Finance Act 2004

[F1Drawdown pension year and basis amount for drawdown pension year]U.K.

23(1)[F2“Drawdown pension year”] means—U.K.

(a)the period of 12 months beginning with the day on which the dependant first becomes entitled to [F3dependants' drawdown pension] in respect of the arrangement, and

(b)each succeeding period of 12 months.

[F4This is subject to paragraph 24B.]

[F5(2)The drawdown pension year in which the dependant dies is the last drawdown pension year and ends immediately before the dependant's death.]

24[F6(A1)This paragraph applies in relation to drawdown pension years beginning on or before the dependant's 75th birthday.U.K.

(1)Subject as follows, the period of three drawdown pension years beginning with the first drawdown pension year, and each succeeding period of three drawdown pension years, is a “reference period”.

(1ZA)But the reference period in which the dependant reaches the age of 75 ends with the drawdown pension year in which the dependant reaches that age.]

[F7(1A)Sub-paragraph (1B) applies if, at any time during a reference period (“the current reference period”), the dependant notifies the scheme administrator that the dependant wishes a new reference period to begin on the next day that is an anniversary of the reference date in relation to the current reference period.

(1B)The scheme administrator may determine—

(a)that the current reference period is to end immediately before that day (so that sub-paragraph (1) no longer applies), and

(b)that (subject to [F8sub-paragraph (1ZA) and] any further operation of this sub-paragraph) the period of [F9three drawdown pension years] beginning with that day, and each succeeding period of [F9three drawdown pension years], is to be a reference period.

(1C)The first day of each reference period is, in relation to that period, “the reference date”.]

(2)For the first [F10drawdown pension year] falling within a reference period, the basis amount is the annual amount of the relevant annuity which could have been purchased by the application of the sums and assets representing the [F11dependant's drawdown pension fund] on the nominated date (but subject to sub-paragraph (5)).

(3)“The nominated date”—

(a)in relation to the first reference period, is the reference date, and

(b)in relation to any subsequent reference period, is such day, within the period of 60 days ending with the reference date, as is nominated by the scheme administrator (or if no day is nominated by the scheme administrator, is the reference date).

(4)For each other [F12drawdown pension year] falling within a reference period, the basis amount is the annual amount of the relevant annuity which could have been purchased by the application of the sums and assets representing the [F13dependant's drawdown pension fund]—

(a)if there has been no recent annuity purchase[F14, recent additional fund designation or recent pension sharing event], on the nominated date, and

(b)otherwise, immediately after the last annuity purchase[F15, additional fund designation or pension sharing event],

(but subject to sub-paragraph (5)).

(5)On the occasion of each additional fund designation during [F16a drawdown pension year], the basis amount for [F17that drawdown pension year] is to be recalculated in accordance with sub-paragraph (6).

(6)The basis amount for the [F18drawdown pension year] is the annual amount of the relevant annuity which could have been purchased by the application of the sums and assets representing the [F19dependant's drawdown pension fund] immediately after the additional fund designation.

[F20(6A)But sub-paragraph (5) does not apply where the operation of that sub-paragraph in relation to an additional fund designation during a drawdown pension year would reduce the basis amount for that drawdown pension year.]

(7)“Annuity purchase” means the purchase of a dependants' scheme pension or dependants' annuity by the application of sums or assets representing the whole or part of the [F21dependant's drawdown pension fund].

(8)“Additional fund designation” means the designation under the arrangement of further [F22sums or assets] held for the purposes of the arrangement as available for the payment of [F23dependants' drawdown pension] to the dependant.

[F24(8A)“Pension sharing event” means the coming into operation of a pension sharing order or provision relating to the sums and assets representing the [F25dependant's drawdown pension fund].]

(9)An annuity purchase[F26, additional fund designation or pension sharing event] is “recent” if it took place during the period—

(a)beginning with the reference date, and

(b)ending with the last day of the immediately preceding [F27drawdown pension year].

(10)Paragraph 14 defines “relevant annuity”.

F28(11). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F2924A(1)This paragraph applies in relation to drawdown pension years beginning after the dependant's 75th birthday.U.K.

(2)For each drawdown pension year beginning after the dependant reached the age of 75, the basis amount is the annual amount of the relevant annuity which could have been purchased by the application of the sums and assets representing the dependant's drawdown pension fund on the nominated date.

(3)“The nominated date” is such day within the period of 60 days ending with the first day of the drawdown pension year as is nominated by the scheme administrator (or, if no day is nominated by the scheme administrator, is the first day of that year).

(4)On the occasion of each additional fund designation during a drawdown pension year, the basis amount of that drawdown pension year is to be recalculated in accordance with sub-paragraph (5).

(5)The basis amount for the drawdown pension year is the annual amount of the relevant annuity which could have been purchased by the application of the sums and assets representing the dependant's drawdown pension fund immediately after the additional fund designation.

(6)But sub-paragraph (4) does not apply where the operation of that sub-paragraph in relation to an additional fund designation during a drawdown pension year would reduce the basis amount for that drawdown pension year.

(7)“Additional fund designation” has the meaning given by paragraph 24(8).

(8)Paragraph 14 defines “relevant annuity”.

F30(9). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

24B(1)This paragraph applies if the dependant has reached the age of 75.U.K.

(2)Sub-paragraph (3) applies if, at any time during a drawdown pension year in respect of an arrangement (“the current drawdown pension year”), the dependant notifies the scheme administrator that the dependant wishes the drawdown pension year following the current drawdown pension year to begin on the day on which the next drawdown pension year in respect of another arrangement relating to the dependant under the pension scheme (including any arrangement relating to that person as a member of the scheme) will begin.

(3)The scheme administrator may determine—

(a)that the current drawdown pension year is to end immediately before that day, and

(b)that the period of 12 months beginning with that day, and each succeeding period of 12 months, is a drawdown pension year in respect of the arrangement.

(4)The scheme administrator may not make a determination under this paragraph more than once in relation to the same arrangement.]