The Occupational Pension Schemes (Winding up etc.) Regulations 2005

Made: 22nd March 2005

Laid before Parliament: 23rd March 2005

Coming into force, except for

The Secretary of State for Work and Pensions, in exercise of the powers conferred upon him by sections 9, 25(2), 97(1), (2)(b) and (3), 101I, 101L, 113, 181(1) and 183(3) of the Pension Schemes Act 1993 , sections 49(2)(b), 56(3), 57(1) and (5), 68(2)(e), 73(2)(b), (6), (7) and (9), 73A(7), (8)(a) and (b) and (10), 73B(4), (5) and (8), 74(2) and (3)(e), 76(2), 91(5)(c), 118(1)(a) and (b), 119, 124(1) and (3E), 174(2)(a) and (3) of the Pensions Act 1995 and sections 30(1) and (2) and 83(4) and (6) of, and paragraph 8(1) of Schedule 5 to, the Welfare Reform and Pensions Act 1999 , and of all other powers enabling him in that behalf, by this instrument which is consequential on section 270 of the Pensions Act 2004 and section 326 of and Part 3 of Schedule 42 to the Finance Act 2004 and is made before the end of the period of six months beginning with the coming into force of those provisions , and having consulted such persons as the Secretary of State considers appropriate with respect to regulations 16 and 17 , hereby makes the following Regulations:

Citation, commencement and application

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• (1) These Regulations may be cited as the Occupational Pension Schemes (Winding up etc.) Regulations 2005.

• (2) These Regulations, apart from paragraph 4 of the Schedule, come into force on 6th April 2005 and that paragraph comes into force on 6th April 2006.

• (3) Regulations 3 to 13 do not apply in the case of any scheme which—

• (a) was regarded by virtue of regulation 2 of the Occupational Pension Schemes (Winding Up) Regulations 1996 (commencement of winding up) as having begun to be wound up before 6th April 2005 for the purposes of those Regulations; or

• (b) in accordance with section 124(3A) to (3E) of the 1995 Act began to wind up before that date.

Interpretation

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• (1) In these Regulations––

• “the 1995 Act” means the Pensions Act 1995;

• “the 1999 Act” means the Welfare Reform and Pensions Act 1999;

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

• “assessment period” has the meaning given by section 132 of the 2004 Act (assessment periods);

• “the tax condition”, in relation to a scheme, means—that the scheme has been approved by the Commissioners of the Board of Inland Revenue for the purposes of section 590 or 591 of the Income and Corporation Taxes Act 1988 (conditions for approval of retirement benefit schemes or discretionary approval) at any time before 6th April 2006; orthat the scheme is registered under section 153 of the Finance Act 2004 (registration of pension schemes).

• (2) In these Regulations “scheme” must be read in appropriate cases in accordance with the modifications of sections 73 to 74 of the 1995 Act made by regulation 13 (multi-employer sectionalised schemes, schemes with partial government guarantee and partly foreign schemes); and “employer” and “member” must be read accordingly.

• (3) Subject to paragraphs (1) and (2) and regulation 12 (commencement of winding up), expressions used in these Regulations have the same meaning as in Part 1 of the 1995 Act (see section 124 of that Act).

Winding up

Schemes to which section 73 of the 1995 Act does not apply

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• (1) Section 73 of the 1995 Act does not apply to any scheme which is—

• (a) a public service pension scheme under the provisions of which there is no requirement for assets related to the intended rate or amount of benefit under the scheme to be set aside in advance (disregarding requirements relating to voluntary contributions);

• (b) a scheme which is made under section 7 of the Superannuation Act 1972 (superannuation of persons employed in local government etc.) and provides pensions to local government employees;

• (c) a scheme which is made under section 2 of the Parliamentary and Other Pensions Act 1987 (power to provide for pensions for Members of the House of Commons etc.);

• (ca) a scheme, provision for which is made by virtue of section 81(3) of the Scotland Act 1998 (remuneration of members of the Parliament and Executive);

• (d) a scheme in respect of which a relevant public authority, as defined in subsection (4) of section 307 of the 2004 Act (modification of that Act in relation to certain categories of schemes), has given a guarantee or made any other arrangements for the purposes of securing that the assets of the scheme are sufficient to meet its liabilities;

• (e) a scheme which does not meet the tax condition;

• (f) a scheme which—

• (i) has been categorised by the Commissioners of the Board of Inland Revenue for the purposes of its approval as a centralised scheme for non-associated employers;

• (ii) which was not contracted-out at any time before the second abolition date; and

• (iii) under the provisions of which the only benefits that may be provided on or after retirement (other than money purchase benefits derived from the payment of voluntary contributions by any person) are lump sum benefits which are not calculated by reference to a member's salary;

• (g) a scheme—

• (i) the only benefits provided by which (other than money purchase benefits) are death benefits; and

• (ii) under the provisions of which no member has accrued rights (other than rights to money purchase benefits);

• (h) a scheme—

• (i) which has such a superannuation fund as is mentioned in section 615(6) of the Income and Corporation Taxes Act 1988 (exemption from tax in respect of certain pensions); ...

• . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (i) a scheme with fewer than two members;

• (j) a scheme with fewer than 12 members where all the members are trustees of the scheme and either—

• (i) the provisions of the scheme provide that any decision made by the trustees is made by the unanimous agreement of the trustees who are members of the scheme; or

• (ii) the scheme has a trustee who is independent in relation to the scheme for the purposes of section 23 of the 1995 Act (power to appoint independent trustees) (see subsection (3) of that section) and is registered in the register maintained by the Authority in accordance with regulations made under subsection (4) of that section;

• (k) a scheme with fewer than 12 members where all the members are directors of a company which is the sole trustee of the scheme and either—

• (i) the provisions of the scheme provide that any decision made by the company in its capacity as trustee is made by the unanimous agreement of the directors who are members of the scheme; or

• (ii) one of the directors of the company is independent in relation to the scheme for the purposes of section 23 of the 1995 Act and is registered in the register maintained by the Authority in accordance with regulations made under subsection (4) of that section; or

• (l) the Chatsworth Settlement Estate Pension Scheme;...

• (m) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (1A) Section 73 of the 1995 Act does not apply to a section of a scheme that is a collective money purchase scheme for the purposes of Part 1 of the Pension Schemes Act 2021.

• (2) Before 6th April 2006 paragraph (1)(e) applies with the addition at the end of the words “and is not a relevant statutory scheme providing relevant benefits”; and for the purposes of that paragraph “relevant statutory scheme” and “relevant benefits” have the same meaning as in Chapter 1 of Part 14 of the Income and Corporation Taxes Act 1988 (see sections 611A and 612(1) of that Act).

• (3) In this regulation—

• “contracted-out” is to be construed in accordance with section 7B(2) (meaning of “contracted-out scheme” etc.) of the Pension Schemes Act 1993; and

• “the second abolition date” has the meaning given in section 181(1) (general interpretation) of the Pension Schemes Act 1993.

Corresponding PPF liability: modifications of the pension compensation provisions etc.

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• (1) For the purposes of section 73 of the 1995 Act, when determining the corresponding PPF liability in relation to any liability of a scheme to or in respect of a member for pensions or other benefits, the pension compensation provisions apply as if—

• (a) those provisions applied to all schemes to which section 73 of the 1995 Act applies and any reference in the pension compensation provisions to members, employers or any other expression the construction of which is dependent on the meaning of “scheme” were to be read accordingly (but subject to the following provisions of this regulation);

• (b) sections 140 to 142, 164 and 168(2)(a) and (c) to (f) of the 2004 Act were omitted;

• (c) Schedule 7 to that Act (pension compensation provisions) applied—

• (i) with the substitution for the references in paragraphs 5(4A), 15(5A) and 19(5A) to the Board of references to the trustees or managers of the scheme;

• (ii) with the substitution for the references in paragraphs 20(1)(a) and 32(1)(a) to the commencement of the assessment period of references to the commencement of the winding up period;

• (iii) with the substitution for the reference in paragraph 35(4) to the time immediately before the assessment period which begins on the assessment date of a reference to the time immediately before the winding up period begins;

• (iv) with the addition at the end of paragraph 35(5) of the words––

and in this sub-paragraph as it applies for the purposes of section 73(4)(b) of the Pensions Act 1995, “the employer” includes both any person included by virtue of regulation 4(1)(a) of the Occupational Pension Schemes (Winding up etc.) Regulations 2005 and any person who is the employer apart from by virtue of that regulation.

• (v) with the substitution for other references to the assessment date of references to the winding up date; and

• (vi) with the omissions specified in paragraph (2);

• (d) no determination might be made under paragraph 29 of Schedule 7 (Board's powers to alter rates of revaluation and indexation) after the time as at which the corresponding PPF liability is determined for the purposes of section 73 of the 1995 Act;

• (e) no order might be made under paragraph 30 of that Schedule (Secretary of State's powers to vary any percentage paid as compensation) after that time;

• (f) the Pension Protection Fund (Compensation) Regulations 2005 applied with the modifications specified in paragraph (3); and

• (g) (so far as they are included in the pension compensation provisions) the Pension Protection Fund (Hybrid Schemes) (Modification) Regulations 2005 applied with the substitution for the reference in regulation 3(2) of those Regulations to the assessment date of a reference to the winding up date.

• (2) The omissions are—

• (a) paragraphs 2, 20(4), 23A , 24, 25, 27 and 31A and all references to those paragraphs;

• (b) in paragraph 26—

• (i) in sub-paragraphs (2)(b)(i), (6B)(a) and (9)(a) and (b), the words “or a connected occupational pension scheme”;

• (ii) in sub-paragraph (6B)(b) the words “or a relevant connected occupational pension scheme”; and

• (iii) the words following sub-paragraph (6B)(b).

• (3) The modifications are––

• (a) in regulation 4 (compensation for surviving dependants)—

• (i) in paragraph (2) omit the words following “otherwise)”; and

• (ii) for regulation 4(3) substitute––

(3) In the case of a surviving dependant the circumstances are where the admissible rules of the scheme provide for the payment of pension or other benefits to that person.

