House of Commons Public Bill Committee Proceedings

Session 2014 - 15
Internet Publications
Other Bills before Parliament

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23

, continued

      (2)
In section 573 (foreign pensions to which section 573 applies) after subsection

(2) insert—

“(2A)
This section does not apply to pension within section 574(1)(ba) if—

(a)
the pension is paid in respect of a deceased member of a

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

of death, and

(b)
no pension payments to the person entitled to the pension

were made before 6 April 2015 in respect of the deceased

member out of any of the following—

(i)
the fund from which the pension is paid, and

(ii)
any fund represented (to any extent) by that fund.

(2B)
This section does not apply to pension within section 574(1)(bb) if the

pension is paid in respect of a deceased individual who had not

reached the age of 75 at the date of death.

(2C)
Subsection (2A) is subject to subsection (2D).

(2D)
This section does apply to pension within section 574(1)(ba) paid in

respect of a deceased member of a pension scheme who had not

reached the age of 75 at the date of death if the pension is paid in

respect of sums or assets held for the purposes of the pension scheme

under which the pension is paid (“the paying scheme”) that would, if

the paying scheme were a registered pension scheme, be sums or

assets—

(a)
representing unused uncrystallised funds (within the meaning

of paragraph 27E(4) and (5) of Schedule 28 to FA 2004) in the

deceased member’s case,

(b)
designated on or after 6 April 2015 as available for the

payment of dependants’ drawdown pension or nominees’

drawdown pension, but

(c)
not so designated before the end of the period of two years

beginning with the earlier of the day on which the scheme

manager of the paying scheme first knew of the member’s

death and the day on which the scheme manager could first

reasonably have been expected to have known of it.”

      (3)
In section 574(1) (foreign pensions: meaning of “pension”)—

(a)
in paragraph (b) (“pension” includes amounts corresponding to

income withdrawal or dependants’ income withdrawal)—

(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),”.

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24

, continued

      (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

(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—

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25

, continued

(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,

“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—

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26

, continued

(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.

Clause 3 Agreed to.

Bill, as amended, to be reported.



© Parliamentary copyright	Revised 21 November 2014