2009 No. 2930

Pensions

The Occupational and Personal Pension Schemes (Authorised Payments) Amendment Regulations 2009

Made

Laid before Parliament

Coming into force

The Secretary of State for Work and Pensions makes the following Regulations in exercise of the powers conferred by sections 12C(1)(c), 21(1), 28(4), 32A(2)(c), 71(6), 101C(2), 181(1), 182(2) and (3) and 183(1) of the Pension Schemes Act 19931, sections 74(3)(e), 91(5)(c)(ii) and (iii), 124(1) and 174(2) and (3) of the Pensions Act 19952 and section 83(4) and (6) of, and paragraph 7(4) of Schedule 5 to, the Welfare Reform and Pensions Act 19993.

In accordance with section 185(1) of the Pension Schemes Act 19934, section 120(1) of the Pensions Act 1995 and section 83(11) of the Welfare Reform and Pensions Act 1999, the Secretary of State has consulted with such persons as the Secretary of State considers appropriate5.

Citation and commencement1

These Regulations may be cited as the Occupational and Personal Pension Schemes (Authorised Payments) Amendment Regulations 2009 and shall come into force on 1st December 2009.

Amendment of the Occupational Pension Schemes (Preservation of Benefit) Regulations 19912

For regulation 5 of the Occupational Pension Schemes (Preservation of Benefit) Regulations 19916 (short service benefit in lump sum form), substitute—

Short service benefit in lump sum form5

For the purposes of section 71(6) of the Act (basic principle as to short service benefit), the circumstances in which the trustees or managers of a scheme may provide for payment of short service benefit in the form of a lump sum before normal pension age are that the payment of a lump sum—

a

to the member is permitted in accordance with paragraph (a), (b), (e), (f) or (g) of the lump sum rule in section 166(1) of the Finance Act 20047 (lump sum rule); or

b

is—

i

made by a registered pension scheme (within the meaning given in section 150(2) of the Finance Act 2004 (meaning of “pension scheme”));

ii

a payment that is described in Part 2 of the Registered Pension Schemes (Authorised Payments) Regulations 20098; and

iii

made to or in respect of a member.

Amendment of the Occupational Pension Schemes (Discharge of Protected Rights on Winding Up) Regulations 19963

In regulation 5 of the Occupational Pension Schemes (Discharge of Protected Rights on Winding Up) Regulations 19969 (conditions upon which appropriate policies of insurance may be commuted)—

a

in paragraph (1), for “paragraph (2)” substitute “paragraph (2), (2A)”, and

b

after paragraph (2), insert—

2A

This paragraph is satisfied if the lump sum payment is—

a

made by a registered pension scheme (within the meaning given in section 150(2) of the Finance Act 2004 (meaning of “pension scheme”));

b

a payment that is described in Part 2 of the Registered Pension Schemes (Authorised Payments) Regulations 2009; and

c

made to or in respect of a member.

Amendment of the Occupational Pension Schemes (Contracting-out) Regulations 19964

1

The Occupational Pension Schemes (Contracting-out) Regulations 199610 are amended in accordance with this regulation.

2

In regulation 1(2) (interpretation)11, after the definition of “the 2004 Act” insert—

  • “the 2009 Regulations” means the Registered Pension Schemes (Authorised Payments) Regulations 2009;

3

In regulation 20(1) (payment of a lump sum instead of a pension payable under a relevant scheme)12—

a

immediately before sub-paragraph (a), omit “is permitted either”,

b

in sub-paragraphs (a) and (b), insert at the beginning “is permitted”, and

c

after sub-paragraph (b), insert—

; or

c

is—

i

made by a registered pension scheme (within the meaning given in section 150(2) of the Finance Act 2004 (meaning of “pension scheme”));

ii

a payment that is described in Part 2 of the 2009 Regulations; and

iii

made to or in respect of a member.

4

In regulation 60(1)(b)(i) (payment of a guaranteed minimum pension as a lump sum)13—

a

omit “qualifies as”,

b

in sub-paragraphs (aa) and (bb), insert at the beginning “qualifies as”, and

c

after sub-paragraph (bb), insert—

cc

is made by a registered pension scheme (within the meaning given in section 150(2) of the Finance Act 2004 (meaning of “pension scheme”)), is a payment that is described in Part 2 of the 2009 Regulations and is made to or in respect of a member; or

Amendment of the Personal and Occupational Pension Schemes (Protected Rights) Regulations 19965

In regulation 8 of the Personal and Occupational Pension Schemes (Protected Rights) Regulations 199614 (giving effect to protected rights by the provision of a lump sum)—

a

in paragraph (1), for “either paragraph (1A)” substitute “paragraph (1A), (1AA)”, and

b

after paragraph (1A), insert—

1AA

This paragraph is satisfied if the lump sum payment is—

a

made by a registered pension scheme (within the meaning given in section 150(2) of the Finance Act 2004 (meaning of “pension scheme”));

b

a payment that is described in Part 2 of the Registered Pension Schemes (Authorised Payments) Regulations 2009; and

c

made to or in respect of a member.

