Session 2014 - 15
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Notices of Amendments:                               

1002

 

, continued

 
 

Secretary Iain Duncan Smith

 

NC12

 

To move the following Clause

 

         

“Independent advice: consequential amendments - Northern Ireland

 

(1)    

The Pension Schemes (Northern Ireland) Act 1993 is amended as follows.

 

(2)    

In section 95 (trustees’ duties after exercise of option), after subsection (1)

 

insert—

 

“(1A)    

Subsection (2) does not apply if—

 

(a)    

the trustees or managers have been unable to carry out the check

 

required by section (Independent advice in respect of

 

conversions and transfers: Northern Ireland) of the Pension

 

Schemes Act 2014 by reason of factors outside their control, or

 

(b)    

the trustees or managers have carried out the check required by

 

section (Independent advice in respect of conversions and

 

transfers: Northern Ireland) of the Pension Schemes Act 2014

 

but the check did not confirm that the member had received

 

appropriate independent advice.”

 

(3)    

In section 97J (time for compliance with transfer notice in respect of pension

 

credit benefits), after subsection (2) insert—

 

“(2A)    

Subsection (1) does not apply if—

 

(a)    

the trustees or managers have been unable to carry out the check

 

required by section (Independent advice in respect of

 

conversions and transfers: Northern Ireland) of the Pension

 

Schemes Act 2014 by reason of factors outside their control, or

 

(b)    

the trustees or managers have carried out the check required by

 

section (Independent advice in respect of conversions and

 

transfers: Northern Ireland) of the Pension Schemes Act 2014

 

but the check did not confirm that the member had received

 

appropriate independent advice.””

 

Member’s explanatory statement

 

This amendment is consequential upon NC10.

 


 

Secretary Iain Duncan Smith

 

NC13

 

To move the following Clause

 

         

“Independent advice: income tax exemption

 

(1)    

In Part 4 of the Income Tax (Earnings and Pensions) Act 2003 (employment

 

income: exemptions), in Chapter 9 (exemptions: pension provision), after section

 

308A insert—

 

“308B

Independent advice in respect of conversions and transfers of pension

 

scheme benefits

 

(1)    

No liability to income tax arises in respect of—

 

(a)    

the provision to an employee or former employee of appropriate

 

independent advice, or


 
 

Notices of Amendments:                               

1003

 

, continued

 
 

(b)    

the payment or reimbursement, to or in respect of an employee

 

or former employee, of the cost of such advice,

 

    

if conditions A to C are met.

 

(2)    

Condition A is that the provision, payment or reimbursement is required

 

by regulations under section (Power to require employer to arrange

 

advice for purposes of section (Independent advice in respect of

 

conversions and transfers: Great Britain)) or (Power to require

 

employer to arrange advice for purposes of section (Independent advice

 

in respect of conversions and transfers: Northern Ireland)) of the

 

Pension Schemes Act 2014 (power to require employer to arrange

 

independent advice in respect of conversions and transfers).

 

(3)    

If condition A is met only as respects part of the payment or

 

reimbursement because the amount of the payment or reimbursement

 

exceeds the amount required to be paid or reimbursed, subsection (1)

 

applies in respect of that part.

 

(4)    

Condition B is that the provision, payment or reimbursement is not

 

pursuant to relevant salary sacrifice arrangements.

 

(5)    

Condition C is that such other requirements as may be specified in

 

regulations made by the Treasury are satisfied in relation to the provision,

 

payment or reimbursement.

 

(6)    

In this section—

 

“appropriate independent advice”—

 

(a)    

in relation to England and Wales and Scotland, has the meaning

 

given by regulations under section (Independent advice in

 

respect of conversions and transfers: Great Britain) of the

 

Pension Schemes Act 2014;

 

(b)    

in relation to Northern Ireland, has the meaning given by

 

regulations under section (Independent advice in respect of

 

conversions and transfers: Northern Ireland) of that Act;

 

“relevant salary sacrifice arrangements” means arrangements (whenever

 

made, whether before or after the employment began) under which an

 

employee gives up the right to receive an amount of general earnings or

 

specific employment income in return for the provision of appropriate

 

independent advice or the payment or reimbursement of the cost of such

 

advice.”

