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(a) in regulation 1(2) (interpretation), in the appropriate alphabetical places, insert—

" "income withdrawal" has the meaning given by paragraph 7 of Schedule 28 to the Finance Act 2004 (income withdrawal);
"lifetime annuity" has the meaning given by paragraph 3 of Schedule 28 to the Finance Act 2004[3] (lifetime annuity);
"scheme pension" has the meaning given by paragraph 2 of Schedule 28 to the Finance Act 2004[4] (scheme pension); and
"the scheme pension purchase price" has the meaning given by paragraph 3(7B) of Schedule 29 to the Finance Act 2004[5] (the scheme pension purchase price);"; and

(b) for regulation 5(5)[6] (conditions upon which appropriate policies of insurance may be commuted), substitute—

    " (5) The limit referred to in paragraph (4) must not exceed—


(a) in respect of a scheme pension, the lesser of—


(i) one third of the value of the protected rights included in the scheme pension purchase price; or

(ii) the amount which represents the proportion (expressed in percentage terms) of the value of the protected rights which is equal to the percentage that the pension commencement lump sum bears to the scheme pension purchase price and the pension commencement lump sum; or



(b) in respect of a lifetime annuity or income withdrawal, the lesser of—



(i) 25 per cent. of the member's protected rights which are crystallised by the member's benefit crystallisation event 6 and the relevant pension benefit crystallisation event connected with event 6 ("the member's benefit crystallisation events"); or

(ii) the amount which represents the proportion (expressed in percentage terms) of the value of the protected rights which is equal to the percentage that the pension commencement lump sum bears to the amount crystallised by the member's benefit crystallisation events.".

Consequential amendment of the Occupational Pension Schemes (Discharge of Protected Rights on Winding Up) Regulations (Northern Ireland) 1996
     3. In the Occupational Pension Schemes (Discharge of Protected Rights on Winding Up) Regulations (Northern Ireland) 1996[7]—

(a) in regulation 1(2) (interpretation), after the definition of "administrative charges" insert—

" "income withdrawal" has the meaning given by paragraph 7 of Schedule 28 to the Finance Act 2004;
"lifetime annuity" has the meaning given by paragraph 3 of Schedule 28 to the Finance Act 2004;
"scheme pension" has the meaning given by paragraph 2 of Schedule 28 to the Finance Act 2004;
"the scheme pension purchase price" has the meaning given by paragraph 3(7B) of Schedule 29 to the Finance Act 2004;"; and

(b) for regulation 5(5)[8] (conditions upon which appropriate policies of insurance may be commuted) substitute—

    " (5) The limit referred to in paragraph (4) must not exceed—


(a) in respect of a scheme pension, the lesser of—


(i) one third of the value of the protected rights included in the scheme pension purchase price, or

(ii) the amount which represents the proportion (expressed in percentage terms) of the value of the protected rights which is equal to the percentage that the pension commencement lump sum bears to the scheme pension purchase price and the pension commencement lump sum, or



(b) in respect of a lifetime annuity or income withdrawal, the lesser of—



(i) 25 per cent. of the member's protected rights which are crystallised by the member's benefit crystallisation event 6 and the relevant pension benefit crystallisation event connected with event 6 ("the member's benefit crystallisation events"), or

(ii) the amount which represents the proportion (expressed in percentage terms) of the value of the protected rights which is equal to the percentage that the pension commencement lump sum bears to the amount crystallised by the member's benefit crystallisation events.".

Consequential amendment of the Personal and Occupational Pension Schemes (Protected Rights) Regulations 1996
     4. In the Personal and Occupational Pensions Schemes (Protected Rights) Regulations 1996[9]—

(a) in regulation 1(2) (interpretation), in the appropriate alphabetical places, insert—

" "income withdrawal" has the meaning given by paragraph 7 of Schedule 28 to the Finance Act 2004;
"lifetime annuity" has the meaning given by paragraph 3 of Schedule 28 to the Finance Act 2004;
"scheme pension" has the meaning given by paragraph 2 of Schedule 28 to the Finance Act 2004; and
"the scheme pension purchase price" has the meaning given by paragraph 3(7B) of Schedule 29 to the Finance Act 2004;"; and

