The Overseas Pension Schemes (Miscellaneous Amendments) Regulations 2015

Citation and commencement

1.  These Regulations may be cited as The Overseas Pension Schemes (Miscellaneous Amendments) Regulations 2015 and come into force on 6th April 2015.

Amendments to the Pension Schemes (Categories of Country and Requirements for Overseas Pension Schemes and Recognised Overseas Pension Schemes) Regulations 2006

2.  The Pension Schemes (Categories of Country and Requirements for Overseas Pension Schemes and Recognised Overseas Pension Schemes) Regulations 2006(1) are amended as follows.

3.  In regulation 3 (recognised overseas pension schemes: prescribed countries or territories and prescribed requirements)—

(a) in paragraph (1)(a)(2) for “the requirement in paragraph (6)” substitute “the requirements in paragraphs (6) and (6A)”;

(b) after paragraph (6)(3) insert—

“(6A) The benefits payable to the member under the scheme, to the extent that they consist of the member’s relevant transfer fund, are payable no earlier than they would be if pension rule 1 in section 165 applied.”.

Amendments to the Pension Schemes (Information Requirements - Qualifying Overseas Pension Schemes, Qualifying Recognised Overseas Pensions Schemes and Corresponding Relief) Regulations 2006

4.  The Pension Schemes (Information Requirements - Qualifying Overseas Pension Schemes, Qualifying Recognised Overseas Pensions Schemes and Corresponding Relief) Regulations 2006(4) are amended as follows.

5.  After regulation 3A (information – transfer of sums or assets to a QROPS)(5) insert—

“Information provided to member of QROPS or former QROPS by scheme manager where it appears member may be first flexibly accessing pension rights

3AA.— (1) If a relevant event occurs in relation to a member of a QROPS or former QROPS which is to be treated as a registered pension scheme for the purposes of section 227G (when pension rights are first flexibly accessed)(6) by virtue of paragraph 9ZA or 9ZB of Schedule 34 (non-UK schemes: application of certain charges)(7), the scheme manager—

(a) must provide the member with a statement—

(i) stating the date of the relevant event; and

(ii) explaining the matters specified in paragraph (3); and

(b) must do so before the end of 91 days beginning with the date of the relevant event,

but this is subject to paragraphs (4) and (7).

(2) For the purposes of this regulation—

(a) if—

(i) the member has a member’s flexi-access drawdown fund(8) in respect of an arrangement under the scheme; and

(ii) the fund came into existence as a result of sums or assets being designated on or after 6th April 2015 as available for the payment of drawdown pension,

a relevant event occurs when a qualifying payment is made to the member from the fund;

(b) if section 165(3A) (pension rules)(9) applied in the individual’s case to an arrangement at any time before 6th April 2015, a relevant event occurs at the start of 6th April 2015;

(c) if—

(i) the member has a member’s drawdown pension fund in respect of an arrangement under the scheme; and

(ii) the sums or assets that make up the fund become newly-designated funds by the operation of paragraph 8B or 8C of Schedule 28 (registered pension schemes: authorised pensions – supplementary)(10),

a relevant event occurs when a qualifying payment is made to the member from the member’s flexi-access drawdown fund in respect of the arrangement; or

(d) a relevant event occurs when an uncrystallised funds pension lump sum(11) is paid to the member by the scheme.

(3) The matters mentioned in paragraph (1)(a)(ii) are—

(a) that a relevant event has occurred in relation to the member and that, as a result, the member has flexibly accessed the member’s pension rights (although may first have done so previously);

(b) that if in any tax year the total of the pension inputs to money purchase arrangements, and certain hybrid arrangements, relating to the member exceeds £10,000—

(i) there will be an annual allowance tax charge on the excess; and

(ii) the annual allowance for pension inputs to other arrangements relating to the member will be £10,000 less than it would otherwise be;

(c) where paragraph (2)(d) applies, that the member may be liable to a charge under section 636A(1A) and (1B) (exemption for certain lump sums) of ITEPA 2003(12) by virtue of paragraph 1(3)(da) of Schedule 34 (member payment charges)(13); and

(d) the duties under regulation 3AB and the circumstances in which the member will have to comply with them.

