Office of Public Sector Information
PART 2 continued CHAPTER 3 continued
(1) This section applies where there is an assessment period in relation to an eligible scheme.
(2) The Board may review a reviewable ill health pension in respect of a member if—
(a) disregarding section 141, the member would be entitled to compensation under paragraph 3 of Schedule 7 in respect of the pension if the Board assumed responsibility for the scheme,
(b) the member did not attain normal pension age in respect of the pension before the assessment date, and
(c) the pension is attributable to the member’s pensionable service.
(3) An ill health pension in respect of a member is reviewable for the purposes of subsection (2) if the member is entitled to the pension by reason of an award under the scheme rules (“the award”) which was made—
(a) in the period of three years ending immediately before the assessment date, or
(b) before the end of the prescribed period beginning with the assessment date, in response to an application made before that date.
(4) Where—
(a) before the assessment date, an application was made under the scheme for the award of a pension before normal pension age by virtue of any provision of the scheme rules making special provision as to early payment of pension on grounds of ill health, and
(b) the trustees or managers of the scheme failed to decide the application before the end of the period mentioned in subsection (3)(b),
section 10 of the Pensions Act 1995 (c. 26) (civil penalties) applies to any trustee or manager who has failed to take all reasonable steps to secure that the application was decided before the end of that period.
(5) Where—
(a) the award was made in response to an application which—
(i) was made on or after the assessment date, or
(ii) was made before that date but not decided by the trustees or managers of the scheme before the end of the period mentioned in subsection (3)(b), and
(b) in the absence of this subsection, the award would take effect before the assessment date,
the award is, for the purposes of determining the compensation payable under this Chapter in a case where the Board assumes responsibility for the scheme, to be treated as taking effect after the date on which the decision to make the award was made.
(6) Regulations must prescribe the procedure to be followed in relation to the review of a pension under this section and any subsequent decision under section 141.
(1) This section applies where, during an assessment period in relation to an eligible scheme, the Board reviews an ill health pension by virtue of section 140.
(2) Where the conditions of subsection (3) are satisfied, the Board may determine that the compensation payable in respect of the pension, in a case where the Board assumes responsibility for the scheme, is to be determined in the prescribed manner on and after the relevant date.
(3) The conditions are—
(a) that the annual rate of compensation which would be payable under this Part in respect of the pension at the assessment date, if the Board assumed responsibility for the scheme, exceeds the notional reviewed rate of compensation in respect of the pension,
(b) that the Board is satisfied—
(i) that the decision to make the award was made in ignorance of, or was based upon a mistake as to, a material fact relevant to the decision,
(ii) that, at the time that decision was made, the member knew or could reasonably have been expected to know of that fact and that it was relevant to the decision, and
(iii) that, had the trustees or managers known about, or not been mistaken as to, that fact, they could not reasonably have decided to make the award, and
(c) that the Board is not satisfied that the criteria in the admissible rules governing entitlement to early payment of pension on grounds of ill health were satisfied in respect of the member at any time after that decision but before the assessment date.
(4) For the purposes of subsection (2) “the relevant date” means the date during the assessment period on which a scheme valuation in relation to the scheme becomes binding.
(5) The power to make a decision in respect of the pension under subsection (2) may only be exercised at a time which falls—
(a) during the assessment period but before the time the Board first approves a scheme valuation under section 144 in relation to the scheme, and
(b) within a reasonable period beginning with the assessment date or, where the decision to make the award was made at a later date, that date.
(6) Regulations made for the purposes of subsection (2) may, in particular, include provision applying any provision of Schedule 7 with such modifications as may be prescribed.
(1) For the purposes of sections 140 and 141—
“admissible rules” is to be construed in accordance with Schedule 7;
“assessment date” means the date on which the assessment period begins;
“ill health pension”, in relation to a scheme, means a pension which, immediately before the assessment date, is a pension to which a person is entitled under the admissible rules in circumstances where that entitlement arose before normal pension age by virtue of any provision of the admissible rules making special provision as to early payment of pension on grounds of ill health;
“normal pension age”, in relation to a scheme and any pension under it, means the age specified in the admissible rules as the earliest age at which the pension becomes payable without actuarial adjustment (disregarding any admissible rule making special provision as to early payment on the grounds of ill health) and sub-paragraphs (2) and (3) of paragraph 34 of Schedule 7 apply in relation to this section as they apply in relation to that Schedule;
“notional reviewed rate of compensation”, in respect of an ill health pension, means—
the annual rate of compensation which would be payable in respect of the pension at the assessment date, if the Board assumed responsibility for the scheme and the compensation so payable at that date was determined in accordance with regulations under section 141(2), or
if no such compensation would have been so payable at that date, nil;
“pensionable service” is to be construed in accordance with Schedule 7;
“scheme valuation”, in relation to a scheme, means a valuation under section 143 of the assets and protected liabilities of the scheme as at the time immediately before the assessment period begins.
