Office of Public Sector Information
PART III continued CHAPTER I continued
(2) Any such regulations may be made so as to apply to earners who are not in employment at the time of the transfer.
(3) Regulations under subsection (1) may provide that any provision of this Part (other than sections 14, 15 and 39 to 41, and sections 22 to 29 so far as they apply to personal pension schemes) or of Chapter III of Part IV or Chapter II of Part V shall have effect, where there has been a transfer to which they apply, subject to such modifications as may be specified in the regulations.
(4) Regulations under subsection (1) shall have effect in relation to transfers whenever made unless they provide that they are only to have effect in relation to transfers which take place after they come into operation.
(5) The power conferred by subsection (1) is without prejudice to the generality of section 177(2) or section 17(5) of the [1954 c. 33 (N.I.).] Interpretation Act (Northern Ireland) 1954.
(6) In the provisions mentioned in subsection (3) “accrued rights”, in relation to an earner, means the rights conferring prospective entitlement under the scheme in question to the pensions to be provided for the earner and the earner’s widow or widower in accordance with sections 9 and 13, and references to an earner’s accrued rights to guaranteed minimum pensions shall be construed accordingly.
(1) Where the annual rate of a pension required to be provided by a scheme in accordance with section 9 or 13 would not exceed the prescribed amount and the circumstances are such as may be prescribed, the scheme may provide for the payment of a lump sum instead of that pension.
(2) Neither section 9 nor section 13 shall preclude a scheme from providing for the earner’s or the earner’s widow’s or widower’s guaranteed minimum pension to be suspended or forfeited in such circumstances as may be prescribed.
The resources of the scheme must be derived in whole or in part from—
(a) payments made or to be made by one or more employers of earners to whom the scheme applies, being payments either—
(i) under an actual or contingent legal obligation; or
(ii) in the exercise of a power conferred, or the discharge of a duty imposed, on a Minister of the Crown, government department or any other person, being a power or duty which extends to the disbursement or allocation of public money; or
(b) such other payments by the earner or his employer, or both, as may be prescribed for different categories of scheme.
(1) The Board must be satisfied that the scheme complies with—
(a) regulations prescribing the means by which guaranteed minimum pensions under contracted-out schemes are to be secured (whether irrevocable trust, policy of insurance, annuity contract or other means); and
(b) the conditions which are required by the regulations to be satisfied in relation to any means adopted;
and generally as to the arrangements in force or to be in force from time to time for securing those pensions.
(2) Subject to subsection (3), the scheme must contain a rule by which any liabilities of the scheme in respect of—
(a) guaranteed minimum pensions and accrued rights to guaranteed minimum pensions;
(b) any such benefits as are excluded by section 9(6) from earners' guaranteed minimum pensions;
(c) pensions and other benefits (whether or not within paragraph (a) or (b)) in respect of which entitlement to payment has already arisen; and
(d) state scheme premiums,
are accorded priority on a winding up over other liabilities under the scheme in respect of benefits attributable to any period of service after the rule has taken effect.
(3) The rule may also accord priority, on a winding up occurring after an earner has attained normal pension age, to liabilities of the scheme in respect of pensions and other benefits to which—
(a) he will be entitled on ceasing to be in employment, or
(b) the earner’s widow or widower or any dependant of the earner’s will be entitled on the earner’s death.
(4) Subsections (1) to (3) do not apply to public service pension schemes.
(5) The duties imposed on the Board by subsection (1) shall cease to subsist in relation to guaranteed minimum pensions for a member and the member’s widow or widower where a scheme has ceased by virtue of section 15 to be liable to provide those pensions.
(6) Subsections (2) and (3) do not apply to schemes falling within any category or description prescribed as being exempt from the requirements of those subsections.
(7) If the scheme provides for the payment out of any sum representing the surrender value of a policy of insurance taken out for the purposes of the scheme, it must make provision so that there may be no payment out in relation to guaranteed minimum pensions except in such circumstances as may be prescribed.
