SolvedNIM02768 | Class 1 NICs: earnings of employees and office holders: retirement benefits schemes from 6th April 2006: employer-financed retirement benefits schemes: payments from such schemes: authorised member payments: pensions: pension rule 4
From HM Revenue & Customs · National Insurance Manual
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 paragraph 1 of Schedule 28 to, Finance Act 2004
Pension rule 4 referred to in NIM02766 as follows:
Pension rule 4
The only types of pension that may be paid in respect of a money purchase arrangement are:
a scheme pension, so long as the individual has had the opportunity to select a lifetime annuity instead
a lifetime annuity; or
drawdown pension.
Here:
“lifetime annuity” where an employee became entitled to it before 6 April 2015 means an annuity :
payable by an insurance company of the employee’s choosing
paid at least once a year
payable for life, or the later of the employee’s death and the end of a guarantee period specified in the annuity contract which cannot exceed 10 years
that cannot allow the amount to go down unless is it varied in accordance with HMRC regulations
that cannot allow the payment of a capital sum on the employee’s death, except in certain circumstances
that is not capable of assignment or surrender, except in certain circumstances.
Where an employee becomes entitled to it on or after 6 April 2015, “lifetime annuity” means an annuity payable to the employee:
by an insurance company
for life, or the later of the employee’s death and the end of a guarantee period specified in the annuity contract (paragraph 3 of Schedule 28; PTM062400)
“drawdown pension” (paragraph 4 of Schedule 28; PTM062710) means:
income withdrawal (paragraph 4(b) and 7 of Schedule 28; PTM062730 onwards)
"”short-term annuity” where the employee became entitled to it before 6 April 2015 means an annuity:
bought from an insurance company of the employee’s choosing
bought only from funds held in the employee’s drawdown pension fund
which is payable for a period not exceeding five years
whose amount cannot go down unless it is varied in accordance with HMRC regulations.
Where an employee becomes entitled to it on or after 6 April 2015, “short-term annuity” means an annuity: bought from an insurance company
bought only from funds held in the employee’s drawdown pension fund
which is payable for a period not exceeding five years.
“income withdrawal” means an amount (other than an annuity) which the employee is entitled to be paid from their drawdown pension fund or flexi-access drawdown fund.