pensions: pension rules 1 and 3
Paragraphs 8(b) and 10 of Part 6 of Schedule 3 to the Social Security (Contributions)Regulations 2001 (as inserted by regulation 8(7) of the Social Security (Contributions)(Amendment No. 2) Regulations 2006)
Sections 152(6)-(7), 165(1), 279(1) of, and paragraphs 1 and 2 of Schedule 28 to,Finance Act 2004 (as amended by Finance Act 2005)
Pension rules 1 and 3 referred to in NIM02766 are asfollows:
Pension rule 1
No payment of pension may be made before the date on which the employee reaches normalminimum pension age unless the ill-health condition was met immediately before theemployee became entitled to a pension under the scheme.
- “normal minimum pension age” means:
- before 6th April 2010, age 50
- on or after that date, age 55 (section 279(1); RPSM08100010)
- “ill-health condition” means:
- the person responsible (NIM02765) for the employer-financed retirement benefits scheme (“EFRBS”) has received evidence from a registered medical practitioner that the employee is, and will continue to be, incapable of carrying on their occupation because of physical or mental impairment; and
- the employee has, in fact , ceased to carry on their employment (paragraph 1 of Schedule 28; RPSM08100070).
Pension rule 3
In respect of a defined benefits arrangement, the only pension that itmay pay is a scheme pension.
- “defined benefits arrangement” means an arrangement under which all the benefits that may be provided to the employee are “defined benefits” (section 152(6))
- “defined benefits” means benefits which are not money purchase benefits: that is, they are calculated by reference to:
- the employee’s earnings or length of service; or
- any other factor other than an amount available for the provision of the benefits (section 152(7)).
- “scheme pension” means a pension payable to an employee which:
- is payable by either the responsible person (see NIM02765) or an insurance company (paragraph 2(2)(a) of Schedule 28; RPSM09101210);and
- is payable at least annually until the employee’s death or the later of:
a. the employee’s death; and
b. the period ending 10 years after the date from which the employee became entitled to the scheme pension (paragraph 2(3)(a) of Schedule 28; RPSM09101210 and RPSM09101280)
- the rate of pension payable during any relevant 12 month period is not less than the rate payable at the relevant time (paragraph 2(3)(b) of Schedule 28; RPSM09101250 and RPSM09101260).
For details of pension rules 4 and 6, see NIM02768.
|Words in bold are defined in the Glossary to the Registered Pension Schemes Manual (RPSM20000000). They have the same meaning for NICs purposes unless otherwise stated.|