Session 2014 - 15
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Notices of Amendments:                               

15

 

, continued

 
 

(i)    

omit “or dependants’ income withdrawal”, and

 

(ii)    

for “paragraphs 7 and 21” substitute “paragraph 7”, and

 

(b)    

before the “and” at the end of paragraph (b) insert—

 

“(ba)    

an amount paid under a relevant non-UK scheme or

 

an overseas pension scheme which, if the scheme

 

were a registered pension scheme, would be

 

dependants’ income withdrawal or nominees’ income

 

withdrawal (within the meaning of paragraphs 21 and

 

27D of Schedule 28 to FA 2004),

 

(bb)    

an amount paid under a relevant non-UK scheme or

 

an overseas pension scheme which, if the scheme

 

were a registered pension scheme, would be

 

successors’ income withdrawal (within the meaning

 

of paragraph 27J of Schedule 28 to FA 2004),”.

 

      (4)  

In section 579A(1) (section applies to pensions under registered pension

 

schemes, subject to subsection (2)) after “subsection (2)” insert “and section

 

579CZA”.

 

      (5)  

After section 579C insert—

 

“579CZA 

Exemption for beneficiaries’ income withdrawal in some cases

 

(1)    

Section 579A does not apply to dependants’ income withdrawal or

 

nominees’ income withdrawal if it is paid—

 

(a)    

in respect of a deceased member of a registered pension

 

scheme who had not reached the age of 75 at the date of the

 

member’s death, and

 

(b)    

to a person from the person’s—

 

(i)    

dependant’s drawdown pension fund,

 

(ii)    

dependant’s flexi-access drawdown fund, or

 

(iii)    

nominee’s flexi-access drawdown fund,

 

    

in respect of a money purchase arrangement under a registered

 

pension scheme.

 

(2)    

Section 579A does not apply to successors’ income withdrawal if it is

 

paid—

 

(a)    

in respect of a deceased beneficiary of a deceased member of

 

a registered pension scheme where the beneficiary had not

 

reached the age of 75 at the date of the beneficiary’s death,

 

and

 

(b)    

to a person from the person’s successor’s flexi-access

 

drawdown fund in respect of a money purchase arrangement

 

under a registered pension scheme,

 

    

and here “beneficiary” means dependant, nominee or successor.

 

(3)    

Subsection (1) is subject to the following provisions of this section.

 

(4)    

Section 579A does apply to dependants’ income withdrawal paid on

 

or after 6 April 2015 to a person from the person’s dependant’s

 

drawdown pension fund in respect of a money purchase arrangement

 

under a registered pension scheme (“the drawdown fund”) if before 6

 

April 2015—

 

(a)    

any payment of dependants’ income withdrawal was made

 

from—

 

(i)    

the drawdown fund, or


 
 

Notices of Amendments:                               

16

 

, continued

 
 

(ii)    

any fund represented (to any extent) by the drawdown

 

fund, or

 

(b)    

any payment was made of a dependants’ short-term annuity

 

purchased using sums or assets out of—

 

(i)    

the drawdown fund, or

 

(ii)    

any fund represented (to any extent) by the drawdown

 

fund.

 

(5)    

Section 579A does apply to dependants’ income withdrawal paid in

 

respect of a deceased member of a registered pension scheme to a

 

person from the person’s dependant’s flexi-access drawdown fund in

 

respect of a money purchase arrangement under a registered pension

 

scheme (“the new fund”) if—

 

(a)    

any of the sums or assets that make up the new fund—

 

(i)    

became newly-designated dependant funds under

 

paragraph 22A(2)(b) of Schedule 28 to FA 2004 or as

 

a result of the operation of any of paragraphs 22B to

 

22D of that Schedule, or

 

(ii)    

arise, or (directly or indirectly) derive, from any such

 

newly-designated dependant funds or from sums or

 

assets which so arise or derive,

 

(b)    

before 6 April 2015 any payment of dependants’ income

 

withdrawal in respect of the deceased member was made to

 

the person from the person’s dependant’s drawdown pension

 

fund in respect of a money purchase arrangement under a

 

registered pension scheme, and

 

(c)    

any of the sums or assets that made up that fund at the time of

 

that payment to any extent make up, or are represented by

 

sums or assets that to any extent make up, the new fund.