(1) The Board must be satisfied that the resources of the scheme are sufficient—
(a) for meeting from time to time all claims in respect of guaranteed minimum pensions so far as falling to be met out of those resources, having regard to the expected extent of the scheme’s resources and its other liabilities at any time when claims may be expected to arise; and
(b) for paying state scheme premiums in respect of all persons at any time entitled to, or having accrued rights to, guaranteed minimum pensions under the scheme; and
(c) for meeting in full in the event of an immediate winding up—
(i) the liabilities accorded priority in accordance with section 19(2) and (3), and
(ii) the expenses of administration so far as those expenses are payable out of the resources of the scheme.
(2) Subsection (1) does not apply to public service schemes and the duties imposed on the Board by that subsection shall cease to subsist in relation to guaranteed minimum pensions for a member and the member’s widow or widower where a scheme has ceased by virtue of section 15 to be liable to provide those pensions.
(3) Regulations may provide for subsection (1) to have effect in prescribed cases—
(a) with the omission of paragraphs (b) and (c), or
(b) with the omission of either of those paragraphs, or
(c) with the substitution for both or either of those paragraphs of provisions specified in the regulations.
(4) In considering a scheme by reference to the considerations of subsection (1), the Board shall have regard to any investments held for the purposes of the scheme.
(1) The Board may by reference to the considerations of section 20(1) make it a condition of the contracting-out or continued contracting-out of a scheme to which that section applies that—
(a) no part, or no more than a specified proportion, of the scheme’s resources shall be invested in investments of a specified class or description; or
(b) the whole or a specified proportion of investments of a specified class or description forming part of the scheme’s resources when the condition is imposed shall be realised before the end of a specified period.
(2) Where contracting-out or continued contracting-out depends on the Board’s being satisfied as mentioned in section 20(1), the scheme may be contracted-out or continue to be contracted-out, as the case may be, in relation to any employment subject to such conditions as the Board think fit to impose for securing—
(a) that they are kept informed about any matters affecting the security of the minimum pensions guaranteed under the scheme;
(b) that the resources of the scheme are brought to and maintained at a level satisfactory to the Board.
(3) Conditions imposed by the Board for the purpose mentioned in subsection (2)(b) may require steps to be taken, at the instance of the Board, to increase the scheme’s resources at any time after contracting-out, including a time when the scheme has ceased to be contracted-out.
The Department may prescribe descriptions of persons by whom or bodies by which the scheme may be established and, if the Department does so, the scheme may only be established by a person or body of a prescribed description.
(1) Where the rules of the scheme make such provision as is mentioned in section 6(2) or (3), they must also make provision for the identification of the protected rights.
(2) The value of such protected rights as are mentioned in section 6(2) or (3) must be calculated in a manner no less favourable than that in which the value of any other rights of the member to money purchase benefits under the scheme are calculated.
(3) Subject to subsection (2), the value of protected rights must be calculated and verified in such manner as may be prescribed.
(1) The rules of the scheme must provide for effect to be given to the protected rights of a member—
(a) in any case where subsection (3) so requires, by the purchase of such an annuity as is mentioned in that subsection, and
(b) in any other case, in such of the ways permitted by the following subsections as the rules may specify,
and they must not provide for any part of a member’s protected rights to be discharged otherwise than in accordance with those subsections.
(2) Effect may be given to protected rights—
(a) by the provision by the scheme of a pension which—
(i) complies with the pension requirements (within the meaning of section 25(1)), and
(ii) satisfies such conditions as may be prescribed; or
(b) in such circumstances and subject to such conditions as may be prescribed, by the making of a transfer payment—
(i) in the case of an occupational pension scheme, to another occupational pension scheme or to a personal pension scheme, and
(ii) in the case of a personal pension scheme, to another personal pension scheme or to an occupational pension scheme,
where the scheme to which the payment is made satisfies such requirements as may be prescribed.
