1 Citation and commencement

This Order may be cited as the Taxation of Pension Schemes (Protected Rights and Pension Commencement Lump Sums) (Amendment) Order 2007 and shall come into force on 6th April 2007.

NOTES
Initial Commencement
Specified date

Specified date: 6 April 2007: see above.

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2 Consequential amendment of the Occupational Pension Schemes (Discharge of Protected Rights on Winding Up) Regulations 1996

2Consequential amendment of the Occupational Pension Schemes (Discharge of Protected Rights on Winding Up) Regulations 1996

In the Occupational Pension Schemes (Discharge of Protected Rights on Winding Up) Regulations 1996—

(a)    in regulation 1(2) (interpretation), in the appropriate alphabetical places, insert—

““income withdrawal” has the meaning given by paragraph 7 of Schedule 28 to the Finance Act 2004 (income withdrawal);

“lifetime annuity” has the meaning given by paragraph 3 of Schedule 28 to the Finance Act 2004 (lifetime annuity);

“scheme pension” has the meaning given by paragraph 2 of Schedule 28 to the Finance Act 2004 (scheme pension); and

“the scheme pension purchase price” has the meaning given by paragraph 3(7B) of Schedule 29 to the Finance Act 2004 (the scheme pension purchase price);”; and

(b)    for regulation 5(5) (conditions upon which appropriate policies of insurance may be commuted), substitute—

“(5)    The limit referred to in paragraph (4) must not exceed—

(a)    in respect of a scheme pension, the lesser of—

(i)    one third of the value of the protected rights included in the scheme pension purchase price; or

(ii)    the amount which represents the proportion (expressed in percentage terms) of the value of the protected rights which is equal to the percentage that the pension commencement lump sum bears to the scheme pension purchase price and the pension commencement lump sum; or

(b)    in respect of a lifetime annuity or income withdrawal, the lesser of—

(i)    25 per cent of the member's protected rights which are crystallised by the member's benefit crystallisation event 6 and the relevant pension benefit crystallisation event connected with event 6 (“the member's benefit crystallisation events”); or

(ii)    the amount which represents the proportion (expressed in percentage terms) of the value of the protected rights which is equal to the percentage that the pension commencement lump sum bears to the amount crystallised by the member's benefit crystallisation events.”.

NOTES
Initial Commencement
Specified date

Specified date: 6 April 2007: see art 1.

Personal & Occupational Pensions98 Pensions Law98

3 Consequential amendment of the Occupational Pension Schemes (Discharge of Protected Rights on Winding Up) Regulations (Northern Ireland) 1996

3Consequential amendment of the Occupational Pension Schemes (Discharge of Protected Rights on Winding Up) Regulations (Northern Ireland) 1996

In the Occupational Pension Schemes (Discharge of Protected Rights on Winding Up) Regulations (Northern Ireland) 1996—

(a)    in regulation 1(2) (interpretation), after the definition of “administrative charges” insert—

““income withdrawal” has the meaning given by paragraph 7 of Schedule 28 to the Finance Act 2004;

“lifetime annuity” has the meaning given by paragraph 3 of Schedule 28 to the Finance Act 2004;

“scheme pension” has the meaning given by paragraph 2 of Schedule 28 to the Finance Act 2004;

“the scheme pension purchase price” has the meaning given by paragraph 3(7B) of Schedule 29 to the Finance Act 2004;”; and

(b)    for regulation 5(5) (conditions upon which appropriate policies of insurance may be commuted) substitute—

“(5)    The limit referred to in paragraph (4) must not exceed—

(a)    in respect of a scheme pension, the lesser of—

(i)    one third of the value of the protected rights included in the scheme pension purchase price, or

(ii)    the amount which represents the proportion (expressed in percentage terms) of the value of the protected rights which is equal to the percentage that the pension commencement lump sum bears to the scheme pension purchase price and the pension commencement lump sum, or

(b)    in respect of a lifetime annuity or income withdrawal, the lesser of—

(i)    25 per cent of the member's protected rights which are crystallised by the member's benefit crystallisation event 6 and the relevant pension benefit crystallisation event connected with event 6 (“the member's benefit crystallisation events”), or

(ii)    the amount which represents the proportion (expressed in percentage terms) of the value of the protected rights which is equal to the percentage that the pension commencement lump sum bears to the amount crystallised by the member's benefit crystallisation events.”.

NOTES
Initial Commencement
Specified date

Specified date: 6 April 2007: see art 1.

