Session 2014 - 15
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Notices of Amendments:                               

30

 

, continued

 
 

(ii)    

were, immediately before being so designated,

 

unused drawdown funds or unused uncrystallised

 

funds, or

 

(b)    

they arise, or (directly or indirectly) derive, from newly-

 

designated nominee funds under paragraph (a) or from

 

sums or assets which so arise or derive.

 

      (3)  

Sums or assets held for the purposes of an arrangement after the

 

member’s death are unused drawdown funds if—

 

(a)    

immediately before the member’s death, they were held for

 

the purposes of the arrangement and represented (whether

 

alone or with other sums or assets) the member’s flexi-

 

access drawdown fund, or drawdown pension fund, in

 

respect of the arrangement, or

 

(b)    

they arise, or (directly or indirectly) derive, from unused

 

drawdown funds under paragraph (a) or from sums or

 

assets which so arise or derive.

 

      (4)  

In the case of a cash balance arrangement, sums or assets held for

 

the purposes of the arrangement after the member’s death are

 

unused uncrystallised funds if—

 

(a)    

they represent the whole or any part of the sum that would

 

have been available immediately before the member’s

 

death for the provision of benefits to or in respect of the

 

member if entitlement had arisen immediately before the

 

member’s death to all benefits under the arrangement to

 

which entitlement had not previously arisen, and

 

(b)    

since the member’s death they have not been designated as

 

available for the payment of dependants’ drawdown

 

pension, not been designated as available for the payment

 

of nominees’ drawdown pension, not been applied towards

 

the provision of a dependants’ annuity and not been applied

 

towards the provision of a dependants’ scheme pension.

 

      (5)  

In the case of any other money purchase arrangement, sums or

 

assets held for the purposes of the arrangement after the member’s

 

death are unused uncrystallised funds if—

 

(a)    

immediately before the member’s death they were held for

 

the purposes of the arrangement and at that time—

 

(i)    

were not member-designated funds,

 

(ii)    

were not newly-designated funds,

 

(iii)    

had not been applied towards the provision of a

 

scheme pension, and

 

(iv)    

had not been applied towards the provision of a

 

dependants’ scheme pension, or

 

(b)    

they arise, or (directly or indirectly) derive, from unused

 

uncrystallised funds under paragraph (a) or from sums or

 

assets which so arise or derive,

 

            

and since the member’s death they have not been designated as

 

available for the payment of dependants’ drawdown pension, not

 

been designated as available for the payment of nominees’

 

drawdown pension, not been applied toward the provision of a

 

dependants’ annuity and not been applied toward the provision of a

 

dependants’ scheme pension.


 
 

Notices of Amendments:                               

31

 

, continued

 
 

Meaning of “successor”

 

27F(1)  

“Successor of the member” means an individual—

 

(a)    

nominated by a dependant of the member,

 

(b)    

nominated by a nominee of the member,

 

(c)    

nominated by a successor of the member, or

 

(d)    

nominated by the scheme administrator,

 

            

but see sub-paragraph (2).

 

      (2)  

In relation to any particular benefits under an arrangement relating

 

to a dependant, nominee or successor of the member (“the

 

beneficiary”) in that capacity, no individual nominated by the

 

scheme administrator counts as a successor of the member at any

 

time after the beneficiary’s death when there is an individual, or

 

charity, nominated by the beneficiary in relation to the benefits.

 

      (3)  

A reference in sub-paragraph (2) to being nominated in relation to

 

particular benefits under an arrangement includes—

 

(a)    

a reference to being nominated in relation to the scheme,

 

(b)    

a reference to being nominated in relation to arrangements

 

that include the arrangement,

 

(c)    

a reference to being nominated in relation to the

 

arrangement, and

 

(d)    

a reference to being nominated in relation to benefits that

 

include the particular benefits.

 

      (4)  

Where a successor of the member is an individual who is also a

 

dependant of the member, the individual in the capacity of a

 

successor of the member is to be treated as not also being a

 

dependant of the member.

 

Successors’ drawdown pension

 

27G      

“Successors’ drawdown pension” means—

 

(a)    

a successors’ short-term annuity, or

 

(b)    

successors’ income withdrawal.

 

Successors’ short-term annuity

 

27H(1)  

For the purposes of this Part an annuity payable to a successor is a

 

successors’ short-term annuity if—

 

(a)    

it is purchased by the application of sums or assets

 

representing the whole or any part of the successor’s flexi-

 

access drawdown fund in respect of an arrangement,

 

(b)    

it is payable by an insurance company,

 

(c)    

the successor becomes entitled to it on or after 6 April

 

2015, and

 

(d)    

it is payable for a term which does not exceed five years

 

and ends before the successor dies.

