The Social Security (Contributions) Regulations 2001

[F1 Payments from employer-financed retirement benefits schemes and employer-financed pension only schemes U.K.

10.— (1) This paragraph applies to payments in paragraphs 8(b) and 9(1)(b) which—

(a) if the scheme had been a registered pension scheme—

(i) would have been authorised member payments under any of the provisions of section 164 of the Finance Act 2004 (authorised member payments) listed in sub-paragraph (4); and

(ii) would satisfy any of the conditions in sub-paragraph (5); and

(b) are made after the employment of the employed earner by—

(i) the secondary contributor,

(ii) a subsidiary of the secondary contributor, or

(iii) a person connected with the secondary contributor or a subsidiary of the secondary contributor,

has ceased.

• For the purposes of this sub-paragraph—

• “subsidiary” has the meaning given in section 838 of the Taxes Act 1988; and

• an employer is connected with any of the persons with respect to whom he would be a connected person by virtue of section 839 of that Act.

(2) In the following provisions of this paragraph—

(a) “the Act” means the Finance Act 2004;

(b) a reference to a numbered section or Schedule (without more) is a reference to the section or Schedule bearing that number in the Act; and

(b) any reference to a numbered pension rule is to the pension rule contained in section 165 bearing that number.

(3) In applying any provision of the Act for the purposes of this paragraph, a reference to the scheme administrator is to be read as a reference to—

(a) the responsible person, within the meaning of section 399A of ITEPA 2003, in relation to the employer-financed retirement benefits scheme, or

(b) the person who would be the responsible person if the scheme were an employer-financed retirement benefits scheme.

(4) The provisions referred to in sub-paragraph (1)(a)(i) are—

(a) [F2 section 164(a)] [F2 section 164(1)(a)] (pensions permitted by the pension rules (see section 165)),

(b) [F3 section 164(b)] [F3 section 164(1)(b)] (lump sums permitted by the lump sum rule (see section 166)),

(c) [F4 section 164(e)] [F4 section 164(1)(e)] (payments pursuant to a pension sharing order or provision), and

(d) [F5 section 164(f)] [F5 section 164(1)(f)] (payments of a description prescribed by regulations made by the Commissioners for Revenue and Customs).

(5) The conditions referred to in sub-paragraph (1)(a)(ii) are that, if the scheme had been a registered pension scheme—

[F6 (a) any pension payable under its rules would have satisfied pension rules 1, 3 and 4;]

(b) in relation to any lump sum payable under its rules, section 166(1)(a) (pension commencement lump sum) and paragraphs 1 to 3 of Schedule 29, as modified by sub-paragraph (6) below, would have been satisfied;

(c) in relation to any lump sum payable under its rules, section 166(1)(b) (serious ill-health lump sum) and paragraph 4 of Schedule 29, as modified by sub-paragraph (6) below, would have been satisfied; and

(d) any pension is payable until the member’s death in instalments at least annually.

(6) The amount to be disregarded shall be computed in accordance with Part 1 of Schedule 29 (lump sum rule) as if that Part were modified as follows—

(a) in paragraph 1 (pension commencement lump sum)—

(i) paragraphs (b) and (f) of sub-paragraph (1) were omitted,

(ii) for sub-paragraph (2) there were substituted—

“(2) But if a lump sum falling within sub-paragraph (1) exceeds the permitted lump sum, no part of it shall be disregarded.”;

(iii) sub-paragraph (4) were omitted; and

(iv) for sub-paragraph (5) there were substituted—

“(5) Paragraph 2 defines the permitted lump sum.”;

(b) for paragraph 2 there were substituted—

“2.   The permitted lump sum is the higher of—

where—

• MVF is the market value of the employee’s employer-financed retirement benefits scheme fund at the time the benefit is paid to the individual,

• LS is the amount of the lump sum, and

• MAP is the maximum annual pension which could be paid to the member under the arrangement.”;

(c) paragraph 3 were omitted;

(d) in paragraph 4, paragraphs (b) and (c) of sub-paragraph (1) and [F7 sub-paragraph (2)] [F7 sub-paragraphs (2) and (3)] were omitted.

(7) No payment by way of benefits shall be disregarded by virtue of this paragraph if they are payable in respect of a period during which an earner is—

(a) engaged as a self-employed earner under a contract for services with, or

(b) re-employed as an employed earner by,

the secondary contributor from employment with whom the benefits were derived.]

Textual Amendments

F1 Sch. 3 Pt. VI paras. 8-11 added (6.4.2006) by The Social Security (Contributions) (Amendment No. 2) Regulations 2006 (S.I. 2006/576), regs. 1, 8(7)

F2 Words in Sch. 3 Pt. VI para. 10(4)(a) substituted (E.W.S.) (6.12.2011) by The Social Security (Contributions) (Amendment No. 5) Regulations 2011 (S.I. 2011/2700), regs. 1(1), 6(c)(i)

F3 Words in Sch. 3 Pt. VI para. 10(4)(b) substituted (E.W.S.) (6.12.2011) by The Social Security (Contributions) (Amendment No. 5) Regulations 2011 (S.I. 2011/2700), regs. 1(1), 6(c)(ii)

F4 Words in Sch. 3 Pt. VI para. 10(4)(c) substituted (E.W.S.) (6.12.2011) by The Social Security (Contributions) (Amendment No. 5) Regulations 2011 (S.I. 2011/2700), regs. 1(1), 6(c)(iii)

F5 Words in Sch. 3 Pt. VI para. 10(4)(d) substituted (E.W.S.) (6.12.2011) by The Social Security (Contributions) (Amendment No. 5) Regulations 2011 (S.I. 2011/2700), regs. 1(1), 6(c)(iv)

F6 Words in Sch. 3 Pt. VI para. 10(5)(a) substituted (6.4.2012) by The Social Security (Contributions) (Amendment No. 2) Regulations 2012 (S.I. 2012/817), regs. 1(1), 6(b) (with reg. 11)

F7 Words in Sch. 3 Pt. VI para. 10(6)(d) substituted (E.W.S.) (6.12.2011) by The Social Security (Contributions) (Amendment No. 5) Regulations 2011 (S.I. 2011/2700), regs. 1(1), 6(c)(vi)