| [s179, sch 30] |
All loans made by
registered pension schemes to employers must
charge interest at least equivalent to the rate specified in The
Registered Pension Schemes (Prescribed Interest Rates for
Authorised Employer Loans) Regulations 2005 (SI 2005/3449). This is
to ensure that a commercial rate of interest is applied to the
loan.
The minimum interest rate a scheme may charge is calculated
by reference to 1% above the average of the base lending rates of
the following 6 leading high street banks:
The average rate calculated should be rounded up as necessary to
the nearest multiple of ¼%.
Interest rates come into force on the operative date of each
month, which is on the 6th working day. But they are calculated
using the interest rates in force on the reference date, which is
the 12th working day before the operative date.
The interest rates that should be used for loans to employers
are expressed on the HMRC website in the CTSA tables entitled
‘Interest charged on underpaid quarterly Instalment
payments’. This figure is inclusive of the 1% above base
rate.
This rate is the same as that charged on unpaid Corporation
Tax Self Assessment and will be published on the HMRC website.
A registered pension scheme may make a loan at a fixed rate
of interest as long as that interest rate is at least the rate
specified. As long as the terms of the loan remain unchanged there
will be no requirement to alter the interest charged on the loan
during its life.
Scheme makes a loan to employer ABC Ltd on 17 July 2006.
The operative date is the 6th working day in July – 10 July.
The reference date is the 12th working day before the operative day – 22 June.
On 22 June the average of the base lending rates from all 6 banks is 5.15%.
The minimum interest rate charged by the scheme must therefore be:
5.25% (which is 5.15% rounded up to nearest ¼ %) + 1% = 6.25%.
| Glossary ( RPSM20000000) |
