House of Commons Amendments

Session 2014 - 15
Internet Publications
Other Bills before Parliament

Consideration of Bill:
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, continued

(3)
For the purposes of subsection (2), if the circumstances are as

described in subsection (2)(e)(ii), the member is treated as not having

become entitled to the expected pension as a result of the cancelled

contract having been entered into.”

Calculation of “applicable amount” in certain cases

4
In paragraph 3 of Schedule 29 to FA 2004 (pension commencement lump

sums: applicable amount) after sub-paragraph (8) insert—

  “(8A)
Sub-paragraphs (1) to (8) have effect subject to the following—

(a)
if—

(i)
paragraph 1A or 1B applies to the lump sum,

(ii)
the lump sum is paid more than 6 months before

the day on which the member becomes entitled to

it,

(iii)
a contract for a lifetime annuity is entered into to

provide the pension in connection with which the

lump sum is paid, and

(iv)
on or after 19 March 2014 the contract is cancelled,


the applicable amount is one third of the annuity purchase

price that would have been given by sub-paragraphs (4) to

(5) in the case of that annuity had the contract not been

cancelled, and

(b)
if—

(i)
paragraph 1A or 1B applies to the lump sum,

(ii)
the lump sum is paid more than 6 months before

the day on which the member becomes entitled to

it, and

(iii)
paragraph (a) does not apply,


the applicable amount is one third of the sums, plus one

third of the then market value of the assets, held at the time

the lump sum is paid for the purpose of providing the

pension at that time expected to be the pension in

connection with which the lump sum is paid.

    (8B)
For the purposes of sub-paragraph (8A)(a)(ii), the member is

treated as not having become entitled to a pension as a result of the

cancelled contract having been entered into.”

Expected pension commencement lump sums treated as trivial commutation lump sums

5    (1)
In section 166(1) of FA 2004, in the lump sum rule, omit the “or” after

paragraph (f), and after paragraph (g) insert “, or

(h)
a transitional 2013/14 lump sum.”

      (2)
In Schedule 29 to FA 2004, after paragraph 11 insert—

“Transitional 2013/14 lump sum, and its related trivial commutation lump sum

11A(1)
A lump sum is a transitional 2013/14 lump sum for the purposes of

this Part if—

(a)
the sum (“the earlier sum”) is paid to the member in

connection with a pension under a registered pension

scheme to which it is expected that the member will

become entitled (“the expected pension”),

Consideration of Bill:
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, continued

(b)
the earlier sum is paid before the member becomes entitled

to the expected pension,

(c)
either—

(i)
the earlier sum is paid on or after 19 September

2013 but before 27 March 2014, or

(ii)
the earlier sum is paid before 19 September 2013,

a contract for a lifetime annuity is entered into to

provide the expected pension, and on or after 19

March 2014 the contract is cancelled,

(d)
all of the sums and assets for the time being representing

the sums and assets that when the earlier sum was paid

were held for the purpose of providing the expected

pension are, before the member becomes entitled to the

expected pension, used in paying a further lump sum to the

member (“the further sum”),

(e)
the further sum is paid on or after 6 July 2014 but before 6

April 2015, and

(f)
the further sum is a trivial commutation lump sum (see sub-

paragraph (2)).

      (2)
Sub-paragraph (4) applies when deciding under paragraph 7

whether the further sum is a trivial commutation lump sum in a case

where the earlier sum is paid before the nominated date (see

paragraph 7(3) for the meaning of “the nominated date”).

      (3)
If the earlier sum is a transitional 2013/14 lump sum, and the earlier

sum and the further sum are not the only lump sums paid under

registered pension schemes to the member, sub-paragraph (4)

applies when deciding under paragraph 7 whether any other lump

sum paid under a registered pension scheme to the member is a

trivial commutation lump sum.

      (4)
If this sub-paragraph applies, the payment of the earlier sum is to be

treated for the purposes of paragraph 8(1)(b) as a benefit

crystallisation event—

(a)
which occurs when the earlier sum is paid, and

(b)
on which the amount crystallised is the amount of the

earlier sum.

