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Make provision about the rights and choices of savers in relation to pensions |
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and pension schemes, annuities and savings; and for connected purposes. |
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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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Savings and Retirement Account schemes |
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1 | Meaning of “Savings and Retirement Account (SaRA) schemes” |
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(1) | A pension scheme is a Savings and Retirement Account (SaRA) scheme for the |
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purposes of this Part if it is registered as such a scheme under section 2 and |
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each of the following is fulfilled, namely— |
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(a) | the conditions set out in subsections (2) to (11), and |
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(b) | such other conditions as may be prescribed. |
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(2) | The first condition is that the scheme is established under a trust or in such |
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other way as may be prescribed. |
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(3) | The second condition is that the provisions made by the instruments |
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establishing the scheme comply with such requirements as may be prescribed. |
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(4) | The third condition is that the scheme complies with the investment |
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requirements set out in section 4. |
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(5) | The fourth condition is that the scheme complies with the drawdown |
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requirements set out in section 5. |
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(6) | The fifth condition is that the scheme complies with such requirements as may |
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be prescribed as regards the extent to which, and the circumstances in which— |
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(a) | any payment made to the scheme by, or on behalf or in respect of, a |
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(b) | any income or capital gain arising from the investment of such a |
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(c) | the value of rights under the scheme, |
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| may be used to defray the administrative expenses of the scheme, to pay |
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commission or in any other way which does not result in the provision of |
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benefits for or in respect of members. |
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(7) | The sixth condition is that the scheme complies with such of the requirements |
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of regulations under section 113 of the 1993 Act (disclosure of information |
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about schemes to members etc.) and of regulations under section 237 of the |
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2004 Act (combined pension forecasts) as are applicable to it. |
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(8) | The seventh condition is that, subject to such minimum contribution levels and |
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other restrictions as may be prescribed, members of the scheme may make such |
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contributions to the scheme as they think appropriate. |
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(9) | The eighth condition is that, except in so far as is necessary to ensure that the |
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scheme has tax-exemption or tax-approval (within the meaning of the 1993 |
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Act), the scheme accepts transfer payments in respect of members’ rights |
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(a) | other pension schemes, |
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(b) | contracts and schemes approved under Chapter 3 of Part 14 of the |
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Income and Corporation Taxes Act 1988 (c. 1) (retirement annuity |
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(c) | annuities and insurance policies purchased or transferred for the |
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purpose of giving effect to rights under pension schemes; and |
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(d) | annuities purchased or entered into for the purpose of discharging |
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liability in respect of pension credits under section 29(1)(b) of the 1999 |
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Act or under corresponding Northern Ireland legislation. |
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(10) | The ninth condition is that the scheme has such exemption or approval as is |
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mentioned in subsection (9). |
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(11) | The tenth condition is that— |
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(a) | if the scheme is an occupational pension scheme, it is specified in a |
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contracting-out certificate in relation to all categories of employment to |
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which the scheme relates, and |
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(b) | if the scheme is a personal pension scheme, it is an appropriate scheme |
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within the meaning of section 7(4) of the 1993 Act. |
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2 | Registration of SaRA schemes |
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(1) | The Authority shall keep a register of SaRA schemes. |
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(2) | Subject to subsection (3), the Authority shall register a pension scheme under |
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this section if the trustees of the scheme, or any person or persons prescribed |
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in relation to the scheme— |
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(a) | make an application for the purpose and pay such fee as the Authority may |
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(b) | declare that each of the following is fulfilled in relation to the scheme, |
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(i) | the conditions set out in subsections (2) to (11) of section 1; and |
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(ii) | such other conditions as may be prescribed under subsection (1) |
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(3) | Where the Authority are satisfied on reasonable grounds that any of those |
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conditions is not fulfilled in relation to a pension scheme, the Authority may |
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(a) | refuse to register the scheme; or |
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(b) | where the scheme is registered under this section, remove it from the |
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(4) | Section 10 of the 1995 Act (civil penalties) applies to any trustee of a pension |
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scheme which is or has been registered under this section, and to any person |
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prescribed in relation to such a scheme, if— |
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(a) | he fails to take all such steps as are reasonable to secure that each of |
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those conditions is fulfilled in relation to the scheme or (as the case may |
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be) while the scheme was so registered he failed to take all such steps |
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as were reasonable to secure that each of those conditions was so |
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(b) | where the scheme was registered on his application, any of those |
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conditions was not fulfilled in relation to the scheme at the time of the |
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(5) | The Secretary of State may by regulations make provision— |
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(a) | for the register, or extracts from the register, or for copies of the register |
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or of extracts from the register, to be open to inspection by, and |
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(b) | for copies of the register, or of extracts from it, to be supplied to, |
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| such persons, in such manner, at such times, on payment of such fees, and |
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subject to such other terms and conditions, as may be prescribed. |
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3 | Duty of employers to facilitate access to SaRA schemes |
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(1) | Except in so far as regulations otherwise provide, it shall be the duty of an |
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employer of relevant employees to comply with the requirements set out |
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(2) | The first requirement is that the employer shall ensure that at all times there is |
