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Finance (No. 3) Bill


Finance (No. 3) Bill
Schedule 16 — Benefits under pension schemes
Part 3 — Commencement and transitional provision

264

 

Member’s unsecured or alternatively secured pension fund existing on 5 April 2011

88         

Paragraph 8(1A) of Schedule 28 to FA 2004 (member’s drawdown pension

fund) has effect on and after 6 April 2011 as if any reference to sums or assets

having been designated as available for the payment of drawdown pension

included a reference to sums or assets having been designated, before that

5

date, as available for the payment of unsecured pension or alternatively

secured pension.

Current unsecured pension year to become drawdown pension year

89    (1)  

This paragraph applies in the case of a person who, immediately before 6

April 2011, was entitled to unsecured pension.

10

      (2)  

Where the last unsecured pension year began on or after 7 April 2010, the

reference in paragraph 9(1)(a) of Schedule 28 to FA 2004 (drawdown pension

year) to the day on which the member first becomes entitled to drawdown

pension is to be read as a reference to the day on which that unsecured

pension year began.

15

      (3)  

Accordingly, any unsecured pension year which began on or after 7 April

2010 is to be regarded, on and after 6 April 2011, as a drawdown pension

year.

      (4)  

In this paragraph and paragraphs 90 and 91 “the last unsecured pension

year” means the unsecured pension year in which 5 April 2011 fell.

20

Previous limit on amount of pension payable in year to apply for limited period

90    (1)  

This paragraph applies in the case of a person who, immediately before 6

April 2011—

(a)   

was entitled to unsecured pension, and

(b)   

had not reached the age of 75.

25

      (2)  

Where, immediately before 6 April 2011, the last reference period to begin

before that date has not ended—

(a)   

pension rule 5 in section 165 of FA 2004 has effect in relation to every

drawdown pension year ending on or before the relevant date as if

for “100%” there were substituted “120%”, and

30

(b)   

paragraph 10 of Schedule 28 to FA 2004 has effect with the following

modifications—

(i)   

the reference in sub-paragraph (1) to the first drawdown

pension year is to be read as a reference to the first drawdown

pension year beginning after the relevant date;

35

(ii)   

any reference in sub-paragraphs (1ZA) to (1C) to a reference

period is to be read as including a reference to the current

reference period.

      (3)  

The “relevant date” is the earlier of the following—

(a)   

the day on which the current reference period ends, and

40

(b)   

if a transfer within sub-paragraph (5) occurs in relation to the person,

the day on which the drawdown pension year in which the transfer

takes place ends.

 
 

Finance (No. 3) Bill
Schedule 16 — Benefits under pension schemes
Part 3 — Commencement and transitional provision

265

 

      (4)  

Subject to the operation of paragraph 10(1ZA) and (1B) of Schedule 28 to FA

2004, “the current reference period” is the period of 5 years beginning before

6 April 2011 and comprising—

(a)   

the drawdown pension year in which that date falls,

(b)   

any unsecured pension years which—

5

(i)   

began after the end of the last reference period ending before

that date, and

(ii)   

ended before that date,

   

and

(c)   

if the sum of the years falling within paragraphs (a) and (b) is less

10

than five, one or more drawdown pension years beginning after that

date.

      (5)  

A transfer is within this sub-paragraph if—

(a)   

it takes place on or after 6 April 2011, and

(b)   

it is a recognised transfer for the purposes of Part 4 of FA 2004 (see

15

section 169 of that Act).

      (6)  

For the purposes of pension rule 5 in section 165 of FA 2004, the amount

which, immediately before 6 April 2011, was by virtue of paragraph 10 of

Schedule 28 to FA 2004 the basis amount for the last unsecured pension year

continues, on and after that date, to be the basis amount for every drawdown

20

pension year ending on or before the relevant date.

           

This is subject to sub-paragraphs (4)(b) and (5) of that paragraph.

      (7)  

Paragraph 10(4) of Schedule 28 to FA 2004 has effect for drawdown pension

years beginning on or after 6 April 2011 and ending on or before the relevant

date as it has effect for drawdown pension years falling within any reference

25

period beginning after the relevant date, but as if—

(a)   

paragraph (a) were omitted,

(b)   

in paragraph (b), for “otherwise” there were substituted “if there has

been a recent annuity, recent additional fund designation or recent

pension sharing event”, and

30

(c)   

in paragraph 10(9) of that Schedule—

(i)   

the reference to the reference date were a reference to the day

on which the last unsecured pension year began, and

(ii)   

the reference to the immediately preceding drawdown

pension year included, in the case of a drawdown pension

35

year beginning on 6 April 2011, a reference to the last

unsecured pension year.

