RPSM20000000 - Glossary

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A

Active member An individual who has benefits currently accruing for or in respect of that person under one or more arrangements in the pension scheme.
Active membership period The active membership period
  • begins with the date on which benefits first began to accrue to or in respect of the individual under the registered pension scheme or, if later, 6 April 2006, and
ends immediately before the benefit crystallisation event or, if earlier, the date on which benefits cease to accrue under the scheme.
Alternatively secured pension Before 6 April 2011 payment of income withdrawals direct from a money purchase arrangement to the member of the arrangement (aged 75 or over) and that met the conditions laid down in paragraphs 12 and 13 of Schedule 28 to the Finance Act 2004.
Alternatively secured pension fund Before 6 April 2011 funds (whether sums or assets) that were held under a money purchase arrangement that had been 'designated' to provide a scheme member (aged 75 or over) with an alternatively secured pension, as identified in paragraph 11 of Schedule 28 to the Finance Act 2004. Once sums or assets had been 'designated' as part of an 'alternatively secured pension fund' any capital growth or income generated from such sums or assets were equally treated as being part of the 'alternatively secured pension fund'. Similarly, where assets were purchased at a later date from such funds, or 'sums' generated by the sale of assets held in such funds, those replacement assets or sums also fell as part of the 'alternatively secured pension fund' (as did any future growth or income generated by those assets or sums).
Annual allowance Before 6 April 2011 - for the tax year 2006-07 the annual allowance was £215,000. For subsequent tax years it was such amount, not being less than the amount for the immediately preceding tax year, as was specified by order made by the Treasury. For the following tax years the annual allowance was:
2007-08: £225,000
2008-09: £235,000
2009-10: £245,000
2010-11: £255,000
From 6 April 2011 - for the tax year 2011-12 the annual allowance was £50,000 and subsequent tax years the annual allowance was £50,000 unless changed by an order made by the Treasury. For the following tax years the annual allowance was:
2012-13: £50,000
2013-14: £50,000
From 6 April 2014 - for the tax year 2014-15 and subsequent tax years the annual allowance is £40,000 unless changed by an order made by the Treasury.
Annual allowance charge Before 6 April 2011 - was a charge at the rate of 40% in respect of the amount by which the total pension input amount for a tax year in the case of an individual who is a member of one or more registered pension schemes exceeds the amount of the annual allowance for the tax year.From 6 April 2011 - a charge at the ‘appropriate rate’ in respect of the amount by which the total pension input amount for a tax year in the case of an individual who is a member of one or more registered pension schemes exceeds the amount of the annual allowance. (That amount of annual allowance is increased by unused annual allowance carried forward from any of the previous three tax years, if the individual has such available unused annual allowance.)
Annuity protection lump sum death benefit Before 6 April 2011 was a lump sum benefit paid following the death of a scheme member who died before age 75 and was in receipt of either a lifetime annuity or scheme pension under a money purchase arrangement, and which does not exceed the limits imposed through paragraph 16 Schedule 29 Finance Act 2004.From 6 April 2011 is a lump sum benefit paid following the death of a scheme member in receipt of either a lifetime annuity or scheme pension under a money purchase arrangement, and which does not exceed the limits imposed through paragraph 16 Schedule 29 Finance Act 2004.
Appropriate date Before 6 April 2011 - this meant the earlier of
  • a nominated date falling in the tax year immediately after that in which the last pension input period ended, and
  • the anniversary of the date on which the last pension input period ended.
From 6 April 2011 - is
  • a nominated date falling in the tax year immediately after that in which the last pension input period ended, or
  • if there is no such nominated date, the anniversary of the date on which the last pension input period ended.
Arm's length bargain A normal commercial transaction between two or more persons.
Arrangement A contractual or trust-based arrangement made by or on behalf of a member of a pension scheme under that scheme. A member may have more than one arrangement under a scheme.
Authorised employer payment Authorised employer payments are payments made to sponsoring employers or former sponsoring employers as follows:
  • public service scheme payments,
  • authorised surplus payments,
  • compensation payments,
  • authorised employer loans,
  • scheme administration employer payments, and
any other payment prescribed by Regulations.
Authorised member payment Authorised member payments are made to a current or former member of a registered pension scheme and are:
  • pensions that comply with the pension rules in section 165 Finance Act (FA) 2004 or the pension death benefit rules in section 167 FA 2004 (current members only),
  • lump sum payments that comply with the lump sum rule in section 166 FA 2004 or lump sum death benefit rule in section 168 FA 2004 (current members only),
  • recognised transfers that comply with section 169 FA 2004 (current members only),
  • scheme administration member payments,
  • payments in accordance with a pension sharing order or provision, and
any other payment prescribed by Regulations.
Authorised open-ended investment company A body incorporated by virtue of regulations under section 262 of the Financial Services and Markets Act 2000 in respect of which an authorisation order is in force under any provision made in such regulations by virtue of subsection (2)(l) of that section.

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B

Bank One of the following
  • a person within section 840A(1)(b) of the Income and Corporation Taxes Act 1988 (ICTA) (persons other than building societies etc. permitted to accept deposits), or
  • a body corporate which is a subsidiary or holding company of a person falling within section 840A(1)(b) of ICTA or is a subsidiary of the holding company of such a person (subsidiary and holding company having the meanings in section 736 of the Companies Act 1985 or Article 4 of the Companies (Northern Ireland) Order 1986).
Basis amount Before 6 April 2011 the basis amount was the base calculation for determining the maximum level of unsecured pension or alternatively secured pension (and the dependant equivalents) payable from a money purchase arrangement. The basis amount represented the annual amount of lifetime annuity (or relevant annuity) income the unsecured pension fund or alternatively secured funds (etc.) could purchase at the initial calculation and review points.From 6 April 2011 the basis amount is the base calculation for determining the maximum level of capped drawdown pension or dependants’ capped drawdown pension payable from a money purchase arrangement. The basis amount represents the annual amount of lifetime annuity (or relevant annuity) income the drawdown pension fund or dependants’ drawdown pension fund could purchase at the initial calculation and review points.
BCE Benefit crystallisation event
Benefit crystallisation event Is a defined event or occurrence that triggers a test of the benefits 'crystallising' at that point against the individual's available lifetime allowance.
Block transfer The transfer in a single transaction of all the sums and assets held for the purposes of (or representing accrued rights under) the arrangements under the pension scheme from which the transfer is made, which relate to the member in question and at least one other member of that pension scheme. Before the transfer the member must not have already been a member of the registered pension scheme to which the transfer was made for longer than 12 months before the date of transfer. If the receiving scheme is a personal pension scheme any period of membership is ignored if the member’s rights under the personal pension scheme were solely contracted out rights. To be a single transaction
  • all of the sums and assets must be transferred from the transferring scheme to only one receiving scheme. Two or more partial transfers to two or more different schemes cannot be a transfer in a single transaction; and
  • the transaction must be made under a single agreement for a single transfer between the two schemes.
It is not necessary that all of the sums and assets are all physically passed from the transferring scheme to the receiving scheme on the same day - there may be legal or administration reasons why this is not possible. However they should all be transferred in relation to the agreement to transfer and within a reasonable timescale.
Building society This means a building society within the Building Societies Act 1986.

