The Registered Pension Schemes (Provision of Information) (Amendment) (No.2) Regulations 2011

EXPLANATORY NOTE

(This note is not part of the Regulations)

These Regulations amend the Registered Pension Schemes (Provision of Information) Regulations 2006 (S.I. 2006/567) (“the Principal Regulations”). These provisions are consequential on the following amendments to Part 4 of the Finance Act 2004 (“FA 2004”) made by the Finance Act 2011:

• amendments which reduce the annual allowance for pension savings from £255,000 to £50,000 from the 2011-12 tax year.

• amendments which remove certain tax rules that require members of registered pension schemes to secure an income, usually by buying an annuity, by age 75. The concepts of an “unsecured pension” and an “alternatively secured pension” are replaced with the concept of a “drawdown pension”.

• amendments which enable members of registered pension schemes or their dependants, who meet the “flexible drawdown conditions”, chiefly a minimum annual income requirement of £20,000, to be able to access the whole of their funds as pension income without a limit on annual withdrawal.

• amendments which reduce the lifetime allowance from £1,800,000 to £1,500,000 with effect from 6th April 2012. Transitional protection (“fixed protection”) is provided for individuals who think they are likely to exceed the reduced lifetime allowance of £1,500,000 when they become entitled to their benefits and who would otherwise face a lifetime allowance charge on the excess. Individuals must apply for fixed protection before 6th April 2012.

Regulation 1 provides for citation, commencement and effect.

Regulation 3 inserts new definitions into the Principal Regulations.

Regulation 4 amends the table appended to regulation 3 of the Principal Regulations.

Regulations 4(2) and (6) make minor amendments to ensure consistency in wording.

Regulation 4(3) amends entry 6 of the table with effect from the tax year 2012-13 to provide that a reportable event takes place where a registered pension scheme member relies on fixed protection when a benefit crystallisation event and one of the circumstances outlined in the table at entry 6(a) takes place. The reportable event triggers the notification requirement contained in regulation 3 of the Principal Regulations and the information specified in entry 6 must be reported in the event report supplied by the scheme administrator to Her Majesty’s Revenue and Customs (“HMRC”).

Regulations 4(4), (5), (7) and (8) make consequential amendments to the table.

Regulation 4(9) inserts a new entry 21 into the table with effect from the tax year 2012-13. Entry 21 is added to the list of reportable events requiring the scheme administrator to provide HMRC with specified information about schemes which meet the flexible drawdown conditions. The event report is listed in Schedule 1 of the Registered Pension Schemes and Overseas Pension Schemes (Electronic Communication of Returns and Information) Regulations 2006 (S.I. 2006/570) as information which must be supplied to HMRC by an approved method of electronic communication.

Regulation 5 inserts a new regulation 5B which will only be effective for information relating to the tax year 2011-12. The new regulation 5B provides that a scheme administrator of a scheme which meets the flexible drawdown conditions in section 165(3A) and (3B) or section 167(2A) and (2B) of FA 2004 shall provide HMRC with a written report containing specified information.

Regulation 6 amends regulation 11 of the Principal Regulations so that if a registered pension scheme member intends to rely on fixed protection the member must give to the scheme administrator the reference number issued by HMRC under the Registered Pension Schemes (Lifetime Allowance Transitional Protection) Regulations 2011 (S.I 2011/1752). These amendments take effect for the tax year 2012-13.

Regulation 7 makes a consequential amendment to regulation 14.

Regulation 8 inserts regulations 14A and 14B into the Principal Regulations. New regulation 14A requires the scheme administrator of a registered pension scheme to provide certain members with the information (“pension savings statement”) they will need to work out whether or not the annual allowance charge will be payable for a tax year and if so, the amount of the charge. The pension savings statement must be provided by 6th October following the end of the tax year but in the 2011-12 tax year the pension savings statement must be provided by 6th October 2013. Regulation 14B provides that a scheme administrator must provide a member or former member with such information as is referred to in regulation 14A if a written request is made by the member.

Regulation 9 inserts regulation 15A into the Principal Regulations. This regulation provides that the sponsoring employer of a registered pension scheme must supply the scheme administrator with the information required to calculate the pension input amount relating to an employee or director for a tax year, by 6th July following the end of that tax year. Where the tax year in question is 2011-12, the employer must supply the information to the scheme administrator on or before 6th July 2013. The employer must supply the scheme administrator with the information required to calculate the pension input amounts for the periods ending in the tax years 2008-09 to 2010-11 on written request. Such information must be supplied within 3 months of receipt of the written request or by 6th July 2013. Where there is a straddling pension input period the employer must supply the scheme administrator with such information as is necessary to provide the member with a pension savings statement in respect of the pre-announcement and post-announcement period. The obligations contained in regulation 15A will also apply to persons other than employers who are responsible for providing scheme administrators with information about a member of the scheme.

Regulations 10 11 and 12 make consequential amendments to regulations 16 and 17.

A Tax Information and Impact Note (“TIIN”) covering this instrument was published on 9 December 2010 alongside draft legislation for the Finance (No.3) Bill 2011. This was updated on 3 March 2011 to reflect further decisions relating to the restriction of pensions tax relief. A separate TIIN covering the removal of the effective requirement to annuitise by age 75 and the limit on annual withdrawals was published on 9th December 2010. Both TIINs remain an accurate summary of the impacts that apply to this instrument and are available on the HMRC website at http://www.hmrc.gov.uk/thelibrary/tiins.htm.