Legalize / United Kingdom / Public General Act

Finance Act 2004

Type Public General Act

Publication 2004-07-22

Last updated 2025-04-24

State In force

Department Statute Law Database

Source legislation.gov.uk

articles Not indexed

Reform history JSON API

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In section 613(4) (parliamentary pension funds)—

(a) omit “respective” and paragraphs (b) to (d), and

(b) for “those funds” (in both places) substitute “ that Fund ”.

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33

In section 824(9) (repayment supplements), after “settlement” insert “, scheme administrators of registered pension schemes sub-scheme administrators of sub-schemes which form part of a split scheme pursuant to the Registered Pensions (Splitting of Schemes) Regulations 2006”.

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Finance Act 1990 (c. 29)

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Taxation of Chargeable Gains Act 1992 (c. 12)

38

The Taxation of Chargeable Gains Act 1992 is amended as follows.

39

In section 13(10B)(b) (attribution of gains to members of non-resident companies), for “section 271(1)(b), (c), (d), (g) or (h) or (2)” substitute “ section 271(1)(c) or (1A) ”.

40

For sections 239A and 239B (cessation of approval of retirement benefits schemes and withdrawal of approval of personal pension arrangements) substitute—

(239A) (1) This section applies where tax is charged in accordance with section 242 of the Finance Act 2004 (de-registration charge) where the registration of a registered pension scheme is withdrawn. (2) For the purposes of this Act the assets which at the relevant time are held for the purposes of the pension scheme— (a) are treated as having been acquired at the relevant time for a consideration equal to the amount on which tax is charged by virtue of section 242 of the Finance Act 2004 by the person who would be chargeable in respect of a chargeable gain accruing on a disposal of the assets at the relevant time, and (b) are not to be treated as having been disposed of by any person at the relevant time. (3) In subsection (2) “the relevant time” means the time immediately before the date of withdrawal of registration of the pension scheme.

41

In section 288 (1) (interpretation), after the definition of “recognised stock exchange” insert—

“registered pension scheme” has the meaning given by section 150(2) of the Finance Act 2004;

42

(1) Paragraph 2 of Schedule 1 (application of exempt amount and reporting limits in cases involving settled property) is amended as follows.

(2) In sub-paragraph (7)(b)(ii), for “any such scheme or fund as is mentioned in sub-paragraph (8) below” substitute “ a registered pension scheme, a superannuation fund to which section 615(3) of the Taxes Act applies or an occupational pension scheme (within the meaning of section 150(5) of the Finance Act 2004) that is not a registered pension scheme ”.

(3) Omit sub-paragraph (8).

Finance Act 1996 (c. 8)

43

The Finance Act 1996 is amended as follows.

44

In section 148 (mis-sold personal pensions), after subsection (6) insert—

(6A) References in subsections (3)(d) and (6) to provisions of Part 14 of the Taxes Act 1988 are to those provisions as they had effect at the time in question.

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Finance Act 1999 (c. 16)

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Capital Allowances Act 2001 (c. 2)

47

The Capital Allowances Act 2001 is amended as follows.

48

In section 4(2A) (expenditure and sums that are not capital expenditure or capital sums), in the definition of “relevant provision”, for paragraph (d) substitute—

(d) sections 188 to 194of FA 2004 (contributions under registered pension schemes), and

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Finance Act 2002 (c. 23)

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Income Tax (Earnings and Pensions) Act 2003 (c. 1)

54

The Income Tax (Earnings and Pensions) Act 2003 is amended as follows.

55

In section 23(3) (calculation of “chargeable overseas earnings”), in Step 2, for paragraphs (b) and (c) substitute—

(b) sections 188 to 194 of FA 2004 (contributions to registered pension schemes), or

56

In section 54 (1) (calculation of deemed employment payment), in Step 5, for “scheme approved under Chapter 1 or 4 of Part 14 of ICTA” substitute “ registered pension scheme ”.

57

In section 56(8) (application of Income Tax Acts in relation to deemed employment), for “relevant earnings of the worker for the purposes of section 644 of ICTA (relevant earnings for purposes of permissible pension contributions).” substitute “ relevant UK earnings of the worker for the purposes of Part 4 of FA 2004. ”

58

In section 218(4) (“lower-paid employment”: deductions to be subtracted), for the references to sections 592(7) and 594 of ICTA substitute— “ sections 188 to 194 of FA 2004 (contributions to registered pension schemes), or ”.

59

In section 315(5) (limited exemption for expenses connected with certain living accommodation), in Step 3, for paragraph (b) substitute—

(b) sections 188 to 194 of FA 2004 (contributions to registered pension schemes), or

60

(1) Section 327 (deductions from earnings: general) is amended as follows.

(2) In subsection (4), omit the entry relating to section 619 of ICTA.

(3) In subsection (5), for the entries relating to sections 592(7) and 594 (1) of ICTA substitute “ and sections 188 to 194 of FA 2004 (contributions to registered pension schemes). ”

61

In section 381 (deductions from seafarers' earnings: taking account of other deductions), for paragraphs (c) to (e) substitute—

(c) section 262 of CAA 2001 (capital allowances to be given effect by treating them as deductions from earnings), and (d) sections 188 to 194 of FA 2004 (contributions to registered pension schemes).

62

(1) Section 407 (payments and benefits on termination of employment: exception for payments and benefits under tax-exempt pension schemes) is amended as follows.

(2) In subsection (2), for paragraph (a) substitute—

(a) a registered pension scheme, (aa) a scheme set up by a government outside the United Kingdom for the benefit of employees or primarily for their benefit, or

(3) Omit subsection (3).

63

(1) Section 408 (payments and benefits on termination of employment: exception for contributions to tax-exempt pension schemes) is amended as follows.

(2) In subsection (1), for “tax-exempt pension scheme or approved personal pension arrangements” substitute “ registered pension scheme ”.

(3) Omit subsection (2).

(4) In the heading, for “tax-exempt pension schemes” substitute “ registered pension schemes ”.

64

In section 563 (former employees: deductions for liabilities), in the definition of “relevant retirement benefit”, for paragraphs (a) and (b) substitute—

(a) which is received by the former employee under an employer-financed retirement benefits scheme, and (b) which, under Chapter 2 of Part 6, counts as employment income of the former employee.

65

(1) Schedule 1 (abbreviations and defined expressions) is amended as follows.

(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) In Part 2, insert at the appropriate place—

registered pension scheme	section 832 (1) of ICTA

SCHEDULE 36

Part 1 — Pre-commencement pension schemes

Deemed registration of existing schemes

1

(1) Any pension scheme which, immediately before 6th April 2006, is—

(a) a retirement benefits scheme approved for the purposes of Chapter 1 of Part 14 of ICTA,

(b) a former approved superannuation fund (see sub-paragraph (3)),

(c) a relevant statutory scheme, as defined in section 611A of ICTA, or a pension scheme treated by the Inland Revenue on that date as if it were such a relevant statutory scheme,

(d) an annuity contract by means of which benefits provided under a pension scheme within paragraph (a), (b) or (c) have been secured but which does not provide for the immediate payment of benefits,

(e) a scheme or fund mentioned in section 613(4)(b) to (d) of ICTA (Parliamentary pension schemes or funds),

(f) 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, or

(g) a personal pension scheme approved under Chapter 4 of Part 14 of ICTA,

is to be treated as becoming a registered pension scheme on that date.