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C

Capped drawdown pension A form of ‘income withdrawal’ where a members’ pension is paid direct from a drawdown pension fund. Within certain limits the member can choose how much pension they can get each year
Cash balance arrangement A type of money purchase arrangement. An arrangement is a cash balance arrangement where the member will be provided with money purchase benefits, but where the amount that will be available to provide those benefits is not calculated purely by reference to payments made under the arrangement by or on behalf of the member. This means that in a cash balance arrangement, the capital amount available to provide benefits (the member's "pot") will not derive wholly from any actual contributions (or credits or transfers) made year on year.
For example, the scheme may promise that on retirement, a specified amount will be made available to provide the member with benefits for each year of pensionable service. The specified amount might be an absolute amount, e.g. £5,000 per year of service, or might be a percentage of the member's salary for each relevant year of service. Optionally, the scheme might also guarantee a rate of investment return on the specified amount. The member knows what will go into the promised pot each year (regardless of any contributions actually made) and so can ascertain the amount that accrues in that promised pot each year. It is possible that in a cash balance arrangement the promised pot builds up entirely notionally year by year, being funded only at the end. So, during the build-up phase, the amount in any actual fund held in respect of the member (whether more or less than the amount in the promised pot) is irrelevant. And when benefits ultimately become due, the amount in the promised pot is funded and it is that amount that is used to provide benefits.
In a cash balance arrangement, some of the investment and mortality risk is transferred to the scheme (or, if there is one, the employer); the fact that all or part of the pot is guaranteed or promised means that the promised amount must be made available to provide benefits irrespective of the level of actual funds held.
Chargeable amount The amount that crystallises for lifetime allowance at a benefit crystallisation event that is not covered by an individual's available lifetime allowance at that time, plus any 'scheme-funded tax payment'. The chargeable amount is the amount on which the lifetime allowance charge arises.
Charity lump sum death benefit Before 6 April 2011 was a lump sum benefit paid from a money purchase arrangement to a charity (as defined in paragraph 1 Schedule 6 FA 2010, previously in section 506 Income and Corporation Taxes Act 1988) following the death of a scheme member (or a dependant of such a member) who was aged 75 or over which met the conditions of paragraph 18, Schedule 29 to the Finance Act 2004. Such a lump sum could not be paid where there is still a surviving dependant of the member.From 6 April 2011 is a lump sum benefit paid from a money purchase arrangement to a charity (as now defined in paragraph 1 Schedule 6 FA 2010, previously in section 506 Income and Corporation Taxes Act 1988) following the death of a scheme member (or a dependant of such a member) which meets the conditions of paragraph 18, Schedule 29 to the Finance Act 2004. Such a lump sum cannot be paid where there is still a surviving dependant of the member.
CPI Stands for the Consumer Prices Index, which is the general index of consumer prices published by the Statistics Board. Where that index is not published for a relevant month any substitute index or index figures published by the Statistics Board may be used. (See section 279 Finance Act 2004.)