      (5)
If the earlier sum is a transitional 2013/14 lump sum, and only the

sums and assets mentioned in sub-paragraph (1)(d) are used in

paying the further sum, section 636B of ITEPA 2003 applies in

relation to the further sum with the omission of its subsection (3).

      (6)
If the earlier sum is a transitional 2013/14 lump sum, and the sums

and assets mentioned in sub-paragraph (1)(d) are used together with

other sums and assets in paying the further sum—

(a)
section 636B of ITEPA 2003 applies in relation to the

further sum as if instead of the further sum there were two

separate trivial commutation lump sums as follows—

(i)
one (“the first part of the further sum”) consisting

of so much of the further sum as is attributable to

the sums and assets mentioned in sub-paragraph

(1)(d), and

(ii)
another consisting of the remainder of the further

sum,

Consideration of Bill:
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, continued

(b)
the first part of the further sum is to be treated for the

purposes of section 636B of ITEPA 2003 as having been

paid immediately before the remainder of the further sum,

(c)
section 636B of ITEPA 2003 applies in relation to the first

part of the further sum with the omission of its subsection

(3), and

(d)
for the purposes of applying section 636B(3) of ITEPA

2003 in relation to the remainder of the further sum, the

rights to which the first part of the further sum relates are to

be treated as rights that are not uncrystallised rights

immediately before the remainder of the further sum is

paid.

      (7)
For the purposes of sub-paragraph (1), if the circumstances are as

described in sub-paragraph (1)(c)(ii), the member is treated as not

having become entitled to the expected pension as a result of the

cancelled contract having been entered into.”

      (3)
In section 636A of ITEPA 2003 (income tax exemption for certain lump

sums)—

(a)
in subsection (1) after paragraph (c) insert—

“(ca)
a transitional 2013/14 lump sum,”, and

(b)
in subsection (6) (definitions) omit the “and”, and after ““short service

refund lump sum”,” insert “and

“transitional 2013/14 lump sum”,”.

      (4)
In section 280(2) of FA 2004 (index of expressions) at the appropriate place

insert—

“transitional 2013/14 lump sum
paragraph 11A of Schedule 29”.

Small pot lump sums

6    (1)
In the Registered Pension Schemes (Authorised Payments) Regulations 2009

(S.I. 2009/1171) after regulation 3 insert—

“3A(1)
This regulation applies to a lump sum if—

(a)
the sum (“the earlier sum”) is paid under a registered

pension scheme to a member of the scheme,

(b)
the earlier sum is paid to the member in connection with a

pension under a registered pension scheme to which it is

expected that the member will become entitled (“the

expected pension”),

(c)
the earlier sum is paid before the member becomes entitled

to the expected pension,

(d)
either—

(i)
the earlier sum is paid on or after 19 September

2013 but before 27 March 2014, or

(ii)
the earlier sum is paid before 19 September 2013,

a contract for a lifetime annuity is entered into to

provide the expected pension, and on or after 19

March 2014 the contract is cancelled,

(e)
all of the sums and assets for the time being representing

the sums and assets that when the earlier sum was paid

were held for the purpose of providing the expected

Consideration of Bill:
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, continued

pension are, before the member becomes entitled to the

expected pension, used in paying a further lump sum to the

member (“the further sum”),

(f)
the further sum is paid on or after 6 July 2014 but before 6

April 2015, and

(g)
either—

(i)
the payment of the further sum is a payment

described in regulation 11, 11A or 12, or

(ii)
the further sum is a trivial commutation lump sum

within paragraph 7A of Schedule 29 and the earlier

sum is the pension commencement lump sum in

connection with which the further sum is paid.

      (2)
If this regulation applies to the earlier sum, and the payment of the

further sum is a payment described in regulation 11, 11A or 12—

(a)
the payment of the earlier sum is a payment of a prescribed

description for the purposes of section 164(1)(f), and

(b)
section 636A of ITEPA 2003 (exemption from income tax

for certain lump sums) applies in relation to the earlier sum

as if the earlier sum were a pension commencement lump

sum.

      (3)
When deciding for the purposes of this regulation whether the

further sum is a trivial commutation lump sum within paragraph 7A

of Schedule 29, sub-paragraph (2)(c) of that paragraph is to be

omitted.

