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The Financial Assistance Scheme Regulations 2005

Type Statutory-Instrument

Publication 2005-07-19

Last updated 2021-07-08

State In force

Department King's Printer of Acts of Parliament

Source legislation.gov.uk

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(zac) in paragraph 3(3) and (3ZD), for “attains normal retirement age” substitute “becomes entitled to an ill health payment”.

(zb) in paragraph 4(3)—

(i) after paragraph (b) insert “and”;

(ii) after paragraph (c) omit “and”; and

(iii) omit paragraph (d);

(a) for paragraph 5(8)(b) substitute—

(b) ending on the day before the day on which the scheme began to wind up.

(b) in paragraph 4(7)(b)(i) for “the day on which the qualifying member attains normal retirement age” substitute “the day from which the qualifying member is entitled to an ill health payment in accordance with regulation 17A(1)

(bza) for paragraph 4(7A)(a) substitute—

(a) the day from which the qualifying member is entitled to an ill health payment in accordance with regulation 17A(1);

(ba) in paragraph 4(10A) for “annual payment” substitute “ill health payment”;

(b) ending on the earlier of— (i) the day on which the qualifying member became entitled to an ill health payment in accordance with regulation 17A(1); and (ii) 31st March 2011.

(ca) in paragraph 5(10A) for the words from “the earlier of” to the end substitute “the day from which the qualifying member became entitled to an ill health payment.”;

(d) omit paragraphs 2A, 4(13) to (13D), 4A, 7, 9 and 10; and

(e) for paragraph 10(ba) substitute—

(ba) for “regulation 17A(1)”, in each place it occurs, substitute “regulation 17B(2)”; (bb) for “ill health payment”, in each place it occurs, substitute “interim ill health payment”; (bc) for paragraph 4(7)(b) substitute— (“b) ending on the day from which the qualifying member is entitled to an interim ill health payment in accordance with regulation 17B(2).

Cap on expected pension and actual pension

7

(1) Where the amount of a qualifying member’s expected pension determined in accordance with paragraph 2, 3 or 3A multiplied by 0.9 exceeds the FAS cap—

(a) the amount of the ill health payment or interim ill heath payment payable to, or in respect of, that member under paragraph 2, 2A, 3 or 3A shall be determined on the basis that the product of that calculation was the amount of the FAS cap; and

(b) the amount “A” under paragraph 2 for the purposes of paragraph (b)(i) in the definition of “underlying rate” in paragraph 9 shall be the amount of the FAS cap;

(2) Where the amount of a qualifying member’s actual pension or interim pension determined in accordance with this Schedule exceeds—

(a) the amount of the qualifying member’s expected pension determined in accordance with paragraph 2 or 3 multiplied by 0.9; or

(b) the FAS cap,

no ill health payment or interim ill health payment shall be payable to, or in respect of, that member.

(3) In this paragraph, the standard amount is—

(a) where the qualifying member became entitled to an ill health payment in the period beginning on 1st April 2008 and ending on 31st March 2009, £27,987;

(b) where the qualifying member became entitled, or becomes entitled, to an ill health payment in the period beginning on 1st April 2009 and ending on 31st March 2010, £29,386; ...

(c) where the qualifying member becomes entitled to an ill health payment in the period beginning on 1st April 2010 and ending on 31st March 2011, £29,386; and

(d) where the beneficiary becomes entitled to an ill health payment after 31st March 2011, the amount determined in accordance with sub-paragraph (4).

(4) For each successive period of 12 months from 1st April 2011, the standard amount shall be—

(a) where paragraph (b) does not apply, the amount of the standard amount for the previous period of 12 months increased by the percentage increase in the general level of prices for the period of 12 months ending on the 30th September falling within that previous period of 12 months; or

(b) where there is no such percentage increase, the amount of the standard amount for the previous period of 12 months.

(5) Where the amount of the standard amount determined in accordance with sub-paragraph (3)(d) results in a fraction of a pound, that fraction shall be treated as a pound.

Rounding

8

Where the amount of an ill health payment or interim ill health payment determined in accordance with this Schedule results in a fraction of a penny, that fraction shall be treated as a penny.

Qualifying members for the purposes of section 286A

15A

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Insufficient assets

Annual payments for certain applications in cases of severe ill health

17C

(1) A qualifying member shall be entitled to an annual payment determined in accordance with Schedule 2 where the conditions in paragraphs (2) and (3) are met.

(2) The condition in this paragraph is that, subject to paragraph (9), the qualifying member makes a written request for an annual payment under this regulation during the period of 12 months beginning with the date on which the Financial Assistance Scheme and Incapacity Benefit (Miscellaneous Amendments) Regulations 2009 come into force.

(3) The conditions in this paragraph are that the scheme manager is satisfied that the qualifying member—

(a) has attained the age of 55;

(b) suffers from a progressive disease and as a consequence can reasonably be expected to die within five years;

(c) is unable to work due to ill health and is likely to continue to be so unable to work until normal retirement age; and

(d) is not regarded as a qualifying member by virtue of regulation 15(5).

(4) The date from which a qualifying member is entitled to an annual payment under this regulation is—

(a) where the scheme manager is satisfied that the conditions in paragraph (3) were met before the date on which the scheme manager receives the written request mentioned in paragraph (2), whichever is the later of—

(i) the date on which the scheme manager is satisfied that the conditions in paragraph (3) would first have been met; or

(ii) 14th May 2004; or

(b) in all other cases, the date on which the scheme manager receives the written request mentioned in paragraph (2).

(5) In determining whether or not the scheme manager is satisfied in accordance with paragraph (4)(a), the scheme manager shall have regard to—

(a) the information available as to the length of time the qualifying member has met the conditions in paragraph (3);

(b) the medical evidence available, taking into account—

(i) such evidence as the scheme manager would have expected the qualifying member to have been able to provide in accordance with Schedule 2 to the FAS Information and Payments Regulations, and

(ii) the effect of the lapse of time on the availability of that evidence; and

(6) Paragraphs (4) to (7) of regulation 17 apply to annual payments made under this regulation.

(7) Paragraph (8) applies where—

(a) on the date the Financial Assistance Scheme and Incapacity Benefit (Miscellaneous Amendments) Regulations 2009 come into force, the qualifying member is receiving a payment in accordance with these Regulations (other than payments for a survivor by virtue of regulation 17(4), 17A(3), 17B(2)(b) or 18(4)); and

(b) the qualifying member is entitled to an annual payment in accordance with this regulation.

(8) Where this paragraph applies, from the date on which the scheme manager determines that the qualifying member is entitled to an annual payment in accordance with this regulation—

(a) the qualifying member is not entitled to—

(i) an annual payment under regulation 17(2);

(ii) an annual payment for terminal illness under regulation 17(3); or

(iii) an ill health payment under regulation 17A(1); and

(b) the scheme manager may not make—

(i) an initial payment under regulation 18 in anticipation of an annual payment being payable under regulation 17(2);

(ii) an interim ill health payment under regulation 17B(2); or

(iii) an initial payment for terminal illness by virtue of regulation 18(4).

(9) Where—

(a) a qualifying member has died;

(b) the scheme manager is satisfied that prior to death that qualifying member satisfied the conditions in paragraph (3); and

(c) the relevant representative makes a written request in respect of that qualifying member during the time period set out in paragraph (2);

that qualifying member shall be entitled to an annual payment in accordance with this regulation.

(10) Any annual payment (or initial payment under regulation 18) payable under paragraph (9) is payable to the estate of the deceased qualifying member.

(11) For the purposes of paragraph (9), references in these Regulations to “qualifying member” may be construed as references to the deceased qualifying member or to the deceased qualifying member’s estate, as the case requires.

(12) For the purposes of this regulation—

“relevant representative” means—the survivor of the deceased qualifying member referred to in paragraph (9), orwhere there is no survivor in relation to that qualifying member, that member’s personal representative; and

“personal representative” has the meaning given in regulation 2(1) of the FAS Information and Payments Regulations.

Initial payments

Payment for an entitlement under regulation 17C

5A

(1) This paragraph applies where a qualifying member is entitled to an annual payment in accordance with regulation 17C for a period during which that member has previously received a relevant payment.

(2) The annual payment payable to a qualifying member to whom this paragraph applies is determined in accordance with this Schedule.

(3) For any period for which an annual payment under regulation 17C is due to be paid and a relevant payment has previously been paid, the relevant payment is treated as a payment on account of the annual payment under regulation 17C.

(4) Where the amount of the relevant payment so treated equals the amount of the annual payment payable under sub-paragraph (2), no further payment under regulation 17C is due to the qualifying member.