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D

Deferred member An individual who has rights under a pension scheme and who is neither an active member, nor a pensioner member.
Defined benefits Benefits provided under a pension scheme that are calculated by reference to earnings or service of the member or any other factor other than by reference to an amount available under the scheme for the provision of benefits to or in respect of that member (so which are not money purchase benefits).
Defined benefits arrangement An arrangement other than a money purchase arrangement that provides only defined benefits. “Defined benefits” are calculated by reference to the earnings or the service of the member, or by any other means except by reference to an available amount for the provision of benefits to or in respect of the member, (thus making the definitions of money purchase and defined benefit arrangements mutually exclusive). A defined benefit arrangement is, typically, a ‘final salary’ scheme, that is, one where the level of benefits paid is calculated by reference to the member’s final salary and length of service with the employer. Contributions are often made to such an arrangement, and so there may be a pension fund or pot, but the benefits that may be paid are not calculated by reference to that fund or pot.
Defined benefits lump sum death benefit Before 6 April 2011 was a lump sum benefit paid from a defined benefits arrangement following the death of the scheme member before the age of 75 (and within two years of that date of death), and as defined in paragraph 13, Schedule 29 to the Finance Act 2004.From 6 April 2011 is a lump sum benefit paid from a defined benefits arrangement following the death of the scheme member within two years of the date that the scheme administrator knew of the death (or could reasonable be expected to have known of it if earlier) as defined in paragraph 13, Schedule 29 to the Finance Act 2004. However, if the member was 75 or older at the time of death the two year limit does not apply.
Dependant A person who was married to, or a civil partner of, the member at the date of the member’s death is a dependant of the member.Additionally, if the rules of the pension scheme so provide, the above test can be extended to apply not only at the date of the member’s death, but to extend to the point in time when the member first became actually entitled to a pension under the pension scheme.A child of the member is a dependant of the member if the child has
  • not reached the age of 23,
  • has reached age 23 and, in the opinion of the scheme administrator, was at the date of the member’s death dependent on the member because of physical or mental impairment, or
  • is covered by any of the transitional provisions described in RPSM10104042.
A person who was not married to the member or was not in a civil partnership with the member at the date of the member’s death and is not a child of the member is a dependant of the member if, in the opinion of the scheme administrator, at the date of the member’s death the person was:
  • financially dependant on the member,
  • the person’s financial relationship with the member was one of mutual dependence, or
  • the person was dependant on the member because of physical or mental impairment.
Further information on the concepts used in this definition can be found on page RPSM10104040.
Dependants' alternatively secured pension Before 6 April 2011 payment of income withdrawals direct from a money purchase arrangement to a dependant of a scheme member who was aged 75 or over, that met the conditions laid down in paragraphs 26 and 27 of Schedule 28 to the Finance Act 2004.
Dependants' alternatively secured pension fund Before 6 April 2011 funds (whether sums or assets) that were held under a money purchase arrangement that had been 'designated' after the death of a scheme member to provide a particular dependant of that member (aged 75 or over) with a dependants' alternatively secured pension, as identified in paragraph 25 of Schedule 28 to the Finance Act 2004. Once sums or assets had been 'designated' as part of a 'dependants' alternatively secured pension fund', any capital growth or income generated from such sums or assets were equally treated as being part of the 'dependants' alternatively secured pension fund'. Similarly, where assets were purchased at a later date from such funds, or 'sums' generated by the sale of assets held in such funds, those replacement assets or sums also fell as part of the 'dependants' alternatively secured pension fund' (as did any future growth or income generated by those assets or sums).
Dependants' annuity An annuity paid by an insurance company to a dependant of a scheme member following the death of that member that meets the conditions laid down in paragraph 17, Schedule 28 to the Finance Act 2004.
Dependants’ capped drawdown pension A form of ‘income withdrawal’ where a dependants’ pension is paid direct from a dependants’ drawdown pension fund. Within certain limits the recipient can choose how much pension they can get each year. Up to 5 April 2011 this was called either dependants’ unsecured pension or dependants’ alternatively secured pension.
Dependants’ drawdown pension A dependants’ short term annuity or income withdrawal paid to a dependant of a deceased member of a registered pension scheme. Up to 5 April 2011 this was called either dependants’ unsecured pension or dependants’ alternatively secured pension.
Dependants’ drawdown pension fund A dependant’s drawdown pension fund in respect of an arrangement in a registered pension scheme consists of such of the sums or assets held for the purposes of the arrangement that a dependant has designated as available for dependants’ drawdown pension and have not been applied towards the provision of a dependants’ scheme pension or dependants’ annuity. Up to 5 April 2011 this was called either a dependants’ unsecured pension fund or a dependants’ alternatively secured pension fund.
Dependants’ flexible drawdown pension A form of ‘income withdrawal’ where the dependants’ pension is paid direct from a dependants’ drawdown pension fund. There is no limit on the amount that the registered pension scheme can pay the recipient in any year.
Dependants' scheme pension A pension paid to a dependant of a member of a registered pension scheme following the death of that member, the entitlement to which is an absolute entitlement under the scheme and that meets the conditions laid down in paragraph 16, Schedule 28 to the Finance Act 2004.
Dependants' short-term annuity Before 6 April 2011 was an annuity contract purchased from a dependants' unsecured pension fund held under a money purchase arrangement that provided that dependant with an income for a term of no more than five years (not reaching to or beyond their 75th birthday), and which met the conditions imposed through paragraph 20, Schedule 28 to the Finance Act 2004. This definition covers replacement assets purchased after the initial 'designation' from such funds, or any capital growth from or income generated by assets held in the fund (whether held at the time of 'designation' or where replacement assets).From 6 April 2011 An annuity contract purchased from a dependants' unsecured pension fund held under a money purchase arrangement that provides that dependant with an income for a term of no more than five years and which meets the conditions imposed through paragraph 20, Schedule 28 to the Finance Act 2004. This definition covers replacement assets purchased after the initial 'designation' from such funds, or any capital growth from or income generated by assets held in the fund (whether held at the time of 'designation' or where replacement assets).
Dependants' unsecured pension Before 6 April 2011 payments of income withdrawals direct from a money purchase arrangement, or income paid from a dependants' short-term annuity contract purchased from such an arrangement, to a dependant (aged under 75) of the scheme member who established the arrangement and that met the conditions laid down in paragraph 20 and 23 to 24 of Schedule 28 to the Finance Act 2004.
Dependants' unsecured pension fund Before 6 April 2011 funds (whether sums or assets) held under a money purchase arrangement that had been 'designated' after the death of a scheme member to provide a particular dependant of that member (aged under 75) with a dependants' unsecured pension, as identified in paragraph 22 of Schedule 28 to the Finance Act 2004. Once sums or assets had been 'designated' as part of a 'dependants' unsecured pension fund', any capital growth or income generated from such sums or assets were equally treated as being part of the 'dependants' unsecured pension fund'. Similarly, where assets were purchased at a later date from such funds, or 'sums' generated by the sale of assets held in such funds, those replacement assets or sums also fell as part of the 'dependants' unsecured pension fund' (as did any future growth or income generated by those assets or sums).
Drawdown pension A short term annuity or income withdrawal paid to a member of a registered pension scheme. Up to 5 April 2011 this was called unsecured pension or alternatively secured pension.
Drawdown pension fund A pension fund in respect of an arrangement consisting of such of the sums or assets held for the purposes of the arrangement as are member-designated funds. Up to 5 April 2011 this was called an unsecured pension fund or an alternatively secured pension fund.
Drawdown pension fund lump sum death benefit A lump sum death benefit paid in respect of income withdrawal to which the member (or dependant) was entitled under an arrangement at the date of the member’s (or dependants’) death not exceeding the market value of the sums and assets representing the member’s (or dependant’s) drawdown pension fund in respect of the arrangement immediately before the payment.

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E

Employer-financed retirement benefits scheme This means a scheme for the provision of benefits consisting of or including relevant benefits to or in respect of employees or former employees of an employer. However, neither a registered pension scheme nor a section 615(3) scheme is an employer-financed retirement benefits scheme.
EU member state Any of the following -Austria, Belgium, Bulgaria, Czech Republic, Cyprus, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, United Kingdom.
European Economic Area (EEA) investment portfolio manager This means an institution which
  • is an EEA firm of the kind mentioned in paragraph 5(a), (b) or (c) of Schedule 3 to the Financial Services and Markets Act 2000 (certain credit and financial institutions), or
  • qualifies for authorisation under paragraph 12(1) or 12(2) of that Schedule, or
has permission under the Financial Services and Markets Act 2000 to manage portfolios of investments.
Ex-spouse An individual to whom pension credit rights have been or are to be allocated following a pension sharing order, agreement or equivalent provision.

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F

Flexible drawdown A form of ‘income withdrawal’ where the members’ pension is paid direct from a drawdown pension fund. There is no limit on the amount that the members’ pension scheme can pay the member in any year.
Former approved superannuation fund Any fund which immediately before 6 April 1980 was an approved superannuation fund for the purposes of section 208 Income and Corporation Taxes Act 1970, that
  • has not been approved for the purposes of Chapter 1 Part 14 Income and Corporation Taxes Act 1988 since 5 April 1980, and
has not received any contributions since 5 April 1980.
Former civil partner An individual to whom pension credit rights have been or are to be allocated following a pension sharing order, agreement or equivalent provision.
FSAVCS A registered pension scheme that was originally approved by the Board before 6 April 2006 as a retirement benefits scheme by virtue of section 591(2)(h) Income and Corporation Taxes Act 1988, established by a pension provider or the trustees of an approved centralised scheme for non-associated employers to which the employer does not contribute and which provides benefits additional to those provided by a scheme to which the employer does contribute.

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G

GAD The Government Actuary’s Department.
GAD tables The Government Actuary's Department Tables on a single life basis.
Group personal pension scheme Arrangements administered on a group basis under a personal pension scheme which are available to some or all of the employees of the same employer or some or all of the employees of employers which are in the same group of companies.For this purpose a ‘group’ is formed by a company and all of its ‘75% subsidiaries’. If any of those ‘75% subsidiaries’ have ‘75% subsidiaries’ the group includes them and their ‘75% subsidiaries’ and so on. ‘75% subsidiary’ is defined in section 838 of the Income and Corporation Taxes Act 1988.This is intended to be an objective test according to the facts. The key to the test is simply as to whether in operating the arrangements the personal pension provider has decided that administration on a group basis is appropriate.If there is in any doubt, the individual should be able to obtain confirmation from the personal pension provider that the arrangements involved are "arrangements administered on a group basis”.
GMPs Stands for guaranteed minimum pensions and has the same meaning as in the Pension Schemes Act 1993.

