• Authorised: certain types of payments that may be made by registered pension schemes such as transfer payments and benefit payments.
• Unauthorised: a payment is unauthorised unless specifically authorised under the Finance Act 2004.
• unauthorised payments surcharge = 15%
• If a scheme makes too many unauthorised payments its registration may be withdrawn and a de-registration charge of 40% applied to scheme assets

Tax relief on contributions.

Annual Allowance 2008/09

• 100% of taxable earnings or £3,600, whichever is higher.
• Where the overall increase in value of an individual's pension benefits exceeds the annual allowance, the excess is subject to a charge of 40%.
• 2008/09 = £235,000

• The maximum level of pension saving that can benefit from favourable tax treatment.
• Pension benefits are tested whenever there is a 'benefit crystallisation event'.
• Charges on excess
  • 55% lump sum.
  • 25% pension, subject to income tax at 40%.
• 2008/09 £1.65m

• Primary
  • Pension benefits greater than £1.5m at A-Day.
  • 'Primary Protection Factor' - standard lifetime allowance will be increasd using this factor.
  • Can continue to accrue benefits.
• Enhanced
  • Available to all regardless of the value of benefits at A-Day.
  • Must have ceased accrual.
  • All benefits will escape the lifetime allowance charge.

• By reference to the amount by which the pension benefit exceeded £1.5m on A-Day.
• (RR - SLA) / SLA
• If a member's pension rights were valued at £4.5m at A-Day, then the primary protection factor is 2. This means that whenever the benefits are tested against the lifetime allowance, an additional amount of 2*lifetime allowance will be added to the current lifetime allowance.

• Prior to A-Day the government introduced regulations to modify the rules of existing schemes
• Regulations designed to preserve status quo until 5 April 2011 for schemes that have made no amendments in response to new regime
• Regulations are overriding therefore must be misapplied if a scheme wants to pay out benefits in excess of pre A-Day limits.
• Schemes must make amendments to allow their members to take advantage of the additonal option that are available under FA04
• At the end of the transitional period the regulations will cease to apply.  All schemes will need to ensure their rules have been reviewed and amended if required.

1. Contracting Out Legislation  - RST
2. 'Preservation' Requirement - short service benefits and anti-franking requirements
3. Cash Equivalent Transfer Payments
4. Jurisdiction of Pensions Ombudsman
5. Increases to GMP's in payment
6. Pension credit benefits following PSO

What Act does the cash equivalent transfer payments come under?

What requirements does it set out?

• Pension Schemes Act 1993
• Members right to CETV's
• circumstances in which they can exercise that right
• requirements trustees must comply with in order to calculate those payment amounts

1. powers and functions of the OPRA

2. appointment of MNT's

3. trustee's investment powers and powers to delegate

4. Internal dispute resolutions

5. MFR, schedule of contributions/payment schedules

6. equal treatment rule

7. priority order on wind up

8. protection for accrued benefits

9. statutory increases on pensions in payment.

1. Stakeholder pensions

2. adjusted the law of bankruptcy

3. pension sharing on divorce

1. replaced OPRA with Pensions Regulator

2. PPF

3. Financial Assistance Scheme

4. restriction on indexation on pensions in payment

5. amended priority order

6. changed law regarding debt owed by an employer on underfunded scheme

7. strengthened pension rights of members whose employment is transferred under TUPE

8. removed restrictions for contracted out rights

9. replaced MFR