The Teachers' Superannuation (Scotland) Amendment Regulations 2006

Explanatory Note

(This note is not part of the Regulations)

These Regulations amend the Teachers' Superannuation (Scotland) Regulations 2005 (“the 2005 Regulations”) and the Teachers' Superannuation (Additional Voluntary Contributions) (Scotland) Regulations 1995 (“the AVC Regulations”) in connection with the new provisions for the taxation of pension schemes contained in the Finance Act 2004. They also correct some minor inaccuracies in the 2005 Regulations, and update the cross references in the AVC Regulations to the 2005 Regulations.

Amendment of the 2005 Regulations

Regulation 4 amends regulation E6 of the 2005 Regulations to increase the minimum pension age from 50 to 55 where the teacher is a “post-30th June 2006 entrant” as defined.

Regulation 5 amends regulation E26 of the 2005 Regulations so that a child’s pension can only be paid until the age of 23, except where the child is incapacitated. The effect of regulation 5(6) is that these changes do not apply where the child is in receipt of benefits under the 2005 Regulations on 5th April 2006, or where the teacher in question was already in receipt of retirement benefits on 5th April 2006, and the child was born on or before 5th April 2007.

The other amendments are minor amendments consequential on the new taxation provisions and the provisions specified above. These include–

(a) amendments referring to provisions in the Finance Act 2004 which allow payments to be made without incurring a charge to tax (for example the commutation of small pensions to lump sums, or the refund of contributions in respect of short service); and

(b) amendments changing references to schemes which were approved under the old tax regime to references to registered pension schemes; this has meant some simplification to provisions relating to transfers (regulations 7, 8 and 12) including an express provision preventing the acceptance of a transfer value from certain schemes which are money purchase arrangements and which provide additional benefits (regulation 8(4)).

Amendment of the AVC Regulations

Regulations 16, 17, 18, 24 and 27 amend the AVC Regulations to remove the constraints on the levels of contributions and benefits payable. Following the introduction of the Finance Act 2004, an individual can make contributions up to his or her relevant UK earnings which are chargeable to income tax without incurring a charge to tax.

Regulations 22, 23 and 26 amend the AVC Regulations so that a teacher or pension credit member can elect to take part of his or her benefits as a lump sum if it is a “pension commencement lump sum” as defined in the Finance Act 2004.

Regulation 21 amends the rules on outward transfers so that a person who is still a contributor on the date that these Regulations come into force becomes entitled to request a transfer in respect of his or her AVC investments, regardless of whether that individual has also applied for a transfer value under the 2005 Regulations.

The other amendments are minor amendments consequential on the new taxation provisions in the provisions specified above, or update cross references to the 2005 Regulations.

General

A regulatory impact assessment has not produced for these Regulations as they have no additional impact on business, charities, voluntary bodies or any public bodies distinct from that as the Finance Act 2004 itself. The regulatory impact assessment in relation to the provisions of Part 4 of the Finance Act 2004 and subordinate legislation under it was published by the Board of Inland Revenue on 8th April 2004, and is available on the website of Her Majesty’s Revenue and Customs at http://www.hmrc.gov.uk/ria/simplifying-pensions.pdf or (for hard copies) by writing to the Ministerial Correspondence Unit, Capital and Savings, First Floor, Ferrers House, PO Box 38, Castle Meadow Road, Nottingham, NG2 1BB.