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H

Hybrid arrangement An arrangement where only one type of benefit will ultimately be provided, but the type of benefit that will be provided is not known in advance because it will depend on certain given circumstances at the point benefits are drawn.For example, a hybrid arrangement may provide the member with other money purchase benefits based on a pot derived from the contributions that have accrued over time, but subject to a defined benefit minimum or underpin. If the benefits provided by the money purchase pot at the point benefits are drawn fall below a certain defined level, for example 1/60ths of final remuneration for every year worked, that higher defined benefit will be provided. So the benefits will be either other money purchase benefits, or defined benefits.When benefits are drawn, if the benefits actually provided are other money purchase or cash balance benefits then the arrangement will become a money purchase arrangement. And if the benefits provided are defined benefits then the arrangement will become a defined benefits arrangement.

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I

Insurance company Either
  • a person who has permission under Part 4 of the Financial Services and Markets Act 2000 to effect or carry out contracts of long-term insurance, or
a European Economic Area (EEA) firm of the kind mentioned in paragraph 5(d) of Schedule 3 to the Financial Services and Markets Act 2000 (certain direct insurance undertakings) which has permission under paragraph 15 of that Schedule (as a result of qualifying for authorisation under paragraph 12 of that Schedule) to effect or carry out contracts of long-term insurance.

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L

Lifetime allowance The lifetime allowance is an overall ceiling on the amount of tax privileged pension savings that any one individual can draw. The exact figure will be whatever the 'standard lifetime allowance' for the tax year concerned is or a multiple of this figure where certain circumstances apply.
Lifetime allowance charge A charge to income tax that arises on any chargeable amount generated at a 'benefit crystallisation event'. The rate of charge is either 25% or 55%, depending on whether the 'event' giving rise to the charge was the payment of a lump sum or not. The scheme administrator and member are jointly liable to the charge, except where the chargeable amount arises following the death of the member. Here, the recipient of the payment giving rise to the charge is solely liable.
Lifetime allowance excess lump sum A lump sum benefit paid to a member of a registered pension scheme (who is aged under 75) because they have used up their available lifetime allowance, and which meets the conditions of paragraph 11 of Schedule 29 to the Finance Act 2004.
Lifetime annuity An annuity contract purchased under a money purchase arrangement from an insurance company of the member's choosing that provides the member with an income for life, and which meets the conditions imposed through paragraph 3, Schedule 28 to the Finance Act 2004.

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M

Market value The market value of an asset held for the purposes of a pension scheme is to be determined in accordance with section 272 of the Taxation of Chargeable Gains Act 1992 and section 278(2) to (4) Finance Act 2004 (where dealing with a right or interest in respect of money lent directly or indirectly to certain parties).
Member An individual who is either an active member, a pensioner member, a deferred member or a pension credit member of a pension scheme.
Money purchase benefits Benefits provided under a pension scheme, the rate or amount of which is calculated by reference to an amount available for the provision of benefits to or in respect of the member (whether the amount so available is calculated by reference to payments made under the scheme by the member or any other person or employer on behalf of the member, or any other factor).
Money purchase arrangement An arrangement is a money purchase arrangement if, at that time, all the benefits that may be provided to or in respect of the member under the arrangement are cash balance or other money purchase benefits.

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N

Nominated date This means
  • in the case of a money purchase arrangement other than a cash balance arrangement, such date as the individual or scheme administrator nominates, or
  • in the case of any other arrangement, such date as the scheme administrator nominates.
From 6 April 2011, a nominated date cannot be any earlier than the date on which the nomination is made.
Non-group life policy A policy of insurance under which the only benefits which may become payable are benefits payable in consequence, or anticipation of:
  • the death of the individual or
  • the death of one of a group of individuals which includes the individual (e.g. a policy which covers a number of individuals but only pays a benefit out on the first death or last survivor’ death) or
  • the deaths of more than one of a group of individuals (e.g. a policy which pays a benefit out on the death of each of the individuals)
    • where the group includes the individual, and
    • the other members of the group are connected with the individual in accordance with section 195A(8) FA 2004.
Normal minimum pension age This is
  • age 50 for the period before 6 April 2010
  • age 55 on or after 6 April 2010.

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O

Occupational pension scheme A pension scheme established by an employer or employers and having (or capable of having) effect so as to provide benefits to or in respect of any or all of the employees of that employer or employers, or any other employer (whether or not it also has effect so as to provide benefits to or in respect of other persons, or is capable of having such effect).
Other money purchase arrangement A money purchase arrangement other than a cash balance arrangement.
An arrangement is an other money purchase arrangement where the member will be provided with money purchase benefits, and the amount that will be available to provide those benefits is calculated purely by reference to payments made under the arrangement by or on behalf of the member. This means that in an other money purchase arrangement the capital amount available to provide benefits (the member’s “pot”) will derive wholly from actual contributions (or credits or transfers) made year on year.
The scheme administrator or trustees may use the payments made under the arrangement to make investments of any kind on behalf of the member (for example, cash on deposit, shares, other investment assets, a life assurance policy on the member’s death). As long as the pot ultimately used to provide benefits is wholly derived from the original payments, the arrangement is an other money purchase arrangement. The subsequent investment income and any capital gains are derived from payments made under the arrangement, and they themselves become part of the member’s pot.
It is a feature of other money purchase arrangements that the member bears all the investment and mortality risk. The scheme simply pays out whatever benefits the amount in the pot, including the proceeds of all the investments that have been made using the payments into the scheme, will support.
Overseas arrangement active membership period This is the period beginning with the date on which the benefits first began to accrue to, or in respect of, the individual under the recognised overseas scheme arrangement or, if later, 6 April 2006 and ending immediately before the recognised overseas scheme transfer. If benefits ceased to accrue under the recognised overseas scheme arrangement before the transfer then it is this date on which the overseas arrangement active membership period is treated as ending.
Overseas pension scheme A pension scheme is an overseas pension scheme if it is not a registered pension scheme but it is established in a country or territory outside the UK and satisfies the requirements in the Pension Schemes (Categories of Country and Requirements for Overseas Pension Schemes and Recognised Overseas Schemes) Regulations 2006 - SI 2006/206.

