Session 2014 - 15
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9

 

House of Commons

 
 

Thursday 20 November 2014

 

Public Bill Committee Proceedings

 

Taxation of Pensions Bill


 

[Fourth and FIfth Sittings]


 

New Clauses

 

Cathy Jamieson

 

Negatived on division  NC3

 

To move the following Clause

 

         

“Pension flexibility: Treasury review

 

(1)    

The Chancellor of the Exchequer shall, within one year of this Act receiving

 

Royal Assent, publish and lay before the House of Commons a comprehensive

 

review of the impact of the changes made by this Act to the Finance Act 2004 and

 

the Income Tax (Earnings and Pensions) Act 2003.

 

(2)    

The information published under subsection (1) must include—

 

(a)    

the distributional impact, by income decile of the population, of changes

 

made by this Act to the Finance Act 2004 and Income Tax (Earnings and

 

Pensions) Act 2003;

 

(b)    

a behavioural analysis;

 

(c)    

an analysis of the impact of this Act on Exchequer revenues;

 

(d)    

an analysis of the impact of this Act on the use of salary sacrifice

 

arrangements; and

 

(e)    

an analysis of the impact of this Act on the purchase of annuities.”

 



 
 

:                                             

10

 

, continued

 
 

New Schedule

 

Mr David Gauke

 

Agreed to  NS1

 

To move the following Schedule

 

“Death of pension scheme member

 

Death benefits: Nominees and successors

 

Drawdown benefits for nominees and successors of deceased scheme members

 

1          

FA 2004 is amended as follows.

 

2    (1)  

Section 167 (the pension death benefit rules) is amended as follows.

 

      (2)  

In pension death benefit rule 1 (pension death benefit may be paid only to

 

dependant of deceased member) after “dependant” insert “, or nominee or

 

successor,”.

 

      (3)  

After pension death benefit rule 3 (pension death benefits which may be paid

 

under a money purchase arrangement to a dependant) insert—

 

    

Pension death benefit rule 3A

 

    

No payment of pension death benefit, other than nominees’ drawdown

 

pension in respect of a money purchase arrangement, may be made to

 

a nominee of the member.

 

    

Pension death benefit rule 3B

 

    

No payment of pension death benefit, other than successors’

 

drawdown pension in respect of a money purchase arrangement, may

 

be made to a successor of the member.”

 

      (4)  

After subsection (1) insert—

 

“(1A)    

For the purposes of this Part, a person becomes entitled to dependants’

 

income withdrawal, nominees’ income withdrawal or successors’

 

income withdrawal under a registered pension scheme whenever sums

 

or assets held for the purposes of an arrangement under the pension

 

scheme are designated as available for the payment of (as the case may

 

be) dependants’ drawdown pension, nominees’ drawdown pension or

 

successors’ drawdown pension.”

 

      (5)  

In subsection (2) (meaning of “pension death benefit”) after “see section 165)”

 

insert “, or a pension payable in respect of the member on the subsequent death

 

of a dependant, nominee or successor of the member”.

 

3    (1)  

In Part 2 of Schedule 28 (interpretation of the pension death benefit rules) at

 

the end insert—

 

“Meaning of “nominee”

 

27A(1)  

“Nominee of the member” means an individual—

 

(a)    

nominated by the member, or

 

(b)    

nominated by the scheme administrator,

 

            

who is not a dependant of the member, but see sub-paragraph (2).

 

      (2)  

In relation to any particular benefits under an arrangement, no

 

individual nominated by the scheme administrator counts as a

 

nominee of the member at any time when there is—


 
 

:                                             

11

 

, continued

 
 

(a)    

a dependant of the member, or

 

(b)    

an individual, or charity, nominated by the member in

 

relation to the benefits.

 

      (3)  

The reference in sub-paragraph (2)(b) 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.

 

Nominees’ drawdown pension

 

27B      

“Nominees’ drawdown pension” means—

 

(a)    

a nominees’ short-term annuity, or

 

(b)    

nominees’ income withdrawal.

 

Nominees’ short-term annuity

 

27C(1)  

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

 

nominees’ short-term annuity if—

 

(a)    

it is purchased by the application of sums or assets

 

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

 

access drawdown fund in respect of an arrangement,

 

(b)    

it is payable by an insurance company,

 

(c)    

the nominee 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 nominee dies.

 

      (2)  

The Commissioners for Her Majesty’s Revenue and Customs may

 

by regulations make provision in relation to cases in which a

 

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

 

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

 

consequence of that—

 

(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 nominees’ short-

 

term annuity (a “new nominees’ 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 nominees’ short-term annuity

 

becomes payable, the new nominees’ 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 nominees’ short-

 

term annuity, and


 
 

:                                             

12

 

, continued

 
 

(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

 

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

 

held for the purposes of the pension scheme.

 

Nominees’ income withdrawal

 

27D      

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

 

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

 

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

 

arrangement.

 

Nominee’s flexi-access drawdown fund

 

27E(1)  

For the purposes of this Part a nominee’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 nominee funds.

 

      (2)  

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

 

an arrangement are newly-designated nominee 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 nominees’ drawdown pension, and

 

(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


 
 

:                                             

13

 

, continued

 
 

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.

 

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


 
 

:                                             

14

 

, continued

 
 

(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—

 

(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


 
 

:                                             

15

 

, continued

 
 

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.

 

      (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.


 
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Revised 21 November 2014