(2) Where immediately before 6th April 2006 a retirement benefits scheme is, in accordance with section 611 of ICTA, treated as two or more separate schemes, the reference in sub-paragraph (1)(a) to an approved retirement benefits scheme is to such of the separate schemes as are approved (and not to the whole retirement benefits scheme).

(3) For the purposes of sub-paragraph (1)(b) any fund which immediately before 6th April 1980 was an approved superannuation fund for the purposes of section 208 of ICTA 1970 is a former approved superannuation fund unless since 5th April 1980—

(a) the fund has been approved for the purposes of Chapter 1 of Part 14 of ICTA (retirement benefits schemes), or

(b) any sum has been paid under the fund by way of contribution.

(4) Sub-paragraph (1)(a) or (g) applies in relation to a pension scheme approved (for the purposes of Chapter 1, or under Chapter 4, of Part 14 of ICTA) on or after 6th April 2006 if the approval has effect for a period ending with 5th April 2006.

(4A) This Part of this Act applies in relation to a pension scheme that—

(a) is a registered pension scheme by virtue of sub-paragraph (1)(a), and

(b) is neither a public service pension scheme nor an occupational pension scheme,

as it applies in relation to an occupational pension scheme.

(5) This paragraph is subject to paragraph 2 (opt-out).

Opting out of deemed registration

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(1) Paragraph 1 (1) does not apply to a pension scheme if the relevant administrator has, at any time before 6th April 2006, notified the Inland Revenue that the pension scheme is not to become a registered pension scheme on that date.

(2) If, by virtue of sub-paragraph (1) of this paragraph, sub-paragraph (1) of paragraph 1 does not apply to a pension scheme within any of paragraphs (a) to (d), (f) and (g) of that sub-paragraph, income tax is to be charged at the rate of 40% on the relevant amount.

(3) The relevant amount is an amount equal to the aggregate of—

(a) the amount of the sums held for the purposes of the pension scheme immediately before 6th April 2006, and

(b) the market value (at that time) of the assets held for the purposes of the pension scheme at that time.

(4) The liability to income tax is a liability of the person who is the relevant administrator on 5th April 2006 or, if more than one person is the relevant administrator on that date, is a joint and several liability of those persons.

(5) Where tax is charged in accordance with sub-paragraph (2), for the purposes of TCGA 1992 the assets which immediately before 6th April 2006 are held for the purposes of the pension scheme—

(a) are to be treated as having been acquired at that time for a consideration equal to the amount on which tax is charged by virtue of sub-paragraph (2) by the person who would be chargeable in respect of a chargeable gain accruing on a disposal of the assets on that date, and

(b) are not to be treated as having been disposed of by any person at that time.

(6) “Relevant administrator” means—

(a) in the case of a pension scheme within paragraph 1(1)(a), (b) or (c), the person who is, or the persons who are, the administrator of the pension scheme under section 611AA of ICTA,

(b) in the case of a pension scheme within paragraph 1(1)(d) or (f), the trustee or trustees of the pension scheme, or the insurance company which is a party to the contract in which the pension scheme is comprised,

(d) in the case of a pension scheme within paragraph 1(1)(g), the person who is referred to in section 638 (1) of ICTA.

(7) If paragraph 1 (1) does not apply to a pension scheme by virtue of sub-paragraph (1), sections 431B(2) and 466(2B) of ICTA (meaning of pension business: pension scheme ceasing to be a registered pension scheme) apply as if the pension scheme had ceased to be a registered pension scheme at the beginning of 6th April 2006.

Power to modify rules of existing schemes

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(1) The Board of Inland Revenue may by regulations make any modifications of the rules of pension schemes to which paragraph 1 (1) applies if the modifications appear appropriate in consequence of, or in connection with, the provision made by this Part (or the repeals made by this Act in consequence of the provision made by this Part).

(2) Any modifications of the rules of a pension scheme made by the regulations have effect until the earlier of—

(a) the first date after 5th April 2006 on which amendments of the rules of the pension scheme which state that the modifications no longer apply in relation to it take effect, or

(b) the end of the tax year 2010-11 or such later time as the Board of Inland Revenue may by regulations prescribe.

(3) The modifications that may be made by the regulations include, in particular—

(a) modifications for relieving pension schemes of obligations to make payments which, on and after 6th April 2006, would be unauthorised payments, and

(b) modifications of provisions (however expressed) referring to any limit contained in, or relevant in relation to approval under or for the purposes of, any provision of Part 14 of ICTA (pension schemes etc.) as it has effect at any time before 6th April 2006.

Scheme administrator

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(1) Where under paragraph 1 (1) a pension scheme is treated as becoming a registered pension scheme on 6th April 2006, (despite anything in section 270) the following person is, or the following persons are, to be treated as becoming the scheme administrator of the pension scheme on that date.

(2) If the pension scheme is within paragraph 1(1)(a), (b) or (c) immediately before that date, the person who is, or the persons who are, the administrator of the pension scheme under section 611AA of ICTA immediately before that date is or are to be treated as becoming the scheme administrator.

(3) If the pension scheme is within paragraph 1(1)(d) or (f) immediately before that date, the trustee or trustees of the pension scheme, or the insurance company which is a party to the contract in which the pension scheme is comprised, is or are to be treated as becoming the scheme administrator.

(4) If the pension scheme is within paragraph 1(1)(e) immediately before that date, the trustees of the scheme or fund are to be treated as becoming the scheme administrator.

(5) If the pension scheme is within paragraph 1(1)(g) immediately before that date, the person who is referred to in section 638 (1) of ICTA in relation to the pension scheme immediately before that date is to be treated as becoming the scheme administrator.

Post-commencement withdrawal of approval

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(1) The repeal by this Act of—

(a) section 591B (1) of ICTA (withdrawal of approval of retirement benefits scheme),

(b) section 620(7) of ICTA (withdrawal of approval of retirement annuity contract), and

does not prevent the withdrawal of an approval under any of those provisions at any time after 5th April 2006 (from any earlier date until 6th April 2006).

(2) A withdrawal of approval made under any of those provisions by virtue of sub-paragraph (1) has the same consequences as a withdrawal of approval made under the provision concerned before 6th April 2006, so that (in particular)—

(a) sections 591C and 591D of ICTA (tax on cessation of approval of retirement benefits scheme), or

(b) sections 650A and 651 of ICTA (charge on cessation of approval of personal pension arrangements and appeal against such withdrawal of such approval),

apply where they would have applied had the approval been withdrawn before that date.

