The Pension Protection Fund (Entry Rules) Regulations 2005

• (a) are satisfied that to do so is consistent with the objective of ensuring that the scheme's protected liabilities do not exceed its assets or, if they do exceed its assets, that the excess is kept to a minimum; and

• (b) reduce the value or amount of the benefits (or the portion of them) to be converted or replaced, the transfer or transfer payment or the refund of contributions by the extent necessary to ensure that it does not exceed the cost of securing benefits for and in respect of members of the scheme which correspond to the compensation that would be payable, in relation to the scheme, in accordance with the pension compensation provisions if the Board were to assume responsibility for the scheme in accordance with Chapter 3 of Part 2 of the Act.

• (3) For the purposes of this regulation, a member is entitled to—

• (a) a pension or other benefit where he has reached normal pension age; and

• (b) a refund of contributions when he has—

• (i) requested and received a quotation from the trustees or managers of the scheme showing the amount of the contributions which may be refunded in respect of his accrued rights to benefits under the scheme, and

• (ii) notified the trustees or managers of the scheme in writing of his agreement to accept a refund of contributions on the basis of the quotation.

• (4) In this regulation—

• “the guarantee date” has the meaning given in section 93A(2) of the 1993 Act; and

• “the applicable rules” has the meaning given in section 94(2) of the 1993 Act.

Payment of scheme benefits

17

• (1) The commencement of a member's pension or payment of a member's lump sum or other benefits under an eligible scheme may be postponed for the whole or any part of an assessment period in relation to the scheme for which he continues in employment after attaining normal pension age in circumstances where—

• (a) the trustees or managers of the scheme have not received a notice from the Board to the effect that a notice issued by an insolvency practitioner or former insolvency practitioner in relation to the employer in relation to the scheme which confirms that a scheme rescue is not possible has become binding; or

• (b) the trustees or managers of the scheme have not received a binding scheme failure notice issued by the Board in respect of the scheme under section 130(2) of the Act.

• (2) Where—

• (a) a member of an eligible scheme has died before the commencement of an assessment period in relation to the scheme; and

• (b) during the assessment period, a person becomes entitled under the scheme rules to a death benefit or a contribution refund (within the meaning of section 101AB(4) of the 1993 Act) payable in respect of that member,

that benefit is, for the purposes of section 138(2) of the Act (payment of scheme benefits), to be treated as having become payable before the commencement of the assessment period.

Loans to pay scheme benefits

18

• (1) The prescribed rate of interest referred to in section 139(6) of the Act (loans to pay scheme benefits) shall be the base rate.

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

• (3) In this regulation—

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

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

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

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

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

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

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

Withdrawal following issue of section 122(4) notice

19

• (1) A notice issued by the Board under section 148(3) or (4) of the Act (withdrawal following issue of section 122(4) notice) shall be in writing and shall contain the following information—

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

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

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

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

• (e) if the notice is issued pursuant to a determination by the Board under section 148(3) of the Act, a statement of the Board's determination and the date on which that determination was made;

• (f) if the notice is issued by the Board under section 148(4) of the Act, a statement by the Board of the basis on which the notice is issued;

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

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

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

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

• (2) Where a notice issued by the Board under section 148(3) or (4) of the Act becomes binding, the notice which the Board must issue to this effect under section 148(7) of the Act shall be in writing and shall contain the following information—

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

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

• (c) a statement that the withdrawal notice referred to in paragraph (1) of this regulation has become binding; and

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

Consequences of the Board ceasing to be involved with a scheme

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• (1) Where an assessment period in relation to an eligible scheme comes to an end by virtue of the Board ceasing to be involved with the scheme following the issue of a withdrawal notice under section 122(2)(b) of the Act (scheme rescue has occurred) in relation to the scheme which has become binding then, subject to paragraphs (2) and (3), benefits are to accrue under the scheme rules to or in respect of any member of the scheme in respect of any period of service in employment during that assessment period which, but for section 133(5) of the Act (no benefits may accrue to or in respect of members during an assessment period), would have qualified that member for those benefits under the scheme rules.

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

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

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

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

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

Refusal to assume responsibility – schemes which become eligible schemes

21

• (1) The prescribed period referred to in section 146(1) of the Act schemes which become eligible schemes) throughout which the Board must be satisfied that an occupational pension scheme is not an eligible scheme shall—

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

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

• (c) in the case of a scheme which becomes an eligible scheme on 1st April 2015 in accordance with regulation 43(1)(b) of the Pensions Act 2011 (Transitional, Consequential and Supplementary Provisions) Regulations 2014—

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

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

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

• (a) a section of a segregated scheme;

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

• (c) a segregated part of—

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

• (ii) a non-segregated scheme,

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

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

• (a) regulation 2(1A) (schemes which are not eligible schemes) of these Regulations; or

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

applies to a scheme.

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

22

• (1) The prescribed period referred to in section 147(1)(a) of the Act (new schemes created to replace existing schemes) during which the Board must be satisfied that a new occupational pension scheme was established shall be the period of three years preceding the date on which an assessment period began in relation to the scheme.

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

• (a) a section of a segregated scheme,

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

• (c) a segregated part of—

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

• (ii) a non-segregated scheme,

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

Form and content of withdrawal notices issued under sections 146 and 147 of the Act

23

• (1) A notice issued under section 146(2) or 147(2) of the Act (“a withdrawal notice”) shall be in writing and shall contain the following information—

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Applications for reconsideration

24

• (1) An application for reconsideration under section 151 of the Act (application for reconsideration) shall be made in writing and shall be accompanied by—

• (a) either–

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

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

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

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

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

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

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

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

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

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

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

• (f) the date on which the trustees or managers of the scheme received a binding valuation notice under section 145(3) or a binding determination notice under section 143A(4) issued by the Board in respect of the scheme;

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

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

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

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

• (3) The prescribed period referred to in section 151(6) of the Act as “the authorised period” for making an application for reconsideration is the period of six months.

Form and content of audited scheme accounts

25

The prescribed requirements referred to in section 151(9)(b) (application for reconsideration) which are to apply in respect of the preparation of audited scheme accounts are that those accounts shall—

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

• (b) show a true and fair view of—

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

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

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

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

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

1

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

2

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

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

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

• (i) insurance policies;

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

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

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

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

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

• (vii) unit trusts invested in property;

• (viii) other unit trusts;

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

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

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

• (xii) cash deposits and cash in hand;

• (xiii) investments and other assets not included in heads (i) to (xii) above; and

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

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

• (3) Where the assets—

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

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

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

3

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

4

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

5

Where the scheme has employer-related investments, within the meaning of section 40(2) of the 1995 Act (restriction on employer related investments), a statement—

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

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

6

In respect of every other amount shown in the accounts other than the amounts referred to in paragraph 7, a statement of the corresponding amount for the scheme year previous to the accounting period, except in a case where regulation 2 of the Occupational Pension Schemes (Requirement to obtain Audited Accounts and a Statement from the Auditor) Regulations 1996 (requirement for trustees or managers to obtain documents) is complied with by the trustees or managers of a scheme for the first time.

7

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

8

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

Signed

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

Malcolm Wicks — Minister of State, — Department for Work and Pensions — 2005-03-10

Explanatory note

(This note is not part of the Regulations)

Footnotes

Editorial notes