(2) For the purposes of section 140(4)—
(a) the definition of “normal pension age” in subsection (1), and
(b) sub-paragraphs (2) and (3) of paragraph 34 of Schedule 7 as they apply by virtue of that definition,
have effect as if the references in those provisions to the admissible rules were references to the scheme rules.
(3) Paragraph 37(4) of Schedule 7 (references to “ill health” to be construed in accordance with regulations) applies in relation to sections 140 and 141 and this section as if, in that provision, the reference to that Schedule included a reference to those sections and this section.
(4) In those sections references to the Board assuming responsibility for the scheme are to the Board assuming responsibility for the scheme in accordance with this Chapter at the time the assessment period in question comes to an end.
(1) This section applies in a case within subsection (1) of section 127 or 128.
(2) For the purposes of determining whether the condition in subsection (2)(a) of the section in question is satisfied, the Board must, as soon as reasonably practicable, obtain an actuarial valuation of the scheme as at the relevant time.
(3) For those purposes, regulations may provide that any of the following are to be regarded as assets or protected liabilities of the scheme at the relevant time if prescribed requirements are met—
(a) a debt due to the trustees or managers of the scheme by virtue of a contribution notice issued under section 38, 47 or 55 during the pre-approval period;
(b) an obligation arising under financial support for the scheme (within the meaning of section 45) put in place during the pre-approval period in accordance with a financial support direction issued under section 43;
(c) an obligation imposed by a restoration order made under section 52 during the pre-approval period in respect of a transaction involving assets of the scheme.
(4) For the purposes of this section, regulations may prescribe how—
(a) the assets and the protected liabilities of eligible schemes, and
(b) their amount or value,
are to be determined, calculated and verified.
(5) Regulations under subsection (4) may provide, in particular, that when calculating the amount or value of assets or protected liabilities of an eligible scheme at the relevant time which consist of any of the following—
(a) a debt (including any contingent debt) due to the trustees or managers of the scheme from the employer under section 75 of the Pensions Act 1995 (c. 26) (deficiencies in the scheme assets),
(b) a debt due to the trustees or managers of the scheme by virtue of a contribution notice issued under section 38, 47 or 55,
(c) an obligation arising under financial support for the scheme (within the meaning of section 45) put in place in accordance with a financial support direction issued under section 43, or
(d) an obligation imposed by a restoration order made under section 52 in respect of a transaction involving assets of the scheme,
account must be taken in the prescribed manner of prescribed events which occur during the pre-approval period.
(6) Subject to any provision made under subsection (4), the matters mentioned in paragraphs (a) and (b) of that subsection are to be determined, calculated and verified in accordance with guidance issued by the Board.
(7) In calculating the amount of any liabilities for the purposes of this section, a provision of the scheme rules which limits the amount of the scheme’s liabilities by reference to the value of its assets is to be disregarded.
(8) The duty imposed by subsection (2) ceases to apply if and when the Board ceases to be involved with the scheme.
(9) Nothing in subsection (2) requires the actuarial valuation to be obtained during any period when the Board considers that an event may occur which, by virtue of regulations under subsection (3) or (4), may affect the value of the assets or the amount of the protected liabilities of the scheme for the purposes of the valuation.
(10) In a case where there are one or more reviewable ill health pensions (within the meaning of section 140), nothing in subsection (2) requires the actuarial valuation to be obtained during the period mentioned in section 141(5)(b) (period during which Board may exercise its power to make a decision following a review) relating to any such pension.
(11) For the purposes of this section—
(a) “actuarial valuation”, in relation to the scheme, means a written valuation of the assets and protected liabilities of the scheme which—
(i) is in the prescribed form and contains the prescribed information, and
(ii) is prepared and signed by—
(a) a person with prescribed qualifications or experience, or
(b) a person approved by the Secretary of State,
(b) “the pre-approval period”, in relation to the scheme, means the period which—
(i) begins immediately after the relevant time, and
(ii) ends immediately before the time the Board first approves a valuation of the scheme under section 144 after the relevant time,
(c) “the relevant time”—
(i) in a case within subsection (1) of section 127, has the meaning given in subsection (4)(b) of that section, and
(ii) in a case within subsection (1) of section 128, has the meaning given in subsection (3)(b) of that section, and
(d) references to “assets” do not include assets representing the value of any rights in respect of money purchase benefits under the scheme rules.
