The Pension Sharing (Valuation) Regulations 2000

Made: 13th April 2000

Laid before Parliament: 19th April 2000

Coming into force: 1st December 2000

The Secretary of State for Social Security, in exercise of the powers conferred upon him by sections 27(2), 30(1) and (2) and 83(4) and (6) of the Welfare Reform and Pensions Act 1999, and of all other powers enabling him in that behalf, after consulting such persons as he considered appropriate, hereby makes the following Regulations:

Citation, commencement and interpretation

1

• (1) These Regulations may be cited as the Pension Sharing (Valuation) Regulations 2000 and shall come into force on 1st December 2000.

• (2) In these Regulations—

“the 1993 Act" means the Pension Schemes Act 1993 ;

“the 1995 Act" means the Pensions Act 1995 ;

“the 1999 Act" means the Welfare Reform and Pensions Act 1999;

“the 2004 Act” means the Pensions Act 2004;

...

“employer" has the meaning given by section 181(1) of the 1993 Act;

...

“occupational pension scheme" has the meaning given by section 1 of the 1993 Act;

“pension arrangement" has the meaning given by section 46(1) of the 1999 Act;

“relevant arrangement" has the meaning given by section 29(8) of the 1999 Act;

...

“scheme" means an occupational pension scheme;

...

...

“transfer credits" has the meaning given by section 181(1) of the 1993 Act;

“transfer day” has the meaning given by section 29(8) of the 1999 Act;

“transferor" has the meaning given by section 29(8) of the 1999 Act;

“the Transfer Values Regulations” means the Occupational Pension Schemes (Transfer Values) Regulations 1996;

“trustees or managers" has the meaning given by section 46(1) of the 1999 Act;

“valuation day" has the meaning given by section 29(7) of the 1999 Act.

Rights under a pension arrangement which are not shareable

2

• (1) Rights under a pension arrangement which are not shareable are—

• (a) subject to paragraph (2), any rights accrued between 1961 and 1975 which relate to contracted-out equivalent pension benefit within the meaning of section 57 of the National Insurance Act 1965 (equivalent pension benefits, etc.);

• (b) any rights in respect of which a person is in receipt of—

• (i) a pension;

• (ii) an annuity; or

• (iii) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (iv) dependants’, nominees’ or successors’ income withdrawal within the meaning of, as the case may be, paragraph 21 (dependants’ income withdrawal), 27D (nominees’ income withdrawal) or 27J (successors’ income withdrawal) of Schedule 28 to the Finance Act 2004,

by virtue of being the widow, widower, surviving civil partner, nominee, successor or other dependant of a deceased person with pension rights under a pension arrangement; ...

• (ba) any rights relating to sums and assets held for the purposes of—

• (i) a dependant’s drawdown pension fund or flexi-access drawdown fund within the meaning of, as the case may be, paragraph 22 (dependant’s drawdown pension fund) or 22A (dependant’s flexi-access drawdown fund) of Schedule 28 to the Finance Act 2004;

• (ii) a nominee’s or successor’s flexi-access drawdown fund within the meaning of, as the case may be, paragraph 27E (nominee’s flexi-access drawdown fund) or 27K (successor’s flexi-access drawdown fund) of Schedule 28 to the Finance Act 2004;

• (c) any rights which will result in the payment of a benefit which is to be provided solely by reason of the—

• (i) disablement, or

• (ii) death,

due to an accident suffered by a person occurring during his pensionable service; and

• (d) any rights in respect of a cash transfer sum or contribution refund that the member would be entitled to under section 101AB of the 1993 Act (right to cash transfer sum and contribution refund) if pensionable service were to be terminated.

• (2) Paragraph (1)(a) applies only when those rights are the only rights held by a person under a pension arrangement.

Calculation and verification of cash equivalents for the purposes of the creation of pension debits and credits

3

For the purposes of section 29 of the 1999 Act (creation of pension debits and credits), cash equivalents may be calculated and verified—

• (a) where the relevant arrangement is an occupational pension scheme in accordance with regulation 4; or

• (b) in any other case, in accordance with regulations 5 and 7.

Occupational pension schemes: manner of calculation and verification of cash equivalents

4

• (1) Subject to this regulation, where a person with pension rights is, for the purposes of Part I of the 1995 Act, an active member, a deferred member or a pensioner member of an occupational pension scheme, or where a person with pension rights attains, or is over, normal pension age and is not in receipt of the pension, the value of rights in relation to a category of benefits referred to in section 93(6) of the 1993 Act (category of benefits) must be calculated and verified in accordance with regulations 7 to 7C and 7E(1) to (3) of the Transfer Values Regulations (calculation and verification of cash equivalents), as if—

• (a) in the case of benefits other than money purchase benefits, the member has made an application for a statement of entitlement under section 93A of the 1993 Act (right to statement of entitlement: benefits other than money purchase); or

• (b) in the case of money purchase benefits, the member has made an application under section 95 of the 1993 Act (ways of taking right to cash equivalent) to use the cash equivalent of those benefits.

• (2) Where a person with pension rights is continuing to accrue rights to benefits in the category of benefits to be valued, paragraph (1) applies as if the person had ceased to accrue rights in that category of benefits on the valuation day.

• (3) Where a person with pension rights is entitled to present payment of the pension, but the pension is not yet in payment, the cash equivalent must be calculated and verified on the assumption that the pension comes into payment on the transfer day.

• (4) When calculating and verifying the cash equivalent, regulations 7 to 7C and 7E(1) to (3) of the Transfer Values Regulations are to be read as if—

• (a) in regulation 7—

• (i) in paragraph (1)(a), the words “and then making any reductions in accordance with regulation 7D” do not appear;

• (ii) in paragraph (1)(b), the words “regulation 7E” are replaced with “regulation 7E(1) to (3)”;

• (b) in regulation 7A(2), the words “guarantee date” are replaced with “valuation day”;

• (c) in regulation 7C(2), the words “at the date of calculation” are replaced with “on the valuation day”; and

• (d) “valuation day” has the meaning given by section 29(7) of the 1999 Act (meaning of valuation day).

Occupational pension schemes: further provisions as to the calculation of cash equivalents and increases and reductions of cash equivalents

5

• (1) Subject to this regulation, cash equivalents for members of a relevant arrangement other than an occupational pension scheme are to be calculated and verified in accordance with regulations 7 to 7C and 7E(1) to (3) of the Transfer Values Regulations, as if the person with the pension rights had made a valid application under section 95 of the 1993 Act to use the cash equivalent of the rights to benefits.

• (2) When calculating and verifying the cash equivalent, the Transfer Value Regulations are to be read as if—

• (za) in regulation 7(1)(a), the words “and then making any reductions in accordance with regulation 7D” do not appear;

• (zb) in regulation 7(1)(b), the words “regulation 7E” are replaced with “regulation 7E(1) to (3)”;

• (a) in regulation 1(2)—

• (i) for the definition of “trustees” there were substituted—

• “trustees” means the person responsible for the relevant arrangement;

; and

• (ii) there were inserted at the appropriate alphabetical places—

• “personal pension scheme” has the meaning given by section 1 of the 1993 Act (categories of pension scheme);

• “transfer day” has the meaning given by section 29(8) of the Welfare Reform and Pensions Act 1999 (creation of pension debits and credits);

• (b) in regulation 7(1) (manner of calculation and verification of cash equivalents – general provisions), for “paragraphs (4) and (7)” there were substituted “paragraphs (4), (7) and (8)”; and

• (c) after regulation 7(7), there were inserted—

(8) Where the person with pension rights is a member of a personal pension scheme, or those rights are contained in a retirement annuity contract, the value of the benefits which he has accrued under that scheme or contract on the transfer day must be taken to be the cash equivalent to which he would have acquired a right under section 94(1)(b) of the 1993 Act (right to cash equivalent), if he had made an application under section 95(1) of that Act (ways of taking right to cash equivalent) on the date on which the request for the valuation was received.

• (3) In relation to a personal pension scheme which is comprised in a retirement annuity contract made before 4th January 1988, this regulation applies as if such a scheme were not excluded from the scope of Chapter 1 of Part 4ZA of the 1993 Act by section 93(5)(b) of that Act (scope of Chapter 1).

Other relevant arrangements: manner of calculation and verification of cash equivalents

6

• (1) Except in a case to which paragraph (3) applies, cash equivalents are to be calculated and verified in such manner as may be approved in a particular case by—

• (a) a Fellow of the Institute of Actuaries;

• (b) a Fellow of the Faculty of Actuaries; or

• (c) a person with other actuarial qualifications who is approved by the Secretary of State, at the request of the person responsible for the relevant arrangement, as being a proper person to act for the purposes of this regulation and regulation 7 in connection with that arrangement,

and in paragraph (2) “actuary” means any person such as is referred to in sub-paragraph (a), (b) or (c) of this paragraph.

• (2) Except in a case to which paragraph (3) applies, cash equivalents are to be calculated and verified by adopting methods and making assumptions which—

• (a) if not determined by the person responsible for the relevant arrangement, are notified to them by an actuary; and

• (b) are certified by an actuary to the person responsible for the relevant arrangement as being consistent with “Retirement Benefit Schemes—Transfer Values (GN11)”, published by the Institue of Actuaries and the Faculty of Actuaries and current on the valuation day.

• (3) Where a transferor’s cash equivalent, or any portion of it—

• (a) represents his rights to money purchase benefits under the relevant arrangement; and

• (b) those rights do not fall, either wholly or in part, to be valued in a manner which involves making estimates of the value of benefits,

then that cash equivalent, or that portion of it, shall be calculated and verified in such manner as may be approved in a particular case by the person responsible for the relevant arrangement.