Pre-commencement liabilities of scheme administrator

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Any liabilities or obligations of—

(a) the administrator of a retirement benefits scheme (within the meaning of Chapter 1 of Part 14 of ICTA), or

(b) the scheme administrator of a personal pension scheme (within the meaning of Chapter 4 of Part 14 of ICTA),

incurred in relation to the scheme before 6th April 2006 or by virtue of paragraph 4 are (on and after that date) to be treated as liabilities or obligations of the scheme administrator of the scheme.

Part 2 — Pre-commencement rights: enhancement of allowances etc

“Primary protection”

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(1) This paragraph applies in the case of an individual where—

(a) the amount of the relevant pre-commencement pension rights of the individual exceeds £1,500,000, and

(b) notice of intention to rely on this paragraph is given to His Majesty’s Revenue and Customs in accordance with regulations made by the Commissioners for His Majesty’s Revenue and Customs.

(2) Chapter 15A of Part 9 of ITEPA 2003 (pension income: lump sums under registered pension schemes) has effect in relation to the individual as if—

(a) the amount specified in section 637P of that Act (individual’s lump sum allowance) were £375,000, and

(b) the amount specified in section 637R of that Act (individual’s lump sum and death benefit allowance) were the individual’s enhanced lump sum and death benefit allowance (as determined under paragraph 20H of this Schedule).

(3) For the purposes of paragraph 20H—

(a) the individual’s “protected lump sum and death benefit allowance” is £1,800,000;

(b) a lump sum and death benefit allowance enhancement factor, determined in accordance with sub-paragraphs (4) to (7) of this paragraph, operates in relation to the individual.

(4) The lump sum and death benefit allowance enhancement factor is the primary protection factor.

(5) The primary protection factor is—

$$RR-£1,500,000£1,500,000$where RR is the amount of the relevant pre-commencement pension rights of the individual (see sub-paragraph (6)).$

(6) The amount of the relevant pre-commencement pension rights of the individual is the aggregate of—

(a) the value of the individual’s relevant uncrystallised pension rights on 5th April 2006 (calculated in accordance with paragraphs 8 and 9), and

(b) the value of the individual’s relevant crystallised pension rights on that date (calculated in accordance with paragraph 10).

(7) Sub-paragraph (5) is subject to paragraph 11 (pension debit on or after 6th April 2006) and paragraph 11A (pension debit on or after 6th April 2006: lump sum death benefits).

(8) Where this paragraph applies in the case of an individual, for the purposes of this Part a lump sum is not an uncrystallised funds pension lump sum (see paragraph 4A of Schedule 29) if—

(a) the lump sum condition (see paragraphs 24(2) and (3), 25 and 26 of this Schedule) is met in relation to the individual, or

(b) ... the amount given by the formula in sub-paragraph (9) is less than 25% of the lump sum.

(9) The formula is—

$$£1,800,000-A4$where A is the amount that would be the previously-used amount within the meaning of section 637S of ITEPA 2003 (availability of individual’s lump sum and death benefit allowance) if a relevant benefit crystallisation event within the meaning of that section had occurred immediately before the lump sum is paid.$

8

(1) The value of the individual’s relevant uncrystallised pension rights on 5th April 2006 is the aggregate value of the individual’s uncrystallised rights on that date under each relevant pension arrangement relating to the individual.

(2) An arrangement is a “relevant pension arrangement”if it is an arrangement under a pension scheme within paragraph 1(1).

(3) For the purposes of this paragraph 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.

(4) And the individual is to be 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) of ICTA) made an election to defer the purchase of an annuity.

(5) For the purposes of this paragraph the value of the individual’s uncrystallised rights on 5th April 2006 under an arrangement is to be calculated in accordance with section 212 (valuation of uncrystallised rights for purposes of section 210) on the assumption that the individual became entitled to the present payment of benefits in respect of the rights on that date.

(6) Section 212 has effect for the purposes of sub-paragraph (5) as if the reference to such age (if any) as must have been reached to avoid any reduction in benefits on account of age in paragraph (a) of section 277 were to the relevant age; and for this purpose “the relevant age” is—

(a) if on 10th December 2003 the terms of the arrangement made provision for a reduction in the amount of benefits payable in respect of rights under the arrangement on account of the holder of the rights being below a particular age, that age, and

(b) otherwise, 60.

9

(1) This paragraph applies if any of the individual’s uncrystallised rights on 5th April 2006 are rights under one or more arrangements under a pension scheme or schemes within paragraph 1(1)(a) to (d).

(2) The value of the individual’s uncrystallised rights on 5th April 2006 under the arrangement, or the aggregate of the values of the individual’s uncrystallised rights on 5th April 2006 under such of the arrangements as relate to a particular employment, is ...—

(a) the value, or the aggregate of the values, calculated under paragraph 8, or (if lower)

(b) the amount arrived at in accordance with sub-paragraph (3).

(3) The amount arrived at in accordance with this sub-paragraph is—

$$20×MPP$where MPP is the maximum permitted pension as increased, in a case where sub-paragraph (5A) applies, in accordance with sub-paragraph (5B).$

(4) “The maximum permitted pension” means

(a) in the case of an arrangement under a pension scheme which immediately before 6th April 2006 was within section 611A(1)(a) of ICTA, the maximum annual pension that could be paid to the individual under the pension scheme on 5th April 2006, and

(b) in any other case, the maximum annual pension that could be paid to the individual on 5th April 2006 under the arrangement or arrangements if it or they were made under a pension scheme within paragraph 1(1)(a) without giving the Board of Inland Revenue grounds for withdrawing approval of the pension scheme under section 591B of ICTA.

(5) For the purposes of sub-paragraph (4) it is to be assumed—

(a) in the case of any arrangement, that if the individual was in the employment to which the arrangement or arrangements relates or relate on 5th April 2006 the individual left the employment on that date, and

(aa) in the case of an arrangement within sub-paragraph (4)(a), that the valuation assumptions apply (see section 277),

(b) in the case of any other arrangement, that if the individual had not reached the lowest age at which a pension may be paid under a pension scheme within paragraph 1(1)(a) to a person in good health without giving the Board of Inland Revenue grounds for withdrawing the approval of the pension scheme that fact would not give the Board such grounds.

(5A) This sub-paragraph applies where, in the case of an arrangement under a pension scheme which immediately before 6th April 2006 was within section 611A(1)(a) of ICTA—

(a) a lump sum could be paid to the individual on 5th April 2006 under the pension scheme otherwise than by commutation of pension, and

(b) that lump sum could not be exchanged (in whole or in part) for an increased pension.

(5B) Where sub-paragraph (5A) applies, the amount arrived at under sub-paragraph (3) is the aggregate of what it otherwise would be and so much of the amount of the lump sum as could not be so exchanged.