(3) Subject to subsections (5) and (7), if—
(a) the rules of the scheme do not provide for a pension; or
(b) the member so elects,
then, except to the extent that effect is given to protected rights in accordance with subsection (4), effect shall be given to them by the purchase by the scheme of an annuity which—
(i) complies with the annuity requirements (within the meaning of section 25(3)), and
(ii) satisfies such conditions as may be prescribed.
(4) Effect may be given to protected rights by the provision of a lump sum if—
(a) the lump sum is payable on a date which is—
(i) in the case of an occupational pension scheme, a date not earlier than that on which the member attains the age of 60 nor later than that on which he attains the age of 65, or
(ii) in the case of a personal pension scheme, the date on which the member attains pensionable age, or
(iii) in either case, such later date as has been agreed by him;
(b) the annual rate of a pension under subsection (2) or an annuity under subsection (3) giving effect to the protected rights and commencing on the date on which the lump sum is payable would not exceed the prescribed amount;
(c) the circumstances are such as may be prescribed; and
(d) the amount of the lump sum is calculated in a manner satisfactory to the Board by reference to the amount of the pension or annuity.
(5) If the member has died without effect being given to protected rights under subsection (2), (3) or (4), effect may be given to them in such manner as may be prescribed.
(6) No transaction is to be taken to give effect to protected rights unless it falls within this section.
(7) Effect need not be given to protected rights if they have been extinguished—
(a) in the case of an occupational pension scheme, by the payment of a contracted-out protected rights premium under section 51; or
(b) in the case of a personal pension scheme, by the payment of a personal pension protected rights premium under that section.
(1) For the purposes of section 24 a pension complies with the pension requirements if—
(a) it commences—
(i) in the case of an occupational pension scheme, on a date not earlier than that on which the member attains the age of 60 nor later than that on which he attains the age of 65, or
(ii) in the case of a personal pension scheme, on the date on which the member attains pensionable age, or
(iii) in either case, on such later date as has been agreed by him,
and continues until the date of his death; and
(b) in a case where the member dies while it is payable to him and is survived by a widow or widower—
(i) it is payable to the widow or widower in prescribed circumstances and for the prescribed period at an annual rate which at any given time is one-half of the rate at which it would have been payable to the member if the member had been living at that time; or
(ii) where that annual rate would not exceed a prescribed amount and the circumstances are such as may be prescribed, a lump sum calculated in a manner satisfactory to the Board is provided in lieu of it.
(2) As respects the period of 5 years beginning with the commencement of the pension referred to in subsection (1), that subsection shall have effect in relation to that pension as if the words “at least” were inserted immediately before the words “one-half” in paragraph (b)(i).
(3) For the purposes of section 24 an annuity complies with the annuity requirements if—
(a) it satisfies the requirements mentioned in subsections (1) and (2) (taking the references in those subsections to pensions as references to annuities); and
(b) it is provided by an insurance company which—
(i) satisfies prescribed conditions;
(ii) complies with such conditions as may be prescribed as to the calculation of annuities provided by it and as to the description of persons by or for whom they may be purchased; and
(iii) subject to subsection (4), has been chosen by the member.
(4) A member is only to be taken to have chosen an insurance company if he gives notice of his choice to the trustees or managers of the scheme within the prescribed period and in such manner and form as may be prescribed, and with any such supporting evidence as may be prescribed; and, if he does not do so, the trustees or managers may themselves choose the insurance company instead.
(1) The Board must be satisfied that the scheme complies with any such requirements as may be prescribed for meeting the whole or a prescribed part of any liability in respect of protected rights under the scheme which the scheme is unable to meet from its own resources—
(a) by reason of the commission by any person of a criminal offence;
(b) in such other circumstances as may be prescribed.
(2) Subsection (1) does not apply to a public service pension scheme.
