Office of Public Sector Information
PART 5 continued
(1) References in the subsisting rights provisions to the actuarial equivalence requirements, in respect of a detrimental modification which is not a protected modification, are to be read in accordance with this section and section 67D.
(2) The actuarial equivalence requirements apply in the case of an affected member only if—
(a) the modification is not a protected modification, and
(b) the trustees of the scheme determine that they are to apply in his case.
(3) The actuarial equivalence requirements consist of—
(a) the information requirement (see subsection (4)),
(b) the actuarial value requirement (see subsection (5)), and
(c) the actuarial equivalence statement requirement (see subsection (6)).
(4) The information requirement is satisfied in the case of an affected member if before the modification is made the trustees have taken all reasonable steps to—
(a) give him information in writing adequate to explain the nature of the modification and its effect on him,
(b) notify him in writing that he may make representations to the trustees about the modification,
(c) afford him a reasonable opportunity to make such representations, and
(d) notify him in writing that the actuarial equivalence requirements apply in his case in respect of the modification.
(5) The actuarial value requirement is satisfied in the case of an affected member if before the modification is made the trustees have made such arrangements, or taken such steps, as are adequate to secure that actuarial value will be maintained.
(6) The actuarial equivalence statement requirement is satisfied in the case of an affected member if the trustees have, within a reasonable period beginning with the date on which the modification takes effect, obtained an actuarial equivalence statement relating to the affected member in respect of the modification.
(7) For the purposes of subsection (6) “actuarial equivalence statement” means a statement in writing which—
(a) is given by—
(i) the actuary appointed in relation to the scheme under section 47(1)(b), or
(ii) a person with prescribed qualifications or experience or who is approved by the Secretary of State, and
(b) certifies that actuarial value has been maintained.
(8) For the purposes of subsections (5) and (7) as they apply in relation to an affected member, actuarial value is maintained if the actuarial value, immediately after the time at which the modification takes effect, of the affected member’s subsisting rights is equal to or greater than the actuarial value of his subsisting rights immediately before that time.
(1) This section applies for the purposes of section 67C.
(2) Where—
(a) the information requirement has been satisfied in the case of an affected member in respect of a proposed modification (“the original modification”),
(b) before the trustees have made a determination, or given their consent, for the purposes of section 67E(1) in relation to the original modification, the original modification has been revised, and
(c) the modification as so revised (“the revised modification”) does not differ from the original modification in any material respect,
the information requirement is to be taken to have been satisfied in relation to the revised modification.
(3) The trustees are to be regarded as having taken all reasonable steps to notify an affected member as mentioned in section 67C(4)(d) in respect of a modification if they have taken all reasonable steps to notify him in writing that—
(a) if he gives his consent to the modification for the purposes of the consent requirements, those requirements apply in his case in respect of the modification, but
(b) otherwise, the actuarial equivalence requirements apply in his case in respect of the modification.
(4) Any calculation for the purposes of section 67C of the actuarial value of an affected member’s subsisting rights at any time must conform with such requirements as may be prescribed.
(5) Requirements prescribed by regulations under subsection (4) may include requirements for any such calculation to be made in accordance with guidance that—
(a) is prepared and from time to time revised by a prescribed body, and
(b) if the regulations so provide, is approved by the Secretary of State.
(6) Nothing in subsections (6) and (7) of section 67C precludes actuarial equivalence statements relating to—
(a) two or more affected members, or
(b) affected members of any particular description,
in respect of a modification being given in a single document.
(1) For the purposes of section 67(2)(b), the trustee approval requirement is satisfied in relation to the exercise of a power to make a regulated modification if—
(a) the trustees of the scheme have determined to exercise the power to make the modification, or
(b) if the power is exercised by another person, the trustees have consented to the exercise of the power to make the modification,
and the making of the determination, or giving of consent, complies with subsections (2) and (3).
