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| | (2) | In section 573 (foreign pensions to which section 573 applies) after subsection |
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| | “(2A) | This section does not apply to pension within section 574(1)(ba) if— |
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| | (a) | the pension is paid in respect of a deceased member of a |
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| | pension scheme who had not reached the age of 75 at the date |
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| | (b) | no pension payments to the person entitled to the pension |
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| | were made before 6 April 2015 in respect of the deceased |
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| | member out of any of the following— |
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| | (i) | the fund from which the pension is paid, and |
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| | (ii) | any fund represented (to any extent) by that fund. |
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| | (2B) | This section does not apply to pension within section 574(1)(bb) if the |
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| | pension is paid in respect of a deceased individual who had not |
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| | reached the age of 75 at the date of death. |
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| | (2C) | Subsection (2A) is subject to subsection (2D). |
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| | (2D) | This section does apply to pension within section 574(1)(ba) paid in |
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| | respect of a deceased member of a pension scheme who had not |
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| | reached the age of 75 at the date of death if the pension is paid in |
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| | respect of sums or assets held for the purposes of the pension scheme |
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| | under which the pension is paid (“the paying scheme”) that would, if |
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| | the paying scheme were a registered pension scheme, be sums or |
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| | |
| | (a) | representing unused uncrystallised funds (within the meaning |
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| | of paragraph 27E(4) and (5) of Schedule 28 to FA 2004) in the |
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| | (b) | designated on or after 6 April 2015 as available for the |
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| | payment of dependants’ drawdown pension or nominees’ |
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| | (c) | not so designated before the end of the period of two years |
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| | beginning with the earlier of the day on which the scheme |
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| | manager of the paying scheme first knew of the member’s |
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| | death and the day on which the scheme manager could first |
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| | reasonably have been expected to have known of it.” |
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| | (3) | In section 574(1) (foreign pensions: meaning of “pension”)— |
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| | (a) | in paragraph (b) (“pension” includes amounts corresponding to |
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| | income withdrawal or dependants’ income withdrawal)— |
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| | (i) | omit “or dependants’ income withdrawal”, and |
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| | (ii) | for “paragraphs 7 and 21” substitute “paragraph 7”, and |
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| | (b) | before the “and” at the end of paragraph (b) insert— |
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| | “(ba) | an amount paid under a relevant non-UK scheme or |
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| | an overseas pension scheme which, if the scheme |
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| | were a registered pension scheme, would be |
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| | dependants’ income withdrawal or nominees’ income |
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| | withdrawal (within the meaning of paragraphs 21 and |
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| | 27D of Schedule 28 to FA 2004), |
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| | (bb) | an amount paid under a relevant non-UK scheme or |
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| | an overseas pension scheme which, if the scheme |
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| | were a registered pension scheme, would be |
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| | successors’ income withdrawal (within the meaning |
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| | of paragraph 27J of Schedule 28 to FA 2004),”. |
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| | (4) | In section 579A(1) (section applies to pensions under registered pension |
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| | schemes, subject to subsection (2)) after “subsection (2)” insert “and section |
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| | (5) | After section 579C insert— |
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| | “579CZA | Exemption for beneficiaries’ income withdrawal in some cases |
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| | (1) | Section 579A does not apply to dependants’ income withdrawal or |
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| | nominees’ income withdrawal if it is paid— |
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| | (a) | in respect of a deceased member of a registered pension |
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| | scheme who had not reached the age of 75 at the date of the |
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| | (b) | to a person from the person’s— |
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| | (i) | dependant’s drawdown pension fund, |
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| | (ii) | dependant’s flexi-access drawdown fund, or |
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| | (iii) | nominee’s flexi-access drawdown fund, |
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| | | in respect of a money purchase arrangement under a registered |
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| | (2) | Section 579A does not apply to successors’ income withdrawal if it is |
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| | (a) | in respect of a deceased beneficiary of a deceased member of |
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| | a registered pension scheme where the beneficiary had not |
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| | reached the age of 75 at the date of the beneficiary’s death, |
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| | (b) | to a person from the person’s successor’s flexi-access |
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| | drawdown fund in respect of a money purchase arrangement |
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| | under a registered pension scheme, |
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| | | and here “beneficiary” means dependant, nominee or successor. |
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| | (3) | Subsection (1) is subject to the following provisions of this section. |
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| | (4) | Section 579A does apply to dependants’ income withdrawal paid on |
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| | or after 6 April 2015 to a person from the person’s dependant’s |
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| | drawdown pension fund in respect of a money purchase arrangement |
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| | under a registered pension scheme (“the drawdown fund”) if before 6 |
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| | (a) | any payment of dependants’ income withdrawal was made |
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| | (i) | the drawdown fund, or |
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| | (ii) | any fund represented (to any extent) by the drawdown |
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| | (b) | any payment was made of a dependants’ short-term annuity |
