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A
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Bill
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[AS AMENDED IN STANDING COMMITTEE C]
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To
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amend
the law relating to the provision of retirement income in respect of
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private and personal pensions, annuities
and defined and additional
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voluntary contribution pension schemes.
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Be
it enacted by the Queen’s most Excellent Majesty, by and
with the advice and
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consent of the Lords Spiritual and
Temporal, and Commons, in this present
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Parliament assembled, and by the authority
of the same, as follows:—
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1 Amendment
of the Income and Corporation Taxes Act 1988
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(1) The
Income and Corporation Taxes Act 1988 is amended as follows.
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(2) In
subsection (1) of section 630 (interpretation)—
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(a) in
the definition of “personal pension scheme”, substitute for
the words
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“or lump sums” the words
“, lump sums, or withdrawals from a
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Retirement Income Fund”; and
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(b) in
the definition of “income withdrawal”, insert after the word
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“annuity” the words “or
withdrawal of funds from a Retirement
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Income Fund”.
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(3) In
section 633 (scope of benefits) after subsection (1)(e) there is inserted—
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“(f) the
payment to a member of income from a Retirement Income
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Fund
satisfying the conditions in section 637B”.
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(4) In
section 634 (annuity to member)—
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(a) after
subsection (1), there is inserted—
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“(1A)
Subject
to subsection (7) below, the annuity must provide the
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member
with an annual income not less than the Minimum
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Retirement
Income set under section 2 of the Retirement Income
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Reform
Act 2003.”;
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(b) in
subsection (2) the words from “commence” to the end are replaced
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by the following—
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“(a)
before the member attains the age of 50; or
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(b)
in relation to a member who is in receipt of benefits
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under
section 634A before the date of this Act’s entry
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into
force, after the member attains the age of 75; or
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(c) in
relation to any member aged 65 or over as at the date
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of
this Act’s entry into force, within twelve months of
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that
date; or
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(d) in
relation to all other members, after the member
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attains
the age of 65.”
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(c) after
subsection (6) there is inserted—
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“(7)
Section 45 of the Sex Discrimination Act 1975 shall not apply to the
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annuity provided under subsection (1A).
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(8)
The income provided each year from the annuity under section (1A)
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must increase by reference to increases
in the retail price index, so far
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as not exceeding 5%.”
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(5) Sections
634A and 636A are repealed.
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(6) Subsection
(5) shall not apply to schemes executed before the date of entry into
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effect of this Act.
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(7) After
section 637A (Return of contributions on death of a member), the
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following section is inserted—
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“637B
Retirement Income Fund
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(1) Subject
to subsections (2) and (3) of this section, a Retirement Income
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Fund
is a vehicle for the reinvestment of savings in retirement, which
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(a) has
been established by a person designated by subsection (1) of
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section
632; and
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(b) is
a vehicle whose investments are—
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(i) investments
of a kind described in the Insurance
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Companies
Regulations 1994, Schedule X, Part 1; or
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(ii) approved
by the Inland Revenue.
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(2) Funds
held in a Retirement Income Fund as referred to in subsection (1)
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may
be withdrawn from the Retirement Income Fund by the member
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as
and when he elects.
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(3) A
member may not invest in a Retirement Income Fund unless the
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requirements
of subsection (1A) of section 634, in relation to the
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Minimum
Retirement Income, are satisfied.
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(4) A
Retirement Income Fund, and any income derived from it, must not
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be
capable of assignment or surrender by the member.
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(5) Any
withdrawal from the Fund by the member under subsection (2)
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shall
be assessable to tax under Schedule E (and section 203 shall apply
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accordingly)
and shall be treated as earned income of the member.”
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2 Minimum
Retirement Income
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(1) The
amount of the Minimum Retirement Income shall be set for each financial
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year, following consultation, by the
Chancellor of the Exchequer by order.
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