OpenLegislation

Section 165 Pension rulesI1C1C2C3C4C5

United Kingdom

C6(1)

These are the rules relating to the payment of pensions by a registered pension scheme to a member of the pension scheme (“the pension rules”).

  • Pension rule 1

    No payment of pension may be made before the day on which the member reaches normal minimum pension age, unless the ill-health condition was met immediately before the member became entitled to a pension under the pension scheme.

  • Pension rule 2

    If the member dies before the end of the period of ten years beginning with the day on which the member became entitled to a scheme pension F1or an annuity, F2and if in the case of an annuity that day was before 6 April 2015, payment of the scheme pension F3or annuity may continue to be made (to any person) until the end of that period.

    F4If the member becomes entitled to an annuity on or after 6 April 2015 and the annuity is payable until the later of the member's death and the end of a term certain, payment of the annuity may continue to be made (to any person) until the end of that term.

    F5Except as provided by the preceding provisions of this rule, no payment of the member’s pension may be made after the member’s death.

  • Pension rule 3

    No payment of pension other than a scheme pension may be made in respect of a defined benefits arrangement F6or a collective money purchase arrangement.

  • Pension rule 4

    F7No payment of pension other than—

    1. (a)

      a scheme pension,

    2. (b)

      a lifetime annuity, or

    3. (c)

      F8drawdown pension

    may be made in respect of a money purchase arrangement F9that is not a collective money purchase arrangement; but a scheme pension may only be paid if the member had an opportunity to select a lifetime annuity instead.

  • F10Pension rule 5

    The total amount of drawdown pension paid in each drawdown pension year F11from, or under a short-term annuity purchased using sums or assets out of, the member's drawdown pension fund in respect of a money purchase arrangement must not exceed F12150% of the basis amount for the drawdown pension .

  • F13. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

  • . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2)

In this Part “pension”, in relation to a registered pension scheme, includes—

(a)

an annuity, and

(b)

income withdrawal.

(3)

For the purposes of this Part, a person becomes entitled to a pension under a registered pension scheme—

(a)

in the case of income withdrawal under the pension scheme, whenever sums or assets held for the purposes of an arrangement under the pension scheme are designated as available for the payment of F14drawdown pension, and

(b)

in any other case, when the person first acquires an actual (rather than a prospective) right to receive the pension

F15and, for this purpose, the abatement of a scheme pension under a public service pension scheme is not to be taken to affect the right to receive it.

F16(3A)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3B)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4)

Part 1 of Schedule 28 gives the meaning of expressions used in the pension rules.

Annotations

Textual amendments

F1

Words in s. 165(1) substituted (with effect as specified in Sch. 19 para. 29(1) to the amending Act) by Finance Act 2007 (c. 11), Sch. 19 para. 2(2)(a)

F2

Words in s. 165(1) inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 41(a)

F3

Words in s. 165(1) substituted (with effect as specified in Sch. 19 para. 29(1) to the amending Act) by Finance Act 2007 (c. 11), Sch. 19 para. 2(2)(b)

F4

Words in s. 165(1) inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 41(b)

F5

Words in s. 165(1) substituted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 41(c)

F6

Words in s. 165(1) inserted (1.8.2022) by Finance Act 2021 (c. 26), Sch. 5 paras. 3(2), 25(1); S.I. 2022/874, reg. 2

F7

Words in s. 165(1) substituted (with effect in accordance with Sch. 16 para. 85 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 1(2)(a)(i)

F8

Words in s. 165(1) substituted (with effect in accordance with Sch. 16 para. 85 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 1(2)(a)(ii)

F9

Words in s. 165(1) inserted (1.8.2022) by Finance Act 2021 (c. 26), Sch. 5 paras. 3(3), 25(1); S.I. 2022/874, reg. 2

F10

Words in s. 165(1) substituted (with effect in accordance with Sch. 16 para. 85 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 1(2)(b)

F11

Words in s. 165(1) inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 1

F12

Word in s. 165(1) substituted (with effect in accordance with s. 41(6) of the amending Act) by Finance Act 2014 (c. 26), s. 41(1)

F13

Words in s. 165(1) omitted (with effect in accordance with Sch. 16 para. 85 of the amending Act) by virtue of Finance Act 2011 (c. 11), Sch. 16 para. 1(2)(c); and omitted (6.4.2015) by virtue of Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 32(1)(a)(4)

F14

Words in s. 165(3)(a) substituted (with effect in accordance with Sch. 16 para. 85 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 64

F15

Words in s. 165(3) inserted (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 7, 64(1)