 

(2)    

In that Part of that Act, in section 228 (effect of exemptions on liability under

 

provisions outside Part 2), in subsection (2), after paragraph (d) insert—

 

“(da)    

section 308B (independent advice in respect of conversions and

 

transfers of pension scheme benefits),”.

 

(3)    

The amendments made by this section have effect for the tax year 2015-16 and

 

subsequent tax years.”

 

Member’s explanatory statement

 

This amendment is consequential upon NC7, NC8, NC10 and NC11. It prevents the cost of

 

independent financial advice, relating to the conversion or transfer of certain pension benefits,

 

that is paid for or reimbursed by an employer from being treated as a taxable benefit in kind for

 

income tax purposes if conditions are met.

 



 
 

Notices of Amendments:                               

1004

 

, continued

 
 

Secretary Iain Duncan Smith

 

NC14

 

To move the following Clause

 

         

“Sums or assets that may be designated as available for drawdown: Great

 

Britain

 

(1)    

In the case of a member of an occupational pension scheme the only sums or

 

assets that may be designated as available for the payment of drawdown pension

 

for the member under the scheme are sums or assets held for the purposes of

 

providing money purchase benefits to or in respect of the member.

 

(2)    

In the case of a survivor of a member of an occupational pension scheme the only

 

sums or assets that may be designated as available for the payment of dependants’

 

drawdown pension for the survivor under the scheme are sums or assets held for

 

the purposes of providing money purchase benefits to the survivor.

 

(3)    

This section overrides any provision of an occupational pension scheme to the

 

extent that there is a conflict.

 

(4)    

This section does not apply in relation to sums or assets designated before 6 April

 

2015.”

 

Member’s explanatory statement

 

This ensures that occupational pension schemes may only pay drawdown pensions out of assets

 

held for the purpose of providing money purchase benefits. The requirement applies to assets

 

designated on or after 6 April 2015 as available for payment of drawdown, and overrides any

 

conflicting provision in scheme rules.

 


 

Secretary Iain Duncan Smith

 

NC15

 

To move the following Clause

 

         

“Provision about conversion of certain benefits for drawdown: Great Britain

 

(1)    

The Secretary of State may by regulations make provision about the conversion

 

of benefits under an occupational pension scheme in circumstances where—

 

(a)    

a member of the scheme, or a survivor of a member of the scheme, has

 

subsisting rights in respect of any flexible benefits other than money

 

purchase benefits under the scheme, and

 

(b)    

the member or survivor exercises an option to convert any of the benefits

 

into money purchase benefits for the purposes of enabling sums or assets

 

to be designated as available for the payment of drawdown pension or

 

dependants’ drawdown pension.

 

(2)    

Regulations under subsection (1) may, in particular, make provision about how

 

the rate or amount of any benefits not converted are to be calculated in future.

 

(3)    

In relation to a conversion that takes place before the member or survivor reaches

 

normal pension age, regulations under subsection (1) may in particular make

 

provision about—

 

(a)    

the manner in which benefits are to be calculated for the purpose of

 

converting them into money purchase benefits;

 

(b)    

the use of any power to reduce benefits.

 

(4)    

Regulations made under this section may include provision for them to override

 

the provisions of a pension scheme to the extent that there is a conflict.”

 

Member’s explanatory statement

 

This provides a power to make regulations in relation to the conversion of flexible benefits into


 
 

Notices of Amendments:                               

1005

 

, continued

 
 

money purchase benefits for the purpose of paying a drawdown pension, where an occupational

 

scheme offers that option to members or their survivors. The clause outlines particular areas

 

which such regulations may cover.

 


 

Secretary Iain Duncan Smith

 

NC16

 

To move the following Clause

 

         

“Provision about calculation of lump sums: Great Britain

 

(1)    

The Secretary of State may by regulations make provision about the calculation

 

of lump sums in circumstances where—

 

(a)    

a member of an occupational pension scheme, or a survivor of a member

 

of the scheme, has subsisting rights in respect of any flexible benefits

 

other than money purchase benefits under the scheme, and

 

(b)    

the member or survivor exercises an option to be paid a lump sum in

 

respect of any of those benefits.

 

(2)    

Regulations under subsection (1) may, in particular, make provision about how

 

the rate or amount of any remaining benefits are to be calculated in future.

