Statutory Instrument 2001 No. 118
The Personal Pension Schemes (Conversion of Retirement Benefits Schemes) Regulations 2001
(The document as of February, 2008. Arhiv.Online Library)
2001 No. 118
The Personal Pension Schemes (Conversion of Retirement Benefits Schemes) Regulations 2001
The Commissioners of Inland Revenue, in exercise of the powers conferred upon them by paragraphs 2 and 4 of Schedule 23ZA to the Income and Corporation Taxes Act 1988, hereby make the following Regulations:
Citation and commencement
1.These Regulations may be cited as the Personal Pension Schemes (Conversion of Retirement Benefits Schemes) Regulations 2001 and shall come into force on 6th April 2001.
2. - (1) In these Regulations -
(b) in relation to a personal pension scheme, means the person referred to in section 638(1);
(b) is to remain a member of the scheme if it becomes a personal pension scheme;
(b) within paragraph (b) of section 417(5);
(2) In these Regulations, except where the context otherwise requires -
(b) a reference in a regulation to a numbered paragraph is a reference to the paragraph bearing that number in that regulation;
(c) a reference in a paragraph to a lettered sub-paragraph is a reference to the sub-paragraph bearing that letter in that paragraph; and
(d) a reference to a numbered section or Schedule is a reference to the section of, or Schedule to, the Taxes Act bearing that number.
Application to convert eligible scheme to personal pension scheme
(b) be accompanied by the statements specified in paragraph (2) and the documents specified in paragraph (3).
(2) The statements, which must be signed by or on behalf of the trustees, are -
(b) a statement showing how the assets referred to in sub-paragraph (a) were identified; and
(c) a statement showing for each individual whom the trustees propose should be a continuing member, if approval is given, whether the whole of each asset so identified has been appropriated to that individual's personal pension fund and, if not, what part of the asset has been so appropriated.
(3) The documents are -
(b) the written consent, to the making of the application, of each relevant employer; and
(c) documents showing how the requirements of regulations 7 and 8 were satisfied.
Board's discretion to refuse approval: prescribed descriptions of retirement benefits scheme
(b) in any other case, the class mentioned in paragraph (3).
(2) The classes referred to in paragraph (1)(a) are those comprising -
(b) persons who are connected with a person falling within sub-paragraph (a); and
(c) members of the scheme -
(ii) whose remuneration derived from their employment with the relevant employer is, or was, for any year of assessment falling (wholly or partly) during the period of six years prior to the date on which the application is made, more than the permitted maximum for the year of assessment in which the application is made.
(3) The class referred to in paragraph (1)(b) is that comprising members of the scheme -
(b) whose remuneration derived from employment with the relevant employer is, or was, for any year of assessment falling (wholly or partly) during the period of six years prior to the date on which the application is made, more than the permitted maximum for the year of assessment in which the application is made.
(4) For the purposes of paragraph (2) a person is connected with another if he is -
(b) that person's brother, sister, parent or remoter forebear, child or remoter lineal descendant;
(c) the husband or wife of a brother, sister, parent or remoter forebear, child or remoter lineal descendant of that person; or
(d) a brother, sister, parent or remoter forebear, child or remoter lineal descendant of that person's husband or wife.
(5) In this regulation -
Valuation of prescribed member's benefits
(b) the Board have exercised their discretion under section 611(3) to treat the eligible scheme as two (or more) separate schemes;
the restriction in paragraph (2) applies to the prescribed member.
(b) any sum attributable to growth through investment of the conversion payment.
(3) If the controlling director has died before any benefits have been paid to him under the arrangements represented by the accumulated value, the accumulated value must be applied -
(b) to secure the payment of income withdrawals with respect to which the conditions in section 636A (income withdrawals after death of member) are satisfied and, as to any amount not used for that purpose, to secure the payment of such an annuity as is referred to in sub-paragraph (a); or
(c) as to not more than 25 per cent., to secure the payment of a lump sum and, as to the balance, to secure the payment of such an annuity as is referred to in sub-paragraph (a) or of such income withdrawals and annuity as are referred to in sub-paragraph (b).
This paragraph is subject to the qualification in paragraph (4).
(b) if the arrangement so requires, that there is no dependant to whom such an annuity or income withdrawals can be paid;
the whole of the accumulated value may be applied to secure the payment of a lump sum.