 

(6)    

Where relevant unused uncrystallised funds—

 

(a)    

are designated on or after 6 April 2015 as available for the

 

payment of dependants’ drawdown pension or nominees’

 

drawdown pension, and

 

(b)    

as a result of the designation make up (to any extent) a

 

person’s dependant’s flexi-access drawdown fund or

 

nominee’s flexi-access drawdown fund in respect of a money

 

purchase arrangement under a registered pension scheme, but

 

(c)    

are not so designated before the end of the relevant two-year

 

period,

 

    

section 579A does apply to dependants’ income withdrawal or

 

nominees’ income withdrawal paid to the person from the fund so far

 

as it is paid in respect of sums or assets for the time being representing

 

the whole or any part of those relevant unused uncrystallised funds.

 

(7)    

In this section—

 

“dependant”, “nominee” and “successor” have the meaning given

 

(respectively) by paragraphs 15, 27A and 27F of Schedule 28 to FA

 

2004,

 

“dependant’s drawdown pension fund”, “dependant’s flexi-access

 

drawdown fund”, “nominee’s flexi-access drawdown fund” and

 

“successor’s flexi-access drawdown fund” have the meaning given

 

(respectively) by paragraphs 22, 22A, 27E and 27K of Schedule 28 to

 

FA 2004,


 
 

Notices of Amendments:                               

17

 

, continued

 
 

“money purchase arrangement” has the meaning given by section 152 of

 

FA 2004, and

 

“the relevant two-year period”, in relation to relevant unused

 

uncrystallised funds held for the purposes of a money purchase

 

arrangement relating to a deceased individual under a registered

 

pension scheme, means the period of two years beginning with the

 

earlier of the day on which the scheme administrator of the scheme

 

first knew of the individual’s death and the day on which the scheme

 

administrator could first reasonably have been expected to have

 

known of it.

 

(8)    

For the purposes of this section, sums or assets held after the death of

 

a member of a registered pension scheme for the purposes of a money

 

purchase arrangement relating to the member under the scheme are

 

“relevant unused uncrystallised funds” if—

 

(a)    

they are unused uncrystallised funds, and

 

(b)    

the member had not reached the age of 75 at the date of the

 

member’s death.

 

(9)    

Paragraph 27E(4) and (5) of Schedule 28 of FA 2004 (meaning of

 

“unused uncrystallised funds”) apply for the purposes of subsection

 

(8)(a).”

 

      (6)  

In section 579D (interpretation of sections 579A to 579D)—

 

(a)    

at the appropriate places insert—

 

““nominees’ income withdrawal” has the meaning given by

 

paragraph 27D of that Schedule;”, and

 

““successors’ income withdrawal” has the meaning given by

 

paragraph 27J of Schedule 28 to FA 2004.”, and

 

(b)    

in paragraph (b) of the definition of “pension under a registered

 

pension scheme” after “dependants’ income withdrawal” insert “, or

 

nominees’ income withdrawal or successors’ income withdrawal,”.

 

      (7)  

The amendments made by sub-paragraphs (2) to (5) have effect in relation to

 

pension paid on or after 6 April 2015.”

 

Member’s explanatory statement

 

This new Schedule provides that persons other than dependants can inherit unused drawdown

 

funds. For deaths before age 75, lump sum death benefits and flexi-access drawdown pensions

 

from these funds can be paid tax free, subject (for example) to the member having sufficient

 

available lifetime allowance.

 

Mr David Gauke

 

Schedule,  page  11,  line  3,  at end insert—

 

  “(2A)  

A lump sum death benefit is also a flexi-access drawdown fund

 

lump sum death benefit if—

 

(a)    

it is paid on the death of a nominee of the member,

 

(b)    

it is paid in respect of nominees’ income withdrawal to

 

which the nominee was at the date of the nominee’s death

 

entitled to be paid from the nominee’s flexi-access

 

drawdown fund in respect of an arrangement relating to the

 

member, and

 

(c)    

it is not a charity lump sum death benefit.

 

    (2B)  

A lump sum death benefit is also a flexi-access drawdown fund

 

lump sum death benefit if—


 
 

Notices of Amendments:                               

18

 

, continued

 
 

(a)    

it is paid on the death of a successor of the member,

 

(b)    

it is paid in respect of successors’ income withdrawal to

 

which the successor was at the date of the successor’s death

 

entitled to be paid from the successor’s flexi-access

 

drawdown fund in respect of an arrangement relating to the

 

member, and

 

(c)    

it is not a charity lump sum death benefit.”