 

      (2)  

The Commissioners for Her Majesty’s Revenue and Customs may

 

by regulations make provision in relation to cases in which a

 

successors’ short-term annuity payable to a person (“the original

 

successors’ short-term annuity”) ceases to be payable and in

 

consequence of that—


 
 

Notices of Amendments:                               

32

 

, continued

 
 

(a)    

sums or assets (or both) are transferred from the insurance

 

company to another insurance company and are applied—

 

(i)    

towards the provision of another successors’ short-

 

term annuity (a “new successors’ short-term

 

annuity”) by the other insurance company, or

 

(ii)    

otherwise, or

 

(b)    

sums or assets are transferred to the relevant registered

 

pension scheme.

 

      (3)  

The regulations may provide that—

 

(a)    

in a case where a new successors’ short-term annuity

 

becomes payable, the new successors’ short-term annuity

 

is to be treated, to such extent as is prescribed by the

 

regulations and for such of the purposes of this Part as are

 

so prescribed, as if it were the original successors’ short-

 

term annuity, and

 

(b)    

in any other case, the relevant registered pension scheme is

 

to be treated as making an unauthorised payment in respect

 

of the member of an amount equal to the aggregate of the

 

sums, and the market value of the assets, transferred.

 

      (4)  

For the purposes of sub-paragraphs (2) and (3) a registered pension

 

scheme is the relevant registered pension scheme if the original

 

successors’ short-term annuity was acquired using sums or assets

 

held for the purposes of the pension scheme.

 

Successors’ income withdrawal

 

27J      

“Successors’ income withdrawal” means an amount (other than an

 

annuity) which the successor is entitled to be paid from the

 

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

 

arrangement.

 

Successor’s flexi-access drawdown fund

 

27K(1)  

For the purposes of this Part a successor’s flexi-access drawdown

 

fund in respect of an arrangement consists of such of the sums or

 

assets held for the purposes of the arrangement as are newly-

 

designated successor funds.

 

      (2)  

For the purposes of this Part sums or assets held for the purposes of

 

an arrangement are newly-designated successor funds if—

 

(a)    

they—

 

(i)    

have, at any time on or after 6 April 2015, been

 

designated under the arrangement as available for

 

the payment of successors’ drawdown pension,

 

and

 

(ii)    

were, immediately before being so designated,

 

unused drawdown funds of the same deceased

 

dependant, nominee or successor of the member,

 

or

 

(b)    

they arise, or (directly or indirectly) derive, from newly-

 

designated successor funds under paragraph (a) or from

 

sums or assets which so arise or derive.


 
 

Notices of Amendments:                               

33

 

, continued

 
 

      (3)  

Sums or assets held for the purposes of an arrangement after the

 

death of a dependant, nominee or successor (“the beneficiary”) are

 

unused drawdown funds of the beneficiary’s if—

 

(a)    

immediately before the beneficiary’s death, they were held

 

for the purposes of the arrangement and represented

 

(whether alone or with other sums or assets) the

 

beneficiary’s—

 

(i)    

dependant’s flexi-access drawdown fund,

 

(ii)    

dependant’s drawdown pension fund,

 

(iii)    

nominee’s flexi-access drawdown fund, or

 

(iv)    

successor’s flexi-access drawdown fund,

 

    

in respect of the arrangement, or

 

(b)    

they arise, or (directly or indirectly) derive, from unused

 

drawdown funds of the beneficiary’s under paragraph (a) or

 

from sums or assets which so arise or derive.”

 

      (2)  

The provisions inserted by sub-paragraph (1) have effect even in relation to

 

cases where the member concerned, or any dependant concerned, dies before

 

6 April 2015.

 

Nominees and successors: further drawdown amendments

 

4          

In section 169(1D) (regulations about transfers of drawdown funds) after

 

paragraph (aa) (which is inserted by this Act) insert “or

 

(ab)    

a nominee’s flexi-access drawdown fund, or

 

(ac)    

a successor’s flexi-access drawdown fund,”.

 

5          

In section 172(1)(a) (assignment of rights or benefits) after “dependant” insert

 

“, nominee or successor”.

 

6          

In section 172A(1)(a) (surrender of rights or benefits) after “dependant” insert

 

“, nominee or successor”.