(1) This section applies where the Board obtains a valuation in respect of a scheme under section 143.
(2) Where the Board is satisfied that the valuation has been prepared in accordance with that section, it must—
(a) approve the valuation, and
(b) give a copy of the valuation to—
(i) the Regulator,
(ii) the trustees or managers of the scheme, and
(iii) any insolvency practitioner in relation to the employer or, if there is no such insolvency practitioner, the employer.
(3) Where the Board is not so satisfied, it must obtain another valuation under that section.
(1) For the purposes of this Chapter a valuation obtained under section 143 is not binding until—
(a) it is approved under section 144,
(b) the period within which the approval may be reviewed by virtue of Chapter 6 has expired, and
(c) if the approval is so reviewed—
(i) the review and any reconsideration,
(ii) any reference to the PPF Ombudsman in respect of the approval, and
(iii) any appeal against his determination or directions,
has been finally disposed of.
(2) For the purposes of determining whether or not the condition in section 127(2)(a) or, as the case may be, section 128(2)(a) (condition that scheme assets are less than protected liabilities) is satisfied in relation to a scheme, a binding valuation is conclusive.
This subsection is subject to section 172(3) and (4) (treatment of fraud compensation payments).
(3) Where a valuation becomes binding under this section the Board must as soon as reasonably practicable give a notice to that effect together with a copy of the binding valuation to—
(a) the Regulator,
(b) the trustees or managers of the scheme, and
(c) any insolvency practitioner in relation to the employer or, if there is no such insolvency practitioner, the employer.
(4) A notice under subsection (3) must be in the prescribed form and contain the prescribed information.
(1) Regulations may provide that where the Board is satisfied that an eligible scheme was not such a scheme throughout such period as may be prescribed, the Board must refuse to assume responsibility for the scheme under this Chapter.
(2) Where, by virtue of subsection (1), the Board is required to refuse to assume responsibility for a scheme, it—
(a) must issue a notice to that effect (a “withdrawal notice”), and
(b) give a copy of that notice to—
(i) the Regulator,
(ii) the trustees or managers of the scheme, and
(iii) any insolvency practitioner in relation to the employer or, if there is no such insolvency practitioner, the employer.
(3) For the purposes of this Part a withdrawal notice issued by virtue of this section is not binding until—
(a) the period within which the issue of the notice may be reviewed by virtue of Chapter 6 has expired, and
(b) if the issue of the notice is so reviewed—
(i) the review and any reconsideration,
(ii) any reference to the PPF Ombudsman in respect of the issue of the notice, and
(iii) any appeal against his determination or directions,
has been finally disposed of and the notice has not been revoked, varied or substituted.
(4) Where a withdrawal notice issued by virtue of this section becomes binding, the Board must as soon as reasonably practicable give a notice to that effect together with a copy of the binding notice to—
(a) the Regulator,
(b) the trustees or managers of the scheme, and
(c) any insolvency practitioner in relation to the employer or, if there is no such insolvency practitioner, the employer.
(5) Notices under this section must be in the prescribed form and contain such information as may be prescribed.
(6) A notice given under subsection (4) must state the time from which the Board ceases to be involved with the scheme (see section 149).
(1) The Board must refuse to assume responsibility for a scheme (“the new scheme”) under this Chapter where it is satisfied that—
(a) the new scheme was established during such period as may be prescribed,
(b) the employer in relation to the new scheme was, at the date of establishment of that scheme, also the employer in relation to a scheme established before the new scheme (the “old scheme”),
(c) a transfer or transfers of, or a transfer payment or transfer payments in respect of, any rights of members under the old scheme has or have been made to the new scheme, and
(d) the main purpose or one of the main purposes of establishing the new scheme and making the transfer or transfers, or transfer payment or transfer payments, was to enable those members to receive compensation under the pension compensation provisions in respect of their rights under the new scheme in circumstances where, in the absence of the transfer or transfers, regulations under section 146 would have operated to prevent such payments in respect of their rights under the old scheme.
(2) Where, under subsection (1), the Board is required to refuse to assume responsibility for a scheme, it—
(a) must issue a notice to that effect (a “withdrawal notice”), and
(b) give a copy of that notice to—
(i) the Regulator,
(ii) the trustees or managers of the scheme, and
(iii) any insolvency practitioner in relation to the employer or, if there is no such insolvency practitioner, the employer.