      (4)
If this regulation applies to the earlier sum, and only the sums and

assets mentioned in paragraph (1)(e) are used in paying the further

sum, section 636B of ITEPA 2003 applies in relation to the further

sum with the omission of its subsection (3).

      (5)
If this regulation applies to the earlier sum, and the sums and assets

mentioned in paragraph (1)(e) are used together with other sums

and assets in paying the further sum—

(a)
section 636B of ITEPA 2003 applies in relation to the

further sum as if instead of the further sum there were two

separate trivial commutation lump sums as follows—

(i)
one (“the first part of the further sum”) consisting

of so much of the further sum as is attributable to

the sums and assets mentioned in paragraph (1)(e),

and

(ii)
another consisting of the remainder of the further

sum,

(b)
the first part of the further sum is to be treated for the

purposes of section 636B of ITEPA 2003 as having been

paid immediately before the remainder of the further sum,

(c)
section 636B of ITEPA 2003 applies in relation to the first

part of the further sum with the omission of its subsection

(3), and

(d)
for the purposes of applying section 636B(3) of ITEPA

2003 in relation to the remainder of the further sum, the

rights to which the first part of the further sum relates are to

be treated as rights that are not uncrystallised rights

Consideration of Bill:
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, continued

immediately before the remainder of the further sum is

paid.

      (6)
For the purposes of paragraph (1), if the circumstances are as

described in paragraph (1)(d)(ii), the member is treated as not

having become entitled to the expected pension as a result of the

cancelled contract having been entered into.”

      (2)
The amendment made by sub-paragraph (1) is to be treated as having been

made by the Commissioners for Her Majesty’s Revenue and Customs under

the powers to make regulations conferred by section 164(1)(f) and (2) of FA

2004.

Preservation of protected pension age following certain transfers of pension rights

7    (1)
In paragraph 22 of Schedule 36 to FA 2004 (protection of rights to take benefit

before normal minimum pension age) after sub-paragraph (6) insert—

  “(6A)
A transfer is also a block transfer if—

(a)
it involves the transfer in a single transaction of all the sums

and assets held for the purposes of, or representing accrued

rights under, the arrangements under the pension scheme

from which the transfer is made which relate to the

member,

(b)
the transfer takes place—

(i)
on or after 19 March 2014, and

(ii)
before 6 April 2015, and

(c)
the date mentioned in sub-paragraph (7)(a) is before 6

October 2015.”

      (2)
In paragraph 23(6) of Schedule 36 to FA 2004 (meaning of “block transfer”)

after “22(6)” insert “and (6A), but for this purpose paragraph 22(6A)(c) is to

be read as if its reference to paragraph 22(7)(a) were a reference to sub-

paragraph (7) of this paragraph”.

Operation of enhanced protection of pre-6 April 2006 rights to take lump sums

8
In paragraph 29 of Schedule 36 to FA 2004 (modifications of paragraph 3 of

Schedule 29 to FA 2004 for cases where there is enhanced protection) after

sub-paragraph (3) insert—

    “(4)
Paragraph 3 applies as if in sub-paragraph (8A)(a) for “is one third

of” there were substituted “is—


where VULSR, VUR and LS have the same meaning as in sub-

paragraph (1), and CAPP is”.

      (5)
Paragraph 3 applies as if in sub-paragraph (8A)(b) for “is one third

of the sums, plus one third of” there were substituted “is—


where VULSR, VUR and LS have the same meaning as in sub-

paragraph (1), and EP is the total of the sums, and”.”

Consideration of Bill:
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Protected lump sum entitlement following certain transfers of pension rights

9
In paragraph 31(8) of Schedule 36 to FA 2004 (“block transfer” has meaning

given by paragraph 22(6) of Schedule 36 to FA 2004)—

(a)
after “22(6)” insert “and (6A)”, and

(b)
at the end insert “, and reading paragraph 22(6A)(c) as if its reference

to paragraph 22(7)(a) were a reference to sub-paragraph (3) of this

paragraph.”

10  (1)
In paragraph 34(2) of Schedule 36 to FA 2004 (modifications required by

paragraph 31 in cases involving protected entitlements to lump sums) the sub-

paragraphs treated as substituted in paragraph 2 of Schedule 29 to FA 2004 are

amended as follows.

