The Personal and Occupational Pension Schemes (Indexation and Disclosure of Information) (Miscellaneous Amendments) Regulations 2005

© Crown Copyright 2005

Statutory Instruments printed from this website are printed under the superintendence and authority of the Controller of HMSO being the Queen's Printer of Acts of Parliament.

The legislation contained on this web site is subject to Crown Copyright protection. It may be reproduced free of charge provided that it is reproduced accurately and that the source and copyright status of the material is made evident to users.

It should be noted that the right to reproduce the text of Statutory Instruments does not extend to the Queen's Printer imprints which should be removed from any copies of the Statutory Instrument which are issued or made available to the public. This includes reproduction of the Statutory Instrument on the Internet and on intranet sites. The Royal Arms may be reproduced only where they are an integral part of the original document.

The text of this Internet version of the Statutory Instrument which is published by the Queen's Printer of Acts of Parliament has been prepared to reflect the text as it was Made. A print version is also available and is published by The Stationery Office Limited as the The Personal and Occupational Pension Schemes (Indexation and Disclosure of Information) (Miscellaneous Amendments) Regulations 2005, ISBN 0110725603. The print version may be purchased by clicking here. Braille copies of this Statutory Instrument can also be purchased at the same price as the print edition by contacting TSO Customer Services on 0870 600 5522 or e-mail: customer.services@tso.co.uk.

Further information about the publication of legislation on this website can be found by referring to the Frequently Asked Questions.

To ensure fast access over slow connections, large documents have been segmented into "chunks". Where you see a "continue" button at the bottom of the page of text, this indicates that there is another chunk of text available.

"the Disclosure of Information Regulations" means the Occupational Pension Schemes (Disclosure of Information) Regulations 1996[5];

"the Indexation Regulations" means the Occupational Pension Schemes (Indexation) Regulations 1996[6]; and

"the Protected Rights Regulations" means the Personal and Occupational Pension Schemes (Protected Rights) Regulations 1996[7].

"hybrid scheme" means an occupational pension scheme - 

(a) which is not a money purchase scheme, but

(b) where some of the benefits that may be provided are money purchase benefits;

"money purchase benefits" and "money purchase scheme" have the meaning given by section 181(1) of the Pension Schemes Act 1993.

(a) omit the word "and" at the end of the definition of "scheme"; and

(b) after the definition of "section 9(2B) rights"[9] insert - 

" and
"specified pension or annuity" means any pension or annuity which became a pension or annuity in payment before 6th April 2005.".

Indexation requirement limited to specified pensions or annuities
     4.  - (1) Regulation 4 of the Protected Rights Regulations[10] (conditions applying to pensions and annuities which give effect to protected rights) is amended as follows.

    (2) In paragraph (1)(b), for paragraph (i) substitute - 

" (i) is necessary to establish what the initial rate and the method of payment of the pension or annuity are to be;

(ia) ia)is necessary to establish that, throughout the lifetime of the member, the pension or annuity shall continue to be paid at a rate which is at least equal to (but may be more than) the initial rate and which, in the case of a specified pension or annuity falling within paragraph (3) or (6) or within section 51 or 162 of the Pensions Act 1995, is the rate determined in accordance with that paragraph or section;".

    (3) In paragraph (3), after the words "In the case of" insert "a specified pension or annuity which gives effect to".

    (4) In paragraph (6), after the words "In the case of" insert "a specified pension or annuity which gives effect to".

Removal of indexation: interim arrangements
     5. For paragraphs (2) and (3) of regulation 7 of the Protected Rights Regulations[11] (payments made under interim arrangements) substitute - 

    " (2) For the purposes of section 28A(5)(a) of the 1993 Act (calculating the annual amount of annuity which would have been purchasable by a person), the prescribed manner is by reference to the current published tables prepared by the Government Actuary in accordance with paragraph (3).

    (3) For the purposes of section 28A(5)(a)(ii) of the 1993 Act (preparation of current published tables of rates of annuities), the prescribed manner is on the same basis as that on which the Government Actuary prepares tables of rates of annuities for the purposes of Chapter 4 of Part 14 of the Income and Corporation Taxes Act 1988[12] (personal pension schemes).".

Removal of indexation: death of member before payment
     6.  - (1) Regulation 12 of the Protected Rights Regulations[13] (death of member before effect given to his protected rights) is amended as follows.