(3) For the purposes of this Part a withdrawal notice issued under this section is not binding until—
(a) the period within which the issue of the notice may be reviewed by virtue of Chapter 6 has expired, and
(b) if the issue of the notice is so reviewed—
(i) the review and any reconsideration,
(ii) any reference to the PPF Ombudsman in respect of the issue of the notice, and
(iii) any appeal against his determination or directions,
has been finally disposed of and the notice has not been revoked, varied or substituted.
(4) Where a withdrawal notice issued under this section becomes binding, the Board must as soon as reasonably practicable give a notice to that effect together with a copy of the binding notice to—
(a) the Regulator,
(b) the trustees or managers of the scheme, and
(c) any insolvency practitioner in relation to the employer or, if there is no such insolvency practitioner, the employer.
(5) Notices under this section must be in the prescribed form and contain such information as may be prescribed.
(6) A notice given under subsection (4) must state the time from which the Board ceases to be involved with the scheme (see section 149).
(1) This section applies where—
(a) a notice under section 122(4) (inability to confirm status of scheme) is issued in relation to an eligible scheme and becomes binding, and
(b) a withdrawal event has not occurred in relation to the scheme in respect of a withdrawal notice which has been issued during the period—
(i) beginning with the occurrence of the last insolvency event in relation to the employer, and
(ii) ending immediately before the notice under section 122(4) becomes binding,
and the occurrence of such a withdrawal event in respect of a withdrawal notice issued during that period is not a possibility (see section 149).
(2) The Board must determine whether any insolvency event—
(a) has occurred in relation to the employer since the issue of the notice under section 122(4), or
(b) is likely to so occur before the end of the period of six months beginning with the date on which this section applies.
(3) If the Board determines under subsection (2) that no insolvency event has occurred or is likely to occur as mentioned in that subsection, it must issue a notice to that effect (a “withdrawal notice”).
(4) Where—
(a) no withdrawal notice is issued under subsection (3) before the end of the period mentioned in subsection (2)(b), and
(b) no further insolvency event occurs in relation to the employer during that period,
the Board must issue a notice to that effect (a “withdrawal notice”).
(5) Where the Board is required to issue a withdrawal notice under this section, it must give a copy of the notice to—
(a) the Regulator,
(b) the trustees or managers of the scheme, and
(c) the employer.
(6) For the purposes of this Part, a withdrawal notice issued under this section is not binding until—
(a) the period within which the issue of the notice may be reviewed by virtue of Chapter 6 has expired, and
(b) if the issue of the notice is so reviewed—
(i) the review and any reconsideration,
(ii) any reference to the PPF Ombudsman in respect of the issue of the notice, and
(iii) any appeal against his determination or directions,
has been finally disposed of and the notice has not been revoked, varied or substituted.
(7) Where a withdrawal notice issued under this section becomes binding, the Board must as soon as reasonably practicable give a notice to that effect together with a copy of the binding notice to—
(a) the Regulator,
(b) the trustees or managers of the scheme, and
(c) the employer.
(8) Notices under this section must be in the prescribed form and contain such information as may be prescribed.
(9) A notice given under subsection (7) must state the time from which the Board ceases to be involved with the scheme (see section 149).
(1) Where an assessment period begins in relation to an eligible scheme, the Board ceases to be involved with the scheme, for the purposes of this Part, on the occurrence of the first withdrawal event after the beginning of that period.
(2) For this purpose the following are withdrawal events in relation to a scheme—
(a) a withdrawal notice issued under section 122(2)(b) (scheme rescue has occurred) becoming binding;
(b) a withdrawal notice issued under section 130(3) (scheme rescue has occurred) becoming binding;
(c) a withdrawal notice issued under or by virtue of section 146 or 147 (refusal to assume responsibility) becoming binding;
(d) a withdrawal notice issued under section 148 (no insolvency event has occurred or is likely to occur) becoming binding;
and references in this Chapter to a “withdrawal event” are to be construed accordingly.
(3) Subsection (4) applies where a withdrawal notice mentioned in subsection (2) is issued in relation to a scheme and becomes binding and—
(a) an insolvency event in relation to the employer occurs during the interim period and, if subsection (4) did not apply, the event would not be a qualifying insolvency event within the meaning given by subsection (3) of section 127 solely because the condition in sub-paragraph (ii) of paragraph (b) of that subsection would not be satisfied, or
(b) an application under section 129(1) is made, or a notification under section 129(5)(a) is given, in relation to the scheme during the interim period and, if subsection (4) did not apply, the application or notification would be disregarded for the purposes of—
(i) subsection (1) of section 128 by virtue of subsection (4) of that section, and
(ii) subsection (4) of section 132 by virtue of subsection (5) of that section.