      (8)  

In paragraph 10(7) to (8A) of that Schedule any reference to drawdown

pension or the member’s drawdown pension fund is to be read as including,

in relation to anything occurring before 6 April 2011, a reference to

40

unsecured pension or the member’s unsecured pension fund.

91    (1)  

This paragraph applies in the case of a person who—

(a)   

reached the age of 75 on or after 22 June 2010 and before 6 April 2011,

and

(b)   

immediately before 6 April 2011, was entitled to unsecured pension.

45

      (2)  

Where the last unsecured pension year began on or after 7 April 2010—

(a)   

pension rule 5 in section 165 of FA 2004 has effect in relation to that

year as if for “100%” there were substituted “120%”, and

 
 

Finance (No. 3) Bill
Schedule 16 — Benefits under pension schemes
Part 3 — Commencement and transitional provision

266

 

(b)   

for the purposes of that pension rule, the amount which,

immediately before 6 April 2011, was the basis amount for that year

by virtue of paragraph 10 of Schedule 28 to FA 2004 continues, on

and after that date, to be the basis amount for that year.

      (3)  

The amendments made by paragraph 9 of this Schedule have effect in

5

relation to drawdown pension years beginning on or after 6 April 2011.

Drawdown pension year and basis amount where person’s whereabouts unknown at age 75

92    (1)  

This paragraph applies in the case of a person who—

(a)   

reached the age of 75 before 22 June 2010, and

(b)   

immediately before 6 April 2011, had a member’s unsecured pension

10

fund by virtue of paragraph 11(6) and (7) of Schedule 28 to FA 2004

(cases where member’s whereabouts are unknown at age 75).

      (2)  

In a case where—

(a)   

the scheme administrator was unable to ascertain the person’s

whereabouts during the relevant period, but

15

(b)   

the person’s whereabouts are ascertained by the scheme

administrator after the end of that period,

           

the reference in paragraph 9(1)(a) of Schedule 28 to FA 2004 (drawdown

pension year) to the day on which the member first becomes entitled to

drawdown pension is to be read as a reference to the day on which the

20

person’s whereabouts are so ascertained.

      (3)  

The “relevant period” is the period beginning with the person’s 75th

birthday and ending with 5 April 2011.

      (4)  

In a case where the person’s whereabouts have been ascertained by the

scheme administrator within the period of 6 months ending on 6 April 2011,

25

the reference in paragraph 9(1)(a) of that Schedule to the day on which the

member first becomes entitled to drawdown pension is to be read as a

reference to 6 April 2011.

Current alternatively secured pension year to become drawdown pension year

93    (1)  

This paragraph applies in the case of a person who, immediately before 6

30

April 2011, was entitled to alternatively secured pension.

      (2)  

Where the last alternatively secured pension year began on or after 7 April

2010, the reference in paragraph 9(1)(a) of Schedule 28 to FA 2004

(drawdown pension year) to the day on which the member first becomes

entitled to drawdown pension is to be read as a reference to the day on

35

which that alternatively secured pension year began.

      (3)  

Accordingly, any alternatively secured pension year which began on or after

7 April 2010 is to be regarded, on and after 6 April 2011, as a drawdown

pension year.

      (4)  

For the purposes of pension rule 5 in section 165 of FA 2004, the amount

40

which, immediately before 6 April 2011, was the basis amount for that

alternatively secured pension year by virtue of paragraph 13 of Schedule 28

to FA 2004 continues, on and after that date, to be the basis amount for that

year.

 
 

Finance (No. 3) Bill
Schedule 16 — Benefits under pension schemes
Part 3 — Commencement and transitional provision

267

 

      (5)  

In this paragraph “the last alternatively secured pension year” means the

alternatively secured pension year in which 5 April 2011 fell.

Entitlement to dependants’ unsecured or alternatively secured pension on 5 April 2011

94         

Any person who, immediately before 6 April 2011, was entitled to

dependants’ unsecured pension or dependants’ alternatively secured

5

pension is to be treated, on and after that date, as entitled to dependants’

drawdown pension.

95         

Paragraph 20 of Schedule 28 to FA 2004 (short-term annuity) has effect on

and after 6 April 2011 as if the reference to an annuity purchased by the

application of sums or assets representing the whole or any part of the

10

dependant’s drawdown pension fund in respect of an arrangement

included a reference to an annuity purchased before that date by the

application of sums or assets representing the whole or any part of the

dependant’s unsecured pension fund in respect of the arrangement.

Dependant’s unsecured or alternatively secured pension fund existing on 5 April 2011

15

96         

Paragraph 22(2) of Schedule 28 to FA 2004 (dependant’s drawdown pension

fund) has effect on and after 6 April 2011 as if any reference to sums or assets

having been designated as available for the payment of dependants’

drawdown pension included a reference to sums or assets having been

designated, before that date, as available for the payment of dependants’

20

unsecured pension or dependants’ alternatively secured pension.