(5) In this paragraph, “relevant payment” means a payment in accordance with these Regulations other than a payment for a survivor by virtue of regulation 17(4), 17A(3), 17B(2)(b) or 18(4).

Exclusion of certain benefits

Cap on expected pension and actual pension

De minimis rule

Revaluation

Initial payments

Rounding

Financial and other arrangements to enable or assist the Board of the Pension Protection Fund to carry out its functions in relation to the financial assistance scheme

Use of information

6A

(1) Information held by the Secretary of State or the Department for Social Development in Northern Ireland for the purposes of any of their functions relating to social security or the financial assistance scheme may be disclosed to—

(a) the scheme manager; or

(b) to a person with whom the scheme manager has made arrangements under paragraph 18 of Schedule 5 to the Act (as modified by Schedule 1 to these Regulations) and who is authorised by the scheme manager to receive and use such information,

for any use connected with, or incidental to, the exercise of the scheme manager’s functions relating to the financial assistance scheme.

(2) Information obtained by the scheme manager, or a person referred to in paragraph (1)(b), in the exercise of the scheme manager’s functions in relation to the financial assistance scheme—

(a) may be disclosed to the Secretary of State or the Department for Social Development in Northern Ireland in any case in which disclosure is for the purpose of enabling or assisting the scheme manager to exercise its functions; and

(b) shall be disclosed to the Secretary of State or the Department for Social Development in Northern Ireland on request by the Secretary of State or, as the case may be, that Department in any case in which disclosure is for the purpose of enabling or assisting the Secretary of State or, as the case may be, the Department to exercise their functions relating to the financial assistance scheme.

Annual reports

Delegation

Working with qualifying pension schemes

14A

(1) The scheme manager may manage, or make arrangements in relation to the management of, the transfer of any property, rights and liabilities of qualifying pension schemes which have not been fully wound up.

(2) The power conferred by paragraph (1) includes, but is not limited to—

(a) the preparation of plans or other similar preparatory documentation;

(b) undertaking work calculated to assist in ensuring any transfer is carried out effectively and efficiently;

(d) the inspection, examination and auditing of data or other information relating to qualifying pension schemes.

Payments in relation to administration or other costs

14B

(1) Where the scheme manager is satisfied that—

(a) the trustees or managers of a qualifying pension scheme are not able to pay or meet administration or other costs which have been incurred or which are likely to be incurred in relation to that scheme from the assets of the scheme; and

(b) paying or meeting those administration or other costs is necessary in order to—

(i) assist the scheme in winding-up;

(ii) keep any reduction in the scheme’s assets to a minimum; or

(iii) increase the scheme’s assets,

the scheme manager may, on an application by the trustees or managers, pay to them such amounts as it considers appropriate for the purpose of enabling the trustees or managers to pay or meet those costs.

(2) The scheme manager may make a payment under paragraph (1) on such terms as the scheme manager thinks fit.

Survivors

16A

(1) Subject to paragraphs (2) and (3), a person is a survivor of a qualifying member who has died where that person is the qualifying member’s widow, widower or surviving civil partner.

(2) Where the conditions in paragraph (4) are satisfied—

(a) the qualifying member’s surviving partner is a survivor of that qualifying member; and

(b) where the qualifying member leaves a widow, widower or surviving civil partner, that widow, widower or surviving civil partner is not a survivor of that qualifying member.

(3) Where a person is regarded as a qualifying member by virtue of regulation 15(5) that person is not a survivor of the former member referred to in regulation 15(5)(b).

(4) The conditions for the purposes of paragraph (2) are that—

(a) immediately before the qualifying member’s death, the qualifying member had a partner (“the surviving partner”);

(b) the rules of the qualifying pension scheme include provision (whether discretionary or otherwise) to pay a survivor’s pension to a partner of the qualifying member;

(c) the scheme manager is satisfied that the surviving partner was living with the qualifying member immediately before the qualifying member’s death; and

(d) either—

(i) the qualifying member provided the scheme manager with a signed written notice nominating the surviving partner as that member’s survivor;

(ii) the qualifying member provided the trustees or managers of the qualifying pension scheme with a valid nomination in accordance with the rules of the qualifying pension scheme to pay a survivor’s pension to the surviving partner; or

(iii) where the qualifying member did not leave a widow, widower or surviving civil partner, the scheme manager is satisfied that the qualifying member and the surviving partner were financially interdependent or the surviving partner was financially dependent on the qualifying member.

(5) For the purposes of enabling the scheme manager to be satisfied or not satisfied that the conditions in paragraphs (4)(c) and (d)(ii) or (iii) are met, the surviving partner must provide evidence that those conditions are met to the scheme manager.

Surviving dependants

16B

(1) Subject to paragraph (2), a child of the family of a qualifying member is a surviving dependant of that qualifying member for the purposes of these Regulations where—

(a) the child was financially dependent on the member and is aged—

(i) less than 18; or

(ii) less than 23 and is—

(aa) attending a qualifying course; or

(bb) incapable of engaging in full time paid employment due to having a disability within the meaning of the Disability Discrimination Act 1995; and

(b) the scheme manager is provided with—

(i) in the case of a natural child or unborn child, a birth certificate demonstrating that the child was the natural child of the member;

(ii) in the case of an adopted child, the adoption certificate demonstrating that the child was the adopted child of the member;

(iii) in the case of any other child in respect of whom sub-paragraph (a) is satisfied, evidence demonstrating to the satisfaction of the scheme manager that the child was a dependent child of the member immediately before the qualifying member’s death.

(2) Where a person is regarded as a qualifying member by virtue of regulation 15(5) that person is not a surviving dependant of the former member referred to in regulation 15(5)(b).

3ZA

In section 113 (investment of funds)—

(a) at the beginning of subsection (1), insert “Subject to subsection (1A),”; and

(b) after subsection (1), insert—

(1A) The Board may hold any grant received in accordance with regulation 5(3) of the Financial Assistance Scheme Regulations 2005 (scheme manager) in an interest-bearing account but may not otherwise invest any such grant.

3ZB

After section 114(4) (investment principles), insert—

(4A) A statement of investment principles need not cover investments made in accordance with section 113(1A).

3ZC

In section 115(1)(a) (borrowing), after “any of its functions”, insert “except its functions relating to the financial assistance scheme”.

3ZD

In section 117(1)(b) (administration levy), after “section 116”, insert “except where such expenditure relates to the financial assistance scheme”.

3ZE

In section 119 (annual reports to Secretary of State)—

(a) in subsection (2)—

(i) after “the Board” insert “in relation to the financial assistance scheme”;

(ii) for “the report” substitute “any part of the report”; and

(iii) after “that section” insert “which relates to the financial assistance scheme”;

(b) in subsection (3), after paragraph (c) insert—

(“d) the operation of the financial assistance scheme including the number of persons who have received payments under the Financial Assistance Scheme Regulations 2005 and the total amount of those payments.”; and

(c) in subsection (6)(a), for “the date on which the Board is established” substitute “the date on which the Financial Assistance Scheme (Miscellaneous Provisions) Regulations 2009 come into force”.

17

In paragraph 18(2) of Schedule 5 (delegation)—

(a) after sub-paragraph (g), insert—

(zga) Paragraphs 6A, 7(1) and 8 of Schedule 6 (transfer of property, rights and liabilities to the Board) as modified; (ga) regulation 9(1)(d) of the Financial Assistance Scheme Regulations 2005 (“the 2005 Regulations”) (receiving notification of the details prescribed in regulation 14); (gb) regulation 14A of the 2005 Regulations (working with qualifying pension schemes); (gc) regulations 17 to 20 of, and Schedules 2 to 7 to, the 2005 Regulations in so far as those provisions relate to— (i) the determination of the amount of payments to beneficiaries, (ii) paying instalments of payments to beneficiaries (including non-payment where the scheme manager decides to suspend payments in accordance with regulation 8 of the Financial Assistance Scheme (Provision of Information and Administration of Payments) Regulations 2005), or (iii) receiving information pursuant to notification requirements; (gd) the Financial Assistance Scheme (Provision of Information and Administration of Payments) Regulations 2005 except— (i) regulation 3(2) (notification following determination of whether or not a scheme is a qualifying pension scheme), and (ii) regulation 8 (suspension of payments) in so far as that regulation provides for the scheme manager to decide to suspend payments or not continue any such suspension; (ge) regulations 3 (notice of a reviewable determination), 14(d) (dealing with matters arising out of a review decision) and 16 (notice of a review decision or a subsequent review decision) of the Financial Assistance Scheme (Internal Review) Regulations 2005; (gf) regulation 23(6) and (8) (taking or refraining from taking such steps as directed by the Ombudsman) of the Financial Assistance Scheme (Appeals) Regulations 2005; (gg) regulation 27 of the 2005 Regulations (scheme manager calculations after a valuation); (gh) regulation 28 of the 2005 Regulations (determination of certain asset shares, notional pensions and survivor notional pensions); (gi) regulation 31 of the 2005 Regulations (payments where amounts relating to money purchase benefits are transferred to the Secretary of State);

; and

(b) in sub-paragraph (h), for the words “paragraphs (a) to (g)” substitute “paragraphs (a) to (gi)”.

