Explanatory note
(This note is not part of the Regulations)
These Regulations amend the Teachers' Superannuation (Additional Voluntary Contributions) Regulations 1994 (“the 1994 Regulations”) and the Teachers' Pensions Regulations 1997(“the 1997 Regulations”) in connection with the new provisions for the taxation of pension schemes contained in the Finance Act 2004.
Amendment of the 1994 Regulations
Regulation 4 amends regulation 3(2) of the 1994 Regulations to remove the constraints on accepting an election relating to the level of contributions and benefits. Regulation 5 omits regulation 8(3) of the 1994 Regulations which imposed a limit on contributions. Regulations 10 and 13 omit, respectively, regulation 14 of, and the Schedule to, the 1994 Regulations which imposed limits on benefits.
Regulation 7 provides that regulation 11(2) of the 1994 Regulations, which provides that a transfer value can only be paid if one is also payable under the 1997 Regulations, only applies to a person who has ceased to be a contributor before 6th April 2006.
Regulation 8(a),(b), (c) and 12(a) amend, respectively, regulations 12 and 16 of the 1994 Regulations to provide that a person can elect to take part of his benefit as a lump sum if it is a “pension commencement lump sum” as defined in the Finance Act 2004.
The other amendments are all minor amendments consequential on the new taxation provisions and the provisions referred to above. These include—
amendments changing references to schemes approved under various provisions of the Income and Corporation Taxes Act 1988 (“the Taxes Act”) to references to registered pension schemes; in consequence the provisions relating to transfers are simplified (Regulations 3, 6, and 7), and
amendments reflecting the provisions in the Finance Act 2004 under which small pensions can be commuted to a lump sum (Regulations 8(d) and 9).
Amendment of the 1997 Regulations
Regulation 16 amends regulation E4 of the 1997 Regulations to increase the age at which a person can retire early on the basis of redundancy or in the interests of the efficient discharge of his employer’s functions from 50 to 55 where the person is a “post-5th April 2006 entrant” as defined.
Regulation 18 amends regulation E22 of the 1997 Regulations so as to change the meaning of “child”. The effect of regulation 18(d) is that these changes do not apply where the child is in receipt of benefits under the 1997 Regulations on 5th April 2006 or to the child of a person who had retired on or before 5th April 2006.
Again, the other amendments are minor amendments consequential on the new taxation provisions and the provisions specified above. These include—
amendments referring to provisions in the Finance Act 2004 under which small pensions can be commuted to a lump sum (regulation 17), and
amendments changing references to schemes approved under various provisions of the Taxes Act to references to a registered pension scheme; this has meant some simplification to provisions relating to transfers (regulations 19, 20 and 22) including an express provision preventing the acceptance of a transfer value from certain schemes which are money purchase arrangements and which provide additional benefits (regulation 20 (c) and (d)).
General
Regulation 23 makes provision for persons to be able to elect that the amendments made by these regulations do not apply if the effect is that the person is placed in a worse position.