The Personal Pension Schemes (Restriction on Discretion to Approve) (Permitted Investments) Regulations 2001

Explanatory Note

(This note is not part of the Regulations)

These Regulations impose restrictions on the Board of Inland Revenue’s discretion to approve a personal pension scheme by restricting the investments in which the scheme may invest.

Regulation 1 provides for citation and commencement, and regulation 2 for interpretation.

Regulation 3 defines a “self-invested personal pension scheme” for the purposes of these Regulations.

Regulation 4 defines “individual pension account” for the purposes of regulations 6 and 7 of these Regulations.

Regulation 5 introduces regulations 6 to 10 which impose restrictions on the investments in which a personal pension scheme may invest.

Regulation 6 provides that a self-invested personal pension scheme may only invest in those investments listed in the Schedule to these Regulations, and stipulates restrictions on a self-invested personal pension scheme’s borrowing powers.

Regulation 7 prohibits personal pension schemes other than self-invested personal pension schemes from investing in personal chattels or, subject to specified exceptions, residential property.

Regulation 8 prohibits self-invested personal pension schemes from lending to any person, and personal pension schemes that are not self-invested personal pension schemes from lending to members of the scheme or persons connected with members.

Regulation 9 prohibits personal pension schemes from purchasing, selling or leasing assets from or to members of the scheme or persons connected with members (subject to exceptions relating to commercial property).

Regulation 10 prohibits self-invested personal pension schemes from setting up borrowing arrangements for a member, or issuing further instalments of an existing serialised loan, after an annuity first becomes payable to the member under the scheme or the member elects to defer the purchase of an annuity (“the member’s pension date”). The regulation also prohibits such schemes from acquiring commercial property for a member after the member’s pension date or he attains 65, whichever is the later.

Regulation 11 contains transitional provisions with regard to personal pension schemes which had not yet been submitted for approval, or were awaiting the Board’s approval, when these Regulations came into force.