 

7          

In section 172A(5) (exceptions to provisions on surrender: entitlement to

 

benefits)—

 

(a)    

in paragraph (b) after “dependant” insert “, or nominee,”,

 

(b)    

after paragraph (b) insert—

 

“(ba)    

a surrender (or agreement to surrender) by a

 

dependant, nominee or successor of the member (“the

 

beneficiary”) in return for the conferring, on a

 

successor of the member, of an entitlement to benefits

 

after the beneficiary’s death,”, and

 

(c)    

in paragraph (c) for “or dependant” substitute “, dependant, nominee

 

or successor”.

 

8          

In section 172A(5A) (further provision on surrender exceptions)—

 

(a)    

after “dependant”, in the first place it occurs, insert “, or nominee,”,

 

and

 

(b)    

after “dependant”, in the second place it occurs, insert “or nominee”.

 

9          

In section 172A after subsection (5A) insert—

 

“(5B)    

Subsection (5)(ba) applies only if the entitlement is held (or is to be

 

held) by the successor under an arrangement under the pension

 

scheme relating to the beneficiary or successor.”

 

10         

In section 172A(7) (exceptions to provisions on surrender: prospective

 

entitlements)—


 
 

Notices of Amendments:                               

34

 

, continued

 
 

(a)    

in the opening words after “dependant” insert “or nominee or

 

successor”, and

 

(b)    

in paragraph (a) after “dependant” insert “, or nominee or successor,”.

 

11         

In section 172B(2) (rights of a “relevant member”)—

 

(a)    

in paragraph (a) after “dependant” insert “or nominee or successor”,

 

and

 

(b)    

after paragraph (aa) insert—

 

“(ab)    

rights representing the nominee’s flexi-access

 

drawdown fund or successor’s flexi-access

 

drawdown fund in respect of an arrangement under

 

the pension scheme,”.

 

12         

In section 172B(7A) (section does not apply to certain increases in rights)

 

before “dependant’s drawdown pension fund” (in both places) insert

 

“nominee’s flexi-access drawdown fund, successor’s flexi-access drawdown

 

fund,”.

 

13         

In section 182(3) (value of arrangement for purposes of borrowing limits) after

 

paragraph (b) insert—

 

“(ba)    

the amount of such of the sums and the market value of such

 

of the assets as represent nominees’ flexi-access drawdown

 

funds in respect of the arrangement (if any),

 

(bb)    

the amount of such of the sums and the market value of such

 

of the assets as represent successors’ flexi-access drawdown

 

funds in respect of the arrangement (if any),”.

 

14         

In section 280(2) (index of defined expressions) at the appropriate places

 

insert—

 

“dependant (of a member of a

paragraph 15 of Schedule 28”

 
 

registered pension scheme)

  
 

“nominee (of a member of a

paragraph 27A of Schedule 28”

 
 

registered pension scheme)

  
 

“nominees’ drawdown pension

paragraph 27B of Schedule 28”

 
 

“nominee’s flexi-access drawdown

paragraph 27E of Schedule 28”

 
 

fund

  
 

“nominees’ income withdrawal

paragraph 27D of Schedule 28”

 
 

“nominees’ short-term annuity

paragraph 27C of Schedule 28”

 
 

“successor (of a member of a

paragraph 27F of Schedule 28”

 
 

registered pension scheme)

  
 

“successors’ drawdown pension

paragraph 27G of Schedule 28”

 
 

“successor’s flexi-access

paragraph 27K of Schedule 28”

 
 

drawdown fund

  
 

“successors’ income withdrawal

paragraph 27J of Schedule 28”

 
 

“successors’ short-term annuity

paragraph 27H of Schedule 28”

 

 
 

Notices of Amendments:                               

35

 

, continued

 
 

Nomination of charities by nominees and successors of deceased scheme members

 

15  (1)  

Paragraph 18 of Schedule 29 (charity lump sum death benefit) is amended as

 

follows.

 

      (2)  

After sub-paragraph (2) insert—

 

  “(2A)  

A lump sum death benefit is also a charity lump sum death benefit

 

if—

 

(a)    

it is paid on the death of an individual who is—

 

(i)    

a nominee of the member, or

 

(ii)    

a successor of the member,

 

(b)    

there are no dependants of the member,

 

(c)    

it is paid in respect of the individual’s nominee’s flexi-

 

access drawdown fund or successor’s flexi-access

 

drawdown fund at the date of the individual’s death in

 

respect of an arrangement relating to the individual in the

 

capacity of a nominee or successor of the member, and

 

(d)    

it is paid to a charity nominated by the member or, if the

 

member made no nomination, by the individual.”