Amendment of the Occupational Pension Schemes (Winding Up) Regulations 19966

For regulation 8(6)(b)(i) of the Occupational Pension Schemes (Winding Up) Regulations 199615 (requirements to be satisfied by transferee schemes, annuities etc.), substitute—

i

of a lump sum—

aa

that is a trivial commutation lump sum or a winding up lump sum for the purposes of Part 1 of Schedule 29 to the Finance Act 200416 is made to a member; or

bb

is made by a registered pension scheme (within the meaning given in section 150(2) of the Finance Act 2004 (meaning of “pension scheme”)), is a payment that is described in Part 2 of the Registered Pension Schemes (Authorised Payments) Regulations 2009 and is made to or in respect of a member; and

Amendment of the Occupational Pension Schemes (Assignment, Forfeiture, Bankruptcy etc.) Regulations 19977

In regulation 2(1)(a) of the Occupational Pension Schemes (Assignment, Forfeiture, Bankruptcy etc.) Regulations 199717 (commutation of a pension under an occupational pension scheme), after paragraph (ii) insert—

iii

the earner or the earner’s widow, widower or surviving civil partner is a payment—

aa

by a registered pension scheme (within the meaning given in section 150(2) of the Finance Act 2004 (meaning of “pension scheme”)); and

bb

that is described in Part 2 of the Registered Pension Schemes (Authorised Payments) Regulations 2009; or

Amendment of the Pension Sharing (Implementation and Discharge of Liability) Regulations 20008

In regulation 15 of the Pension Sharing (Implementation and Discharge of Liability) Regulations 200018 (disqualification as a destination for pension credit – annuity contracts and insurance policies)—

a

in paragraph (4)—

i

omit the word “either”, and

ii

after sub-paragraph (a), insert—

aa

the condition set out in paragraph (5A) is satisfied; or

b

after paragraph (5), insert—

5A

The condition referred to in paragraph (4)(aa) is that the lump sum payment is—

a

made by a registered pension scheme (within the meaning given in section 150(2) of the Finance Act 2004 (meaning of “pension scheme”));

b

a payment that is described in Part 2 of the Registered Pension Schemes (Authorised Payments) Regulations 2009; and

c

made to or in respect of a member.

Amendment of the Pension Sharing (Pension Credit Benefit) Regulations 20009

For regulation 3 of the Pension Sharing (Pension Credit Benefit) Regulations 200019 (pension credit benefit in lump sum form), substitute—

Pension credit benefit in lump sum form3

For the purposes of section 101C(2) of the 1993 Act (basic principle as to pension credit benefit), the circumstances in which the trustees or managers of a scheme may provide for payment of pension credit benefit in the form of a lump sum before normal benefit age are—

a

those which permit payment of a lump sum in accordance with paragraph (a), (b), (e), (f) or (g) of the lump sum rule in section 166(1) of the Finance Act 2004 (lump sum rule); or

b

that the lump sum payment is—

i

made by a registered pension scheme (within the meaning given in section 150(2) of the Finance Act 2004 (meaning of “pension scheme”));

ii

a payment that is described in Part 2 of the Registered Pension Schemes (Authorised Payments) Regulations 2009; and

iii

made to or in respect of a member.

Signed by authority of the Secretary of State for Work and Pensions.

Angela EagleMinister of State
Department for Work and Pensions
EXPLANATORY NOTE

(This note is not part of the Regulations)

These Regulations amend occupational and personal pensions legislation to update references to certain tax legislation.

The Registered Pension Schemes (Authorised Payments) Regulations 2009 (S.I. 2009/1171) (“the 2009 Regulations”) introduce new tax rules for pension schemes. They provide that some more payments made by pension schemes will be authorised payments, so will not attract some tax charges.

These Regulations update the following occupational and personal pensions legislation so that it refers to the new tax rules in the 2009 Regulations.

  • The Occupational Pension Schemes (Preservation of Benefit) Regulations 1991 (S.I. 1991/167).

  • The Occupational Pension Schemes (Discharge of Protected Rights on Winding Up) Regulations 1996 (S.I. 1996/775).

  • The Occupational Pension Schemes (Contracting-out) Regulations 1996 (S.I. 1996/1172).

  • The Personal and Occupational Pension Schemes (Protected Rights) Regulations 1996 (S.I. 1996/1537).

  • The Occupational Pension Schemes (Winding Up) Regulations 1996 (S.I. 1996/3126).

  • The Occupational Pension Schemes (Assignment, Forfeiture, Bankruptcy etc.) Regulations 1997 (S.I. 1997/785).

  • The Pension Sharing (Implementation and Discharge of Liability) Regulations 2000 (S.I. 2000/1053).

  • The Pension Sharing (Pension Credit Benefit) Regulations 2000 (S.I. 2000/1054).

A full impact assessment has not been produced for this instrument as it has only a negligible impact on the private and voluntary sectors. An impact assessment was produced by Her Majesty’s Revenue and Customs of the Government’s intention to make the changes to the tax legislation. This accompanied the Budget announcement made on 12th March 2008 and is available on the HMRC website at http://www.hmrc.gov.uk/budget2008/widen-scope-authpyt.pdf.