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Finance Bill
Schedule 18 — Pensions schemes: abolition of relief for life assurance premium contributions etc

217

 

(a)   

rights under a non-group life policy (see subsection (2)) are

(or later become) held for the purposes of the pension

scheme, and

(b)   

the contributions are treated by this section as paid in respect

of premiums under the non-group life policy (see subsections

5

(3) to (5)).

(2)   

For the purposes of this section a “non-group life policy” is a policy

of insurance under which the only benefits which may become

payable are benefits payable in consequence, or in anticipation, of—

(a)   

the death of the individual or one of a group of individuals

10

which includes the individual, or

(b)   

the deaths of more than one of a group of individuals—

(i)   

which includes the individual, and

(ii)   

the other members of which are connected with the

individual.

15

(3)   

Contributions paid by or on behalf of the individual under the

pension scheme are treated as paid in respect of premiums under the

non-group life policy if—

(a)   

the payment of the contributions constitutes the payment of

premiums under the policy, or

20

(b)   

the person by whom the contributions are paid intends the

contributions (or an amount equivalent to them) to be

applied towards paying premiums under the policy.

(4)   

Where the amount of the premiums under the policy in a tax year

exceeds the amount of any contributions treated as paid in respect of

25

the premiums by subsection (3), other contributions paid by or on

behalf of the individual under the pension scheme in the tax year are

treated as paid in respect of premiums under the policy to the extent

that their amount does not exceed the difference between the amount

of the premiums and the amount of any contributions treated as paid

30

in respect of the premiums by subsection (3).

(5)   

But where—

(a)   

the benefits under the policy relate to the death of one or

more of a group of individuals, and

(b)   

contributions are also paid under the pension scheme in the

35

tax year by or on behalf of another member or other members

of the group,

   

the amount of the contributions paid by or on behalf of the

individual which are treated as paid in respect of premiums under

the policy by subsection (4) does not exceed what is just and

40

reasonable having regard to the operation of section 188(3)(aa) in

relation to the contributions paid by or on behalf of another member

or other members of the group.

(6)   

The Commissioners for Her Majesty’s Revenue and Customs may by

regulations amend subsections (2) to (5).

45

(7)   

Regulations under subsection (6) which limit—

(a)   

the policies of insurance which are non-group life assurance

policies for the purposes of this section, or

 

 

Finance Bill
Schedule 18 — Pensions schemes: abolition of relief for life assurance premium contributions etc

218

 

(b)   

the contributions which are treated by this section as paid in

respect of premiums under such policies,

   

may be made so as to have effect in relation to times before they are

made.

(8)   

For the purposes of this section an individual (“A”) is connected with

5

another individual (“B”) if—

(a)   

A is B’s spouse or civil partner,

(b)   

A is a relative of B,

(c)   

A is the spouse or civil partner of a relative of B,

(d)   

A is a relative of B’s spouse or civil partner, or

10

(e)   

A is the spouse or civil partner of a relative of B’s spouse or

civil partner;

   

and for the purposes of this subsection “relative” means brother,

sister, ancestor or lineal descendant.”

Commencement: schemes other than occupational pension schemes

15

4     (1)  

In relation to contributions under any pension scheme that is not an

occupational pension scheme, the amendments made by this Schedule have

effect in relation to contributions paid on or after 6th April 2007.

      (2)  

But they do not have effect in relation to such contributions paid at any time

if the contributions are treated as paid in respect of premiums under a policy

20

of insurance which at that time is a protected policy (see paragraph 5).

5     (1)  

This paragraph specifies when a policy of insurance is a protected policy in

a case where the rights under it are held for the purposes of a pension

scheme that is not an occupational pension scheme.

      (2)  

A policy of insurance within sub-paragraph (3) or (4) is a protected policy

25

but only until a relevant event occurs (see sub-paragraphs (5) and (6)).

      (3)  

A policy of insurance is within this sub-paragraph if—

(a)   

it is issued in respect of insurances made before 6th December 2006,

(b)   

the pension scheme became a registered pension scheme before that

date, and

30

(c)   

rights under the policy became held for the purposes of the pension

scheme before that date.

