The Pension Protection Fund (Compensation) Regulations 2005

Made: 11th March 2005

Laid before Parliament: 16th March 2005

Coming into force: 6th April 2005

The Secretary of State for Work and Pensions, in exercise of the powers conferred upon him by sections 315(2), (4) and (5), and 318(1) and (4)(a) of, and paragraphs 4(4), 6(4), 9(4), 12(4)(a), 13(4), 16(3)(b), 17(4)(a), 18(4), 20(4) and (7), 23, 24(1), (2) and (6), 25(1), 26(9) and (10), 28(6) and (7), 31(2)(a) and (3) and 33 of Schedule 7 to, the Pensions Act 2004 , and of all other powers enabling him in that behalf, by this instrument, which contains regulations made before the end of the period of six months beginning with the coming into force of the provisions of that Act by virtue of which they are made , hereby makes the following Regulations:

PART 1 — Preliminary

Citation commencement and interpretation

1

• (1) These Regulations may be cited as the Pension Protection Fund (Compensation) Regulations 2005 and shall come into force on 6th April 2005.

• (2) In these Regulations—

• “the 2004 Act” means the Finance Act 2004;

• “the Act” means the Pensions Act 2004;

• “the assessment date” means the date on which the assessment period in relation to the scheme or section, or (where there has been more than one such assessment period) the last one, began;

• “the basic element” and “the bridging element”, in relation to a pension which falls within regulation 28(1)(b) (variable-rate schemes which provide for a decrease in annual rate of pension: modification of Schedule 7 to the Act), have the meanings given in regulation 28(2);

• “commutation limit” means the amount specified in paragraph 7(4) of Schedule 29 to the 2004 Act (trivial commutation lump sum);

• “commutation period” means the period beginning with the day on which a trivial commutation lump sum or PPF trivial commutation lump sum is first paid to the member and ending 12 months after that day;

• “early retirement age” means the age specified in the scheme rules as being the date on which a member may, subject to actuarial adjustment, become entitled to payment of a pension prior to attaining normal pension age;

• “employer”, in relation to—an occupational pension scheme which is not a multi-employer scheme; ora single-employer section of a segregated scheme,which has no active members, includes the person who was the employer of persons in the description of employment to which the scheme or section relates immediately before the time at which the scheme or section ceased to have any active members in relation to it;

• “employer”, in relation to a non-segregated scheme or a multi-employer section of a segregated scheme—in an assessment period, includes any person who before the assessment date has ceased to be the employer of persons in the description of employment to which the scheme or section relates unless condition A, B, C or D is satisfied where—condition A is that a debt under section 75 of the Pensions Act 1995 (deficiencies in the assets) became due from that employer and the full amount of the debt has been paid before the assessment date;condition B is that—such a debt became due;a legally enforceable agreement has been entered into the effect of which is to reduce the amount which may be recovered in respect of the debt; andthe reduced amount has been paid in full before the assessment date;condition C is that such a debt became due but before the assessment date it is excluded from the value of the assets of the scheme or section because it is unlikely to be recovered without disproportionate costs or within a reasonable time;condition D is that at the time at which any such person ceased to be the employer of persons in the description of employment to which the scheme or section relates the value of the assets of the scheme or section was such that no such debt was treated as becoming due;in any other case, includes any person who has ceased to be the employer of persons in the description of employment to which the scheme or section relates unless condition A, B, C or D is satisfied where—condition A is that a debt under section 75 of the Pensions Act 1995 became due from that employer and the full amount of the debt has been paid;condition B is that—such a debt became due;a legally enforceable agreement has been entered into the effect of which is to reduce the amount which may be recovered in respect of the debt; andthe reduced amount has been paid in full;condition C is that such a debt became due but it is excluded from the value of the assets of the scheme or section because it is unlikely to be recovered without disproportionate costs or within a reasonable time;condition D is that at the time at which any such person ceased to be the employer of persons in the description of employment to which the scheme or section relates the value of the assets of the scheme or section was such that no such debt was treated as becoming due;

• “employment” means any trade, business, profession, office or vocation;

• “lump sum compensation” means— any lump sum compensation payments made in relation to a person, payable under the pension compensation provisions as specified in section 162(2) of the Act (the pension compensation provisions); orany lump sum payments made in relation to a person, payable under section 166 of the Act (duty to pay scheme benefits unpaid at assessment date etc.);

• “non-segregated scheme” means a multi-employer scheme which is not a segregated scheme;

• “PPF compensation” means any payments made under the pension compensation provisions specified in section 162 of the Act (the pension compensation provisions);

• “PPF trivial commutation lump sum” has the meaning given in regulation 20(2) (circumstances in which the portion of compensation to be commuted may exceed 25 per cent);

• ...

• “periodic compensation” means— any periodic compensation payments made in relation to a person, payable under the pension compensation provisions specified in section 162(2) of the Act; orany periodic payments made in relation to a person, payable under section 166 of the Act;

• “qualifying course” means a full time educational or vocational course at a recognised educational establishment where in pursuit of that course, the time spent receiving instruction or tuition, undertaking supervised study, examination or practical work or taking part in any exercise, experiment or project for which provision is made in the curriculum of the course, exceeds 12 hours per week in normal term time, and shall include any gaps between the ending of one course and the commencement of another, where the person is enrolled on and commences the latter course;

• “the register” means the system for keeping records provided under section 30(2) of the Civil Partnership Act 2004 (the Registrar General and the register);

• “registered pension scheme” has the meaning given in section 150(2) of the 2004 Act (meaning of pension schemes);

• “relevant partner” means a person who was not married to, or in a civil partnership with, the member but who was living with the member as if that person and the member were a married couple or civil partners;

• “retail prices index” means the general index (for all items) published by the Office for National Statistics or, if that index is not published for a relevant month, any substituted index or index figures published by that office ;

• “scheme” in the case of a section or a segregated part of a scheme, which for the purposes of Part 2 of the Act, is an eligible scheme, includes that section or segregated part of a scheme;

• “scheme benefit age”, in relation to a scheme, means the earliest age at which a person who has pension credit rights under the scheme is entitled to receive a pension by virtue of those rights (disregarding any scheme rule making special provision as to early payment of pension on grounds of ill-health or otherwise);

• “scheme pension age”, in relation to a scheme and a member's pensionable service under it, means—in a case where the scheme provides for the member only a guaranteed minimum pension, the earliest date at which the member is entitled to receive the guaranteed minimum pension on retirement from any employment to which the scheme applies; andin any other case, the earliest age at which the member is entitled to receive benefits (other than a guaranteed minimum pension) on his retirement from such employment;

• “segregated scheme” means a multi-employer scheme which is divided into two or more sections where—any contributions payable to the scheme by an employer in relation to the scheme or by a member are allocated to that employer’s or that member’s section; anda specified proportion of the assets of the scheme is attributable to each section of the scheme and cannot be used for the purposes of any other section;

• ...

• “surviving dependant” means—a child of the family who is financially dependent on the member, and who is aged less than 18; ora child of the family who is financially dependent on the member, who is aged less than 25 and who is—either attending a qualifying course; orincapable of engaging in full time paid employment due to a condition that falls within the definition of a disability under the Disability Discrimination Act 1995 ;

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

• “tax year” has the meaning given in section 279(1) of the 2004 Act (other definitions);

• “trivial commutation lump sum” has the meaning given in paragraph 7 of Schedule 29 to the 2004 Act (trivial commutation lump sum).

• ...

PART 2 — Early payment of compensation

Circumstances where a person shall be entitled to early payment of compensation

2

• (1) The conditions subject to which a person may become entitled to—

• (a) periodic compensation under paragraphs 11 or 15; or

• (b) lump sum compensation under paragraphs 14 or 19,

of Schedule 7 to the Act before he attains normal pension age are those prescribed in the following paragraphs of this regulation.

• (2) Those conditions are—

• (a) that the person has given notice to the Board, in accordance with paragraph (3), that he wishes to receive that compensation before he attains normal pension age; ...

