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Circumstances in which minimum contributions are not to be paid
     12 .  - (1) Minimum contributions shall not be paid in respect of an earner for the tax year or any part of the tax year in which that earner - 

(a) reaches pensionable age; or

(b) dies and in which he would have reached pensionable age.

    (2) Where effect has been given to the earner's protected rights under section 28 of the 1993 Act[13] (ways of giving effect to protected rights), minimum contributions shall not, except as provided by paragraphs (3) to (9) be paid in respect of the period during which the scheme was the earner's chosen scheme.

    (3) Where effect has been given to the earner's protected rights by the making of a transfer payment to another appropriate scheme which has become the earner's chosen scheme or a money purchase contracted-out scheme, the minimum contributions shall be paid to the trustees or managers of that scheme.

    (4) Where effect has been given to the earner's protected rights by the making of a transfer payment to a salary-related scheme or an overseas scheme and the Secretary of State becomes aware, as a consequence of evidence in respect of the earner's age being brought to his attention, that an additional amount of minimum contributions would have been payable had he been aware of that evidence, that additional amount of minimum contributions shall be paid to the trustees or managers of that scheme.

    (5) Where effect has been given to the earner's protected rights by the purchase of an annuity or by the provision by the scheme of a pension, and the amount of the minimum contributions in question is at least 10 times as great as the lower earnings limit for the tax year in which the Secretary of State becomes aware that minimum contributions are payable or would be payable, but for paragraph (2), those minimum contributions shall be paid (in the case of an annuity) to the insurance company from which the annuity has been purchased or (in the case of a pension) to the trustees or managers of the scheme.

    (6) Where effect has been given to the earner's protected rights by the purchase of an annuity or by the provision by the scheme of a pension and - 

(a) the circumstances in paragraph (5) do not exist; and

(b) minimum contributions are payable for the tax year or part of the tax year in which the earner died,

those minimum contributions shall be paid to the earner's widow or widower, or if the earner died unmarried, they may at the Secretary of State's discretion be paid to any person.

    (7) Where effect has been given to the earner's protected rights by the purchase of an annuity or by provision by the scheme of a pension and - 

(a) the circumstances in paragraph (5) do not exist; and

(b) the Secretary of State becomes aware, as a consequence of evidence in respect of the earner's age being brought to his attention, that an additional amount of mimimum contributions would have been payable had he been aware of that evidence,

that additional amount of minimum contributions shall be payable for any tax year before or part of a tax year before effect has been given to protected rights to the earner or the earner's widow or widower, or if the earner died unmarried, they may at the Secretary of State's discretion be paid to any person.

    (8) Where effect has been given to the earner's protected rights by the provision of a lump sum, minimum contributions shall be payable to the earner or the earner's widow or widower, or if the earner died unmarried, they may at the Secretary of State's discretion be paid to any person.

    (9) Where effect has been given to the earner's protected rights by the making of payments under an interim arrangement, minimum contributions shall continue to be payable to the trustees or managers of the earner's chosen scheme.

Manner of payment of minimum contributions
     13 . Minimum contributions shall be paid - 

(a) by automated credit transfer into a bank or building society account which relates to the relevant scheme and which accepts payments made by automated credit transfer; or

(b) in such other manner as the Secretary of State may in his discretion approve.

Allocation of minimum contributions
     14 . A personal pension scheme can be an appropriate scheme only if the rules of the scheme provide that any minimum contributions falling to be applied so as to provide benefits in respect of a member are to be so applied from the date on which payment is made by the Secretary of State in accordance with regulation 13 and that such minimum contributions are to be allocated to that member's account within three months of that date.

Calculation or estimation of earnings
     15 .  - (1) In relation to any tax year, the earnings of an earner shall be calculated or estimated, for the purposes of section 45(1) of the 1993 Act, on the basis mentioned in this regulation.

    (2) In paragraph (3) - 

"eligible tax week" means any tax week in any part of which the earner in question is at least 16 years of age and in no part of which he is over pensionable age; and

"ineligible tax week" means any tax week which is not an eligible tax week.

    (3) In relation to any eligible tax week in a tax year the earnings of an earner shall be taken to be the amount calculated or estimated in accordance with paragraph (4) divided by the number of eligible tax weeks in that tax year, and in relation to any ineligible tax week they shall be taken to be nil.

    (4) The formula to be applied shall be the formula set out in paragraph (5)(a) or, if it produces a smaller value for X, the formula set out in paragraph (5)(b), so however, that if the formula set out in paragraph (5)(a) produces a negative value for X, or if the value of P is nil, the value of X shall be taken to be nil.

    (5) The formulae mentioned in paragraph (4) are - 

(a)     X = P + R - S - 52L; and

(b)     X = 53U - 52L.