Current unsecured pension year to become drawdown pension year

97    (1)  

This paragraph applies in the case of a person who, immediately before 6

April 2011, was entitled to dependants’ unsecured pension.

      (2)  

Where the last unsecured pension year began on or after 7 April 2010, the

25

reference in paragraph 23(1)(a) of Schedule 28 to FA 2004 (drawdown

pension year) to the day on which the dependant first becomes entitled to

dependants’ drawdown pension is to be read as a reference to the day on

which that unsecured pension year began.

      (3)  

Accordingly, any unsecured pension year which began on or after 7 April

30

2010 is to be regarded, on and after 6 April 2011, as a drawdown pension

year.

      (4)  

In this paragraph and paragraphs 98 and 99 “the last unsecured pension

year” means the unsecured pension year in which 5 April 2011 fell.

Previous limit on amount of pension payable in year to apply for limited period

35

98    (1)  

This paragraph applies in the case of a person who, immediately before 6

April 2011—

(a)   

was entitled to dependants’ unsecured pension, and

(b)   

had not reached the age of 75.

      (2)  

Where, immediately before 6 April 2011, the last reference period to begin

40

before that date has not ended—

 
 

Finance (No. 3) Bill
Schedule 16 — Benefits under pension schemes
Part 3 — Commencement and transitional provision

268

 

(a)   

pension death benefit rule 4 in section 167 of FA 2004 has effect in

relation to every drawdown pension year ending on or before the

relevant date as if for “100%” there were substituted “120%”, and

(b)   

paragraph 24 of Schedule 28 to FA 2004 has effect with the following

modifications—

5

(i)   

the reference in sub-paragraph (1) to the first drawdown

pension year is to be read as a reference to the first drawdown

pension year beginning after the relevant date;

(ii)   

any reference in sub-paragraphs (1ZA) to (1C) to a reference

period is to be read as including a reference to the current

10

reference period.

      (3)  

The “relevant date” is the earlier of the following—

(a)   

the day on which the current reference period ends, and

(b)   

if a transfer within sub-paragraph (5) occurs in relation to the person,

the day on which the drawdown pension year in which the transfer

15

takes place ends.

      (4)  

Subject to the operation of paragraph 24(1ZA) and (1B) of Schedule 28 to FA

2004, “the current reference period” is the period of 5 years beginning before

6 April 2011 and comprising—

(a)   

the drawdown pension year in which that date falls,

20

(b)   

any unsecured pension years that—

(i)   

began after the end of the last reference period ending before

that date, and

(ii)   

ended before that date,

   

and

25

(c)   

if the sum of the years falling within paragraphs (a) and (b) is less

than five, one or more drawdown pension years beginning after that

date.

      (5)  

A transfer is within this sub-paragraph if—

(a)   

it takes place on or after 6 April 2011, and

30

(b)   

it is a recognised transfer for the purposes of Part 4 of FA 2004 (see

section 169 of that Act).

      (6)  

For the purposes of pension death benefit rule 4 in section 167 of FA 2004,

the amount which, immediately before 6 April 2011, was by virtue of

paragraph 24 of Schedule 28 to FA 2004 the basis amount for the last

35

unsecured pension year continues, on and after that date, to be the basis

amount for every drawdown pension year ending on or before the relevant

date.

           

This is subject to sub-paragraphs (4)(b) and (5) of that paragraph.

      (7)  

Paragraph 24(4) of Schedule 28 to FA 2004 has effect for drawdown pension

40

years beginning after 6 April 2011 and ending on or before the relevant date

as it has effect for drawdown pension years falling within any reference

period beginning after the relevant date, but as if—

(a)   

paragraph (a) were omitted,

(b)   

in paragraph (b), for “otherwise” there were substituted “if there has

45

been a recent annuity, recent additional fund designation or recent

pension sharing event”, and

(c)   

in paragraph 24(9) of that Schedule—

 
 

Finance (No. 3) Bill
Schedule 16 — Benefits under pension schemes
Part 3 — Commencement and transitional provision

269

 

(i)   

the reference to the reference date were a reference to the day

on which the last unsecured pension year began, and

(ii)   

the reference to the immediately preceding drawdown

pension year included, in the case of a drawdown pension

year beginning on 6 April 2011, a reference to the last

5

unsecured pension year.

      (8)  

In paragraph 24(7) to (8A) of that Schedule any reference to dependants’

drawdown pension or the dependant’s drawdown pension fund is to be

read as including, in relation to anything occurring before 6 April 2011, a

reference to dependants’ unsecured pension or the dependant’s unsecured

10

pension fund.