• (b) that on the date on which the compensation is to become payable early the person has attained—

• (i) except in a case to which paragraph (ii) applies, normal minimum pension age as defined in section 279(1) of the 2004 Act;

• (ii) in a case where the person has a protected pension age of less than 50 by virtue of paragraph 22 of Schedule 36 to the 2004 Act (rights to take benefit before normal minimum pension age), the age of 50; and

• (c) where regulation 29 (variable-rate schemes which provide for a decrease in annual rate of pension: modification of Schedule 7 to the Act) applies to the scheme and the notice referred to in sub‑paragraph (a) relates, in whole or in part, to compensation in respect of a pension which falls within regulation 28(1)(b), that the notice—

• (i) relates to both the compensation in respect of the basic element and that in respect of the bridging element; and

• (ii) specifies the same date in relation to both for the purposes of paragraph (3)(a)(iii).

• (3) The notice referred to in paragraph (2)(a)—

• (a) must include—

• (i) the person's name, address, date of birth and national insurance number;

• (ii) the name of the scheme for which the Board has assumed responsibility (“the relevant scheme”); and

• (iii) the date on which the person would like the compensation to become payable early; and

• (b) must not be given before the date on which the Board assumes responsibility for the relevant scheme; and

• (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART 3 — Benefits for Survivors

Circumstances where a widow or widower is not entitled to periodic compensation

3

A widow or widower shall not be entitled to periodic compensation under paragraph 4 (pensions in payment at assessment date), 6 (pension benefits postponed at assessment date), 9 (active members over normal pension age at assessment date), 13 (active members who have not attained normal pension age at assessment date) or 18 (deferred members who have not attained normal pension age at assessment date) of Schedule 7 to the Act where there is—

• (a) a valid nomination made by the member in accordance with either—

• (i) the admissible rules of the scheme; or

• (ii) regulation 4(2)(a),

to pay a survivor’s pension to a relevant partner; or

• (b) no provision to a pay a survivor’s pension under the admissible rules of the scheme.

Compensation for surviving dependants

4

• (1) A person shall be entitled to periodic compensation under paragraph 23 of Schedule 7 to the Act (compensation in form of dependants' benefits)in the circumstances prescribed in this regulation.

• (2) Subject to paragraph (2A), in the case of a relevant partner, the circumstances are where there is provision to pay a survivor's pension to an unmarried partner of the member under the admissible rules of the scheme (whether discretionary or otherwise); and

• (a) the member—

• (i) has provided the Board with a signed written notice informing the Board that the person is a relevant partner; and

• (ii) the relevant partner has demonstrated to the satisfaction of the Board that he was co-habiting with the member at the date of the member's death; or

• (b) where the member has not provided the Board with a signed notice in accordance with paragraph (2)(a)(i), the relevant partner provides evidence to the satisfaction of the Board that—

• (i) he was financially dependent on, or interdependent on the member; and

• (ii) he was co-habiting with the member;

at the date of the member's death.

• (2A) No compensation may be paid under paragraph (2) where the member had a civil partner, or a spouse, at the date of his death, and there is no valid nomination in favour of the relevant partner.

• (2B) Subject to paragraph (2C), in the case of a civil partner, the circumstances are—

• (a) where there is provision to pay a survivor’s pension to a civil partner or spouse of the member under the admissible rules of the scheme (whether discretionary or otherwise);

• (b) the surviving civil partner has provided the Board, or during the assessment period the trustees or managers of the eligible scheme, with a certified copy of the entry in the register relating to the civil partnership; and

• (c) the civil partnership was still in existence at the date of the member’s death.

• (2C) No compensation may be paid under paragraph (2B) where there is a valid nomination made by the member in accordance with either—

• (a) the admissible rules of the scheme; or

• (b) regulation 4(2)(a),

to pay a survivor’s pension to a relevant partner.

• (3) Subject to paragraph (4), in the case of a surviving dependant the circumstances are where the surviving dependant provides—

• (a) in the case of a natural child ... of the member, a birth certificate or other evidence demonstrating to the satisfaction of the Board that he was the natural child of the member;

• (b) in the case of an adopted child of the member, the adoption certificate demonstrating that he was the adopted child of the member; or

• (ba) in the case of a child of the member who, at the date of the member’s death, was being carried by the mother and had not been born, evidence demonstrating to the satisfaction of the Board that the child—

• (i) is the child of the member; and

• (ii) would have been a dependant of the member had the child been born before the date of the member’s death; or

• (c) in the case of any other child who is a dependant of the member at the date of the member's death, evidence demonstrating to the satisfaction of the Board that he was a dependant child of the member at the date of the member's death,

to the Board or, where evidence is provided during the assessment period, to the trustees or managers of the eligible scheme.

• (4) Where regulation 29 (variable-rate schemes which provide for a decrease in annual rate of pension: modification of Schedule 7 to the Act) applies to the scheme, no compensation may be paid under paragraph (3) in respect of the bridging element of a pension which falls within regulation 28(1)(b).

Amount and duration of periodic compensation in the case of relevant partners

5

Subject to regulation 8, where periodic compensation is payable to a relevant partner or civil partner, the amount and duration of periodic compensation shall be—

• (a) where a pension was in payment to the member on the assessment date, an amount calculated in accordance with paragraph 4(2) and (3) of Schedule 7 to the Act (pensions in payment at assessment date);

• (b) where a pension was not in payment to the member at the assessment date because the member had postponed payment of the pension, an amount calculated in accordance with paragraph 6(2) and (3) of Schedule 7 to the Act (pension benefits postponed at assessment date);

• (c) where a pension was not in payment to the member at the assessment date because the member was an active member and over the normal pension age, an amount calculated in accordance with paragraph 9(2) and (3) of Schedule 7 to the Act (active members over normal pension age at assessment date);

• (d) where a pension was not in payment to the member at the assessment date because the member was an active member and under the normal pension age, an amount calculated in accordance with paragraph 13(2) and (3)(a) or (b) of Schedule 7 to the Act (active members who have not attained normal pension age at assessment date);

• (e) where a pension was not in payment to the member at the assessment date because the member was a deferred member and under the normal pension age, an amount calculated in accordance with paragraph 18(2) and (3) of Schedule 7 to the Act (deferred members who have not attained normal pension age at assessment date).

Amount of periodic compensation that can be paid in the case of surviving dependants

6

• (1) Subject to Regulation 8, and to paragraphs (2) and (3), where periodic compensation is payable to a surviving dependant the amount of periodic compensation shall be—

• (a) where a pension was in payment to the member on the assessment date, an amount calculated in accordance with paragraph 3 of Schedule 7 to the Act (pensions in payment at assessment date);

• (b) where a pension was not in payment to the member at the assessment date because the member had postponed payment of the pension, an amount calculated in accordance with paragraph 5 of Schedule 7 to the Act (pension benefits postponed at assessment date);

• (c) where a pension was not in payment to the member at the assessment date because the member was an active member, and over the normal pension age, an amount calculated in accordance with paragraph 8 of Schedule 7 to the Act (active members over normal pension age at assessment date);

• (d) where a pension was not in payment to the member at the assessment date because the member was an active member and under the normal pension age, but died after attaining normal pension age, an amount calculated in accordance with paragraphs 11 and 13(3)(a) of Schedule 7 to the Act (active members who have not attained normal pension age at assessment date);

• (e) where a pension was not in payment to the member at the assessment date because the member was an active member and under the normal pension age, but died before attaining normal pension age, an amount calculated in accordance with paragraphs 11 and 13(3)(b) of Schedule 7 to the Act (active members who have not attained normal pension age at assessment date);

• (f) where a pension was not in payment to the member at the assessment date because the member was a deferred member, and under the normal pension age, an amount calculated in accordance with paragraph 15 of Schedule 7 to the Act (deferred members who have not attained normal pension age at assessment date).

and references in those paragraphs to the member (whether deferred or otherwise), relating to entitlement to periodic compensation shall be treated as if they were references to a surviving dependant for the purposes of this calculation.

• (2) Where periodic compensation is also payable to a surviving spouse, relevant partner or civil partner and—

• (a) there is only one surviving dependant, the amount of periodic compensation shall be 25% of the amount calculated under paragraph (1);

• (b) there are two or more surviving dependants, the amount of periodic compensation shall be half of the amount calculated under paragraph (1), divided equally between the surviving dependants.

• (3) Where periodic compensation is not payable to a surviving spouse, relevant partner or civil partner, or where such a claim has not been made, and—

• (a) there is only one surviving dependant, the amount of periodic compensation shall be half of the amount calculated under paragraph (1); or

• (b) there are two or more surviving dependants, the amount of periodic compensation shall be the amount calculated under paragraph (1), divided equally between the surviving dependants.

