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Rights of Savers Bill


Rights of Savers Bill
Part 2 — Retirement income reform

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“account investor” means the individual who subscribes to an account;

“the Authority” means the Pensions Regulator established under section

1 of the 2004 Act;

“designated scheme”, in relation to an employer, means a scheme

designated by him for the purposes of section 3(2);

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“drawdown” means the withdrawal of cash from an account prior to

retirement;

“employee” has the meaning given by section 181(1) of the 1993 Act;

“occupational pension scheme” and “personal pension scheme” have the

meanings given by section 1 of the 1993 Act;

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“pension scheme” means an occupational pension scheme or a personal

pension scheme;

“prescribed” means prescribed by regulations made by the Secretary of

State;

“SaRA scheme” shall be construed in accordance with section 1.

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(2)   

The Secretary of State may by regulations make provision for a SaRA scheme

which—

(a)   

is prescribed or is of a prescribed description, and

(b)   

would (apart from the regulations) be an occupational pension scheme,

   

to be treated for all purposes, or for such purposes as may be prescribed, as if

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it were a personal pension scheme and not an occupational pension scheme.

(3)   

This Part applies to a pension scheme managed by or on behalf of the Crown

as it applies to other pension schemes; and, accordingly, references in this Part

to a person in his capacity as a trustee or manager of, or person prescribed in

relation to, a pension scheme include the Crown, or a person acting on behalf

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of the Crown, in that capacity.

(4)   

This Part applies to persons employed by or under the Crown in like manner

as if such persons were employed by a private person; and references in this

Part to a person in his capacity as an employer include the Crown, or a person

acting on behalf of the Crown, in that capacity.

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(5)   

Subsections (3) and (4) do not apply to any provision of this Part under or by

virtue of which a person may be prosecuted for an offence; but such a provision

applies to persons in the public service of the Crown as it applies to other

persons.

(6)   

Nothing in this Part applies to Her Majesty in Her private capacity (within the

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meaning of the Crown Proceedings Act 1947 (c. 44)).

Part 2

Retirement income reform

9       

Retirement Income Funds

(1)   

The Finance Act 2004 (c. 12) is amended as follows.

40

(2)   

After section 152 (meaning of “arrangement”), insert—

“152A   

Meaning of ‘Retirement Income Fund’

(1)   

In this Part, a Retirement Income Fund means a scheme for the

reinvestment of savings in retirement which—

 
 

Rights of Savers Bill
Part 2 — Retirement income reform

9

 

(a)   

is operated by or on behalf of a person authorised to operate a

registered pension scheme,

(b)   

is a scheme in which investments are approved by the Inland

Revenue, and

(c)   

meets the conditions set out in subsections (2) to (9).

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(2)   

The first condition is that, subject to the other conditions in this section,

funds held in the Retirement Income Fund may be invested and

withdrawn by the member as and when he elects.

(3)   

The second condition is that an authorised Retirement Income Fund

provider must set an annual maximum withdrawal allowance for each

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member, based on an assessment of each member’s life expectancy, and

a member’s withdrawals from the fund in any one year must not

exceed that allowance.

(4)   

The third condition is that, in setting annual maximum withdrawal

allowances, an authorised provider must ensure that no member’s total

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future annual income falls below the Minimum Retirement Income

level (as set under section 11 of the Rights of Savers Act 2005) except in

the circumstances provided for in the sixth condition.

(5)   

The fourth condition is that an authorised provider must set an annual

minimum withdrawal allowance so that each member’s total income is

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at least equivalent to the Minimum Retirement Income level, except in

the circumstances provided for in the sixth condition.

(6)   

The fifth condition is that if a member chooses not to declare his total

annual income to the authorised provider he must withdraw funds

equivalent to the level of the Minimum Retirement Income level or his

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annual maximum withdrawal allowance, whichever is the lower.

(7)   

The sixth condition is that, where there are insufficient funds to enable

the annual minimum withdrawal allowance to be set so that a

member’s total income is at least equivalent to the Minimum

Retirement Income level, the allowance should be set at the highest

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level consistent with the assessment of the member’s life expectancy.

(8)   

The seventh condition is that the maximum and minimum withdrawal

allowances must be set at the same level if a member’s total annual

income, including his maximum withdrawal allowance, is lower than

the Minimum Retirement Income level.