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P

Pension commencement lump sum Before 6 April 2011 a lump sum benefit paid to a member of a registered pension scheme (aged under 75) in connection with an arising entitlement to a pension benefit (other than a short-term annuity contract), and which meets the conditions detailed in paragraphs 1 to 3 of Schedule 29 to the Finance Act 2004.From 6 April 2011 a lump sum benefit paid to a member of a registered pension scheme in connection with an arising entitlement to a pension benefit (other than a short-term annuity contract), and which meets the conditions detailed in paragraphs 1 to 3 of Schedule 29 to the Finance Act 2004.
Pension credit The pension sharing provisions in the Welfare Reform and Pensions Act 1999 (WRPA) introduced the ‘pension debit’ and ‘pension credit’. The ‘pension debit’ is the amount by which the value of the original member’s pension rights are reduced and the ‘pension credit’ the corresponding amount by which the ex-spouse’s or former civil partner's pension rights are increased. Section 29 WRPA determines the value of the pension credit to be transferred to the ex-spouse or former civil partner.
Pension credit member An individual who has rights in a pension scheme which are directly or indirectly attributable to pension credits.
Pension debit The pension sharing provisions in the Welfare Reform and Pensions Act 1999 (WRPA) introduced the ‘pension debit’ and ‘pension credit’. The ‘pension debit’ is the amount by which the value of the original member’s pension rights are reduced and the ‘pension credit’ the corresponding amount by which the ex-spouse’s or former civil partner's pension rights are increased.
Pension input amount The amounts as arrived in accordance with sections 230 to 237 of Finance Act 2004
Pension input period Before 6 April 2011 - this meant
  • the period beginning with the relevant commencement date and ending with the earlier of a nominated date and the anniversary of the relevant commencement date, and
  • each subsequent period beginning immediately after the end of a period which is a pension input period (under either this or the earlier paragraph) and ending with the appropriate date.
From 6 April 2011 - this means
  • the period beginning with the relevant commencement date and ending with
    • a nominated date falling before the anniversary of the relevant commencement date, or
    • if there is no such nominated date, the first 5 April after the relevant commencement date, and
  • each subsequent period beginning immediately after the end of a period which is a pension input period (under either this or the previous paragraph) and ending with the appropriate date.
Pension protection lump sum death benefit Before 6 April 2011 a lump sum benefit paid following the death of a scheme member of a registered pension scheme, who died before age 75 and was in receipt of a scheme pension under a defined benefits arrangement and which does not exceed the limits imposed through paragraph 14 of Schedule 29 to the Finance Act 2004.From 6 April 2011 a lump sum benefit paid following the death of a scheme member of a registered pension scheme, who was in receipt of a scheme pension under a defined benefits arrangement and which does not exceed the limits imposed through paragraph 14 of Schedule 29 to the Finance Act 2004.
Pension scheme A pension scheme is a scheme or other arrangements which is comprised in one or more instruments or agreements, having or capable of having effect so as to provide benefits to or in respect of persons on retirement, on death, on having reached a particular age, on the onset of serious ill-health or incapacity or in similar circumstances.
Pension sharing order An order or provision made as listed in section 28(1) of the Welfare Reform and Pensions Act 1999 (or the Welfare Reform and Pensions (Northern Ireland) Order 1999 (SI 1999/3147)) following a divorce or the dissolution of a civil partnership.
Pension year Before 6 April 2011 the period the maximum unsecured pension and alternatively secured pension limits apply to (and the dependant equivalents). In the legislation these are referred to as 'unsecured pension years' and 'alternatively secured pension years'. These periods run in consecutive 12-month periods from the point initial entitlement to such pensions actually arise under a money purchase arrangement. These periods are set at the point that initial entitlement arises, and cannot be changed from that point onwards (although the pension year the member or dependant dies or reaches age 75 will be deemed to end immediately before such an occurrence - these truncated 12-month periods are treated as a whole 12-month period for limit purposes).From 6 April 2011 the period the maximum capped drawdown pension and dependants’ capped drawdown pension limits apply to. In the legislation these are referred to as 'drawdown pension years' or ‘dependants’ drawdown pension years'. These periods run in consecutive 12-month periods from the point initial entitlement to such pensions actually arise under a money purchase arrangement. These periods are set at the point that initial entitlement arises, and cannot be changed from that point onwards until you reach your 75th birthday. After you have reached age 75 you can ask you scheme administrator to make a one-off change to an arrangement’s pension year.
Pensioner member A member of a pension scheme who is entitled to the payment of benefits from the scheme and who is not an active member.
Personal pension scheme A pension scheme previously approved by the Board of Inland Revenue under section 631 Income and Corporation Taxes Act 1988.
Personal representatives In relation to a person who has died, this means (in the UK) persons responsible for administering the estate of the deceased. In a country or territory outside the UK, it means the persons having functions under its law equivalent to those administering the estate of the deceased.
Prescribed occupation Any of the following occupations -Athlete, Badminton Player, Boxer, Cricketer, Cyclist, Dancer, Diver (Saturation, Deep Sea and Free Swimming), Footballer, Golfer, Ice Hockey Player, Jockey - Flat Racing, Jockey - National Hunt, Member of the Reserve Forces, Model, Motor Cycle Rider (Motocross or Road Racing), Motor Racing Driver, Rugby League player, Rugby Union Player, Skier (Downhill), Snooker or Billiards Player, Speedway Rider, Squash Player, Table Tennis Player, Tennis Player (including Real Tennis), Trapeze Artiste, Wrestler.
Prescribed scheme Any of the following schemes:-The Armed Forces Pension Scheme, The British Transport Police Force Superannuation Fund, The Firefighters’ Pension Scheme, The Firemen’s Pension Scheme (Northern Ireland), The Police Pension Scheme, The Police Service of Northern Ireland Pension Scheme, The Police Service of Northern Ireland Full Time Reserve Pension Scheme.
Property investment LLP A Limited Liability Partnership whose business consists wholly or mainly in the making of investments in land and the principal part of whose income is derived from that business.
Protected rights As defined in regulation 3 of the Personal and Occupational Pension Schemes (Protected Rights) Regulations 1996. Before 6th April 2009 this also included safeguarded rights, wherever appropriate.
Public service pension scheme A pension scheme
  • established by or under any enactment,
  • approved by a relevant governmental or Parliamentary person or body, or
  • specified as being a public service pension scheme by a Treasury order.

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Q

Qualifying overseas pension scheme An overseas pension scheme is a qualifying overseas pension scheme if it satisfies certain HMRC requirements. The scheme manager must notify HMRC that the scheme is an overseas pension scheme and provide evidence to HMRC where required. The scheme manager must also sign an undertaking to inform HMRC if the scheme ceases to be an overseas pension scheme and comply with any prescribed benefit crystallisation information requirements imposed on the scheme manager by HMRC. The overseas pension scheme must not be excluded by HMRC from being a qualifying overseas pension scheme.
Qualifying recognised overseas pension scheme A recognised overseas pension scheme is a qualifying recognised overseas pension scheme if it satisfies certain HMRC requirements. The scheme manager must notify HMRC that the scheme is a recognised overseas pension scheme and provide evidence to HMRC where required. The scheme manager must also sign an undertaking to inform HMRC if the scheme ceases to be a recognised overseas pension scheme and comply with any prescribed information requirements imposed on the scheme manager by HMRC. The recognised overseas pension scheme must not be excluded by HMRC from being a qualifying recognised overseas pension scheme.