 

(3)    

In a case where a member or survivor exercises an option to be paid a lump sum

 

before reaching normal pension age, regulations under subsection (1) may in

 

particular make provision about—

 

(a)    

the manner in which benefits are to be calculated for the purpose of

 

determining the amount available for the payment of the lump sum;

 

(b)    

the use of any power to reduce the amount of the lump sum.

 

(4)    

Regulations made under this section may include provision for them to override

 

the provisions of a pension scheme to the extent that there is a conflict.”

 

Member’s explanatory statement

 

This provides a power to make regulations in relation to the payment of lump sums by occupational

 

pension schemes in respect of flexible benefits. The clause outlines particular areas which such

 

regulations may cover.

 


 

Secretary Iain Duncan Smith

 

NC17

 

To move the following Clause

 

         

“Restrictions on conversion of benefits during winding up etc: Great Britain

 

(1)    

In section 73A of the Pensions Act 1995 (operation of scheme during winding up

 

period), after subsection (6) insert—

 

“(6A)    

During the winding up period no right or entitlement of any member, or

 

of any other person in respect of a member, to a benefit that is not a

 

money purchase benefit is to be converted into, or replaced with, a right

 

or entitlement to a money purchase benefit under the scheme rules.”

 

(2)    

In section 73B of that Act (sections 73 and 73A: supplementary), in subsections

 

(1) and (3), after “section 73A(3)” insert “or (6A)”.


 
 

Notices of Amendments:                               

1006

 

, continued

 
 

(3)    

In section 135 of the Pensions Act 2004 (restrictions on winding up, discharge of

 

liabilities etc during assessment period), in subsection (4), before paragraph (a)

 

insert—

 

“(za)    

no right or entitlement of any member, or of any other person in

 

respect of a member, to a benefit that is not a money purchase

 

benefit is to be converted into, or replaced with, a right or

 

entitlement to a money purchase benefit under the scheme

 

rules,”.”

 

Member’s explanatory statement

 

Where an occupational pension scheme is winding up or being assessed for transfer into the

 

Pension Protection Fund, this amendment prevents any right under the scheme to a benefit which

 

is not a money purchase benefit being converted into a money purchase benefit.

 


 

Secretary Iain Duncan Smith

 

NC18

 

To move the following Clause

 

         

“Restriction on payment of lump sums during PPF assessment period: Great

 

Britain

 

(1)    

Section 138 of the Pensions Act 2004 (payment of scheme benefits during

 

assessment period) is amended as follows.

 

(2)    

In subsection (1), after “Subsections (2)” insert “, (2A)”.

 

(3)    

After subsection (2) insert—

 

“(2A)    

Benefits in the form of a lump sum may be paid to or in respect of a

 

member under the scheme rules during the assessment period only in the

 

circumstances in which, and to the extent to which, lump sum

 

compensation would be payable to or in respect of the member in

 

accordance with this Chapter if—

 

(a)    

the Board assumed responsibility for the scheme in accordance

 

with this Chapter, and

 

(b)    

the assessment date referred to in Schedule 7 were the date on

 

which the assessment period began.”

 

(4)    

In subsection (3), omit “But”.

 

(5)    

In subsection (5), for “subsection (2)” substitute “subsections (2) and (2A)”.

 

(6)    

In subsection (6), for “subsection (3)” substitute “subsections (2A) and (3)”.

 

(7)    

In subsection (7), after “Subsections (2),” insert “(2A),”.

 

(8)    

In subsection (8), after “subsections (2)” insert “, (2A)”.

 

(9)    

In subsection (9), for “subsections (2) and (3)” substitute “subsections (2) to (3)”.

 

(10)    

After subsection (9) insert—

 

“(9A)    

Regulations may make provision as to circumstances in which benefits in

 

the form of a lump sum are to be treated for the purposes of subsection

 

(2A) as being paid in the circumstances in which lump sum compensation

 

would be payable in accordance with this Chapter.

 

(9B)    

Regulations may create exceptions to subsection (2A).”

 

(11)    

In subsection (12), for “subsection (2)” substitute “subsections (2) and (2A)”.


 
 

Notices of Amendments:                               

1007

 

, continued

 
 

(12)    

In subsection (13), after “subsection (2)” insert “, (2A)”.”

 

Member’s explanatory statement

 

This clarifies restrictions on the payment of benefits by an occupational pension scheme which is

 

being assessed for transfer into the Pension Protection Fund. It specifies the types of lump sums

 

that can be paid, and includes a power to make further provision in relation to particular

 

circumstances.