    (2) In paragraph (4)(b), for paragraph (i) substitute - 

" (i) is necessary to establish what the initial rate and the method of payment of the pension or annuity are to be,

(ia) ia)is necessary to establish that, throughout the period described in paragraph (5), the pension or annuity shall continue to be paid to the widow or widower at a rate which is at least equal to (but may be more than) the initial rate and which, in the case of a specified pension or annuity falling within paragraph (6) or (8) or within section 51 or 162 of the Pensions Act 1995, is the rate determined in accordance with that paragraph or section,".

    (3) In paragraph (6), after the words "In the case of" insert "a specified pension or annuity which gives effect to".

Indexation: treatment of transfers made before 6th April 2005 from pension schemes
     8.  - (1) Regulation 2 of the Indexation Regulations (indexation of occupational pensions derived from the acceptance of transfer payments from pension schemes) is amended as follows.

    (2) For the heading substitute "Indexation of occupational pensions derived from the acceptance of transfers from pension schemes: transfers made before 6th April 2005".

    (3) In paragraph (1), for the words "Subject to paragraph (2)" substitute "Subject to the following provisions".

    (4) After paragraph (2) add - 

    " (3) Paragraph (1) of this regulation shall not apply in any case where the transfer credit referred to in that paragraph is allowed by reference to a transfer which is made on or after 6th April 2005.".

Indexation: treatment of transfers made on or after 6th April 2005 from pension schemes
     9. After regulation 2 of the Indexation Regulations insert - 

" Indexation of occupational pensions derived from the acceptance of transfers from pension schemes: transfers made on or after 6th April 2005
     2A.  - (1) This regulation applies where - 


(a) a person's accrued rights to a pension payable under an occupational pension scheme ("scheme A") to which section 51 of the Act applies, or any part of them, derive from the allowance by the scheme of a transfer credit in respect of rights in any pension scheme ("scheme B") of which that person has previously been a member; and

(b) the transfer credit is allowed by reference to a transfer which is made on or after 6th April 2005.



    (2) Subsections (2) and (3) of section 51 of the Act shall apply to such part of the pension payable by scheme A as is attributable to any accrued rights deriving from the allowance of the transfer credit - 



(a) only to the extent that those accrued rights are - 


(i) i)section 9(2B) rights; or

(ii) rights (other than section 9(2B) rights) which are allowed by reference to rights in scheme B that were subject to the indexation requirement at the time of the transfer; and



(b) as if those accrued rights were attributable to pensionable service on or after the appointed day.".

Indexation: treatment of payments made before 6th April 2005 from insurance policies or annuity contracts
     10.  - (1) Regulation 3 (indexation of occupational pensions derived from the acceptance of payments from insurance policies or annuity contracts) of the Indexation Regulations is amended as follows.

    (2) For the heading substitute "Indexation of occupational pensions derived from the acceptance of payments from insurance policies and annuity contracts: transfers made before 6th April 2005".

    (3) Renumber the existing text as paragraph (1).

    (4) In paragraph (1), at the beginning insert the words "Subject to paragraph (2) of this regulation".

    (5) After paragraph (1) add - 

    " (2) Paragraph (1) of this regulation shall not apply in any case where the payment from the policy of insurance or annuity contract referred to in that paragraph is made on or after 6th April 2005.".

Indexation: treatment of payments made on or after 6th April 2005 from insurance policies or annuity contracts
     11. After regulation 3 of the Indexation Regulations add - 

" Indexation of occupational pensions derived from the acceptance of payments from insurance policies and annuity contracts: transfers made on or after 6th April 2005
     4.  - (1) This regulation applies where - 


(a) a person's accrued rights to a pension payable under an occupational pension scheme ("scheme A") to which section 51 of the Act applies, or any part of them, derive from the acceptance by the scheme of a payment from a policy of insurance or annuity contract in respect of rights in any pension scheme of which that person has previously been a member; and

(b) the payment was made on or after 6th April 2005.



    (2) Subsections (2) and (3) of section 51 of the Act shall apply to such part of the pension payable by scheme A as is attributable to any accrued rights deriving from the acceptance of the payment from the policy of insurance or annuity contract - 



(a) only to the extent that those accrued rights are - 


(i) i)section 9(2B) rights; or

(ii) rights (other than section 9(2B) rights) which are allowed by reference to rights specified in paragraph (3) of this regulation; and



(b) as if those accrued rights were attributable to pensionable service on or after the appointed day.