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R

Recognised European Economic Area (EEA) collective investment scheme This means a collective investment scheme (within the meaning given by section 235 of the Financial Services and Markets Act 2000) which is recognised by virtue of section 264 of that Act (schemes constituted in other EEA states).
Recognised overseas pension scheme A recognised overseas pension scheme is an overseas pension scheme which satisfies the requirements of regulation 3 of the Pension Schemes (Categories of Country and Requirements for Recognised Overseas Schemes) Regulations 2006 - SI 2006/206.
Recognised transfer A transfer representing a member's accrued rights under a registered pension scheme to another registered pension scheme (or, in certain circumstances, to an insurance company) or a qualifying recognised overseas pension scheme.
Refund of excess contributions lump sum A lump sum benefit paid to a member of a registered pension scheme because they have contributed more to the scheme than they are entitled to tax relief on, and which meets the conditions of paragraph 6, Schedule 29 to the Finance Act 2004.
Registered pension scheme A pension scheme is a registered pension scheme at any time when, either through having applied for registration and been registered by the Inland Revenue, or through acquiring registered status by virtue of being an approved pension scheme on 5 April 2006, it is registered under Chapter 2 of Part 4 of the Finance Act 2004.
Relevant administrator For a retirement benefits scheme, former approved superannuation fund or relevant statutory scheme as defined in section 611A Income and Corporation Taxes Act 1988 (ICTA), or a pension scheme treated by HMRC as a relevant statutory scheme, this is the person(s) who is/are the administrator of the pension scheme under section 611A of ICTA.For a deferred annuity contract where the benefits are provided under one of the types of scheme above, or a retirement annuity, this is the trustee(s) of the pension scheme, or the insurance company which is a party to the contract in which the pension scheme is comprised.For a Parliamentary pension scheme or fund, this is the trustees of the scheme or fund.For a personal pension scheme, this is the person who is referred to in section 638(1) of the Income and Corporation Taxes Act 1988).
Relevant annuity For the purposes of Part 4 of the Finance Act 2004 (pension schemes etc) a “relevant annuity” is a single life annuity without a guaranteed term.
Relevant commencement date This meansa) in the case of a cash balance arrangement or a defined benefits arrangement or a hybrid arrangement, the only benefits under which may be cash balance benefits or defined benefits, the date on which rights under the arrangement begin to accrue to or in respect of the individual, orb) in the case of a money purchase arrangement other than a cash balance arrangement, the first date on which a contribution within section 233(1) of Finance Act 2004 is made, orc) in the case of a hybrid arrangement not within paragraph (a), whichever is the earlier of the date mentioned in that paragraph and the date mentioned in paragraph (b).
Relevant consolidated contribution A contribution made by way of discharge of any liability incurred by the employer before 6 April 2006 to pay any pension or lump sum to or in respect of the individual.
Relevant overseas individual An individual who either does not qualify for UK relief on contributions paid to a registered pension scheme because they are not a “relevant UK individual” as defined in section 178 Finance Act 2004, or an individual who is not employed by a UK resident employer and only qualifies for UK relief on pension contributions because they were resident in the UK both during 5 years immediately before the tax year under consideration and when they became a member of the registered pension scheme.
Relevant UK earnings This means any one or more of the following types of income:
  • employment income such as salary, wages, bonus, overtime, commission providing it is chargeable to tax under s7(2) ITEPA 2003;
  • income which is chargeable under Part 2 of ITTOIA 2005 (trading income) and is immediately derived from the carrying on or exercise of a trade, profession or vocation (whether individually, or as a partner acting personally in a partnership);
  • income which is chargeable under Part 3 ITTOIA and is immediately derived from the carrying on of a UK (and / or an EEA) furnished holiday lettings business (whether individually, or as a partner acting personally in a partnership);
here a ‘UK furnished holiday lettings business’ means a UK property business so far as it consists of the commercial letting of furnished holiday accommodation (Chapter 6 Part 3 ITTOIA),
similarly an ‘EEA furnished holiday lettings business’ means an overseas property business so far as it consists of the commercial letting of furnished holiday accommodation (Chapter 6 Part 3 ITTOIA) in one or more EEA states,
in either case if there is a letting of accommodation only part of which is holiday accommodation, a just and reasonable apportionment is to be made to determine the amount of the income from that business that is to be counted;
  • patent income, meaning:
    • royalties or other sums paid regarding patent use and charged to tax under s579 ITTOIA (intellectual property)
    • amounts on which tax is payable under s587 ITTOIA (sales of patent rights) or s593 ITTOIA (death of seller of patent rights), or
    • amounts on which tax is payable under s 472(5) of the Capital Allowances Act 2001 (balancing charge) or paragraph 100 of schedule 3 to that Act (balancing charges)

but only where the individual alone or jointly devised the invention for which the patent in question is granted.

Relevant UK earnings are to be treated as not being chargeable to income tax if, in accordance with arrangements having effect by virtue of section 2(1) TIOPA 2010 (double taxation arrangements), they are not taxable in the United Kingdom.
Relevant UK individual An individual is a relevant UK individual for a tax year if
  • the individual has relevant United Kingdom (UK) earnings chargeable to income tax for that year,
  • the individual is resident in the UK at some time during that year,
  • the individual was resident in the UK both at some time during the five tax years immediately before that year and when the individual became a member of the pension scheme, or
  • the individual, or the individual's spouse, has for the tax year general earnings from overseas Crown employment subject to UK tax (s28 ITEPA 2003).
Relievable pension contribution A contribution paid to a registered pension scheme by or on behalf of a member of that scheme, unless one or more of the following exceptions applies. A payment is not a relievable contribution if
  • the member was aged 75 or over when the contribution was made, or
  • the contribution is paid by the member’s employer, or
  • the payment is an age related rebate or a minimum contribution paid by HMRC to a contracted-out pension scheme under section 42A(3) or section 43 of the Pension Schemes Act 1993 or the corresponding Northern Ireland legislation or
  • it is a life assurance premium contribution in accordance with section 195A Finance Act 2004.
Remaining unused funds Any uncrystallised funds held in a money purchase arrangement when the member reaches age 75. What constitutes remaining unused funds depends on whether or not the arrangement is a cash balance arrangement.
  • For an arrangement that is not a cash balance arrangement, remaining unused funds are the amount of sums and assets held for the purposes of the arrangement which have not been designated by the member as available for the payment of drawdown pension and which have not been used to provide a scheme pension or a dependants’ scheme pension.
  • For a cash balance arrangement, the level of the uncrystallised funds actually in the arrangement at age 75 will not necessarily reflect the true value of the undrawn rights the member is entitled to under the arrangement at that time. So, the legislation provides that the value of the remaining unused funds is taken as being the amount that would be made available to provide the member with benefits at that time if the member became entitled to benefits under the arrangement on reaching age 75. So it is not the funds actually held in the cash balance arrangement at that time, but what funds would be there if the member decided to draw benefits on that date (ignoring any potential reduction that may be applied by the scheme, based on the member’s age).
Retirement annuity contract A retirement annuity contract or trust scheme previously approved by the Board under Chapter 3 of Part 14 of Income and Corporation Taxes Act 1988.
Retirement benefit scheme A retirement benefit scheme is any of the following
  • a scheme which was approved under Chapter 1 of Part 14 of Income and Corporation Taxes Act (ICTA) 1988;
  • a relevant statutory scheme (as defined in s611A ICTA 1988);
  • a scheme treated as a relevant statutory scheme; or
  • an old code scheme approved under s208 ICTA 1970 that has not received contributions since 5 April 1980.
RPI Stands for the Retail Prices Index, which is the general index of retail prices (for all items) published by the Statistics Board. Where that index is not published for a relevant month any substitute index or index figures published by the Statistics Board may be used. (See section 989 Income Tax Act 2007.)

