Finance Act 2004

BorrowingU.K.

182Unauthorised borrowing: money purchase arrangements [F1other than collective money purchase arrangements] U.K.

(1)A registered pension scheme is not authorised to borrow an amount in respect of a money purchase arrangement [F2that is not a collective money purchase arrangement] unless the arrangement borrowing condition is met.

(2)The arrangement borrowing condition is met if—

(3)The value of the arrangement is the aggregate of—

(a)the amount of such of the sums and the market value of such of the assets as represent the [F3member's drawdown pension fund] in respect of the arrangement (if any),

[F4(aa)the amount of such of the sums and the market value of such of the assets as represent the member's flexi-access drawdown fund in respect of the arrangement (if any),]

(b)the amount of such of the sums and the market value of such of the assets as represent [F5dependants' drawdown pension funds] [F6or dependants' flexi-access drawdown funds] in respect of the arrangement (if any),

[F7(ba)the amount of such of the sums and the market value of such of the assets as represent nominees' flexi-access drawdown funds in respect of the arrangement (if any),

(bb)the amount of such of the sums and the market value of such of the assets as represent successors' flexi-access drawdown funds in respect of the arrangement (if any),]

(c)the aggregate of the value of each scheme pension or dependants' scheme pension payable in respect of the arrangement, and

(d)the value of the uncrystallised rights under the arrangement.

(4)The value of a scheme pension or dependants' scheme pension payable in respect of the arrangement is—

(5)Rights are uncrystallised if no-one has become entitled to the present payment of benefits in respect of the rights; and a person is to be treated as entitled to the present payment of benefits in respect of the sums and assets representing the person’s [F8drawdown pension fund] [F9or the person's flexi-access drawdown fund].

(6)If the arrangement is a cash balance arrangement, the value of the uncrystallised rights under the arrangement is the amount which would, on the valuation assumptions (see section 277), be available for the provision of benefits in respect of those rights if a person became entitled to benefits in respect of those rights.

(7)If the arrangement is a money purchase arrangement other than a cash balance arrangement, the value of the uncrystallised rights under the arrangement is the aggregate of the amount of such of the sums, and the market value of such of the assets, held for the purposes of the arrangement as represent those rights.

(8)If the arrangement is a hybrid arrangement under which either cash balance benefits or other money purchase benefits (but not defined benefits [F10or collective money purchase benefits]) may be provided, the value of the uncrystallised rights under the arrangement is the greater of—

(a)their value calculated under subsection (6) (on the assumption that cash balance benefits are provided), and

(b)their value calculated under subsection (7) (on the assumption that other money purchase benefits are provided).

183Effect of unauthorised borrowing: money purchase arrangements [F11other than collective money purchase arrangements] U.K.

(1)Subsection (2) applies if a registered pension scheme borrows in respect of a money purchase arrangement an amount which it is not authorised to borrow under section 182.

(2)The pension scheme is to be treated as having made a scheme chargeable payment—

(a)if subsection (3) applies, of an amount calculated in accordance with subsection (4), and

(b)otherwise, of the amount borrowed.

(3)This subsection applies if, immediately before the amount is borrowed—

(4)If subsection (3) applies, the amount of the scheme chargeable payment is—

(5)In subsections (3) and (4)—

• APB is the aggregate of the amounts previously borrowed in respect of the arrangement (excluding any amounts which have been repaid),

• AB is the amount borrowed, and

• VA is the value of the arrangement, calculated in accordance with section 182(3), immediately before the amount is borrowed.

184Unauthorised borrowing: other arrangementsU.K.

(1)A registered pension scheme is not authorised to borrow an amount in respect of any [F12relevant arrangement] unless the scheme borrowing condition is met.

[F13(1A)In this section “relevant arrangement” means an arrangement that—

(a)is not a money purchase arrangement, or

(b)is a collective money purchase arrangement.]

(2)The scheme borrowing condition is met if—

(3)The aggregate amount of the relevant sums and assets is the aggregate of—

(a)the amount of the sums held for the purposes of such of the arrangements under the pension scheme as are [F15relevant arrangements], and

(b)the market value of the assets held for the purposes of such of the arrangements under the pension scheme as are [F16relevant arrangements].

185Effect of unauthorised borrowing: other arrangementsU.K.

(1)Subsection (2) applies if a registered pension scheme borrows, in respect of an arrangement which is not a money purchase arrangement, an amount which it is not authorised to borrow under section 184.

(2)The pension scheme is to be treated as having made a scheme chargeable payment—

(a)if subsection (3) applies, of an amount calculated in accordance with subsection (4), and

(b)otherwise, of the amount borrowed.

(3)This subsection applies if, immediately before the amount is borrowed—

(4)If subsection (3) applies, the amount of the scheme chargeable payment is—

(5)In subsections (3) and (4)—

• APB is the aggregate of the amounts previously borrowed by the pension scheme in respect of arrangements which are not money purchase arrangements (excluding any amounts which have been repaid),

• AB is the amount borrowed, and

• AARA is the aggregate amount of the relevant sums and assets, calculated in accordance with section 184(3), immediately before the amount is borrowed.