Period of payment

7

• (1) Subject to paragraph (2), where periodic compensation is payable under regulation 6 it shall be payable from the day after the member's death.

• (2) Where a surviving dependant

• (a) is an unborn child, periodic compensation shall be payable from the date of the child's birth;

• (b) has left a qualifying course, and payment of periodic compensation has ceased under regulation 7(4)(a), but he begins another qualifying course before attaining the age of 23 ..., it shall be payable from the date the later qualifying course begins;

• (c) becomes disabled after he has attained the age of 18, periodic compensation shall be payable from the date that the surviving dependant became disabled.

• (3) Except where paragraph (4) applies, periodic compensation shall be paid until the surviving dependant attains the age of 18.

• (4) This paragraph applies where the surviving dependant—

• (a) is attending a qualifying course—

• (i) until the surviving dependant leaves the qualifying course; or

• (ii) attains the age of 23;

whichever is the earlier; or

• (b) is incapable of engaging in full time paid employment due to a condition that falls within the definition of a disability under the Disability Discrimination Act 1995, until the surviving dependant attains the age of 23.

Change of circumstances and backdating

8

• (1) The amount of periodic compensation payable under these Regulations may be varied where—

• (a) there is a change in the circumstances of the person or persons to whom periodic compensation is payable; and

• (b) that change would have resulted in—

• (i) a different rate of periodic compensation being payable (including where a rate of nil may apply); or

• (ii) periodic compensation being payable from a different start date,

and such a variation shall take effect from the date that the change in circumstances occurred.

• (2) The amount of periodic compensation calculated under paragraph (1) shall be subject to paragraphs 28 (annual increase in periodic compensation) and 29 (Board's powers to alter rates of revaluation and indexation) of Schedule 7 to the Act, and any regulations made under those paragraphs.

• (3) Where a person makes a claim for periodic compensation, his claim for periodic compensation shall be backdated to the date he became eligible to claim periodic compensation, or where that date is more than five years prior to the date of the claim, for five years from the date of the claim.

PART 4 — Admissible Rules

Special provision in relation to pensions in payment to survivors

9

Where immediately before the assessment date—

• (a) a person is entitled to present payment of a pension under the scheme rules;

• (b) that pension is attributable to the pensionable service of a member of the scheme who has died; and

• (c) the effect of disregarding rules within paragraphs (a) and (b) of paragraph 35(2) of Schedule 7 to the Act, is that the person is not entitled to compensation under paragraph 3(2) (pensions in payment at assessment date) by reason of the pension or a part of the pension,

that person shall be treated, for the purposes of the pension compensation provisions, as entitled, immediately before the assessment date, to present payment of a pension under the admissible rules.

Special provision in relation to pensions in payment following early retirement

10

• (1) Where immediately before the assessment date—

• (a) a person is entitled to present payment of a pension under the scheme rules;

• (b) the scheme rules provide that the award of that pension is dependent on—

• (i) that person having attained early retirement age; and

• (ii) the consent of—

• (aa) the trustees or managers; or

• (bb) the employer; and

• (c) the effect of disregarding rules within paragraphs (a) and (b) of paragraph 35(2) of Schedule 7 to the Act (scheme rules, admissible rules etc) is that the person is not entitled to compensation under paragraph 3(2) by reason of the pension or a part of the pension,

paragraphs (2) and (3) shall apply.

• (2) Where in the opinion of the trustees or managers—

• (a) the trustees or managers; or

• (b) the employer,

would have consented to the award of a pension to that person under the admissible rules of the scheme prior to the assessment date, they must notify the Board in that respect.

• (3) Where the Board receives a notice under paragraph (2) that person shall be treated, for the purposes of the pension compensation provisions, as entitled, immediately before the assessment date, to present payment of a pension under the admissible rules.

Special provision in relation to pensions in payment on grounds of ill-health

11

• (1) Where immediately before the assessment date—

• (a) a person is entitled to present payment of a pension under the scheme rules;

• (b) that pension was awarded by the trustees or managers on grounds of ill health; and

• (c) the effect of disregarding rules within paragraphs (a) and (b) of paragraph 35(2) of Schedule 7 to the Act is that the person is not entitled to compensation under paragraph 3(2) by reason of the pension or a part of the pension,

paragraphs (2) and (3) shall apply.

• (2) Where in the opinion of the trustees or managers of the scheme a person to whom paragraph (1) applies would have been awarded an ill health pension under the admissible rules of the scheme prior to the assessment date, they must notify the Board in that respect.

• (3) Where the Board receives a notice under paragraph (2) that person shall be treated, for the purposes of the pension compensation provisions, as entitled, immediately before the assessment date, to present payment of a pension under the admissible rules.

Modification of Schedule 7 in relation to certain pensions in payment before the assessment date

12

• (1) Where immediately before the assessment date—

• (a) a person is entitled to present payment of a pension under the scheme rules;

• (b) the effect of disregarding rules within paragraphs (a) and (b) of paragraph 35(2) of Schedule 7 to the Act is that the person is not entitled to compensation under paragraph 3(2) by reason of the pension or a part of the pension; and

• (c) regulations 9, 10 or 11 of these Regulations do not apply to that person,

PART 5 — Revaluation

Manner of determining the revaluation percentage in the case of active members who have not attained normal pension age at assessment date

13

Subject to regulation 15B, for the purposes of paragraph 12(4)(a) of Schedule 7 to the Act (determination of revaluation percentage in the case of active members who have not attained normal pension age at assessment date) the manner prescribed for the determination of the percentage increase in the general level of prices in Great Britain during the revaluation period is—

Manner of determining the revaluation amount

14

• (1) Subject to paragraph (2), for the purposes of paragraph 16(3)(b) of Schedule 7 to the Act (determination of revaluation amount for the first revaluation period in the case of deferred members who have not attained normal pension age at assessment date), the manner prescribed for the determination of the revaluation amount for the first revaluation period is the manner in which that revaluation amount would have been determined under the admissible rules of the scheme.

• (2) For the purposes of paragraph (1) references under the admissible rules of the scheme to normal pension age shall be applied as if they were references to the assessment date.

Manner of determining the revaluation percentage in the case of deferred members who have not attained normal pension age at assessment date

15

Subject to regulation 15B, for the purposes of paragraph (a) of the definition of “higher revaluation percentage” in paragraph 17(4) of Schedule 7 to the Act (determination of revaluation percentage in the case of deferred members who have not attained normal pension age at assessment date) the manner prescribed for the determination of the percentage increase in the general level of prices in Great Britain during the revaluation period is—

PART 6 — Compensation in respect of protected transfer payment or protected contribution repayment

Modification of admissible rules

16

• (1) For the purposes of paragraph 20(4) of Schedule 7 to the Act (calculation of amount of compensation in accordance with admissible rules in respect of scheme right to transfer payment or contribution refund) where the Board is satisfied that it is not possible to apply the admissible rules in order to calculate the amount of the protected transfer payment or protected contribution repayment the Board shall apply the admissible rules as if they included—

• (a) the formula in paragraph (2) in order to calculate the amount of the protected transfer payment; or

• (b) the provision specified in paragraph (4) in order to calculate the amount of the protected contribution repayment.

• (2) Subject to paragraph (3), the formula referred to in paragraph (1)(a) is—

$$ARxPExPS$where—a AR is the person's annual accrual rate in respect of the value of benefits accrued to him under the scheme rules;b PE is the person's annual pensionable earnings in respect of the value of benefits accrued to him under the scheme rules; andc PS is the person's pensionable service in respect of the value of benefits accrued to him under the scheme rules in years (including any fraction of a year).$

• (3) In any case where the Board is satisfied that it is not possible to identify one or more of the elements of the formula in paragraph (2), the Board may, having regard to the admissible rules, determine how the protected transfer payment is to be calculated.

• (4) The provision specified in this paragraph is that the protected contribution repayment shall be calculated by reference to the amount of contributions actually made by the person or on his behalf to the scheme.

Disapplication of paragraphs 8, 10, 11 and 14 of Schedule 7

17

• (1) In the case of a person who, in respect of the same pensionable service under the scheme would be entitled to compensation under paragraph 20 of Schedule 7 to the Act (compensation for persons who were active members immediately before assessment date), paragraphs 8, 10, and 11 of that Schedule are modified in their effect, as if after sub-paragraph (8) of those paragraphs there were inserted the following sub-paragraph—

(9) Compensation shall not be payable in accordance with the provisions of this paragraph, where a person is entitled to compensation in accordance with the provisions of paragraph 20.

