S.I. No. 277/2002 - Occupational Pension Schemes (Preservation of Benefits) (Special Calculations) Regulations, 2002

The Minister for Social, Community and Family Affairs, in exercise of the powers conferred on him by sections 5 and 37 of the Pensions Act, 1990 , (No. 25 of 1990) hereby makes the following Regulations:-

Short Title and Collective Citation

1.

1. (1) These Regulations may be cited as the Occupational Pension Schemes (Preservation of Benefits) (Special Calculations) Regulations, 2002.

• (2) The Principal Regulations and these Regulations shall be construed together as one and may be cited together as the Occupational Pension Schemes (Preservation of Benefits) Regulations, 2002.

• (3) The Occupational Pension Schemes (Preservation of Benefits) (Special Calculations) Regulations, 1993 ( SI No. 217 of 1993 ) are hereby revoked.

Definitions

2.

2. In these Regulations -

“the Act” means the Pensions Act, 1990 ;

“appropriate contributions” shall be construed in accordance with articles 7 and 8 of these Regulations;

“defined benefit scheme” means, subject to sub-article (5) of article 4, a scheme which is not a defined contribution scheme;

“defined contribution scheme” means, subject to sub-article (5) of article 4, a scheme which, under its rules, provides long service benefit, the rate or amount of which is in total directly determined by the amount of the contributions paid by or in respect of the member and includes a scheme the contributions under which are used, directly or indirectly, to provide -

• (a) benefits, other than long service benefit, and

• (b) long service benefit the rate or amount of which is in total directly determined by the part of the contributions aforesaid that is used for the provision of the long service benefit;

“final scheme” means the scheme in which the member was in reckonable service immediately prior to termination of relevant employment;

“preserved benefit” has the meaning assigned to it by section 28(2) of the Act;

“the Principal Regulations” means the Occupational Pension Schemes (Preservation of Benefits) Regulations, 2002 ( S.I. No. 279 of 2002 );

Commencement.

3.

3. These Regulations shall come into operation on the 2^nd day of June, 2002.

Calculation of Preserved Benefits.

4.

4. (1) Where on termination of relevant employment a member has periods of reckonable service in more than one scheme relating to the same employment the preserved benefit in respect of such member shall be calculated in accordance with these Regulations.

• (2) Where the period or periods of reckonable service relate to a defined benefit scheme, subject to sub-article (3) of this article, the preserved benefit in respect of each such period shall be calculated in accordance with articles 5 and 6 of these Regulations. Where the period or periods of reckonable service relate to a defined contribution scheme the preserved benefit in respect of each such period shall be calculated in accordance with article 7. Where additional long service benefit has been granted under a scheme to a member in respect of a transfer of accrued rights from another scheme where such accrued rights result from the termination of the employment to which that scheme applies the preserved benefit in respect thereof shall be calculated in accordance with article 9. A member's total preserved benefit shall be determined by aggregating the amounts of preserved benefit calculated in accordance with each such article or articles, as the case may be, that are relevant to that member.

• (3) Where a period of reckonable service under a defined benefit scheme is followed by a period of reckonable service under a defined contribution scheme relating to the same employment and where the trustees apply in respect of the member concerned part of the resources of the defined benefit scheme in the making up of a payment to the defined contribution scheme, instead of calculating the preserved benefit in respect of the period of reckonable service under the defined benefit scheme in accordance with articles 5 and 6 the trustees may calculate such preserved benefit in accordance with article 8.

• (4) A preserved benefit, or part thereof, determined in accordance with these Regulations shall be payable out of the resources of the scheme or schemes to which the period or periods of reckonable service relate except that, where the trustees apply in respect of the member concerned part of the resources of the scheme in the making of a payment to another scheme relating to the same employment, such part of the preserved benefit in respect of the period of reckonable service to which the payment relates shall be determined in accordance with these Regulations but shall be payable from the resources of such other scheme.