(1) The scheme must comply with such requirements as may be prescribed as regards the investment of its resources and with any direction of the Board—
(a) that no part, or no more than a specified proportion, of the scheme’s resources shall be invested in investments of a specified class or description;
(b) that the whole or a specified proportion of investments of a specified class or description forming part of the scheme’s resources when the direction is given shall be realised before the end of a specified period.
(2) The scheme must comply with such requirements as may be prescribed as regards the part—
(a) of any payment that is made to the scheme by or on behalf of a member of the scheme;
(b) of any income or capital gain arising from the investment of such a payment; or
(c) of the value of rights under the scheme,
that may be used—
(i) to defray the administrative expenses of the scheme;
(ii) to pay commission; or
(iii) in any other way which does not result in the provision of benefits for or in respect of members.
(3) Subject to subsection (4)—
(a) in the case of an occupational pension scheme, all minimum payments and any payments made by the Department under Article 9 of the [S.I. 1986/1888 (N.I. 18).] Social Security (Northern Ireland) Order 1986, and
(b) in the case of a personal pension scheme, all minimum contributions,
which are paid to a scheme in respect of one of its members must be applied so as to provide money purchase benefits for or in respect of that member, except so far as they are used—
(i) to defray the administrative expenses of the scheme; or
(ii) to pay commission.
(4) If regulations are made under subsection (2), the payments mentioned in paragraph (a) of subsection (3) and the contributions mentioned in paragraph (b) of that subsection may be used in any way which the regulations permit, but not in any way not so permitted except to provide money purchase benefits for or in respect of the member.
Except in such circumstances as may be prescribed, the rules of the scheme must not permit the suspension or forfeiture of a member’s protected rights or of payments giving effect to them.
Nothing in sections 22 to 28 shall be taken to prejudice any requirements with which a scheme must comply if it is to qualify for tax-exemption or tax-approval.
(1) Regulations shall provide for the cancellation, variation or surrender of any contracting-out certificate or appropriate scheme certificate, or the issue of an amended certificate—
(a) in the case of a contracting-out certificate, on any change of circumstances affecting the treatment of an employment as contracted-out employment; and
(b) in the case of an appropriate scheme certificate, on any relevant change of circumstances.
(2) Regulations may enable the Board to cancel or vary a contracting-out certificate where—
(a) they have reason to suppose that any employment to which it relates ought not to be treated as contracted-out employment in accordance with the certificate; and
(b) the employer does not show that it ought to be so treated.
(3) Where—
(a) by or by virtue of any provision of this Part the contracting-out of a scheme in relation to an employment depends on the satisfaction of a particular condition, or
(b) by or by virtue of any provision of sections 22 to 28 a scheme’s being an appropriate scheme depends on the satisfaction of a particular condition,
the continued contracting-out of the scheme or, as the case may be, the scheme’s continuing to be an appropriate scheme shall be dependent on continued satisfaction of the condition; and if the condition ceases to be satisfied, that shall be a ground (without prejudice to any other) for the cancellation or variation of the contracting-out or appropriate scheme certificate.
(4) A contracting-out certificate in respect of any employment may be withheld or cancelled by the Board if they consider that there are circumstances which make it inexpedient that the employment should be or, as the case may be, continue to be, contracted-out employment by reference to the scheme, notwithstanding that the relevant scheme is one that they would otherwise treat as proper to be contracted-out in relation to all earners in that employment.
(5) An appropriate scheme certificate may be withheld or cancelled by the Board if they consider that there are circumstances which make it inexpedient that the scheme should be or continue to be an appropriate scheme, notwithstanding that they would otherwise issue such a certificate or not cancel such a certificate.
(6) Without prejudice to their powers apart from this subsection, the Board may withhold or cancel a contracting-out certificate in respect of a scheme if they consider that the rules of the scheme are such that persons over particular ages may be prevented from participating in the scheme.