18

In paragraph 22(7)(a) of Schedule 5 (accounts), for “the date on which the Board is established” substitute “the date on which the Financial Assistance Scheme (Miscellaneous Provisions) Regulations 2009 come into force”.

Annual redetermination

2A

(1) This paragraph applies where—

(a) on the first indexation date following the date on which the beneficiary first became entitled to an annual payment; and

(b) on any indexation date following that first indexation date;

the annual rate of annuity which has been or could have been paid to the beneficiary as at that indexation date as a result of the purchase of an annuity with the assets available to discharge the liability of the scheme to, or in respect of, the qualifying member after that liability has or had been determined, is higher as a result of indexation or revaluation than the annual rate determined in accordance with paragraph 2.

(2) Where this paragraph applies, the scheme manager shall redetermine the annual payment payable to that beneficiary with effect from the indexation date.

(3) When redetermining an annual payment under sub-paragraph (2), the actual pension for the purposes of paragraph 3(2) or 4(2) shall be the annual rate of annuity which has been or could have been paid to the beneficiary as at the indexation date as a result of the purchase of an annuity with the assets available to discharge the liability of the scheme to, or in respect of, the qualifying member after that liability has or had been determined, on the basis of, and having regard to, the matters referred to in paragraph 2(3).

(4) In any case where the scheme manager is satisfied, having regard to the information available to it, that it is not possible for it to determine the annual rate of annuity for the purposes of this paragraph, it shall determine that annual rate having regard to such matters as it considers relevant.

(5) Where the scheme manager is satisfied that increases have been, are being, or will be made to the annual rate of annuity, and it considers that those increases are not reasonable, it may determine the annual rate of annuity for the purposes of this paragraph on the basis of the sum which would discharge the liability of the scheme to the beneficiary and of such other matters as it considers relevant.

Qualifying members receiving pensions from the qualifying pension scheme

Active and deferred members

Bridging pensions

4A

(1) This paragraph applies where—

(a) the annual rate of the pension determined for the purposes of calculating the expected pension under paragraph 3(2) or 4(2) includes an amount which, under the scheme rules, was payable for a period which is shorter than the period in respect of which the remainder of the pension was payable; and

(b) either—

(i) an annuity has been purchased for the beneficiary which provides for payment of a pension to the beneficiary at a lower annual rate from the date on which the amount referred to in sub-paragraph (1)(a) would have ceased to be payable under the scheme rules; or

(ii) a notional pension has been determined in respect of the beneficiary which includes an amount in respect of an amount which under scheme rules would be payable for a period which is shorter than the period in respect of which the remainder of the pension would be payable.

(2) Where this paragraph applies, the scheme manager shall redetermine the annual payment payable to that beneficiary with effect from the date on which the amount referred to in sub-paragraph (1)(a) would have ceased to be payable under the rules of the pension scheme.

(3) When redetermining an annual payment under sub-paragraph (2)—

(a) the annual rate of the pension for the purposes of paragraph 3(3)(a) and (c) shall be the annual rate of pension which was or should have been in payment to the qualifying member in accordance with the scheme rules in respect of rights accrued in a qualifying pension scheme less the annual amount which was payable for the shorter period referred to in sub-paragraph (1)(a), as at the day which is the day before the day on which the qualifying pension scheme began to be wound up;

(b) the annual rate of the pension for the purposes of paragraph 3(3)(b)(i) shall be the amount which was or should have been in payment to the qualifying member in accordance with the scheme rules in respect of rights accrued in a qualifying pension scheme less the annual amount which was payable for the shorter period referred to in sub-paragraph (1)(a), as at the day on which the qualifying member attained normal retirement age;

(c) the amount specified in paragraph 4(3)(a) shall be the amount determined in accordance with that paragraph less the amount which is the amount which was payable for the shorter period referred to in sub-paragraph (1)(a);

(d) the amount which was payable for the shorter period referred to in sub-paragraph (1)(a) shall be disregarded when determining the revaluation amounts; and

(e) the beneficiary shall be entitled to so much of the total amount of the annual increases determined in accordance with paragraph 9 payable to the beneficiary as at the date referred to in sub-paragraph (2) as are attributable to the amount of expected pension determined in accordance with this paragraph.

(4) In any case where the scheme manager is satisfied, having regard to the information available to it, that it is not possible for it to determine the annual rate of pension for the purposes of sub-paragraph (3)(a) or (b) or any one of the amounts for the purposes of sub-paragraph (3)(c) to (e) it shall determine that annual rate or amount, having regard to such matters as it considers relevant.

(5) In sub-paragraph (3)(d) “the revaluation amounts” means—

(a) the revaluation amount referred to in paragraph 3(3)(b)(ii) and (c)(ii) and (iii); and

(b) the revaluation amounts referred to in paragraph 4(3)(b) to (d).

Pension payable at an age other than normal retirement age

4B

(1) This paragraph applies where any pension or part of a pension would have been payable to the qualifying member for life without actuarial adjustment under the rules of the qualifying pension scheme (disregarding any rule making special provision as to early payment on the grounds of ill health or otherwise) at an age other than the member’s normal retirement age.

(2) Where this paragraph applies—

(a) paragraphs 3(3) and 4(3) and (3A) shall have effect as if the amount of pension or part of a pension payable at the age other than the member’s normal retirement age were a separate pension;

(b) paragraph 4(3)(a) shall have effect as if the reference to normal retirement age were a reference to the age at which the pension or part of a pension would be payable to the qualifying member without actuarial reduction under the rules of the qualifying pension scheme (disregarding any rule making special provision as to early payment on the grounds of ill health or otherwise); and

(c) “expected pension” in paragraphs 3(2) and 4(2) means, subject to paragraph 4(4), the aggregate of the amounts calculated as the expected pension in accordance with paragraphs 3 and 4 in relation to any pension treated as a separate pension in accordance with paragraph (a).

(3) An actuarial factor, determined having regard to such matters as the person determining the factor considers relevant, shall be applied to any amount determined in accordance with sub-paragraph (2)(a).

Survivors of qualifying members

Payment for an entitlement under regulation 17C

Surviving dependants of qualifying members

5B

(1) The annual payment payable to a surviving dependant of a qualifying member shall be determined in accordance with sub-paragraphs (2) to (5).

(2) Where an annual payment is also payable to a survivor of the qualifying member and—

(a) there is only one surviving dependant, the amount of the annual payment shall be—

$0.5×Q2+D−B;$

(b) there are two or more surviving dependants, the amount of the annual payment shall be—

$(0.5×Q)+D−BN.$

(3) Where the qualifying member does not have a survivor and—

(a) there is only one surviving dependant, the amount of annual payment shall be—

$Q2+D+S−B;$

(b) there are two or more surviving dependants, the amount of the annual payment shall be—

$Q+S+D−BN.$

(4) Where—

(a) a survivor of a qualifying member, who is not a person who is treated as a survivor by virtue of regulation 37 of the Financial Assistance Scheme (Miscellaneous Provisions) Regulations 2009, dies;

(b) a person ceases to be a surviving dependant of a qualifying member; or

the annual payment payable to a surviving dependant of that qualifying member shall be redetermined with effect from the day after the day on which the event referred to in paragraphs (a) to (c) occurred.

(5) In this paragraph—

“B” means—where there is only one surviving dependant, the surviving dependant’s actual pension; orwhere there are two or more surviving dependants, the sum of the actual pensions of all the surviving dependants of that qualifying member;

“D” means—subject to paragraph (b), where sub-paragraph (4) applies, the total amount of annual increases to which any surviving dependant was entitled under this Schedule on the day on which the event referred to in paragraphs (a) to (c) of that sub-paragraph occurred;where sub-paragraph (4)(a) applies and, as a result, the annual payment payable to a surviving dependant is redetermined under sub-paragraph (3)(a), nil; andin all other cases, nil;

“N” means the number of surviving dependants of the qualifying member;

“Q” means the sum of—the product of 0.9 multiplied by the expected pension which has been or could have been determined in accordance with paragraph 5(4); andthe total amount of any annual increases determined in accordance with paragraph 9 to which the qualifying member was entitled on the day on which the qualifying member died;

“S” means—where sub-paragraph (4)(a) applies and, as a result the annual payment payable to a surviving dependant is redetermined under sub-paragraph (3), the total amount of annual increases to which the survivor was entitled on the day on which the survivor died; andin all other cases, nil.