• (5) Where the rate or amount of part of the long service benefit payable under a defined benefit scheme is directly determined by an amount of contribution paid by or in respect of the member, then, for the purposes of these Regulations, the scheme in so far as it relates to such part of the long service benefit shall be treated as a defined contribution scheme and, in so far as it relates to other benefits (including the remaining part of the long service benefit) shall be treated as a defined benefit scheme.

• (6) Unless specified to the contrary in these Regulations the provisions of Part III and Part B of the Second Schedule of the Act shall apply to a preserved benefit calculated in accordance with these Regulations.

Defined Benefit Scheme.

5.

5. (1) Where the basis of calculating long service benefit does not alter between the date of commencement of the period of reckonable service to which the calculation relates and the date of termination of the same period of reckonable service the amount of preserved benefit payable from the final scheme shall be calculated in accordance with the formula -

where -

A1 is the amount of long service benefit (excluding any such benefit which is being secured by way of additional voluntary contributions or which represents a transfer of accrued rights from another scheme or which represents an increase required under section 35A) calculated at the date of termination of the member's relevant employment less, where the long service benefit under the scheme includes rights to long service benefit granted under the scheme in substitution for accrued rights in respect of a previous period of reckonable service under any other scheme relating to the same employment,

• (a) the amount of preserved benefit calculated in accordance with sub-article (3) in respect of such previous period of reckonable service, and

• (b) the amount of long service benefit which represents a transfer of accrued rights from any such scheme;

whichever is the greater.

B1 is the period of reckonable service to which the calculation relates, and

C1 is the period of reckonable service that would have been completed if the member had remained in relevant employment and in membership of the scheme until normal pensionable age and such service had continued to qualify for long service benefit.

• (2) Where the basis of calculating long service benefit is altered between the date of commencement of the period of reckonable service to which the calculation relates and the date of termination of the same period of reckonable service the amount of preserved benefit shall be the sum of:

• (a) the amount calculated in accordance with the formula set out in sub-article (1) where A1 is calculated on the basis of the rules of the scheme in force at the date of commencement of the period of reckonable service to which the calculation relates, and

• (b) an amount calculated in accordance with the formula —

where -

D1 is the amount of the difference in long service benefit calculated at the date of termination of relevant employment,

E1 is the period of reckonable service to which the calculation relates completed after the date on which the basis of calculation was altered, and

F1 is the period of reckonable service that would have been completed from the date of such alteration if the member had remained in relevant employment and in membership of the scheme until normal pensionable age and such service had continued to qualify for long service benefit:

Provided that where there is more than one such alteration each alteration shall be separately calculated in accordance with this formula and they shall be aggregated for the purposes of the calculation of the amount.

• (3) For the purpose of the calculation in sub-article (1), the preserved benefit from the previous scheme is calculated in accordance with Part A of the Second Schedule of the Act and is enhanced in accordance with sub-article (4).

• (4) The enhancement to preserved benefit for the purpose of sub-article (3) is calculated as the difference between the preserved benefit calculated in accordance with Part A of the Second Schedule of the Act and that preserved benefit revalued annually in respect of each revaluation year from the date of termination of reckonable service to which the calculation relates to the date of termination of relevant employment.

• (5) Any preserved benefit calculated under this article shall be subject to a minimum of such amount as will ensure that the actuarial value of such benefit is equal to the amount of any contributions (excluding additional voluntary contributions) paid by the member to the scheme in respect of the period of reckonable service to which the calculation relates completed after the commencement of Part III of the Act together with compound interest thereon at the rate, if any, applicable under the rules of the scheme to refunds of members' contributions on leaving service.

Additional Voluntary Contributions.

6.

6. (1) Where a member of a scheme is entitled to additional long service benefit under the scheme by virtue of the payment of additional voluntary contributions, a preserved benefit in respect of such benefit shall be calculated in accordance with sub-article (2) of this article:

Provided that if the member has received a refund of any such contributions paid by him during any period of reckonable service prior to 1 January 1991 then, in calculating the amount of any preserved benefit under sub-article (2) of this article, any period of reckonable service prior to 1 January 1991 shall be disregarded.