 

Member’s explanatory statement

 

This amendment, and amendment 2, ensure that unused funds in the drawdown fund of a deceased

 

beneficiary, who was not a dependant of the member, can be paid out as a lump sum death benefit.

 

Mr David Gauke

 

Schedule,  page  11,  line  5,  leave out “or (2)” and insert “, (2), (2A) or (2B)”

 

Member’s explanatory statement

 

See explanatory statement to amendment 1.

 

Mr David Gauke

 

Schedule,  page  11,  line  10,  leave out “or dependant’s” and insert “, dependant’s,

 

nominee’s or successor’s”

 

Member’s explanatory statement

 

This amendment ensures that the maximum lump sum death benefit that can be paid from a non-

 

dependant beneficiary’s drawdown fund is equal to the value of the investments representing the

 

funds that were unused immediately before the beneficiary’s death.

 

Mr David Gauke

 

Schedule,  page  35,  line  3,  at end insert—

 

“(da)    

a payment of nominees’ drawdown pension,

 

(db)    

paid to purchase a nominees’ short-term annuity,

 

(dc)    

a payment of successors’ drawdown pension,

 

(dd)    

paid to purchase a successors’ short-term annuity,”

 

Member’s explanatory statement

 

This amendment extends the circumstances when pension schemes can pay benefits that are

 

authorised payments for tax purposes but are not permitted under their scheme rules. It adds

 

drawdown pensions paid to non-dependant beneficiaries.

 

Mr David Gauke

 

Schedule,  page  35,  line  38,  at end insert—

 

“(ba)    

any nominees’ income withdrawal paid to the person from a

 

nominee’s flexi-access drawdown fund in respect of an

 

arrangement relating to the person under a registered pension

 

scheme,

 

(bb)    

any successors’ income withdrawal paid to the person from a

 

successor’s flexi-access drawdown fund in respect of an

 

arrangement relating to the person under a registered pension

 

scheme,”

 

Member’s explanatory statement

 

This amendment, and amendments 6, 7 and 8, ensure that income withdrawals made from a non-

 

dependant beneficiary’s drawdown fund under a registered pension scheme when the beneficiary

 

was temporarily non-resident are treated as accruing when the person returns to the UK.


 
 

Notices of Amendments:                               

19

 

, continued

 
 

Mr David Gauke

 

Schedule,  page  35,  line  46,  at end insert—

 

“(da)    

any payment to the person of a nominees’ short-term annuity

 

purchased using sums or assets out of a nominee’s flexi-

 

access drawdown fund in respect of an arrangement relating

 

to the person under a registered pension scheme,

 

(db)    

any payment to the person of a successors’ short-term annuity

 

purchased using sums or assets out of a successor’s flexi-

 

access drawdown fund in respect of an arrangement relating

 

to the person under a registered pension scheme,”

 

Member’s explanatory statement

 

See the explanatory statement to amendment 5.

 

Mr David Gauke

 

Schedule,  page  37,  line  22,  at end insert—

 

“(ba)    

any nominees’ income withdrawal paid to the person from a

 

nominee’s flexi-access drawdown fund in respect of an

 

arrangement relating to the person under a registered pension

 

scheme,

 

(bb)    

any successors’ income withdrawal paid to the person from a

 

successor’s flexi-access drawdown fund in respect of an

 

arrangement relating to the person under a registered pension

 

scheme,”

 

Member’s explanatory statement

 

See the explanatory statement to amendment 5.

 

Mr David Gauke

 

Schedule,  page  37,  line  30,  at end insert—

 

“(da)    

any payment to the person of a nominees’ short-term annuity

 

purchased using sums or assets out of a nominee’s flexi-

 

access drawdown fund in respect of an arrangement relating

 

to the person under a registered pension scheme,

 

(db)    

any payment to the person of a successors’ short-term annuity

 

purchased using sums or assets out of a successor’s flexi-

 

access drawdown fund in respect of an arrangement relating

 

to the person under a registered pension scheme,”

 

Member’s explanatory statement

 

See the explanatory statement to amendment 5.