F16

S. 165(3A)(3B) omitted (6.4.2015) by virtue of Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 32(1)(b)(4)

Modifications

C1

S. 165 modified (6.4.2006) by The Pensions Schemes (Application of UK Provisions to Relevant Non-UK Schemes) Regulations 2006 (S.I. 2006/207), regs. 1(1), 6

C2

S. 165 modified (27.7.2010) by Finance (No. 2) Act 2010 (c. 31), Sch. 3 para. 2(1)(2)(a) (with Sch. 2 para. 2(1))

C3

S. 165 modified (with effect in accordance with Sch. 16 para. 85 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 90(2)(a)

C4

S. 165 modified (with effect in accordance with Sch. 16 para. 85 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 91(2)(a)

C5

S. 165 modified by The Pensions Schemes (Application of UK Provisions to Relevant Non-UK Schemes) Regulations 2006 (S.I. 2006/207), reg. 6 (as substituted (with effect in accordance with reg. 1(2) of the amending S.I.) by S.I. 2012/1795, regs. 1(1), 3)

C6

S. 165(1) modified (6.4.2006) by The Taxation of Pension Schemes (Transitional Provisions) Order 2006 (S.I. 2006/572), arts. 1(1), 3, 4(1)(2)

Commencement

I1

Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

Notes on Part 4

Modifications

C1

Pt. 4 modified (N.I.) (1.4.2006) by The Firemens Pension Scheme Order (Northern Ireland) 2006 (S.R. 2006/210), arts. 1(2), 103

C2

Pt. 4 modified (6.4.2006) by The Pension Protection Fund (Tax) Regulations 2006 (S.I. 2006/575), regs. 1, 9, 10

C3

Pt. 4 modified (6.4.2006) by The Pension Protection Fund (Tax) Regulations 2006 (S.I. 2006/575), regs. 1, 12

C4

Pt. 4 modified (6.4.2006) by The Pension Protection Fund (Tax) Regulations 2006 (S.I. 2006/575), regs. 1, 13(5)

C5

Pt. 4 modified (6.4.2006) by The Pension Protection Fund (Tax) Regulations 2006 (S.I. 2006/575), regs. 1, 26

C6

Pt. 4 modified (31.12.2007) by Police and Justice Act 2006 (c. 48), s. 53(1), Sch. 3 para. 7; S.I. 2007/3203, art. 3(b)

C7

Pt. 4 modified (1.7.2008) (N.I.) (with effect in accordance with reg. 1 of the amending Rule) by The Health and Social Care (Pension Scheme) Regulations (Northern Ireland) 2008 (S.R. 2008/256), regs. 1, 124(1) (with regs. 134, 258)

C8

Pt. 4 modified by The Taxation of Pension Schemes (Transitional Provisions) Order 2006 (S.I. 2006/572), reg. 5A (as inserted (6.4.2006) by S.I. 2008/2990, arts. 1(1), 3)

C9

Pt. 4 applied (21.7.2009) by Finance Act 2009 (c. 10), Sch. 35 para. 18

C10

Pt. 4 modified (19.7.2011) by Finance Act 2011 (c. 11), Sch. 18 para. 14(3)

C11

Pt. 4 applied (with modifications) (with application in accordance with Sch. 22 para. 1 of the amending Act) by Finance Act 2013 (c. 29), Sch. 22 para. 1(2)

C12

Pt. 4 modified (17.7.2014) by Finance Act 2014 (c. 26), Sch. 6 para. 1(2)(3)

C13

Pt. 4: power to amend conferred (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), s. 4(3)

C14

Pt. 4 modified (15.9.2016) by Finance Act 2016 (c. 24), Sch. 4 para. 1

C15

Pt. 4 modified (15.9.2016) by Finance Act 2016 (c. 24), Sch. 4 para. 9(2)

C16

Pt. 4 modified (with effect in relation to the tax year 2024-25 and subsequent tax years) by The MPs’, Senedd and Assembly Pension Schemes (Tax) Regulations 2025 (S.I. 2025/52), regs. 1(2)(3), 6

C17

Pt. 4 modified (14.7.2026 for the tax year 2014-15 and subsequent tax years) by The Public Service Pension Schemes (Rectification of Unlawful Discrimination) (Tax) Regulations 2026 (S.I. 2026/673), regs. 1(2), 10

Notes on Chapter 3

Modifications

C1

Pt. 4 modified (19.7.2011) by Finance Act 2011 (c. 11), Sch. 18 para. 14(3)

C2

Pt. 4 modified (with effect in relation to the tax year 2024-25 and subsequent tax years) by The MPs’, Senedd and Assembly Pension Schemes (Tax) Regulations 2025 (S.I. 2025/52), regs. 1(2)(3), 6