    (3) The rights specified in this paragraph are rights to payment under the policy of insurance or annuity contract which - 



(a) were subject to provision contained in (or endorsed on) the policy or contract requiring an increase in the annual rate of payment; and

(b) in any case where the policy or contract was entered into before 6th April 2005, would have been subject to such provision if the policy or contract had been entered into on or after that date.".

" (b) that the policy or contract contains, or is endorsed with, terms so as to provide for such increase (if any) in the payments under the policy or contract as is required by paragraph (2);".

    (4) After paragraph (1) add - 

    " (2) For the purposes of paragraph (1)(b) - 


(a) an increase is required if sections 51 and 52 of the 1995 Act, and regulations made under those sections, would apply to payments under the policy or contract if those payments were benefits payable under an occupational pension scheme (and for this purpose, the provisions of the 1995 Act shall be construed in accordance with regulation 11(6)(a) to (d)); and

(b) such an increase shall be payable at the same rate, and to the same extent, as would be required under those provisions.".

Discharge of liability: pensions under a relevant scheme
     13.  - (1) Regulation 11 of the Occupational Pension Schemes (Discharge of Liability) Regulations 1997[15] (conditions on which liability to provide pensions under a relevant scheme may be discharged) is amended as follows.

    (2) In paragraph (3) - 

(a) for sub-paragraph (c) substitute - 


" (c) payments to a beneficiary, or to his widow or widower, under the policy or contract which derive from a pension or accrued rights under the relevant scheme shall be subject to such increase (if any) as is required by paragraph (4A);"; and



(b) in sub-paragraph (e) omit paragraph (i).

    (3) After paragraph (4) insert - 

    " (4A) For the purposes of paragraph (3)(c) - 


(a) an increase is required if sections 51 and 52 of the 1995 Act, and regulations made under those sections, would apply to payments under the policy or contract if those payments were benefits payable under an occupational pension scheme; and

(b) such an increase shall be payable at the same rate, and to the same extent, as would be required under those provisions.".

    (4) In paragraph (6), for the words "For the purposes of paragraph (3)(e)" substitute "For the purposes of paragraphs (3)(e) and (4A)".

    " (2) But paragraph (1) does not apply in relation to the provision by an occupational pension scheme of a pension to which regulation 2 of the Personal and Occupational Pension Schemes (Indexation and Disclosure of Information) (Miscellaneous Amendments) Regulations 2005 applies (removal of indexation: money purchase benefits provided under a hybrid occupational pension scheme).".

" (b) the maximum percentage.".

    (3) In paragraph (2), after the definition of "appropriate percentage" insert - 

" "maximum percentage" means - 
(a) 5 per cent. in a case where - 


(i) i)the pension is in payment before 6th April 2005; or

(ii) the pension is not in payment before 6th April 2005 but the entitlement to the relevant pension credit arose before that day; and



(b) 2.5 per cent. in a case where the entitlement to the relevant pension credit arises on or after 6th April 2005;



"relevant pension credit" means the pension credit to which eligible pension credit rights are (directly or indirectly) attributable;".

Eligible pension credit rights
     16. For regulation 35 of the Pension Sharing (Pension Credit Benefit) Regulations 2000 (definition of eligible pension credit rights) substitute - 

" Definition of eligible pension credit rights
     35.  - (1) For the purposes of section 40(3) of the 1999 Act, pension credit rights are eligible if they fall within paragraph (2) and are not excluded by paragraph (3).

    (2) Pension credit rights are within this paragraph if - 


(a) they are derived from rights attributable to pensionable service on or after 6th April 1997 of the member whose pension rights were the subject of a pension sharing order or provision; or

(b) they are safeguarded rights.



    (3) Excluded pension credit rights are - 



(a) rights to pensions which are money purchase benefits and which become pensions in payment on or after 6th April 2005; or

(b) rights derived from additional voluntary contributions.".

" Civil penalties
     11. Where any person fails, without reasonable excuse, to comply with any requirement imposed under these Regulations, the Regulatory Authority may require that person to pay within 28 days a penalty which shall - 


(a) in the case of an individual, not exceed £5,000, and

(b) in any other case, not exceed £50,000.".

Choice of annuities: members
     18. For paragraph 7 of Schedule 2 to the Disclosure of Information Regulations[19] (information as to options under scheme to be made available to members) substitute - 

     " 7.  - (1) The options available to the member within the scheme rules.