• (2) In the case of a person who, in respect of the same pensionable service under the scheme would be entitled to compensation under paragraph 20 of Schedule 7 to the Act (compensation for persons who were active members immediately before assessment date), paragraph 14 of that Schedule is modified in its effect, as if after sub-paragraph (9) of that paragraph, there were inserted the following sub-paragraph—

(10) Compensation shall not be payable in accordance with the provisions of this paragraph, where a person is entitled to compensation in accordance with the provisions of paragraph 20.

Transitional provisions

18

Where compensation would be payable under paragraph 20 of Schedule 7 to the Act if Chapter 5 of Part 4 of the Pension Schemes Act 1993 were in force, paragraph 20(1)(c) and (d) shall have effect, as if Chapter 5 were in force.

PART 7 — Commutation

Commutation of periodic compensation

19

• (1) The prescribed circumstances for the purposes of paragraph 24(1) of Schedule 7 to the Act (commutation of periodic compensation) are the circumstances specified in paragraph (2) .

• (2) The circumstances are that a person entitled to periodic compensation under paragraph 5, 8, 11 or 15 of Schedule 7 (pension compensation provisions)—

• (a) must not have exercised an option to commute for a lump sum a portion of the pension in respect of which that person is entitled to periodic compensation; and

• (b) must exercise the option to commute under paragraph 24(1) of Schedule 7 within six months beginning with the date on which—

• (i) the Board gives the trustees or managers of the scheme a transfer notice under section 160(2) of the Act (transfer notice); or

• (ii) payment of periodic compensation commences,

whichever is the later.

• (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Circumstances in which the portion of compensation to be commuted may exceed 25 per cent

20

• (1) The prescribed circumstances for the purposes of paragraph 24(2) of Schedule 7 to the Act (commutation of periodic compensation) are that the portion to be commuted is a PPF trivial commutation lump sum, in accordance with paragraph (2).

• (2) A payment is a PPF trivial commutation lump sum if—

• (a) either—

• (i) no trivial commutation lump sum or PPF trivial commutation lump sum has previously been paid to the person—

• (aa) by a registered pension scheme; or

• (bb) the Board; or

• (ii) if such a lump sum has previously been paid; that lump sum is paid before the end of the commutation period;

• (b) on the nominated date, the value of the member's entitlement to PPF compensation and pension rights do not exceed the commutation limit;

• (c) it is paid when all or part of the member's lump sum and death benefit allowance (see section 637R of the Income Tax (Earnings and Pensions) Act 2003) is available; and

• (d) it extinguishes the member's entitlement to PPF compensation.

• (3) The nominated date is—

• (a) the day within the period of three months ending with the first day of the commutation period nominated by the person; or

• (b) if no day is nominated, the first day of the commutation period.

• (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (5) The value of the member's pension rights on the nominated date is the aggregate of—

• (a) the value of the member's relevant crystallised pension rights on that date; and

• (b) the value of the member's uncrystallised rights on that date.

• (6) For the purposes of paragraph (5)—

• (a) relevant crystallised pension rights shall be calculated in accordance with paragraph 8 of Schedule 29 to the 2004 Act (trivial commutation lump sum); and

• (b) a member's uncrystallised rights shall be calculated in accordance with paragraph 9 of Schedule 29 to the 2004 Act.

• (7) The value of the member's entitlement to PPF compensation shall be calculated by adding any entitlement he may have to lump sum compensation and any entitlement he may have to periodic compensation.

• (8) For the purposes of paragraph (7), the value of any entitlement to—

• (a) lump sum compensation, shall be the full amount of the lump sum compensation to which that member would be entitled on the nominated date; and

• (b) periodic compensation, shall be calculated by multiplying the annual periodic compensation to which that member would be entitled on the nominated date by 20.

Manner in which an option to commute may be exercised

21

• (1) The manner in which an option to commute periodic compensation under paragraph 24(1) of Schedule 7 may be exercised is specified in paragraphs (2) to (5).

• (2) A person must exercise an option to commute a portion of his periodic compensation under paragraph 24(1) by giving notice to the Board in writing.

• (3) A notice given under paragraph (2) must include—

• (a) the name, address, date of birth and national insurance number of the person exercising the option;

• (b) the name and address of the employer in respect of the scheme; and

• (c) the percentage of the periodic compensation that the person opts to commute.

• (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (5) The Board may require a person exercising an option under paragraph 24(1) to produce any document or provide any other information relevant to the exercise of the Board's functions in respect of the notice given under paragraph (2).

PART 8 — Compensation cap modifications

Application of compensation cap where compensation becomes payable on different dates

22

• (1) Paragraph 26 of Schedule 7 to the Act (compensation cap) applies with the modification specified in paragraph (3) where a person becomes entitled to relevant compensation in respect of a benefit (“benefit A”) and he has previously—

• (a) become entitled to relevant compensation in respect of a benefit or benefits under the scheme or a connected occupational pension scheme; or

• (b) become entitled to one or more lump sums under the scheme or a relevant connected occupational pension scheme.

• (2) For the purposes of paragraph (1)(b), a scheme is a relevant connected occupational pension scheme if it is an eligible scheme for the purposes of Part 2 of the Act when the person becomes entitled to the relevant compensation in respect of benefit A.

• (3) After paragraph 26(6) insert—

(6A) Where sub-paragraph (6B) or sub-paragraph (6BA) applies to a person, sub-paragraphs (6C) and (6D) apply (instead of sub-paragraph (1)) in relation to the entitlements referred to in the sub-paragraph which applies to him. (6B) This sub-paragraph applies if— (a) a person becomes entitled to relevant compensation in respect of a benefit (“benefit A”) that is attributable to a pension credit from a transferor; and (b) before the person becomes entitled to relevant compensation in respect of benefit A, he has become entitled to— (i) relevant compensation in respect of one or more other benefits under the scheme or a connected occupational pension scheme that are also attributable to a pension credit from the same transferor (“benefit or benefits C”); or (ii) one or more lump sums under the scheme or a relevant connected occupational pension scheme (“sum or sums L”) that are also attributable to a pension credit from the same transferor. (6BA) This paragraph applies if— (a) a person becomes entitled to relevant compensation in respect of a benefit (“benefit A”) that is attributable to the person’s pensionable service; and (b) before the person becomes entitled to relevant compensation in respect of benefit A, he has become entitled to— (i) relevant compensation in respect of one or more other benefits under the scheme or a connected occupational pension scheme that are also attributable to his pensionable service (“benefit or benefits C”); or (ii) one or more lump sums under the scheme or a relevant connected occupational pension scheme (“sum or sums L”) that are also attributable to his pensionable service. (6BB) For the purposes of sub-paragraphs (6B)(b)(ii) and (6BA)(b)(ii), a scheme is a relevant connected compensation pension scheme if it is an eligible scheme when the person becomes entitled to the relevant compensation in respect of benefit A. (6C) If the previous aggregate cap percentage is or exceeds 100, no relevant compensation is payable in respect of benefit A. (6D) If the previous aggregate cap percentage is less than 100— (a) the amount of the compensation in respect of benefit A, and (b) the amount of any payments by way of periodic compensation for benefit or benefits C that are payable on or after the assessment date for the relevant compensation in respect of benefit A, must be restricted in accordance with sub-paragraph (6H). (6E) For the purposes of this paragraph, “the previous aggregate cap percentage” means the aggregate of— (a) the cap percentage for the relevant compensation in the case of each of benefit or benefits C, and (b) the cap percentage in the case of each of sum or sums L. (6F) For the purposes of this paragraph, “the cap percentage”, in the case of any relevant compensation or lump sum, means— $$(AAVx100)/ACC$where—AAV is the appropriate annual value, andACC is the appropriate compensation cap.$ (6G) In sub-paragraph (6F)– “the appropriate annual value” means— (a) in the case of each of benefit A, benefit or benefits B and benefit or benefits C, the annual value of that benefit at the time when the relevant compensation becomes or, in the case of periodic compensation, first becomes payable, and (b) in the case of each of sum or sums L— (i) if the person became entitled to that sum on or after 6th April 2005, the annualised value of that sum at the time that sum became payable, and (ii) otherwise, the annualised value of that sum on 6th April 2005, (calculated on the assumption that on that date the person was the same age as when he became entitled to that sum); “the appropriate compensation cap” means— (a) in the case of each of benefit A, benefit or benefits B and benefit or benefits C, the compensation cap at the time when the person becomes entitled to relevant compensation in respect of the benefit, and (b) in the case of each of sum or sums L— (i) if the person became entitled to that sum on or after 6th April 2005, the compensation cap at the time when he became so entitled, and (ii) otherwise, the compensation cap on 6th April 2005. (6GA) Where sub-paragraph (6B) or (6BA) applies, “the compensation cap” has the meaning given by paragraph 26A, except that the reference in sub-paragraph (2) of that paragraph to the length of the person’s pensionable service is to be treated as if it were a reference to the total length of the person’s pensionable service at the time when he becomes entitled to the relevant compensation in respect of benefit A. (6H) Where sub-paragraph (6D) applies— (a) the relevant compensation in respect of benefit A is required to be restricted in accordance with sub-paragraph (3), but taking references in that sub-paragraph to the cap fraction as references to the revised cap fraction, and (b) the amount of any payments by way of periodic compensation for benefit or benefits C payable on or after the assessment date for the relevant compensation in respect of benefit A is required to be restricted to the revised cap fraction of the amount that would be payable apart from this sub-paragraph. (6I) For the purposes of this paragraph, “the revised cap fraction” means— 100 / the aggregate cap percentage (6J) For the purposes of this paragraph, “the aggregate cap percentage” means the aggregate of— (a) the previous aggregate cap percentage, (b) the cap percentage for the relevant compensation in the case of benefit A, and (c) in a case within sub-paragraph (2)(b)(i), the cap percentage for the relevant compensation in the case of each of benefit or benefits B.