      (4)  

A policy of insurance is within this sub-paragraph if—

(a)   

it is issued in respect of insurances made before 6th April 2007,

(b)   

the pension scheme became a registered pension scheme before that

35

date,

(c)   

rights under the policy became held for the purposes of the pension

scheme before that date,

(d)   

the policy was issued in pursuance of a proposal made in writing (by

whatever means) and received by or on behalf of the insurer on or

40

before 13th December 2006,

(e)   

the amount of the benefits payable under the policy (at the latest of

the time when the insurances were made, the pension scheme was

registered or rights under the policy became held for the purposes of

the pension scheme) is no more than the amount applied for in the

45

proposal,

 

 

Finance Bill
Schedule 18 — Pensions schemes: abolition of relief for life assurance premium contributions etc

219

 

(f)   

the period for which benefits are so payable (at the latest of those

times) is no longer than the period specified in the proposal, and

(g)   

the policy is not a protected policy by virtue of sub-paragraph (3).

      (5)  

For the purposes of sub-paragraph (2) a “relevant event” occurs if, after the

relevant time, the terms of the policy are varied so as to—

5

(a)   

increase the benefits payable under the policy, or

(b)   

extend the period during which benefits are so payable.

      (6)  

“The relevant time”—

(a)   

in the case of a policy of insurance within sub-paragraph (3) which is

issued in respect of insurances made before 6th April 2006, is 20th

10

March 2007,

(b)   

in the case of any other policy of insurance within sub-paragraph (3),

is 5th December 2006, and

(c)   

in the case of a policy of insurance within sub-paragraph (4), is the

time when it became a protected policy.

15

Commencement: occupational pension schemes

6     (1)  

In relation to contributions under any occupational pension scheme, the

amendments made by this Schedule have effect in relation to contributions

paid on or after 1st August 2007.

      (2)  

But they do not have effect in relation to such contributions paid at any time

20

if the contributions are treated as paid in respect of premiums under a policy

of insurance which at that time is a protected policy (see paragraph 7).

7     (1)  

This paragraph specifies when a policy of insurance is a protected policy in

a case where the rights under it are held for the purposes of an occupational

pension scheme.

25

      (2)  

A policy of insurance within sub-paragraph (3) or (4) is a protected policy

but only until a relevant event occurs (see sub-paragraphs (5) to (7)).

      (3)  

A policy of insurance is within this sub-paragraph if—

(a)   

it is issued in respect of insurances made before 21st March 2007,

(b)   

the pension scheme became a registered pension scheme before that

30

date, and

(c)   

rights under the policy became held for the purposes of the pension

scheme before that date.

      (4)  

A policy of insurance is within this sub-paragraph if—

(a)   

it is issued in respect of insurances made before 1st August 2007,

35

(b)   

the pension scheme became a registered pension scheme before that

date,

(c)   

rights under the policy became held for the purposes of the pension

scheme before that date,

(d)   

the policy was issued in pursuance of a proposal made in writing (by

40

whatever means) and received by or on behalf of the insurer before

29th March 2007,

(e)   

the amount of the benefits payable under the policy (at the latest of

the time when the insurances were made, the pension scheme was

registered or rights under the policy became held for the purposes of

45

 

 

Finance Bill
Schedule 19 — Alternatively secured pensions and transfer lump sum death benefit etc

220

 

the pension scheme) is no more than the amount applied for in the

proposal,

(f)   

the period for which benefits are so payable (at the latest of those

times) is no longer than the period specified in the proposal, and

(g)   

the policy is not a protected policy by virtue of sub-paragraph (3).

5

      (5)  

For the purposes of sub-paragraph (2) a “relevant event” occurs if, after the

relevant time, the terms of the policy are varied so as to—

(a)   

increase the benefits payable under the policy, or

(b)   

extend the period during which benefits are so payable.

      (6)  

“The relevant time”—

10

(a)   

in the case of a policy of insurance within sub-paragraph (3), is 20th

March 2007, and

(b)   

in the case of a policy of insurance within sub-paragraph (4), is the

time when it became a protected policy.

