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| Taxation of Pensions Bill
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| | To move the following Clause— |
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| | | “Death of pension scheme member |
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| | Schedule (Death of pension scheme member) has effect.” |
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| | Member’s explanatory statement
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| | This new clause introduces NS1 (death of pension scheme member). |
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| | To move the following Schedule— |
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| “Death of pension scheme member |
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| | Death benefits: Nominees and successors |
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| | Drawdown benefits for nominees and successors of deceased scheme members |
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| | 1 | FA 2004 is amended as follows. |
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| | 2 (1) | Section 167 (the pension death benefit rules) is amended as follows. |
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| | (2) | In pension death benefit rule 1 (pension death benefit may be paid only to |
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| | dependant of deceased member) after “dependant” insert “, or nominee or |
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| | (3) | After pension death benefit rule 3 (pension death benefits which may be paid |
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| | under a money purchase arrangement to a dependant) insert— |
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| | | “Pension death benefit rule 3A |
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| | | No payment of pension death benefit, other than nominees’ drawdown |
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| | pension in respect of a money purchase arrangement, may be made to |
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| | | Pension death benefit rule 3B |
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| | | No payment of pension death benefit, other than successors’ |
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| | drawdown pension in respect of a money purchase arrangement, may |
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| | be made to a successor of the member.” |
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| | (4) | After subsection (1) insert— |
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| | “(1A) | For the purposes of this Part, a person becomes entitled to dependants’ |
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| | income withdrawal, nominees’ income withdrawal or successors’ |
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| | income withdrawal under a registered pension scheme whenever sums |
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| | or assets held for the purposes of an arrangement under the pension |
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| | scheme are designated as available for the payment of (as the case may |
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| | be) dependants’ drawdown pension, nominees’ drawdown pension or |
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| | successors’ drawdown pension.” |
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| | (5) | In subsection (2) (meaning of “pension death benefit”) after “see section 165)” |
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| | insert “, or a pension payable in respect of the member on the subsequent death |
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| | of a dependant, nominee or successor of the member”. |
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| | 3 (1) | In Part 2 of Schedule 28 (interpretation of the pension death benefit rules) at |
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| | 27A(1) | “Nominee of the member” means an individual— |
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| | (a) | nominated by the member, or |
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| | (b) | nominated by the scheme administrator, |
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| | | who is not a dependant of the member, but see sub-paragraph (2). |
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| | (2) | In relation to any particular benefits under an arrangement, no |
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| | individual nominated by the scheme administrator counts as a |
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| | nominee of the member at any time when there is— |
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| | (a) | a dependant of the member, or |
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| | (b) | an individual, or charity, nominated by the member in |
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| | relation to the benefits. |
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| | (3) | The reference in sub-paragraph (2)(b) to being nominated in |
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| | relation to particular benefits under an arrangement includes— |
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| | (a) | a reference to being nominated in relation to the scheme, |
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| | (b) | a reference to being nominated in relation to arrangements |
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| | that include the arrangement, |
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| | (c) | a reference to being nominated in relation to the |
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| | (d) | a reference to being nominated in relation to benefits that |
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| | include the particular benefits. |
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| | Nominees’ drawdown pension |
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| | 27B | “Nominees’ drawdown pension” means— |
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| | (a) | a nominees’ short-term annuity, or |
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| | (b) | nominees’ income withdrawal. |
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| | Nominees’ short-term annuity |
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| | 27C(1) | For the purposes of this Part an annuity payable to a nominee is a |
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| | nominees’ short-term annuity if— |
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| | (a) | it is purchased by the application of sums or assets |
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| | representing the whole or any part of the nominee’s flexi- |
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| | access drawdown fund in respect of an arrangement, |
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| | (b) | it is payable by an insurance company, |
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| | (c) | the nominee becomes entitled to it on or after 6 April 2015, |
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| | (d) | it is payable for a term which does not exceed five years |
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| | and ends before the nominee dies. |
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| | (2) | The Commissioners for Her Majesty’s Revenue and Customs may |