(6) For the purposes of this paragraph an arrangement relating to an individual relates to an employment if—

(a) the earnings by reference to which benefits under the arrangement are calculated are earnings from the employment, or

(b) the person who is the employer in relation to the employment pays contributions under the arrangement in respect of the individual.

10

(1) The value of the individual’s relevant crystallised pension rights on 5th April 2006 is—

$$25×ARP$where ARP is an amount equal to the annual rate at which any relevant existing pension is payable to the individual on 5th April 2006 or, if more than one relevant existing pension is payable to the individual on that date, to the aggregate of the annual rates at which each of the relevant existing pensions is so payable.$

(2) “Relevant existing pension” means—

(a) a pension under a retirement benefits scheme approved for the purposes of Chapter 1 of Part 14 of ICTA,

(b) a pension under a former approved superannuation fund (defined as for the purposes of paragraph 1(1)(b)),

(c) a pension under 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,

(d) an annuity (or pension in the form of income drawdown) under an annuity contract by means of which benefits provided under a pension scheme within paragraph (a), (b) or (c) have been secured,

(e) a pension under a scheme or fund mentioned in section 613(4)(b) to (d) of ICTA (Parliamentary pension schemes or funds),

(f) an annuity under 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,

(g) an annuity acquired using funds held for the purposes of a personal pension scheme approved under Chapter 4 of Part 14 of ICTA, or

(h) a right to make income withdrawals under section 634A of ICTA.

(3) But a pension, annuity or right is not a relevant existing pension if entitlement to it was attributable to the death of any person.

(4) In the case of a pension within sub-paragraph (2) taking the form of income drawdown, the annual rate at which the pension is payable on 5th April 2006 is the amount which, on that date, is the maximum annual amount that may be drawn down by the individual as income in accordance with the pension scheme or contract concerned.

(5) In the case of a right which is a relevant existing pension by virtue of sub-paragraph (2)(h), the annual rate at which the pension is payable on 5th April 2006 is the maximum amount of income withdrawals that may be made by the individual in the period of 12 months referred to in section 634A(4) of ICTA during which 5th April 2006 falls.

11

(1) This paragraph applies where—

(a) paragraph 7 applies in relation to an individual, and

(b) on or after 6th April 2006, the rights of the individual under a relevant pension arrangement (see paragraph 8(2)) relating to the individual are reduced by becoming subject to a pension debit.

(2) The primary protection factor (see paragraph 7(5)) is to be recalculated.

(3) The recalculation involves reducing RR (see paragraph 7(5)) by the amount by which the individual’s rights are reduced and arriving at a revised primary protection factor.

(4) The revised primary protection factor operates in relation to any relevant benefit crystallisation event occurring in relation to the individual after the time when the individual’s rights are reduced by becoming subject to the pension debit.

(5) In this paragraph “relevant benefit crystallisation event” has the same meaning as in section 637S of ITEPA 2003 (availability of individual’s lump sum and death benefit allowance).

“Enhanced protection”

12

(1) This paragraph applies on and after 6th April 2006 in the case of an individual who has one or more relevant existing arrangements if notice of intention to rely on it is given to the Inland Revenue in accordance with regulations made by the Board of Inland Revenue.

(2) But this paragraph ceases to apply if the notice under sub-paragraph (1) is given on or after 15 March 2023 and—

(a) relevant benefit accrual occurs under the arrangement, or any of the arrangements (see paragraph 13),

(aa) there is an impermissible transfer into the arrangement or any of the arrangements (see paragraph 17A),

(b) a transfer of sums or assets held for the purposes of, or representing accrued rights under, the arrangement or any of the arrangements is made that is not a permitted transfer, or

(c) an arrangement relating to the individual is made under a registered pension scheme otherwise than in permitted circumstances.

(2A) An arrangement is made in permitted circumstances if it is made—

(a) for the purposes of a permitted transfer,

(b) as part of a retirement-benefit activities compliance exercise, or

(2B) For the purposes of sub-paragraph (2A)(b) an arrangement (“the new arrangement”) relating to an individual is made as part of a retirement-benefit activities compliance exercise if—

(a) it is made in connection with the cancellation of rights under another arrangement relating to the individual (“the old arrangement”),

(b) the old arrangement and the new arrangement relate to the same employment,

(c) there is a prospective entitlement to pension death benefits within section 167(1) or lump sum death benefits within section 168(1) (or both) under both the old arrangement and the new arrangement,

(d) the making of the new arrangement and the cancellation of the old arrangement constitute or form part of a transaction the purpose of which is to secure that the activities of the pension scheme under which the arrangement is made are limited to retirement-benefit activities within the meaning of section 255 of the Pensions Act 2004 or Article 232 of the Pensions (Northern Ireland) Order 2005, and

(e) the rights cancelled under the old arrangement and the rights conferred under the new arrangement are not significantly different.

(2C) For the purposes of sub-paragraph (2A)(c) an arrangement (“the new arrangement”) is made as part of an age-equality compliance exercise if—

(a) it is made in connection with the cancellation of rights under another arrangement relating to the individual (“the old arrangement”),

(b) the old arrangement and the new arrangement relate to the same employment,

(c) there is a prospective entitlement to pension death benefits within section 167(1) or lump sum death benefits within section 168(1) (or both) under both the old arrangement and the new arrangement, and

(d) the new arrangement is made, and the old arrangement cancelled, in order to comply with the Part 5 of the Equality Act 2010, so far as relating to age, or the or Employment Equality (Age) Regulations (Northern Ireland) 2006 (or any regulations amending or replacing those Regulations).

(3A) Where this paragraph applies in the case of an individual—

(a) this Part of this Act, and

(b) Chapter 15A of Part 9 of ITEPA 2003 (pension income: lump sums under registered pension schemes),

have effect in relation to the individual with the modifications specified in paragraph 12A.

(3B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3E) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3F) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3G) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3H) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) An individual has a relevant existing arrangement if—

(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 date.

(5) Notice of intention to rely on this paragraph in relation to the individual may not be given in a case where—

(a) the value of the uncrystallised rights of the individual on 5th April 2006 under an arrangement, or

(b) the aggregate of the values of the uncrystallised rights of the individual on 5th April 2006 under arrangements,

is arrived at 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 relevant excess have been surrendered.

(6) In sub-paragraph (5) “the relevant excess” means the amount by which the value of—

(a) the individual’s uncrystallised rights, or

(b) the aggregate of the values of the individual’s uncrystallised rights,

as arrived at in accordance with paragraph 8 exceeds what it would be if arrived at under paragraph 9(3).

(7) For the purposes of this paragraph and paragraphs 13 and 15, a transfer of sums or assets held for the purposes of, or representing accrued rights under, an arrangement is a permitted transfer if—

(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) the sums or assets . . . are transferred so that sub-paragraph (8) applies in relation to them, and

(c) the aggregate of the amount of the sums and the market value of the assets is, applying normal actuarial practice, equivalent before and after the transfer.

