Part 4Pension schemes etc
Chapter 3Payments by registered pension schemes
Authorised employer payments
179Authorised employer loan
1
A loan made to or in respect of a sponsoring employer is an authorised employer loan if—
a
the amount loaned does not exceed an amount equal to 50% of the aggregate of the amount of the sums, and the market value of the assets, held for the purposes of the pension scheme immediately before the loan is made,
b
the loan is secured by a charge which is of adequate value, and
c
the repayment terms comply with subsection (2).
2
The repayment terms comply with this subsection if—
a
the rate of interest payable on the loan is not less than the rate prescribed by regulations made by the Board of Inland Revenue,
b
the loan repayment date is before the end of the period of five years beginning with the date on which the loan is made, or has been postponed to a date after the end of that period under subsection (3), and
c
the amount payable in each period beginning with the date on which the loan is made, and ending with the last day of a loan year, is not less than the required amount.
3
If on a standard loan repayment date any amount (including interest) is owing, the loan repayment date may be postponed to a date before the end of the period of five years beginning with the standard loan repayment date.
4
The loan repayment date may be postponed under subsection (3) only once.
5
If the amount of a loan to or in respect of a sponsoring employer is increased, the amount of the increase is to be treated as a loan made on the date of the increase.
6
Schedule 30 gives the meaning of expressions used in this section and explains how to calculate the amount of the unauthorised payment when a loan to or in respect of a sponsoring employer does not comply with subsection (1).
7
In this section and that Schedule “charge” includes a right in security or an agreement to create a right in security; and any reference to assets subject to a charge or assets charged includes a reference to the property over which such a right is granted.
8
Schedule 36 contains (in Part 4) transitional provision about loans to sponsoring employers.