The Public Service Pension Schemes (Rectification of Unlawful Discrimination) (Tax) (No. 2) Regulations 2023

PART 2Annual allowance

Chapter 1 schemes: effect of extinguishment and creation of voluntary contributions rights

3.—(1) This regulation applies where, as a result of scheme regulations made by virtue of section 20 of PSPJOA 2022 (voluntary contributions) in respect of an arrangement(1) under a Chapter 1 new scheme(2), rights (“old rights”) in respect of an arrangement under that scheme to additional benefits(3), or to the earlier payment of benefits, that would otherwise have been secured by the payment of voluntary contributions(4) in respect of an individual, are extinguished.

(2) For the purposes of determining the pension input amount(5) of the individual in respect of the arrangement under the Chapter 1 new scheme for the pension input period(6) in which the old rights are extinguished, the individual is to be treated as if those rights had not been extinguished.

(3) Paragraphs (4) and (5) apply where, in connection with the extinguishment of the old rights, and as a result of scheme regulations made by virtue of section 20 of PSPJOA 2022, rights (“new rights”) are created in respect of an arrangement under the relevant Chapter 1 legacy scheme(7) which represent either—

(a)rights of an equivalent value to the extinguished old rights, or

(b)rights that would have been secured under that scheme if the voluntary contributions had been paid to that scheme in respect of that individual.

(4) For the purposes of determining the pension input amount of the individual for the replacement pension input period in respect of the arrangement under the relevant Chapter 1 legacy scheme, the new rights are to be ignored to the extent that they relate to voluntary contributions that were paid with the purpose of securing additional benefits.

(5) For the purposes of determining, in respect of an individual who is a deferred member(8) of the relevant Chapter 1 legacy scheme, whether the value of their relevant rights(9) under the arrangement under that scheme has increased during a pension input period—

(a)for the replacement pension input period or any subsequent pension input period, any new rights are to be ignored to the extent that they relate to voluntary contributions paid to the Chapter 1 new scheme during the period of remediable service(10) for the purpose of securing additional benefits, and

(b)for any pension input period after the replacement pension input period, any new rights are to be ignored to the extent that they relate to voluntary contributions paid to the Chapter 1 new scheme during the period of remediable service for the purpose of securing the earlier payment of benefits.

(6) In this regulation, “replacement pension input period” means the pension input period in which any new rights are conferred.

Chapter 1 legacy schemes: effect of variation of voluntary contributions rights where new scheme benefits election is made.

4.—(1) Paragraph (2) applies where—

(a)a new scheme benefits election is made in relation to the remediable service of an individual,

(b)as a result of scheme regulations made by virtue of section 20 of PSPJOA 2022, the individual’s rights under the relevant Chapter 1 legacy scheme that would otherwise have been secured by the payment of voluntary contributions are varied, and

(c)that variation would (disregarding paragraph (2)) lead to an increase in the pension input amount in respect of an arrangement under that scheme for the retirement pension input period.

(2) For the purposes of determining the pension input amount of the individual in respect of the arrangement for the retirement pension input period, the individual is to be treated, on and after the coming into effect of the election, as entitled to the rights that the individual would have been entitled to if the election had not been made.

(3) In this regulation, “the retirement pension input period” means the pension input period ending in the tax year in which the new scheme benefits election comes into effect.

Chapter 1 schemes: additional pension commencement lump sum unavailable after voluntary contributions rights extinguished or varied

5.—(1) Paragraph (3) applies where—

(a)before the relevant time, an individual was paid a pension commencement lump sum(11) under a Chapter 1 scheme,

(b)that lump sum was paid in connection with rights (“original rights”) in respect of an arrangement under that scheme to additional benefits, or to the earlier payment of benefits, that were secured by the payment of voluntary contributions, and

(c)as a result of scheme regulations made by virtue of section 20 of PSPJOA 2022—

(i)later rights are created in an arrangement under the relevant Chapter 1 legacy scheme, or

(ii)original rights or later rights are varied (“varied rights”).

(2) In paragraph (1)—

“later rights” means rights that represent either—

“the relevant time” means the time at which section 2(1) of PSPJOA 2022 (remediable service treated as pensionable under Chapter 1 legacy schemes) comes into force.

(3) After the relevant time, the relevant Chapter 1 legacy scheme is to be treated as making an unauthorised payment(12) to the individual, or to the individual’s personal representatives, if it pays a pension commencement lump sum in connection with later rights or varied rights.

Chapter 1 schemes and judicial 2015 schemes: pension debits and pension credits

6.—(1) Paragraph (2) applies where—

(a)a member of a Chapter 1 scheme or a judicial scheme(13) has at any time become entitled to a pension credit or subject to a pension debit(14), and

(b)the amount of that pension debit or pension credit is (disregarding paragraph (2)) adjusted by provision made under section 19(1) or 57(1) of PSPJOA 2022 (pension credit members).

(2) For the purposes of determining the pension input amount in respect of an arrangement under the Chapter 1 scheme or the judicial 2015 scheme(15) for the pension input period in which the debit or credit is adjusted, any provision made under section 19(1) or section 57(1) of PSPJOA 2022, as the case may be, is to be ignored.

Chapter 1 legacy schemes: inward transfer, extinguishment and creation of PPA rights

7.—(1) Paragraphs (2) and (3) apply where—

(a)there is a transfer of sums or assets held for the purposes of, or representing accrued rights under, an arrangement under a partnership pension account (“the transfer”),

(b)as a result of the transfer, the sums or assets become held for the purposes of, or represent rights under, an arrangement under the relevant Chapter 1 legacy scheme,

(c)the transfer is made in accordance with conditions specified in provision made under section 5 of PSPJOA 2022 (election for retrospective provision to apply to opted-out service),

(d)rights are conferred in the arrangement under the relevant Chapter 1 legacy scheme which represent the benefits that a member would have accrued under that scheme, and

(e)in connection with that conferral of rights, all rights relating to the transferred sums or assets are then extinguished in that arrangement.

(2) For the purposes of determining the pension input amount of an individual in respect of an arrangement under the relevant Chapter 1 legacy scheme—

(a)for any pension input period in which the individual had relevant opted-out service, the pension input amount is to be reduced by the amount of any pension input amount for an arrangement under the partnership pension account which relates to a pension input period ending in the same tax year,

(b)where all the steps in paragraph (1)(a) to (e) occur during the transfer pension input period, section 236(5A) of FA 2004 (relevant inward transfers)(16) is to be ignored for that pension input period, and

(c)where the conferral of rights mentioned in paragraph (1)(d) occurs during the transfer pension input period, but the extinguishment of rights mentioned in paragraph (1)(e) occurs during a subsequent pension input period, the extinguishment is be ignored for that subsequent pension input period.

(3) For the purposes of paragraph (2)(a), if the individual has become entitled under an arrangement under the partnership pension account to the present payment of benefits prior to the transfer, the pension input amount for that arrangement is to be determined by—

(a)calculating the pension input amount of the arrangement under section 233 of FA 2004 (pension input amount: other money purchase arrangements)(17),

(b)establishing the percentage of the individual’s rights under the arrangement that do not relate to that entitlement, and

(c)multiplying the amount mentioned in sub-paragraph (a) by that percentage.

(4) In this regulation—

“relevant opted-out service” has the same meaning as in Part 1 of Chapter 1 of PSPJOA 2022(18), and

“transfer pension input period” means the pension input period in which the transfer mentioned in paragraph (1)(a) occurs.