(2) The trustees must not make a determination, or give their consent, for the purposes of subsection (1) unless, in the case of each affected member—
(a) if the modification is a protected modification, the informed consent requirement is satisfied (within the meaning of section 67B), or
(b) if it is not a protected modification—
(i) the informed consent requirement is satisfied, or
(ii) the information and actuarial value requirements are satisfied (within the meaning of section 67C),
in respect of the modification.
(3) The trustees must not make a determination, or give their consent, for the purposes of subsection (1) more than a reasonable period after the first consent given by an affected member under section 67B(4)(b) in respect of the modification was given.
(1) For the purposes of section 67(2)(c), the reporting requirement is satisfied in relation to the exercise of a power to which the subsisting rights provisions apply to make a regulated modification if the trustees have, in accordance with subsection (2)—
(a) notified each affected member in whose case the consent requirements apply in respect of the modification, and
(b) taken all reasonable steps to notify each affected member in whose case the actuarial equivalence requirements apply in respect of the modification,
that they have made a determination, or given their consent, for the purposes of section 67E(1) in relation to the exercise of the power to make the modification.
(2) The trustees must give (or, where the actuarial equivalence requirements apply, take all reasonable steps to give) the notification—
(a) within a reasonable period beginning with the date of the determination or giving of consent mentioned in subsection (1), and
(b) before the date on which the modification takes effect.
(1) Subsection (2) applies in relation to a regulated modification made in exercise of a power to which the subsisting rights provisions apply which is voidable by virtue of—
(a) section 67(2), or
(b) section 67H(3).
(2) The Authority may make an order declaring that subsection (6) applies in relation to the regulated modification.
(3) An order under subsection (2) relating to a regulated modification may also declare that subsection (6) applies in relation to—
(a) any other modification of the scheme made by the exercise of the power mentioned in subsection (1), or
(b) the grant of any rights under the scheme (whether by virtue of the attribution of notional periods as pensionable service or otherwise) in connection with the regulated modification.
(4) An order under subsection (2) relating to a regulated modification must specify the affected member or affected members or description of affected members in respect of whom subsection (6) applies (“the specified persons”).
(5) An order under subsection (2) relating to a regulated modification may also—
(a) require the trustees to take, within the time specified in the order, such steps as are so specified for the purpose of giving effect to the order;
(b) declare that subsection (7) applies in relation to anything done by the trustees after the time at which the modification would, disregarding the order, have taken effect which—
(i) would not have contravened any provision of the scheme rules if the modification had taken effect at that time, but
(ii) as a result of the modification being void to any extent by virtue of the order, would (but for that subsection) contravene such a provision.
This is without prejudice to section 174(3).
(6) Where the Authority make an order declaring that this subsection applies in relation to a modification of a scheme, or the grant of any rights under the scheme, the modification or grant is void to the extent specified in the order, and in respect of the specified persons, as from the time when it would, disregarding the order, have taken effect.
(7) Where, by virtue of subsection (5)(b), the Authority make an order under subsection (2) declaring that this subsection applies in relation to anything done by the trustees, that thing is to be taken, for such purposes as are specified in the order, not to have contravened any provision of the trust deed or scheme rules.
(8) An order under subsection (2) relating to a regulated modification, or other modification, of a scheme or the grant of any rights under the scheme may be made before or after the time at which the modification or grant would, disregarding the order, have taken effect.
(1) Subsection (2) applies where the Authority have reasonable grounds to believe that a power to which the subsisting rights provisions apply—
(a) will be exercised, or
(b) has been exercised,
to make a regulated modification in circumstances where the modification will be voidable by virtue of section 67(2).
(2) The Authority may by order—
(a) in a case within subsection (1)(a), direct the person on whom the power is conferred not to exercise the power to make the regulated modification;
(b) require the trustees to take, within the time specified in the order, such steps as are so specified for the purpose of securing that any of the requirements mentioned in section 67(2) is satisfied.