(7) Without prejudice to the previous provisions of this section—
(a) non-compliance with any such condition as is mentioned in subsection (1) of section 21 shall be a ground on which the Board may withhold or cancel a contracting-out certificate in respect of any employment within the application of the scheme; and
(b) non-compliance with any such condition as is mentioned in subsection (2) of that section shall be a ground on which the Board may cancel a contracting-out certificate issued in respect of any such employment.
(8) Except in prescribed circumstances, no cancellation, variation or surrender of a contracting-out certificate or appropriate scheme certificate shall have effect from a date earlier than that on which the cancellation, variation or surrender is made.
(1) This section applies in any case where—
(a) a contracting-out certificate (“the first certificate”) has been surrendered by an employer or cancelled by the Board; and
(b) at any time before the end of the period of 12 months beginning with the date of the surrender or cancellation, that or any connected employer makes an election under section 7 in respect of any employment which was specified by virtue of section 3(2)(a) in the first certificate, with a view to the issue of a further contracting-out certificate.
(2) This section applies whether or not the scheme specified in the first certificate in relation to the employment concerned is the same as the scheme which would be specified in the further certificate if it were issued.
(3) The Board shall not give effect to the election referred to in subsection (1) by issuing a further certificate unless they consider that, in all the circumstances of the case, it would be reasonable to do so.
(4) Regulations may make such supplemental provision in relation to cases falling within this section as the Department considers necessary or expedient.
(5) For the purposes of subsection (1)—
(a) an employment (“the second employment”) in respect of which an election of the kind referred to in subsection (1)(b) has been made; and
(b) an employment (“the first employment”) which was specified by virtue of section 3(2)(a) in the first certificate,
shall be treated as one employment if, in the opinion of the Board—
(i) they are substantially the same, however described; or
(ii) the first employment falls wholly or partly within the description of the second employment or the second employment falls wholly or partly within the description of the first employment.
(6) Regulations shall prescribe the cases in which employers are to be treated as connected for the purposes of this section.
(1) This section applies in any case where—
(a) a contracting-out certificate (“the first certificate”) has been surrendered by an employer or cancelled by the Board;
(b) a further contracting-out certificate (“the further certificate”) has been issued, after the surrender or cancellation of the first certificate but before the end of the period of 12 months beginning with the date of the surrender or cancellation, in respect of any employment which was specified by virtue of section 3(2)(a) in the first certificate; and
(c) the Board have formed the opinion that had they been aware of all the circumstances of the case at the time when the further certificate was issued they would have been prevented by section 31(3) from issuing it.
(2) This section applies whether or not the scheme specified in the first certificate in relation to the employment concerned is the same as the scheme specified in the further certificate.
(3) The Board may, before the end of the period of 12 months beginning with the date on which the further certificate was issued, cancel that certificate.
(4) Where a contracting-out certificate is cancelled under subsection (3) the provisions of this Act and of any regulations and orders made under it shall have effect as if the certificate had never been issued.
(5) Regulations may make such supplemental provision in relation to cases falling within this section as the Department considers necessary or expedient.
(6) Without prejudice to subsection (5), regulations may make provision, in relation to any case in which the Board have cancelled a contracting-out certificate under subsection (3), preventing the recovery by the employer concerned (whether by deduction from emoluments or otherwise) of such arrears which he is required to pay to the Department in respect of an earner’s liability under section 6(3) of the [1992 c. 7.] Social Security Contributions and Benefits (Northern Ireland) Act 1992 as may be prescribed.
(7) For the purposes of subsection (1)—
(a) an employment (“the second employment”) in respect of which a further contracting-out certificate of the kind referred to in subsection (1)(b) has been issued; and
(b) an employment (“the first employment”) which was specified by virtue of section 3(2)(a) in the first certificate,
shall be treated as one employment if, in the opinion of the Board—
(i) they are substantially the same, however described; or
(ii) the first employment falls wholly or partly within the description of the second employment or the second employment falls wholly or partly within the description of the first employment.