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S

Scheme administration employer payment Payments made
  • by a registered pension scheme that is an occupational pension scheme,
  • to or in respect of a sponsoring employer or a former sponsoring employer
  • for the purposes of administration or management of the scheme.
Scheme administration member payment Payments made by a registered pension scheme to or in respect of a member or a former member for the purposes of administration or management of the scheme.
Scheme administrator The person(s) appointed in accordance with the pension scheme rules to be responsible for the discharge of the functions conferred or imposed on the scheme administrator of the pension scheme by and under Part 4 of Finance Act 2004. This person must be resident in an EU member state or in Norway, Liechtenstein or Iceland (EEA states which are not EU states). The person must have made the declarations to HMRC required by section 270(3) Finance Act 2004.
Scheme chargeable payment Scheme chargeable payments are
  • any unauthorised payment by the pension scheme other than a payment that is exempted by section 241(2) Finance Act 2004 from being a scheme chargeable payment (see list below), and
  • a payment that the pension scheme is treated as having made and classed as a scheme chargeable payment by
    • section 181A Finance Act 2004 because of not meeting the minimum level of payment of alternatively secured pension,
    • section 183 or 185 Finance Act 2004 because of unauthorised borrowing, or
    • section 185A or 185F Finance Act 2004 because of income or gains from taxable property.
The following unauthorised payments are not scheme chargeable payments.
  1. The payment is treated as having been made by section 173 Finance Act 2004 and the asset used to provide the benefit is not a wasting asset as defined in section 44 Taxation of Capital Gains Act 1992.
  2. The payment is a compensation payment as defined by section 178 Finance Act 2004.
  3. The payment is made to comply with a court order or an order by a person or body with the power to order the making of the payment.
  4. The payment is made on the grounds that a court or any such person or body is likely to order (or would be were it asked to do so) the making of the payment.
  5. The payment is of a description prescribed by regulations made by HMRC.
Scheme pension A pension entitlement provided to a member of a registered pension scheme, the entitlement to which is an absolute entitlement to a lifetime pension under the scheme that cannot be reduced year on year (except in narrowly defined circumstances) and meets the conditions laid down in paragraph 2 of Schedule 28 to Finance Act 2004.
Section 9 (2B) Rights Rights derived through section 9(2B) of the Pension Schemes Act 1993.
Secured pension Either a lifetime annuity or scheme pension.
Short service refund lump sum A lump sum benefit paid to a member of an occupational pension scheme because they have stopped accruing benefits under the scheme and have less than two years of pensionable service under the scheme, and which meets the conditions of paragraph 5, Schedule 29 to the Finance Act 2004.
Short-term annuity Before 6 April 2011 an annuity contract purchased from a member's unsecured pension fund held under a money purchase arrangement that provides that member with an unsecured pension income for a term of no more than five years (not reaching to or beyond their 75th birthday), and which meets the conditions imposed through paragraph 6, Schedule 28 to the Finance Act 2004.From 6 April 2011 an annuity contract purchased from a member's unsecured pension fund held under a money purchase arrangement that provides that member with an unsecured pension income for a term of no more than five years, and which meets the conditions imposed through paragraph 6, Schedule 28 to the Finance Act 2004.
Small lump sum The expression “small lump sum”, when used as a defined term in this manual, refers to a specific type of authorised payment made after 30 November 2009 under part 2 of the Registered Pension Schemes (Authorised Payments) Regulations 2009. In order to qualify as a “small lump sum” the payment must meet certain conditions laid down in the regulations (see RPSM09105400).
Special annual allowance charge A charge in respect of the amount by which the total adjusted pension input amount for a tax year in the case of an individual who is a member of one or more registered pension schemes exceeds the amount of their special annual allowance for the tax year.For 2009-2010 the charge is at the rate of 20%. For 2010-2011 the charge is at the ‘appropriate rate’. The special annual allowance applies only in respect of individuals with ‘relevant income’ (see RPSM15101020) of £130,000 or more.
Sponsoring employer In relation to an occupational pension scheme means the employer, or any of the employers, to or in respect of any or all of whose employees the pension scheme has, or is capable of having, effect as to provide benefits.
Stand-alone lump sum A lump sum benefit paid as a single BCE to a member (aged under 75) of a registered pension scheme that represents all the member’s uncrystallised rights under the scheme. The lump sum must meet the conditions of Articles 25 - 25D of The Taxation of Pension Schemes (Transitional Provisions) Order 2006 - SI 2006/572 - as amended by The Taxation on Pension Schemes (Transitional Provisions)(Amendment No.2) Order 2006 - SI 2006/2004.
Standard lifetime allowance The overall ceiling on the amount of tax-privileged savings that any one individual can accumulate over the course of their lifetime without taking any special factors into account that may increase or decrease the tax-privileged ceiling. For the year 2006-07, this amount was set at £1,500,000 and changed in subsequent years as follows:
2007-08: £1,600,000
2008-09: £1,650,000
2009-10: £1,750,000
2010-11: £1,800,000
2011-12: £1,800,000
2012-13: £1,500,000
2013-14: £1,500,000
2014-15: £1,250,000
 
Where an individual has certain protections from the Lifetime Allowance, all references in RPSM to the standard lifetime allowance are replaced with the amount protected for so long as the lifetime allowance remains less than the amount protected. The protections and the amount replacing the standard lifetime allowance are as follows:
 
Fixed protection - £1,800,000 (applies from 6 April 2012)
Fixed protection 2014 - £1,500,000 (applies from 6 April 2014).

