The Registered Pension Schemes (Bridging Pensions) and Appointed Day Regulations 2016

EXPLANATORY NOTE

(This note is not part of the Regulations)

Part 4 of the Finance Act 2004 (“the Act”) makes provision in respect of registered pension schemes. In order to be authorised a scheme pension may only be reduced in certain specified circumstances. One of those circumstances is where the reduction is based on the state pension coming into payment, known as a “bridging pension”.

Regulation 2 of these Regulations provides for the coming into force of section 20(2) to (5) of the Finance Act 2016. Section 20 removes the existing provision relating to bridging pensions.

Regulations 3 and 4 of these Regulations prescribe the circumstances in which the rate of the scheme pension may reduce and makes provision for bridging pensions to continue to be paid without affecting the nature of the ongoing instalments of scheme pension as authorised payments for tax purposes.

Regulation 3 specifies when a reduction is a prescribed circumstance where an individual reached pensionable age on or before 5 April 2016.

Regulation 4 specifies when a reduction is a prescribed circumstance where an individual reached pensionable age on or after 6 April 2016.

Regulation 2 appoints 6 April 2016 as the date for the coming into force of section 20(2) to (5) of the Finance Act 2016 and regulation 3 and 4 apply to those who reach pensionable age on or before 5 April 2016 or on or after 6 April 2016 respectively. Paragraph 2(8) of Schedule 28 to the Act, as modified by section 20(6) of the Finance Act 2016, provides that Regulations made under paragraph 2(4)(h) and (8) may include provision having effect in relation to times before the Regulations are made and that such amendments may be given effect in relation to times not earlier than 6 April 2016.

A Tax Information and Impact Note covering this instrument was published on 9 December 2015 alongside draft legislation for the Finance Bill 2016, and is available on the HMRC website at https://www.gov.uk/government/collections/tax-information-and-impact-notes-tiins. It remains an accurate summary of the impacts that apply to this instrument.