House of Commons Public Bill Committee Proceedings

Session 2014 - 15
Internet Publications
Other Bills before Parliament

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“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

(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),”.

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285

, continued

(3)
The amendments made by this section have effect for the tax year 2015-16 and

subsequent tax years.”

Secretary Iain Duncan Smith

Added  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.”

Secretary Iain Duncan Smith

Added  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.

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286

, continued

(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.”

Secretary Iain Duncan Smith

Added  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.”

Secretary Iain Duncan Smith

Added  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)”.

(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

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287

, continued

entitlement to a money purchase benefit under the scheme

rules,”.”

Secretary Iain Duncan Smith

Added  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)”.

(12)
In subsection (13), after “subsection (2)” insert “, (2A)”.”

Secretary Iain Duncan Smith

Added  NC19

To move the following Clause—

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288

, continued


“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.”

Secretary Iain Duncan Smith

Added  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.

(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.”

Secretary Iain Duncan Smith

Added  NC21

To move the following Clause—

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289

, continued


“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.”

Secretary Iain Duncan Smith

Added  NC22

To move the following Clause—


“Restrictions on conversion of benefits during winding up etc: Northern

Ireland

(1)
In Article 73A of the Pensions (Northern Ireland) Order 1995 (S.I. 1995/3213

(N.I. 22)) (operation of scheme during winding up period), after paragraph (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 Article 73B of that Order (Articles 73 and 73A: supplementary), in paragraphs

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

(3)
In Article 119 of the Pensions (Northern Ireland) Order 2005 (S.I. 2005/255

(N.I. 1)) (restrictions on winding up, discharge of liabilities etc during assessment

period), in paragraph (4), before sub-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,”.”

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290

, continued

Secretary Iain Duncan Smith

Added  NC23

To move the following Clause—


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

Northern Ireland

(1)
Article 122 of the Pensions (Northern Ireland) Order 2005 (S.I. 2005/255

(N.I. 1)) (payment of scheme benefits during assessment period) is amended as

follows.

(2)
In paragraph (1), after “Paragraphs (2)” insert “, (2A)”.

(3)
After paragraph (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 6 were the date on

which the assessment period began.”

(4)
In paragraph (3), omit “But”.

(5)
In paragraph (5), for “paragraph (2)” substitute “paragraphs (2) and (2A)”.

(6)
In paragraph (6), for “paragraph (3)” substitute “paragraphs (2A) and (3)”.

(7)
In paragraph (7), after “Paragraphs (2),” insert “(2A),”.

(8)
In paragraph (8), after “paragraphs (2)” insert “, (2A)”.

(9)
In paragraph (9), for “paragraphs (2) and (3)” substitute “paragraphs (2) to (3)”.

(10)
After paragraph (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 paragraph

(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 paragraph (2A).”

(11)
In paragraph (12), for “paragraph (2)” substitute “paragraphs (2) and (2A)”.

(12)
In paragraph (13), after “paragraph (2)” insert “, (2A)”.”

Secretary Iain Duncan Smith

Added  NC24

To move the following Clause—


“Rights to transfer benefits

Schedule (Rights to transfer benefits) contains amendments that confer new

statutory rights to transfer benefits.”



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