Explanatory note

These Regulations provide for the modification of provisions contained in Schedule 10 to the Finance Act 1999 (sharing of pensions etc. on divorce or annulment) (“Schedule 10”) in prescribed circumstances. The modifications relate to the application of the Schedule in the case of retirement benefits schemes approved by the Board of Inland Revenue under section 591 of the Income and Corporation Taxes Act 1988 (“the Taxes Act 1988”) before 10th May 2000.

The modifications are of paragraph 18(5) of Schedule 10 which provides that a scheme which has been approved before the day appointed by the Treasury as the first appointed day for the purposes of paragraph 18 of Schedule 10 shall have effect as long as it continues to be approved on or after the day to be appointed by the Treasury as the second appointed day for the purposes of that paragraph as if it contained provision satisfying the conditions set out in section 590(3)(bb) and (da) of the Taxes Act 1988 (conditions for automatic approval).

Regulation 1 provides for commencement, citation and effect, and regulation 2 for interpretation.

Regulation 3 introduces regulations 4 to 8 which prescribe both the circumstances in which Schedule 10 applies with modifications and the modifications themselves.

Regulation 4 disapplies paragraph 18(5) of Schedule 10 as regards simplified defined contribution schemes.

Regulations 5 to 8 prescribe modifications of Schedule 10 in relation to schemes which are not simplified defined contribution schemes. The circumstances prescribed by regulation 5 concern members of schemes who are not controlling directors of a company which is their employer and whose earnings at the date of their divorce are moderate (“moderate earners”). The circumstances prescribed by regulations 6 to 8 concern members of schemes who are not moderate earners.

Regulation 5 disapplies paragraph 18(5) of Schedule 10 where the member is a moderate earner.

Regulation 6 modifies paragraph 18(5) of Schedule 10 in circumstances where a scheme provides an employee who is not a moderate earner with lump sum retirement benefits only which do not exceed three eightieths of his final remuneration for each year of service.

Regulation 7 modifies paragraph 18(5) of Schedule 10 in circumstances where a scheme provides an employee who is not a moderate earner with a lump sum otherwise than by the commutation of a part of a pension.

Regulation 8 modifies paragraph 18(5) of Schedule 10 as regards certain scheme members who are not moderate earners and who continue to accrue benefits on the basis that they would have done before 17th March 1987.