Chapter PTM031200
| Published date | 27 March 2015 |
| Record Number | PTM031200 |
| Court | HM Revenue & Customs |
| Glossary | PTM000001 |
How a registered pension scheme is established
Purpose of a registered pension scheme
Where a registered pension scheme may be set up
Who may set up a registered pension scheme
Requirement for scheme administrator
Sections 153(3) and 270(1) Finance Act 2004
Tax law doesn’t set any restriction on the legal form for setting up a registered pension scheme. A pension scheme may be established by different methods, for example, by:
- a trust
- a contract
- a board resolution
- a deed poll.
The Department for Work and Pensions’ legislation does impose requirements on certain occupational pension schemes.
In practice most registered pension schemes are set up under trust.
In addition to the document establishing the scheme there will be a set of rules covering:
- the type of benefits that are to be provided through the scheme
- how these are to be funded
- when they may be paid
- to whom they may be paid
- how funds may be invested.
The scheme documentation must make provision for the appointment of a scheme administrator, as this is a requirement of the definition of who is a scheme administrator.
To be registered, the scheme documentation cannot entitle any person to unauthorised payments. When the scheme administrator applies for registration of the scheme they have to make a declaration to this effect.
Purpose of a registered pension schemeSection 153(5)(f) Finance Act 2004
To be registered, the pension scheme must have been set up and be maintained wholly or mainly for the purpose of providing authorised pension or lump sum benefits (as set out at section 164(1)(a) or (b) Finance Act 2004).
If it appears to HMRC that this is not the case HMRC can refuse to register the pension scheme.
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Where a registered pension scheme may be set upA registered pension scheme can be set up in any country; it doesn’t have to be set up in the United Kingdom (UK). The same conditions for registering a pension scheme apply whether the scheme is set up in the UK or overseas, namely:
- the requirement for an appropriate scheme administrator based in the UK, an EU member state or a state in the European Economic Area (EEA) (Liechtenstein, Iceland or Norway)
- the restriction on who can set up a registered pension scheme, and
- the making of required declarations by the scheme administrator - see PTM151000. If the scheme is a non-UK scheme that contains members who do not have...
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