Finance Act 2005

Unsecured pension funds and alternatively secured pension fundsU.K.

18(1)Paragraph 8 of Schedule 28 (member's unsecured pension fund) is amended as follows.U.K.

(2)In sub-paragraph (1) (sums and assets designated as available for the payment of unsecured pension), for the words after “of the arrangement” substitute “ as are member-designated funds. ”

(3)After that sub-paragraph insert—

“(1A)For the purposes of this Part sums or assets held for the purposes of an arrangement are member-designated funds if they—

(a)have been designated at any time under the arrangement as available for the payment of unsecured pension, or

(b)arise, or (directly or indirectly) derive, from sums or assets which have been so designated or which so arise or derive,

and have not been applied towards the provision of a scheme pension.”

(4)In sub-paragraph (3) (“relevant uncrystallised funds”), for the words after “means” substitute—

“(a)if the arrangement is a cash balance arrangement, a sum equal to what would, on the valuation assumption in section 277(a), be available for the provision of benefits to or in respect of the member if the member became entitled to them on reaching the age of 75, and

(b)if it is not, such of the sums and assets held for the purposes of the arrangement as are not member-designated funds and have not been applied towards the provision of a scheme pension or a dependants' scheme pension.”

(5)After that sub-paragraph insert—

“(4)If any sums or assets representing the member's unsecured pension fund in respect of an arrangement under the pension scheme would (apart from this sub-paragraph) come to be taken to represent another unsecured pension fund of his under the pension scheme, or a dependant's unsecured pension fund of his under the pension scheme, they are to be treated as not doing so.”

19(1)Paragraph 10 of Schedule 28 (“unsecured pension years” etc.) is amended as follows.U.K.

(2)In sub-paragraph (4)(“basis amount”)—

(a)in paragraph (a), for “or recent additional fund designation” substitute “ , recent additional fund designation or recent pension sharing event ”, and

(b)in paragraph (b), for “or additional fund designation” substitute “ , additional fund designation or pension sharing event ”.

(3)After sub-paragraph (8) insert—

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

(4)In sub-paragraph (9) (“recent”), for “or additional fund designation” substitute “ , additional fund designation or pension sharing event ”.

20(1)Paragraph 11 of Schedule 28 (member's alternatively secured pension fund) is amended as follows.U.K.

(2)In sub-paragraph (1)(b) (exclusion of certain sums and assets), for “for purchasing a scheme pension or a lifetime annuity or paid as income withdrawal” substitute “ towards the provision of a scheme pension. ”

(3)For sub-paragraphs (2) and (3) (conditions to be met) substitute—

“(2)Condition A is that they—

(a)were part of the member's unsecured pension fund in respect of the arrangement when the member reached the age of 75, or

(b)arise, or (directly or indirectly) derive, from sums or assets within paragraph (a) or which so arise or derive.

(3)Condition B is that they—

(a)became held for the purposes of the arrangement after the member reached the age of 75 or arise, or (directly or indirectly) derive, from sums or assets which became so held or which so arise or derive, or

(b)if the arrangement is a relevant arrangement, have at any time since the member reached that age been designated as available for the payment of alternatively secured pension to the member or arise, or (directly or indirectly) derive, from sums or assets which have been so designated or which so arise or derive.”

(4)After sub-paragraph (4) insert—

“(5)If any sums or assets representing the member's alternatively secured pension fund in respect of an arrangement under the pension scheme would (apart from this sub-paragraph) come to be taken to represent another alternatively secured pension fund of his under the pension scheme, or a dependant's alternatively secured pension fund of his under the pension scheme, they are to be treated as not doing so.”

21(1)Paragraph 22 of Schedule 28 (dependant's unsecured pension fund) is amended as follows.U.K.

(2)In sub-paragraph (1) (sums and assets designated as available for the payment of dependants' unsecured pension), for paragraphs (a) and (b) substitute—

“(a)as are dependant-designated funds, and

(b)have not been applied towards the provision of a dependants' scheme pension.”

(3)After that sub-paragraph insert—

“(2)For the purposes of this Part sums or assets held for the purposes of an arrangement are dependant-designated funds if they—

(a)have been designated at any time under the arrangement as available for the payment of dependant's unsecured pension to the dependant, or

(b)arise, or (directly or indirectly) derive, from sums or assets which have been so designated or which so arise or derive.

(3)If any sums or assets representing a dependant's unsecured pension fund in respect of an arrangement under the pension scheme would (apart from this sub-paragraph)—

(a)come to be taken to represent another dependant's unsecured pension fund of his under the pension scheme, or an unsecured pension fund of his under the pension scheme, or

(b)are applied towards the provision of a scheme pension or a lifetime annuity,

they are to be treated as not doing so.”

22(1)Paragraph 24 of Schedule 28 (“unsecured pension years” etc.) is amended as follows.U.K.

(2)In sub-paragraph (4) (“basis amount”)—

(a)in paragraph (a), for “or recent additional fund designation” substitute “ , recent additional fund designation or recent pension sharing event ”, and

(b)in paragraph (b), for “or additional fund designation” substitute “ , additional fund designation or pension sharing event ”.

(3)After sub-paragraph (8) insert—

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

(4)In sub-paragraph (9) (“recent”), for “or additional fund designation” substitute “ , additional fund designation or pension sharing event ”.

23(1)Paragraph 25 of Schedule 28 (dependant's alternatively secured pension fund) is amended as follows.U.K.

(2)In sub-paragraph (1)(b) (exclusion of certain sums and assets), for “for purchasing a dependants' scheme pension or a dependants' annuity or paid as dependants' income withdrawal” substitute “ towards the provision of a dependants' scheme pension ”.

(3)For sub-paragraphs (2) and (3) (conditions to be met) substitute—

“(2)Condition A is that they—

(a)were part of the dependant's unsecured pension fund in respect of the arrangement when the dependant reached the age of 75, or

(b)arise, or (directly or indirectly) derive, from sums or assets within paragraph (a) or which so arise or derive.

(3)Condition B is that they have at any time since the dependant reached the age of 75 been designated as available for the payment of alternatively secured dependants' pension to the dependant or arise, or (directly or indirectly) derive, from sums or assets which have been so designated or which so arise or derive.

(4)If any sums or assets representing a dependant's alternatively secured pension fund in respect of an arrangement under the pension scheme would (apart from this sub-paragraph) come to be taken to represent another dependant's alternatively secured pension fund of his under the pension scheme, or an alternatively secured pension fund of his under the pension scheme, they are to be treated as not doing so.”

24U.K.In paragraph 3(8) of Schedule 29 (pension commencement lump sum: deduction from applicable amount in case of scheme pension), for “surrender” substitute “ application ”.

25(1)Schedule 32 (benefit crystallisation events: supplementary) is amended as follows.U.K.

(2)In paragraph 3(1) (benefit crystallisation events 1, 2 and 4: prevention of overlap), for “surrender” substitute “ application ”.

(3)In paragraph 5(2) (benefit crystallisation events 1 and 5: hybrid arrangements), for “the sums or assets held for the purposes of the arrangement are to be treated as having been designated” substitute “ , under paragraph 8(2) of Schedule 28, any relevant uncrystallised funds are to be treated as having been designated under the arrangement ”.