      (2)
In the substituted sub-paragraph (7A), in the definition of AC, for “(7AA) and

(7B))” substitute “(7AA) to (7B))”.

      (3)
After the substituted sub-paragraph (7AA) insert—

“(7AB)
Where paragraph 1A applies to the lump sum, AC is the total of—

(a)
the sums held, at the time the lump sum is paid, for the

purpose of providing the pension at that time expected to be

the pension in connection with which the lump sum is paid,

and

(b)
the market value at that time of the assets held at that time

for that purpose.

  (7AC)
Where paragraph 1B applies to the lump sum, AC is the total of—

(a)
the sums held, at the time the lump sum is paid, for the

purpose of providing the expected pension (see paragraph

1B(2)(b)), and

(b)
the market value at that time of the assets held at that time

for that purpose.”

Reporting obligations

11  (1)
In the Registered Pension Schemes (Provision of Information) Regulations

2006 (S.I. 2006/567) after regulation 18 insert—

“Modified operation of these Regulations in the case of certain pre-6 April 2015 lump

sums

19
Lump sums to which paragraph 1B of Schedule 29 applies

(1)
Regulations 3 to 18 have effect subject to the following provisions of

this regulation.

(2)
Paragraphs (3) to (8) apply if—

(a)
a lump sum is paid by a registered pension scheme (“the

paying scheme”) to a member of the scheme,

(b)
paragraph 1B of Schedule 29 applies to the lump sum, and

(c)
the member’s becoming entitled to the actual pension

mentioned in paragraph 1B(2)(h) of Schedule 29 has the effect

that—

(i)
the member also becomes entitled to the lump sum,

and

(ii)
the member’s becoming entitled to the lump sum is a

benefit crystallisation event.

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, continued

(3)
For the purposes of—

(a)
reportable event 6,

(b)
regulation 3 so far as applying by virtue of that event, and

(c)
obligations under regulation 14(1),


the benefit crystallisation event mentioned in paragraph (2)(c)(ii) is

treated as occurring—

(i)
in respect of the scheme to which the transfer mentioned in

paragraph 1B(2)(g) of Schedule 29 was made (“the receiving

scheme”) and not in respect of the paying scheme, and

(ii)
when the member becomes entitled to the actual pension or, if

later, on 5 August 2014.

(4)
For the purposes of regulations 15(2)(a) and 17(5)(a)(i) and (7)(a)(i),

that benefit crystallisation event is treated as occurring in respect of

the receiving scheme and not in respect of the paying scheme.

(5)
For the purposes of—

(a)
reportable event 7 (but not its definition of “the entitlement

amount”),

(b)
reportable event 8, and

(c)
regulation 3 so far as applying by virtue of either of those

events,


the lump sum is treated as having been paid—

(i)
by the receiving scheme and not by the paying scheme, and

(ii)
when the member becomes entitled to the actual pension or, if

later, on 5 August 2014.

(6)
For the purposes of reportable event 7 “the entitlement amount” is the

total of—

(a)
the sums held, at the time the lump sum is actually paid, for

the purpose of providing the expected pension mentioned in

paragraph 1B(2)(b) of Schedule 29, and

(b)
the market value at that time of the assets held at that time for

that purpose.

(7)
The scheme administrator of the paying scheme is to provide the

scheme administrator of the receiving scheme with the following

information—

(a)
the date the lump sum was paid,

(b)
the amount of the lump sum,

(c)
the total of—

(i)
the sums held, at the time lump sum is paid, for the

purpose of providing the expected pension mentioned

in paragraph 1B(2)(b) of Schedule 29, and

(ii)
the market value at that time of the assets held at that

time for that purpose, and

(d)
a statement that no further pension commencement lump sum

may be paid in connection with that expected pension.

(8)
The scheme administrator of the paying scheme is to comply with its

obligations under paragraph (7) before—

(a)
the end of 30 days beginning with the date of the transfer

mentioned in paragraph 1B(2)(g) of Schedule 29, or

(b)
if later, the end of 3 September 2014.



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