Office of Public Sector Information
Section 161
1 This Schedule applies where the property, rights and liabilities of an occupational pension scheme are transferred to the Board in accordance with section 161.
2 (1) Subject to sub-paragraph (2), the property, rights and liabilities so transferred include—
(a) property, rights and liabilities that would not otherwise be capable of being transferred or assigned,
(b) property situated anywhere in the United Kingdom or elsewhere, and
(c) rights and liabilities under the law of any part of the United Kingdom or of any country or territory outside the United Kingdom.
(2) Where, but for this sub-paragraph, any rights or liabilities under a contract of employment between the trustees or managers of the scheme and an individual would be transferred to the Board under section 161, this sub-paragraph operates to terminate the contract of employment on the day preceding the day on which the transfer notice is received by the trustees or managers of the scheme.
3 (1) Without prejudice to the generality of section 161 and subject to sub-paragraph (2), any legal proceedings or applications to any authority pending immediately before the transfer by or against any of the trustees or managers of the scheme in their capacity as trustees or managers shall be continued by or against the Board.
(2) The liabilities transferred by section 161 do not include any liabilities in respect of an existing or future cause of action against the trustees or managers of the scheme if, disregarding the transfer, the trustees or managers would have been personally liable to meet the claim and would not have been indemnified from the assets of the scheme.
4 The transfer is binding on all persons, even if, apart from this paragraph, it would have required the consent or concurrence of any person.
5 No person shall have any power, in consequence of the transfer, to terminate or modify any interest or right which was vested in the trustees or managers of the scheme.
6 Any reference in any agreement, document or instrument of any description to the trustees or managers of the scheme shall have effect so far as necessary for the purposes of giving effect to the transfer as a reference to the Board.
7 (1) The Board must take all such steps as may be required to secure that the vesting in the Board, by virtue of section 161, of any foreign property, right or liability is effective under the relevant foreign law.
(2) Until the vesting of any foreign property, right or liability in the Board is effective under the relevant foreign law, the persons who were the trustees or managers of the scheme immediately before the transfer effected by section 161 must hold that property or right for the benefit of, or discharge that liability on behalf of, the Board.
(3) Nothing in this paragraph prejudices the effect under the law of England and Wales or of Scotland of the vesting in the Board, in accordance with section 161, of any foreign property, right or liability.
(4) In this paragraph references to any foreign property, right or liability are references to any property, right or liability as respects which any issue arising in any proceedings would have to be determined (in accordance with the rules of private international law) by reference to the law of a country or territory outside the United Kingdom.
Section 162
1 This Schedule applies for the purposes of determining the compensation payable where the Board assumes responsibility for an eligible scheme (“the scheme”) in accordance with this Chapter.
2 In this Schedule references to “the assessment date” are to the date on which the assessment period in relation to the scheme, or (where there has been more than one such assessment period) the last one, began.
3 (1) Compensation is payable in accordance with this paragraph where, immediately before the assessment date, a person is entitled to present payment of a pension under the admissible rules of the scheme.
(2) That person (“the pensioner”) is entitled to periodic compensation in respect of that pension (“the pension”) commencing at the assessment date and continuing for life or, in a case to which sub-paragraph (8) applies, until such time as entitlement to the pension would have ceased under the admissible rules.
(3) The annual rate of the periodic compensation is the appropriate percentage of the aggregate of—
(a) the protected pension rate, and
(b) any increases under paragraph 28 (annual increases in periodic compensation).
(4) In sub-paragraph (3) “the appropriate percentage” means—
(a) in a case to which sub-paragraph (7) applies, 90%, and
(b) in any other case, 100%.
(5) In sub-paragraph (3) “the protected pension rate” means the annual rate of the pension, under the admissible rules, immediately before the assessment date.
(6) In determining for the purposes of sub-paragraph (5) the annual rate of the pension immediately before the assessment date, any recent discretionary increase is to be disregarded if paragraph 35(3) applies.