• (b) for references in regulations 5, 6, 9, 10(1), 11(1), 12(1), 13, 14 and 15 to the assessment date, wherever they occur, substitute references to the winding up date; and

• (c) omit regulation 16 (modification of admissible rules).

• (4) In this regulation—

• (a) “corresponding PPF liability” has the meaning given in section 73(5) of the 1995 Act;

• (b) “the pension compensation provisions” has the same meaning as in Part 2 of the 2004 Act (see section 162 of that Act); and

• (c) “the winding up date” means the date on which the winding up period began or, if the crystallisation date for the scheme for the purposes of regulation 4 of the Occupational Pension Schemes (Winding Up) Regulations 1996 (calculation of amounts of liabilities) is an earlier date, that date.

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

Early leaver’s rights: deemed election for contribution refund

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Where, on the commencement of the winding up period, a member becomes a person to whom Chapter 5 of Part 4 of the 1993 Act applies (early leavers: cash transfer sums and contribution refunds), that Chapter applies as if—

• (a) he had elected on the day on which that period begins for a contribution refund;

• (b) he had accordingly acquired a right to such a refund (and not a right to a cash transfer sum) under section 101AB of that Act; and

• (c) all steps required to be taken under that Chapter preliminary to that election had been taken.

Adjustments to discretionary awards

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• (1) For the purposes of section 73A of the 1995 Act (operation of scheme during winding up period) and this regulation, “discretionary award”, in relation to an occupational pension scheme, means an award of a pension or other benefit under the scheme where either—

• (a) entitlement to the award arises as a result of the exercise of a discretion conferred by the scheme rules that may be exercised in circumstances specified in those rules; or

• (b) the amount awarded depends on the exercise of such a discretion.

• (2) Where section 73A of the 1995 Act applies, the circumstances in which trustees or managers of the scheme are required to adjust any such entitlement as is referred to in section 73A(7)(a) are where—

• (a) the entitlement to a pension or other benefit is—

• (i) the entitlement of a member; or

• (ii) the entitlement to a pension or other benefit in respect of a member other than a member who dies during the winding up period; and

• (b) it appears to the trustees or managers that as a result of—

• (i) the discretionary award in question;

• (ii) that award and any other awards under the scheme rules to which section 73A(7)(a) applies; or

• (iii) all the awards under the scheme rules to which that section applies and any entitlements in respect of the member to which section 73A(7)(b) applies (“survivor entitlements”),

the total amount of the liability for pensions and other benefits in respect of the member is greater than it was immediately before the commencement of the winding up period.

• (3) In those circumstances, the trustees or managers are required to adjust the entitlement—

• (a) to the discretionary award;

• (b) to that award and the other awards mentioned in paragraph (2)(b)(ii); or

• (c) to the awards and entitlements mentioned in paragraph (2)(b)(iii),

in such manner as they think fit so that the total amount of that liability does not exceed its amount immediately before the commencement of the winding up period.

• (4) If—

• (a) the commencement of the winding up of the scheme is backdated (whether in accordance with section 154 of the 2004 Act or otherwise); and

• (b) the requirement under paragraph (3) to adjust any entitlement arises as a result of that backdating,

the adjustment must be made with effect from the time the award takes effect.

• (5) Where a discretionary award takes effect during a period that is a winding up period or an assessment period in relation to a scheme, the trustees or managers of the scheme must give the person to whom the award is made notice in writing not later than one month after the date on which the award is made—

• (a) that the award may be adjusted by virtue of this regulation; or

• (b) where the award takes effect before the scheme has begun to be wound up, that it may be so adjusted if the scheme begins to be wound up and the commencement of the winding up is backdated.

• (6) Such a notice may be given in accordance with regulations 26 to 28 (giving information and documents) of the Occupational and Personal Pension Schemes (Disclosure of Information) Regulations 2013 and, if the person to whom it is given is not in employment to which the scheme relates, is to be treated as having been given if it is sent to him by post to his last address known to the trustees or managers.

Adjustments to survivors' benefits

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• (1) Where section 73A of the 1995 Act applies, the circumstances in which trustees or managers of the scheme are required to adjust any such entitlement as is referred to in section 73A(7)(b) are where—

• (a) it appears to the trustees or managers that as a result of—

• (i) the entitlement in question having arisen; or

• (ii) that entitlement and any other entitlements under the scheme rules to which section 73A(7)(b) applies having arisen;

the amount of the total liability for pensions and other benefits in respect of the member is greater than it was immediately before the commencement of the winding up period, or

• (b) regulation 6(3) requires the trustees or managers to adjust the entitlement.

• (2) In the circumstances mentioned in paragraph (1)(a), the trustees or managers are required to adjust the entitlement or entitlements in such manner as they think fit so that the total amount of the liability for pensions and other benefits in respect of the member does not exceed its amount immediately before the commencement of the winding up period.

• (3) See regulation 6(3) for the manner in which the trustees or managers are required to adjust the entitlement or entitlements where that regulation applies.

• (4) If—

• (a) the commencement of the winding up of the scheme is backdated (whether in accordance with section 154 of the 2004 Act or otherwise); and