(8) This sub-paragraph applies in relation to sums or assets held for the purposes of, or representing accrued rights under, the arrangement if—

(a) they are transferred so as to become held for the purposes of a money purchase arrangement that is not a cash balance arrangement . . . . . .

(b) where the transfer occurs in connection with the winding up of the pension scheme under which the arrangement is made and the arrangement is a cash balance arrangement or a defined benefits arrangement, they are transferred so as to become held for the purposes of, or to represent rights under, a cash balance arrangement or defined benefits arrangement relating to the same employment as the arrangement and made under a registered pension scheme or recognised overseas pension scheme.

(c) where the arrangement is a cash balance arrangement or a defined benefits arrangement relating to a present or former employment, they are transferred in connection with a relevant business transfer so as to become held for the purposes of, or to represent rights under, a cash balance arrangement or defined benefits arrangement made under a registered pension scheme or recognised overseas pension scheme, or

(d) where the arrangement (“the old arrangement”) is a cash balance arrangement or a defined benefits arrangement, they are transferred as part of a retirement-benefit activities compliance exercise so as to become held for the purposes of, or to represent rights under, a cash balance arrangement or defined benefits arrangement (“the new arrangement”) relating to the same employment as the old arrangement and made under a registered pension scheme or recognised overseas pension scheme.

(8A) For the purposes of sub-paragraph (8)(c) “relevant business transfer” means a transfer of an undertaking or a business (or part of an undertaking or a business) from one person to another—

(a) which involves the transfer of at least 20 employees, and

(b) in the case of which, if the transferor and the transferee are bodies corporate, they would not be treated as members of the same group for the purposes of Part 5 of the Corporation Tax Act 2010.

(8B) For the purposes of sub-paragraph (8)(d) sums or assets held for the purposes of, or representing accrued rights under, the old arrangement are transferred as part of a retirement-benefit activities compliance exercise if—

(a) there is a prospective entitlement to pension death benefits within section 167(1) or lump sum death benefits within section 168(1) (or both) under both the old arrangement and the new arrangement, and

(b) the transfer constitutes or forms part of a transaction the purpose of which is to secure that the activities of the pension scheme under which the old arrangement was made are limited to retirement-benefit activities within the meaning of section 255 of the Pensions Act 2004 or Article 232 of the Pensions (Northern Ireland) Order 2005.

(9) Where there is a permitted transfer—

(a) if the transfer is a permitted transfer by virtue of sub-paragraph (8)(a), this paragraph (and paragraphs 13 , 14 and 17A(1) and (2)) apply in relation to the arrangement . . . to which the transfer is made, and

(b) if the transfer is a permitted transfer by virtue of sub-paragraph (8)(b) or (d), this paragraph (and paragraphs 13 , 15 and 17A(3)to 17) apply as if the arrangement to which the transfer is made were the same as that from which it is made, and

(c) if the transfer is a permitted transfer by virtue of sub-paragraph (8)(c), this paragraph (and paragraphs 13, 15 to 17 and 17A(3)) apply as if the arrangement to which the transfer is made were the same as that from which it is made and (if the employment is transferred) as if the employment with the transferee were the employment with the transferor.

(10) The Treasury may by order amend sub-paragraph (8) (and make other amendments consequential on any amendment of that sub-paragraph).

13

Relevant benefit accrual occurs in relation to an individual under an arrangement—

(a) in the case of a money purchase arrangement that is not a cash balance arrangement, if a relevant contribution is paid under the arrangement or, where the arrangement has been a hybrid arrangement, if a relevant contribution was so paid at any time after 5th April 2006, (see paragraph 14), and

(b) in the case of a cash balance arrangement or defined benefits arrangement, if, when the individual becomes entitled to any pension or lump sum or a transfer that is a permitted transfer by virtue of paragraph 12(8)(a) (a “relevant event”) occurs in relation to the individual and the arrangement, the relevant crystallised amount exceeds the appropriate limit (see paragraph 15).

14

(1) For the purposes of paragraph 13(a) a relevant contribution is paid under the arrangement if—

(a) a relievable pension contribution is paid by or on behalf of the 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 otherwise than by or on behalf of the individual or by an employer of the individual in respect of the individual subsequently becomes held for the purposes of the provision under the arrangement of benefits to or in respect of the individual.

(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) A contribution is not a relevant contribution for the purposes of paragraph 13(a) if—

(a) it may only be applied for or towards the payment of premiums under a policy of insurance on the life of the individual,

(b) the policy is issued, or issued in respect of insurances made, before 6th April 2006,

(d) the terms of the policy are not varied significantly during the period beginning with 6th April 2006 and ending with the individual's actual death so as to increase the benefits payable under the policy or extend the period during which benefits are so payable, and

(e) no benefits are paid, or other payments made, under (or on the surrender of rights under) the policy except by reason of the individual's death;

and any exercise of rights conferred by the policy is to be regarded for this purpose as a variation.

(3A) A variation of the terms of a policy made in order to comply with the Part 5 of the Equality Act 2010, so far as relating to age, or the Employment Equality (Age) Regulations (Northern Ireland) 2006 (or any regulations amending or replacing those Regulations) is to be ignored for the purposes of sub-paragraph (3).

(3B) Where a policy of insurance on the life of the individual issued, or issued in respect of insurances made, before 6th April 2006 is surrendered and a new one is taken out—

(a) as part of a retirement-benefit activities compliance exercise, or

(b) as part of an age-equality compliance exercise.

the new policy is to be treated for the purposes of sub-paragraph (3) as if it were the same as the old.

(3C) For the purposes of sub-paragraph (3B)(a) a policy is surrendered, and a new policy of life insurance is taken out, as part of a retirement-benefit activities compliance exercise if—

(a) the surrender of the old policy and the taking out of the new policy constitute or form part of a transaction the purpose of which is to secure that the activities of the pension scheme under which the arrangement is made are limited to retirement-benefit activities within the meaning of section 255 of the Pensions Act 2004 or Article 232 of the Pensions (Northern Ireland) Order 2005, and

(b) the rights under the old policy and the new policy are not significantly different.

(3D) For the purposes of sub-paragraph (3B)(b) a policy is surrendered, and a new policy of life insurance is taken out, as part of an age-equality compliance exercise if—

(a) the old policy is surrendered, and the new policy is taken out, in order to comply with Part 5 of the Equality Act 2010, so far as relating to age, or the or Employment Equality (Age) Regulations (Northern Ireland) 2006 (or any regulations amending or replacing those Regulations), and

(b) any significant difference between the rights under the old policy and the rights under the new policy is attributable to the need to comply with those Regulations (or any regulations amending or replacing them).

(4) A contribution is not a relevant contribution for the purposes of paragraph 13(a) if it is paid—

(a) by a sponsoring employer,

(b) under a relevant hybrid arrangement, and

(c) solely in respect of the provision in respect of the individual of lump sum death benefits which are defined benefits or cash balance benefits.

