| 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 | Payment of income
withdrawals direct from a money purchase arrangement to the member
of the arrangement (who is aged 75 or over) and that meet the
conditions laid down in paragraphs 12 and 13 of Schedule 28 to the
Finance Act 2004. |
| Alternatively secured pension fund | Funds (whether sums or
assets) held under a money purchase arrangement that have been
'designated' to provide a scheme member (who is 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 have
been 'designated' as part of an 'alternatively secured pension
fund' any capital growth or income generated from such sums or
assets are equally treated as being part of the 'alternatively
secured pension fund'. Similarly, where assets are 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
fall as part of the 'alternatively secured pension fund' (as do any
future growth or income generated by those assets or sums). |
| Annual allowance | The annual allowance is
such amount, not being less than the amount for the immediately
preceding tax year, as is specified by order made by the
Treasury. |
| Annual allowance charge | 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. |
| Annual amount | For the purposes of Part
4 of the Finance Act 2004 the annual amount of a
relevant annuity is the rate of annual income
which the tables published for this purpose by the Government
Actuary’s department show as available if:-
(a) a
relevant annuity were purchased by the application
of the sums and assets representing the member’s pension fund
valued at the relevant date: and
(b) the purchaser were the same age and sex as the member or
dependant. |
| Annuity protection lump sum death benefit | A lump sum benefit paid
following the death of a scheme member who died before age 75 and
was in receipt of a 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 | 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
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. |
| 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 | The basis amount is 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
represents 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. |
| 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. There are eight such
events. |
| 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. |
| 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 | A lump sum benefit paid
from a
money purchase arrangement to a charity (as
defined in section 506 Income and Corporation Taxes Act 1988)
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 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. |
| 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 | 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. |
| 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. A child of the
member is a dependant of the member if the child has
- not reached the age of 23, or
- 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.
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.
|
| Dependants' alternatively secured pension | Payment of income
withdrawals direct from a
money purchase arrangement to a
dependant of a scheme member who is aged 75 or
over, that meets the conditions laid down in paragraphs 26 and 27
of Schedule 28 to the Finance Act 2004. |
| Dependants' alternatively secured pension fund | Funds (whether sums or
assets) held under a
money purchase arrangement that have been
'designated' after the death of a scheme member to provide a
particular
dependant of that member (who is 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 have been 'designated' as part of a
'dependants' alternatively secured pension fund', any capital
growth or income generated from such sums or assets are equally
treated as being part of the 'dependants' alternatively secured
pension fund'. Similarly, where assets are 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 fall as
part of the 'dependants' alternatively secured pension fund' (as do
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' 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 | 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 (not reaching to or beyond their 75th birthday),
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 | 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 (who is aged under 75) of the scheme
member who established the
arrangement and that meets the conditions laid
down in paragraph 20 and 23 to 24 of Schedule 28 to the Finance Act
2004. |
| Dependants' unsecured pension fund | Funds (whether sums or
assets) held under a money purchase arrangement that have been
'designated' after the death of a scheme member to provide a
particular dependant of that member (who is 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 have been
'designated' as part of a 'dependants' unsecured pension fund', any
capital growth or income generated from such sums or assets are
equally treated as being part of the 'dependants' unsecured pension
fund'. Similarly, where assets are 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 fall as part of the
'dependants' unsecured pension fund' (as do any future growth or
income generated by those assets or sums). |
| 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. |
| 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. |
| 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 Recognised Overseas Schemes) Regulations 2004.
(Regulations not finalised yet). |
| Pension commencement lump sum | A lump sum benefit paid
to a member of a registered pension scheme (who is 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. |
| 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 | This means
- 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.
|
| Pension protection lump sum death benefit | 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. |
| 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 | 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 actual
arise under a
money purchase arrangement. These periods are set
at the point that initial entitlement arise, 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). |
| 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 section631
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, but should be read as including
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.
|
| 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 is established in a
country or territory mentioned in regulation 3(2) of the Pension
Schemes (Categories of Country and Requirements for Recognised
Overseas Schemes) Regulations 2006 – SI 2006/206. An overseas
pension scheme which is not established in such a country is a
recognised overseas pension scheme if it satisfies the requirements
prescribed in regulation 3(4) of those regulations. |
| 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 means
a) 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, or
b) 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, or
c) 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
- employment income,
- income which is chargeable under Schedule
D 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), and
- income to which section 529 of Income and
Corporation Taxes Act 1988 (ICTA) (patent income of an individual
in respect of inventions) applies.
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 788 of ICTA (double taxation agreements), 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.
|
| 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..
|
| 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
Price Index, which is the index of retail prices compiled by the
Office for National Statistics. Where that index is not published
for a relevant month any substitute index or index figures
published by the Office for National Statistics may be used. (See
section 279 Finance Act 2004.) |
| 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 183 o 184 Finance Act 2004 because of unauthorised
borrowing.
The following unauthorised payments are not scheme chargeable
payments.
- 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.
- The payment is a compensation payment as defined by section 178
Finance Act 2004.
- 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.
- 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.
- 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 | 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. |
| 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 is
£1,500,000. The standard lifetime allowance for following tax
years will be specified by an annual order made by the Treasury,
and will never be less than the amount for the immediately
preceding tax year. |
| 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 | A lump sum benefit paid
to a member of a
registered pension scheme (who is aged under 75)
because their pension entitlements (under both that scheme and
other such schemes) are deemed trivial, and which meets the
conditions of paragraphs 7 to 9 of Schedule 29 to the Finance Act
2004. |
| Trivial commutation lump sum death benefit | 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 meets the conditions of paragraph 20 of
Schedule 29 to the Finance Act 2004. |
| 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 | 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. |
| 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 | 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 (who is aged under 75) and that meet
the conditions laid down in paragraph 6 and 8 to 10 of Schedule 28
to the Finance Act 2004. |
| Unsecured pension fund | Funds (whether sums or
assets) held under
a money purchase arrangement that have been
'designated' to provide a scheme member (who is aged under 75) with
an
unsecured pension, as identified in paragraph 8 of
Schedule 28 to the Finance Act 2004. Once sums or assets have been
'designated' as part of an 'unsecured pension fund' any capital
growth or income generated from such sums or assets are equally
treated as being part of the 'unsecured pension fund'. Similarly
where assets are 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 fall as part of the 'unsecured
pension fund' (as do any future growth or income generated by those
assets or sums). |
| Unsecured pension fund lump sum death benefit | 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 | A member of a registered
pension scheme who cannot be traced prior to their 75th
birthday. |