(b) for regulation 8(1D)[10] (giving effect to protected rights by the provision of a lump sum), substitute—

    " (1D) The limit referred to in paragraph (1C) must not exceed—


(a) in respect of a scheme pension, the lesser of—


(i) one third of the value of the protected rights included in the scheme pension purchase price; or

(ii) the amount which represents the proportion (expressed in percentage terms) of the value of the protected rights which is equal to the percentage that the pension commencement lump sum bears to the scheme pension purchase price and the pension commencement lump sum; or



(b) in respect of a lifetime annuity or income withdrawal, the lesser of—



(i) 25 per cent. of the member's protected rights which are crystallised by the member's benefit crystallisation event 6 and the relevant pension benefit crystallisation event connected with event 6 ("the member's benefit crystallisation events"); or

(ii) the amount which represents the proportion (expressed in percentage terms) of the value of the protected rights which is equal to the percentage that the pension commencement lump sum bears to the amount crystallised by the member's benefit crystallisation events.".

Consequential amendment of the Personal and Occupational Pension Schemes (Protected Rights) Regulations (Northern Ireland) 1997
     5. In the Personal and Occupational Pensions Schemes (Protected Rights) Regulations (Northern Ireland) 1997[11]—

(a) in regulation 1(2) (interpretation) in the appropriate alphabetical places, insert—

" "income withdrawal" has the meaning given by paragraph 7 of Schedule 28 to the Finance Act 2004;
"lifetime annuity" has the meaning given by paragraph 3 of Schedule 28 to the Finance Act 2004;
"scheme pension" has the meaning given by paragraph 2 of Schedule 28 to the Finance Act 2004;
"the scheme pension purchase price" has the meaning given by paragraph 3(7B) of Schedule 29 to the Finance Act 2004;"; and

(b) for regulation 8(1D)[12] (giving effect to protected rights by the provision of a lump sum), substitute—

    " (1D) The limit referred to in paragraph (1C) must not exceed—


(a) in respect of a scheme pension, the lesser of—


(i) one third of the value of the protected rights included in the scheme pension purchase price, or

(ii) the amount which represents the proportion (expressed in percentage terms) of the value of the protected rights which is equal to the percentage that the pension commencement lump sum bears to the scheme pension purchase price and the pension commencement lump sum, or



(b) in respect of a lifetime annuity or income withdrawal, the lesser of—



(i) 25 per cent. of the member's protected rights which are crystallised by the member's benefit crystallisation event 6 and the relevant pension benefit crystallisation event connected with event 6 ("the member's benefit crystallisation events"), or

(ii) the amount which represents the proportion (expressed in percentage terms) of the value of the protected rights which is equal to the percentage that the pension commencement lump sum bears to the amount crystallised by the member's benefit crystallisation events.".

Frank Roy

Alan Campbell
Two of the Lords Commissioner of Her Majesty's Treasury

13th March 2007

[2] S.I. 1996/775.back

[3] Paragraph 3 was amended by paragraphs 1 and 13 of Schedule 10 and Part 4 of Schedule 11 to the Finance Act 2005 (c.7).back

[4] Paragraph 2 was amended by paragraphs 1 and 11 of Schedule 10, and Part 4 of Schedule 11 to the Finance Act 2005 and paragraphs 1 and 20 of Schedule 23 to the Finance Act 2006 (c.25).back

[5] Paragraph 3(7B) was inserted by paragraph 22(3) of Schedule 23 to the Finance Act 2006.back

[6] Regulation 5 was substituted by S.I. 2006/744.back

[7] S.R. (NI) 1996 No. 94; the relevant amending instrument is S.I. 2006/744.back

[8] Regulation 5 was substituted by S.I. 2006/744.back

[9] 1996/1537, relevant amending instruments are S.I. 1997/786, 1999/3198, 2005/704 and 2050 and 2006/744.back

[10] Regulation 8(1) and (1A) to (1F) was substituted for the original regulation 8(1) by S.I. 2006/744.back

[11] S.R. (NI) 1997 No. 56; the relevant amending instrument is S.I. 2006/744.back

[12] Regulation 8(1) and (1A) to (1F) was substituted for the original regulation 8(1) by S.I. 2006/744.back

 © Crown copyright 2007