Disregard of certain small payments in determining PPF compensation cap

23

• (1) For the purposes of paragraph 26 of Schedule 7 to the Act(compensation cap), in determining the restriction under that paragraph on the compensation to which a person is entitled in respect of a benefit under a scheme, a lump sum within sub-paragraph (6B)(b) of that paragraph (lump sums to which the person has previously become entitled) is to be disregarded if—

• (a) it is a trivial commutation lump sum or a winding up lump sum for the purposes of Part 1 of Schedule 29 to the 2004 Act (see paragraphs 7 and 10 of that Schedule); and

• (b) its payment does not contravene any trivial commutation restriction that applies in the circumstances in question.

• (2) In this regulation “trivial commutation restriction” means a restriction imposed by—

• (a) regulation 19, 20 or 60 of the Occupational Pension Schemes (Contracting-out) Regulations 1996 ;

• (b) regulation 2 of the Occupational Pension Schemes (Assignment, Forfeiture, Bankruptcy etc.) Regulations 1997 ; or

• (c) regulation 3(2)(b) of the Pension Sharing (Pension Credit Benefit) Regulations 2000 .

• (3) Before 6th April 2006 this regulation applies with the modifications in paragraphs (4) and (5).

• (4) For paragraph (1)(a) substitute—

(a) it extinguishes the person's entitlement to benefits under the scheme; (aa) its payment does not contravene Revenue restrictions; and;

• (5) After paragraph (2) insert—

(3) For the purposes of this regulation a payment does not contravene Revenue restrictions if— (a) in the case of a scheme that is an approved scheme for the purposes of Chapter 1 of Part 14 of the Income and Corporation Taxes Act 1988 (see section 612(1) of that Act), it is permitted under the scheme rules in accordance with its approval for those purposes; and (b) in the case of scheme that is a relevant statutory scheme for those purposes (see section 611A of that Act ), it is permitted under the regulations or rules governing the scheme as such a scheme.

PART 9 — Annual increase in periodic compensation

Annual increase in periodic compensation: post-1997 and pre-1997 service

24

• (1) This regulation applies for the purpose of the definitions of “post-1997 service” and “pre-1997 service” in paragraph 28(6) and (7) of Schedule 7 to the Act (annual increase in periodic compensation).

• (2) Pensionable service within paragraph 36(4)(b) is “post-1997 service” where it is treated for the purposes of the scheme as occurring on or after 6th April 1997.

• (3) Pensionable service within paragraph 36(4)(b) of that Schedule is “pre-1997 service” where it is treated for the purposes of the scheme as having occurred before 6th April 1997.

• (4) In relation to any relevant pension credit amount, “post-1997 service” means pension credit rights deriving from rights attributable to—

• (a) actual service of the transferor in any description of employment to which the scheme applies which—

• (i) qualifies the transferor for benefits under the scheme, and

• (ii) occurs on or after 6th April 1997; or

• (b) any notional service allowed in respect of the transferor under the admissible rules which—

• (i) qualifies the transferor for benefits under the scheme, and

• (ii) relates to service treated for the purposes of the scheme as occurring on or after 6th April 1997.

• (5) In relation to any relevant pension credit amount, “pre 1997 service” means pension credit rights deriving from rights attributable to—

• (a) actual service of the transferor in any description of employment to which the scheme applies which—

• (i) qualifies the transferor for benefits under the scheme, and

• (ii) occurred before 6th April 1997; or

• (b) any notional service allowed in respect of the transferor under the admissible rules which—

• (i) qualifies the transferor for benefits under the scheme; and

• (ii) relates to service treated for the purposes of the scheme as having occurred before 6th April 1997.

• (6) In any case where it is unclear whether—

• (a) pensionable service is treated for the purposes of the scheme as service (whether actual or notional) occurring before 6th April 1997, or, on or after that date, or

• (b) pension credit rights are derived from rights attributable to service (whether actual or notional) of the transferor occurring before 6th April 1997, or on, or after, that date,

the Board may determine as best as it is able, having regard to the admissible rules and all the circumstances of the case, how much of the service or notional service concerned should be treated for the purposes of this regulation as having occurred before 6th April 1997 and on or after that date.

PART 10 — Cash balance schemes

Cash balance schemes: modification of paragraphs 5, 15 and 19 paragraphs 3, 5, 8, 10, 11, 14, 15, 19, 22 and 37 of Schedule 7 to the Act

25

• (1) Subject to paragraph (1A), this regulation applies to a cash balance scheme, that is to say an occupational pension scheme the rules of which entitle a member of the scheme, upon attaining normal pension age, to a guaranteed sum which the trustees or managers of the scheme use to purchase for the member either a pension within the scheme or an annuity.

• (1A) This regulation does not apply to a cash balance scheme which is also a career average revalued earnings scheme within the meaning of regulation 26(1).

• (2) In their application to a pension attributable to a cash balance scheme, the provisions of Schedule 7 to the Act shall have effect with the following modifications—

• (a) paragraph 5 has effect as if—

• (i) after sub-paragraph (4), there were inserted—

(4A) In any case where the Board is satisfied that it is not possible to determine on the basis referred to in sub-paragraph (4) what would have been the annual rate of the pension, the “protected pension rate” shall mean what the Board may, having regard to the admissible rules, determine would have been the annual rate of pension, if the postponement of the pension had ceased immediately before the assessment date.

; and

• (ii) in sub-paragraph (5), after “(4)” there were inserted “ or (4A) ”;

• (b) paragraph 15 has effect as if, after sub-paragraph (5), there were inserted—

(5A) In any case where the Board is satisfied that it is not possible to determine on the basis referred to in sub-paragraph (5) what would have been the initial annual rate of the pension, the “accrued amount” shall mean an amount equal to such initial annual rate as the Board may, having regard to the admissible rules, determine the deferred member would have been entitled to had he attained the normal pension age when the pensionable service relating the pension ended.

; and

• (c) paragraph 19 has effect as if, after sub-paragraph (5), there were inserted—

(5A) In any case where the Board is satisfied that it is not possible to determine on the basis referred to in sub-paragraph (5) what would have been the amount of the scheme lump sum, the “accrued amount” shall mean an amount equal to such scheme lump sum amount as the Board may, having regard to the admissible rules, determine the deferred member would have been entitled to had normal pension age been the actual age attained by the deferred member when the pensionable service relating to the lump sum ended.

In their application to cash balance benefits or to a pension derived from cash balance benefits, the provisions of Schedule 7 to the Act have effect with the following modifications—

• (a) paragraph 3 (pensions in payment at assessment date) has effect as if—

• (i) in sub-paragraph (3), after “The annual rate of the periodic compensation is” there were inserted “subject to sub-paragraph (3A)”; and

• (ii) after sub-paragraph (3) there were inserted—

(3A) In a case where— (a) the pension is derived from money purchase benefits or cash balance benefits; (b) there is no requirement or discretion under the admissible rules to increase the pension; and (c) the pension is not required to be increased in accordance with section 51 of the Pensions Act 1995, the annual rate of the periodic compensation is the protected pension rate.