(3) A regulated modification made in exercise of a power to which the subsisting rights provisions apply is voidable in accordance with section 67G if—
(a) the exercise of the power contravened an order under paragraph (a) of subsection (2), or
(b) the trustees fail to comply with a requirement imposed by an order under paragraph (b) of that subsection relating to any exercise of the power to make the modification.
(1) Subsections (2) and (3) apply where a regulated modification is voidable by virtue of section 67(2).
(2) Where the modification was made by the exercise of a power—
(a) by the trustees of the scheme, or
(b) by any other person in circumstances which do not fall within subsection (3),
section 10 applies to any trustee who has failed to take all reasonable steps to secure that the modification is not so voidable.
(3) Section 10 applies to any person other than the trustees of the scheme who, without reasonable excuse, exercises a power to make the modification if—
(a) the trustees have not given their consent, for the purposes of section 67E(1), to the exercise of the power to make the modification, or
(b) in the case of any affected member, the timing requirement is not satisfied (within the meaning of section 67B) in respect of the modification.
(4) Where the trustees fail to comply with any requirement imposed, by virtue of subsection (5)(a) of section 67G, by an order under subsection (2) of that section, section 10 applies to any trustee who has failed to take all reasonable steps to secure such compliance.
(5) Where a regulated modification is made by the exercise of a power in contravention of an order under section 67H(2)(a)—
(a) if the power is exercised by the trustees, section 10 applies to any trustee who has failed to take all reasonable steps to secure that the order was not contravened;
(b) section 10 applies to any other person who without reasonable excuse exercises the power in contravention of the order.
(6) Where the trustees fail to comply with any requirement specified in an order under section 67H(2)(b), section 10 applies to any trustee who has failed to take all reasonable steps to secure such compliance.”
(1) In section 71 of the Pension Schemes Act 1993 (c. 48) (basic principle as to short service benefit), for subsection (3) substitute—
“(3) Subject to subsection (4), short service benefit must be made payable as from an age which is no greater than—
(a) the age of 65, or
(b) if in the member’s case normal pension age is greater than 65, normal pension age.”
(2) In section 72 of that Act (no discrimination between short service and long service beneficiaries), at the end add—
“(4) This section is subject to subsections (3) and (6) of section 71 (age at which short service benefit is to be payable).”
After section 101 of the Pension Schemes Act 1993 insert—
(1) This Chapter applies to any member of an occupational pension scheme to which Chapter 1 applies (see section 69(3)) if—
(a) his pensionable service terminates before he attains normal pension age, and
(b) on the date on which his pensionable service terminates—
(i) the three month condition is satisfied, but
(ii) he does not have relevant accrued rights to benefit under the scheme.
(2) For the purposes of subsection (1), the three month condition is that the period of the member’s pensionable service under the scheme, taken together with—
(a) any previous period of his pensionable service under the scheme, and
(b) any period throughout which he was employed in linked qualifying service under another scheme,
amounts to at least three months.
(3) A period counts for the purposes of paragraph (a) or (b) of subsection (2) only so far as it counts towards qualification for long service benefit within the meaning of Chapter 1.
(4) For the purposes of subsection (1), “relevant accrued rights to benefit under the scheme”, in relation to a member of a scheme, means rights which—
(a) have accrued to or in respect of him under the scheme, and
(b) entitle him to the relevant benefits which would have accrued to or in respect of him under the applicable rules if paragraphs (a) and (b) of section 71(1) (and the word “and” immediately preceding them) did not have effect.
(5) References in the following provisions of this Chapter to a member, in relation to an occupational pension scheme, are to a member of the scheme to whom this Chapter applies.
(1) On the termination of his pensionable service, a member of an occupational pension scheme acquires a right to whichever one he elects of the following options—
(a) a cash transfer sum;
(b) a contribution refund.
(2) Subsection (1) is subject to the following provisions of this Chapter.
(3) In this Chapter “cash transfer sum” means, in relation to a member of an occupational pension scheme, the cash equivalent, at the date on which his pensionable service terminates, of the benefits mentioned in section 101AA(4)(b).