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| | by regulations make provision in relation to cases in which a |
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| | nominees’ short-term annuity payable to a person (“the original |
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| | nominees’ short-term annuity”) ceases to be payable and in |
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| | (a) | sums or assets (or both) are transferred from the insurance |
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| | company to another insurance company and are applied— |
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| | (i) | towards the provision of another nominees’ short- |
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| | term annuity (a “new nominees’ short-term |
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| | annuity”) by the other insurance company, or |
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| | (b) | sums or assets are transferred to the relevant registered |
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| | (3) | The regulations may provide that— |
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| | (a) | in a case where a new nominees’ short-term annuity |
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| | becomes payable, the new nominees’ short-term annuity is |
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| | to be treated, to such extent as is prescribed by the |
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| | regulations and for such of the purposes of this Part as are |
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| | so prescribed, as if it were the original nominees’ short- |
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| | (b) | in any other case, the relevant registered pension scheme is |
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| | to be treated as making an unauthorised payment in respect |
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| | of the member of an amount equal to the aggregate of the |
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| | sums, and the market value of the assets, transferred. |
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| | (4) | For the purposes of sub-paragraphs (2) and (3) a registered pension |
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| | scheme is the relevant registered pension scheme if the original |
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| | nominees’ short-term annuity was acquired using sums or assets |
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| | held for the purposes of the pension scheme. |
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| | Nominees’ income withdrawal |
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| | 27D | “Nominees’ income withdrawal” means an amount (other than an |
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| | annuity) which the nominee is entitled to be paid from the |
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| | nominee’s flexi-access drawdown fund in respect of an |
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| | Nominee’s flexi-access drawdown fund |
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| | 27E(1) | For the purposes of this Part a nominee’s flexi-access drawdown |
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| | fund in respect of an arrangement consists of such of the sums or |
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| | assets held for the purposes of the arrangement as are newly- |
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| | designated nominee funds. |
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| | (2) | For the purposes of this Part sums or assets held for the purposes of |
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| | an arrangement are newly-designated nominee funds if— |
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| | (i) | have, at any time on or after 6 April 2015, been |
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| | designated under the arrangement as available for |
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| | the payment of nominees’ drawdown pension, and |
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| | (ii) | were, immediately before being so designated, |
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| | unused drawdown funds or unused uncrystallised |
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| | (b) | they arise, or (directly or indirectly) derive, from newly- |
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| | designated nominee funds under paragraph (a) or from |
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| | sums or assets which so arise or derive. |
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| | (3) | Sums or assets held for the purposes of an arrangement after the |
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| | member’s death are unused drawdown funds if— |
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| | (a) | immediately before the member’s death, they were held for |
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| | the purposes of the arrangement and represented (whether |
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| | alone or with other sums or assets) the member’s flexi- |
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| | access drawdown fund, or drawdown pension fund, in |
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| | respect of the arrangement, or |
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| | (b) | they arise, or (directly or indirectly) derive, from unused |
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| | drawdown funds under paragraph (a) or from sums or |
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| | assets which so arise or derive. |
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| | (4) | In the case of a cash balance arrangement, sums or assets held for |
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| | the purposes of the arrangement after the member’s death are |
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| | unused uncrystallised funds if— |
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| | (a) | they represent the whole or any part of the sum that would |
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| | have been available immediately before the member’s |
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| | death for the provision of benefits to or in respect of the |
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| | member if entitlement had arisen immediately before the |
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| | member’s death to all benefits under the arrangement to |
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| | which entitlement had not previously arisen, and |
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| | (b) | since the member’s death they have not been designated as |
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| | available for the payment of dependants’ drawdown |
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| | pension, not been designated as available for the payment |
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| | of nominees’ drawdown pension, not been applied towards |
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| | the provision of a dependants’ annuity and not been applied |
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| | towards the provision of a dependants’ scheme pension. |
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| | (5) | In the case of any other money purchase arrangement, sums or |
