These Regulations make consequential amendments to the Pensions Schemes (Application of UK Provisions to Relevant Non-UK Schemes) Regulations 2006 (S.I. 2006/207) (“the RNUKS Regulations”) following the amendments to the Finance Act 2004 (c. 12) (“FA 2004”) made by the Finance Act 2011 (c. 11) (“FA 2011”). The RNUKS Regulations modify certain provisions of Part 4 of FA 2004 in their application to relevant non-UK pension schemes. From 6th April 2011, Schedule 16 to FA 2011 amends Part 4 of FA 2004 (pension schemes etc) to remove certain tax rules that require members of registered pension schemes to secure an income, usually by buying an annuity, by age 75. The amendments replace the concept of an “unsecured pension” and an “alternatively secured pension” with the concept of a “drawdown pension”. A new facility is introduced removing the annual limit on payments from drawdown and dependants’ drawdown pensions provided a minimum income requirement of £20,000 per annum is met.
Regulation 2 introduces the amendments which have retrospective effect from 6th April 2011 pursuant to the power contained in paragraph 7(2)(a) of Schedule 34 to FA 2004.
Regulations 3 and 4 make consequential amendments to regulations 6 and 7 of the RNUKS Regulations following the removal of certain pension and pension death benefit rules which imposed restrictions on the sorts of pensions that could be paid to members aged 75 and over.
Regulation 5 amends regulation 14(3) of the RNUKS Regulations so as to extend the modifications which replace “scheme administrator” with a reference to a “scheme manager” to the new provisions introduced by FA 2011.
Regulation 6 amends regulation 15 of the RNUKS Regulations. Regulation 15 modifies Schedule 29 to FA 2004 which sets out the types of lump sum which may be paid out by registered pension schemes without incurring an unauthorised payment charge. The amendments cover two situations: firstly where there has been a transfer to a qualifying recognised overseas pension scheme which constitutes benefit crystallisation event 8 and secondly where a member of a relieved non-UK pension scheme has chosen for his or her benefits under the scheme to be tested against the lifetime allowance (a paragraph 15 BCE). The amendments ensure that the scheme may pay out the same amount of lump sum once the member has reached the age of 75 as would have been permissible prior to the member reaching that age. This brings the position of relevant non-UK schemes and relieved non-UK pension schemes into line with registered pension schemes following the changes made by FA 2011.
A Tax Information and Impact Note covering this instrument was published on 9th December 2010 alongside draft legislation for the Finance (No.3) Bill 2011 concerning the removal of the effective requirement to annuitise by age 75 and is available on the HMRC website at http://www.hmrc.gov.uk/thelibrary/tiins.htm. It remains an accurate summary of the impacts that apply to this instrument.