House of Commons Amendments

Session 2014 - 15
Internet Publications
Other Bills before Parliament

29

(i)
the actual pension is income withdrawal, a lifetime

annuity or a scheme pension, or some combination of

them, and

(j)
all of the sums and assets that represent the sums and

assets transferred by the recognised transfer are used

to provide the actual pension.

      (3)
If a lump sum to which this paragraph applies is a pension

commencement lump sum, any lump sum paid—

(a)
to the member,

(b)
by the scheme to which the recognised transfer

mentioned in sub-paragraph (2)(g) is made or by any

other registered pension scheme (including the scheme

from which the transfer was made), and

(c)
in connection with the member’s becoming entitled to

the actual pension,


is not a pension commencement lump sum.

      (4)
For the purposes of sub-paragraph (2), if the circumstances are

as described in sub-paragraph (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.”

      (2)
In section 166(2) of FA 2004 (time at which a person becomes entitled to

a lump sum)—

(a)
before paragraph (a) insert—

“(za)
in the case of a pension commencement lump sum

to which paragraph 1B of Schedule 29 applies

(certain sums paid before 6 April 2015),

immediately before the person becomes entitled

to the actual pension (see paragraph 1B(2)(h) of

that Schedule),”, and

(b)
in paragraph (a) for “of a” substitute “of any other”.

Temporary relaxation to allow lump sum to be repaid to pension scheme that paid it

3
In Chapter 3 of Part 4 of FA 2004 (payments by registered pension

schemes) after section 185I insert—

“Repayments of lump sums

185J
Effect of repayment of certain pre-6 April 2015 lump sums

(1)
For the purposes of this Part—

(a)
a lump sum to which this section applies is treated as

never having been paid, and

(b)
the payment by which it is repaid is treated as not being

a payment.

(2)
This section applies to a lump sum if—

(a)
the sum is paid by a registered pension scheme to a

member of the scheme in respect of a money purchase

arrangement,

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

pension under the scheme to which it is expected that the

member will become entitled (“the expected pension”),

(c)
the expected pension is income withdrawal, a lifetime

annuity or a scheme pension,

(d)
the sum is paid before the member becomes entitled to

the expected pension,

(e)
either—

(i)
the sum is paid on or after 19 September 2013 but

before 6 April 2015, or

(ii)
the 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,

(f)
before the member becomes entitled to the expected

pension, the member repays the sum to the pension

scheme that paid it, and

(g)
the repayment is made before 6 October 2015.

(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

31

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”),

(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

32

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,

(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

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(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
paragraph 11A of Schedule

sum
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 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—

34

(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 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.

35

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”.”

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.”



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