Exclusion of certain benefits

Cap on expected pension and actual pension

De minimis rule

Annual increase to an annual payment

Initial payments

Shared initial payments

10A

(1) Where two or more survivors of a qualifying member are entitled to a shared initial payment by virtue of regulation 18(4B), the amount of each survivor’s shared initial payment shall be—

$Z−YN$

(2) In this paragraph—

“N” means the number of survivors of the qualifying member;

“Y” means the sum of the interim pensions of all the survivors which would have been determined in accordance with paragraph 5(3) had that paragraph applied to the survivors; and

“Z” means the product of 0.9 multiplied by the expected pension which would have been determined in accordance with paragraph 5(3) had that paragraph applied to the survivors.

Rounding

Amount of an ill health payment to a surviving dependant

2A

(1) The amount of an ill health payment payable to a surviving dependant of a qualifying member shall be determined in accordance with sub-paragraphs (2) to (5).

(2) Where an ill health payment is also payable to a survivor of the qualifying member and—

(a) there is only one surviving dependant, the amount of the ill health payment shall be—

$0.5×Q2+D−B;$

(b) there are two or more surviving dependants, the amount of the ill health payment shall be—

$(0.5×Q)+D−BN.$

(3) Where the qualifying member does not have a survivor and—

(a) there is only one surviving dependant, the amount of the ill health payment shall be—

$(0.5×Q)+D+S−B;$

(b) there are two or more surviving dependants, the amount of the ill health payment shall be—

$Q+S+D−BN.$

(4) Where—

(a) a survivor of a qualifying member, who is not a person who is treated as a survivor by virtue of regulation 37 of the Financial Assistance Scheme (Miscellaneous Provisions) Regulations 2009, dies;

(b) a person ceases to be a surviving dependant of a qualifying member; or

the ill health payment payable to a surviving dependant of that qualifying member shall be redetermined with effect from the day after the day on which the event referred to in paragraphs (a) to (c) occurred.

(5) In this paragraph—

“A” means the amount of expected pension which would be determined in accordance with Schedule 2 if—the qualifying member were entitled to an annual payment; andthe modifications in paragraph 6 applied;

“B” means—where there is only one surviving dependant, the actual pension of that surviving dependant which would be determined in accordance with Schedule 2 if—the surviving dependant were entitled to an annual payment; andthe modifications in paragraph 6 applied;where there are two or more surviving dependants, the sum of the actual pensions of all the surviving dependants of the qualifying member which would be determined in accordance with Schedule 2 if—the surviving dependants were entitled to annual payments; andthe modifications in paragraph 6 applied;

“C” means the actuarial factor, determined in accordance with paragraph 5, to be applied;

“D” means—subject to paragraph (b), where sub-paragraph (4) applies, the total amount of annual increases to which any surviving dependant was entitled under this Schedule on the day on which the event referred to in paragraphs (a) to (c) of that sub-paragraph occurred;where sub-paragraph (4)(a) applies and, as a result, the annual payment payable to a surviving dependant is redetermined under sub-paragraph (3)(a), nil; andin all other cases, nil;

“N” means the number of surviving dependants of the qualifying member;

“Q” means the sum of—the product of C multiplied by A multiplied by 0.9; andthe total amount of any annual increases determined in accordance with paragraph 9 to which the qualifying member was entitled on the day on which the qualifying member died; and

“S” means—where sub-paragraph (4)(a) applies and, as a result the annual payment payable to a surviving dependant is redetermined under sub-paragraph (3), the total amount of annual increases to which the survivor was entitled on the day on which the survivor died; andin all other cases, nil.

Amount of an interim ill health payment

Amount of an interim ill health payment for a surviving dependant

3A

(1) The amount of an interim ill health payment payable to a surviving dependant of a qualifying member shall be determined in accordance with sub-paragraphs (2) to (5).

(2) Where an interim ill health payment is also payable to a survivor of the qualifying member and—

(a) there is only one surviving dependant, the amount of the interim ill health payment shall be—

$F2−G$

(b) there are two or more surviving dependants, the amount of the interim ill health payment shall be—

$F−GN$

(3) Where the qualifying member does not have a survivor and—

(a) there is only one surviving dependant, the amount of the interim ill health payment shall be—

$F−G$

(b) there are two or more surviving dependants, the amount of the ill health payment shall be—

$(2×F)−GN$

(4) Where—

(a) a survivor of a qualifying member, who is not a person who is treated as a survivor under regulation 37 of the Financial Assistance Scheme (Miscellaneous Provisions) Regulations 2009, dies; ...

(b) a person ceases to be a surviving dependant of a qualifying member; or

the interim ill health payment payable to a surviving dependant of that qualifying member shall be redetermined with effect from the day after the day on which the event referred to in paragraphs (a) to (c) occurred.

(5) In this paragraph—

“A” means the amount of expected pension which would be determined in accordance with Schedule 2 if—the qualifying member were entitled to an annual payment; andthe modifications in paragraph 6 applied;

“C” means the actuarial factor, determined in accordance with paragraph 5, to be applied;

“F” means one half of the product of—$(C(A×0.9))+H$

“G” means—where there is only one surviving dependant, the interim pension of the surviving dependant which would be determined in accordance with Schedule 2 if—the surviving dependant was entitled to an annual payment; andthe modifications in paragraph 6 applied;where there are two or more surviving dependants, the sum of the interim pensions of all the surviving dependants which would be determined in accordance with Schedule 2 if—the surviving dependants were entitled to annual payments; andthe modifications in paragraph 6 applied;

“H” means the aggregate of any annual increases determined in accordance with paragraph 9 to which the qualifying member was entitled on the day on which the qualifying member died; and

“N” means the number of surviving dependants of that qualifying member.

Revaluation

Actuarial reduction

Modifications to Schedule 2

Cap on expected pension and actual pension

Rounding

Annual increase to an ill health payment

9

(1) Except where there is no percentage increase in the general level of prices for the period of 12 months ending with 31st May last falling before the indexation date, a beneficiary entitled to an amount determined in accordance with this Schedule shall be entitled, on the indexation date, to an increase of—

(a) the appropriate percentage of the amount of the underlying rate immediately before that date, or

(b) where the beneficiary first became entitled to an ill health payment during the period of 12 months ending immediately before that date, one twelfth of that amount for each full month since the date on which the ill health payment was first payable.

(2) In this paragraph—

“appropriate percentage” means the lesser of—the percentage increase in the general level of prices for the period of 12 months ending with the 31st May last falling before the indexation date; and2.5%;

“C” means the actuarial factor, determined in accordance with paragraph 5, to be applied;

“E” means so much of the expected pension as is attributable to post-1997 service;

“post-1997 service” means—pensionable service (whether actual or notional) which occurs on or after 6th April 1997; orwhere the ill health payment is payable to, or in respect of, a qualifying member who is, or was, a pension credit member of the scheme, pension credit rights deriving from rights attributable to service (whether actual or notional) which occurred on or after 6th April 1997;

“underlying rate” means—the aggregate of—the product of X multiplied by $(C×E)$;where the beneficiary is a survivor or a surviving dependant of a qualifying member, the product of X multiplied by W; andany annual increases to which the beneficiary is entitled in accordance with sub-paragraph (1) immediately before the indexation date; orwhere paragraph 7(1) applies, the aggregate of—so much of the amount “A” for the purposes of paragraph 2 as is, proportionately, attributable to post-1997 service; andany annual increases to which the beneficiary is entitled in accordance with sub-paragraph (1) immediately before the indexation date;

“W” means the aggregate of any annual increases to which the qualifying member was entitled in accordance with sub-paragraph (1) on ... the day on which the qualifying member died;

“X” means—0.9, where the beneficiary is the qualifying member;0.45, where the beneficiary is a survivor who is not a survivor to whom paragraph 2(2A) applies;the product of 0.45 divided by Y, where the beneficiary is a survivor to whom paragraph 2(2A) applies;the product of 0.9 divided by Z, where the beneficiary is a surviving dependant and the qualifying member does not have a survivor; orthe product of 0.45 divided by Z, where the beneficiary is a surviving dependant and an ill health payment is also payable to a survivor of the qualifying member;

“Y” means the number of survivors of the qualifying member; and

“Z” means—where there is only one surviving dependant, 2; orwhere there is more than one surviving dependant, the number of surviving dependants of the qualifying member.

(3) In any case where the scheme manager is satisfied, having regard to the information available, that it is not possible for the scheme manager to determine the amount of the amount “A” which is attributable to post-1997 service for the purposes of this paragraph, the scheme manager shall determine that amount, having regard to such matters as the scheme manager considers relevant.