• (4) This regulation and regulation 7 apply to a relevant arrangement other than an occupational pension scheme.

Other relevant arrangements: reduction of cash equivalents

7

• (1) Where all or any of the benefits to which a cash equivalent relates have been surrendered, commuted or forfeited before the date on which the person responsible for the relevant arrangement discharges his liability for the pension credit in accordance with the provisions of Schedule 5 to the 1999 Act, the cash equivalent of the benefits so surrendered, commuted or forfeited shall be reduced in proportion to the reduction in the total value of the benefits.

• (2) This regulation does not apply to occupational pension schemes.

Signed

Signed by authority of the Secretary of State for Social Security.

Jeff Rooker — Minister of State, — Department of Social Security — 2000-04-13

Explanatory note

(This note is not part of the Regulations)

Footnotes

[^f00001]: 1999 c. 30.

[^f00002]: See section 83(11) of the Welfare Reform and Pensions Act 1999.

[^f00003]: 1993 c. 48.

[^f00004]: 1995 c. 26.

[^f00005]: 1988 c. 1. Section 612 was amended by sections 103(2) and 258 of, and paragraph 12 of Part V of Schedule 26 to, the Finance Act 1994 (c. 9).

[^f00006]: 1965 c. 51. Section 57 is continued in force by virtue of regulation 3 of S.I. 1974/2057.

[^f00007]: Section 28(1A) is amended by paragraph 5(3) of Schedule 2 to the Welfare Reform and Pensions Act 1999.

[^f00008]: The definition of “income withdrawal” was inserted by paragraph 1 of Schedule 11 to the Finance Act 1995 (c. 4).

[^f00009]: The Institute of Actuaries is at Staple Inn Hall, High Holborn, London WC1V 7QJ. The Faculty of Actuaries is at Maclaurin House, 18 Dublin Street, Edinburgh EH1 3PP.

[^f00010]: 1972 c. 11.

[^f00011]: The publication “Retirement Benefit Schemes—Transfer Values (GN11)” may be obtained from the Institute of Actuaries, Staple Inn Hall, High Holborn, London WC1V 7QJ and from the Faculty of Actuaries, Maclaurin House, 18 Dublin Street, Edinburgh EH1 3PP. The publication is also available on the following internet web-site: http://www.actuaries.org.uk.

[^f00012]: Section 73 was modified by regulation 3 of S.I. 1996/3126 and is amended by section 38(1) of, and paragraph 55 of Schedule 12 to, the Welfare Reform and Pensions Act 1999.

[^f00013]: S.I. 1996/1536. Schedule 5 was amended by S.I. 1997/786 and 1997/3038.

[^f00014]: Section 74 is amended by paragraph 56 of Schedule 12 to the Welfare Reform and Pensions Act 1999.

[^f00015]: S.I. 1996/3126, amended by S.I. 1997/786, and S.I. 1999/3198.

Manner of calculation and verification of cash equivalents: occupational pension schemes

Manner of calculation and verification of cash equivalents: other relevant arrangements

Other relevant arrangements: reduction of cash equivalents

Editorial notes

[^c1601226]: 1999 c. 30.

[^c1601227]: See section 83(11) of the Welfare Reform and Pensions Act 1999.

[^c1601228]: 1993 c. 48.

[^c1601229]: 1995 c. 26.

[^c1601231]: 1965 c. 51. Section 57 is continued in force by virtue of regulation 3 of S.I. 1974/2057.

[^key-c1da9afad2b74d6fee7912dd5608c2b0]: Words in reg. 1(2) inserted (1.12.2000) by The Pension Sharing (Consequential and Miscellaneous Amendments) Regulations 2000 (S.I. 2000/2691), regs. 1, 10(2)

[^key-a2426867b85c90d13752713e5504a80e]: Words in reg. 2(1)(b) inserted (5.12.2005) by The Civil Partnership (Pensions, Social Security and Child Support) (Consequential, etc. Provisions) Order 2005 (S.I. 2005/2877), art. 1, Sch. 1 para. 3 (with art. 3)

[^key-b20cbefdbbe15aa0d9484ed87d637675]: Words in reg. 1(2) inserted (30.12.2005) by The Occupational Pension Schemes (Scheme Funding) Regulations 2005 (S.I. 2005/3377), regs. 1, 20(1), Sch. 3 paras. 9(2)

[^key-70ca9bbd4a93d1a76e2790fe93527d3a]: Words in reg. 1(2) omitted (6.4.2006) by virtue of Taxation of Pension Schemes (Consequential Amendments of Occupational and Personal Pension Schemes Legislation) Order 2006 (S.I. 2006/744), art. 1, art. 16(2)