Short-term annuityU.K.
6(1)[F1For the purposes of this Part an] annuity payable to the member is a short-term annuity if—U.K.
(a)it is purchased by the application of sums or assets representing the whole or any part of the [F2member's drawdown pension fund] in respect of an arrangement,
(b)it is payable by an insurance company,
(c)the member had an opportunity to select the insurance company,
[F3(ca)the member becomes entitled to it before 6 April 2015,]
(d)it is payable for a term which does not exceed five years F4..., and
[F5(e)its amount either cannot decrease or falls to be determined in any manner prescribed by regulations made by the Board of Inland Revenue.]
[F6(1ZA)For the purposes of this Part, but subject to any provision made under sub-paragraph (1C)(za), an annuity payable to the member is also a short-term annuity if—
(a)it is purchased by the application of sums or assets representing the whole or any part of the member's drawdown pension fund, or of the member's flexi-access drawdown fund, in respect of an arrangement,
(b)it is payable by an insurance company,
(c)the member becomes entitled to it on or after 6 April 2015, and
(d)it is payable for a term which does not exceed five years.]
[F7(1A)An annuity does not fail to satisfy sub-paragraph (1)(e) by reason of the operation of a pension sharing order or provision.
(1B)The Board of Inland Revenue may by regulations make provision in relation to cases in which a short-term annuity payable by an insurance company (“the original short-term annuity”) ceases to be payable and in consequence of that—
(a)sums or assets (or both) are transferred from the insurance company to another insurance company and are applied towards the provision of either another short-term annuity (a “new short-term annuity”) or a scheme pension, lifetime annuity, dependants' scheme pension, dependants' annuity[F8, nominees' annuity] or dependants' short-term annuity by the other insurance company, or
(b)sums or assets are transferred to the relevant registered pension scheme.
(1C)The regulations may provide that—
[F9(za)in a case where—
(i)a new annuity becomes payable,
(ii)the member becomes entitled to it on or after 6 April 2015,
(iii)it would be a short-term annuity if any provision made under this paragraph were ignored,
(iv)the terms of the contract for it are such that there will or could be decreases in its amount other than allowed decreases (see sub-paragraph (1E)), and
(v)any other conditions prescribed by the regulations are met,
the new annuity is not a short-term annuity for the purposes of this Part,]
(a)in a case where a new short-term annuity becomes payable, the new short-term annuity is to be treated, to such extent as is prescribed by the regulations and for such of the purposes of this Part as are so prescribed, as if it were the original short-term annuity, and
(b)in [F10a case other than one where a new short-term annuity becomes payable], the relevant registered pension scheme is to be treated as making an unauthorised payment to the member of an amount equal to the aggregate of the amount of the sums, and the market value of the assets, transferred.
(1D)For the purposes of sub-paragraphs (1B) and (1C) a registered pension scheme is the relevant registered pension scheme if the original short-term annuity was acquired using sums or assets held for the purposes of the pension scheme.]
[F11(1E)In sub-paragraph (1C)(za)(iv) “allowed decreases” means decreases from time to time allowed by regulations under sub-paragraph (1)(e); and any such regulations are to be treated as having effect for this purpose.]
F12(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Textual Amendments
F1Words in Sch. 28 para. 6(1) substituted (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 14(2), 64(1)
F2Words in Sch. 28 para. 6(1)(a) substituted (with effect in accordance with Sch. 16 para. 85 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 4(a)
F3Sch. 28 para. 6(1)(ca) inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 45
F4Words in Sch. 28 para. 6(1)(d) 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. 4(b)
F5Sch. 28 para. 6(1)(e) substituted (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 14(3), 64(1)
F6Sch. 28 para. 6(1ZA) inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 38
F7Sch. 28 para. 6(1A)-(1D) inserted (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 14(4), 64(1)
F8Words in Sch. 28 para. 6(1B)(a) inserted (26.3.2015) by Finance Act 2015 (c. 11), Sch. 4 para. 13(3)
F9Sch. 28 para. 6(1C)(za) inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 46(1)(a)
F10Words in Sch. 28 para. 6(1C)(b) substituted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 46(1)(b)
F11Sch. 28 para. 6(1E) inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 46(2)
F12Sch. 28 para. 6(2) repealed (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 14(5), 64(1), Sch. 11 Pt. 4
Modifications etc. (not altering text)
C1Sch. 28 para. 6 modified (27.7.2010) by Finance (No. 2) Act 2010 (c. 31), Sch. 3 para. 3(1)
C2Sch. 28 para. 6 modified (with effect in accordance with Sch. 16 para. 85 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 87