back to previous page

These Regulations provide for the protection of the pension rights of existing and former employees and Board Members in the electricity supply industry in Scotland (including employees of the Consultative Councils) on the transfer date as defined in section 95(1) of the Electricity Act 1989 (and which will be 31st March 1990), and their dependents ("protected persons"), who are or were participants in either the South of Scotland Electricity Board's Superannuation Scheme ("the South Scheme") or the Hydroboard Superannuation Fund ("the North Scheme").

The pension rights protected fall into two categories:
    —  accrued pension rights; and

    —  future pension rights.

The Regulations lay a duty on employers to ensure the protection of the pension rights of protected persons in the event of:
    —  the partial or total winding up of the North Scheme, South Scheme or any alternative scheme provided under the Regulations;

    —  the restructuring or change of ownership of the participating employers; and

    —  the transfer of employees (whether at the requirement of the employer or on a voluntary basis) from one employer to another within the Scottish electricity supply industry.

The Regulations provide that, as far as possible, a protected employee shall be enabled to remain a member of the North Scheme or the South Scheme. If this is not possible (eg in the case of a partial or total winding up of the North Scheme or the South Scheme), the employer is required to provide his protected employees with an alternative scheme which offers future pension rights which are no worse than those they enjoyed immediately before ceasing to participate in the North Scheme or the South Scheme. The protection extends to circumstances where an alternative scheme is wound up. There is also a duty on employers to protect the accrued pension rights of protected persons, including benefits in payment to pensioners and dependents.

The protection continues to apply in certain circumstances when a protected employee moves within the industry in Scotland, and the Regulations set out the level of pension rights to be provided on transfers between companies in different circumstances. The protection will cease to apply if continuity of employment in the industry is broken.

The Regulations come into force on 31st March 1990. Regulation 1 provides for the citation and commencement of the Regulations, and regulation 2 provides for interpretation.

Regulation 3 defines who is a "protected employee" and specifies the circumstances in which he ceases to enjoy that status: in particular, at the employee's request, if he ceases to be in continuous employment or if, following his withdrawal from any relevant scheme (defined as North Scheme, South Scheme or an alternative scheme), he does not then join another relevant scheme and transfer to it his accrued benefits. The regulation also provides for a number of circumstances in which the protected status will not cease. These include the circumstances in which employees of the North of Scotland Hydro Electric Board at Cruachan Pumped Storage Station who, on the transfer date, become employees of Scottish Power plc, are entitled to transfer to South Scheme and leave accrued benefits in North Scheme without losing their protected employee status (except that this provision will cease to apply if the employee voluntarily changes job within Scottish Power plc, in which case he must transfer his accrued benefits to South Scheme to retain his protected employee status).

Regulation 4 defines who is a "protected beneficiary" and specifies the circumstances in which he ceases to enjoy that status, (in particular at the beneficiary's request, or if he withdraws his accrued pension rights in certain circumstances from the relevant scheme). A protected employee and a protected beneficiary are both "protected persons". Regulation 5 defines "continuous employment". Broadly, any change of employment between successor companies (as defined in regulation 2) or their subsidiaries will, for this purpose, be treated as continuous.

Regulation 6 deals with "accrued pension rights" of protected persons; it sets out the employer's duties to ensure that these rights are funded by the scheme in which they are at any time, and provides for the rights to be secured in the event of the total or partial winding up of a scheme and for their transferability if an employee changes employer.

Regulation 7 defines the rights which a protected employee will have to accrue future pension rights. It provides that, subject to specified qualifications, while the protected employee is a member of the North Scheme or the South Scheme, the rights will accrue on the same basis as for other protected employees in the Scheme, from time to time, and that they may be improved, or reduced (but only if the procedure in regulation 16 is followed). The regulation provides that, if the North Scheme or the South Scheme is wound up, the basis for each employer will be "frozen" at the level applying at the time of the winding up. Additional benefits may be provided thereafter , but will not be subject to protection under the Regulations. If a protected employee transfers to an employer whose protected employees have pension rights worse than transfer date rights as defined in regulation 7(6) or who has no other protected employees, the minimum level of pension rights he can offer are those which applied in that Scheme on the transfer date.

Regulation 8 defines an "alternative scheme". It sets out the criteria that must be met by a scheme if it is to be regarded as an alternative scheme for the purpose of these Regulations (see also regulations 11, 12 and 14).