(4) The scheme manager is not required to comply with paragraph (1) if—

(a) the scheme manager has complied with paragraph (1) in respect of an earlier relevant event; or

(b) the scheme manager is, at any time before complying with paragraph (1) in relation to the relevant event, informed—

(i) by the member; or

(ii) by the scheme manager of another QROPS or former QROPS or by the scheme administrator of a registered pension scheme,

that the member flexibly accessed pension rights at a time before the relevant event occurred.

(5) In this regulation, a reference to a qualifying payment from a fund is a reference to—

(a) payment of income withdrawal from the fund; or

(b) payment of a short-term annuity purchased using sums or assets out of the fund,

but does not include payment at a time when the whole of the fund represents rights attributable to a disqualifying pension credit.

(6) In paragraph (5) “disqualifying pension credit” is to be read in accordance with paragraph 2(3) and (4) of Schedule 29 (registered pension schemes: authorised lump sums – supplementary).

(7) This regulation does not apply unless the member is—

(a) resident in the United Kingdom when the relevant event occurs (or would occur but for this paragraph); or

(b) has been resident in the United Kingdom in any of the five tax years immediately preceding the tax year in which the relevant event occurs (or would occur but for this paragraph).

Passing-on by member of information under regulation 3AA if active or contributing etc

3AB.— (1) Paragraphs (2) and (3) apply if—

(a) an individual receives a statement under regulation 3AA from the scheme manager of a QROPS or former QROPS (the “flexed scheme”); and

(b) on the date of the relevant event concerned, or at any later time, the individual is an accruing member of—

(i) the flexed scheme;

(ii) a relevant non-UK scheme(14) which is a QROPS or former QROPS other than the flexed scheme; or

(iii) a registered pension scheme,

and in this regulation “other relevant scheme” is a scheme mentioned in sub-paragraphs (ii) and (iii).

(2) The individual must before the end of the relevant period—

(a) pass on a copy of the statement; or

(b) otherwise give notice—

(i) of receipt of the statement; and

(ii) of the date of the relevant event concerned or (if applicable) of its having occurred more than 2 years before the start of the relevant period,

to the scheme manager or scheme administrator (as the case may be) of each other relevant scheme of which the individual is an accruing member on any day in the intervening period.

(3) Where, in the case of a particular scheme which is any other relevant scheme, the individual is not an accruing member of that other scheme on any day in the intervening period but becomes an accruing member of that scheme on a day (“the activation day”) after the last day of that period, the individual must before the end of the 91 days beginning with the activation day—

(a) pass on a copy of the statement; or

(b) otherwise give notice—

(i) of receipt of the statement; and

(ii) of the date of the relevant event concerned or (if applicable) of its having occurred more than 2 years before the activation day,

to the scheme manager or scheme administrator (as the case may be) of that other relevant scheme; but this is subject to paragraph (4).

(4) Paragraph (3) does not apply in connection with the individual becoming an accruing member of any particular scheme if the individual becomes an accruing member of that scheme upon or after becoming a member of that scheme as a result of a transfer of the member’s relevant transfer fund or of a recognised transfer after the date of the relevant event concerned.

(5) For the purposes of this regulation, the individual is an accruing member of a pension scheme on any particular day if—

(a) the individual is an active member(15) of the scheme on that day as a result of there presently being arrangements for the accrual of benefits to or in respect of the individual under a cash balance arrangement or hybrid arrangement(16); or

(b) a relevant contribution is made under the scheme on that day.

(6) For the purposes of this regulation, a relevant contribution is made under a scheme if—

(a) a relievable pension contribution(17) is paid by or on behalf of the individual under a non-cash-balance money purchase arrangement relating to the individual under the scheme;

(b) a contribution is paid in respect of the individual by an employer of the individual under a non-cash-balance money purchase arrangement relating to the individual under the scheme; or

(c) a contribution—

(i) paid under the scheme by an employer of the individual; and

(ii) paid otherwise than in respect of any individual,

becomes held for the purposes of a non-cash-balance money purchase arrangement relating to the individual under the scheme,

and in this paragraph “non-cash-balance money purchase arrangement” means a money purchase arrangement other than a cash balance arrangement.

