At present, benefits held in any pension arrangement which contains rights to a GMP, protected rights, or s.9(2B) rights can only be commuted for triviality under the "1% of LTA" rule in FA 2004 Sch 29 paras 7-9. The easements contained in the Registered Pension Schemes (Authorised Payments) Regulations 2009 (SI 2009/1171) are not available.

The reason for this is that the circumstances in which contracted-out rights can be provided in lump sum form, defined in SI 1996/1172 Regs 20 (s.9(2B) rights) and 60 (GMP) and SI 1996/1537 Reg 8 (Protected Rights) have not yet been amended. Last December the DWP published draft amending Regs (see Aries article), aligned with HMRC's May 2008 draft of the Authorised Payments Regs, but had to shelve them due to the delay by HMRC in laying the Regs.

The deficiency is now about to be rectified by the Occupational and Personal Pension Schemes (Authorised Payments) Amendment Regulations 2009, on which the DWP is currently consulting. In fact the DWP has had to go back to the drawing board, as HMRC's final regs were rather different from those originally proposed. Nevertheless, the intention is to bring the changes into force on the same date as HMRC's new trivial commutation rules, ie on 1 December 2009. The consultation ends on 29 September.

The draft regs once more aim to amend a raft of provisions in existing DWP secondary legislation (eight SIs in all) to reflect the changes in the Registered Pension Schemes (Authorised Payments) Regulations 2009. Broadly speaking these enable:

1. small pension pots that as noted above cannot be commuted under existing rules on trivial commutation, but fall within the Authorised Payments Regulations, to be treated as authorised lump sums; and
2. certain lump sum payments to be treated as taxed lump sums.

Aries comment

The DWP might have taken the opportunity here to address another anomaly in the authorised payments rules. Presently, contracted-out benefits cannot be taken as part of a Lifetime Allowance Excess Lump Sum (defined at FA 2004 Sch 29 para 11, again because this is not included in the list of circumstances in which payment of C/O right as a lump sum is permissible.

The Social Security (State Pension and National Insurance Credits) Regulations 2009 (SI 2009/2206)

This SI, laid on 20 August, amends existing legislation in line with changes to the state pension scheme introduced by the Pensions Acts of 1995 and 2007 (see Aries article), which begin to take effect from 6 April 2010. In particular, the amendments:

• specify the amount of basic state pension a person is entitled to if he does not satisfy the new (30-year) contribution condition in full;
• provide for the gradual phasing-out of automatic National Insurance credits for men who are within five years of state pension age; and
• provide for men and women to be treated equally with respect to the calculation and inheritance of graduated retirement benefit.