Regulation 9 provides that where an employer is required by any regulation to provide a "relevant scheme" (the North Scheme, the South Scheme or an alternative scheme) and it is not reasonably practicable for him to do so, he shall provide the relevant pension rights by other suitable means.

Regulation 10 provides that where an employer is no longer permitted to continue to participate in the North Scheme or the South Scheme (otherwise than by reason of his liquidation) or if a participating employer in the South Scheme withdraws from the Scheme having given the required notice, he shall provide an alternative scheme for the protected employees in his employment. The alternative pension rights thus provided are to be no worse than the pension rights previously enjoyed by those employees immediately before ceasing to participate in the North Scheme or the South Scheme.

Regulation 11 provides that in the event of the North Scheme or the South Scheme being totally wound up, each employer participating in the Scheme in question shall provide an alternative scheme as soon as practicable and enable all the protected employees in hs employment to participate in it. The alternative pension rights to be provided are to be no worse than those enjoyed by the employees immediately before ceasing to participate in the North Scheme or South Scheme, as appropriate.

Regulation 12 provides that if an alternative scheme is partially or totally wound up, each participating employer shall as soon as practicable provide a relevant scheme to replace it and shall enable his protected employees to participate in it. The new scheme shall provide future pension rights no worse than the protected rights required to be provided under regulations 10 and 11.

Regulation 13 provides that where a protected employee who is a member of the North Scheme or the South Scheme moves to an employer within t he same Scheme, his new employer shall allow him to remain in the Scheme with the same pension rights as those applying to the employer's existing protected employees or, if their pension rights are worse than those applying in the Scheme on the transfer date or there are no other such protected employees, with pension rights no worse than those applying in the Scheme on the transfer date. If the new employer is not in the same Scheme, but is a wholly owned subsidiary of a company which is, the employer must apply to join for the benefit of the protected employee concerned. This regulation does not apply in the case of voluntary transfers where the new employer is in a different group of companies from the former employer.

Regulation 14 provides that if the new employer's application to join the North Scheme or the South Scheme under regulation 13 is refused, he shall, so far as reasonably practicable, provide an alternative scheme for the benefit of his new protected employee. The future pension rights to be provided shall be no worse than those already applying to protected employees of the employer under an existing alternative scheme or, if the pension rights of his existing protected employees are worse than those applying in the Scheme on the transfer date or there are no such protected employees, no worse than the rights applying in the Scheme on the transfer date.

Regulation 15 applies in any circumstances not falling within regulation 13 or 14 where a protected employee changes employment. It provides that where the new employer participates in a relevant scheme he shall enable the new employee to join that scheme, which shall offer future pension rights in accordance with regulation 13(4), and that where the new employer does not participate in a relevant scheme he shall provide an alternative scheme offering future pension rights no worse than transfer date rights applying in the Scheme in which any company in the same company group participates.

Regulation 16 provides that the North Scheme or the South Scheme may reduce the level of protected benefits in respect of or increase contributions made by protected employees only if two-thirds of those protected employees concerned who vote on the question vote in favour of the change. This provision does not apply to a relevant scheme other than the North Scheme or the South Scheme; such schemes may not be amended so as to reduce the benefits or increase the contributions of protected employees.

Regulation 17 permits a protected person to elect to surrender his protected rights. The form of the notice of such an election to be served on the employer is set out in Schedule 1. The elector is allowed a period of 21 days from receiving the employer's acknowledgement (in the form set out in Schedule 2) to change his mind and withdraw the notice.

Regulation 18 sets out the ways in which a duty to provide a relevant scheme under the Regulations may be met. This may be by participating in the North Scheme or the South Scheme, amending an existing scheme where necessary, or establishing a new scheme.

Regulation 19 provides that a duty imposed by the Regulations on the employer of a protected person shall also be a duty owed by other specified persons (who thus act as guarantors of the employer). The other persons owing a duty are (inter alia) the parent company (if the employer is a wholly-owned subsidiary); and, if neither the employer nor the parent company is a successor company (as defined in regulation 2), the last successor company to employ the protected person or the parent company of such a successor company. The regulation provides for the appropriate apportionment of the duty where there is more than one previous successor company involved. By virtue of the definition of "employer" in regulation 2, the duty in respect of a protected beneficiary is owed by the employer to whom the beneficiary concerned is allocated for pension purposes.

Regulation 20 sets out the rights of indemnity between the guarantors where any employer is in breach of a duty imposed by the Regulations.

Regulation 21 provides that any dispute arising under the Regulations shall be referred to arbitration, and sets out the procedure to be followed.