Finance Act 2004

232Cash balance arrangements: adjustments of closing valueU.K.

(1)This section applies for adjusting the closing value of the individual’s rights under the arrangement as calculated under section 230(5).

(2)If, during the pension input period, the rights of the individual under the arrangement have been reduced by having become subject to a pension debit, the amount of [F1the reduction] is to be added.

(3)If, during the pension input period, the rights of the individual under the arrangement have been increased by the individual having become entitled to a pension credit deriving from the same or another registered pension scheme, the amount of [F2the increase] is to be subtracted.

(4)[F3In subsection (4A) “relevant outward transfer” means] [F4a transfer relating to the individual of any sums or assets] held for the purposes of, or representing accrued rights under, the arrangement so as to become held for the purposes of, or to represent rights under, any F5... pension scheme that is—

(a)a registered pension scheme, or

(b)a qualifying recognised overseas pension scheme.

F6...

[F7(4A)If there is a relevant outward transfer during the pension input period, then—

(a)if condition A is met, the amount of the reduction specified in paragraph (b) of that condition is to be added;

(b)if condition A is not met but the rights of the individual under the arrangement have been reduced by reason of the relevant outward transfer, the amount of that reduction is to be added.

Condition A is that—

(a)the relevant outward transfer (“the transfer”) takes place within a block transfer,

(b)the rights of the individual under the arrangement have been reduced, and the rights of the individual under the pension scheme mentioned in subsection (4) have been increased, as a consequence (whether direct or indirect) of the transfer, and

(c)the amount of that reduction is equal (or virtually equal) to the amount of that increase.]

F8(5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6)[F9In subsection (6A) “relevant inward transfer” means] [F10 a transfer relating to the individual] of any sums or assets held for the purposes of, or representing accrued rights under, any pension scheme so as to become held for the purposes of, or to represent rights under, the arrangementF11...

[F12(6A)If there is a relevant inward transfer during the pension input period, then—

(a)if condition B is met, the amount of the increase specified in paragraph (b) of that condition is to be subtracted;

(b)if condition B is not met but the rights of the individual under arrangement have been increased by reason of the relevant inward transfer, the amount of that increase is to be subtracted.

Condition B is that—

(a)the relevant inward transfer (“the transfer”) takes place within a block transfer,

(b)the rights of the individual under the arrangement have been increased, and the rights of the individual under the pension scheme mentioned in subsection (6) have been reduced, as a consequence (whether direct or indirect) of the transfer, and

(c)the amount of that increase is equal (or virtually equal) to the amount of that reduction.

(6B)For the purposes of Condition A in subsection (4A) and Condition B in subsection (6A)—

(a)normal actuarial practice must be used when determining and comparing the amount of the reduction, and the amount of the increase, in rights,

(b)the amount of a reduction or increase in rights under the arrangement is the difference between the amount of those rights under the arrangement immediately before the transfer and immediately after the transfer, and

(c)the amount of an increase or reduction in rights under a pension scheme is the difference between the amount of those rights under the pension scheme immediately before the transfer and immediately after the transfer.

(6C)In subsections (4A) and (6A)—

• “block transfer” means a transfer which involves the transfer in a single transaction of all the sums or assets held for the purposes of, or representing accrued rights under, the arrangements under a pension scheme which relate to the individual and at least one other member of that pension scheme so as to become held for the purposes of, or to represent rights under, any pension scheme.]

[F13(6D)For the purposes of subsections (4A) and (6A), the rights of the individual under the arrangement have been reduced or increased, as the case may be, “by reason of” a transfer of sums or assets only where that reduction or increase is solely attributable to the value of those sums or assets.]

F14(7). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F15(8)If, during the pension input period, the rights of the individual under the arrangement have been reduced by any surrender made, or similar action taken, pursuant to an option available to the individual under the arrangement, the amount of the reduction is to be added.

(8A)If, during the pension input period—

(a)benefit crystallisation event 1, 2 or 4 occurs in relation to the individual and the arrangement,

(b)benefit crystallisation event 3 occurs in relation to the individual and the arrangement otherwise than by reason of a provision contained in, or made under, any enactment,

(c)benefit crystallisation event 6 occurs or, but for paragraph 15A of Schedule 32, would occur in relation to the individual and the arrangement by virtue of the individual becoming entitled to a pension commencement lump sum or a lifetime allowance excess lump sum, or

(d)there is an allocation of rights of the individual under the arrangement (not falling within paragraph (a)),

the relevant amount is to be added.

(8B)In subsection (8A) “the relevant amount” is—

F16(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F16(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(c)in the case of benefit crystallisation event 6, the amount of the lump sum, and

(d)in any other case, the amount of the reduction in the amount of the rights available for the provision of benefits to or in respect of the individual occurring by reason of the benefit crystallisation event or allocation.

(8C)If, during the pension input period, an adjustment to the individual's rights under the arrangement is made in consequence of the scheme administrator satisfying a liability under section 237B in respect of the individual, if and to the extent that the adjustment is reflected in the closing amount the amount of the adjustment is to be added to the closing amount.

(8D)But no amount is to be added under subsection (8C) by reason of an adjustment made in consequence of the scheme administrator satisfying a liability under section 237B [F17in a case where—

(a)the individual becomes actually entitled to all of the individual’s benefits under the pension scheme or benefit crystallisation event 5, 5A or 5B occurs in relation to the individual and the pension scheme, and

(b)the adjustment takes place after the individual becomes so entitled or the benefit crystallisation event occurs.]]

F18(9). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .