The Pension Protection Fund (Entry Rules) Regulations (Northern Ireland) 2005

• (1) The prescribed rate of interest referred to in Article 123(6) (loans to pay scheme benefits) shall be the base rate.

• (2) The rate of interest referred to in paragraph (1) shall be calculated on a day-to-day basis from the date on which a loan is made by the Board to the trustees or managers of an eligible scheme to the date of payment and compounded with 3-monthly rests.

• (3) In this regulation –

• “base rate” means the rate for the time being quoted by the reference banks as applicable to sterling deposits or, where there is for the time being more than one such base rate, the rate which, when the base rate quoted at each bank is ranked in a descending sequence of 4, is the first in the sequence;

• “date of payment” means the date on which the full amount of the loan, together with interest, is repaid to the Board by the trustees or managers of the scheme to which the loan has been made;

• “reference banks” means the 4 largest persons for the time being who –have permission under Part IV of the FSMA 2000 (permission to carry on regulated activities) to accept deposits, and ;are incorporated in the United Kingdom and carrying on there a regulated activity of accepting deposits, and quote a base rate applicable to sterling deposits.

• (4) In paragraph (3), paragraph (b) of the definition of “reference banks” must be read with –

• (a) section 22 of the FSMA 2000 (the classes of activity and categories of investment),

• (b) any relevant order under that section, and

• (c) Schedule 2 to that Act (regulated activities).

Withdrawal following issue of Article 106(4) notice

19

• (1) A notice issued by the Board under Article 132(3) or (4) (withdrawal following issue of Article 106(4) notice) shall be in writing and shall contain the following information –

• (a) the name or type of the notice issued;

• (b) the date on which the notice is issued;

• (c) the name, address and pension scheme registration number of the scheme in respect of which the notice is issued;

• (d) the name of the employer in relation to the scheme in respect of which the notice is issued;

• (e) if the notice is issued pursuant to a determination by the Board under Article 132(2), a statement of the Board’s determination and the date on which that determination was made;

• (f) if the notice is issued by the Board under Article 132(4), a statement by the Board of the basis on which the notice is issued;

• (g) the address for communications at which the Board may be contacted in connection with the issue of the notice;

• (h) whether the issue of the notice by the Board is a reviewable matter and, if so, the time limit for applying for a review of, or appeal against, the issue of the notice;

• (i) the date on which the notice issued will become binding, and

• (j) whether the notice issued contains any restricted information and, if so, the nature of the restrictions.

• (2) Where a notice issued by the Board under Article 132(3) or (4) becomes binding, the notice which the Board must issue to this effect under Article 132(7) shall be in writing and shall contain the following information –

• (a) the information described in paragraph (1)(a) to (g);

• (b) the date on which the withdrawal notice referred to in paragraph (1) was issued;

• (c) a statement that the withdrawal notice referred to in paragraph (1) has become binding, and

• (d) the date on which the Board ceases to be involved with the scheme in respect of which the binding notice is issued.

Consequences of the Board ceasing to be involved with a scheme

20

• (1) Where an assessment period in relation to an eligible scheme comes to an end by virtue of the Board ceasing to be involved with the scheme following the issue of a withdrawal notice under Article 106(2)(b) (insolvency practitioner’s duty to issue notices confirming status of scheme) in relation to the scheme which has become binding then, subject to paragraphs (2) and (3), benefits are to accrue under the scheme rules to, or in respect of, any member of the scheme in respect of any period of service in employment during that assessment period which, but for Article 117(5) (admission of new members, payment of contributions etc.), would have qualified that member for those benefits under the scheme rules.

• (2) No benefits shall accrue under the scheme rules to, or in respect of, any member of the scheme in the circumstances described in paragraph (1) unless contributions are paid to the scheme by, or on behalf of, that member before whichever is the earlier of –

• (a) the end of the period of one year beginning with the date on which the assessment period in relation to the scheme came to an end, and

• (b) the end of the period beginning with the date on which the assessment period in relation to the scheme came to an end and ending at least 28 days before the date on which the member requests the trustees or managers of the scheme to put his entitlement to a pension or other benefits under the scheme into payment.

• (3) Where, during the period prescribed in paragraph (2)(a) or (b), contributions are paid to a scheme by, or on behalf of, a member in respect of any period of that member’s employment during an assessment period, contributions shall also become payable to the scheme by the employer in relation to the scheme in respect of that period of the member’s employment during that assessment period.

• (4) Where, during the period prescribed in paragraph (2)(a) or (b), contributions are paid to a scheme by, or on behalf of, a member of the scheme or by the employer in relation to the scheme in respect of any period of that member’s employment during an assessment period, those contributions must be accepted by the trustees or managers of the scheme for the assessment period or for any part of that period.

Refusal to assume responsibility – schemes which become eligible schemes

21

• (1) The prescribed period referred to in Article 130(1) (schemes which become eligible schemes) throughout which the Board must be satisfied that an occupational pension scheme is not an eligible scheme shall –

• (a) in the case of a scheme which was established at least 3 years before the date on which an assessment period began in relation to the scheme, be the period of 3 years preceding the date on which that assessment period began, ...

• (b) in the case of a scheme which was established less than 3 years before the date on which an assessment period began in relation to a scheme, be the period beginning with the date on which the scheme was established and ending with the date on which that assessment period began and

• (c) in the case of a scheme which becomes an eligible scheme on 1st April 2015 in accordance with regulation 42(1)(b) of the Pensions (2012 Act) (Transitional, Consequential and Supplementary Provisions) Regulations (Northern Ireland) 2014—

• (i) where the date on which an assessment period began is less than 3 years after 1st April 2015, be the period beginning on 1st April 2015 and ending with the assessment date, or

• (ii) where the date on which an assessment period began is at least 3 years after 1st April 2015, be the period of 3 years preceding the date on which that assessment period began.

• (2) Paragraph (1) shall have effect in relation to –

• (a) a section of a segregated scheme;

• (b) a multi-employer section of a segregated scheme, or

• (c) a segregated part of –

• (i) a multi-employer section of a segregated scheme, or

• (ii) a non-segregated scheme,

as if that section, or segregated part, were a separate occupational pension scheme²⁹.

• (3) This regulation shall not apply where either—

• (a) regulation 2(1A) of these Regulations, or

• (b) regulation 2A of the Pension Protection Fund (Partially Guaranteed Schemes) (Modification) Regulations (Northern Ireland) 2005 (schemes to which regulation 2(1) does not apply),

applies to a scheme.

Refusal to assume responsibility – new schemes created to replace existing schemes

22

• (1) The prescribed period referred to in Article 131(1)(a) (new schemes created to replace existing schemes) during which the Board must be satisfied that a new occupational pension scheme was established shall be the period of 3 years preceding the date on which an assessment period began in relation to the scheme.

• (2) Paragraph (1) shall have effect in relation to –

• (a) a section of a segregated scheme;

• (b) a multi-employer section of a segregated scheme, or

• (c) a segregated part of –

• (i) a multi-employer section of a segregated scheme, or

• (ii) a non-segregated scheme,

as if that section, or segregated part, were a separate occupational pension scheme³⁰.

Form and content of withdrawal notices issued under Article 130 or 131

23

• (1) A notice issued under Article 130(2) or 131(2) (a “withdrawal notice”) shall be in writing and shall contain the following information –

• (a) the name or type of the notice issued;

• (b) the date on which the notice is issued;

• (c) the name, address and pension scheme registration number of the scheme in respect of which the notice is issued;

• (d) the name of the employer in relation to the scheme in respect of which the notice is issued;

• (e) a statement that the Board has refused to assume responsibility for the scheme in respect of which the notice is issued;

• (f) the period in relation to which the Board is satisfied that the scheme in respect of which the notice is issued is not an eligible scheme;

• (g) a statement of reasons for the Board’s decision to refuse to assume responsibility for the scheme in respect of which the notice is issued;

• (h) whether the issue of the notice by the Board is a reviewable matter and, if so, the time limits for applying for a review of, or appeal against, the issue of that notice;

• (i) the date on which the notice issued will become binding;

• (j) the address for communications at which the Board may be contacted in respect of the issue of the notice, and

• (k) whether the notice issued contains restricted information and, if so, the nature of any restrictions.

• (2) Where a notice to which this regulation applies becomes binding, the Board shall issue a notice to that effect (a “binding notice”) which shall be in writing and shall contain the following information –

• (a) the information described in paragraph (1)(a) to (f), (j) and (k);

• (b) the date on which the withdrawal notice referred to in paragraph (1) was issued, and

• (c) a statement that the withdrawal notice referred to in paragraph (1) has become binding.

Applications for reconsideration

24

• (1) An application for reconsideration under Article 135 (application for reconsideration) shall be made in writing and shall be accompanied by –

• (a) either—

• (i) a protected benefits quotation in relation to the scheme, or

• (ii) written evidence which shows that the trustees or managers of the scheme have taken all reasonable steps to obtain a protected benefits quotation but were unable to do so, and

• (b) audited scheme accounts in relation to the scheme for the period which –

• (i) begins with the date of the last audited scheme accounts in relation to the scheme, and

• (ii) ends with any day within the period of 6 months preceding the date on which the application is made.

• (2) An application for reconsideration shall contain the following information –

• (a) a description of the type or purpose of the application;

• (b) the name, address and pension scheme registration number of the scheme in respect of which the application is made;

• (c) the name and address of the employer in relation to the scheme;

• (d) the name and address of the trustees or managers of the scheme in respect of which the application is made;

• (e) the date on which the trustees or managers of the scheme received a binding scheme failure notice issued by the Board in respect of the scheme;

• (f) the date on which the trustees or managers of the scheme received a binding valuation notice under Article 129(3) (binding valuations) or a binding determination notice under Article 127A(4) (determinations under Article 127) issued by the Board in respect of the scheme;

• (g) the date on which the application was sent to the Board by the trustees or managers of the scheme;

• (h) where the application is accompanied by a protected benefits quotation, the cost quoted in the protected benefits quotation which accompanies the application;

• (i) where the application is accompanied by a protected benefits quotation, the value of the assets of the scheme adjusted to take into account any outstanding liabilities of the scheme which are not covered by the protected benefits quotation which accompanies the application, and

• (j) the estimated cost of winding the scheme up.

• (3) The prescribed period referred to in Article 135(6) as “the authorised period” for making an application for reconsideration is the period of 6 months.

Form and content of audited scheme accounts

25

The prescribed requirements referred to in Article 135(9)(b) (application for reconsideration) which are to apply in respect of the preparation of audited scheme accounts are that those accounts shall –

• (a) contain the information specified in the Schedule;

• (b) show a true and fair view of –

• (i) the financial transactions of the scheme during the period to which the accounts relate (“the accounting period”);

• (ii) the amount and disposition of the assets at the end of the accounting period, and

• (iii) the liabilities of the scheme, other than the liabilities to pay pensions and benefits, after the end of the accounting period, and

• (c) include a report by the auditor in writing as to whether or not, in his opinion, the requirements of paragraphs (a) and (b) are satisfied.

SCHEDULE — CONTENTS OF ACCOUNTS AUDITED BY THE AUDITOR OF THE SCHEME

1

An account of the financial additions to, withdrawals from, and changes to, the value of the fund during the accounting period.

2

• (1) A statement, as at the end of the accounting period, of the assets at market value, or the trustees' or managers' estimate thereof where the market value is not readily ascertainable, and liabilities of the scheme, other than liabilities to pay pensions and benefits after the end of the accounting period –

• (a) giving, in the case of any assets which are stated at an estimate of their market value, the reason why the valuation is an estimate;

• (b) showing the distribution of the investments and other assets of the scheme between each of the following categories (where none of the investments falls within a particular category, that fact is not required to be stated), namely –

• (i) insurance policies;

• (ii) public sector fixed interest investments and separately quoted securities and unquoted securities;

• (iii) other fixed interest investments and separately showing quoted securities and unquoted securities;

• (iv) index-linked securities and separately showing quoted securities and unquoted securities;

• (v) equities (including convertible shares) and separately showing quoted equities and unquoted equities;

• (vi) property (which in this paragraph means any right or interest in freehold or leasehold land or buildings);

• (vii) unit trusts invested in property;

• (viii) other unit trusts;

• (ix) managed funds (other than unit trusts) invested in property;

• (x) other managed funds (not being unit trusts);

• (xi) loans (whether or not secured by mortgages);

• (xii) cash deposits and cash in hand;

• (xiii) investments and other assets not included in paragraphs (i) to (xii), and

• (c) showing separately, in the case of investments in each category, investments in the United Kingdom and investments outside the United Kingdom, and in the case of cash investments mentioned in head (b)(vii) to (x) investments where the company operating the unit trust or managed fund is, and where it is not, a company registered in the United Kingdom.

• (2) Where the assets include insurance policies which are specifically allocated to the provision of benefits for, and which provide all the benefits payable under the scheme to, particular members or other persons in respect of particular members or both, those policies must be included in the statement and there must be a note of the existence of such policies but that entry need not include their market value or an estimate.

• (3) Where the assets –

• (a) are invested only for the purposes of securing additional money purchase benefits derived from voluntary contributions..., and

• (b) are specifically allocated to the provision of additional benefits for particular members or other persons in respect of particular members (or both),

a note that heads (a) and (b) apply must be included in the statement, but that entry need not include the market value or an estimate of value of those assets.

3

Where any assets or liabilities are denominated in currencies other than sterling, a translation of those assets into sterling and an explanation of the basis on which they have been translated.

4

Particulars of any investment (other than in United Kingdom Government securities) in which more than 5 per cent. of the total value of the net assets of the scheme is invested, and if any such investment is an insurance policy, a statement of its main characteristics.

5

Where the scheme has employer-related investments, within the meaning of Article 40(2)³¹ of the 1995 Order (restriction on employer-related investments), a statement –

• (a) as to the percentage of the scheme’s resources invested in such investments at the end of the accounting period, and

• (b) if that percentage exceeds 5 per cent., as to the percentage of the scheme’s resources which are investments to which regulation 13 of the Occupational Pension Schemes (Investment) Regulations (Northern Ireland) 2005 (investments to which restrictions do not apply) applies.

6

In respect of every other amount shown in the accounts other than the amounts referred to in paragraph 7, a statement of the corresponding amount for the scheme year previous to the accounting period, except in a case where regulation 2 of the Occupational Pension Schemes (Requirement to obtain Audited Accounts and a Statement from the Auditor) Regulations (Northern Ireland) 1997³² (requirement of trustees or managers to obtain documents) is complied with by the trustees or managers of a scheme for the first time.

7

The total amount of the purchases and the total amount of the sales of investments during the accounting period.

8

A statement whether the accounts have been prepared in accordance with the Statement of Recommended Practice, the guidelines “Financial Reports of Pension Schemes” published by the Pensions Research Accountants Group³³ or another organisation approved for this purpose by the Financial Reporting Council Limited , current at the end of the accounting period and, if not, an indication of where there are any material departures from those guidelines.

Signed

Sealed with the Official Seal of the Department for Social Development on 16th March 2005.

John O'Neill — A senior officer of the — Department for Social Development

Explanatory note

(This note is not part of the Regulations.)

These Regulations make provision relating to various requirements under Part III of the Pensions (Northern Ireland) Order 2005 (“the Order”).

Regulation 1 provides for citation, commencement and interpretation, and includes an extension of the meaning of “employer” for the purposes of these Regulations.

Regulation 2 sets out those schemes which are not “eligible schemes” for the purposes of Part III of the Order and therefore are not able to receive compensation from the Board of the Pension Protection Fund (“the Board”) pursuant to the pension compensation provisions in that Part of the Order. The Board is established under section 107 of the Pensions Act 2004 (c. 35).

Regulation 3 provides that where, after the beginning of an assessment period in relation to an eligible scheme, the scheme ceases to be an eligible scheme in prescribed circumstances, the scheme shall, for the purposes of Part III of the Order, be treated as remaining an eligible scheme.

Regulation 4 makes provision in respect of the period in which an insolvency practitioner is required to notify the Board of the occurrence of an insolvency event in relation to the employer in relation to an eligible scheme. If an insolvency event is a “qualifying insolvency event” within the meaning of Part III of the Order, the start of an assessment period will be triggered in relation to an eligible scheme and the scheme will become subject to the various requirements under Part III of the Order.

Regulation 5 provides for certain events in relation to certain types of bodies (such as building societies, friendly societies and limited liability partnerships) to be classified as insolvency events for the purposes of Part III of the Order.

Regulation 6 sets out the circumstances in which insolvency proceedings in relation to the employer in relation to an eligible scheme are stayed or come to an end. Where those circumstances exist, the insolvency practitioner will be required to issue a notice to the effect that he is not able to confirm whether a scheme rescue has occurred or is not possible. This may lead to the Board ceasing to be involved with a scheme.

Regulation 7 makes provision in respect of applications and notifications to the Board under Article 113 of the Order for it to assume responsibility for an eligible scheme in circumstances where the employer in relation to the scheme is unlikely to continue as a going concern and meets prescribed requirements.

Regulation 8 sets out the time limit for making applications to the Board under Article 113 of the Order. It also makes provision in respect of the form and content of such applications, and about the form and content of notifications to the Board which the Pensions Regulator is required to make in circumstances where it becomes aware that an employer in relation to an eligible scheme is unlikely to continue as a going concern and meets prescribed requirements.

Regulations 9 and 10 set out the circumstances which must exist before an insolvency practitioner in relation to an employer in relation to an eligible scheme or the Board is able to determine whether or not a scheme rescue has occurred or is not possible in relation to the scheme. They also make provision regarding the form and content of the notices which must be issued by the insolvency practitioner or the Board in order to confirm the status of a scheme.

Regulations 11 and 12 modify the application of regulations 9 and 10 so as to make similar provision in respect of multi-employer schemes.

Regulation 13 makes provision regarding the form and content of binding notices confirming the status of a scheme. A notice is not binding until the period in respect of which it is possible for the issue of the notice to be reviewed under Chapter 6 of Part III of the Order has expired or, if an application for a review has been made, until the review or any subsequent appeal has been conclusively resolved.

Regulation 14 makes provision in respect of the types of payments that may be made to a scheme during an assessment period.

Regulation 15 makes provision in respect of the “relevant person” in relation to an eligible scheme to whom the Board may issue directions under Article 118 of the Order.

Regulation 16 provides for the circumstances in which a transfer payment may be made during an assessment period in respect of a member’s rights under an eligible scheme. It also provides for the other circumstances in which the trustees or managers of a scheme may take steps to discharge a member’s rights under an eligible scheme during an assessment period.

Regulation 17 makes provision in respect of the circumstances where a member of an eligible scheme may postpone the receipt of his entitlement to a pension or lump sum payment under the scheme during an assessment period.

Regulation 18 makes provision in respect of the rate of interest which is payable by the trustees or managers of an eligible scheme to which the Board has made a loan to pay scheme benefits under Article 123 of the Order. It also makes provision in respect of how the rate of interest payable is to be calculated.

Regulation 19 makes provision in respect of the form and content of withdrawal notices issued by the Board under Article 132 of the Order.

Regulation 20 makes provision in respect of the accrual of benefits under a scheme in respect of an assessment period in relation to an eligible scheme when that assessment period comes to an end.

Regulations 21 and 22 make provision in respect of the period in relation to which the Board is to determine whether or not to refuse to assume responsibility for a scheme under Articles 130 and 131 of the Order.

Regulation 23 makes provision in respect of the form and content of withdrawal notices issued by the Board under Articles 130 and 131 of the Order.

Regulation 24 makes provision in respect of the form and content of applications for reconsideration made under Article 135 of the Order. It also makes provision in respect of the time limits for making such applications and the documents which are to accompany the application.

Regulation 25 and the Schedule make provision in respect of the prescribed form and content of the audited scheme accounts and report from the auditor which is to accompany an application for reconsideration.

The Pensions (2005 Order) (Commencement No. 1 and Consequential and Transitional Provisions) Order (Northern Ireland) 2005 (S.R. 2005 No. 48 (C. 8)) provides for the coming into operation of some of the enabling provisions under which these Regulations are made as follows –

• Article 110(1)(b) and (5), for the purpose of authorising the making of regulations on 25th February 2005 and for all other purposes on 1st April 2005;

• Articles 2(5)(a), 104(3) and (4), 105(5), 106(3), (5) and (8), 107(5), 110(3), 113(1)(b), (3) and (8), 114(5) and (8), 117(3), 118(3)(a) (in part), 119(4), 122(10)(b) and (12), 123(6), 130(1) and (5), 131(1)(a) and (5), 132(8), 134(5) and (6)(a) to (c) and 135(4), (6), (8) (in part) and (9)(b), for the purpose of authorising the making of regulations on 25th February 2005 and for all other purposes on 6th April 2005.

As these Regulations are made before the end of the period of six months beginning with the coming into operation of the provisions of the Order by virtue of which they are made, the requirement to consult under Article 289(1) of the Order does not apply by virtue of paragraph (2)(c) of that Article.

Footnotes

Editorial notes