 

      (3)  

In sub-paragraph (3) (cases where lump sum exceeds the permitted maximum)

 

for “or (2)” substitute “, (2) or (2A)”.

 

      (4)  

In sub-paragraph (4) (meaning of “permitted maximum”) after “arrangement”

 

insert “, or the nominee’s or successor’s flexi-access drawdown fund in respect

 

of the arrangement,”.

 

Related amendments in regulations

 

16  (1)  

Regulation 12 of the Registered Pension Schemes (Transfer of Sums and

 

Assets) Regulations 2006 (S.I. 2006/499) (drawdown funds—recognised

 

transfers) is amended as follows.

 

      (2)  

In the heading before “—recognised” insert “and nominee’s flexi-access

 

drawdown fund and successor’s flexi-access drawdown fund”.

 

      (3)  

In paragraph (1) (transfer recognised only if transferred items are only items

 

held under arrangement to which transfer made) before “member’s drawdown

 

pension fund” insert “nominee’s flexi-access drawdown fund, successor’s

 

flexi-access drawdown fund,”.

 

      (4)  

The amendments made by this paragraph—

 

(a)    

come into force on 6 April 2015, and

 

(b)    

are 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 169(1D) and (1E) of FA 2004 (as

 

amended by this Schedule).

 

Lump sum death benefits

 

Special lump sum death benefits charge

 

17  (1)  

Section 206 of FA 2004 (special lump sum death benefits charge) is amended

 

as follows.

 

      (2)  

After subsection (1) insert—

 

“(1ZA)    

In subsection (1) the reference to a member (and to the member’s

 

death) are to be read—


 
 

Notices of Amendments:                               

36

 

, continued

 
 

(a)    

in relation to—

 

(i)    

a drawdown pension fund lump sum death benefit

 

under paragraph 17(2) of Schedule 29, or

 

(ii)    

a flexi-access drawdown fund lump sum death benefit

 

under paragraph 17A(2) of Schedule 29,

 

    

as a reference to a dependant (and to the dependant’s death),

 

(b)    

in relation to a flexi-access drawdown fund lump sum death

 

benefit under paragraph 17A(2A) of Schedule 29, as a

 

reference to a nominee (and to the nominee’s death), and

 

(c)    

in relation to a flexi-access drawdown fund lump sum death

 

benefit under paragraph 17A(2B) of Schedule 29, as a

 

reference to a successor (and to the successor’s death).”

 

      (3)  

After subsection (1A) insert—

 

“(1B)    

The special lump sum death benefits charge also arises where—

 

(a)    

a lump sum death benefit is paid by a registered pension

 

scheme in respect of a member of the scheme who had not

 

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

 

(b)    

the lump sum death benefit is—

 

(i)    

a drawdown pension fund lump sum death benefit

 

under paragraph 17(1) of Schedule 29,

 

(ii)    

a flexi-access drawdown fund lump sum death benefit

 

under paragraph 17A(1) of Schedule 29, or

 

(iii)    

an uncrystallised funds lump sum death benefit, and

 

(c)    

the lump sum death benefit is not paid before the end of the

 

period of two years beginning with the earlier of the day on

 

which the scheme administrator of the scheme first knew of

 

the member’s death and the day on which the scheme

 

administrator could first reasonably have been expected to

 

have known of it.

 

(1C)    

The special lump sum death benefits charge also arises where—

 

(a)    

a lump sum death benefit is paid by a registered pension

 

scheme on the death of a dependant, nominee or successor of

 

a deceased member of the scheme,

 

(b)    

the dependant, nominee or successor (“the beneficiary”) had

 

not reached the age of 75 at the date of the beneficiary’s death,

 

(c)    

the lump sum death benefit is—

 

(i)    

a drawdown pension fund lump sum death benefit

 

under paragraph 17(2) of Schedule 29, or

 

(ii)    

a flexi-access drawdown fund lump sum death benefit

 

under paragraph 17A(2), (2A) or (2B) of Schedule 29,

 

and

 

(d)    

the lump sum death benefit is not paid before the end of the

 

period of two years beginning with the earlier of the day on

 

which the scheme administrator of the scheme first knew of

 

the beneficiary’s death and the day on which the scheme

 

administrator could first reasonably have been expected to

 

have known of it.”


 
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Revised 10 November 2014