 

Mr David Gauke

 

Schedule,  page  39,  line  16,  at end insert—

 

“(ba)    

is paid to the person in respect of an arrangement relating to

 

the person under the scheme and would, if the scheme were a

 

registered pension scheme, be nominees’ income withdrawal

 

(within the meaning of paragraph 27D of Schedule 28 to FA

 

2004) paid to the person from the person’s nominee’s flexi-

 

access drawdown fund in respect of the arrangement,

 

(bb)    

is paid to the person in respect of an arrangement relating to

 

the person under the scheme and would, if the scheme were a

 

registered pension scheme, be successors’ income withdrawal


 
 

Notices of Amendments:                               

20

 

, continued

 
 

(within the meaning of paragraph 27J of Schedule 28 to FA

 

2004) paid to the person from the person’s successor’s flexi-

 

access drawdown fund in respect of the arrangement,”

 

Member’s explanatory statement

 

This amendment, and amendments 10, 11 and 12, ensure that payments by a non-UK pension

 

scheme during a person’s period of temporary non-residence that correspond to income

 

withdrawals from a drawdown fund under a registered pension scheme are treated as arising when

 

the person returns to the UK.

 

Mr David Gauke

 

Schedule,  page  39,  line  32,  at end insert—

 

“(da)    

is a payment to the person of an annuity purchased using sums

 

or assets held for the purposes of an arrangement relating to

 

the person under the scheme and would, if the scheme were a

 

registered pension scheme, be a payment of a nominees’

 

short-term annuity (within the meaning of paragraph 27C of

 

Schedule 28 to FA 2004) purchased using sums or assets out

 

of the person’s nominee’s flexi-access drawdown fund in

 

respect of the arrangement,

 

(db)    

is a payment to the person of an annuity purchased using sums

 

or assets held for the purposes of an arrangement relating to

 

the person under the scheme and would, if the scheme were a

 

registered pension scheme, be a payment of a successors’

 

short-term annuity (within the meaning of paragraph 27H of

 

Schedule 28 to FA 2004) purchased using sums or assets out

 

of the person’s successor’s flexi-access drawdown fund in

 

respect of the arrangement,”

 

Member’s explanatory statement

 

See the explanatory statement to amendment 9.

 

Mr David Gauke

 

Schedule,  page  41,  line  16,  at end insert—

 

“(ba)    

is paid to the person in respect of an arrangement relating to

 

the person under the scheme and would, if the scheme were a

 

registered pension scheme, be nominees’ income withdrawal

 

(within the meaning of paragraph 27D of Schedule 28 to FA

 

2004) paid to the person from the person’s nominee’s flexi-

 

access drawdown fund in respect of the arrangement,

 

(bb)    

is paid to the person in respect of an arrangement relating to

 

the person under the scheme and would, if the scheme were a

 

registered pension scheme, be successors’ income withdrawal

 

(within the meaning of paragraph 27J of Schedule 28 to FA

 

2004) paid to the person from the person’s successor’s flexi-

 

access drawdown fund in respect of the arrangement,”

 

Member’s explanatory statement

 

See the explanatory statement to amendment 9.

 

Mr David Gauke

 

Schedule,  page  41,  line  32,  at end insert—

 

“(da)    

is a payment to the person of an annuity purchased using sums

 

or assets held for the purposes of an arrangement relating to


 
 

Notices of Amendments:                               

21

 

, continued

 
 

the person under the scheme and would, if the scheme were a

 

registered pension scheme, be a payment of a nominees’

 

short-term annuity (within the meaning of paragraph 27C of

 

Schedule 28 to FA 2004) purchased using sums or assets out

 

of the person’s nominee’s flexi-access drawdown fund in

 

respect of the arrangement,

 

(db)    

is a payment to the person of an annuity purchased using sums

 

or assets held for the purposes of an arrangement relating to

 

the person under the scheme and would, if the scheme were a

 

registered pension scheme, be a payment of a successors’

 

short-term annuity (within the meaning of paragraph 27H of

 

Schedule 28 to FA 2004) purchased using sums or assets out

 

of the person’s successor’s flexi-access drawdown fund in

 

respect of the arrangement,”

 

Member’s explanatory statement

 

See the explanatory statement to amendment 9.

 


 
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