99    (1)  

This paragraph applies in the case of a person who—

(a)   

reached the age of 75 on or after 22 June 2010 and before 6 April 2011,

and

(b)   

immediately before 6 April 2011, was entitled to dependants’

15

unsecured pension.

      (2)  

Where the last unsecured pension year began on or after 7 April 2010—

(a)   

pension death benefit rule 4 in section 167 of FA 2004 has effect in

relation to that year as if for “100%” there were substituted “120%”,

and

20

(b)   

for the purposes of that pension death benefit rule, the amount

which, immediately before 6 April 2011, was the basis amount for

that year by virtue of paragraph 24 of Schedule 28 to FA 2004

continues, on and after that date, to be the basis amount for that year.

      (3)  

The amendments made by paragraph 19 of this Schedule have effect in

25

relation to drawdown pension years beginning on or after 6 April 2011.

Current alternatively secured pension year to become drawdown pension year

100   (1)  

This paragraph applies in the case of a person who, immediately before 6

April 2011, was entitled to dependants’ alternatively secured pension.

      (2)  

Where the last alternatively secured pension year began on or after 7 April

30

2010, the reference in paragraph 23(1)(a) of Schedule 28 to FA 2004

(drawdown pension year) to the day on which the dependant first becomes

entitled to drawdown pension is to be read as a reference to the day on

which that alternatively secured pension year began.

      (3)  

Accordingly, any alternatively secured pension year which began on or after

35

7 April 2010 is to be regarded, on and after 6 April 2011, as a drawdown

pension year.

      (4)  

For the purposes of pension death benefit rule 4 in section 167 of FA 2004,

the amount which, immediately before 6 April 2011, was the basis amount

for that alternatively secured pension year by virtue of paragraph 27 of

40

Schedule 28 to FA 2004 continues, on and after that date, to be the basis

amount for that year.

      (5)  

In this paragraph “the last alternatively secured pension year” means the

alternatively secured pension year in which 5 April 2011 fell.

 
 

Finance (No. 3) Bill
Schedule 16 — Benefits under pension schemes
Part 3 — Commencement and transitional provision

270

 

Lump sums and lump sum death benefits

101        

The amendments made by paragraphs 24 to 26, 31 and 79(2) and (3) have

effect in relation to any lump sum to which a person becomes entitled for the

purposes of Part 4 of FA 2004 on or after 6 April 2011.

102        

The amendments made by paragraphs 27 to 30, 40, 42(2)(a) and (3), 63, 77(4),

5

81(2) and (4), 82(3) to (5) and 83 have effect in relation to lump sums paid on

or after 6 April 2011.

103        

The amendments made by paragraphs 33 to 39, 41, 42(2)(b) and (c), (4) and

(5), 65, 67, 68, 75(a), 76, 77(5), 79(4) and 82(6) have effect in relation to deaths

occurring on or after 6 April 2011.

10

Lifetime allowance charge

104   (1)  

The amendments made by paragraphs 43, 44, 73, 80 and 82(2) have effect in

relation to benefit crystallisation events occurring on or after 6 April 2011.

      (2)  

Any reference in a provision within sub-paragraph (3) to an amount

previously crystallised on the designation of sums or assets as available for

15

the payment of drawdown pension includes a reference to an amount

crystallised before 6 April 2011 on the designation of sums or assets as

available for the payment of unsecured pension.

      (3)  

The provisions are—

(a)   

paragraph 3(2) of Schedule 32 to FA 2004 (benefit crystallisation

20

events 1 and 2: prevention of overlap);

(b)   

paragraph 4(2) of that Schedule (benefit crystallisation events 1 and

4: prevention of overlap);

(c)   

paragraph 17(2) of that Schedule (benefit crystallisation event 8:

prevention of overlap with other events).

25

Inheritance tax

105        

The amendments made by paragraphs 47 and 50 have effect in relation to

dispositions made (or treated as made) on or after 6 April 2011.

106        

The amendments made by paragraphs 48 and 51 to 57 have effect in relation

to deaths occurring on or after 6 April 2011.

30

Consequential repeals

107        

Any repeal in paragraph 84 has effect to the same extent as the provision of

this Schedule to which the repeal relates.

Power to make retrospective provision in orders and regulations under Part 4 of FA 2004

108   (1)  

This paragraph applies to any order or regulations under Part 4 of FA 2004

35

which—

(a)   

are made in the tax year beginning on 6 April 2011, and

(b)   

are made in consequence of, or for the purposes of, or for giving full

effect to, the amendments of that Part made by this Schedule.

      (2)  

Section 282 of that Act (orders and regulations) has effect in relation to any

40

order or regulations to which this paragraph applies as if in subsection (A1)

 
 

 
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Revised 31 March 2011