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T

Total pension input amount The aggregation of the pension input amounts in respect of each arrangement relating to an individual under a registered pension scheme of which the individual is a member.
Transfer lump sum death benefit A lump sum benefit paid from a money purchase arrangement for the benefit of another member of the same pension scheme following the death of a scheme member (or a dependant of such a member), who is aged 75 or over, which meets the conditions of paragraph 19, Schedule 29 to the Finance Act 2004. Such a lump sum cannot be paid where there is still a surviving dependant of the member.
Trivial commutation lump sum Before 6 April 2011 a lump sum benefit paid to a member of a registered pension scheme (aged under 75) because their pension entitlements (under both that scheme and other such schemes) are deemed trivial, and which met the conditions of paragraphs 7 to 9 of Schedule 29 to the Finance Act 2004.From 6 April 2011 to 26 March 2014, a lump sum benefit paid to a member of a registered pension scheme because their pension entitlements (under both that scheme and other such schemes) are deemed trivial, and which met the other conditions of paragraphs 7 to 9 of Schedule 29 to the Finance Act 2004.For payments in commutation periods starting on or after 27 March 2014, a lump sum benefit paid to a member of a registered pension scheme because their pension entitlements (under both that scheme and other such schemes) were valued at £30,000 or less on the nominated date, and which meets the other conditions of paragraphs 7 to 9 of Schedule 29 to the Finance Act 2004.
Trivial commutation lump sum death benefit Before 6 April 2011 a lump sum benefit paid to a dependant of a scheme member of a registered pension scheme (who died before age 75) because that dependant's entitlement under that scheme is deemed trivial, and which met the conditions of paragraph 20 of Schedule 29 to the Finance Act 2004.From 6 April 2011 a lump sum benefit paid to a dependant of a scheme member of a registered pension scheme because that dependant's entitlement under that scheme is deemed trivial, and which meets the other conditions of paragraph 20 of Schedule 29 to the Finance Act 2004.

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U

Unauthorised employer payment An unauthorised employer payment is
  • a payment by a registered pension scheme that is an occupational pension scheme to or in respect of a sponsoring employer or a former sponsoring employer which is not an authorised employer payment, or
  • anything which is treated as being an unauthorised payment to a sponsoring employer or former sponsoring employer under Part 4 of Finance Act 2004.
Unauthorised member payment An unauthorised member payment is
  • a payment by a registered pension scheme to or in respect of a member or a former member of that pension scheme that is not an authorised member payment, or
  • anything which is treated as being an unauthorised payment to or in respect of a member or former member under Part 4 of Finance Act 2004.
Unauthorised payments charge Tax due under section 208 Finance Act 2004 on either unauthorised member payments or unauthorised employer payments. The rate of tax is 40% of the unauthorised payment.
Unauthorised payments surcharge Tax due under section 209 Finance Act that is paid in addition to the unauthorised payments charge. The tax will be due where total unauthorised payments go over a set limit in a set period of time of no more than 12 months. The rate of tax is 15% of the unauthorised payments.
Uncrystallised funds Funds held in respect of the member under a money purchase arrangement that have not as yet been used to provide that member with a benefit under the scheme (so have not crystallised), as defined in paragraph 8(3) of Schedule 28 to the Finance Act 2004. These are defined differently for cash balance arrangements. Here it is what funds there would be if the member decided to draw benefits on a particular date not the funds actually held in the cash balance arrangement at that time.
Uncrystallised funds lump sum death benefit Before 6 April 2011 a lump sum benefit paid from a money purchase arrangement following the death of the scheme member before the age of 75 (and within two years of that date of death) from any uncrystallised funds the member held in that arrangement at the point of death, and as defined in paragraph 15, Schedule 29 to the Finance Act 2004.From 6 April 2011 A lump sum benefit paid from a money purchase arrangement following the death of the scheme member from any uncrystallised funds the member held in that arrangement at the point of death within two years of the date that the scheme administrator knew of the death (or could reasonable be expected to have known of it if earlier), and as defined in paragraph 15, Schedule 29 to the Finance Act 2004. However, if the member was 75 or older at the time of death the two year limit does not apply.
Unit trust scheme manager This means one of the following(a) a person who has permission under Part 4 of the Financial Services and Markets Act 2000 to manage unit trust schemes authorised under section 243 of that Act, or(b) a firm which has permission under paragraph 4 of Schedule 4 to the Financial Services and Markets Act 2000 (as a result of qualifying for authorisation under paragraph of that Schedule; Treaty firms) to manage unit trust schemes authorised under that section.
Unsecured pension Before 6 April 2011 payment of income withdrawals direct from a money purchase arrangement, or income paid from a short-term annuity contract purchased from such an arrangement, to the member of the arrangement (aged under 75) and that met the conditions laid down in paragraph 6 and 8 to 10 of Schedule 28 to the Finance Act 2004.
Unsecured pension fund Before 6 April 2011 funds (whether sums or assets) held under a money purchase arrangement that had been 'designated' to provide a scheme member (aged under 75) with an unsecured pension, as identified in paragraph 8 of Schedule 28 to the Finance Act 2004. Once sums or assets had been 'designated' as part of an 'unsecured pension fund' any capital growth or income generated from such sums or assets were equally treated as being part of the 'unsecured pension fund'. Similarly where assets were purchased at a later date from such funds, or 'sums' generated by the sale of assets held in such funds, those replacement assets or sums also fell as part of the 'unsecured pension fund' (as did any future growth or income generated by those assets or sums).
Unsecured pension fund lump sum death benefit Before 6 April 2011 a lump sum benefit paid from a money purchase arrangement following the death of the scheme member before the age of 75 from any unsecured pension fund the member held in that arrangement at the point of death, and as defined in paragraph 17, Schedule 29 to the Finance Act 2004.
Untraceable member Before 6 April 2011 a member of a registered pension scheme who could not be traced prior to their 75th birthday.

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V

Valuation assumptions The valuation assumptions in relation to a person, benefits and a date are assumptions
  1. if the person has not reached such age (if any) as must have been reached to avoid any reduction in the benefits on account of age, that the person reached that age on the date, and
  2. that the person’s right to receive the benefits had not been occasioned by physical or mental impairment.

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W

Winding-up lump sum A lump sum benefit paid to a member of an occupational pension scheme because the scheme is being wound-up and their accrued benefits under the scheme are deemed ‘trivial’, and which meets the conditions of paragraph 10, Schedule 29 to the Finance Act 2004.
Winding-up lump sum death benefit A lump sum benefit paid to a dependant of a member of an occupational pension scheme because the scheme is being wound-up and their accrued benefits under the scheme are deemed 'trivial', and which meets the conditions of paragraph 21, Schedule 29 to the Finance Act 2004.