(5) A “relevant hybrid arrangement” is a hybrid arrangement under an occupational pension scheme—

(a) which subsequently becomes a money purchase arrangement that is not a cash balance arrangement, and

(b) under which lump sum death benefits would have been payable in respect of the individual if the individual had died on 5th April 2006.

15

(1) For the purposes of paragraph 13(b) “the relevant crystallised amount”is—

(a) if the relevant event is the first relevant event occurring in relation to the individual and to the arrangement or any other cash balance arrangement or defined benefits arrangement related to the arrangement (“the first relevant event”), the amount crystallised by that event, and

(b) otherwise, the aggregate of the amount crystallised by the relevant event and the amount crystallised by the relevant event, or by each of the relevant events, which has or have previously occurred in relation to the individual and to the arrangement or any other cash balance arrangement or defined benefits arrangement related to the arrangement.

(2) If the relevant event is a relevant permitted transfer ..., sub-paragraph (1) applies as if the amount crystallised by the event were the aggregate of—

(a) the amount of any sums held for the purposes of, or representing accrued rights under, the arrangement which are transferred, and

(b) the market value of any assets held for the purposes of, or representing accrued rights under, the arrangement which are transferred.

(2A) In sub-paragraph (2) “relevant permitted transfer” means a permitted transfer that is not a transfer of sums or assets held for the purposes of, or representing accrued rights under, any of the relevant pension schemes so as to become held for the purposes of, or to represent rights under, a qualifying recognised overseas pension scheme in connection with the individual’s membership of that pension scheme.

(3) For the purposes of this paragraph (and paragraphs 15A and 16) another arrangement is related to the arrangement if—

(a) the other arrangement relates to the individual, and

(b) both the arrangement and the other arrangement relate to the same employment;

and whether an arrangement relates to an employment is to be determined in accordance with paragraph 9(6).

(4) For the purposes of paragraph 13(b) “the appropriate limit”, in relation to a relevant event, is (subject to paragraph 15A) the greater of—

(a) the value of the individual’s rights on 5th April 2006 under the arrangement, or (where there is or are one or more other cash balance arrangements or defined benefits arrangements related to the arrangement) the aggregate of the value of the individual’s rights under the arrangement and the other arrangement or arrangements, arrived at in accordance with paragraphs 8 and 9, as increased by the relevant indexation percentage (see sub-paragraph (5)), and

(b) what would be the value of those rights, so arrived at, on the assumptions specified in sub-paragraph (6).

(5) For the purposes of sub-paragraph (4)(a) and paragraph 15A(2)(a) “the relevant indexation percentage”, in relation to a relevant event, means whichever is the greatest of—

(a) the percentage by which an amount would be increased if it were increased for the period beginning with 6th April 2006 and ending with the date on which the relevant event occurs at an annual rate of 5%,

(b) the percentage by which an amount would be increased if it were increased for that period at an annual percentage rate referred to in regulations made by the Board of Inland Revenue, and

(c) the percentage by which the retail prices index for the month in which the relevant event occurs is higher than that for April 2006.

(6) The assumptions referred to in sub-paragraph (4)(b) and paragraph 15A(2)(b) are—

(a) that the individual’s age on 5th April 2006 were what it is at the time of the first relevant event (so that neither paragraph 8(6) nor section 277(a) applies in arriving at what would be the value of the rights under paragraph 8), and

(b) that the amount of the earnings which would have fallen to be taken into account under the arrangement for calculating the amount of benefits payable to or in respect of the individual (if the individual became entitled to the present payment of benefits in respect of the rights under the arrangement on that date) were the lesser of the two amounts specified in sub-paragraph (7).

(7) The amounts referred to in sub-paragraph (6)(b) are—

(a) the current amount of the relevant pensionable earnings immediately before the first relevant event, and

(b) the post-commencement earnings limit (see paragraphs 16 and 17).

(8) But sub-paragraph (6)(b) applies in relation to an arrangement under a pension scheme within paragraph 1(1)(c) or (e) as if for “the lesser of the two amounts specified in sub-paragraph (7)” there were substituted “ the amount specified in sub-paragraph (7)(a) ”.

(9) In this paragraph “the relevant pensionable earnings” means the description of earnings (or the portion of the description of earnings) of the individual by reference to which the amount of benefits payable to or in respect of the individual would have fallen to be calculated if the individual became entitled to the present payment of benefits in respect of the rights under the arrangement on 5th April 2006.

(10) For the purposes of sub-paragraph (7)(a) “the current amount”of the relevant pensionable earnings immediately before the first relevant event is the amount of the relevant pensionable earnings which, at that time, would fall to be taken into account in calculating the amount of benefits payable to or in respect of the individual under the arrangement if the individual became entitled to the present payment of benefits at that time (but subject to sub-paragraph (11)).

(11) If at that time the individual is absent from work in connection with pregnancy, maternity, paternity or adoption, the current amount of the relevant pensionable earnings at that time includes what would be likely to be included in that amount if the individual were not so absent.

16

(1) This paragraph specifies the post-commencement earnings limit if the individual was on 5th April 2006 a person in relation to whom—

(a) section 590C of ICTA or paragraph 20 of Schedule 6 to FA 1989 (earnings cap) had effect, or

(b) provision similar to section 590C of ICTA had effect by virtue of conditions imposed under section 591 of that Act (discretionary approval),

in relation to any pension scheme under which the arrangement or any other arrangement related to the arrangement was made.

(2) The post-commencement earnings limit is the lesser of amount A and amount B.

(3) Amount A is £135,000.

(4) Amount B is the amount of the individual’s employment income from the employment to which the arrangement relates for the best period of 12 months during the appropriate three year period.

(5) The appropriate three year period is the period of three years ending with the earliest of—

(a) the first relevant event,

(b) the individual leaving the employment to which the arrangement relates, and

(5A) Where the appropriate three year period ends otherwise than with the first relevant event, Amount B is what it would be apart from this sub-paragraph increased by whichever is the greatest of—

(a) the percentage by which an amount would be increased if it were increased for the period beginning with the date on which it ends and ending with the date on which the relevant event occurs at an annual rate of 5%,

(b) the percentage by which an amount would be increased if it were increased for that period at an annual percentage rate referred to in regulations made by the Board of Inland Revenue, or

(c) the percentage by which the retail prices index for the month in which the first relevant event occurs is higher than that for the month in which the appropriate period ends.

(6) A period of 12 months during the appropriate three year period is the best period of 12 months during the appropriate three year period if the amount of the individual’s employment income from the employment to which the arrangement relates is greater for that period of 12 months than for any other period of 12 months during the appropriate three year period.

(7) For the purposes of this paragraph and paragraph 17 the amount of the individual’s employment income includes, in relation to any time when the individual is absent from work in connection with pregnancy, maternity, paternity or adoption, what would be likely to be included in that amount if the individual were not so absent.

17

(1) This paragraph specifies the post-commencement earnings limit in any other case.

