|
| |
|
(2) | This paragraph only applies if notice of intention to rely on it is given in |
| |
accordance with regulations made by the Board of Inland Revenue. |
| |
(3) | Where this paragraph applies in the case of an individual there is no liability |
| |
to the lifetime allowance charge in respect of the individual. |
| |
(4) | An individual has a relevant existing arrangement if— |
| 5 |
(a) | before 6th April 2006 an arrangement relating to the individual has |
| |
been made under a pension scheme within paragraph 1(1), and |
| |
(b) | the pension scheme becomes a registered pension scheme on that |
| |
| |
(5) | Notice of intention to rely on this paragraph in relation to the individual |
| 10 |
may not be given in a case where— |
| |
(a) | any of the individual’s relevant existing arrangements are |
| |
arrangements in the case of which paragraph 9 applies, and |
| |
(b) | the (actual) value of the individual’s uncrystallised rights on 5th |
| |
April 2006 under the arrangement, or any of the arrangements, |
| 15 |
(calculated in accordance with paragraph 8) exceeds the amount |
| |
calculated in accordance with paragraph 9(3), |
| |
| unless such rights as (in accordance with regulations made by the Board of |
| |
Inland Revenue) are to be treated as representing the amount of the excess |
| |
| 20 |
(6) | For the purposes of sub-paragraph (5) the individual’s rights are |
| |
“uncrystallised” if the individual has not, on 5th April 2006, become entitled |
| |
to the present payment of benefits in respect of the rights (the individual |
| |
being treated as entitled to the present payment of benefits in respect of any |
| |
accrued rights in relation to which the individual has, under section 634A(1) |
| 25 |
of ICTA, made an election to defer the purchase of an annuity). |
| |
(7) | For the purposes of sub-paragraph (1)(b) an arrangement is a permitted |
| |
transfer arrangement if — |
| |
(a) | it is made only so that any sums or assets held for the purposes of, or |
| |
representing accrued rights under, an arrangement under a |
| 30 |
registered pension scheme or a recognised overseas pension scheme |
| |
may be transferred so as to become sums or assets held for the |
| |
purposes of, or representing rights under, the arrangement, and |
| |
(b) | the amount of any sums, and market value of any assets, transferred |
| |
is, applying normal actuarial practice, equivalent before and after the |
| 35 |
| |
13 (1) | Relevant benefit accrual occurs in relation to an individual under an |
| |
arrangement under a registered pension scheme— |
| |
(a) | in the case of a cash balance arrangement, if the value of the |
| |
individual’s rights under the arrangement immediately before a |
| 40 |
benefit crystallisation event occurs in relation to the individual and |
| |
the arrangement exceeds their value on 5th April 2006 by more than |
| |
the permitted percentage, |
| |
(b) | in the case of a money purchase arrangement that is not a cash |
| |
balance arrangement, if a relevant contribution is paid under the |
| 45 |
| |
(c) | in the case of a defined benefits arrangement, if sub-paragraph (5) |
| |
| |
(2) | For the purposes of sub-paragraph (1)(a)— |
| |
|
| |
|
| |
|
(a) | the value of the individual’s rights under the arrangement at any |
| |
time is the amount which would be available for the provision of |
| |
benefits under the arrangement to or in respect of the individual at |
| |
| |
(b) | “the permitted percentage” is the percentage by which the retail |
| 5 |
prices index for the month in which the benefit crystallisation event |
| |
occurs is higher than that for April 2006. |
| |
(3) | For the purposes of sub-paragraph (1)(b) a relevant contribution is paid |
| |
under the arrangement if— |
| |
(a) | a relievable pension contribution is paid by or on behalf of the |
| 10 |
individual under the arrangement, |
| |
(b) | a contribution is paid in respect of the individual under the |
| |
arrangement by an employer of the individual, or |
| |
(c) | a contribution paid by an employer of the individual otherwise than |
| |
in respect of the individual subsequently becomes held for the |
| 15 |
purposes of the provision under the arrangement of benefits to or in |
| |
respect of the individual. |
