PTM145300 - Other authorised payments: authorised employer payments: conditions for authorised surplus payments

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General conditions
Surplus solely in respect of the death of a member
Meaning of connected

General conditions

Section 177 Finance Act 2005

The Registered Pension Schemes (Authorised Surplus Payments) Regulations 2006 - SI 2006/574

An authorised surplus payment is a payment made to a sponsoring employer of an occupational pension scheme, which:

  • meets conditions relating to section 37 of the Pensions Act 1995 (PA1995) for schemes that are not winding up, or
  • meets conditions relating to section 76 of PA1995 for schemes that are winding up, or
  • the scheme is otherwise winding up and meets certain other conditions.

All of these conditions are subject to a qualification regarding surplus payments solely in respect of the death of a member - see more details under the heading below.

Sections 37 and 76 of PA1995 allow for surplus assets to be returned from trust-based pension schemes to an employer. Certain requirements have to be met, such as those set out in the Occupational pension schemes (Payments to Employer) Regulations 2006 - SI 2006/802.

Where a scheme is subject to Northern Ireland legislation, sections 37 and 76 of PA1995 should be construed as a reference to the corresponding enactment in Northern Ireland.

A summary of the conditions is as follows:

A) The scheme is not winding-up

Section 37 PA 1995 applies - authorised surplus payment

Section 37 PA1995 doesn바카라 사이트™t apply - authorised surplus payment only if:

  • the rules of the scheme allow for a surplus payment to be made, and
  • the scheme rules limit the maximum amount of benefits that can be paid to or in respect of the members, and
  • the payment is made in accordance with the requirements of section 37 of PA1995, as if the requirements set out in that section had ordinarily applied to the scheme.

B) The scheme is winding-up

Section 76 PA1995 applies - authorised surplus payment

Section 76 PA1995 doesn바카라 사이트™t apply - authorised surplus payment only if:

  • the rules of the scheme allow for a surplus payment to be made, and
  • the scheme rules limit the maximum amount of benefits that can be paid to or respect of the members, and
  • the liabilities of the scheme have been fully discharged (including any tax liability), and
  • there is a surplus of scheme assets over the scheme바카라 사이트™s liabilities.

A limit to the maximum amount of benefits in these circumstances does not include a limit on benefits solely by reference to the size of the member바카라 사이트™s fund in the scheme, such as in the case of a money purchase arrangement.

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Surplus solely in respect of the death of a member

There is a qualification where an occupation pension scheme, makes a surplus payment to a sponsoring employer solely in respect of the death of a member.

  • As well as the payment having to meet the 바카라 사이트˜general conditions바카라 사이트™ for an authorised surplus payment, as described above, the payment will be an authorised surplus payment only if the member had not been connected with the sponsoring employer at the date of his or her death.

Also, there were further conditions for alternatively secured pensions up to 5 April 2011, see page in the National Archives.

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Meaning of connected

For this purpose a member is 바카라 사이트˜connected바카라 사이트™ to a sponsoring employer at the date of death where:

  • if the sponsoring employer is a partnership
  • the member is 바카라 사이트˜connected바카라 사이트™ with a partner in the partnership, or
  • 바카라 사이트˜connected바카라 사이트™ with a person who was a partner in the partnership at any time during the year preceding the member바카라 사이트™s death

or

  • if the sponsoring employer is a company:
  • the member is, at the date of death, a 바카라 사이트˜controlling director바카라 사이트™ of the company, or
  • was a 바카라 사이트˜controlling director바카라 사이트™ of the company at any time in the year preceding the member바카라 사이트™s death, or
  • the member is 바카라 사이트˜connected바카라 사이트™ with a person who is a 바카라 사이트˜controlling director바카라 사이트™ of the company at the date of the member바카라 사이트™s death, or
  • was a 바카라 사이트˜controlling director바카라 사이트™ of the company at any time during the year preceding the member바카라 사이트™s death.

Guidance on whether a person is 바카라 사이트˜connected바카라 사이트™ with another person is at PTM027000.

A 바카라 사이트˜controlling director바카라 사이트™ is a director to whom section 450 and 452 Corporation Tax Act 2010 applies (re-written from section 417(5)(b) with (3),(4)and(6) of the Income and Corporation Taxes Act 1988).