(4) In this Chapter, “contribution refund” means, in relation to a member of an occupational pension scheme, a sum representing the aggregate of—
(a) the member’s employee contributions to the scheme, and
(b) where transfer credits have been allowed to the member under the scheme by virtue of a payment (“the transfer payment”) made by the trustees or managers of another occupational pension scheme, the member’s employee contributions to that other scheme, so far as they—
(i) relate to the transfer payment, and
(ii) do not, in aggregate, exceed the amount of the transfer payment.
(5) In subsection (4), “employee contributions” means, in relation to a member of an occupational pension scheme, contributions made to the scheme by or on behalf of the member on his own account, but does not include—
(a) a transfer payment by virtue of which transfer credits have been allowed to the member under the scheme, or
(b) any pension credit or amount paid to the scheme which is attributable (directly or indirectly) to a pension credit.
(1) This section applies where the pensionable service of a member of an occupational pension scheme has terminated.
(2) The trustees or managers of the scheme must—
(a) within a reasonable period after the termination give the member a statement in writing containing information adequate to explain—
(i) the nature of the right acquired by him under section 101AB, and
(ii) how he may exercise the right,
and such other information as may be prescribed, and
(b) afford the member a reasonable period after giving him that statement within which to exercise the right.
(3) The statement given under subsection (2)(a) must specify, in particular—
(a) in relation to the cash transfer sum to which the member acquires a right under section 101AB, its amount and the permitted ways in which the member can use it,
(b) the amount of the contribution refund to which the member so acquires a right, and
(c) the last day on which the member may, disregarding section 101AI(2), exercise the right (“the reply date”).
(4) Information which may be prescribed under subsection (2)(a) includes, in particular—
(a) information about any tax liability in respect of, or deduction required or permitted to be made from, the cash transfer sum or contribution refund, and
(b) information about the effect on other rights of the member (whether under the applicable rules or otherwise) of exercising the right.
(5) The trustees or managers may notify the member that, if he does not exercise the right mentioned in subsection (2)(a)(i) on or before the reply date, the trustees or managers will be entitled to pay the contribution refund to him.
(6) Where the trustees or managers of the scheme fail to comply with subsection (2), section 10 of the Pensions Act 1995 (civil penalties) applies to any trustee or manager who has failed to take all reasonable steps to secure compliance.
(1) This section applies where a member of an occupational pension scheme acquires a right under section 101AB.
(2) The member may exercise the right by giving a notice in writing to that effect to the trustees or managers stating—
(a) which of the options under section 101AB(1) he elects, and
(b) if he elects for the cash transfer sum, the permitted way in which he requires that sum to be used.
(3) The notice under subsection (2) must be given on or before—
(a) the reply date, or
(b) such later date as the trustees or managers may allow in his case under section 101AI(2).
(1) This section applies in relation to a cash transfer sum to which a member of an occupational pension scheme acquires a right under section 101AB.
(2) The ways in which the cash transfer sum may be used are—
(a) for acquiring transfer credits allowed under the rules of another occupational pension scheme—
(i) whose trustees or managers are able and willing to accept the cash transfer sum, and
(ii) which satisfies prescribed requirements,
(b) for acquiring rights allowed under the rules of a personal pension scheme—
(i) whose trustees or managers are able and willing to accept the cash transfer sum, and
(ii) which satisfies prescribed requirements,
(c) for purchasing one or more appropriate annuities,
(d) in such circumstances as may be prescribed, for subscribing to other pension arrangements which satisfy prescribed requirements.
(3) For the purposes of subsection (2), “appropriate annuity” means an annuity which satisfies prescribed requirements and is purchased from an insurer who—
(a) falls within section 19(4)(a),
(b) is chosen by the member, and
(c) is willing to accept payment on account of the member from the trustees or managers of the scheme.
(1) Cash transfer sums are to be calculated and verified in the prescribed manner.