| |
(4) | But the following are not relevant contributions for the purposes of sub- |
| |
| |
(a) | contributions which may be applied only for the provision of |
| 20 |
benefits in respect of the individual after the individual’s death, and |
| |
(b) | minimum payments under section 8 of the Pension Schemes Act |
| |
1993 (c. 48) or section 4 of the Pension Schemes (Northern Ireland) |
| |
Act 1993 (c. 49) or any amount recovered under regulations made |
| |
under subsection (3) of either of those sections. |
| 25 |
(5) | This sub-paragraph applies if— |
| |
(a) | there is an increase in the value of the individual’s rights under the |
| |
arrangement which is attributable either to service after 5th April |
| |
2006 or an increase in the rate at which the individual’s rights accrue |
| |
under the arrangement, or |
| 30 |
(b) | paragraph 14 (benefits calculated by reference to excessive earnings) |
| |
applies in relation to the arrangement. |
| |
(6) | The references in sub-paragraph (1) to a cash balance arrangement, a money |
| |
purchase arrangement that is not a cash balance arrangement and a defined |
| |
benefits arrangement include (respectively) a hybrid arrangement under |
| 35 |
which the benefits that may be provided to or in respect of the individual are |
| |
cash balance benefits, other money purchase benefits or defined benefits. |
| |
14 (1) | This paragraph applies in relation to an arrangement if, immediately before |
| |
a benefit crystallisation event occurs in relation to the individual and the |
| |
arrangement, the amount of the relevant earnings exceeds the permitted |
| 40 |
| |
(2) | But this paragraph does not apply if the arrangement is under a pension |
| |
scheme within paragraph 1(1)(c) or (e). |
| |
(3) | For the purposes of this paragraph and paragraphs 15 and 16 earnings are |
| |
“relevant” if they are earnings by reference to which benefits are payable |
| 45 |
under the arrangement to or in respect of the individual. |
| |
(4) | For those purposes the amount of the relevant earnings means— |
| |
(a) | in relation to any time before 6th April 2006, so much of the relevant |
| |
earnings as would have been taken into account under the |
| |
|
| |
|
| |
|
arrangement for calculating benefits payable to or in respect of the |
| |
| |
(b) | in relation to any time on or after that date, so much of such of the |
| |
relevant earnings as both would be so taken into account and are |
| |
| 5 |
| together, if the individual is absent from work due to pregnancy or |
| |
childbirth, with earnings which would be likely to be within whichever of |
| |
paragraphs (a) and (b) applies if the individual were not so absent. |
| |
(5) | “The permitted amount” is the greater of— |
| |
(a) | the amount of the relevant earnings on 5th April 2006, and |
| 10 |
(b) | the post-commencement earnings limit (see paragraphs 15 and 16). |
| |
15 (1) | This paragraph specifies the post-commencement earnings limit if the |
| |
individual was on 5th April 2006 a person in relation to whom section 590C |
| |
of ICTA (earnings cap) had effect in relation to the pension scheme under |
| |
which the arrangement was made |
| 15 |
(2) | The post-commencement earnings limit is the lesser of amount A and |
| |
| |
(3) | Amount A is 7.5% of the standard lifetime allowance when the benefit |
| |
crystallisation event occurs. |
| |
(4) | Amount B is the amount of the relevant earnings for the best period of 12 |
| 20 |
months during the appropriate three year period. |
| |
(5) | The appropriate three year period is the period of three years ending with |
| |
the time when the benefit crystallisation event occurs or, if earlier, with the |
| |
time when the relevant earnings were last paid. |
| |
(6) | A period of 12 months during the appropriate three year period is the best |
| 25 |
period of 12 months during the appropriate three year period if the amount |
| |
of the relevant earnings are greater for that period of 12 months than for any |
| |
other period of 12 months during the appropriate three year period. |
| |
16 (1) | This paragraph specifies the post-commencement earnings in any other |
| |
| 30 |
(2) | The post-commencement earnings limit is— |
| |
(a) | if amount B is not greater than amount A, amount B, and |