Annual redetermination

10

(1) This paragraph applies where—

(a) on the first indexation date following the date on which the beneficiary first became entitled to an ill health payment; and

(b) on any indexation date following that first indexation date;

the annual rate of annuity which has been or could have been paid to the beneficiary as at that indexation date as a result of the purchase of an annuity with the assets available to discharge the liability of the scheme to, or in respect of, the qualifying member after that liability has, or had been, determined, is higher as a result of indexation or revaluation than the annual rate determined in accordance with the preceding paragraphs of this Schedule.

(2) Where this paragraph applies, the scheme manager shall redetermine the ill health payment payable to that beneficiary with effect from the indexation date.

(3) When redetermining an ill health payment under sub-paragraph (2), the actual pension shall be the annual rate of annuity which has been or could have been paid to the beneficiary as at the indexation date as a result of the purchase of an annuity with the assets available to discharge the liability of the scheme to, or in respect of, the qualifying member after that liability has, or had been, determined, on the basis of, and having regard to, the matters referred to in paragraph 2(3) of Schedule 2.

(4) In any case where the scheme manager is satisfied, having regard to the information available to it, that it is not possible for it to determine the annual rate of annuity for the purposes of this paragraph, it shall determine that annual rate having regard to such matters as it considers relevant.

(5) Where the scheme manager is satisfied that increases have been, are being, or will be made to the annual rate of annuity, and it considers that those increases are not reasonable, it may determine the annual rate of annuity for the purposes of this paragraph on the basis of the sum which would discharge the liability of the scheme to the beneficiary and of such other matters as it considers relevant.

Bridging pensions

11

(1) This paragraph applies where—

(a) the annual rate of the pension determined for the purposes of calculating the expected pension under paragraph 3(2) or 4(2) of Schedule 2 (for the purposes of determining an ill health payment) includes an amount which, under the scheme rules, was payable for a period which is shorter than the period in respect of which the remainder of the pension was payable; and

(b) either—

(i) an annuity has been purchased for the beneficiary which provides for payment of a pension to the beneficiary at a lower annual rate from the date on which the amount referred to in sub-paragraph (1)(a) would have ceased to be payable under the rules of the pension scheme; or

(ii) a notional pension has been determined in respect of the beneficiary which includes an amount in respect of an amount which under scheme rules would be payable for a period which is shorter than the period in respect of which the remainder of the pension would be payable.

(2) Where this paragraph applies, the scheme manager shall redetermine the ill health payment payable to that beneficiary with effect from the date on which the amount referred to in sub-paragraph (1)(a) would have ceased to be payable under the rules of the pension scheme.

(3) When redetermining an ill health payment under sub-paragraph (2)—

(a) the annual rate of the pension for the purposes of paragraph 3(3)(a) of Schedule 2 shall be the annual rate of pension which was or should have been in payment to the qualifying member in accordance with the scheme rules in respect of rights accrued in a qualifying pension scheme less the annual amount which was payable for the shorter period referred to in sub-paragraph (1)(a), as at the day which is the day before the day on which the qualifying pension scheme began to be wound up;

(b) the annual rate of the pension for the purposes of paragraph 3(3)(b)(i) of Schedule 2 shall be the amount which was or should have been in payment to the qualifying member in accordance with the scheme rules in respect of rights accrued in a qualifying pension scheme less the annual amount which was payable for the shorter period referred to in sub-paragraph (1)(a), as at the day on which the qualifying member attained normal retirement age;

(c) the amount specified in paragraph 4(3)(a) of Schedule 2 shall be the amount determined in accordance with that paragraph less the amount which is the amount which was payable for the shorter period referred to in sub-paragraph (1)(a);

(d) the amount which was payable for the shorter period referred to in sub-paragraph (1)(a) shall be disregarded when determining the revaluation amounts; and

(e) the beneficiary shall be entitled to so much of the total amount of the annual increases determined in accordance with paragraph 9 payable to the beneficiary as at the date referred to in sub-paragraph (2) as are attributable to the amount of expected pension determined in accordance with this paragraph.

(4) In any case where the scheme manager is satisfied, having regard to the information available to it, that it is not possible for it to determine the annual rate of pension for the purposes of sub-paragraph (3)(a) or (b) or any one of the amounts for the purposes of sub-paragraph (3)(c) to (e) it shall determine that annual rate or amount, having regard to such matters as it considers relevant.

(5) In sub-paragraph (3)(d) “the revaluation amounts” means—

(a) the revaluation amount referred to in paragraph 3(3)(b)(ii) of Schedule 2; and

(b) the revaluation amounts referred to in paragraph 4(3)(b) and (c) of Schedule 2.

Lump sum payments

17D

(1) This regulation applies where the qualifying member—

(a) is a qualifying member to whom Part 7 applies;

(b) is a qualifying member of a qualifying pension scheme in respect of which a transfer notice has been given;

(d) was not receiving a present payment under scheme rules before the day on which the transfer notice was given;

(e) has made a written request to commute for a lump sum a portion of the annual payment or ill health payment to which that qualifying member is entitled no later than—

(i) the day before the day on which the qualifying member becomes entitled to an annual payment or ill health payment; or

(ii) such later day by which the scheme manager may determine that it will accept a written request in the case of any particular member; and

(f) the notional pension determined for the qualifying member is more than nil.

(2) Where this regulation applies a qualifying member shall be entitled to commute for a lump sum a portion of the payments payable or which may become payable to and in respect of that qualifying member under these Regulations—

(a) subject to sub-paragraph (b), immediately before the day on which that member becomes entitled to an annual payment or ill health payment in accordance with these Regulations; or

(b) where paragraph (1)(e)(ii) applies, at any point prior to the date determined by the scheme manager under that paragraph.

(3) The portion commuted for a lump sum under paragraph (2) shall not exceed the revalued notional pension as construed in accordance with regulation 17(10) or, where the qualifying member is entitled to an ill health payment, regulation 17A(10).

(4) The lump sum payable under paragraph (2) is the actuarial equivalent of the commuted portion of payments to be made in respect of the qualifying member in accordance with these Regulations and shall not exceed 25% of the sum of—

(a) the product of 20 multiplied by the amount of the annual payment or ill health payment after commutation; and

(b) the lump sum derived from the portion commuted.

(5) The scheme manager shall only be bound to make a determination in relation to the amount of an annual payment or an ill health payment payable after the time within which the qualifying member may make a written request for a lump sum in accordance with paragraph (1)(e) has expired.

Redetermination of an annual payment previously determined in accordance with Schedule 4

17E

(1) This regulation applies where, on an indexation date following the date on which the beneficiary first became entitled to an annual payment determined in accordance with Schedule 4, the aggregate of the amounts referred to in paragraph (2) is lower than the aggregate of the amounts referred to in paragraph (3).

(2) The amounts in this paragraph are—

(a) the amount of the annual payment determined in accordance with Schedule 4; and

(b) the amount of any annual increases to which the beneficiary was entitled on the indexation date in accordance with paragraph 7 of Schedule 4.

(3) The amounts in this paragraph are—

(a) the amount of an annual payment which would be determined in accordance with Schedule 2 in respect of the beneficiary; and

(b) the amount of any annual increases to which the beneficiary would be entitled in accordance with paragraph 9 of Schedule 2,

if the beneficiary were entitled to an annual payment determined in accordance with Schedule 2.

(4) Where this regulation applies—

(a) the scheme manager shall redetermine the amount of the annual payment; and

(b) the beneficiary shall, from the indexation date—

(i) be entitled to an annual payment determined in accordance with Schedule 2; and

(ii) cease to be entitled to an annual payment determined in accordance with Schedule 4.

Redetermination of an ill health payment previously determined in accordance with Schedule 6

17F

(1) This regulation applies where, on an indexation date following the date on which the beneficiary first became entitled to an ill health payment determined in accordance with Schedule 6, the aggregate of the amounts referred to in paragraph (2) is lower than the aggregate of the amounts referred to in paragraph (3).

(2) The amounts in this paragraph are—

(a) the amount of the ill health payment determined in accordance with Schedule 6; and

(b) the amount of any annual increases to which the beneficiary was entitled on the indexation date in accordance with paragraph 7 of Schedule 6.

(3) The amounts in this paragraph are—

(a) the amount of an ill health payment which would be determined in accordance with Schedule 2A in respect of the beneficiary; and

(b) the amount of any annual increases to which the beneficiary would be entitled in accordance with paragraph 9 of Schedule 2A,

if the beneficiary were entitled to an ill health payment determined in accordance with Schedule 2A.

