The Registered Pension Schemes (Standard Lifetime and Annual Allowances) Order 2007 This Order, made pursuant to sections 218(3) and 228(2) of the Finance Act 2004, came into force on 6 April 2007. The Order sets the amounts of the standard lifetime allowance and the annual allowance for the tax years from 2007 up to 2011.
The standard lifetime allowance is the amount of an individual's total pension savings in registered pension schemes which can benefit from tax relief. For the tax year 2007-08 this is set at £1,600,000.
The annual allowance is the maximum amount that an individual may contribute to registered pension schemes in a given year. For the tax year 2007-08 this is set at £225,000.
The Pensions Increase (Review) Order 2007
This Order provides for an increase in the rates of public service pensions to take account of increases in the cost of living, as required under section 59 of the Social Security Pensions Act 1975 (as amended).
For pensions that began before 10 April 2006 the increase is 3.6 per cent. Pensions that began on or after 10 April 2006 and have been in payment for less than a year, will receive a pro rata increase.
The Order came into force on 9 April 2006.
The Registered Pension Schemes (Bridging Pensions) Regulations 2007
These Regulations deal with "bridging pensions", that is pensions paid by some occupational pension schemes to members who retire before they reach State pension age. The existing legislation allows such schemes to reduce the scheme pension once the member becomes eligible for a State pension, so that a pensioner’s level of income remains broadly the same before and after his attaining State pension age.
The new Regulations introduce a different rate of reduction to be applied in the cases of members whose employment was partly contracted-out. This rate is designed to provide a level of reduction between that in the cases of fully contracted-out employment and those cases where the employment is not contracted-out at all.
Regulation 2 sets out a formula to be used when calculating the rate of reduction for partly contracted-out pensions. The rate is calculated by reference to the number of years of contracted-out employment as a percentage of the total number of years to which the pension scheme relates.
The Regulations came into force on 6 April 2007 and will be applied retrospectively with effect from 6 April 2006. This is to ensure that pensions reduced from 6 April 2006 are not taxed over and above what they would have been liable to pay if the new rate of reduction were applied.
The Taxation of Pension Schemes (Protected Rights and Pension Commencement Lump Sums) (Amendment) Order 2007
This Order amends several regulations dealing with protected rights to bring the legislation into line with the tax rules, following the amendment of the Finance Act 2004 by the Finance Act 2006.
The protected rights legislation restricts the pension commencement lump sum that may be taken tax-free to a maximum of 25% of the member’s fund. This mirrors the tax rules under which the maximum proportion is also restricted to 25%. However, the Finance Act 2006 introduced changes to the way the pension commencement lump sum is calculated in the case of money purchase schemes. As a consequence, the link to the tax rules has been distorted. The new Order restores the link by amending the protected rights legislation. The Order came into force on 6 April 2007.
The Registered Pension Schemes (Block Transfers) (Permitted Membership Period) (Amendment) Regulations 2007
These Regulations, dealing with block transfers, came into force on 6 April 2007. If a transfer from one pension scheme to another constitutes a "block transfer", then certain member’s rights are preserved in the transferee scheme and enjoy certain tax benefits. The previous legislation provided that for a transfer to be considered a “block transfer”, the transferring members must have been members of the transferee scheme for no longer than twelve months. The new Regulations have removed the twelve month limit for the transfers made on or after 6 April 2007.
The Pension Protection Fund (Closed Schemes) Regulations 2007
These Regulations, issued under section 153 of the 2004 Act, deal with pension schemes which are required to wind up following an insolvency event and which have already gone through the assessment period with the PPF, as required by the 2004 Act.
Those schemes which have sufficient assets to meet their protected liabilities, but which are nevertheless unable to purchase the necessary annuities (for example, because the size of their liabilities make this impracticable), can apply to the PPF for authority to continue operating as closed schemes within the meaning of section 155 of the 2004 Act.
The Regulations prescribe the procedure to be followed when making such applications to the PPF and the information that must be provided with the applications. Regulation 3 prescribes the time limits for obtaining actuarial valuation of a closed scheme’s assets and liabilities under section 156 of the Act. Regulation 4 and the Schedule set the principles which must be followed when performing such valuation.
Regulation 6 lays down the procedure and the time limits for making applications to the PPF under section 157 of the 2004 Act - this is when the value of a closed scheme’s assets becomes less than its liabilities.
The Regulations came into force on 6 April 2007.
The Pension Protection Fund (Pension Compensation Cap) Order 2007
The Order sets £29,928.56 as the amount of the compensation cap for the purposes of paragraph 26(7) of Schedule 7 of the 2004 Act. This is to make the amount consistent with the general level of earnings in Great Britain.
The compensation cap is used when calculating the amount of compensation payable by PPF to members of certain occupational pension schemes if the scheme's sponsoring employer becomes insolvent or if the scheme becomes underfunded at a certain level.
The Order came into force on 1 April 2007. The Pension Protection Fund (Pension Compensation Cap) Order 2006 is revoked.
The Social Security, Occupational Pension Schemes and Statutory Payments (Consequential Provisions) Regulations 2007
These Regulations amend certain social security legislation, the Occupational Pension Schemes (Contracting-out) Regulations 1996 and the Occupational Pension Schemes (Contracting-out) Regulations (Northern Ireland) 1996. The new Regulations enable the employer to recover from an employee additional pension contributions in respect of "retrospective earnings", that is the amounts treated as earnings by certain retrospective contributions regulations. Following such recovery, the employer must also pay to the trustees of an occupational pension scheme additional amounts of employer’s contributions in relation to the retrospective earnings.
http://www.opsi.gov.uk/si/si2007/20071154.htm Extracts may be copied provided their source is acknowledged.