| |
| |
(3) | Amount A and amount B have the same meanings as in paragraph 15. |
| |
(4) | Amount C is the greater of— |
| 35 |
| |
| |
(5) | Amount D is—![equation: over[times[char[E],char[T],char[Y]],num[3.00000000,"3"]]](missing.gif) |
| |
| where ETY is the amount of the relevant earnings for the appropriate three |
| |
year period (within the meaning of paragraph 15). |
| 40 |
Pre-commencement pension credits |
| |
17 (1) | This paragraph makes provision for the operation of a lifetime allowance |
| |
enhancement factor in relation to all benefit crystallisation events occurring |
| |
in relation to an individual where before 6th April 2006 the individual has |
| |
|
| |
|
| |
|
acquired rights under a pension scheme within paragraph 1(1) by virtue of |
| |
having become entitled to a pension credit. |
| |
(2) | The lifetime allowance enhancement factor is the pre-commencement |
| |
| |
(3) | The pre-commencement pension credit factor is—![equation: over[times[char[I],char[A],char[P],char[C]],times[char[S],char[L],char[A]]]](missing.gif) |
| 5 |
| |
| IAPC is the amount which is the appropriate amount for the purposes |
| |
of section 29(1) of WRPA 1999 or Article 26(1) of WRP(NI)O 1999 in |
| |
relation to the pension credit, as increased by the percentage |
| |
specified in sub-paragraph (4), and |
| 10 |
| SLA is £1,500,000 (the standard lifetime allowance for the tax year |
| |
| |
(4) | The percentage is the percentage by which the retail prices index for April |
| |
2006 is greater than that for the month in which the rights were acquired. |
| |
(5) | This paragraph does not apply in the case of an individual if paragraph 7 |
| 15 |
(primary protection) applies in relation to the individual. |
| |
(6) | This paragraph only applies if notice of intention to rely on this paragraph |
| |
is given to the Inland Revenue in accordance with regulations made by the |
| |
| |
Individuals permitted to take pension before normal minimum pension age |
| 20 |
18 (1) | This paragraph applies where a benefit crystallisation event occurs in |
| |
relation to an individual who is a member of a registered pension scheme— |
| |
(a) | in protected circumstances, and |
| |
(b) | before the individual reaches normal minimum pension age. |
| |
(2) | What would otherwise be the individual’s lifetime allowance is to be |
| 25 |
reduced by the relevant percentage. |
| |
(3) | A benefit crystallisation event occurs in protected circumstances if— |
| |
(a) | paragraph 21 or 22 (right to take pension before normal minimum |
| |
pension age) applies to the individual and the pension scheme, |
| |
(b) | the individual’s protected pension age (see paragraph 21(4) and (5) |
| 30 |
or paragraph 22(4)) is less than 50, and |
| |
(c) | the pension scheme is not prescribed by regulations made by the |
| |
| |
(4) | The relevant percentage is—![equation: cross[char[Y],num[2.50000000,"2.5"]]](missing.gif) |
| |
| where Y is the number of complete years falling between the date on which |
| 35 |
the benefit crystallisation event occurs and the date on which the individual |
| |
will reach normal minimum pension age. |
| |
(5) | Sub-paragraph (6) applies where, after the occurrence in relation to the |
| |
individual of a benefit crystallisation event in relation to which this |
| |
paragraph has had effect, another benefit crystallisation event occurs in |
| 40 |
relation to the individual and the pension scheme. |
| |
(6) | If the amount crystallised on the previous benefit crystallisation event |
| |
exceeded the available amount of the individual’s lifetime allowance at the |
| |
time of that benefit crystallisation event, section 208 (availability of |
| |
|
| |
|
| |
|
individual’s lifetime allowance) applies as if the amount crystallised were |
| |
the available amount of the individual’s lifetime allowance at that time. |
| |
Pre-commencement pensions |
| |
19 (1) | This paragraph makes provision about an individual who, on 5th April 2006, |
| |
has an actual (rather than a prospective) right to the payment of one or more |
| 5 |
relevant existing pensions. |
| |
(2) | Section 208 (availability of individual’s lifetime allowance) applies as if, |
| |
immediately before the first benefit crystallisation event occurring in |