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| | assets held for the purposes of the arrangement after the member’s |
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| | death are unused uncrystallised funds if— |
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| | (a) | immediately before the member’s death they were held for |
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| | the purposes of the arrangement and at that time— |
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| | (i) | were not member-designated funds, |
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| | (ii) | were not newly-designated funds, |
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| | (iii) | had not been applied towards the provision of a |
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| | (iv) | had not been applied towards the provision of a |
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| | dependants’ scheme pension, or |
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| | (b) | they arise, or (directly or indirectly) derive, from unused |
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| | uncrystallised funds under paragraph (a) or from sums or |
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| | assets which so arise or derive, |
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| | | and since the member’s death they have not been designated as |
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| | available for the payment of dependants’ drawdown pension, not |
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| | been designated as available for the payment of nominees’ |
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| | drawdown pension, not been applied toward the provision of a |
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| | dependants’ annuity and not been applied toward the provision of a |
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| | dependants’ scheme pension. |
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| | 27F(1) | “Successor of the member” means an individual— |
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| | (a) | nominated by a dependant of the member, |
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| | (b) | nominated by a nominee of the member, |
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| | (c) | nominated by a successor of the member, or |
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| | (d) | nominated by the scheme administrator, |
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| | | but see sub-paragraph (2). |
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| | (2) | In relation to any particular benefits under an arrangement relating |
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| | to a dependant, nominee or successor of the member (“the |
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| | beneficiary”) in that capacity, no individual nominated by the |
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| | scheme administrator counts as a successor of the member at any |
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| | time after the beneficiary’s death when there is an individual, or |
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| | charity, nominated by the beneficiary in relation to the benefits. |
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| | (3) | A reference in sub-paragraph (2) to being nominated in relation to |
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| | particular benefits under an arrangement includes— |
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| | (a) | a reference to being nominated in relation to the scheme, |
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| | (b) | a reference to being nominated in relation to arrangements |
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| | that include the arrangement, |
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| | (c) | a reference to being nominated in relation to the |
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| | (d) | a reference to being nominated in relation to benefits that |
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| | include the particular benefits. |
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| | (4) | Where a successor of the member is an individual who is also a |
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| | dependant of the member, the individual in the capacity of a |
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| | successor of the member is to be treated as not also being a |
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| | Successors’ drawdown pension |
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| | 27G | “Successors’ drawdown pension” means— |
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| | (a) | a successors’ short-term annuity, or |
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| | (b) | successors’ income withdrawal. |
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| | Successors’ short-term annuity |
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| | 27H(1) | For the purposes of this Part an annuity payable to a successor is a |
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| | successors’ short-term annuity if— |
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| | (a) | it is purchased by the application of sums or assets |
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| | representing the whole or any part of the successor’s flexi- |
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| | access drawdown fund in respect of an arrangement, |
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| | (b) | it is payable by an insurance company, |
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| | (c) | the successor becomes entitled to it on or after 6 April |
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| | (d) | it is payable for a term which does not exceed five years |
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| | and ends before the successor dies. |
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| | (2) | The Commissioners for Her Majesty’s Revenue and Customs may |
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| | by regulations make provision in relation to cases in which a |
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| | successors’ short-term annuity payable to a person (“the original |
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| | successors’ short-term annuity”) ceases to be payable and in |
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| | |
| | (a) | sums or assets (or both) are transferred from the insurance |
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| | company to another insurance company and are applied— |
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| | (i) | towards the provision of another successors’ short- |
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| | term annuity (a “new successors’ short-term |
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| | annuity”) by the other insurance company, or |
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| | (b) | sums or assets are transferred to the relevant registered |
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| | (3) | The regulations may provide that— |
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| | (a) | in a case where a new successors’ short-term annuity |
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| | becomes payable, the new successors’ short-term annuity |