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| | purchased using sums or assets out of— |
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| | (i) | the drawdown fund, or |
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| | (ii) | any fund represented (to any extent) by the drawdown |
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| | (5) | Section 579A does apply to dependants’ income withdrawal paid in |
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| | respect of a deceased member of a registered pension scheme to a |
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| | person from the person’s dependant’s flexi-access drawdown fund in |
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| | respect of a money purchase arrangement under a registered pension |
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| | scheme (“the new fund”) if— |
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| | (a) | any of the sums or assets that make up the new fund— |
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| | (i) | became newly-designated dependant funds under |
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| | paragraph 22A(2)(b) of Schedule 28 to FA 2004 or as |
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| | a result of the operation of any of paragraphs 22B to |
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| | (ii) | arise, or (directly or indirectly) derive, from any such |
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| | newly-designated dependant funds or from sums or |
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| | assets which so arise or derive, |
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| | (b) | before 6 April 2015 any payment of dependants’ income |
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| | withdrawal in respect of the deceased member was made to |
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| | the person from the person’s dependant’s drawdown pension |
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| | fund in respect of a money purchase arrangement under a |
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| | registered pension scheme, and |
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| | (c) | any of the sums or assets that made up that fund at the time of |
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| | that payment to any extent make up, or are represented by |
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| | sums or assets that to any extent make up, the new fund. |
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| | (6) | Where relevant unused uncrystallised funds— |
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| | (a) | are designated on or after 6 April 2015 as available for the |
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| | payment of dependants’ drawdown pension or nominees’ |
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| | (b) | as a result of the designation make up (to any extent) a |
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| | person’s dependant’s flexi-access drawdown fund or |
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| | nominee’s flexi-access drawdown fund in respect of a money |
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| | purchase arrangement under a registered pension scheme, but |
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| | (c) | are not so designated before the end of the relevant two-year |
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| | |
| | | section 579A does apply to dependants’ income withdrawal or |
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| | nominees’ income withdrawal paid to the person from the fund so far |
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| | as it is paid in respect of sums or assets for the time being representing |
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| | the whole or any part of those relevant unused uncrystallised funds. |
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| | “dependant”, “nominee” and “successor” have the meaning given |
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| | (respectively) by paragraphs 15, 27A and 27F of Schedule 28 to FA |
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| | “dependant’s drawdown pension fund”, “dependant’s flexi-access |
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| | drawdown fund”, “nominee’s flexi-access drawdown fund” and |
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| | “successor’s flexi-access drawdown fund” have the meaning given |
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| | (respectively) by paragraphs 22, 22A, 27E and 27K of Schedule 28 to |
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| | “money purchase arrangement” has the meaning given by section 152 of |
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| | “the relevant two-year period”, in relation to relevant unused |
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| | uncrystallised funds held for the purposes of a money purchase |
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| | arrangement relating to a deceased individual under a registered |
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| | pension scheme, means the period of two years beginning with the |
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| | earlier of the day on which the scheme administrator of the scheme |
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| | first knew of the individual’s death and the day on which the scheme |
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| | administrator could first reasonably have been expected to have |
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| | (8) | For the purposes of this section, sums or assets held after the death of |
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| | a member of a registered pension scheme for the purposes of a money |
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| | purchase arrangement relating to the member under the scheme are |
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| | “relevant unused uncrystallised funds” if— |
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| | (a) | they are unused uncrystallised funds, and |
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| | (b) | the member had not reached the age of 75 at the date of the |
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| | (9) | Paragraph 27E(4) and (5) of Schedule 28 of FA 2004 (meaning of |
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| | “unused uncrystallised funds”) apply for the purposes of subsection |
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| | (6) | In section 579D (interpretation of sections 579A to 579D)— |
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| | (a) | at the appropriate places insert— |
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| | ““nominees’ income withdrawal” has the meaning given by |
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| | paragraph 27D of that Schedule;”, and |
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| | ““successors’ income withdrawal” has the meaning given by |
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| | paragraph 27J of Schedule 28 to FA 2004.”, and |
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| | (b) | in paragraph (b) of the definition of “pension under a registered |
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| | pension scheme” after “dependants’ income withdrawal” insert “, or |
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| | nominees’ income withdrawal or successors’ income withdrawal,”. |
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| | (7) | The amendments made by sub-paragraphs (2) to (5) have effect in relation to |
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| | pension paid on or after 6 April 2015.” |
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| | Member’s explanatory statement
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| | This new Schedule provides that persons other than dependants can inherit unused drawdown |
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| | funds. For deaths before age 75, lump sum death benefits and flexi-access drawdown pensions |
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| | from these funds can be paid tax free, subject (for example) to the member having sufficient |
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| | available lifetime allowance. |
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| | Bill, as amended, to be reported. |
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