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at least one scheme designated by him for the purposes of this subsection |
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which is registered under section 2 and offers membership to all his relevant |
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employees (whether or not any other scheme registered under that section |
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which does not offer membership to all those employees is for the time being |
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designated by him for those purposes). |
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(3) | Before designating a scheme for the purposes of subsection (2) the employer |
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shall consult with his relevant employees and any organisations representing |
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(4) | The second requirement is that the employer shall supply his relevant |
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(a) | the name and address of the designated scheme or, as the case may be, |
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of each of the designated schemes; and |
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(b) | such other information as may be prescribed. |
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(5) | The third requirement is that the employer shall allow representatives of the |
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designated scheme or schemes reasonable access to his relevant employees for |
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the purpose of supplying them with information about the scheme or schemes. |
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(6) | The fourth requirement is that, subject to such exceptions and qualifications as |
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may be prescribed, the employer shall, if he is requested to do so by a relevant |
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employee of his who is a member of a qualifying scheme— |
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(a) | deduct the employee’s contributions to the scheme from his |
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(b) | pay them to the trustees or managers of the scheme or, if regulations so |
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provide, to a prescribed person. |
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(7) | The fifth requirement is that the employer shall, if any scheme designated by |
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him for the purposes of subsection (2) ceases to be registered under section 2, |
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withdraw his designation of the scheme (but this requirement is not to be taken |
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as implying that he cannot withdraw his designation of a scheme in other |
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(8) | Section 10 of the 1995 Act (civil penalties) applies to an employer who fails to |
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comply with any of the requirements set out above. |
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(9) | An employer is not, whether before designating a scheme for the purposes of |
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subsection (2) or at any time while a scheme is designated by him for those |
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purposes, under any duty— |
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(a) | to make any enquiries, or act on any information, about the scheme for |
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any purpose not connected with— |
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(i) | ascertaining whether the scheme is for the time being registered |
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(ii) | ascertaining the persons to whom it offers membership, or |
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(iii) | enabling him to comply with subsection (4), or |
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(b) | in particular, to investigate or monitor, or make any judgment as to, the |
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past, present or future performance of the scheme. |
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“employer” means any employer, whether or not resident or incorporated |
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in any part of the United Kingdom; |
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“qualifying scheme”, in relation to an employer, means— |
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(a) | the designated scheme or one of the designated schemes; |
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(b) | if regulations so provide, any other SaRA scheme; or |
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(c) | if regulations so provide, any other personal pension as defined |
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in subsection (1) of section 1 of the 1993 Act (categories of |
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“relevant employees”, in relation to an employer, means all employees of |
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his employed in Great Britain and also, in the case of an employer |
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resident or incorporated in any part of Great Britain, all employees of |
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his employed outside the United Kingdom, but with the exception, in |
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the case of any employer, of any employees of his— |
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(a) | whose employment qualifies them for membership of an |
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occupational pension scheme of the employer; |
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(b) | whose earnings fall below the lower earnings limit as defined in |
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section 181 of the 1993 Act; or |
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(c) | who are of such other description as may be prescribed. |
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4 | Investment requirements for SaRA schemes |
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(1) | A SaRA scheme is a scheme of investment, to which an individual may |
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subscribe, and in respect of which the following requirements must be met— |
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(a) | the requirements set out in subsections (2) to (4), and |
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(b) | such other requirements as may be prescribed. |
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(2) | The first requirement is that the account is made up of investments of the kinds |
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specified by the Treasury by regulations. |
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(3) | The second requirement is that each account is an account to which only one |
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(4) | The third requirement is that each account must at all times be managed by an |
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account manager and under terms agreed in a recorded form between the |
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account manager and the account investor. |
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(5) | The terms agreed to which subsection (4) refers shall include the following |
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(a) | that the account investments shall be in the beneficial ownership of the |
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(b) | that the title to all account investments shall be vested in the account |
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manager or his nominee or jointly in one of them and the account |
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(c) | that, where a share certificate or other document evidencing title to an |
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account investment is issued, it shall be held by the account manager or |
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(d) | that the account manager shall satisfy himself that any person to whom |
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he delegates any of his functions or responsibilities under the terms |
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agreed with the account investor is competent to carry out those |
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functions or responsibilities. |
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“account investment” is an investment under an account which is a |
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qualifying investment for a stocks and shares component or a cash |
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component, as the case may be; |
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“account manager” means a person who is approved for the purposes of |
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this section by the Authority. |
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5 | Drawdown requirements for SaRA schemes |
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(1) | In respect of any SaRA scheme the following drawdown requirements must be |
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(a) | the requirements set out in subsections (2) to (6), and |
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(b) | such other requirements as may be prescribed. |
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(2) | The first requirement is that the total sum to be taken out of the account |