 


 

Secretary Iain Duncan Smith

 

NC19

 

To move the following Clause

 

         

“Sums or assets that may be designated as available for drawdown: Northern

 

Ireland

 

(1)    

In the case of a member of an occupational pension scheme the only sums or

 

assets that may be designated as available for the payment of drawdown pension

 

for the member under the scheme are sums or assets held for the purposes of

 

providing money purchase benefits to or in respect of the member.

 

(2)    

In the case of a survivor of a member of an occupational pension scheme the only

 

sums or assets that may be designated as available for the payment of dependants’

 

drawdown pension for the survivor under the scheme are sums or assets held for

 

the purposes of providing money purchase benefits to the survivor.

 

(3)    

This section overrides any provision of an occupational pension scheme to the

 

extent that there is a conflict.

 

(4)    

This section does not apply in relation to sums or assets designated before 6 April

 

2015.”

 

Member’s explanatory statement

 

This ensures that occupational pension schemes may only pay drawdown pensions out of assets

 

held for the purpose of providing money purchase benefits. The requirement applies to assets

 

designated on or after 6 April 2015 as available for payment of drawdown, and overrides any

 

conflicting provision in scheme rules.

 


 

Secretary Iain Duncan Smith

 

NC20

 

To move the following Clause

 

         

“Provision about conversion of certain benefits for drawdown: Northern

 

Ireland

 

(1)    

The Department for Social Development in Northern Ireland may by regulations

 

make provision about the conversion of benefits under an occupational pension

 

scheme in circumstances where—

 

(a)    

a member of the scheme, or a survivor of a member of the scheme, has

 

subsisting rights in respect of any flexible benefits other than money

 

purchase benefits under the scheme, and

 

(b)    

the member or survivor exercises an option to convert any of the benefits

 

into money purchase benefits for the purposes of enabling sums or assets

 

to be designated as available for the payment of drawdown pension or

 

dependants’ drawdown pension.


 
 

Notices of Amendments:                               

1008

 

, continued

 
 

(2)    

Regulations under subsection (1) may, in particular, make provision about how

 

the rate or amount of any benefits not converted are to be calculated in future.

 

(3)    

In relation to a conversion that takes place before the member or survivor reaches

 

normal pension age, regulations under subsection (1) may in particular make

 

provision about—

 

(a)    

the manner in which benefits are to be calculated for the purpose of

 

converting them into money purchase benefits;

 

(b)    

the use of any power to reduce benefits.

 

(4)    

Regulations made under this section may include provision for them to override

 

the provisions of a pension scheme to the extent that there is a conflict.”

 

Member’s explanatory statement

 

This provides a power to make regulations in relation to the conversion of flexible benefits into

 

money purchase benefits for the purpose of paying a drawdown pension, where an occupational

 

scheme offers that option to members or their survivors. The clause outlines particular areas

 

which such regulations may cover.

 


 

Secretary Iain Duncan Smith

 

NC21

 

To move the following Clause

 

         

“Provision about calculation of lump sums: Northern Ireland

 

(1)    

The Department for Social Development in Northern Ireland may by regulations

 

make provision about the calculation of lump sums in circumstances where—

 

(a)    

a member of an occupational pension scheme, or a survivor of a member

 

of the scheme, has subsisting rights in respect of any flexible benefits

 

other than money purchase benefits under the scheme, and

 

(b)    

the member or survivor exercises an option to be paid a lump sum in

 

respect of any of those benefits.

 

(2)    

Regulations under subsection (1) may, in particular, make provision about how

 

the rate or amount of any remaining benefits are to be calculated in future.

 

(3)    

In a case where a member or survivor exercises an option to be paid a lump sum

 

before reaching normal pension age, regulations under subsection (1) may in

 

particular make provision about—

 

(a)    

the manner in which benefits are to be calculated for the purpose of

 

determining the amount available for the payment of the lump sum;

 

(b)    

the use of any power to reduce the amount of the lump sum.

 

(4)    

Regulations made under this section may include provision for them to override

 

the provisions of a pension scheme to the extent that there is a conflict.”

 

Member’s explanatory statement

 

This provides a power to make regulations in relation to the payment of lump sums by occupational

 

pension schemes in respect of flexible benefits. The clause outlines particular areas which such

 

regulations may cover.

 



 
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