| |
relation to the individual, a benefit crystallisation event had occurred in |
| |
relation to the individual and the amount crystallised was the value of the |
| 10 |
individual’s pre-commencement pension rights immediately before the |
| |
benefit crystallisation event. |
| |
(3) | The value of the individual’s pre-commencement pension rights at any time |
| |
is—![equation: cross[num[25.00000000,"25"],times[char[A],char[R],char[P]]]](missing.gif) |
| |
| where (subject to sub-paragraph (4)) ARP is an amount equal to the annual |
| 15 |
rate at which the relevant existing pension is payable to the individual at |
| |
that time or, if more than one relevant existing pension is payable to the |
| |
individual at that time, to the aggregate of the annual rates at which each of |
| |
the relevant existing pensions is so payable. |
| |
(4) | In the case of unsecured pension or alternatively secured pension ARP is the |
| 20 |
maximum amount that may be paid in the unsecured pension year or |
| |
alternatively secured pension year in which the time falls in accordance with |
| |
pension rule 5 or pension rule 7 (see section 155). |
| |
(5) | In this paragraph “relevant existing pension” has the same meaning as in |
| |
paragraph 10(2); and paragraph 10(3) and (4) operate for the purposes of this |
| 25 |
paragraph for determining the annual rate at which a relevant existing |
| |
pension is payable on 5th April 2006. |
| |
| |
Pre-commencement benefit rights |
| |
Rights to take pension before normal minimum pension age |
| 30 |
20 (1) | If paragraph 21 or 22 applies in relation to a registered pension scheme and |
| |
a member of the pension scheme, this Part (except for paragraph 18) has |
| |
effect in relation to the member and the pension scheme as if references to |
| |
normal minimum pension age were to the member’s protected pension age. |
| |
(2) | Paragraphs 21(4) and (5) and 22(4) define the member’s protected pension |
| 35 |
| |
21 (1) | This paragraph applies in relation to a registered pension scheme and a |
| |
member of the pension scheme if— |
| |
(a) | on 5th April 2006 the pension scheme was within any of paragraphs |
| |
(a) to (e) of paragraph 1(1), and |
| 40 |
(b) | the entitlement condition (in sub-paragraph (2)) and the retirement |
| |
condition (in sub-paragraph (3)) are met. |
| |
(2) | The entitlement condition is that— |
| |
|
| |
|
| |
|
(a) | in the case of a relevant statutory scheme as defined in section 611A |
| |
of ICTA or a pension scheme treated by the Inland Revenue as if it |
| |
were such a relevant statutory scheme, on 5th April 2006 the member |
| |
had an actual or prospective right under the pension scheme to a |
| |
pension from an age of less than 55, or |
| 5 |
(b) | in any other case, the member had such a right under the pension |
| |
scheme throughout the period beginning with 10th December 2003 |
| |
and ending with 5th April 2006. |
| |
(3) | The retirement condition is that — |
| |
(a) | there is only one occasion on which the member becomes entitled to |
| 10 |
a pension under the pension scheme, and |
| |
(b) | the member is not employed by a sponsoring employer after |
| |
becoming entitled to a pension under the pension scheme. |
| |
(4) | If the age from which the member had an actual or prospective right to a |
| |
pension under the pension scheme is 50 or less, the member’s protected |
| 15 |
| |
(5) | If the age from which the member had an actual or prospective right to a |
| |
pension under the pension scheme is greater than 50 and less than 55, the |
| |
member’s protected pension age is— |
| |
(a) | before 6th April 2010, 50, and |
| 20 |
(b) | on and after 6th April 2010, the age from which the member had an |
| |
actual or prospective right to a pension under the pension scheme. |
| |
22 (1) | This paragraph applies in relation to a registered pension scheme and a |
| |
member of the pension scheme if— |
| |
(a) | on 5th April 2006 the pension scheme was a personal pension scheme |
| 25 |
approved under Chapter 4 of Part 14 of ICTA, an annuity contract or |
| |
trust scheme approved under section 620 or 621 of ICTA or a |
| |
substituted contract within the meaning of section 622(3) of ICTA, |
| |
| |