      (7)  

A variation of the terms of a policy made in order to comply with the

15

Employment Equality (Age) Regulations 2006 (S.I. 2006/1031) or

Employment Equality (Age) Regulations (Northern Ireland) 2006 (S.R.

2006/261) (or any regulations amending or replacing them) is to be ignored

for the purposes of sub-paragraph (5).

Power to amend commencement provisions

20

8     (1)  

The Commissioners for Her Majesty’s Revenue and Customs may by

regulations amend paragraphs 4 to 7.

      (2)  

Regulations under sub-paragraph (1) having the effect of limiting the

contributions which are life assurance premium contributions may be made

so as to have effect in relation to times before they are made.

25

Schedule 19

Section 68

 

Alternatively secured pensions and transfer lump sum death benefit etc

Introduction

1          

Part 4 of FA 2004 (pension schemes etc) is amended as follows.

Alternatively secured pension: guaranteed pension and maximum

30

2     (1)  

In section 165(1) (pension rules) is amended as follows.

      (2)  

In pension rule 2 (guaranteed pensions)—

(a)   

for “, an annuity or alternatively secured pension” substitute “or an

annuity”, and

(b)   

for “, annuity or alternatively secured pension” substitute “or

35

annuity”.

      (3)  

In pension rule 7 (maximum alternatively secured pension), for “70%”

substitute “90%”.

 

 

Finance Bill
Schedule 19 — Alternatively secured pensions and transfer lump sum death benefit etc

221

 

3          

In paragraph 12 of Schedule 28 (pension rules: alternatively secured pension

year), omit sub-paragraphs (3) and (4) (guaranteed pensions).

Maximum dependants’ alternatively secured pension

4          

In section 167(1) (pension death benefit rules), in pension death benefit rule

6 (maximum dependants’ alternatively secured pension), for “70%”

5

substitute “90%”.

Abolition of transfer lump sum death benefit

5          

In section 168(1) (lump sum death benefit rule), omit paragraph (g) (transfer

lump sum death benefit).

6          

Omit section 172B(5)(a) (reduction for transfer lump sum death benefit).

10

7          

In section 188(5) (amounts not to be treated as contributions), omit

paragraph (b) and the word “and” before it.

8          

In section 280(2) (index), omit the entry relating to transfer lump sum death

benefit.

9          

In Schedule 29, omit paragraph 19 (transfer lump sum death benefit).

15

10         

In paragraph 17A of Schedule 36 (“enhanced protection”)—

(a)   

in sub-paragraph (1), insert “or” after paragraph (a) and omit

paragraph (c) and the word “or” before it, and

(b)   

in sub-paragraph (2), omit “, or to a transfer lump sum death benefit

being paid,”.

20

Untraceable members

11         

In paragraph 11 of Schedule 28 (member’s alternatively secured pension

fund), insert at the end—

    “(6)  

Sub-paragraph (7) applies if—

(a)   

at the time when the member reaches the age of 75, the

25

scheme administrator has been unable to ascertain the

member’s whereabouts after having taken all reasonable

steps to do so, and

(b)   

paragraph 8(2) applies in relation to the member and the

arrangement and none of the sums or assets held for the

30

purposes of the arrangement are member-designated

funds immediately before it applies.

      (7)  

In that case the references in sub-paragraphs (2) and (3) to the time

when the member reached the age of 75 are to be read as referring

to the end of the period of six months beginning with any later

35

date on which the member’s whereabouts are subsequently

ascertained by the scheme administrator.”

Increase in rights on death

12    (1)  

Section 172B (increase in rights of connected person on death) is amended as

follows.

40

 

 

Finance Bill
Schedule 19 — Alternatively secured pensions and transfer lump sum death benefit etc

222

 

      (2)  

In subsection (2)(b), for “, alternatively secured pension fund, dependant’s

unsecured pension fund or dependant’s alternatively secured” substitute

“or dependant’s unsecured”.

      (3)  

In subsection (4), for “(6)” substitute “(5)”.

      (4)  

In subsection (7)(a), after “there” insert “are”.