• (2) The preserved benefit shall be an amount calculated in accordance with the following formula -

where -

X1 is the amount of such additional benefit (or increase or reduction in benefit),

Y1 is the period of reckonable service for which the member of the scheme has contributed towards such benefit (or increase or reduction in benefit) and where the member has contributed under more than one scheme it shall mean the aggregate of all periods of reckonable service for which the member has contributed, and

Z1 is the total period of reckonable service under all such schemes for which such member would have contributed towards such benefit (or increase or reduction in benefit) if he had remained in relevant employment until normal pensionable age.

• (3) For the purposes of sub-article (2), “increase or reduction in benefit” means a benefit related to an increase or reduction in the rate of contribution previously contracted and each such increase or reduction in benefit shall for the purposes of this sub-article be treated separately.

Defined Contribution Scheme.

7.

7. (1) The amount of preserved benefit shall be such that its actuarial value at the date on which payment of it commences is equal to the accumulated value on that date of the appropriate contributions in respect of the member concerned under the scheme.

• (2) Subject to sub-article (3) of this article the appropriate contributions shall be the contributions paid by or in respect of the member concerned for the purposes of long service benefit from the date of the commencement of the period of reckonable service to which the calculation relates and the date of termination of the same period of reckonable service but excluding additional voluntary contributions and any payment representing a transfer of accrued rights from another scheme.

• (3) Where a member of a scheme is entitled to additional long service benefit under the scheme by virtue of the payment of additional voluntary contributions, the appropriate contributions shall be all such contributions:

Provided that if the member has received a refund of any such contributions paid by him prior 1 January 1991, the appropriate contributions shall be the contributions paid by him from 1 January 1991.

• (4) Where benefits under a scheme are secured under one or more policies of assurance, the accumulated value, on the date on which payment of preserved benefit commences, of the appropriate contributions paid by or on behalf of a member shall, for the purposes of these Regulations, be the proportion of the proceeds of every such policy applicable to those contributions.

Transfer from Defined Benefit to Defined Contribution Scheme.

8.

8. Where, in accordance with sub-article (3) of article 4, the trustees elect to calculate a preserved benefit in accordance with this article it shall be such that its actuarial value on the date on which payment of it commences is equal to the accumulated value on that date of the appropriate contributions where such contributions shall be such amount of the payment received by the trustees of the scheme in respect of the period of reckonable service under the defined benefit scheme as represented the actuarial value at the date of transfer of the preserved benefit (including future revaluations thereof) calculated as if the member's service in relevant employment had terminated on the date of termination of reckonable service under the defined benefit scheme but disregarding any provision requiring the completion of a minimum period of qualifying service.

Transfer of Accrued Rights.

9.

9. Where additional long service benefit has been granted under a scheme to a member in respect of a transfer of accrued rights from another scheme where such accrued rights result from the termination of the employment to which that scheme applies, that benefit shall be provided in addition to the preserved benefit under articles 5 to 8:

Provided that if the member has received a refund of the contributions paid by him to the other scheme prior to 1 January 1991 which were included in the rights transferred from the other scheme then, in calculating the amount of any preserved benefit under this article, any additional long service benefit accrued under that other scheme prior to 1 January 1991 shall be disregarded.

EXPLANATORY NOTE

(This note is not part of the Instrument and does not purport to be a legal intrepretation.)

As a consequence of the extension of the Preservation provisions of Part III of the Pensions Act, 1990 (by Chapter 3, Part 4 of the Pensions (Amendment) Act, 2002 ) it has been necessary to amend the Occupational Pension Schemes (Preservation of Benefits) (Special Calculations) Regulations, 1993 ( S.I. No. 217 of 1993 ) to incorporate changes arising from the extension of those provisions. This has been effected by the adoption of the Occupational Pension Schemes (Preservation of Benefits) (Special Calculations) Regulations, 2002 which revoke and replace S.I. No. 217 of 1993 with effect from 2 June 2002.

These Regulations provide for the calculation of the preserved benefit entitlements of members who have completed periods of reckonable services in more than one scheme relating to the same employment.