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| | is to be treated, to such extent as is prescribed by the |
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| | regulations and for such of the purposes of this Part as are |
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| | so prescribed, as if it were the original successors’ short- |
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| | |
| | (b) | in any other case, the relevant registered pension scheme is |
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| | to be treated as making an unauthorised payment in respect |
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| | of the member of an amount equal to the aggregate of the |
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| | sums, and the market value of the assets, transferred. |
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| | (4) | For the purposes of sub-paragraphs (2) and (3) a registered pension |
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| | scheme is the relevant registered pension scheme if the original |
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| | successors’ short-term annuity was acquired using sums or assets |
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| | held for the purposes of the pension scheme. |
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| | Successors’ income withdrawal |
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| | 27J | “Successors’ income withdrawal” means an amount (other than an |
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| | annuity) which the successor is entitled to be paid from the |
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| | successor’s flexi-access drawdown fund in respect of an |
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| | Successor’s flexi-access drawdown fund |
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| | 27K(1) | For the purposes of this Part a successor’s flexi-access drawdown |
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| | fund in respect of an arrangement consists of such of the sums or |
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| | assets held for the purposes of the arrangement as are newly- |
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| | designated successor funds. |
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| | (2) | For the purposes of this Part sums or assets held for the purposes of |
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| | an arrangement are newly-designated successor funds if— |
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| | (i) | have, at any time on or after 6 April 2015, been |
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| | designated under the arrangement as available for |
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| | the payment of successors’ drawdown pension, |
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| | (ii) | were, immediately before being so designated, |
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| | unused drawdown funds of the same deceased |
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| | dependant, nominee or successor of the member, |
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| | (b) | they arise, or (directly or indirectly) derive, from newly- |
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| | designated successor funds under paragraph (a) or from |
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| | sums or assets which so arise or derive. |
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| | (3) | Sums or assets held for the purposes of an arrangement after the |
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| | death of a dependant, nominee or successor (“the beneficiary”) are |
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| | unused drawdown funds of the beneficiary’s if— |
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| | (a) | immediately before the beneficiary’s death, they were held |
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| | for the purposes of the arrangement and represented |
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| | (whether alone or with other sums or assets) the |
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| | (i) | dependant’s flexi-access drawdown fund, |
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| | (ii) | dependant’s drawdown pension fund, |
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| | (iii) | nominee’s flexi-access drawdown fund, or |
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| | (iv) | successor’s flexi-access drawdown fund, |
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| | | in respect of the arrangement, or |
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| | (b) | they arise, or (directly or indirectly) derive, from unused |
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| | drawdown funds of the beneficiary’s under paragraph (a) or |
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| | from sums or assets which so arise or derive.” |
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| | (2) | The provisions inserted by sub-paragraph (1) have effect even in relation to |
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| | cases where the member concerned, or any dependant concerned, dies before |
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| | Nominees and successors: further drawdown amendments |
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| | 4 | In section 169(1D) (regulations about transfers of drawdown funds) after |
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| | paragraph (aa) (which is inserted by this Act) insert “or |
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| | (ab) | a nominee’s flexi-access drawdown fund, or |
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| | (ac) | a successor’s flexi-access drawdown fund,”. |
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| | 5 | In section 172(1)(a) (assignment of rights or benefits) after “dependant” insert |
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| | “, nominee or successor”. |
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| | 6 | In section 172A(1)(a) (surrender of rights or benefits) after “dependant” insert |
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| | “, nominee or successor”. |
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| | 7 | In section 172A(5) (exceptions to provisions on surrender: entitlement to |
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| | (a) | in paragraph (b) after “dependant” insert “, or nominee,”, |
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| | (b) | after paragraph (b) insert— |
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| | “(ba) | a surrender (or agreement to surrender) by a |
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| | dependant, nominee or successor of the member (“the |
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| | beneficiary”) in return for the conferring, on a |
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| | successor of the member, of an entitlement to benefits |
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| | after the beneficiary’s death,”, and |
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| | (c) | in paragraph (c) for “or dependant” substitute “, dependant, nominee |
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| | 8 | In section 172A(5A) (further provision on surrender exceptions)— |
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