The Taxation of Pension Schemes (Transitional Provisions) (Amendment) Order 2011

Amendment of the Taxation of Pension Schemes (Transitional Provisions) Order 2006

5.  After article 43 (protected pension age and multiple pensions – member dies before receiving all pensions) inserted by article 4 of this Order insert—

“Normal minimum pension age – modification of section 165 (payment of pension rules)

44.— (1) This article applies in the case of a member of a registered pension scheme where the primary condition in paragraph (2) and one of conditions in paragraph (3) are met.

(2) The primary condition is—

(a) on 5th April 2010, the member was aged between 50 and 54 (inclusive); and

(b) on or before that date, benefit crystallisation event 1 (“BCE1”), 2 (“BCE2”) or 4 (“BCE4”) had occurred in relation to that member.

(3) The conditions are—

Condition A

On or after 6th April 2010 some or all of the sums and assets held for the purposes of the arrangement in respect of which BCE1 had occurred are applied towards—

(a) the purchase of a short-term annuity or a lifetime annuity (“the new annuity”); or

(b) the provision of a scheme pension under the arrangement.

Condition B

On or after 6th April 2010 the first payment of pension by way of income withdrawal (“withdrawal pension”) is made from some or all of the sums or assets held for the purposes of the arrangement in respect of which BCE1 had occurred.

Condition C

On or before 5th April 2010 some or all of the assets held for the purposes of the arrangement in respect of which BCE1 had occurred were applied towards the purchase of a short-term annuity (“the new annuity”), and the first payment of the new annuity is made on or after 6th April 2010.

Condition D

Where BCE2 or BCE4 had occurred in relation to the member on or before 5th April 2010, the first payment of scheme pension or lifetime annuity (“the new annuity”) in respect of which BCE2 or BCE4 occurred, is made on or after 6th April 2010.

(4) For the purposes of determining whether pension rule 1 in section 165 (payment of pension rules) has been met in relation to a payment of the new annuity, scheme pension or withdrawal pension, the member is deemed to have reached the age of 55 immediately before the date on which the first payment of the new annuity, scheme pension or withdrawal pension is made. This paragraph is subject to paragraph (5).

(5) Where a member was chargeable to income tax at the additional rate for the tax year 2010-11, paragraph (4) shall only have effect in respect of 80% of the amount of any payment of the new annuity, scheme pension or withdrawal pension made in that tax year.

(6) For the purposes of this article “sums or assets held for the purposes of the arrangement” means sums or assets that—

(a) on or before 5th April 2010, have been designated under the arrangement as available for the payment of unsecured pension; or

(b) arise, or (directly or indirectly) derive from sums or assets which have been so designated or which so arise or derive.

Normal minimum pension age – modification of paragraph 1 of Schedule 29 (lump sum rule)

45.— (1) This article applies in the case of a member of a registered pension scheme where the conditions in paragraph (2) are met.

(2) The conditions are that on 5th April 2010—

(a) the member was aged between 50 and 54 (inclusive);

(b) the member had become entitled to a lump sum (“the relevant lump sum”) which would have been a pension commencement lump sum had it been paid on or before that date; and

(c) no payment of the relevant lump sum had been made.

(3) For the purposes of determining whether the condition in paragraph 1(1)(d) of Schedule 29 (pension commencement lump sum) has been met in relation to a payment of the relevant lump sum made on or after 6th April 2010, the member is deemed to have reached the age of 55 immediately before the date on which the payment of the relevant lump sum is made.”.