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amounts to no more than 60 per cent of the value of the account at the time of |
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(3) | The second requirement is that the total sum to be taken out of the account does |
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(4) | The third requirement is that the value of the amount that is drawn down is |
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required to be paid into the account by the account investor within such period |
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as the Treasury may by regulations specify; but the period so specified may not |
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be required to begin within four years of the date of the drawdown. |
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(5) | The fourth requirement is that any amount which has been drawn down and |
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not paid into the account by the account investor within the period specified |
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by regulations made under subsection (4) shall not be exempt from taxation. |
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(6) | The fifth requirement is that drawdown takes place for one of the following |
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(a) | the purpose of providing financial assistance to the account investor in |
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making his first house purchase for his occupation as his principal |
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(b) | the purpose of providing financial assistance to a child in making the |
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child’s first house purchase for his occupation as his principal |
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(c) | the purpose of providing financial assistance to the account investor |
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(i) | an apprenticeship of a prescribed description, or |
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(ii) | a course of higher or further education at a publicly-funded |
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institution or such class of institution as may be prescribed, |
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(d) | such other purpose as may be prescribed. |
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(7) | The Secretary of State shall by regulations amend the amount specified in |
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subsection (3) for the purpose of ensuring that the amount rises annually in line |
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with the retail prices index. |
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(a) | a son or daughter of the account investor, or |
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(b) | a person in respect of whom the account investor had parental |
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responsibility when that person reached the age of 16; |
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“financial assistance” has the prescribed meaning; |
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“first house purchase for his occupation as his principal residence” has the |
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“parental responsibility”— |
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(a) | in relation to England and Wales, has the meaning given by |
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section 3 of the Children Act 1989 (c. 41), and |
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(b) | in relation to Scotland, shall be construed as a reference to |
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“parental responsibilities” within the meaning given by section |
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1(3) of the Children (Scotland) Act 1995 (c. 36); |
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“publicly-funded institution” means— |
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(a) | any university or other institution receiving grants, loans or |
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other payments under section 65 of the Further and Higher |
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Education Act 1992 (c. 13), or under section 5 of the Education |
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Act 1994 (c. 30), any institution maintained by a local education |
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authority in the exercise of their further and higher education |
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functions, any institution receiving a recurrent grant towards its |
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costs under regulations made under section 485 of the |
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Education Act 1996 (c. 56) or any institution receiving financial |
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resources under section 5 or 34 of the Learning and Skills Act |
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(b) | any institution within the higher education sector for the |
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purposes of the Further and Higher Education (Scotland) Act |
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1992 (c. 37), any college of further education within the meaning |
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of section 36(1) of that Act or any central institution within the |
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meaning of section 135(1) of the Education (Scotland) Act 1980 |
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(c) | the Queen’s University of Belfast, the University of Ulster, a |
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college of education in Northern Ireland within the meaning of |
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Article 2(2) of the Education and Libraries (Northern Ireland) |
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Order 1986 (S.I. 1986/594 (N.I. 3)) or any institution providing |
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in Northern Ireland further education as defined in Article 3 of |
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the Further Education (Northern Ireland) Order 1997 (S.I. 1997/ |
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“the retail prices index” means— |
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(a) | the general index of retail prices (for all items) published by the |
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Office for National Statistics, or |
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(b) | where that index is not published for a month, any substituted |
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index or figures published by that Office. |
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6 | Application of Employment Rights Act 1996 |
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(1) | Sections 46 and 102 of the Employment Rights Act 1996 (c. 18) (occupational |
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pension scheme trustees: protection from unfair dismissal and other |
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detriment) shall apply in relation to an employee who is (or is a director of a |
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company which is) a trustee of a scheme designated by his employer under |
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section 3(2) as they apply in relation to an employee who is (or is a director of |
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a company which is) a trustee of a relevant occupational pension scheme which |
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relates to his employment. |
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(2) | Section 58 of that Act (occupational pension scheme trustees: time off) shall |
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apply to the employer in relation to a designated scheme as it applies to the |
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employer in relation to a relevant occupational pension scheme. |
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(3) | In this section “relevant occupational pension scheme” has the meaning given |
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by section 46 of the Employment Rights Act 1996. |
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7 | Application of 1993, 1995 and 2004 Acts to SaRA schemes |
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(1) | Schedule 1 to the 1999 Act (application of 1993 and 1995 Acts to registered |
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schemes) is amended in accordance with subsection (2). |
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(2) | In paragraph 1(1)(b), at the end, insert the words “of this Act or under section |
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2 of the Rights of Savers Act 2005”. |
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(3) | The provisions of Schedule 1 to the 1999 Act (as amended by subsection (2) of |
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this section) shall have effect subject to the provisions of sections 4 and 5 of this |
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8 | Interpretation and application of Part 1 |
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“the 1993 Act” means the Pension Schemes Act 1993 (c. 48); |
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“the 1995 Act means the Pensions Act 1995 (c. 26); |
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“the 1999 Act” means the Welfare Reform and Pensions Act 1999 (c. 30); |
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“the 2004 Act” means the Pensions Act 2004 (c. 35); |
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“account” means an account which is within a SaRA scheme; |
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