition of “TPLS”, for “, annuity protection lump sum death benefit or unsecured pension fund lump sum death benefit” substitute “ or annuity protection lump sum death benefit ”.