(4) In such a case, the withdrawal notice is to be treated for the purposes of subsections (1) and (2), as if the time when it became binding was the time immediately before—
(a) in a case falling within subsection (3)(a), the occurrence of the insolvency event, and
(b) in a case falling within subsection (3)(b), the making of the application under section 129(1) or, as the case may be, the giving of the notification under section 129(5)(a).
(5) For the purposes of subsection (3), the “interim period” in relation to a scheme means the period beginning with the issuing of the withdrawal notice in relation to the scheme and ending with that notice becoming binding.
(6) For the purposes of this Chapter—
(a) the occurrence of a withdrawal event in relation to a scheme in respect of a withdrawal notice issued during a particular period (“the specified period”) is a possibility until each of the following are no longer reviewable—
(i) any withdrawal notice which has been issued in relation to the scheme during the specified period,
(ii) any failure to issue such a withdrawal notice during the specified period,
(iii) any notice which has been issued by the Board under Chapter 2 or this Chapter which is relevant to the issue of a withdrawal notice in relation to the scheme during the specified period or to such a withdrawal notice which has been issued during that period becoming binding,
(iv) any failure to issue such a notice as is mentioned in sub-paragraph (iii), and
(b) the issue of, or failure to issue, a notice is to be regarded as reviewable—
(i) during the period within which it may be reviewed by virtue of Chapter 6, and
(ii) if the matter is so reviewed, until—
(a) the review and any reconsideration,
(b) any reference to the PPF Ombudsman in respect of the matter, and
(c) any appeal against his determination or directions,
has been finally disposed of.
(1) Where—
(a) an assessment period comes to an end by virtue of the Board ceasing to be involved with an eligible scheme, and
(b) during the assessment period any amount of any benefit payable to a member, or to a person in respect of a member, under the scheme rules was not paid by reason of section 138 (requirement to pay benefits in accordance with the pension compensation provisions),
that amount falls due to the member, or as the case may be, person at the end of that period.
(2) Where the winding up of the scheme began before the end of the assessment period (whether by virtue of section 219 (backdating the winding up of eligible schemes) or otherwise), the reference in subsection (1)(b) to the amount of any benefit payable to a member, or to a person in respect of a member, under the scheme rules is a reference to the amount so payable taking account of any reduction required by virtue of sections 73 to 73B of the Pensions Act 1995 (c. 26) (provisions relating to the winding up of certain schemes).
(3) Where—
(a) an assessment period comes to an end by virtue of the Board ceasing to be involved with an eligible scheme, and
(b) during the assessment period the amount of benefit paid to a member, or to a person in respect of a member, under the scheme rules exceeded the amount that would have been payable in the absence of section 138(6) (requirement to disregard winding up when paying benefits during assessment period),
the trustees or managers of the scheme must, at the end of that period, take such steps as they consider appropriate (including steps to adjust future payments under the scheme rules) to recover an amount equal to the excess from the person to whom it was paid.
(4) Subsections (1) to (3) are without prejudice to section 73A(2)(b) of the Pensions Act 1995 (c. 26) (requirement to adjust benefits paid to reflect liabilities which can be met on winding up).
(5) Regulations may provide that, in cases within paragraph (a) of subsection (1), benefits are to accrue under the scheme rules, in such circumstances as may be prescribed, to or in respect of members of the scheme in respect of any specified period of service being service in employment which, but for section 133(5), would have qualified the member in question for those benefits under the scheme rules.
(6) Regulations under subsection (5) may in particular make provision—
(a) for benefits not to accrue to, or in respect of, a member unless contributions are paid by or on behalf of the member towards the scheme within a prescribed period;
(b) for contributions towards the scheme which, but for section 133, would have been payable by or on behalf of the employer (otherwise than on behalf of an employee) during the assessment period, to fall due;
(c) requiring that such contributions as are mentioned in paragraph (a) or (b) are accepted for the assessment period or any part of that period;
(d) modifying section 31 of the Welfare Reform and Pensions Act 1999 (c. 30) (reduction of benefit where a person’s shareable rights are subject to a pension debit), in its application in relation to cases where benefits accrue under the scheme by virtue of regulations under subsection (5).
(7) In this section “contributions” means, in relation to an eligible scheme, contributions payable towards the scheme by or on behalf of the employer or the active members of the scheme in accordance with the schedule of contributions maintained under section 227 in respect of the scheme.
Pensions Act 2004