(2) The post-commencement earnings limit is—

(a) if amount B is not greater than amount A, amount B, and

(b) otherwise, amount C.

(3) Amount A and amount B have the same meanings as in paragraph 16.

(4) Amount C is the greater of—

(a) amount A, and

(b) amount D.

(5) Amount D is—

$$ETY3$where ETY is the amount of the individual’s employment income from the employment to which the arrangement relates for the appropriate three year period (within the meaning of paragraph 16).$

(6) Where the appropriate three year period ends otherwise than with the first relevant event, Amount D is what it would be apart from this sub-paragraph increased by whichever is the greatest of—

(a) the percentage by which an amount would be increased if it were increased for the period beginning with the date on which it ends and ending with the date on which the relevant event occurs at an annual rate of 5%,

(b) the percentage by which an amount would be increased if it were increased for that period at an annual percentage rate referred to in regulations made by the Board of Inland Revenue, or

(c) the percentage by which the retail prices index for the month in which the first relevant event occurs is higher than that for the month in which the appropriate period ends.

Pre-commencement pension credits

18

(1) This paragraph applies in the case of an individual where—

(a) 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,

(b) notice of intention to rely on this paragraph is given to His Majesty’s Revenue and Customs in accordance with regulations made by the Commissioners for His Majesty’s Revenue and Customs, and

(2) Chapter 15A of Part 9 of ITEPA 2003 (pension income: lump sums under registered pension schemes) has effect in relation to the individual as if—

(a) the amount specified in section 637P of that Act (individual’s lump sum allowance) were the lower of—

(i) an amount equal to £268,275 increased by the pre-commencement pension credit factor determined under sub-paragraph (5), and

(ii) £375,000, and

(b) the amount specified in section 637R of that Act (individual’s lump sum and death benefit allowance) were the individual’s enhanced lump sum and death benefit allowance (as determined under paragraph 20H of this Schedule).

(3) For the purposes of paragraph 20H a lump sum and death benefit allowance enhancement factor, determined in accordance with sub-paragraphs (4) to (6) of this paragraph, operates in relation to the individual.

(4) The lump sum and death benefit allowance enhancement factor is the pre-commencement pension credit factor calculated under sub-paragraph (5).

(5) The pre-commencement pension credit factor is—

$$A£1,500,000$where A is the amount which is the appropriate amount for the purposes of section 29(1) of WRPA 1999 or Article 26(1) of WRP(NI)O 1999 in relation to the pension credit, as increased by the percentage specified in sub-paragraph (6).$

(6) 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.

(7) Where this paragraph applies in the case of an individual, for the purposes of this Part a lump sum is not an uncrystallised funds pension lump sum (see paragraph 4A of Schedule 29) if ... the amount given by the formula in sub-paragraph (8) is less than 25% of the lump sum.

(8) The formula is—

$$A-B4$where—A is—in the case of an individual in relation to whom a relevant protection provision applies, the individual’s protected lump sum and death benefit allowance (see paragraph 6A(4));in any other case, £1,073,100;B is the amount that would be the previously-used amount within the meaning of section 637S of ITEPA 2003 (availability of individual’s lump sum and death benefit allowance) if a relevant benefit crystallisation event within the meaning of that section had occurred immediately before the lump sum is paid.$

Individuals permitted to take pension before normal minimum pension age

19

(1) This paragraph applies where a relevant 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.

(1A) Chapter 15A of Part 9 of ITEPA 2003 (pension income: lump sums under registered pension schemes) has effect in relation to the individual with the modifications in sub-paragraphs (1B) and (2).

(1B) Where the relevant benefit crystallisation event is the individual becoming entitled to a pension commencement lump sum, section 637P of ITEPA 2003 (individual’s lump sum allowance) applies as if the amount specified in that section were the amount determined under sub-paragraph (1C) reduced by the relevant percentage (see sub-paragraph (4).

(1C) That amount is the amount —

(a) £268,275, or

(b) in a case where, disregarding sub-paragraph (1B), section 637P of ITEPA 2003 (individual’s lump sum allowance) would apply in relation to the individual as if it specified another amount, that amount.”

(2) Section 637R of ITEPA 2003 (individual’s lump sum and death benefit allowance) applies as if the amount specified in that section were the amount determined under sub-paragraph (2A) reduced by the relevant percentage (see sub-paragraph (4).

(2A) That amount is—

(a) £1,073,100, or

(b) in a case where, disregarding sub-paragraph (2), section 637R of ITEPA 2003 (individual’s lump sum and death benefit allowance) would apply in relation to the individual as if it specified any other amount, that amount.

(3) A relevant benefit crystallisation event occurs in protected circumstances if—

(a) paragraph 22 or 23 (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 22(8) or 23(8)) is less than 50, and

(4) The relevant percentage is—

$$Y×2.5$where Y is the number of complete years falling between the date on which the relevant benefit crystallisation event occurs and the date on which the individual will reach normal minimum pension age.$

(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7) In this paragraph “relevant benefit crystallisation event” has the same meaning as in section 637S of ITEPA 2003 (availability of individual’s lump sum and death benefit allowance).

Pre-commencement pensions

20

(1) This paragraph makes provision about an individual where—

(a) on 5th April 2006, the individual has an actual (rather than a prospective) right to the payment of one or more relevant existing pensions , and

(b) during the period beginning on 5th April 2006 and ending on 5th April 2024, no benefit crystallisation event within the meaning of section 216 as that provision had effect at the end of that period has occurred in relation to the individual.

(1A) Section 637Q of ITEPA 2003 (availability of individual’s lump sum allowance) applies as if, immediately before the first relevant benefit crystallisation event occurring in relation to the individual on or after 6th April 2024—

(a) a relevant benefit crystallisation event within the meaning of that section had occurred in relation to the individual, and

(b) the non-taxable amount in relation to the relevant crystallisation event was an amount equal to 25% of the value of the individual’s pre-commencement pension rights immediately before the relevant benefit crystallisation event.

(2) Section 637S of ITEPA 2003 (availability of individual’s lump sum and death benefit allowance) applies as if, immediately before the first relevant benefit crystallisation event occurring in relation to the individual—

(a) a relevant benefit crystallisation event within the meaning of that section had occurred in relation to the individual, and

(b) the non-taxable amount in relation to the relevant crystallisation event was 25% of the value of the individual’s pre-commencement pension rights immediately before the relevant benefit crystallisation event.

(2A) Section 244IC (availability of member’s overseas transfer allowance) applies as if, immediately before the first transfer of the kind mentioned in section 244IA(1)(a) made in relation to the member on or after 6th April 2024—

(a) a transfer of that kind had been made in relation to the member, and

(b) the transferred value of the transfer was an amount equal to 25% of the value of the member’s pre-commencement pension rights immediately before the transfer.