(7) In this regulation—

“the relevant period” means the period of 91 days beginning with—

(a)

the date of receipt of the statement if the individual is an accruing member of the flexed scheme or any other relevant scheme on any day in the period—

(i)

beginning with the date of the relevant event concerned; and

(ii)

ending with the date of receipt; or

(b)

if not, the first day after the date of receipt when the individual is an accruing member of such a scheme; and

“the intervening period” means the period—

(a)

beginning with the date of the relevant event concerned; and

(b)

ending with the first day of the relevant period.

Information to be given by QROPS and former QROPS: transfers of UK tax-relieved funds and relevant transfer funds after flexible access

3AC.— (1) Paragraph (2) applies if—

(a) in connection with a member of a QROPS or former QROPS which is to be treated as a registered pension scheme for the purposes of section 227G (when pension rights are first flexibly accessed) by virtue of paragraph 9ZA or 9ZB of Schedule 34 (non-UK schemes: application of certain charges) (“the transferring scheme”), there is a transfer of the whole or part of—

(i) the member’s UK tax-relieved fund; or

(ii) the member’s relevant transfer fund(18),

from the transferring scheme to a QROPS or to a registered pension scheme (“the recipient scheme”);

(b) the scheme manager of the transferring scheme has reason to believe that the member first flexibly accessed pension rights before the transfer; and

(c) the individual—

(i) is resident in the United Kingdom when sub-paragraph (b) is met; or

(ii) has been resident in the United Kingdom in any of the five tax years immediately preceding the tax year in which that sub-paragraph is met.

(2) The scheme manager of the transferring scheme must provide the scheme manager or scheme administrator (as the case may be) of the recipient scheme with a statement—

(a) stating that the scheme manager of the transferring scheme has reason to believe that the member first flexibly accessed pension rights before the transfer; and

(b) specifying the date the scheme manager of the transferring scheme understands to be the date when the member first flexibly accessed pension rights.

(3) The requirement under paragraph (2) is to be complied with before—

(a) the end of 91 days beginning with the date of the transfer; or

(b) if later, the end of 91 days beginning with the date when the scheme manager of the transferring scheme first has reason for the belief mentioned in paragraph (1)(b).

Information to be given by QROPS and former QROPS to QROPS about transfers of UK tax-relieved funds and relevant transfer funds

3AD.— (1) Paragraph (2) applies if in connection with a member of a QROPS or former QROPS (“the transferring scheme”) there is a transfer of sums or assets (“the transfer”)—

(a) which immediately before the transfer are comprised in—

(i) the member’s UK tax-relieved fund; or

(ii) the member’s relevant transfer fund;

(b) from the transferring scheme so as to be held for the purposes of, or to represent rights under, a QROPS (“the recipient scheme”).

(2) The scheme manager of the transferring scheme must provide the scheme manager of the recipient scheme with a statement stating—

(a) the value of so many of the transferred sums or assets as are referable to the member’s UK tax-relieved fund (if any);

(b) the value of so many of the transferred sums or assets as are referable to the member’s relevant transfer fund (if any); and

(c) where any transferred sums or assets are—

(i) referable to the member’s relevant transfer fund; and

(ii) the transferring scheme is aware of any recognised transfer from which those sums or assets are derived,

that there was such a recognised transfer and, where it is known, the date of that transfer.

(3) The requirements in paragraph (2) must be complied with before the end of 91 days beginning with the date of the transfer.

(4) In paragraph (2)(c)(ii) the sums or assets are “derived” from a recognised transfer regardless of whether those sums or assets are also derived from one or more relevant transfers(19) which took place after the date of that recognised transfer.”.

6.  In regulation 5 (application and modification of penalty provisions in Part 7 of Schedule 36 to the Finance Act 2008(20)), in paragraph (1)—

(a) after “3A(1)” insert “, 3AA(1)(a), 3AC(2), 3AD(2)”; and

(b) in sub-paragraph (b), for “or 3C” insert “, 3C, 3AA, 3AC or 3AD”.

Edward Troup

Nick Lodge

Two of the Commissioners for Her Majesty’s Revenue and Customs

12th March 2015