• (iii) in sub-paragraph (5), for “sub-paragraph (3)” there were substituted “sub-paragraphs (3) and (3A)”.

• (b) paragraph 5 (pension benefits postponed at assessment date) has effect as if—

• (i) in sub-paragraph (3), after “The annual rate of the periodic compensation is” there were inserted “subject to sub-paragraphs (3A) and (3B)”;

• (ii) after sub-paragraph (3) there were inserted—

(3A) In a case where— (a) the postponed pension is derived from money purchase benefits or cash balance benefits; (b) there is no requirement or discretion under the admissible rules to increase the pension; and (c) the pension is not required to be increased in accordance with section 51 of the Pensions Act 1995, the annual rate of the periodic compensation is to be determined in accordance with sub-paragraph (3B). (3B) In a case falling within sub-paragraph (3A) the annual rate of the periodic compensation is— (a) where the commencement of periodic compensation under this paragraph has not been postponed for any period by virtue of paragraph 25A, 100% of the protected pension rate; or (b) where the commencement of periodic compensation has been so postponed, 100% of the aggregate of the protected pension rate and the amount of the actuarial increase under paragraph 25A.

• (iii) in sub-paragraph (4) for “In sub-paragraph (3)” there were substituted “In sub-paragraphs (3) and (3B)”;

• (iv) after sub-paragraph (4) there were inserted—

(4A) In any case where the Board is satisfied that it is not possible to determine on the basis referred to in sub-paragraph (4) what would have been the annual rate of the pension, the “protected pension rate” shall mean what the Board may, having regard to the admissible rules, determine would have been the annual rate of pension if the postponement of pension had ceased immediately before the assessment date.

; and

• (v) in sub-paragraph (5) after “(4)” there were inserted “or (4A)”;

• (c) paragraph 8 (active members over normal pension age at assessment date) has effect as if—

• (i) for sub-paragraph (5) there were substituted—

(5) Subject to sub-paragraph (5A), the accrued amount means an amount equal to such initial annual rate of pension to which the member would have been entitled under the admissible rules when the pensionable service relating to the pension ended. (5A) In any case where the Board is satisfied that it is not possible to identify the initial annual rate of pension on the basis referred to in sub-paragraph (5), the Board may, having regard to the admissible rules, determine the accrued amount in accordance with actuarial factors published by the Board.

; and

• (ii) sub-paragraphs (6) and (7) were omitted;

• (d) paragraph 10 has effect as if—

• (i) for sub-paragraph (4) there were substituted—

(4) Subject to sub-paragraph (4A), the accrued amount means an amount equal to such amount of scheme lump sum to which the member would have been entitled under the admissible rules had the member attained normal pension age when the pensionable service relating to the scheme lump sum ended. (4A) In any case where the Board is satisfied that it is not possible to identify the amount of the scheme lump sum on the basis referred to in sub-paragraph (4), the Board may, having regard to the admissible rules, determine the accrued amount in accordance with actuarial factors published by the Board.

• (ii) sub-paragraphs (5), (6) and (7) were omitted;

• (e) paragraph 11 (active members who have not attained normal pension age at assessment date) has effect as if—

• (i) for sub-paragraph (5) there were substituted—

(5) Subject to sub-paragraph (5A), the accrued amount means an amount equal to such initial annual rate of pension to which the member would have been entitled under the admissible rules had the member attained normal pension age when the pensionable service relating to the pension ended. (5A) In any case where the Board is satisfied that it is not possible to identify the initial annual rate of pension on the basis referred to in sub-paragraph (5), the Board may, having regard to the admissible rules, determine the accrued amount in accordance with actuarial factors published by the Board.

; and

• (ii) sub-paragraphs (6) and (7) were omitted;

• (f) paragraph 14 has effect as if —

• (i) for sub-paragraph (5) there were substituted—

(5) Subject to sub-paragraph (5A), the accrued amount means an amount equal to such scheme lump sum to which the member would have been entitled under the admissible rules had the member attained normal pension age when the pensionable service relating to the scheme lump sum ended. (5A) In any case where the Board is satisfied that it is not possible to identify the amount of the scheme lump sum on the basis referred to in sub-paragraph (5), the Board may, having regard to the admissible rules, determine the accrued amount in accordance with actuarial factors published by the Board.

• (ii) sub-paragraphs (6) and (7) were omitted;

• (g) paragraph 15 (deferred members who have not attained normal pension age at assessment date) has effect as if—

• (i) at the beginning of sub-paragraph (5) there were inserted “Subject to sub-paragraph (5A)”; and

• (ii) after sub-paragraph (5) there were inserted—

(5A) In any case where the Board is satisfied that it is not possible to determine on the basis referred to in sub-paragraph (5) what would have been the initial annual rate of the pension, the accrued amount shall mean an amount equal to such initial annual rate as the Board may, having regard to the admissible rules and in accordance with actuarial factors published by the Board, determine the deferred member would have been entitled to had normal pension age been the actual age attained by the deferred member when the pensionable service relating to the lump sum ended.

• (h) paragraph 19 has effect as if—

• (i) at the beginning of sub-paragraph (5) there were inserted “Subject to sub-paragraph (5A)”; and

• (ii) after sub-paragraph (5) there were inserted—

(5A) In any case where the Board is satisfied that it is not possible to determine on the basis referred to in sub-paragraph (5) what would have been the amount of the scheme lump sum, the accrued amount shall mean an amount equal to such scheme lump sum amount as the Board may, having regard to the admissible rules and in accordance with actuarial factors published by the Board, determine the deferred member would have been entitled to had normal pension age been the actual age attained by the deferred member when the pensionable service relating to the lump sum ended.

• (i) paragraph 22 (survivors who do not meet conditions for scheme benefits at assessment date) has effect as if—

• (i) at the beginning of sub-paragraph (3)(a) there were inserted “subject to sub-paragraph (3A)”; and

• (ii) after sub-paragraph (3) there were inserted——

(3A) In any case where the Board is satisfied that it is not possible to identify the initial rate of pension mentioned in sub-paragraph (3)(a), the Board may, having regard to the admissible rules, determine the initial rate of the compensation in accordance with actuarial factors published by the Board.

• (j) paragraph 37(1) has effect as if after “In this Schedule—” there were inserted—

• “cash balance benefit” has the meaning given by regulation 2 of the Pensions Act 2011 (Transitional, Consequential and Supplementary Provisions) Regulations 2014;

• (3) In this Part —

• “cash balance benefit” has the meaning given by regulation 2 of the Pensions Act 2011 (Transitional, Consequential and Supplementary Provisions) Regulations 2014; and

• “cash balance scheme” means a scheme which provides cash balance benefits, whether or not the scheme also provides other benefits.

Signed

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

Malcolm Wicks — Minister of State, — Department for Work and Pensions — 2005-03-11

Explanatory note

(This note is not part of the Regulations)

Footnotes

[^f00001]: 2004 c. 35. The Pensions Act 2004 is modified in its application to partially guaranteed schemes by the Pension Protection Fund (Partially Guaranteed Schemes) Regulations 2005 (S.I. 2005/277), in its application to hybrid schemes by the Pension Protection Fund (Hybrid Schemes) (Modification) Regulations 2005 (S.I. 2005/449), and in its application to multi-employer schemes by the Pension Protection Fund (Multi-employer Schemes) (Modification) Regulations 2005 (S.I. 2005/441). Section 318(1) is cited because of the meaning there given to “modifications”, “prescribed” and “regulations”.

[^f00002]: See section 317 of the Pensions Act 2004 which provides that the Secretary of State must consult such persons as he considers appropriate before making regulations by virtue of the provisions of that Act (other than Part 8). This duty does not apply where regulations are made before the end of six months beginning with the coming into force of the provisions of that Act by virtue of which the regulations are made.

[^f00003]: 1995 c. 26. Section 75 is amended by section 271 of the Pensions Act 2004.

[^f00004]: 1993 c 48.

[^f00005]: The retail prices index is available from www.statistics.gov.uk.

[^f00006]: 1995 c. 50.