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(9)   

The eighth condition is that a Retirement Income Fund, and any income

derived from it, must not be capable of assignment or surrender by the

member.”

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Amendment of the pension rules

(1)   

Section 165 of the Finance Act 2004 (c. 12) (pension rules) is amended as

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follows.

(2)   

In subsection (1) (which sets out the pension rules)—

(a)   

in Pension Rule 4, after paragraph (a), insert—

“(aa)   

a withdrawal from a Retirement Income Fund,”;

 
 

Rights of Savers Bill
Part 4 — Miscellaneous and final provisions

10

 

(b)   

in Pension Rule 4, after the second appearance of the words “scheme

pension”, insert the words “a withdrawal from a Retirement Income

Fund”;

(c)   

in Pension Rule 6, after paragraph (a), insert—

“(aa)   

a withdrawal from a Retirement Income Fund,”;

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(d)   

in Pension Rule 6, after the second appearance of the words “scheme

pension”, insert the words “a withdrawal from a Retirement Income

Fund”.

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Minimum Retirement Income

(1)   

The amount of the Minimum Retirement Income in respect of each tax year

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shall be set by the Chancellor of the Exchequer by order at the level of the

standard minimum guarantee prescribed under section 2 of the State Pension

Credit Act 2002 (c. 16).

(2)   

Before making an order under subsection (1), the Chancellor of the Exchequer

shall consult such persons as he considers appropriate.

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(3)   

An order under this section (other than the order that applies to the first tax

year during which this section is in force) must be made on or before 31st

January of the tax year before the tax year to which the order applies.

12      

Removal of age limit for annuity protection lump sum death benefit

(1)   

Schedule 29 to the Finance Act 2004 (c. 12) is amended as follows.

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(2)   

In paragraph 16(1) (definition of annuity protection lump sum death benefit),

paragraph (a) shall cease to have effect.

Part 3

Promotion of personal pension schemes

13      

Duty of employers to facilitate access to personal pension schemes

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(1)   

Section 3 of the Welfare Reform and Pensions Act 1999 (c. 30) (duty of

employers to facilitate access to stakeholder pension schemes) is amended as

follows.

(2)   

In subsection (9), in the definition of “qualifying scheme”, at the end of

paragraph (b), insert “or

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(c)   

if regulations so provide, any other personal pension as defined

in subsection (1) of section 1 of the Pension Schemes Act 1993

(categories of pension scheme);”.

Part 4

Miscellaneous and final provisions

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14      

Consequential amendments and repeals

(1)   

Schedule 1 (which contains consequential amendments) shall have effect.

(2)   

Schedule 2 (which contains repeals) shall have effect.

 
 

Rights of Savers Bill
Part 4 — Miscellaneous and final provisions

11

 

15      

Regulations and orders

(1)   

Any power of a Minister of the Crown or the Treasury under this Act to make

regulations or an order is exercisable by statutory instrument.

(2)   

Any regulations or order made under this Act (other than an order made under

section 17) shall be laid before Parliament after being made and is subject to

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annulment in pursuance of a resolution of either House of Parliament.

(3)   

Every power conferred by this Act on a Minister of the Crown or the Treasury

to make regulations or an order includes power—

(a)   

to make different provision for different cases (including different

provision in respect of different areas);

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(b)   

to make provision subject to such exemptions and exceptions as the

person making the regulations or order thinks fit; and

(c)   

to make such incidental, supplemental, consequential and transitional

provision as the person making the regulations or order thinks fit.

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Financial provisions

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There shall be paid out of money provided by Parliament

(a)   

any expenditure incurred by a Minister of the Crown or government

department under this Act; and

(b)   

any increase attributable to this Act in the sums which under any other Act

are payable out of sums so provided.

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17      

Short title, commencement and extent

(1)   

This Act may be cited as the Rights of Savers Act 2005.

(2)   

The following provisions of this Act shall come into force on such day as the

Secretary of State may by order determine—

(a)   

Part 1,

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(b)   

section 12, and

(c)   

Part 3,

   

and different days may be appointed for different purposes.

(3)   

Sections 9 to 11 shall come into force on 6th April 2007.

(4)   

This Act does not extend to Northern Ireland.

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Revised 25 October 2005