(7) This sub-paragraph applies where the pensioner has not attained normal pension age in respect of the pension before the assessment date and his entitlement to the pension—
(a) is attributable to his pensionable service, and
(b) did not arise by virtue of any provision of the admissible rules of the scheme making special provision as to early payment of pension on grounds of ill health.
(8) This sub-paragraph applies where the pension was not attributable—
(a) to the pensioner’s pensionable service, or
(b) (directly or indirectly) to a pension credit to which the pensioner became entitled under section 29(1)(b) of the Welfare Reform and Pensions Act 1999 (c. 30).
(9) This paragraph does not apply if compensation is payable in respect of the pension in accordance with paragraph 5 (pension benefits postponed at assessment date).
(10) This paragraph is subject to—
paragraph 26 (compensation cap), and
paragraph 30 (power of Secretary of State to change percentage rates by order).
4 (1) This paragraph applies where—
(a) the pensioner dies on or after the assessment date, and
(b) the pension was attributable—
(i) to the pensioner’s pensionable service, or
(ii) (directly or indirectly) to a pension credit to which the pensioner became entitled under section 29(1)(b) of the Welfare Reform and Pensions Act 1999.
(2) Subject to sub-paragraph (4), the pensioner’s widow or widower is entitled to periodic compensation commencing on the day following the pensioner’s death and continuing for life.
(3) The annual rate of the periodic compensation at any time is half of the annual rate of the periodic compensation (including any increases under paragraph 28) to which the pensioner would at that time have been entitled under paragraph 3 in respect of the pension had the pensioner not died.
(4) The pensioner’s widow or widower is not entitled to periodic compensation under this paragraph in such circumstances as may be prescribed.
(5) In this paragraph “the pension” and “the pensioner” are to be construed in accordance with paragraph 3.
5 (1) Compensation is payable in accordance with this paragraph where immediately before the assessment date—
(a) a person is entitled to present payment of a pension under the admissible rules of the scheme,
(b) payment of that pension is postponed, and
(c) he has attained normal pension age in relation to the pension.
(2) That person (“the postponed pensioner”) is entitled to periodic compensation in respect of that pension (“the pension”) commencing at the assessment date and continuing for life or, in a case to which sub-paragraph (7) applies, until such time as entitlement to the pension would have ceased under the admissible rules.
(3) The annual rate of the periodic compensation is 100% of the aggregate of—
(a) the protected pension rate, and
(b) any increases under paragraph 28 (annual increases in periodic compensation).
(4) In sub-paragraph (3) “the protected pension rate” means what would have been the annual rate of the pension, under the admissible rules, if the postponement of payment had ceased immediately before the assessment date.
(5) In determining for the purposes of sub-paragraph (4) the annual rate of the pension immediately before the assessment date, any recent discretionary increase is to be disregarded if paragraph 35(3) applies.
(6) Where the pension is attributable (directly or indirectly) to a pension credit, the reference in sub-paragraph (1)(c) to “normal pension age” is to be read as a reference to “normal benefit age”.
(7) This sub-paragraph applies where the pension was not attributable—
(a) to the postponed pensioner’s pensionable service, or
(b) (directly or indirectly) to a pension credit to which the postponed pensioner became entitled under section 29(1)(b) of the Welfare Reform and Pensions Act 1999 (c. 30).
(8) This paragraph is subject to—
paragraph 24 (commutation), and
paragraph 30 (power of Secretary of State to change percentage rates by order).
6 (1) This paragraph applies where the postponed pensioner—
(a) dies on or after the assessment date, and
(b) the pension was attributable—
(i) to the postponed pensioner’s pensionable service, or
(ii) (directly or indirectly) to a pension credit to which the postponed pensioner became entitled under section 29(1)(b) of the Welfare Reform and Pensions Act 1999.
(2) Subject to sub-paragraph (4), the postponed pensioner’s widow or widower is entitled to periodic compensation commencing on the day following the postponed pensioner’s death and continuing for life.
