The Personal Pension Schemes (Transfer Payments) Regulations 2001

PART IV PROVISION FOR THE APPLICATION OF TRANSFER PAYMENTS

Basic obligations

9.  Subject to regulations 10 to 14, any transfer payment accepted by a personal pension scheme in accordance with these Regulations shall only be used for providing benefits listed in section 633(1) of the Taxes Act(1) or for making a further transfer payment subject to the provisions of these Regulations.

Application of transfer payments to a personal pension scheme from or originating from certain schemes mentioned in Chapter I for the provision of “death benefits”

10.—(1) Where a personal pension scheme has in the circumstances described in regulation 8(2) (omitting the word “proposed” wherever it occurs) accepted a transfer payment from—

(a) an approved retirement benefits scheme, or

(b) a relevant statutory scheme, or

(c) another personal pension scheme in circumstances where the transfer payment, or part of it, had its origin in a transfer payment from an approved retirement benefits scheme or a relevant statutory scheme,

the accumulated value arising from that transfer payment or, as the case may be, that part shall be applied after the death of the individual referred to in regulation 8(2) in accordance with paragraph (2) or (3), in the events described in paragraph (2).

(2) Where the individual dies before any benefits have been paid to him under an arrangement under which the transfer payment falls to be held, the accumulated value arising from that transfer payment or, as the case may be, that part shall be applied—

(a) wholly to secure the payment to a surviving spouse or (if the arrangement so provides) a dependant of an annuity which satisfies the conditions in section 636 of the Taxes Act(2), or

(b) to secure the payment of income withdrawals by the surviving spouse or (if the arrangement so provides) the dependant with respect to which the conditions in section 636A(3) of the Taxes Act are satisfied and, as to any amount not used for that purpose, to secure the payment to the surviving spouse or (if the arrangement so provides) the dependant of such an annuity as is referred to in sub-paragraph (a), or

(c) as to not more than 25 per cent. to secure the payment of a lump sum and as to the balance to secure the payment to the surviving spouse or (if the arrangement so provides) the dependant of such an annuity as is referred to in sub-paragraph (a), or of such income withdrawals and annuity as are referred to in sub-paragraph (b).

(3) In the events described in the words of paragraph (2) preceding sub-paragraph (a), subject to sub-paragraphs (a) to (c) of that paragraph, the whole of the accumulated value may be applied to secure the payment of a lump sum.

Application of transfer payments to a personal pension scheme from or originating from certain schemes mentioned in Chapter I for the provision of lump sums to the member

11.—(1) Where in the circumstances described in regulation 8(2) (omitting the word “proposed” wherever it occurs) a personal pension scheme (“the receiving scheme”) accepts a transfer payment from—

(a) an approved retirement benefits scheme, or

(b) a relevant statutory scheme, or

(c) another personal pension scheme in circumstances where the transfer payment or part of it had its origin in a transfer payment (“the original payment”) from an approved retirement benefits scheme or a relevant statutory scheme,

(“the paying scheme”) the provisions of paragraph (2) shall apply.

(2) Where the provisions of this paragraph apply—

(a) no amount may be paid to the individual in respect of whom the transfer payment is made by way of lump sum on his pension date out of the transfer payment or, as the case may be, the part of that payment unless the administrator of the receiving scheme has obtained from the administrator of the paying scheme the lump sum certificate required by the certificating requirements; and

(b) the amount which may be so paid by way of lump sum may not exceed the aggregate of the amount shown in any such certificate (“the basic amount”) and any amount by which the basic amount may be enhanced at the date of payment.

(3) For the purposes of paragraph (2) the amount by which the basic amount may be enhanced is the result of applying to the basic amount the percentage increase in the retail prices index between—

(a) (i) in a case falling within paragraph (1)(a) or (b), the month in which the transfer payment referred to in the words preceding paragraph (1)(a) was received, or

(ii) in a case falling within paragraph (1)(c), the month in which the original payment was made, and

(b) the last month for which that index had been published at the date of the payment by way of lump sum.

(4) The reference in paragraph (3) to the retail prices index shall be construed in accordance with section 833(2) of the Taxes Act(4) as if it were a reference in the Income Tax Acts.

Application of transfer payments to a personal pension scheme where a “nil” lump sum certificate is held

12.  Where—

(a) a personal pension scheme has accepted a transfer payment in accordance with regulation 7, and

(b) the administrator of the scheme holds a certificate given under any of the certificating requirements with regard to the transfer payment or any other event, showing that no amount is payable out of that payment by way of lump sum to the individual in respect of whom the transfer payment was made on his pension date,

no such lump sum may be paid out of the accumulated value arising from that transfer payment.

Obligations where there is a pension sharing order or provision

13.—(1) Where—

(a) a transfer payment has been accepted by a personal pension scheme in the circumstances described in regulation 5(3) (omitting sub-paragraph (b)(ii) and the word “either” preceding sub-paragraph (b)(i)), and

(b) a pension sharing order or provision is subsequently made against the individual in respect of whom the payment was made,

the administrator of the receiving scheme shall recalculate the amount shown on the certificate referred to in regulation 5(2) or (3)(b), according to any debit to which the individual’s rights under the scheme become subject by virtue of that order or provision, and shall prepare and sign a replacement certificate in respect of the individual’s rights remaining after the reduction referred to in section 29 of the 1999 Act(5) or Article 26 of the 1999 Order(6) has taken place.

(2) Where—

(a) a transfer payment has been accepted by a personal pension scheme in the circumstances described in regulation 5(3) (omitting sub-paragraph (b)(i) and the word “either” which precedes it), and

(b) a pension sharing order or provision is subsequently made against the individual in respect of whom the payment was made,

the administrator of the receiving scheme shall prepare and sign a certificate in respect of the pension credit to which the transferee becomes entitled, showing that no amount may be paid out of the original payment by way of lump sum to the transferee.

(3) Where, after the date which is a member’s pension date in relation to the arrangements in question, a pension sharing order or provision is made against that member, the administrator of the scheme shall prepare and sign a certificate in respect of the pension credit to which the transferee becomes entitled, showing that no amount may be paid out of the pension credit by way of lump sum to the transferee.

(4) The reference in paragraph (1) to a certificate referred to in regulation 5(2) or (3)(b) includes a reference to a certificate given under regulation 4 of the Personal Pension Schemes (Transfer Payments) Regulations 1988(7).

(1)

Section 633(1) was amended by paragraph 3 of Schedule 11 to the Finance Act 1995 (c. 4) and section 172 of the Finance Act 1996 (c. 8).

(2)

Section 636 was amended by paragraph 6 of Schedule 11 to the Finance Act 1995 and paragraph 13 of Schedule 10 to the Finance Act 1999 (c. 16).

(3)

Section 636A was inserted by paragraph 7 of Schedule 11 to the Finance Act 1995.

(4)

Section 833(2) was amended by S.I. 1996/273.

(5)

1999 c. 30.

(6)

S.I. 1999/3147 (N.I. 11).

(7)

S.I. 1988/1014; regulation 4 was amended by S.I. 1989/1115.