(2) Any calculation of a contribution refund must conform with such requirements as may be prescribed.
(3) Regulations may provide—
(a) for amounts to be deducted in respect of administrative costs in calculating cash transfer sums;
(b) for a cash transfer sum or contribution refund to be increased or reduced in prescribed circumstances.
(4) The circumstances that may be prescribed under subsection (3)(b) include in particular—
(a) a failure by the trustees or managers of the scheme to comply with section 101AG(2) or (4) in relation to the cash transfer sum or contribution refund, and
(b) the state of funding of the scheme.
(5) Regulations under subsection (3)(b) may provide—
(a) for a cash transfer sum to be reduced so that the member has no right to have any amount paid by way of cash transfer sum in respect of him;
(b) for a contribution refund to be reduced so that the member has no right to receive any amount by way of contribution refund under this Chapter.
(1) This section applies where a member of an occupational pension scheme has exercised a right under section 101AB in accordance with section 101AD.
(2) Where the member has elected for the cash transfer sum, the trustees or managers of the scheme must, within a reasonable period beginning with the date on which the right was exercised, do what is needed to carry out the requirement specified in the member’s notice under section 101AD(2)(b).
(3) When the trustees or managers have done what is needed to carry out that requirement, they are discharged from any obligation—
(a) in respect of any rights (including conditional rights) of, or in respect of, the member to relevant benefits under the applicable rules, and
(b) to make any other payment by way of refund to or in respect of the member of, or in respect of—
(i) the contributions, or any payment, mentioned in section 101AB(4), or
(ii) any other contributions made to the scheme, or any other scheme, in respect of the member (other than any pension credit or amount attributable (directly or indirectly) to a pension credit).
(4) Where the member has elected for the contribution refund, the trustees or managers of the scheme must, within a reasonable period beginning with the date on which the right was exercised, do what is needed to secure that the amount of the contribution refund is paid to the member or as he directs.
(5) When the trustees or managers have done what is needed to secure the payment of the contribution refund as mentioned in subsection (4)—
(a) they are discharged from any obligation in respect of any rights (including conditional rights) of, or in respect of, the member to relevant benefits under the applicable rules, and
(b) if they are required under the applicable rules, or determine in accordance with those rules, to make any payment (“the refund payment”) by way of refund to or in respect of the member of, or in respect of—
(i) the contributions, or any payment, mentioned in section 101AB(4), or
(ii) any other contributions made to the scheme, or any other scheme, in respect of the member (other than any pension credit or amount attributable (directly or indirectly) to a pension credit),
the amount of the contribution refund may be set off against the refund payment.
(6) Where the trustees or managers fail to comply with subsection (2) or (4), section 10 of the Pensions Act 1995 (civil penalties) applies to any trustee or manager who has failed to take all reasonable steps to secure compliance.
(1) This section applies where—
(a) a member of an occupational pension scheme does not exercise a right acquired by him under section 101AB on or before the reply date or such later date as the trustees or managers of the scheme allow in his case under section 101AI(2), and
(b) the trustees or managers of the scheme have notified the member as mentioned in section 101AC(5).
(2) The trustees or managers may within a reasonable period beginning with—
(a) the reply date, or
(b) if a later date has been allowed as mentioned in subsection (1), that later date,
pay the contribution refund to the member.
(3) When the trustees or managers have paid the contribution refund to the member—
(a) they are discharged from any obligation in respect of any rights (including conditional rights) of, or in respect of, the member to relevant benefits under the applicable rules, and
(b) if they are required under the applicable rules, or determine in accordance with those rules, to make any payment (“the refund payment”) by way of refund to or in respect of the member of, or in respect of—
(i) the contributions, or any payment, mentioned in section 101AB(4), or
(ii) any other contributions made to the scheme, or any other scheme, in respect of the member (other than any pension credit or amount attributable (directly or indirectly) to a pension credit),
the amount of the contribution refund may be set off against the refund payment.
Pensions Act 2004