Updated GAD tables for use in calculating the maximum income from unsecured and alternatively secured pensions (the new FA 2004 terms for income drawdown) from A-Day are now available.

The maximum level of unsecured pension that may be paid from an unsecured pension fund is calculated at the point the member first becomes entitled to such a pension, i.e. when they first designate some of the uncrystallised funds held in the arrangement to be used to provide an unsecured pension. The maximum amount is 120% of a "basis amount" calculated at that point. The basis amount is calculated using these tables, compiled by the Government Actuary's Department (GAD).

The maximum drawdown from age 75 under alternatively secured pension (ASP) rules is calculated in broadly the same manner, and set at 70% of the basis amount.

HMRC has also announced its intention to further revise The Pension Schemes (Transfers, Re-organisation and Winding-up) (Transitional Provisions) Order 2006 [PDF] published in draft on 21 September 2005. We noted then that it covers two aspects of preservation of pre-A Day rights, ie transfers and wind-ups secured by individual contracts of insurance:

1. preservation of the right to retire before the normal minimum pension age where rights are transferred between 10.12.03 and 5.4.06 and the TUPE regs apply; and
2. preservation of pre-A Day rights to retire before the normal minimum pension age or to lump sum rights greater than 25%, where a scheme is wound up after A Day and prospective benefits are secured for a member by an individual deferred annuity contract.

In response to representations received, HMRC says, the terms of the Order will be slightly extended (no new version of the Order is available at the time of writing). Protection of rights to take benefits before the normal minimum pension age will be maintained where a sponsoring employer has reorganised its pension schemes during the period between 10 December 2003 and A-Day. Second, the protection on the winding-up of a scheme will apply where the winding-up has commenced (but not concluded) before A-Day.

Meanwhile, appearing in draft for the first time The Registered Pension Schemes (Authorised Surplus Payments) Regulations 2006 [PDF], made under s.177 FA 2004, prescribe payments of surplus to the employer under s.37 PA 1995) and excess assets on winding-up under s.76 PA 1995) as "authorised surplus payments". The regs also define circumstances in which a payment made by to a sponsoring employer in respect of the death of a member of the scheme may be an authorised surplus payment.

Finally, last week we briefly reported the laying of three new pensions tax SIs, promising to add more information.

1. The Taxation of Judicial Pensions (Consequential Provisions) Order 2006 (SI 2006/497)

This follows the announcement on 15 December 2005 by the Secretary of State for Constitutional Affairs and Lord Chancellor (Lord Falconer) that, as administrator of the judicial pension schemes, he had concluded that it would be in the best interests of the members that those schemes should not be registered pension schemes under FA 2004. This Order removes from the judicial pensions legislation references to ss.590C and 594 of ICTA 1988, which will be redundant from A-Day.

2. The Registered Pension Schemes (Block Transfers) (Permitted Membership Period) Regulations 2006 (SI 2006/498)

Pre-A Day rights may be protected on transfer after A-Day if the transfer is a block transfer. One of the characteristics of a block transfer is either that the member;

• was not a member of the pension scheme to which the transfer is made before the transfer, or (alternatively)
• has been a member of the pension scheme to which the transfer is made for no longer than the period prescribed in regulations.

These Regulations exercise the power conferred and provide that the period in question is to be a period of twelve months ending with the date on which the transfer is made. However, a period before 6 April 2006 is ignored if, during that period, the member was a member of a personal pension scheme and the membership related solely to contracted-out rights.

3. The Registered Pension Schemes (Transfer of Sums and Assets) Regulations 2006 (SI 2006/499)

These regulations provide for the transfer of sums and assets by registered pension schemes and insurance companies, where those sums and assets represent pensions in payment, ie:

• a scheme pension
• a dependants’ scheme pension
• an unsecured pension
• a dependants' unsecured pension
• an alternatively secured pension
• a dependants' alternatively secured pension

Transfers of sums and assets covered by these regulations must be to another registered pension scheme or to an insurance company, but the latter applies only where the transfer is in respect of a scheme pension or dependants' scheme pension. The sums and assets transferred must meet the rules set out in the regulations, which require that the registered pension scheme (or insurance company) that receives these funds must provide a member with the same type of pension that was paid previously.