(3) The value of the individual’s pre-commencement pension rights at any time is—

$$25×ARP$where (subject to sub-paragraph (4)) ARP is an amount equal to—(a) the annual rate at which the relevant existing pension is payable to the individual at that time, or(b) if more than one relevant existing pension is payable to the individual at that time, the aggregate of the annual rates at which each of the relevant existing pensions is so payable.$

(4) In the case of drawdown pension, ARP is—

(a) 80% of the maximum amount that may be paid in the drawdown pension year in which the time falls in accordance with pension rule 5 (see section 165), or

(b) in the case of an arrangement to which subsection (3A) of section 165 applied at any time before 6 April 2015, 80% of the maximum amount that could have been paid in accordance with that rule in the drawdown pension year in which that subsection first applied to the arrangement if it had not so applied.

(c) in the case of an arrangement to which section 165(3A) never applied but only if the time falls after the member's drawdown pension fund in respect of the arrangement is converted into the member's flexi-access drawdown fund in respect of the arrangement by the operation of any of paragraphs 8B to 8D of Schedule 28, 80% of the maximum amount that could have been paid in accordance with pension rule 5 in the drawdown pension year in which the conversion occurs had no conversion happened in that year by the operation of any of paragraphs 8B to 8D of Schedule 28.

, or

(5) In this paragraph “relevant existing pension” has the same meaning as in paragraph 10(2); and paragraph 10(4) and (5) operates for the purposes of this paragraph for determining the annual rate at which a relevant existing pension is payable at any time (treating the references there to 5th April 2006 as to that time).

Part 3 — Pre-commencement benefit rights

Rights to take pension before normal minimum pension age

21

(1) If paragraph 22 , 23 or 23ZB applies in relation to a registered pension scheme and a member of the pension scheme, this Part of this Act (except for section 218(6) and paragraph 19) 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 22(8) , 23(8) and 23ZB(7) define the member’s protected pension age.

22

(1) This paragraph applies in relation to a registered pension scheme and a member of the pension scheme if—

(a) the pension scheme is a protected pension scheme, and

(b) the retirement condition is met in relation to the member and the pension scheme.

(2) A pension scheme is a protected pension scheme if condition A or condition B is met.

(3) Condition A is met if—

(a) the pension scheme was within any of paragraphs (a) to (e) of paragraph 1(1), and

(b) the entitlement condition is met in relation to the member and the pension scheme.

(4) The entitlement condition is met in relation to the member and the pension scheme if—

(a) on 5th April 2006 the member had an actual or prospective right under the pension scheme to any benefit from an age of less than 55,

(b) the rules of the pension scheme on 10th December 2003 included provision conferring such a right on some or all of the persons who were then members of the pension scheme, and

(c) such a right either was then conferred on the member or would have been had the member been a member of the scheme on that date.

(5) Condition B is met if the member is a member of the pension scheme (“a transferee pension scheme”) as a result of—

(a) a block transfer from the pension scheme (“the original pension scheme”) in relation to which condition A is met to the transferee pension scheme, or

(b) a block transfer to the transferee pension scheme from a pension scheme that was a transferee pension scheme in relation to the original pension scheme by virtue of the previous application of paragraph (a) or the previous application (on one or more occasions) of this paragraph.

(6) A transfer is a block transfer if—

(a) it involves the transfer in a single transaction of all the sums and assets held for the purposes of, or representing accrued rights under, the arrangements under the pension scheme from which the transfer is made which relate to the member and at least one other member of that pension scheme, and

(b) either the member was not a member of the pension scheme to which the transfer is made before the transfer or he has been a member of that pension scheme for no longer than such period as is prescribed by regulations made by the Board of Inland Revenue.

(6A) A transfer is also a block transfer if—

(a) it involves the transfer in a single transaction of all the sums and assets held for the purposes of, or representing accrued rights under, the arrangements under the pension scheme from which the transfer is made which relate to the member,

(b) the transfer takes place—

(i) on or after 19 March 2014, and

(ii) before 6 April 2015, and

(7) The retirement condition is met in relation to the member and the pension scheme if—

(a) the member becomes entitled to all the benefits payable to the member under arrangements under the pension scheme (to which the member did not have an actual entitlement on or before 5th April 2006) on the same date, and

(b) in a case where on 5th April 2006 the member had an actual or prospective right under the pension scheme to any benefit from an age of less than 50, Condition 1 is met or, in any other case, Condition 2 or 3 is met.

(7A) Condition 1 is met if—

(a) the member is not, after becoming entitled to the benefits mentioned in sub-paragraph (7)(a), employed by a person who is a sponsoring employer in relation to the pension scheme and with whom the member is connected, and

(b) the member's becoming entitled to those benefits is not part of an arrangement the main purpose (or one of the main purposes) of which is the avoidance of tax or national insurance contributions.

(7B) Condition 2 is met if—

(a) the member is not, after becoming entitled to the benefits mentioned in sub-paragraph (7)(a), employed by a person specified in sub-paragraph (7C), and

(b) the member's becoming entitled to those benefits is not part of an arrangement the main purpose (or one of the main purposes) of which is the avoidance of tax or national insurance contributions.

(7C) The persons referred to in sub-paragraph (7B)(a) are—

(a) any person who was a sponsoring employer in relation to the pension scheme at any time during the period of six months ending with the day on which the member became entitled to the benefits mentioned in sub-paragraph (7)(a) and by whom the member was employed at any time during that period,

(b) any person who is connected with any such person, or

(7D) If the member has become entitled to the benefits payable under arrangements under the pension scheme by reason of service in the armed forces of the Crown, any employment on compulsory recall is to be disregarded for the purposes of sub-paragraph (7B)(a).

(7E) Condition 3 is met if —

(a) paragraph (a) of sub-paragraph (7B) is not satisfied but one of the re-employment conditions is met, and

(b) paragraph (b) of that sub-paragraph is satisfied.

(7F) The re-employment conditions are—

(a) that the member is not employed as mentioned in sub-paragraph (7B)(a) during the period of six months beginning with the day on which the member becomes entitled to the benefits mentioned in sub-paragraph (7)(a), and

(b) that the member is not employed as mentioned in sub-paragraph (7B)(a) during the period of one month beginning with that day, but is so employed during the period of five months beginning at the end of that period, and either the pension abatement condition or the materially different employment condition is met , and

(i) the employment began at any time during the coronavirus period, and

(ii) the only or main reason that the member was taken into employment was to help the employer to respond to the public health, social, economic or other effects of coronavirus.

(7G) The pension abatement condition is met if—

(a) the pension scheme is a public service pension scheme, and

(b) the member's benefits under the scheme consist of or include a scheme pension which is liable to reduction by abatement while the member is employed as mentioned in sub-paragraph (7B)(a) and is under the age of 55.

(7H) The materially different employment condition is met—

(a) in a case where the member is employed as mentioned in sub-paragraph (7B)(a) in more than one employment during the period of five months mentioned in sub-paragraph (7F)(b), if each of those employments, and

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