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The Registered Pension Schemes (Authorised Payments) (Amendment) (No.2) Regulations 2012
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- UK Statutory Instruments
- 2012 No. 1881
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EXPLANATORY NOTE
(This note is not part of the Regulations)
These Regulations amend the Registered Pension Schemes (Authorised Payments) Regulations 2009 (“the 2009 Regulations”).
Regulation 1 provides for citation and commencement and regulations 2 and 3 provide for the date from which the amendments will take effect.
Regulations 2, 4 and 5 provide that a payment of a lump sum by an occupational pension scheme will be an authorised payment for the purposes of the Finance Act 2004 (“the 2004 Act”) if conditions specified in new regulation 20 of the 2009 Regulations are met.
The lump sum payment will be subject to the short service refund lump sum charge in section 205 of the 2004 Act (see new regulation 20(3)). It will be treated as if it were a short service refund lump sum for the purposes of provisions about the taxation of pensions in Part 9 of the Income Tax (Earnings and Pensions) Act 2003 (see the amendment made by regulation 4 of these Regulations).
New regulation 20(1) and (2) specifies that, for the payment to be an authorised payment, rules of the scheme (“the prohibition rules”) must have the effect that only part of the benefits of the scheme can be discharged by the payment of a lump sum. But the prohibition rules must have been made when there was a provision in primary or secondary legislation which had the same effect as the prohibition rules (i.e. the legislation stopped the benefits being extinguished by payment of a lump sum). Further, that legislative provision must have ceased to apply (without the prohibition rules also having been removed).
New regulation 20(1) specifies some other conditions that must be met before the payment is an authorised payment. Those are the same or similar conditions that apply for the purposes of the short service refund lump sum rule (see paragraph 5 of Schedule 29 to the 2004 Act).
A Tax Information and Impact Note has not been prepared for this instrument as it contains no substantive changes to tax policy.
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