B is the amount shown in the certificate mentioned in paragraph (2); and
EF is the greater of 1 and the fraction in paragraph (5).
(5)The fraction referred to in paragraph (4) is -
(6) The references in paragraph (5) to the retail prices index shall be construed in accordance with section 833(2) as if that paragraph were contained in the Income Tax Acts.
(This note is not part of the Regulations)
These Regulations prescribe the way in which retirement benefits schemes which are money-purchase schemes ("occupational money purchase schemes") may apply to the Inland Revenue for approval as personal pension schemes. Schedule 23ZA to the Income and Corporation Taxes Act 1988 (c. 1), inserted by paragraph 27 of Schedule 13 to the Finance Act 2000 (c. 17), introduces the possibility of conversion of occupational money purchase schemes into personal pension schemes.
Regulation 1 provides for the citation and commencement of the Regulations and regulation 2 provides definitions for terms used in them.
Regulation 3 prescribes the conditions to be satisfied before an application can be made for conversion from an occupational pension scheme to a personal pension scheme, whilst regulation 4 prescribes the documents which are to accompany an application.
Regulation 5 prescribes descriptions of scheme in respect of which the Board may refuse applications for conversion under Schedule 23ZA unless prescribed conditions are satisfied. These are all schemes other than simplified defined contribution schemes.
Regulation 6 prescribes classes of member of a scheme in respect of whom specific requirements are imposed ("prescribed members"). There are two classes of schemes for the purposes of this regulation. In the case of a scheme of which a controlling director is a member, the classes of prescribed members are controlling directors, those who are persons connected with them and those who are aged not less than 45 years at the proposed date of change and who have, or in the preceding six years have had, earnings exceeding the cap on earnings for the calculation of pension benefits prescribed by section 590C(2) of the Income and Corporation Taxes Act 1988 for the year in which the application under Schedule 23ZA is made. In the case of a scheme of which no controlling director is to be a continuing member, the prescribed members are those aged not less than 45 years at the date of change and who have, or in the preceding six years have had, earnings exceeding the cap.
Regulation 7 prescribes a requirement as to the valuation of the assets held to provide benefits in respect of a prescribed member.
Regulation 8 prescribes action to be taken before a prescribed member, in respect of whom the conversion assets value exceeds the permitted amount at the time of the valuation, may become a member of the resulting personal pension scheme.
Regulations 9, 10 and 11 impose restrictions on the Board's discretion to approve an application under regulation 3 in respect of the lump sum benefits payable to controlling directors and the death benefits payable to their dependants.
 1988 c. 1. Schedule 23ZA was inserted by paragraph 27 of Schedule 13 to the Finance Act 2000 (c. 17).back
 Section 611AA was inserted by section 103 of the Finance Act 1994 (c. 9).back
 Section 591(2A) was inserted by section 107(3) of the Finance Act 1994.back
 See paragraph 2 of Schedule 23ZA.back
 Section 630 was amended by Schedule 11 to the Finance Act 1995 (c. 4) and paragraph 5 of Schedule 13 to the Finance Act 2000.back
 Section 611 has been amended by paragraph 9(1) of Schedule 10 to the Finance Act 1999 (c. 16) and paragraph 4 of Schedule 13 to the Finance Act 2000.back
 S.I. 1993/3016.back
 Section 590C was inserted by paragraph 4 of Schedule 6 to the Finance Act 1989 (c. 26). There are amendments not relevant for the purposes of the present instrument. The permitted maximum for the year of assessment 2000-01 is Ј91,800.back
 S.I. 2001/119.back
 Section 611(3) was amended by paragraph 4(3) of Schedule 13 to the Finance Act 2000.back
 Section 636 was amended by paragraph 1 of Schedule 11 to the Finance Act 1995 and paragraph 13 of Schedule 10 to the Finance Act 1999.back
 Section 636A was inserted by paragraph 1 of Schedule 11 to the Finance Act 1995 and amended by paragraph 14 of Schedule 10 to the Finance Act 1999 and paragraph 12 of Schedule 13 to the Finance Act 2000.back
 Section 833(2) was amended by Schedule 2 to the Transfer of Functions (Registration and Statistics) Order 1996 (S.I. 1996/273).back
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