(1) Subject to subsection (2), where a contracting-out certificate has been issued, no alteration of the rules of the relevant scheme shall be made so as to affect any of the matters dealt with in this Part (other than sections 14, 15 and 39 to 41, and sections 22 to 29 so far as they apply to personal pension schemes) or Chapter III of Part IV or Chapter II of Part V without the consent of the Board.
(2) Subsection (1) does not apply—
(a) to an alteration consequential on a provision of the [S.I. 1984/1158 (N.I. 8).] Health and Social Security (Northern [S.I. 1985/1209 (N.I. 16).] Ireland) Order 1984, the Social Security (Northern Ireland) Order 1985 or the [S.I. 1986/1888 (N.I. 18).] Social Security (Northern Ireland) Order 1986 (or any provision of this Act derived from any such provision); or
(b) to an alteration of a prescribed description.
(3) Subject to subsection (4), any alteration to which subsection (1) applies shall be void if it is made without the consent of the Board.
(4) A consent given by the Board for the purposes of this section shall, if and to the extent that the Board so direct, operate so as to validate with retrospective effect any alteration of the rules which would otherwise be void under this section.
(5) This section shall continue in force in relation to a scheme after it has ceased to be contracted-out so long as—
(a) any person is entitled to receive, or has accrued rights to, a guaranteed minimum pension under the scheme, or
(b) any person has protected rights under it or is entitled to any benefit giving effect to protected rights under it.
(6) The reference in subsection (5) to a person entitled to receive a guaranteed minimum pension includes a reference to a person so entitled by virtue of being the widower of an earner only in such cases as may be prescribed.
(1) Where an appropriate scheme certificate has been issued, no alteration of the rules of the relevant scheme shall be made so as—
(a) to affect any of the matters dealt with in sections 22 to 29; or
(b) to cause the scheme to take a different permitted form from that previously taken,
unless—
(i) the Board have given their consent to the alteration; and
(ii) notice of intention to apply for their consent was given in accordance with the requirements mentioned in subsection (7) or was so given except in so far as the Board dispenses with the necessity for such a notice.
(2) Subsection (1) does not apply to an alteration of a prescribed description.
(3) Subject to subsection (4), any alteration to which subsection (1) applies shall be void if it is made without the conditions mentioned in subsection (1) being satisfied.
(4) A consent given by the Board for the purposes of this section shall, if and to the extent that the Board so direct, operate so as to validate with retrospective effect any alteration of the rules which would otherwise be void under this section.
(5) This section shall continue in force in relation to a scheme after it has ceased to be an appropriate scheme so long as any person has protected rights under the scheme.
(6) The reference in subsection (1)(b) to a permitted form is to one of the following forms, namely—
(a) an arrangement for the issue of insurance policies or annuity contracts;
(b) a unit trust scheme of a kind mentioned in Part I of Schedule 1 to the [S.R. (N.I.) 1988 No. 34.] Personal Pension Schemes (Appropriate Schemes) Regulations (Northern Ireland) 1988 which has been authorised under section 78(1) of or by virtue of paragraph 9 of Schedule 15 to the [1986 c. 60.] Financial Services Act 1986;
(c) an arrangement for the investment of contributions in an interest-bearing account (including shares in or deposits with a building society (within the meaning of the [1986 c. 53.] Building Societies Act 1986)).
(7) The requirements referred to in subsection (1)(ii) are—
(a) that the notice is given in writing—
(i) to any member of the scheme who has protected rights under it; and
(ii) to any earner who has given a notice under section 40(1) jointly with the managers or trustees of the scheme, being a notice which has not been cancelled,
by sending it to his last known address; and
(b) that the notice specifies—
(i) the name of the scheme,
(ii) the nature of the proposed alteration and its effect on the persons to whom the notice is given, and
(iii) the date on which it is proposed that the alteration should take effect (which must not be less than 3 months after that on which the notice is given).
Pension Schemes (Northern Ireland) Act 1993