(3) The annual rate of the periodic compensation at any time is half of the annual rate of the periodic compensation (including any increases under paragraph 28) to which the postponed pensioner would at that time have been entitled under paragraph 5 in respect of the pension had the postponed pensioner not died.
(4) The postponed pensioner’s widow or widower is not entitled to periodic compensation under this paragraph in such circumstances as may be prescribed.
(5) In this paragraph “the postponed pensioner” and “the pension” are to be construed in accordance with paragraph 5.
7 (1) Compensation is payable in accordance with this paragraph where immediately before the assessment date—
(a) a person is entitled to present payment of a lump sum under the admissible rules of the scheme (“the scheme lump sum”),
(b) payment of that lump sum is postponed, and
(c) he has attained normal pension age in relation to the lump sum.
(2) That person is entitled to compensation in the form of a lump sum of an amount equal to 100% of the amount of the scheme lump sum which would have been payable had the postponement ceased immediately before the assessment date.
(3) The compensation is payable at the assessment date.
(4) Where the scheme lump sum is attributable (directly or indirectly) to a pension credit, the reference in sub-paragraph (1)(c) to “normal pension age” is to be read as a reference to “normal benefit age”.
(5) This paragraph does not apply in relation to a lump sum to which a person is entitled by reason of commuting any part of a pension under the scheme.
(6) This paragraph is subject to paragraph 30 (power of Secretary of State to change percentage rates by order).
8 (1) Compensation is payable in accordance with this paragraph where a person who, under the admissible rules, is (immediately before the assessment date) an active member of the scheme has, before that date, attained normal pension age in respect of his rights under the admissible rules of the scheme to a pension.
(2) The active member is entitled to periodic compensation in respect of that pension (“the pension”) commencing at the assessment date and continuing for life.
(3) The annual rate of the periodic compensation is 100% of the aggregate of—
(a) the protected notional pension, and
(b) any increases under paragraph 28 (annual increases in periodic compensation).
(4) In sub-paragraph (3) “the protected notional pension” means the aggregate of—
(a) the accrued amount, and
(b) any increases in the pension to which the active member would have been entitled under the admissible rules (by virtue of the fact that the pension did not come into payment at normal pension age) if he had ceased to be an active member of the scheme immediately before the assessment date.
(5) Subject to sub-paragraphs (6) and (7), the accrued amount is—
AR × PE × PS
where—
AR is the active member’s annual accrual rate in respect of the pension under the admissible rules,
PE is the active member’s annual pensionable earnings in respect of the pension under the admissible rules, and
PS is the active member’s pensionable service in respect of the pension under the admissible rules in years (including any fraction of a year).
(6) If the accrual rates or pensionable earnings differ in respect of different parts of the active member’s pensionable service relating to the pension, an amount is calculated in accordance with the formula in sub-paragraph (5) in respect of each of those parts and the accrued amount is the aggregate of those amounts.
For this purpose the references in that sub-paragraph to the active member’s pensionable service, accrual rate and pensionable earnings are to be read as references to the part of his pensionable service in question and to his accrual rate and pensionable earnings in respect of that part.
(7) In any case where the Board is satisfied that it is not possible to identify one or more of the elements of the formula in sub-paragraph (5), the Board may, having regard to the admissible rules, determine how the accrued amount is to be calculated.
(8) This paragraph is subject to—
paragraph 20 (compensation in respect of scheme right to transfer payment or contribution refund),
paragraph 24 (commutation), and
paragraph 30 (power of Secretary of State to change percentage rates by order).
9 (1) This paragraph applies where the active member dies on or after the assessment date.
(2) Subject to sub-paragraph (4), the active member’s widow or widower is entitled to periodic compensation commencing on the day following the member’s death and continuing for life.
(3) The annual rate of the periodic compensation at any time is half of the annual rate of the periodic compensation (including any increases under paragraph 28) to which the active member would at that time have been entitled under paragraph 8 in respect of the pension had the member not died.