    (2) Sub-paragraph (3) applies in relation to a member who, under an option within sub-paragraph (1), has an opportunity to select an annuity.

    (3) The information to be provided under sub-paragraph (1) must include - 


(a) a statement that the member may select the annuity (including, where the member has an opportunity to select the provider, a statement to that effect);

(b) a statement that different annuities have different features and different rates of payment;

(c) a statement that these include, by way of example - 


(i) annuities that provide payments that do not vary from year to year and annuities that provide payments that increase from year to year;

(ii) annuities that cover a single life and annuities that make provision for a spouse or partner;

(iii) annuities that may be with or without guarantee on the early death of the member;



(d) general information explaining characteristic features of the types of annuities outlined in the examples in paragraph (c);

(e) a statement that the member should consider taking advice as to which annuity is most suitable for him.



    (4) The provision of approved information shall be taken to satisfy the requirements of sub-paragraph (3)(d).

    (5) "Approved information" means information contained in guidance material published for the purposes of sub-paragraph (3)(d) which - 



(a) is prepared, and from time to time revised, by the Regulatory Authority; and

(b) is for the time being approved by the Secretary of State.".

Choice of annuities: benefit payable on death of member or beneficiary
     19. For paragraph 11 of Schedule 2 to the Disclosure of Information Regulations (information as to rights, options and procedures on death of member or beneficiary) substitute - 

     " 11.  - (1) The rights and options (if any) on the death of the member or beneficiary and the procedures for exercising them.

    (2) Paragraph 7(3) to (5) also applies in relation to a person who, under an option within sub-paragraph (1), has an opportunity to select an annuity (and, for that purpose, any reference in paragraph 7(3) to "the member" is to be read as a reference to the person with that opportunity).".

Minor amendments
     20.  - (1) The Disclosure of Information Regulations are amended as follows.

    (2) In regulation 1(2), in the definition of "Regulatory Authority" for the words "the Occupational Pensions Regulatory Authority" substitute "the Pensions Regulator".

    (3) In Schedule 1 delete paragraph 24.



Signed by authority of the Secretary of State for Work and Pensions.


Malcolm Wicks
Minister of State, Department for Work and Pensions

16th March 2005

[2] 1995 c.26. Section 51(5) is amended by section 278 of the Pensions Act 2004 (c.35). Section 124(1) is cited because of the meaning there given to "prescribed" and "regulations".back

[3] 1999 c.30. Section 40 was amended by section 280 of the Pensions Act 2004.back

[4] See section 185(1) of the Pension Schemes Act 1993 (as amended by Schedule 3, Schedule 5 and Part I of Schedule 7 to the Pensions Act 1995), section 120(1) of the Pensions Act 1995 and section 83(11) of the Welfare Reform and Pensions Act 1999.back

[5] S.I. 1996/1655; relevant amending instruments are S.I. 1997/786 and 1999/3198.back

[6] S.I. 1996/1679.back

[7] S.I. 1996/1537; relevant amending instruments are S.I. 1997/786, 1999/3198 and 2002/681.back

[8] Section 51 was amended by section 84(1) of, and paragraphs 43 and 51 of Part 1 of Schedule 12 to, the Welfare Reform and Pensions Act 1999, section 51(1) of the Child Support, Pensions and Social Security Act 2000 and section 278 of the Pensions Act 2004.back

[9] The definition of "section 9(2B) rights" was substituted S.I. 1997/786 and amended by S.I. 1999/3198.back

[10] Regulation 4 was amended by S.I. 2002/681.back

[11] Paragraphs (2) and (3) of regulation 7 were substituted by S.I. 2002/681.back

[12] 1988 c.1.back

[13] Regulation 12 was amended by S.I. 2002/681.back

[14] S.I. 1997/784.back

[15] Regulation 11 was amended by S.I. 1999/3198.back

[16] S.I. 1997/786.back

[17] S.I. 2000/1054.back

[18] Regulation 11 was amended by S.I. 1997/786 and S.I. 1999/3198.back

[19] Information as to the matters specified in paragraph 7 of Schedule 2 must be sent to members and pension credit members of schemes that make provision for money purchase benefits (see regulation 5(6) and (6A) of those Regulations). Regulation 5(6A) was inserted by S.I. 2000/2691.back