(4) Where this regulation applies—

(a) the scheme manager shall redetermine the amount of the ill health payment; and

(b) the beneficiary shall, from the indexation date—

(i) be entitled to an ill health payment determined in accordance with Schedule 2A; and

(ii) cease to be entitled to an ill health payment determined in accordance with Schedule 6.

Payments to beneficiaries other than qualifying members, survivors and surviving dependants

17G

(1) This regulation applies where—

(a) a notional pension has been determined in accordance with regulation 27 in respect of a person who—

(i) is not a qualifying member, a survivor or surviving dependant; but

(ii) is a person in respect of whom the qualifying pension scheme—

(aa) as a result of the death of a qualifying member, had a liability to provide a pension or other benefit at the calculation date; and

(bb) would have continued to have a liability to provide that pension or other benefit had the trustees or managers not been discharged from that liability under section 161 (as modified by Schedule 1 to these Regulations); and

(b) a transfer notice has been given in respect of the qualifying pension scheme.

(2) Where this regulation applies, that person shall be entitled to a payment, payable in respect of a year, which is the amount determined in accordance with Schedule 7.

(3) A person entitled to a payment under paragraph (2) shall be entitled to that payment—

(a) from the day on which the transfer notice in respect of the qualifying pension scheme is given; and

(b) until the day on which entitlement to a payment from the scheme would have ended in accordance with scheme rules.

(4) The year in respect of which the payment referred to in paragraph (2) is to be made shall be the year starting on the day on which an instalment of the payment is first payable to the person by virtue of regulation 19 and in respect of subsequent years, on each anniversary of that day.

(5) Where a person ceases to be entitled to a payment under this regulation in accordance with paragraph (3)(b)—

(a) subject to sub-paragraph (b), any further instalments of such a payment that would have been payable to that person, in respect of that year, cease to be payable; and

(b) any instalment of such a payment which is payable in respect of a period which includes the day on which the person has died or otherwise ceased to be entitled to a payment shall be payable.

Payments to qualifying members receiving a pension from the qualifying pension scheme before entitlement to an annual payment or ill health payment

17H

(1) This regulation applies where—

(a) a transfer notice has been given in respect of a qualifying pension scheme;

(b) a qualifying member is not entitled to an annual payment or an ill health payment; and

(c) that qualifying member was receiving present payment of a pension under the scheme rules on the day on which the transfer notice is given.

(2) Where this regulation applies, the qualifying member shall be entitled to a payment, payable in respect of a year, which is the amount determined in accordance with Schedule 7.

(3) A qualifying member entitled to a payment under paragraph (2) shall be entitled to that payment—

(a) from the day on which the transfer notice in respect of the qualifying pension scheme is given; and

(b) until the earlier of—

(i) the day before the day on which the qualifying member becomes entitled to an annual payment or an ill health payment; and

(ii) the day on which the qualifying member dies.

(4) The year in respect of which the payment referred to in paragraph (2) is to be made shall be the year starting on the day on which an instalment of the payment is first payable to the qualifying member by virtue of regulation 19 and in respect of subsequent years, on each anniversary of that day.

(5) Where the qualifying member ceases to be entitled to a payment under this regulation in accordance with paragraph (3)(b)—

(a) subject to sub-paragraph (b), any further instalments of such a payment that would have been payable to the qualifying member, in respect of that year, cease to be payable; and

(b) where the member dies before becoming entitled to an annual payment or ill health payment, any instalment of such a payment which is payable in respect of a period which includes the day on which the qualifying member died shall be payable.

Initial payments

Death benefit guarantees

18A

(1) This regulation applies where—

(a) a qualifying member was entitled to an annual payment determined in accordance with Schedule 4 or 6;

(b) under scheme rules, an amount was payable as a result of the qualifying member dying within a period specified in the scheme rules; and

(2) Where this regulation applies, the scheme manager shall pay the amount payable—

(a) to such person or persons specified in the scheme rules;

(b) where no person is specified in the scheme rules, but the qualifying member has made a valid nomination in accordance with those rules, to such person or such persons nominated by the qualifying member; or

(i) to any survivor; or

(ii) if there is no survivor, to any surviving dependant; or

(iii) if there is no survivor or surviving dependant, to the estate of the qualifying member.

(3) In any case where the scheme manager is required under paragraph (2) to make a payment in respect of the qualifying member to more than one person, the amount payable shall be divided between the beneficiaries—

(a) where paragraph (2)(a) or (b) applies and the scheme rules make provision for how the amount is to be divided, in accordance with scheme rules; and

(b) in all other cases, equally.

(4) Where a payment to be made under this regulation would, but for this paragraph, include a fraction of a penny, that fraction shall be disregarded if it is less than half a penny and shall otherwise be treated as a penny.

(5) Payments made under this regulation shall be made by means of direct credit transfer or by such other means as appear to the scheme manager to be appropriate in the circumstances of any particular case.

PART7 — Valuation of assets and liabilities

Application of this Part

21

(1) This Part applies to a qualifying pension scheme where—

(a) the qualifying pension scheme has not been fully wound up;

(b) the liabilities of that scheme to or in respect of all members and former members have not been discharged; and

(c) the liabilities of the scheme to or in respect of all members and former members of the scheme have not been, or in the opinion of the scheme manager are unlikely to be, discharged by way of—

(i) binding commitments to purchase annuities;

(ii) the scheme manager having given approval to the trustees of the scheme to purchase annuities under section 286A;

(iii) a transfer of, or transfer payment in respect of, members’ rights;

(iv) such other method of discharging any liability of the scheme for which the scheme manager has given approval under section 135(4C); or

(v) state scheme premiums being paid pursuant to section 55 of the 1993 Act or state scheme rights having been restored under regulation 49 of the Occupational Pension Schemes (Contracting-out) Regulations 1996 or regulation 49 of the Occupational Pension Schemes (Contracting-out) Regulations (Northern Ireland) 1996.

(2) This Part applies to a qualifying member of a qualifying pension scheme where—

(a) the liabilities of that scheme to and in respect of that member have not been, or, in the opinion of the scheme manager, are unlikely to be, fully discharged as a result of any of the methods listed in paragraph (1)(c); or

(b) the liabilities of the scheme to and in respect of that member have not been, or, in the opinion of the scheme manager, are unlikely to be, partially discharged by way of—

(i) a binding commitment to purchase an annuity; or

(ii) the scheme manager having given approval to the trustees of the scheme to purchase an annuity under section 286A.

(3) Notwithstanding paragraph (2)(b), this Part applies to a qualifying member of a qualifying pension scheme where the liabilities of the scheme for and in respect of that member have been partially discharged by one of the methods listed in paragraph (2)(b) if the only liabilities so discharged relate to benefits derived from the payment of voluntary contributions.

(4) In this regulation, no account shall be taken of any money purchase benefits when determining the liabilities of the scheme.

Scheme manager to obtain a valuation of assets and liabilities

22

(1) Where this Part applies, the scheme manager shall, when it considers it appropriate to do so, instruct the trustees or managers of a qualifying pension scheme to obtain for the scheme manager a valuation of the assets and liabilities of the pension scheme as at the calculation date.

(2) Subject to paragraph (3), where the trustees or managers are instructed to obtain a valuation under paragraph (1), they shall obtain the valuation and it shall include a valuation of the asset share—

(a) of, or in respect of, each qualifying member to whom this Part applies; and

(b) of any other person who is not—

(i) a qualifying member;

(ii) a survivor of a qualifying member; or

(iii) a surviving dependant of a qualifying member,

to whom the scheme has a liability to provide a pension or other benefit which is not a money purchase benefit.

(3) Where the scheme manager is of the opinion that it is not appropriate that a valuation in accordance with paragraph (2)(a) or (b) is obtained in relation to a particular person or category of persons, the valuation shall not include a valuation of that asset share, or, as the case may be, those asset shares.

(4) Where the scheme manager is of the opinion that it is not appropriate to obtain a valuation of some or all of the liabilities of the pension scheme in relation to a particular person or category of persons, the valuation shall not include a valuation of those liabilities.

(5) The valuations referred to in paragraphs (1) and (2) must be—

(a) prepared and signed by a person (“the valuation actuary”)—

(i) who is—

(aa) a Fellow of the Faculty of Actuaries;

(bb) a Fellow of the Institute of Actuaries; or

(cc) a person approved by the Secretary of State; and

(ii) approved by the scheme manager for the purposes of carrying out a valuation under paragraph (1);

(b) prepared in accordance with guidance published from time to time by the Secretary of State;

(d) given to the scheme manager upon completion, together with such information as set out in guidance published from time to time by the Secretary of State.

(6) The scheme manager may direct the trustees or managers whom to appoint as valuation actuary.

