The 2004 Finance Bill was published today as promised. Available either as a two-volume pdf download or an html version, the Bill includes some 164 pages on pensions:

Part 4 ("Pension Schemes etc") , ie clauses 139 - 270; and

Schedules 17; 28 - 34; and 40 part 3 (repeals). Also available, initially from from the Treasury website, are 295 pages of Explanatory Notes relating to "Pensions Simplification".

Within Part 4:

• Chapter 1 defines certain basic concepts.
• Chapter 2 provides details about the registration and deregistration of pension schemes. In order to obtain tax privileges, pension schemes will need to be "registered" under these new rules. In certain clearly defined circumstances, registered schemes can be de-registered, thus losing the entitlement to tax privileged treatment.
• Chapter 3 sets out the payments a registered pension scheme may make, and the rules with which registered schemes will need to comply.
• Chapter 4 provides for tax reliefs and exemptions in relation to registered pension schemes.
• Chapter 5 provides for certain tax charges in relation to registered pension schemes.
• Chapter 6 provides for the tax treatment of "employer-financed pension schemes", which are not registered schemes.
• Chapter 7 provides for compliance rules in relation to registered pension schemes.
• Chapter 8 contains supplementary provisions.

Schedule 17 makes minor amendments to the Income Tax (Earnings and Pensions) Act 2003.

Schedule 28 is closely connected with ss. 155 and 157 and explains the "Pension rules" and the "Pension death benefit rules".

Schedule 29 covers authorised lump sums and links with ss. 156 and 158.

Schedule 30 and s. 168 cover employer loans.

Schedule 31, on the taxation of benefits under registered pension schemes, amends ITEPA 2003.

Schedule 32 supplements the specification of "benefit crystallisation events" in s.205.

Schedule 33 contains minor and consequential amendments.

Schedule 34 covers the transitional provisions and is (predictably) extensive.

Schedule 40 part 3 details the repeals (the last entry being Sch 17 paras 2 and 10(4) of the Finance Act 2004!)

A full analysis by Aries is under way. Among our observations so far are:

1. No requirement for a registered pension scheme to be set up under trust (s.140).
2. No need for a scheme member to be UK resident (s.141).
3. Four different types of benefit "arrangement" (s.142):
   • cash balance (typically where there is a guaranteed annual percentage rate of return)
   • other money purchase
   • defined benefits
   • hybrid (ie may at any one time provide either cash balance, or other money purchase, or defined benefits).
4. Persons eligible to register a pension scheme are defined, and besides employers broadly parallel those listed in IR 76 as permitted personal pension providers (s.144).
5. Schemes with fewer than 50 members will not be permitted to pay pension themselves, but instead must arrange with insurers (Sch 28 part 1 para 2).
6. Employer loans and borrowing are each to be limited to 50% of the asset value (ss. 168, 171).
7. No exception to the 5% self-investment rule for shares in the sponsoring employer, except where there is more than one employer when it may be up to 20% (s.169(5)).
8. Section 615(3) schemes for UK expatriates working abroad are apparently to be allowed to continue (eg s.236(3).
9. Transitional TFC; where pre-A Day TFC rights exceed both £375,000 and 25% of "uncrystallised" rights, the rules applicable to other '£375k+' cases apply (ie no special 'combination of the two' approaches to calculation) (Sch 34 part 3 para 29(2)).