[^f00007]: 1999 c. 30.

[^f00008]: Chapter 5 is substituted by section 264 of the Pensions Act 2004.

[^f00009]: 2004 c. 12.

[^f00010]: S.I. 1996/1172. Regulation 20 was amended by regulation 2(3) of S.I. 2000/2975. Regulation 60 was amended by regulation 4(12) of S.I. 1997/786.

[^f00011]: S.I. 1997/785.

[^f00012]: S.I. 2000/1054.

[^f00013]: 1988 c. 1.

[^f00014]: Section 611A was inserted by section 75 of, and paragraphs 15 and 18(1) of Schedule 6 to, the Finance Act 1989 (c. 26).

Part 13 — Schemes which provide fixed pensions in respect of transfer payments

Schemes which provide fixed pensions in respect of transfer payments: modification of Schedule 7 to the Act

30

• (1) Schedule 7 (pension compensation provisions) to the Act has effect with the modifications set out in paragraphs (3) to (5) in relation to a scheme if, immediately before the assessment date, under the admissible rules of the scheme a person is entitled or has rights to a relevant fixed pension.

• (2) A pension to which a person is entitled or has rights under a scheme is a “relevant fixed pension” for the purposes of this regulation if—

• (a) that entitlement or those rights (as the case may be) arose by virtue of a transfer payment to the scheme in respect of the person’s rights under another occupational or personal pension scheme;

• (b) the initial annual amount of the pension was specified at the time the transfer payment was received (whether or not that amount was subject to revaluation in respect of the period until the pension was to come into payment); and

• (c) the pension is neither—

• (i) attributable (directly or indirectly) to a pension credit; nor

• (ii) payable as a result of a person’s death.

• (3) Where compensation is payable under paragraph 15 (deferred members who have not attained normal pension age at assessment date) of Schedule 7 to the Act in respect of a relevant fixed pension—

• (a) paragraph 15 has effect in its application to that pension as if—

• (i) in sub-paragraph (5), for “when the pensionable service relating to the pension ended”, there were substituted, “immediately after the relevant transfer payment was received”; and

• (ii) after sub-paragraph (5) there were inserted—

(5A) In sub-paragraph (5), “relevant transfer payment” means the transfer payment by virtue of which the deferred member’s rights to the pension were conferred under the scheme.

; and

• (b) except in a case to which regulation 15A(4) (modification of Schedule 7 for schemes with no revaluation) applies, paragraph 16 has effect in its application to that pension as if—

• (i) in sub-paragraph (2)(a) for “deferred member’s pensionable service in respect of the pension ended” there were substituted “relevant transfer payment was received”; and

• (ii) after sub-paragraph (2) there were inserted—

(2A) In sub-paragraph (2)(a), “relevant transfer payment” means the transfer payment by virtue of which the deferred member’s rights to the pension were conferred under the scheme.

• (4) Sub-paragraph (14) of paragraph 26A (meaning of the compensation cap) of Schedule 7 to the Act does not apply in so far as it relates to the meaning of “pensionable service”.

• (5) Except for the purposes of sub-paragraphs (1) and (2) of paragraph 26 (compensation cap) of Schedule 7 to the Act, paragraph 36 (accrual rate, pensionable service and pensionable earnings) has effect as if—

• (a) in sub-paragraph (4), for “sub-paragraph (5)”, there were substituted, “sub-paragraphs (5) and (6)”; and

• (b) after sub-paragraph (5) there were inserted—

(6) For the purposes of this Schedule, where a person is entitled or has rights under a scheme to a pension and— (a) that entitlement or those rights (as the case may be) arose by virtue of a transfer payment to the scheme in respect of the person’s rights under another occupational or personal pension scheme; (b) the initial annual amount of the pension was specified at the time the transfer payment was received (whether or not that amount was subject to revaluation in respect of the period until the pension was to come into payment); and (c) the pension is neither— (i) attributable (directly or indirectly) to a pension credit; nor (ii) payable as a result of a person’s death, the person is to be treated as having pensionable service within sub-paragraph (4)(b) to which that pension is attributable.

Editorial notes

[^c11338741]: 2004 c. 35. The Pensions Act 2004 is modified in its application to partially guaranteed schemes by the Pension Protection Fund (Partially Guaranteed Schemes) Regulations 2005 (S.I. 2005/277), in its application to hybrid schemes by the Pension Protection Fund (Hybrid Schemes) (Modification) Regulations 2005 (S.I. 2005/449), and in its application to multi-employer schemes by the Pension Protection Fund (Multi-employer Schemes) (Modification) Regulations 2005 (S.I. 2005/441). Section 318(1) is cited because of the meaning there given to “modifications”, “prescribed” and “regulations”.

[^c11338751]: See section 317 of the Pensions Act 2004 which provides that the Secretary of State must consult such persons as he considers appropriate before making regulations by virtue of the provisions of that Act (other than Part 8). This duty does not apply where regulations are made before the end of six months beginning with the coming into force of the provisions of that Act by virtue of which the regulations are made.

[^c11338781]: The retail prices index is available from www.statistics.gov.uk.

[^c11338791]: 1995 c. 50.

[^c22709511]: Words in reg. 5(b) substituted (1.4.2005) by The Occupational Pension Schemes and Pension Protection Fund (Amendment) Regulations 2005 (S.I. 2005/993), regs. 1(1), 2

[^c11338811]: Chapter 5 is substituted by section 264 of the Pensions Act 2004.

[^c11338821]: 2004 c. 12.

[^c11338831]: S.I. 1996/1172. Regulation 20 was amended by regulation 2(3) of S.I. 2000/2975. Regulation 60 was amended by regulation 4(12) of S.I. 1997/786.

[^c11338841]: S.I. 1997/785.

[^c11338851]: S.I. 2000/1054.

[^c11338861]: 1988 c. 1.

[^c11338871]: Section 611A was inserted by section 75 of, and paragraphs 15 and 18(1) of Schedule 6 to, the Finance Act 1989 (c. 26).

[^key-fa30724c53d2ec4d9838e49144d23682]: Words in reg. 1(2) inserted (19.8.2005) by Occupational Pension Schemes (Miscellaneous Amendments) Regulations 2005 (S.I. 2005/2113), regs. 1(1), 4(1), (2)(a)

[^key-74e354dc6edab1746df29af16cced208]: Words in reg. 1(2) substituted (19.8.2005) by Occupational Pension Schemes (Miscellaneous Amendments) Regulations 2005 (S.I. 2005/2113), regs. 1(1), 5(1), (2)(a)

[^key-9706a6d087a7af22725522b2b7e055d1]: Words in reg. 1(2) substituted (19.8.2005) by Occupational Pension Schemes (Miscellaneous Amendments) Regulations 2005 (S.I. 2005/2113), regs. 1(1), 6(1), (2)(a)

[^key-ee085bf72a25dc68c1f44a7ce086f543]: Words in reg. 1(2) inserted (19.8.2005) by Occupational Pension Schemes (Miscellaneous Amendments) Regulations 2005 (S.I. 2005/2113), regs. 1(1), 7(1), (2)(a)

[^key-23e36dcd8682ddcbc0c7e25de61750e9]: Words in reg. 1(2) inserted (19.8.2005) by Occupational Pension Schemes (Miscellaneous Amendments) Regulations 2005 (S.I. 2005/2113), regs. 1(1), 8(1), (2)(a)

[^key-fcd454f79da4840388b50722a899ce67]: Words in reg. 1(2) inserted (5.12.2005) by Occupational Pension Schemes (Miscellaneous Amendments) Regulations 2005 (S.I. 2005/2113), regs. 1(3), 9(2)(a)

[^key-e85570ac0f45627f37b3e18104bb85a4]: Words in reg. 1(2) omitted (5.12.2005) by virtue of Occupational Pension Schemes (Miscellaneous Amendments) Regulations 2005 (S.I. 2005/2113), regs. 1(3), 9(2)(b)

[^key-9916981c035eb4bfde54205e98ee1e5b]: Words in reg. 3 substituted (5.12.2005) by Occupational Pension Schemes (Miscellaneous Amendments) Regulations 2005 (S.I. 2005/2113), regs. 1(3), 9(3)

[^key-3c9374c59f13f2964c7f8a22518ea6d8]: Words in reg. 4(2) substituted (5.12.2005) by Occupational Pension Schemes (Miscellaneous Amendments) Regulations 2005 (S.I. 2005/2113), regs. 1(3), 9(4)(a)