(7) When valuing the assets of the scheme, the valuation actuary shall disregard—

(a) any assets representing the value of any rights in respect of money purchase benefits under the scheme rules;

(b) any assets held by or vested in the trustees or managers of the scheme which are to be used prior to transfer of the scheme’s assets in accordance with section 161 (as modified by Schedule 1 to these Regulations) to discharge liabilities in respect of voluntary contributions;

(c) any assets, the value of which is required to discharge the scheme’s pension liabilities to or in respect of a qualifying member to whom this Part does not apply;

(d) any debt due, or treated as due, to the trustees or managers which, in the opinion of the scheme manager, is unlikely to be recovered without disproportionate cost or within a reasonable time;

(e) an amount in respect of the value of any pre-6th April 1997 contract of insurance if—

(i) the trustees or managers have taken all reasonable steps to obtain information concerning that contract of insurance (whether by searching the records of the scheme or otherwise); and

(ii) the information that they provide concerning that contract of insurance is insufficient, in the opinion of the valuation actuary, to conduct a valuation;

(f) any payments made to the trustees or managers of the qualifying pension scheme under regulation 14B (payments in relation to administration and other costs); and

(g) any amount which is required to discharge expenses which have been, or will be reasonably incurred by the trustees or managers of the scheme.

(8) In paragraph (7)(e), “pre-6th April 1997 contract of insurance” means a contract of insurance—

(a) which is a relevant contract of insurance within the meaning given by section 161(8) or Article 145(8);

(b) which was taken out before 6th April 1997; and

(9) Where the scheme manager is of the opinion that it is not appropriate for an asset to be disregarded under paragraph (7)(c), the valuation actuary shall not disregard it.

Valuation of assets

23

(1) This regulation is subject to regulation 24.

(2) Subject to paragraphs (3) to (10), for the purposes of the valuation of the assets of a qualifying pension scheme the valuation actuary shall adopt the given value of the assets of the scheme stated in the relevant accounts as the value of those assets as at the calculation date.

(3) The value of a contract of insurance shall be—

(a) where the contract of insurance is a relevant contract of insurance within the meaning given by section 161(8) or Article 145(8), the value of the liability secured; or

(b) subject to paragraph (4), where the contract of insurance is not a relevant contract of insurance within that meaning, the surrender value of the contract of insurance.

(4) Where a contract of insurance is not a relevant contract of insurance within the meaning given by section 161(8) or Article 145(8) and it appears to the valuation actuary that the surrender value of the contract of insurance does not accurately reflect the actual value at the calculation date, the valuation actuary shall adopt such a value as appears to that actuary to be appropriate.

(5) Subject to paragraph (6), where—

(a) a contribution notice has been issued under section 38 or 47 or Article 34 or 43;

(b) a financial support direction has been issued under section 43 or Article 39; or

in relation to the qualifying pension scheme, the valuation actuary shall adopt the amount due to the scheme given in the notice, direction or order as the value of the asset.

(6) Where—

(a) an amount is due under a notice, direction or order referred to in paragraph (5); and

(b) the valuation actuary is of the opinion that the amount due in relation to the notice, direction or order will not be recouped in full by the scheme,

the valuation actuary shall adjust the value of the asset referred to in paragraph (5) to the value which, in the opinion of the valuation actuary is likely to be recouped by the trustees or managers of the qualifying pension scheme.

(7) Where the valuation actuary is of the opinion that any debt due, or treated as due, will be recouped in the future, the proportion of the debt that the valuation actuary expects to be recouped shall be treated as an asset of the scheme.

(8) Where—

(a) the valuation actuary has been given notice; or

(i) the valuation actuary is of the opinion; and

(ii) the scheme manager agrees with the valuation actuary’s opinion,

that the value of any asset set out in the relevant accounts, that is not excluded from the valuation, is substantially different at the calculation date from that set out in the relevant accounts, the valuation actuary shall adjust the value of the asset to the market value of the asset at the calculation date.

(9) Where the valuation actuary has been given notice, or is of the opinion, that there exists an asset of the scheme which is not listed in the relevant accounts and which is not excluded from the valuation, the valuation actuary shall adopt such a value for the asset as appears to that actuary to be appropriate.

(10) Where the relevant accounts are not readily available and the scheme manager is of the opinion that it is not necessary for the purposes of this Part to require their preparation, the valuation actuary shall determine the value of the assets as at the calculation date on the basis of such information as the scheme manager considers appropriate.

(11) When acting under this regulation, the valuation actuary shall act in accordance with guidance issued by the Secretary of State.

Power of the scheme manager to determine the value of an asset

24

(1) Where the scheme manager is of the opinion that any asset in the scheme has a particular value, the scheme manager may determine the value of that asset of the scheme.

(2) Where the scheme manager makes a determination in accordance with paragraph (1), the valuation actuary shall adopt the value determined by the scheme manager as the value of the asset as at the calculation date.

Approval of valuation

25

(1) Where the scheme manager is satisfied that the valuation has been prepared in accordance with this Part, it must—

(a) approve the valuation; and

(b) notify the trustees or managers of the qualifying pension scheme of the approval.

(2) Where the scheme manager is not so satisfied, it must instruct the trustees or managers of the qualifying pension scheme to obtain another valuation under this Part.

(3) Where the scheme manager gives an instruction in accordance with paragraph (2), the trustees or managers of the qualifying pension scheme shall obtain another valuation and it shall be calculated as at the calculation date as determined in relation to the previous valuation.

Binding valuation

26

(1) A valuation obtained under regulation 22 is not binding until—

(a) it is approved under regulation 25;

(b) the period within which an application for a review of the approval of the valuation may be made under regulation 5 of the Financial Assistance Scheme (Internal Review) Regulations 2005 (time for making an application for a review of a reviewable determination) has expired; and

(i) the internal review;

(ii) any appeal to the Ombudsman in respect of the approval; and

(iii) any appeal against any determinations or directions given or made by the Ombudsman in respect of such an appeal,

has been finally disposed of.

(2) Where a valuation becomes binding under this regulation the scheme manager must as soon as reasonably practicable give a notice to that effect together with a copy of the binding valuation to—

(a) the trustees or managers of the qualifying pension scheme; and

(b) the Regulator.

(3) The notice given by the scheme manager under paragraph (2) shall contain—

(a) a statement that it is a notice under regulation 26 of the Financial Assistance Scheme Regulations 2005;

(b) the date on which the notice is given;

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

(d) a statement that the valuation under Part 7 has become binding;

(e) the date on which the notice was given;

(f) the name of the employer in relation to the qualifying pension scheme in respect of which the notice is given; and

(g) whether the notice given by the scheme manager contains any restricted information and, if so, the nature of the restriction.

PART 8 — Scheme manager functions after a valuation

Scheme manager calculations after a valuation

27

(1) Subject to paragraph (2), where a valuation has been obtained in accordance with regulation 22, the scheme manager shall determine—

(a) the annual rate of annuity (“the notional pension”) which could have been payable from the day determined in accordance with paragraphs (3) and (4) until the day determined in accordance with paragraph (5), if purchased on the calculation date with the asset share determined in accordance with regulation 22(2), in respect of—

(i) each qualifying member of the qualifying pension scheme to whom Part 7 applies; and

(ii) any other person who is not—

(aa) a qualifying member;

(bb) a survivor of a qualifying member; or

(cc) a surviving dependant of a qualifying member,

to whom the scheme, as a result of the death of a qualifying member, has a liability to provide a pension or other benefit which is not a money purchase benefit;

(b) where a qualifying member, who is not a qualifying member by virtue of regulation 15(5), has not died before the calculation date, the benefits that could have been purchased for a survivor and any surviving dependants with the asset share determined in accordance with regulation 22(2);

(c) where a qualifying member to whom Part 7 applies has died before the calculation date, the annual rate of annuity (“the survivor notional pension”) which could have been purchased in respect of each survivor and surviving dependant of that qualifying member with the asset share determined in accordance with regulation 22(2); and

(d) any annual increases to the notional pension and the survivor notional pension which could have been purchased with the asset share determined in accordance with regulation 22(2).

(2) Where the scheme manager is of the opinion that it is not appropriate that a determination in accordance with paragraph (1) is made in relation to a particular person or category of persons, the scheme manager shall not make a determination in accordance with paragraph (1) in relation to such a person or category of persons.

