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SCHEDULE 23B

Limit on Tax-Relieved Pension Funds

Part 30, Chapter 2C.

Calculation of the uncrystallised pension rights of an individual on the specified date

1.

(1) For the purposes of Chapter 2C the amount of uncrystallised pension rights on the specified date in relation to an individual shall be the aggregate of the amounts of such rights on that date in respect of each of the relevant pension arrangements of which the individual is a member; but, where a benefit crystallisation event occurred in relation to the individual under a relevant pension arrangement on the specified date then it shall be deemed for the purposes of this paragraph to have occurred on the day following that date.

(2) Where a relevant pension arrangement referred to in subparagraph (1) is—

(a) a defined contribution arrangement, the individual’s uncrystallised pension rights under that arrangement shall be so much of the aggregate of—

(i) the amount of any cash sums, and

(ii) the market value of any other assets,

held for the purposes of the arrangement on the specified date as represent the individual’s rights under the arrangement,

(b) a defined benefit arrangement, the individual’s uncrystallised pension rights under that arrangement shall be an amount equivalent to the amount determined by the formula—

(RVF × AP) + LS

where—

RVF is the relevant valuation factor ^[7]>on the specified date^<[7],

AP is the annual amount of the pension to which the individual would, on the valuation assumptions, be entitled under the arrangement on the specified date if, on that date, the individual acquired an actual rather than a prospective right to receive a pension in respect of the uncrystallised pension rights, and

LS is the amount of any lump sum to which the individual would, on the valuation assumptions, be entitled under the arrangement on the specified date (otherwise than by way of commutation of pension) if, on that date the individual acquired an actual rather than a prospective right to payment of a lump sum in respect of the rights.

(3) The valuation assumptions referred to in subparagraph (2)(b) are—

(a) if the individual has not reached such age, if any, as the individual is required to have reached under the relevant pension arrangement to avoid any reduction in the benefits on account of age, the assumption that the individual reached that age on the specified date, and

(b) the assumption that the individual’s right to receive the benefits under the relevant pension arrangement had not been occasioned by incapacity of mind or body.

Occurrence of benefit crystallisation event

2. For the purposes of Chapter 2C, a benefit crystallisation event, in relation to an individual, under a relevant pension arrangement of which the individual is a member shall occur where—

(a) the individual becomes entitled under the relevant pension arrangement to any one or more of the following benefits—

(i) a pension,

(ii) an annuity,

(iii) a lump sum,

(b) the individual exercises an option in accordance with section 772(3A), 784(2A) or 787H(1) for the transfer, on the date the annuity or, as the case may be, the pension would otherwise become payable, of an amount to any one or more of the following—

(i) the individual,

(ii) an approved retirement fund, or

(iii) an approved minimum retirement fund,

(c) a payment or transfer is made to an overseas arrangement by direction of the individual under the provisions of the Occupational Pension Schemes and Personal Retirement Savings Accounts (Overseas Transfer Payments) Regulations 2003 (S.I. No. 716 of 2003),

(d) the individual, having become entitled to a pension under a relevant pension arrangement on or after ^[4]>the specified date^<[4][4]>7 December 2005^<[4], becomes entitled to the payment of that pension, other than in excepted circumstances, at an increased annual amount which exceeds by more than the permitted margin the annual amount at which it was payable on the day the individual became entitled to it.

Calculation of amount crystallised by a benefit crystallisation event

3. For the purposes of Chapter 2C, the amount crystallised by a benefit crystallisation event referred to in paragraph 2 shall be—

(b) where the benefit crystallisation event is an event of the kind referred to in paragraph 2(a)(ii), the aggregate of the amount of so much of the cash sums, and the market value of such of the other assets, representing the individual’s rights under the relevant pension arrangement, as are applied to purchase the annuity,

(c) where the benefit crystallisation event is an event of the kind referred to in paragraph 2(a)(iii), the amount of the lump sum paid to the individual,

(d) where the benefit crystallisation event is an event of a kind referred to in paragraph 2(b), the aggregate of the amount of so much of the cash sums and the market value of such of the assets as are to be transferred following the exercise of an option referred to in that paragraph,

(e) where the benefit crystallisation event is an event of the kind referred to in paragraph 2(c), the amount of the payment made, or as the case may be, the market value of the assets transferred, to an overseas arrangement in accordance with the provisions of the Occupational Pension Schemes and Personal Retirement Savings Accounts (Overseas Transfer Payments) Regulations 2003, and

(f) where the benefit crystallisation event is an event of the kind referred to in paragraph 2(d), an amount equivalent to the amount determined by the formula—

where—

IP is the amount (in this assignment of meaning referred to as the “relevant amount”) by which the increased annual amount of the pension exceeds the annual amount at which it was payable on the day the individual became entitled to it, as increased by the permitted margin, but, if one or more benefit crystallisation events has or have previously occurred by reason of the individual having become entitled to payment of the pension at an increased annual amount, there shall be deducted from the relevant amount the amount crystallised by that event or the aggregate of the amounts crystallised by those events.

Amount of a standard fund threshold or personal fund threshold that is available at the date of a current event

4. For the purposes of Chapter 2C, the amount of the standard fund threshold or, as the case may be, personal fund threshold, for an individual, that is available at the date of the current event shall be determined as follows—

(a) if, prior to the current event, no benefit crystallisation event has occurred in relation to the individual on or after ^[5]>the specified date^<[5][5]>7 December 2005^<[5], the whole of the standard or personal fund threshold,

(b) if, prior to the current event, one or more benefit crystallisation events have occurred in relation to the individual on or after ^[5]>the specified date^<[5][5]>7 December 2005^<[5], and the previously used amount is equal to or greater than the amount of the individual’s standard fund threshold or, as the case may be, personal fund threshold, none of the standard fund threshold or the personal fund threshold, and

(c) in any other case, so much of the individual’s standard fund threshold or, as the case may be, personal fund threshold as is left after deducting the previously used amount.

Meaning of previously used amount

5.

(1) For the purposes of paragraph 4 the previously used amount means—

(a) where one benefit crystallisation event has occurred in relation to the individual before the current event, the amount crystallised by the previous benefit crystallisation event adjusted in accordance with subparagraph (2), or

(b) where 2 or more benefit crystallisation events have occurred before the current event, the aggregate of the amounts crystallised by each previous crystallisation event each of those amounts having been adjusted in accordance with subparagraph (2).

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