Finance Act 1989

Part II E+W+S+N.I. Approved Schemes: General

Preliminary E+W+S+N.I.

19 (1) This Part of this Schedule shall be deemed to have come into force on 14thMarch 1989 and, subject to sub-paragraphs (2) to (4) below, applies inrelation to any retirement benefits scheme (within the meaning of Chapter Iof Part XIV of the Taxes Act 1988) approved by the Board before the day onwhich this Act is passed. E+W+S+N.I.

(2) The Board may by regulations provide that, in circumstances prescribed inthe regulations, this Part of this Schedule or any provision of it shall notapply or shall apply with such modifications as may be so prescribed.

(3) Regulations under sub-paragraph (2) above—

(a) may include provision authorising the Board to direct that this Part ofthis Schedule or any provision of it shall not apply in any particular casewhere in the opinion of the Board the facts are such that its applicationwould not be appropriate;

(b) may take effect (and may authorise any direction given under them to takeeffect) as from 14th March 1989 or any later date;

(c) may make such supplementary provision as appears to the Board to benecessary or expedient.

(4) This Part of this Schedule shall not apply to a scheme if, before the endof 1989, the administrator of the scheme gives written notice to the Boardthat it is not to apply.

(5) Where a notice is given to the Board under sub-paragraph (4) above, thescheme shall cease to be approved—

(a) if it came into existence before 14th March 1989, with effect from 1stJune 1989 or (if later) the date with effect from which it was approved;

(b) if it came into existence on or after 14th March 1989, with effect fromthe date with effect from which it was approved.

Annotations:

Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Modifications etc. (not altering text)

C1 For regulations see Part III Vol. 5 (under “Retirement benefit schemes: tax relief on contributions”)

Remuneration E+W+S+N.I.

20 (1) This paragraph applies— E+W+S+N.I.

(a) where the scheme came into existence before 14th March 1989, as regardsan employee who became a member of the scheme on or after 1st June 1989;

(b) where the scheme came into existence on or after 14th March 1989, asregards any employee who is a member of the scheme (whenever he became amember).

(2) The rules of the scheme shall have effect (notwithstanding anything inthem to the contrary and notwithstanding the effect of anything in Schedule23 to the Taxes Act 1988) as if, in arriving at the employee’s relevant annualremuneration for the purposes of calculating benefits, any excess of whatwould be his relevant annual remuneration (apart from this paragraph) over thepermitted maximum for the year of assessment in which his participation in thescheme ceases shall be disregarded.

(3) The rules of the scheme shall have effect (notwithstanding anything inthem to the contrary) as if, in arriving at the employee’s remuneration forthe year 1988-89 or any subsequent year of assessment for the purposes of anyrestriction on the aggregate amount of contributions payable under the schemeby the employee and the employer, there were disregarded any excess of whatwould be his remuneration for the year (apart from this paragraph) over thepermitted maximum for the year.

(4) In this paragraph “the permitted maximum”, in relation to a year of assessment,means the figure found for that year by virtue of sub-paragraphs (5) and (6)below.

(5) For the years 1988-89 and 1989-90 the figure is £60,000.

(6) For any subsequent year of assessment the figure is the figure found forthat year, for the purposes of section 590C of the Taxes Act 1988, by virtueof section 590C(4) and (5).

Annotations:

Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Modifications etc. (not altering text)

C2 See The Retirement Benefits Schemes (Continuationof Rights of Members of Approved Schemes) Regs. 1990 (S.I.1990/2101–in Part III Vol. 5)for circumstanceswhen para. 20disapplied or modified; when para. 21modified; or when para. 22disapplied

21 (1) The rules of the scheme shall have effect (notwithstanding anything inthem to the contrary) as if the amount of contributions payable under thescheme by an employee in the year 1989-90 or any subsequent year of assessmentwere limited to 15 per cent. of his remuneration for the year in respect ofthe employment. E+W+S+N.I.

(2) Where in relation to any year of assessment a percentage higher than 15per cent. applies for the purposes of section 592(8) or (8A) of the Taxes Act1988 (relief in respect of contributions) as regards any employee,sub-paragraph (1) above, as regards him, shall have effect in relation to thatyear with the substitution for 15 per cent. of that higher percentage.

Annotations:

Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Modifications etc. (not altering text)

C3 See The Retirement Benefits Schemes (Continuationof Rights of Members of Approved Schemes) Regs. 1990 (S.I.1990/2101–in Part III Vol. 5)for circumstanceswhen para. 20disapplied or modified; when para. 21modified; or when para. 22disapplied

22 (1) This paragraph applies— E+W+S+N.I.

(a) where the scheme came into existence before 14th March 1989, as regardsan employee who became a member of the scheme on or after 1st June 1989;

(b) where the scheme came into existence on or after 14th March 1989, asregards any employee who is a member of the scheme (whenever he became amember).

(2) For the purposes of paragraph 21(1) above, in arriving at the employee’sremuneration for the year any excess of what would be his remuneration for theyear (apart from this sub-paragraph) over the permitted maximum for the yearshall be disregarded.