(3) Subject to paragraph (4), the day from which the notional pension could have been payable for the purposes of paragraph (1)(a) is—

(a) where the notional pension is in respect of a qualifying member who, on the calculation date, is neither entitled to an ill health payment nor receiving a present payment from the scheme, the day on which the qualifying member attains normal retirement age;

(b) where the notional pension is in respect of a qualifying member who is not a qualifying member by virtue of regulation 15(5) and who is, on the calculation date, entitled to an ill health payment or receiving a present payment from the scheme, the earlier of—

(i) the day on which the qualifying member began to receive a present payment from the scheme in accordance with scheme rules;

(ii) the day on which the qualifying member attains normal retirement age; and

(iii) the day on which the qualifying member became entitled to an ill health payment;

(c) where the notional pension is in respect of a qualifying member who is a qualifying member by virtue of regulation 15(5), the day on which the qualifying member began to receive a present payment from the scheme in accordance with scheme rules;

(d) where the notional pension is in respect of a person referred to in paragraph (1)(a)(ii), the day on which the liability to provide the pension or other benefit arose; and

(e) where a survivor notional pension is being determined, the day after the day on which the qualifying member died.

(4) Where the day determined in accordance with paragraph (3)(b) or (c) falls before the day on which the qualifying pension scheme began to be wound up, the day for the purposes of paragraph (1)(a) is the day on which the qualifying pension scheme began to be wound up.

(5) The day on which the notional pension ceases to be payable for the purposes of paragraph (1)(a) is the day on which entitlement to a payment would end in accordance with these Regulations.

(6) The scheme manager shall make the determination in paragraph (1) by applying the asset share towards satisfying the amounts mentioned in paragraph (7) and—

(a) if sub-paragraph (a) or (b) of paragraph (7) applies and the asset share is insufficient to satisfy the amounts referred to in that sub-paragraph in full, then the asset share must be applied first towards satisfying the amounts mentioned in paragraph (i) of sub-paragraph (a) or (b), as the case may be; and

(b) if the asset share exceeds the amount needed to satisfy those amounts in full, the remainder shall be applied so as to increase the notional pension.

(7) The amounts referred to in paragraph (6) are—

(a) where the notional pension is in respect of a qualifying member who was receiving a present payment from the qualifying pension scheme under the scheme rules before the coming into force of the Financial Assistance Scheme (Miscellaneous Amendments) Regulations 2010—

(i) the pension and other benefits to which the qualifying member was entitled as at the later of—

(aa) the day on which the qualifying member became entitled to present payment of a pension under the scheme rules; or

(bb) the day before the day on which the scheme began to be wound up; and

(ii) annual increases on the amount determined in accordance with paragraph (i);

(b) where the notional pension is in respect of a person referred to in paragraph (1)(a)(ii)—

(i) the pension to which that person was entitled on the day on which the liability to provide the pension or other benefit arose; and

(ii) annual increases on the amount determined in accordance with paragraph (i); and

(c) where the notional pension is in respect of a qualifying member who was not receiving a present payment from the qualifying pension scheme under scheme rules before the coming into force of the Financial Assistance Scheme (Miscellaneous Amendments) Regulations 2010, the annuity which could be purchased in respect the qualifying member including—

(i) the pension and other benefits payable to the qualifying member from the date determined in accordance with paragraph (3);

(ii) benefits which could be purchased for any survivor and surviving dependant of the qualifying member; and

(iii) annual increases on the amounts determined in accordance with paragraphs (i) and (ii).

(8) In determining the amounts mentioned in paragraph (7)(c)(ii), the scheme manager shall have regard to the benefits that would be payable to any survivor or surviving dependant under Schedule 3, or, where the qualifying member is entitled to an ill health payment at the calculation date, under Schedule 5.

(9) The survivor notional pension referred to in paragraph (1)(c) shall be determined by applying the asset share towards satisfying the amounts mentioned in paragraph (10) and—

(a) if sub-paragraph (a) of paragraph (10) applies and the asset share is insufficient to satisfy the amounts referred to in that sub-paragraph in full, then the asset share must be applied first towards satisfying the amounts mentioned in paragraph (i); and

(b) if the asset share exceeds the amount needed to satisfy those amounts in full, the remainder shall be applied so as to increase the survivor notional pension.

(10) The amounts referred to in paragraph (9) are—

(a) where the survivor, surviving dependant or the qualifying member in respect of the survivor or surviving dependant was receiving a present payment from the qualifying pension scheme under scheme rules before the coming into force of the Financial Assistance Scheme (Miscellaneous Amendments) Regulations 2010—

(i) the pension and other benefits to which the survivor or surviving dependant would be entitled as at the day on which the survivor or surviving dependant became entitled to present payment of a pension under the scheme rules; and

(ii) annual increases on the amount determined in accordance with paragraph (i); and

(b) where the survivor, surviving dependant or qualifying member in respect of the survivor or surviving dependant was not receiving a present payment from the qualifying pension scheme under scheme rules before the coming into force of the Financial Assistance Scheme (Miscellaneous Amendments) Regulations 2010, the annuity which could be purchased, including annual increases for the survivor or surviving dependant.

(11) In paragraphs (7)(a)(i) and (10)(a)(i), the pension and other benefits to which the asset share shall be applied in accordance with this regulation are—

(a) the annual rate of pension to which the beneficiary was entitled in accordance with the scheme rules, after any commutation of benefits deriving from the scheme, after the day on which the scheme began to be wound up;

(b) where the beneficiary is a qualifying member, the annual rate of pension to which any survivor or surviving dependant would be entitled in accordance with scheme rules in respect of the qualifying member;

(c) any amount (including any lump sum) payable as a result of a member of the scheme dying within a period specified in the scheme rules which begins on the day on which the member became entitled to a pension from the scheme or, if later, the day on which the pension was first paid; and

(d) any amount which, under the scheme rules, is payable to a beneficiary for a period which is shorter than the period in respect of which the remainder of the pension is payable.

(12) Where the scheme manager is required to determine annual increases for the purposes of this regulation, the scheme manager shall have regard to the way in which annual increases are determined under—

(a) where paragraph (7)(c) or (10)(b) applies and—

(i) the beneficiary is not entitled to an ill health payment at the calculation date, paragraph 6 of Schedule 3; or

(ii) the beneficiary is entitled to an ill health payment at the calculation date, paragraph 6 of Schedule 5;

(b) where paragraph (7)(a) or (10)(a) applies and—

(i) the beneficiary is not entitled to an ill health payment at the calculation date, paragraph 7 of Schedule 4; or

(ii) the beneficiary is entitled to an ill health payment at the calculation date, paragraph 7 of Schedule 6; and

(13) For the purposes of this regulation—

(a) a qualifying member is treated as receiving a present payment from a pension scheme before the coming into force of the Financial Assistance Scheme (Miscellaneous Amendments) Regulations 2010, notwithstanding that no payment has been received, if, prior to the coming into force of those Regulations—

(i) the qualifying member was entitled to payment under the scheme rules;

(ii) the trustees or managers of the scheme received confirmation from the qualifying member that payment should commence; and

(iii) the qualifying member’s entitlement became payable, as a result of (i) and (ii) being satisfied; and

(b) a survivor or surviving dependant is treated as receiving a present payment from a pension scheme before the coming into force of the Financial Assistance Scheme (Miscellaneous Amendments) Regulations 2010, notwithstanding that no payment has been received, if, prior to the coming into force of those Regulations, the beneficiary was entitled to ongoing payments as a result of the death of the qualifying member.

(14) This regulation is subject to regulation 28.

Determination of certain asset shares, notional pensions and survivor notional pensions

28

(1) Where regulation 22(3) applies in any case, the scheme manager shall determine the asset share for the purposes of these Regulations in respect of any person to which that regulation applies, having regard to such matters as it considers relevant.

(2) Where regulation 27(2) applies in any case, the scheme manager shall determine the notional pension or survivor notional pension for the purposes of these Regulations in respect of any person to which that regulation applies, having regard to such matters as it considers relevant.

(3) Paragraph (4) applies where—

(a) a qualifying member commutes a portion of their pension from the qualifying scheme for a lump sum after the calculation date and before the day on which the transfer notice is given; and

(b) a qualifying member, prior to attaining normal retirement age or becoming entitled to an ill health payment, begins to receive a present payment from the qualifying scheme after the calculation date and before the day on which the transfer notice is given.

(4) Where this paragraph applies, the scheme manager may redetermine the notional pension having regard to—

(a) where paragraph (3)(a) applies, the amount of the lump sum;

(b) where paragraph (3)(b) applies—

(i) the qualifying member’s normal retirement age; and

(ii) the date on which the qualifying member began to receive a present payment from the scheme; and

Transfer notice

29

(1) Where a valuation has become binding under regulation 26 and the scheme manager is satisfied that it is an appropriate time for the notice to be given, the scheme manager must give the trustees or managers of the qualifying pension scheme a notice (a “transfer notice”).

(2) Where a transfer notice is given under this regulation the scheme manager—

(a) must give a copy of the transfer notice to the Regulator; and

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