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Finance Act 2014

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This is the original version (as it was originally enacted).

Temporary relaxation to allow transfer of pension rights after lump sum paid

This section has no associated Explanatory Notes

2(1)In Schedule 29 to FA 2004 after paragraph 1A insert—

1B(1)When deciding whether a lump sum to which this paragraph applies is a pension commencement lump sum—

(a)paragraph 1(1)(aa) and (c) and (3) are to be omitted,

(b)paragraph 1(4) is to be treated as referring to the actual pension (see sub-paragraph (2)(h) of this paragraph), and

(c)paragraph 2(2) is to be treated as referring to the arrangement under which the member was expected to become entitled to the expected pension (see sub-paragraph (2)(b) of this paragraph).

(2)This paragraph applies to a lump sum if—

(a)the sum is paid in respect of a money purchase arrangement,

(b)the sum is paid to the member in connection with a pension under a registered pension scheme to which it is expected that the member will become entitled (“the expected pension”),

(c)the expected pension is income withdrawal, a lifetime annuity or a scheme pension,

(d)the sum is paid before the member becomes entitled to the expected pension,

(e)either—

(i)the sum is paid on or after 19 September 2013 but before 6 April 2015, or

(ii)the sum is paid before 19 September 2013, a contract for a lifetime annuity is entered into to provide the expected pension, and on or after 19 March 2014 the contract is cancelled,

(f)the sum is not repaid at any time before 6 October 2015,

(g)before the member becomes entitled to the expected pension, there is a recognised transfer of the sums and assets that immediately before the transfer represent the sums and assets that when the sum was paid were held for the purpose of providing the expected pension,

(h)the member becomes entitled before 6 October 2015 to a pension under the scheme to which the recognised transfer is made (“the actual pension”),

(i)the actual pension is income withdrawal, a lifetime annuity or a scheme pension, or some combination of them, and

(j)all of the sums and assets that represent the sums and assets transferred by the recognised transfer are used to provide the actual pension.

(3)If a lump sum to which this paragraph applies is a pension commencement lump sum, any lump sum paid—

(a)to the member,

(b)by the scheme to which the recognised transfer mentioned in sub-paragraph (2)(g) is made or by any other registered pension scheme (including the scheme from which the transfer was made), and

(c)in connection with the member’s becoming entitled to the actual pension,

is not a pension commencement lump sum.

(4)For the purposes of sub-paragraph (2), if the circumstances are as described in sub-paragraph (2)(e)(ii), the member is treated as not having become entitled to the expected pension as a result of the cancelled contract having been entered into.

(2)In section 166(2) of FA 2004 (time at which a person becomes entitled to a lump sum)—

(a)before paragraph (a) insert—

(za)in the case of a pension commencement lump sum to which paragraph 1B of Schedule 29 applies (certain sums paid before 6 April 2015), immediately before the person becomes entitled to the actual pension (see paragraph 1B(2)(h) of that Schedule),, and

(b)in paragraph (a) for “of a” substitute “of any other”.

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