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Retirement Income Reform Bill (1-i)

Retirement Income Reform Bill







amend the law relating to the provision of retirement income in respect of

private and personal pensions, annuities and defined and additional

voluntary contribution pension schemes.                                                                            

Be it enacted by the Queen’s most Excellent Majesty, by and with the advice and

consent of the Lords Spiritual and Temporal, and Commons, in this present

Parliament assembled, and by the authority of the same, as follows:—

 1     Amendment of the Income and Corporation Taxes Act 1988

     (1)    The Income and Corporation Taxes Act 1988 is amended as follows.

     (2)    In subsection (1) of section 630 (interpretation)—

           (a)           in the definition of “personal pension scheme”, substitute for the words

“or lump sums” the words “, lump sums, or withdrawals from a


Retirement Income Fund”; and

           (b)           in the definition of “income withdrawal”, insert after the word

“annuity” the words “or withdrawal of funds from a Retirement

Income Fund”.

     (3)    In section 633 (scope of benefits) after subsection (1)(e) there is inserted—


                  “(f)                    the payment to a member of income from a Retirement Income

Fund satisfying the conditions in section 637B”.

     (4)    In section 634 (annuity to member)—

           (a)           after subsection (1), there is inserted—

                  “(1A)                                         Subject to subsection (7) below, the annuity must provide the


member with an annual income not less than the Minimum

Retirement Income set under section 2 of the Retirement Income

Reform Act 2003.”;

           (b)           in subsection (2) the words from “commence” to the end are replaced

by the following—



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Retirement Income Reform Bill



                        “(a)                            before the member attains the age of 50; or

                        (b)                            in relation to a member who is in receipt of benefits

under section 634A before the date of this Act’s entry

into force, after the member attains the age of 75; or

                        (c)                           in relation to any member aged 65 or over as at the date


of this Act’s entry into force, within twelve months of

that date; or

                        (d)                           in relation to all other members, after the member

attains the age of 65.”

           (c)           after subsection (6) there is inserted—


                         “(7) Section 45 of the Sex Discrimination Act 1975 shall not apply to the

annuity provided under subsection (1A).

                         (8) The income provided each year from the annuity under section (1A)

must increase by reference to increases in the retail price index, so far

as not exceeding 5%.”


     (5)    Sections 634A and 636A are repealed.

     (6)    Subsection (5) shall not apply to schemes executed before the date of entry into

effect of this Act.

     (7)    After section 637A (Return of contributions on death of a member), the

following section is inserted—


       “637B Retirement Income Fund

           (1)           Subject to subsections (2) and (3) of this section, a Retirement Income

Fund is a vehicle for the reinvestment of savings in retirement, which

                  (a)                 has been established by a person designated by subsection (1) of

section 632; and


                  (b)                 is a vehicle whose investments are—

                        (i)                        investments of a kind described in the Insurance

Companies Regulations 1994, Schedule X, Part 1; or

                        (ii)                       approved by the Inland Revenue.

           (2)           Funds held in a Retirement Income Fund as referred to in subsection (1)


may be withdrawn from the Retirement Income Fund by the member

as and when he elects.

           (3)           A member may not invest in a Retirement Income Fund unless the

requirements of subsection (1A) of section 634, in relation to the

Minimum Retirement Income, are satisfied.


           (4)           A Retirement Income Fund, and any income derived from it, must not

be capable of assignment or surrender by the member.

           (5)           Any withdrawal from the Fund by the member under subsection (2)

shall be assessable to tax under Schedule E (and section 203 shall apply

accordingly) and shall be treated as earned income of the member.”


 2     Minimum Retirement Income

     (1)    The amount of the Minimum Retirement Income shall be set for each financial

year, following consultation, by the Chancellor of the Exchequer by order.



Retirement Income Reform Bill



     (2)    An order under this section shall, in respect of each financial year after that in

which this Act comes into force, be made on or before 31st January preceding

the year in question.

     (3)    An order under this section shall be made by statutory instrument and shall be

subject to annulment in pursuance of a resolution of either House of



 3     Short title and commencement

     (1)    This Act may be cited as the Retirement Income Reform Act 2003.

     (2)    This Act shall come into force on 6th April 2005.



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