(4) The active member’s widow or widower is not entitled to periodic compensation under this paragraph in such circumstances as may be prescribed.
(5) In this paragraph “the pension” and “the active member” are to be construed in accordance with paragraph 8.
10 (1) Compensation is payable in accordance with this paragraph where an active member of the scheme has, before the assessment date, attained normal pension age in respect of his rights under the admissible rules of the scheme to a lump sum (“the scheme lump sum”).
(2) The active member is entitled to compensation of an amount equal to 100% of the aggregate of—
(a) the accrued amount, and
(b) any increases to which the active member would have been entitled under the admissible rules (by virtue of the fact that the lump sum was not paid at normal pension age) had the active member ceased to be an active member immediately before the assessment date.
(3) The compensation is payable at the assessment date.
(4) Subject to sub-paragraphs (5) and (6), the accrued amount is—
AR × PE × PS
where—
AR is the active member’s annual accrual rate in respect of the scheme lump sum under the admissible rules,
PE is the active member’s annual pensionable earnings in respect of the scheme lump sum under the admissible rules, and
PS is the active member’s pensionable service in respect of the scheme lump sum, under the admissible rules, in years (including any fraction of a year).
(5) If the accrual rates or pensionable earnings differ in respect of different parts of the active member’s pensionable service relating to the scheme lump sum, an amount is calculated in accordance with the formula in sub-paragraph (4) in respect of each of those parts and the accrued amount is the aggregate of those amounts.
For this purpose the references in that sub-paragraph to the active member’s pensionable service, accrual rate and pensionable earnings are to be read as references to the part of his pensionable service in question and to his accrual rate and pensionable earnings in respect of that part.
(6) In any case where the Board is satisfied that it is not possible to identify one or more of the elements of the formula in sub-paragraph (4), the Board may, having regard to the admissible rules, determine how the accrued amount is to be calculated.
(7) This paragraph does not apply in relation to a lump sum to which a person is entitled by reason of commuting any part of a pension under the scheme.
(8) This paragraph is subject to—
paragraph 20 (compensation in respect of scheme right to transfer payment or contribution refund), and
paragraph 30 (power of Secretary of State to change percentage rates by order).
11 (1) Compensation is payable in accordance with this paragraph where a person who, under the admissible rules, is (immediately before the assessment date) an active member of the scheme has not, before that date, attained normal pension age in respect of his rights under the admissible rules of the scheme to a pension.
(2) If the active member survives to attain normal pension age in respect of that pension (“the pension”), he is entitled to periodic compensation in respect of the pension commencing at that age and continuing for life.
(3) The annual rate of the periodic compensation is 90% of the aggregate of—
(a) the protected notional pension, and
(b) any increases under paragraph 28 (annual increases in periodic compensation).
(4) In sub-paragraph (3) “the protected notional pension” means the aggregate of—
(a) the accrued amount, and
(b) the revaluation amount for the revaluation period (see paragraph 12).
(5) Subject to sub-paragraphs (6) and (7), the accrued amount is—
AR × PE × PS
where—
AR is the active member’s annual accrual rate in respect of the pension under the admissible rules,
PE is the active member’s annual pensionable earnings in respect of the pension under the admissible rules, and
PS is the active member’s pensionable service in respect of the pension under the admissible rules in years (including any fraction of a year).
(6) If the accrual rates or pensionable earnings differ in respect of different parts of the active member’s pensionable service relating to the pension, an amount is calculated in accordance with the formula in sub-paragraph (5) in respect of each of those parts and the accrued amount is the aggregate of those amounts.
For this purpose the references in sub-paragraph (5) to the active member’s pensionable service, accrual rate and pensionable earnings are to be read as references to the part of his pensionable service in question and to his accrual rate and pensionable earnings in respect of that part.
(7) In any case where the Board is satisfied that it is not possible to identify one or more of the elements of the formula in sub-paragraph (5), the Board may, having regard to the admissible rules, determine how the accrued amount is to be calculated.