    (6) In paragraph (7) - 

(a) "primary Class 1 contributions" does not include contributions which the earner, being a married woman or widow, is liable to make at a reduced rate in accordance with an election which she has made and which is still operative; and

(b) the reference to contributions as having been paid includes the case of contributions which are treated as having been paid under regulation 39 of the Social Security (Contributions) Regulations 1979[14] but does not include the case of contributions which are treated as not paid under regulation 38(1) and (2)(a) of those Regulations.

    (7) In this regulation - 

(a) L is the lower earnings limit for the tax year in question;

(b) P is the total earnings, in so far as the earnings for each week did not exceed U, paid to or for the benefit of the earner in relation to the tax year in question, in relation to which primary Class 1 contributions have been paid with respect to employments that are not contracted-out;

(c) R is the total earnings, in so far as the earnings for each week did not exceed U, paid to or for the benefit of the earner in relation to the tax year in question, in relation to which primary Class 1 contributions have been paid with respect to employments that are contracted-out;

(d) S is the total earnings, in so far as the earnings for each week equalled or exceeded L but did not exceed U, paid to or for the benefit of the earner in relation to the tax year in question, in relation to which primary Class 1 contributions have been paid with respect to employments that are contracted-out; and

(e) U is the upper earnings limit for the tax year in question.

Calculation of minimum contributions
     16 .  - (1) For the purposes of determining the appropriate age related percentage for the purposes of section 45(1) of the 1993 Act[15], the Secretary of State may require an earner to send documentary evidence of his date of birth.

    (2) For the purposes of section 45B(2) of the 1993 Act[16] (information held as to the age to be disclosed by the Secretary of State to trustees or managers of an appropriate personal pension scheme and such other persons as may be prescribed) the prescribed person shall be the person who is responsible for administering the scheme.

Adjustment of amount of minimum contributions
     17 . Where the amount of minimum contributions payable in respect of an earner in relation to a tax year would otherwise not be a whole number of pence, it shall be adjusted to the nearest whole number of pence, and any amount of half penny or less shall be disregarded.

Cancellation of membership of interest-bearing account-funded appropriate personal pension schemes
     18 .  - (1) A personal pension scheme which comprises an arrangement of the kind described in regulation 2(2)(c) can be an appropriate scheme only if it satisfies the requirements of paragraph (2).

    (2) Without prejudice to any right of a member of the scheme, under section 160(1) of the 1993 Act or other rules of the scheme, the rules of the scheme shall include provision - 

(a) that, within 7 days of the day on which a person becomes a member of the scheme, he shall be served, personally or by post, with a notice in writing containing the information specified in Schedule 2 to these Regulations and a form of counter-notice; and

(b) that, if the person signs the form of counter-notice or another document to the same effect and serves it - 


(i) by post or otherwise,

(ii) not later than the fourteenth day after the notice referred to in sub-paragraph (a) is served on him,

(iii) on the person nominated, in that notice, to accept service of it, his membership of the scheme shall be cancelled and the contributions (if any) paid to the scheme by him or for him shall be returned, as soon as reasonably practicable, to the person who paid them.



(3) Where a counter-notice of the kind mentioned in paragraph (2)(b) is properly addressed, pre-paid and served by post, it shall be deemed to have been duly served on the day on which it was posted.

Transitional provision in respect of earnings
     19 . For the purposes of paying minimum contributions in respect of an employed earner for any period up to and including the tax year 1996 - 1997, regulations 16 and 17 of the Personal Pension Schemes (Appropriate Schemes) Regulations 1988[17] shall continue to have effect as if regulation 15 of these Regulations had not come into force.

Revocations
     20 . The regulations listed in column 1 of Schedule 3 to these Regulations are revoked to the extent specified in column 3 of that Schedule.



Signed by authority of the Secretary of State for Social Security

Oliver Heald
Parliamentary Under-Secretary of State, Department of Social Security.

25th February 1997

"investment company with variable capital" means an investment company with variable capital within the meaning of the Open-Ended Investment Companies (Investment Companies with Variable Capital) Regulations 1996[18];

"money market fund" means an authorised unit trust scheme the sole object of which is investment in transferable securities, deposits and instruments creating or evidencing indebtedness which are not transferable securities; and

"transferable security" means any investment falling within paragraphs 1 to 6 of Schedule 1 to the Financial Services Act 1986 other than an investment title to which either cannot be transferred or can be transferred only with the consent of a third party.

[14] S.I. 1979/591; relevant amendments are S.I. 1984/77, 1987/413 and 2111, 1992/669, 1993/2094, 1994/1553 and 1995/829. back

[15] Section 45(1) is amended by section 138(2) of the Pensions Act 1995. back

[16] Section 45B was inserted by section 139 of the Pensions Act 1995. back

[17] S.I. 1988/137. back

[18] S.I. 1996/2827. back