5

      (5)  

After subsection (8) insert—

“(8A)   

Nothing in this section applies in relation to the rights representing

the member’s unsecured pension fund if those rights would

represent the member’s alternatively secured pension fund but for

paragraph 11(6) and (7) of Schedule 28.”

10

13         

After that section insert—

“172BA  

 Increase in rights on death arising from alternatively secured

pension fund etc

(1)   

This section applies if, at any time (“the relevant time”) after the

death of a member of a registered pension scheme, another member

15

of the pension scheme becomes entitled to alternatively secured

rights.

(2)   

“Alternatively secured rights” are rights representing the whole or

part of the dead member’s alternatively secured pension fund, or

dependant’s alternatively secured pension fund, in respect of an

20

arrangement under the pension scheme.

(3)   

The pension scheme is to be treated as making an unauthorised

payment to the other member (or to the other member’s personal

representatives).

(4)   

Subject to subsection (5), the amount of the unauthorised payment is

25

the amount by which—

(a)   

the consideration which might be expected to be received in

respect of an assignment (or assignation) of the benefits to

which the other member is actually or prospectively entitled

under the pension scheme immediately after the relevant

30

time, exceeds

(b)   

the consideration which might be expected to be received in

respect of such an assignment (or assignation) immediately

before the relevant time.

(5)   

But that amount is to be reduced by so much (if any) of the excess as

35

arises from the other member becoming entitled to pension death

benefits or lump sum death benefits in respect of the dead member.

(6)   

This section does not apply if the other member’s entitlement to the

alternatively secured rights is brought about by an assignment (or

agreement to assign) within section 172.

40

(7)   

Rights representing the member’s unsecured pension fund are

alternatively secured rights for the purposes of this section if they

would be rights representing the member’s alternatively secured

pension fund but for paragraph 11(6) and (7) of Schedule 28.”

 

 

Finance Bill
Schedule 19 — Alternatively secured pensions and transfer lump sum death benefit etc

223

 

Minimum alternatively secured pension and dependants’ alternatively secured pension

14         

After section 181 insert—

“Alternatively secured pensions

“181A   

  Minimum level of payment

(1)   

The total amount of alternatively secured pension paid to a member

5

of a registered pension scheme in each alternatively secured pension

year in respect of a money purchase arrangement under the pension

scheme must be at least 55% of the basis amount for the alternatively

secured pension year (but subject to subsection (5)).

(2)   

The total amount of dependants’ alternatively secured pension paid

10

to a dependant of a member of a registered pension scheme in each

alternatively secured pension year in respect of a money purchase

arrangement under the pension scheme must be at least 55% of the

basis amount for the alternatively secured pension year (but subject

to subsection (5)).

15

(3)   

If subsection (1) or (2) is not complied with in an alternatively

secured pension year in the case of any arrangement under a

registered pension scheme, the pension scheme is to be treated as

having made a scheme chargeable payment when the alternatively

secured pension year ends.

20

(4)   

The amount of the scheme chargeable payment is the difference

between—

(a)   

the total amount of alternatively secured pension paid to the

member, or of the dependants’ alternatively secured pension

paid to the dependant, in respect of the arrangement in the

25

alternatively secured pension year, and

(b)   

55% of the basis amount for the alternatively secured pension

year,

   

(or, if nothing is so paid, 55% of the basis amount for the alternatively

secured pension year).

30

(5)   

Subsection (1) or (2) does not apply in relation to an alternatively

secured pension year if—

(a)   

it is the alternatively secured pension year ending

immediately before the death of the member or dependant,

or

35

(b)   

in the alternatively secured pension year the member’s

alternatively secured pension fund, or the dependant’s

alternatively secured pension fund, in respect of the

arrangement is applied on pension or annuity provision (see

subsection (6)).

40

(6)   

The member’s alternatively secured pension fund, or the

dependant’s alternatively secured pension fund, in respect of the

arrangement is applied on pension or annuity provision if all of the

sums and assets representing it are applied in one or more of the

following ways—

45

(a)   

towards the provision of a scheme pension or dependants’

scheme pension;

 

 

 
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