(8) This paragraph is subject to—
paragraph 20 (compensation in respect of scheme right to transfer payment or contribution refund),
paragraph 24 (commutation),
paragraph 26 (compensation cap), and
paragraph 30 (power of Secretary of State to change percentage rates by order).
12 (1) This paragraph applies for the purposes of paragraph 11(4)(b).
(2) The revaluation period is the period which—
(a) begins with the assessment date, and
(b) ends with the day before the day on which the active member attains normal pension age in respect of the pension.
(3) The revaluation amount for the revaluation period is—
(a) in a case where the revaluation period is less than one month, nil, and
(b) in any other case, the revaluation percentage of the accrued amount.
(4) In sub-paragraph (3) “the revaluation percentage” means the lesser of—
(a) the percentage increase in the general level of prices in Great Britain during the revaluation period determined in the prescribed manner, and
(b) the maximum revaluation rate.
(5) For the purposes of sub-paragraph (4)(b) “the maximum revaluation rate” in relation to the revaluation period is—
(a) if that period is a period of 12 months, 5%, and
(b) in any other case, the percentage that would be the percentage mentioned in sub-paragraph (4)(a) had the general level of prices in Great Britain increased at the rate of 5% compound per annum during that period.
This is subject to paragraph 29 (power of Board to determine maximum revaluation rate etc).
(6) In this paragraph “the active member”, “the accrued amount” and “the pension” are to be construed in accordance with paragraph 11.
13 (1) This paragraph applies where the active member dies on or after the assessment date.
(2) Subject to sub-paragraph (4), the widow or widower of the active member is entitled to periodic compensation commencing on the day following the active member’s death and continuing for life.
(3) The annual rate of the periodic compensation at any time is—
(a) where the active member died after attaining normal pension age, half of the annual rate of the periodic compensation (including any increases under paragraph 28) to which the member would at that time have been entitled under paragraph 11 in respect of the pension had the member not died, and
(b) where the active member died before attaining normal pension age, half of the annual rate of the periodic compensation (including any increases under paragraph 28) to which the member would have been entitled at normal pension age under paragraph 11 if—
(i) normal pension age had been the member’s actual age immediately before the date of the member’s death, and
(ii) the member had not died.
(4) The active member’s widow or widower is not entitled to periodic compensation under this paragraph in such circumstances as may be prescribed.
(5) In this paragraph “the pension” and “the active member” are to be construed in accordance with paragraph 11.
14 (1) Compensation is payable in accordance with this paragraph where immediately before the assessment date, under the admissible rules of the scheme, an active member of the scheme has not attained normal pension age in respect of his rights to a lump sum (“the scheme lump sum”).
(2) If the active member survives to attain normal pension age in respect of the scheme lump sum, he is entitled to compensation in respect of the scheme lump sum when he attains that age.
(3) The compensation is a lump sum equal to 90% of the protected amount.
(4) In sub-paragraph (3) “the protected amount” means the aggregate of—
(a) the accrued amount, and
(b) the revaluation amount for the revaluation period.
(5) Subject to sub-paragraphs (6) and (7), the accrued amount is—
AR × PE × PS
where—
AR is the active member’s annual accrual rate in respect of the scheme lump sum under the admissible rules,
PE is the active member’s annual pensionable earnings in respect of the scheme lump sum under the admissible rules, and
PS is the active member’s pensionable service in respect of the scheme lump sum, under the admissible rules, in years (including any fraction of a year).
(6) If the accrual rates or pensionable earnings differ in respect of different parts of the active member’s pensionable service relating to the scheme lump sum, an amount is calculated in accordance with the formula in sub-paragraph (5) in respect of each of those parts and the accrued amount is the aggregate of those amounts.
For this purpose the references in that sub-paragraph to the active member’s pensionable service, accrual rate and pensionable earnings are to be read as references to the part of his pensionable service in question and to his accrual rate and pensionable earnings in respect of that part.