(b) | the entitlement condition (in sub-paragraph (2)) and the retirement |
| 30 |
condition (in sub-paragraph (3)) are met. |
| |
(2) | The entitlement condition is that— |
| |
(a) | on 5th April 2006 the member had an actual or prospective right |
| |
under the pension scheme to a pension from an age of less than 50, |
| |
| 35 |
(b) | the member’s occupation was on that date (or had been) one |
| |
prescribed by regulations made by the Board of Inland Revenue. |
| |
(3) | The retirement condition is that there is only one occasion on which the |
| |
member becomes entitled to a pension under the pension scheme. |
| |
(4) | The member’s protected pension age is the age from which the member had |
| 40 |
an actual or prospective right to a pension under the pension scheme. |
| |
Lump sum rights exceeding £375,000: primary and enhanced protection |
| |
23 (1) | If the lump sum condition and the registration condition are met in relation |
| |
| |
(a) | paragraphs 25 to 27 (which modify Schedule 29 in relation to pension |
| 45 |
commencement lump sums), and |
| |
(b) | paragraph 28 (which makes provision about scheme chargeable |
| |
| |
|
| |
|
| |
|
| apply in relation to the individual. |
| |
(2) | The lump sum condition is met if on 5th April 2006 the amount of an |
| |
individual’s total lump sum rights exceeds £375,000 (25% of the standard |
| |
lifetime allowance for the tax year 2006-07). |
| |
(3) | Paragraph 24 defines the amount of an individual’s total lump sum rights on |
| 5 |
| |
(4) | The registration condition is met if either or both of the notice requirements |
| |
| |
(5) | The first notice requirement is met if notice of intention to rely on paragraph |
| |
7 (primary protection: pre-commencement funds above £1,500,000) is given |
| 10 |
to the Inland Revenue in accordance with regulations under that paragraph |
| |
in relation to the individual. |
| |
(6) | The second notice requirement is met if notice of intention to rely on |
| |
paragraph 12 (enhanced protection: no relevant benefit accrual post- |
| |
commencement) is given to the Inland Revenue in accordance with |
| 15 |
regulations under that paragraph in relation to the individual. |
| |
24 (1) | The amount of an individual’s total lump sum rights on 5th April 2006 is—![equation: plus[(*n*)over[(*n*)times[(*n*)char[(*n*)V],char[(*n*)C],char[(*n*)P],char[(*n*)R]],
num[4.00000000,"4"]],times[(*n*)char[(*n*)V],char[(*n*)U],char[(*n*)L],char[(*n*)S],
char[(*n*)R]]]](missing.gif) |
| |
| |
| VCPR is the value of the individual’s relevant crystallised pension |
| |
rights on 5th April 2006, calculated in accordance with paragraph |
| 20 |
| |
| VULSR is the value of the individual’s relevant uncrystallised lump |
| |
| |
(2) | The value of the individual’s relevant uncrystallised lump sum rights on 5th |
| |
April 2006 is the aggregate value of the individual’s uncrystallised lump |
| 25 |
sum rights on that date under each relevant pension arrangement relating to |
| |
| |
(3) | An uncrystallised lump sum right is a right to a lump sum which on 5th |
| |
April 2006 is prospective (rather than actual). |
| |
(4) | An arrangement is a “relevant pension arrangement” if it is an arrangement |
| 30 |
under a pension scheme within paragraph 1(1). |
| |
(5) | The value of the individual’s uncrystallised lump sum rights under an |
| |
arrangement on 5th April 2006— |
| |
(a) | in the case of an arrangement under a pension scheme falling within |
| |
paragraph 1(1)(f), is 25% of the value of the funds held for the |
| 35 |
purposes of the arrangement on that date, and |
| |
(b) | in the case of any other arrangement, is an amount calculated in |
| |
accordance with sub-paragraph (6). |
| |
(6) | The amount is the amount of any lump sum to which the individual would |
| |
(on the assumptions in sub-paragraph (7)) have been entitled under the |
| 40 |
arrangement on 5th April 2006 if, on that date, the individual had acquired |
| |
an actual (rather than a prospective) right to receive a lump sum under the |
| |
| |
(7) | The assumptions referred to in sub-paragraph (6) are that— |
| |
(a) | if the individual had not reached the age of 50 on 5th April 2006, that |
| 45 |
the individual reached that age on that date, and |
| |
|
| |
|