(3) In sub-paragraph (2) above “the permitted maximum”, in relation to a year of assessment,means the figure found for that year by virtue of sub-paragraphs (4) and (5)below.

(4) For the year 1989-90 the figure is £60,000.

(5) For any subsequent year of assessment the figure is the figure found forthat year, for the purposes of section 590C of the Taxes Act 1988, by virtueof section 590C(4) and (5).

Annotations:

Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Modifications etc. (not altering text)

C4 See The Retirement Benefits Schemes (Continuationof Rights of Members of Approved Schemes) Regs. 1990 (S.I.1990/2101–in Part III Vol. 5)for circumstanceswhen para. 20disapplied or modified; when para. 21modified; or when para. 22disapplied

Accelerated accrual E+W+S+N.I.

23 (1) This paragraph applies where the scheme allows a member to commute hispension or part of it for a lump sum or sums and— E+W+S+N.I.

(a) where the scheme came into existence before 14th March 1989, applies asregards an employee who became a member of the scheme on or after 1st June1989, and

(b) where the scheme came into existence on or after 14th March 1989, appliesas regards any employee who is a member of the scheme (whenever he became amember).

(2) The rules of the scheme shall have effect (notwithstanding anything inthem to the contrary and notwithstanding the effect of paragraph 3 of Schedule23 to the Taxes Act 1988) as if they did not allow the employee to obtain byway of commutation a lump sum or sums exceeding in all the greater of thefollowing sums—

(a) a sum of three-eightieths of his relevant annual remuneration for eachyear of service up to a maximum of 40;

(b) a sum of the pension payable under the scheme to the employee for thefirst year in which it is payable multiplied by 2.25.

(3) The following rules shall apply in calculating, for the purposes ofsub-paragraph (2) above, the pension payable under the scheme to the employeefor the first year in which it is payable—

(a) if the pension payable for the year changes, the initial pension payableshall be taken;

(b) it shall be assumed that the employee will survive for the year;

(c) the effect of commutation, and of any allocation of pension to providebenefits for survivors, shall be ignored.

Annotations:

Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Modifications etc. (not altering text)

C5 See The Retirement Benefits Schemes (Contiuationof Rights of Members of Approved Schemes) Regs. 1990 (S.I.1990/2101–in Part III Vol. 5)for circumstanceswhen para. 23disapplied or modified

24 (1) This paragraph applies where the scheme provides a lump sum or sums fora member otherwise than by commutation of his pension or part of itand— E+W+S+N.I.

(a) where the scheme came into existence before 14th March 1989, applies asregards an employee who became a member of the scheme on or after 1st June1989, and

(b) where the scheme came into existence on or after 14th March 1989, appliesas regards any employee who is a member of the scheme (whenever he became amember).

(2) The rules of the scheme shall have effect (notwithstanding anything inthem to the contrary and notwithstanding the effect of paragraph 4 of Schedule23 to the Taxes Act 1988) as if they did not allow the payment to theemployee, otherwise than by way of commutation, of a lump sum or sumsexceeding in all the greater of the following sums—

(a) a sum of three-eightieths of his relevant annual remuneration for eachyear of service up to a maximum of 40;

(b) a sum of the relevant number of eightieths of his relevant annualremuneration.

(3) For the purposes of sub-paragraph (2) above the relevant number shall befound by taking the number of eightieths (of relevant annual remuneration) byreference to which the pension payable under the scheme to the employee iscalculated, multiplying that number by three, and treating the resultingnumber as 120 if it would otherwise exceed 120.

Annotations:

Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Modifications etc. (not altering text)

C6 See The Retirement Benefits Schemes (Continuationof Rights of Members of Approved Schemes) Regs. 1990 (S.I.1990/2101–in Part III Vol. 5)for circumstanceswhen para. 24disapplied

Associated employments E+W+S+N.I.

25 (1) This paragraph applies— E+W+S+N.I.

(a) where the scheme came into existence before 14th March 1989, as regardsan employee who became a member of the scheme on or after 1st June 1989;

(b) where the scheme came into existence on or after 14th March 1989, asregards any employee who is a member of the scheme (whenever he became amember).

(2) Where the employee is a member of the scheme by virtue of two or morerelevant associated employments, the rules of the scheme shall have effect asmentioned in sub-paragraph (3) below.

(3) The rules of the scheme shall have effect (notwithstanding anything inthem to the contrary) as if they prohibited the amount payable by way ofpension in respect of service in any of the relevant associated employments,when aggregated with any amount payable by way of pension in respect ofservice in the other such employment or employments, from exceeding therelevant amount.

(4) For the purposes of sub-paragraph (3) above the relevant amount, inrelation to the employee, shall be found by applying the followingformula—

(5) For the purposes of this paragraph—

(a) section 590B(5) and (6) of the Taxes Act 1988 shall apply for the purposeof defining A, and

(b) section 590B(9) to (11) of that Act shall apply for the purpose ofdefining C,

as they apply for the purposes of section 590B of that Act, except thatfor the purposes of this paragraph A shall not exceed 20.