(7) In any case where the Board is satisfied that it is not possible to identify one or more of the elements of the formula in sub-paragraph (5), the Board may, having regard to the admissible rules, determine how the accrued amount is to be calculated.
(8) Paragraph 12 applies for the purpose of determining the revaluation amount except that—
(a) in that paragraph the references to the pension are to be read as references to the scheme lump sum, and
(b) in sub-paragraph (6) of that paragraph the reference to paragraph 11 is to be read as a reference to this paragraph.
(9) This paragraph is subject to—
paragraph 20 (compensation in respect of scheme right to transfer payment or contribution refund),
paragraph 26 (compensation cap), and
paragraph 30 (power of Secretary of State to change percentage rates by order).
15 (1) Compensation is payable in accordance with this paragraph where, under the admissible rules of the scheme, a person who is a deferred member immediately before the assessment date has not attained normal pension age, in respect of his rights to a pension under the scheme, before that date.
(2) If that person (“the deferred member”) survives to attain normal pension age in respect of that pension (“the pension”), he is entitled to periodic compensation in respect of the pension commencing at that age and continuing for life.
(3) The annual rate of the periodic compensation is 90% of the aggregate of—
(a) the protected pension rate, and
(b) any increases under paragraph 28 (annual increases in periodic compensation).
(4) In sub-paragraph (3) “the protected pension rate” means the aggregate of—
(a) the accrued amount,
(b) the revaluation amount for the first revaluation period (see paragraph 16), and
(c) the revaluation amount for the second revaluation period (see paragraph 17).
(5) In sub-paragraph (4) “the accrued amount” means an amount equal to the initial annual rate of the pension to which the deferred member would have been entitled in accordance with the admissible rules had he attained normal pension age when the pensionable service relating to the pension ended.
(6) This paragraph is subject to—
paragraph 24 (commutation),
paragraph 26 (compensation cap), and
paragraph 30 (power of Secretary of State to change percentage rates by order).
16 (1) This paragraph applies for the purposes of paragraph 15(4)(b).
(2) The first revaluation period is the period which—
(a) begins with the day after the day on which the deferred member’s pensionable service in respect of the pension ended, and
(b) ends with the day before the assessment date.
(3) The revaluation amount for the first revaluation period is—
(a) where that period is less than one month, nil, and
(b) in any other case, the amount determined in the prescribed manner.
(4) In this paragraph “the deferred member” and “the pension” are to be construed in accordance with paragraph 15.
17 (1) This paragraph applies for the purposes of paragraph 15(4)(c).
(2) The second revaluation period is the period which—
(a) begins with the assessment date, and
(b) ends with the day before the day on which the deferred member attains normal pension age in respect of the pension.
(3) The revaluation amount for the second revaluation period is—
(a) where that period is less than one month, nil, and
(b) in any other case the revaluation percentage of the aggregate of—
(i) the accrued amount, and
(ii) the revaluation amount for the first revaluation period (see paragraph 16).
(4) In sub-paragraph (3) “the revaluation percentage” means the lesser of—
(a) the percentage increase in the general level of prices in Great Britain during the second revaluation period determined in the prescribed manner, and
(b) the maximum revaluation rate.
(5) For the purposes of sub-paragraph (4)(b) “the maximum revaluation rate”, in relation to the second revaluation period, is—
(a) if that period is a period of 12 months, 5%, and
(b) in any other case, the percentage that would be the percentage mentioned in sub-paragraph (4)(a) had the general level of prices in Great Britain increased at the rate of 5% compound per annum during that period.
This is subject to paragraph 29 (power of Board to determine maximum revaluation rate).
(6) In this paragraph “the deferred member”, “the accrued amount” and “the pension” are to be construed in accordance with paragraph 15.
18 (1) This paragraph applies where—
(a) the deferred member dies on or after the assessment date, and
(b) the pension was attributable to the deferred member’s pensionable service.
Pensions Act 2004