Personal & Occupational Pensions97 Pensions Law97

4 Consequential amendment of the Personal and Occupational Pension Schemes (Protected Rights) Regulations 1996

4Consequential amendment of the Personal and Occupational Pension Schemes (Protected Rights) Regulations 1996

In the Personal and Occupational Pensions Schemes (Protected Rights) Regulations 1996—

(a)    in regulation 1(2) (interpretation), in the appropriate alphabetical places, insert—

““income withdrawal” has the meaning given by paragraph 7 of Schedule 28 to the Finance Act 2004;

“lifetime annuity” has the meaning given by paragraph 3 of Schedule 28 to the Finance Act 2004;

“scheme pension” has the meaning given by paragraph 2 of Schedule 28 to the Finance Act 2004; and

“the scheme pension purchase price” has the meaning given by paragraph 3(7B) of Schedule 29 to the Finance Act 2004;”; and

(b)    for regulation 8(1D) (giving effect to protected rights by the provision of a lump sum), substitute—

“(1D)    The limit referred to in paragraph (1C) must not exceed—

(a)    in respect of a scheme pension, the lesser of—

(i)    one third of the value of the protected rights included in the scheme pension purchase price; or

(ii)    the amount which represents the proportion (expressed in percentage terms) of the value of the protected rights which is equal to the percentage that the pension commencement lump sum bears to the scheme pension purchase price and the pension commencement lump sum; or

(b)    in respect of a lifetime annuity or income withdrawal, the lesser of—

(i)    25 per cent of the member's protected rights which are crystallised by the member's benefit crystallisation event 6 and the relevant pension benefit crystallisation event connected with event 6 (“the member's benefit crystallisation events”); or

(ii)    the amount which represents the proportion (expressed in percentage terms) of the value of the protected rights which is equal to the percentage that the pension commencement lump sum bears to the amount crystallised by the member's benefit crystallisation events.”.

NOTES
Initial Commencement
Specified date

Specified date: 6 April 2007: see art 1.

Personal & Occupational Pensions96 Pensions Law96

5 Consequential amendment of the Personal and Occupational Pension Schemes (Protected Rights) Regulations (Northern Ireland) 1997

5Consequential amendment of the Personal and Occupational Pension Schemes (Protected Rights) Regulations (Northern Ireland) 1997

In the Personal and Occupational Pensions Schemes (Protected Rights) Regulations (Northern Ireland) 1997—

(a)    in regulation 1(2) (interpretation) in the appropriate alphabetical places, insert—

““income withdrawal” has the meaning given by paragraph 7 of Schedule 28 to the Finance Act 2004;

“lifetime annuity” has the meaning given by paragraph 3 of Schedule 28 to the Finance Act 2004;

“scheme pension” has the meaning given by paragraph 2 of Schedule 28 to the Finance Act 2004;

“the scheme pension purchase price” has the meaning given by paragraph 3(7B) of Schedule 29 to the Finance Act 2004;”; and

(b)    for regulation 8(1D) (giving effect to protected rights by the provision of a lump sum), substitute—

“(1D)    The limit referred to in paragraph (1C) must not exceed—

(a)    in respect of a scheme pension, the lesser of—

(i)    one third of the value of the protected rights included in the scheme pension purchase price, or

(ii)    the amount which represents the proportion (expressed in percentage terms) of the value of the protected rights which is equal to the percentage that the pension commencement lump sum bears to the scheme pension purchase price and the pension commencement lump sum, or

(b)    in respect of a lifetime annuity or income withdrawal, the lesser of—

(i)    25 per cent of the member's protected rights which are crystallised by the member's benefit crystallisation event 6 and the relevant pension benefit crystallisation event connected with event 6 (“the member's benefit crystallisation events”), or

(ii)    the amount which represents the proportion (expressed in percentage terms) of the value of the protected rights which is equal to the percentage that the pension commencement lump sum bears to the amount crystallised by the member's benefit crystallisation events.”.

NOTES
Initial Commencement
Specified date

Specified date: 6 April 2007: see art 1.

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Signature

Frank Roy

Alan Campbell

Two of the Lords Commissioner of Her Majesty's Treasury

13th March 2007

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EXPLANATORY NOTE

EXPLANATORY NOTE (This note is not part of the Order)

This Order amends the Occupational Pension Schemes (Discharge of Protected Rights on Winding Up) Regulations 1996 (SI 1996/775) and the Occupational Pension Schemes (Discharge of Protected Rights on Winding Up) Regulations (Northern Ireland) 1996 (SR 1996 No 94) (“the Winding up Regulations”) and the Personal and Occupational Pensions Schemes (Protected Rights) Regulations 1996 (SI 1996/1537) and the Personal and Occupational Pension Schemes (Protected Rights) Regulations (Northern Ireland) 1997 (SR 1997 No 56) (“the Protected Rights Regulations”) consequential upon amendments made to the Finance Act 2004 (c 12) (“the 2004 Act”) by the Finance Act 2006 (c 25).

This Order amends the provisions of the Winding up Regulations and the Protected Rights Regulations regarding pension commencement lump sums that are paid out of protected rights used to purchase a scheme pension so that they mirror those contained in the 2004 Act.

A Regulatory Impact Assessment has not been prepared for this instrument as it has only a negligible impact on the costs of business, charities or voluntary bodies.

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