[^key-7219458931596508c5900f69cd213a3a]: Reg. 4(2A)-(2C) inserted (5.12.2005) by Occupational Pension Schemes (Miscellaneous Amendments) Regulations 2005 (S.I. 2005/2113), regs. 1(3), 9(4)(b)

[^key-4f4f5673931af79e7cd971b8b72aa79a]: Words in reg. 5 inserted (5.12.2005) by Occupational Pension Schemes (Miscellaneous Amendments) Regulations 2005 (S.I. 2005/2113), regs. 1(3), 9(5)

[^key-ac40c7e040e5b8a22b3ca4176907535f]: Words in reg. 6(2)(3) substituted (5.12.2005) by Occupational Pension Schemes (Miscellaneous Amendments) Regulations 2005 (S.I. 2005/2113), regs. 1(3), 9(6)

[^key-55109e60efccdbcb22c367f64cce57c0]: Words in reg. 1(2) inserted (6.4.2006) by The Pension Protection Fund (General and Miscellaneous Amendments) Regulations 2006 (S.I. 2006/580), regs. 1(1)(b), 22(2)(a)

[^key-427dae2ddcfcfdca8a3ea4b759431273]: Words in reg. 19(1) substituted (6.4.2006) by The Pension Protection Fund (General and Miscellaneous Amendments) Regulations 2006 (S.I. 2006/580), regs. 1(1)(b), 22(3)(a)

[^key-8bd9b97bbd700322f955531d1d9330b3]: Reg. 20 substituted (6.4.2006) by The Pension Protection Fund (General and Miscellaneous Amendments) Regulations 2006 (S.I. 2006/580), regs. 1(1)(b), 22(4)

[^key-2fa5268ba53bbe633d36a8f260c745f9]: Reg. 21(4) omitted (6.4.2006) by virtue of The Pension Protection Fund (General and Miscellaneous Amendments) Regulations 2006 (S.I. 2006/580), regs. 1(1)(b), 22(5)

[^key-d0b1bc8f6d8b8e5cf07b26ce11dfc31f]: Words in reg. 23(1)(a) substituted (6.4.2006) by The Pension Protection Fund (General and Miscellaneous Amendments) Regulations 2006 (S.I. 2006/580), regs. 1(1)(b), 22(6)

[^key-f66c77c90cd5df6d8c93a454f244a589]: Words in reg. 7 substituted (coming into force in accordance with reg. 1(4) of the amending S.I.) by Occupational Pension Schemes (Miscellaneous Amendments) Regulations 2005 (S.I. 2005/2113), reg. 9(7)

[^key-093e25f0cf6b2dec7140b7af4aa8fc69]: Word in reg. 15 inserted (26.3.2009) by Pensions Act 2008 (Commencement No.3 and Consequential Provisions) Order 2009 (S.I. 2009/809), art. 3(1)(3)

[^key-fa79ea78638cea9c013b319c88d14af3]: Words in reg. 15 substituted (26.3.2009) by Pensions Act 2008 (Commencement No.3 and Consequential Provisions) Order 2009 (S.I. 2009/809), art. 3(2)(3)

[^key-bc4a51488d220aeb472aff17def02803]: Reg. 15A and cross-heading inserted (1.4.2009) by Pension Protection Fund (Miscellaneous Amendments) Regulations 2009 (S.I. 2009/451), regs. 1, 3(2)

[^key-fdf4bcfd2d91809fd537ecc342069604]: Pt. 11 inserted (6.4.2010) by Pension Protection Fund (Miscellaneous Amendments) Regulations 2010 (S.I. 2010/560), regs. 1(2)(b), 4(4)

[^key-6e9af87f911ff2abb1c5ec0207c1054a]: Reg. 2(3)(a)(ii) substituted (6.4.2010) by Pension Protection Fund (Miscellaneous Amendments) Regulations 2010 (S.I. 2010/560), regs. 1(2)(b), 4(2)(b)

[^key-382d616c74a599622f21c6a67feec0b3]: Word in reg. 2(3)(a)(iii) substituted (6.4.2010) by Pension Protection Fund (Miscellaneous Amendments) Regulations 2010 (S.I. 2010/560), regs. 1(2)(b), 4(2)(c)

[^key-0a377ecb1f091a28e25f52548f9b2f8a]: Reg. 2(3)(c) omitted (6.4.2010) by virtue of Pension Protection Fund (Miscellaneous Amendments) Regulations 2010 (S.I. 2010/560), regs. 1(2)(b), 4(2)(d)(i)

[^key-b81a6cba2e8f68e301f74b809aa685a5]: Reg. 2(4) omitted (6.4.2010) by virtue of Pension Protection Fund (Miscellaneous Amendments) Regulations 2010 (S.I. 2010/560), regs. 1(2)(b), 4(2)(d)(ii)

[^key-3245377077f503aef502e3d2693d9530]: Words in reg. 25(1) inserted (6.4.2010) by Pension Protection Fund (Miscellaneous Amendments) Regulations 2010 (S.I. 2010/560), regs. 1(2)(b), 4(3)(a)

[^key-7e0395ea1dfbc886e36909d876841178]: Reg. 25(1A) inserted (6.4.2010) by Pension Protection Fund (Miscellaneous Amendments) Regulations 2010 (S.I. 2010/560), regs. 1(2)(b), 4(3)(b)

[^key-d99cbaac2af3fe1d2ff990173d57b9fa]: Reg. 12A inserted (31.3.2011) by The Pension Protection Fund (Revaluation Amendments) Regulations 2011 (S.I. 2011/554), regs. 1, 3

[^key-c38154369a9e191d53fb97acc05ca9ce]: Reg. 15B and cross-heading inserted (31.3.2011) by The Pension Protection Fund (Revaluation Amendments) Regulations 2011 (S.I. 2011/554), regs. 1, 6

[^key-cfab619e09f886f546414adce75fb9e3]: Words in reg. 13 inserted (31.3.2011) by The Pension Protection Fund (Revaluation Amendments) Regulations 2011 (S.I. 2011/554), regs. 1, 4(a)

[^key-647c618c1737f97be83d541cde072cb1]: Words in reg. 13 substituted (31.3.2011) by The Pension Protection Fund (Revaluation Amendments) Regulations 2011 (S.I. 2011/554), regs. 1, 4(b)

[^key-41ddb2eeee5cfb4dac4118cdd03b4984]: Words in reg. 15 inserted (31.3.2011) by The Pension Protection Fund (Revaluation Amendments) Regulations 2011 (S.I. 2011/554), regs. 1, 5(a)

[^key-e6fb2d5b5602cb837780092c2b05d58a]: Words in reg. 15 substituted (31.3.2011) by The Pension Protection Fund (Revaluation Amendments) Regulations 2011 (S.I. 2011/554), regs. 1, 5(b)

[^key-299de3af38439aff8d992d681489abf9]: Pt. 2A inserted (30.4.2013) by The Pension Protection Fund, Occupational and Personal Pension Schemes (Miscellaneous Amendments) Regulations 2013 (S.I. 2013/627), regs. 1(1), 3(4)

[^key-9462635ef6f381ef156ba2b2bd14184c]: Words in reg. 1(2) inserted (30.4.2013) by The Pension Protection Fund, Occupational and Personal Pension Schemes (Miscellaneous Amendments) Regulations 2013 (S.I. 2013/627), regs. 1(1), 3(2)

[^key-1570233a4ac897e939291ba136282e87]: Reg. 2(5) omitted (30.4.2013) by virtue of The Pension Protection Fund, Occupational and Personal Pension Schemes (Miscellaneous Amendments) Regulations 2013 (S.I. 2013/627), regs. 1(1), 3(3)

[^key-9c40ddc15e0c21147f24fa6b853e551a]: Words in reg. 4(3)(a) omitted (30.4.2013) by virtue of The Pension Protection Fund, Occupational and Personal Pension Schemes (Miscellaneous Amendments) Regulations 2013 (S.I. 2013/627), regs. 1(1), 3(5)(a)(i)

[^key-31e7b2441561fdb55addbc149f19421e]: Words in reg. 4(3)(a) substituted (30.4.2013) by The Pension Protection Fund, Occupational and Personal Pension Schemes (Miscellaneous Amendments) Regulations 2013 (S.I. 2013/627), regs. 1(1), 3(5)(a)(ii)