(6) The reference to two or more relevant associated employments shall beconstrued in accordance with section 590A of the Taxes Act 1988.

Annotations:

Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Modifications etc. (not altering text)

C7 See The Retirement Benefits Schemes (Continuationof Rights of Members of Approved Schemes) Regs. 1990 (S.I.1990/2101–in Part III Vol. 5)for circumstanceswhen paras. 25or 26disapplied

Connected schemes E+W+S+N.I.

26 (1) This paragraph applies— E+W+S+N.I.

(a) where the scheme came into existence before 14th March 1989, as regardsan employee who became a member of the scheme on or after 1st June 1989;

(b) where the scheme came into existence on or after 14th March 1989, asregards any employee who is a member of the scheme (whenever he became amember).

(2) Where in relation to the employee the scheme is connected with anotherscheme which is (or other schemes each of which is) an approved scheme, therules of the scheme shall have effect as mentioned in sub-paragraph (3) below.

(3) The rules of the scheme shall have effect (notwithstanding anything inthem to the contrary) as if they prohibited the amount payable by way ofpension under the scheme, when aggregated with any amount payable by way ofpension under the other scheme or schemes, from exceeding the relevant amount.

(4) For the purposes of sub-paragraph (3) above the relevant amount, inrelation to the employee, shall be found by applying the followingformula—

(5) For the purposes of this paragraph—

(a) section 590B(7) and (8) of the Taxes Act 1988 shall apply for the purposeof defining B, and

(b) section 590B(9) to (11) of that Act shall apply for the purpose ofdefining C,

as they apply for the purposes of section 590B of that Act, except thatfor the purposes of this paragraph B shall not exceed 20.

(6) References in this paragraph to the scheme being connected with anotherscheme in relation to the employee shall be construed in accordance withsection 590A of the Taxes Act 1988.

Annotations:

Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Modifications etc. (not altering text)

C8 See The Retirement Benefits Schemes (Continuationof Rights of Members of Approved Schemes) Regs. 1990 (S.I.1990/2101–in Part III Vol. 5)for circumstanceswhen paras. 25or 26disapplied

Augmentation E+W+S+N.I.

27 (1) This paragraph applies— E+W+S+N.I.

(a) where the scheme came into existence before 14th March 1989, as regardsan employee who became a member of the scheme on or after 1st June 1989;

(b) where the scheme came into existence on or after 14th March 1989, asregards any employee who is a member of the scheme (whenever he became amember).

(2) Where in addition to being a member of the scheme (the main scheme) theemployee is also a member of an approved scheme (the voluntary scheme) whichprovides additional benefits to supplement those provided by the main schemeand to which no contributions are made by any employer of his, sub-paragraph(3) below shall apply in relation to any augmentation of the benefits providedfor him by the main scheme after he has ceased to participate in it.

(3) Any rules of the main scheme imposing a limit on the amount of a benefitprovided for the employee shall have effect (notwithstanding anything in themto the contrary) as if they provided for the limit to be reduced by the amountof any like benefit provided for the employee by the voluntary scheme.

Centralised schemes E+W+S+N.I.

28 (1) Where the scheme is a centralised scheme, sub-paragraph (1)(a) and (b) ofeach of paragraphs 20 and 22 to 27 above shall have effect with thesubstitution for the reference to the coming into existence of the scheme ofa reference to the commencement of the employer’s participation in the scheme. E+W+S+N.I.

(2) For the purposes of this paragraph a centralised scheme is a retirementbenefits scheme (within the meaning of Chapter I of Part XIV of the Taxes Act1988) established for the purpose of enabling any employer, other than anemployer associated with the person by whom the scheme is established, toparticipate in it as regards his employees.

(3) For the purposes of sub-paragraph (2) above one person is associated withanother if (directly or indirectly) one is controlled by the other or if bothare controlled by a third person.

(4) In sub-paragraph (3) above the reference to control, in relation to a bodycorporate, shall be construed—

(a) where the body corporate is a close company, in accordance with section416 of the Taxes Act 1988, and

(b) where it is not, in accordance with section 840 of that Act.

Election E+W+S+N.I.

29 (1) In a case where— E+W+S+N.I.

(a) an employee became a member of the scheme on or after 17th March 1987 andbefore 1st June 1989, and

(b) he gives written notice to the administrator of the scheme that this Partof this Schedule is to apply in his case,

he shall be deemed for the purposes of this Part of this Schedule to havebecome a member of the scheme on 1st June 1989.

(2) A notice under this paragraph shall be given in such form as the Board mayprescribe.

Supplementary E+W+S+N.I.

30 In this Part of this Schedule “relevant annual remuneration” means final remuneration or,if the scheme provides for benefits to be calculated by reference to someother annual remuneration, that other annual remuneration. E+W+S+N.I.