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The Armed Forces Pension Regulations 2014

Type Statutory-Instrument

Publication 2014-08-31

State In force

Department King's Printer of Acts of Parliament

Source legislation.gov.uk

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Made: 31st August 2014

Laid before Parliament: 4th September 2014

Coming into force: 1st April 2015

In accordance with section 3(5) of that Act, these Regulations are made with the consent of the Treasury.

PART 1 — Preliminary

Citation and commencement

1

(1) These Regulations may be cited as the Armed Forces Pension Regulations 2014.

(2) They come into force on 1st April 2015.

Establishment of scheme

2

These Regulations establish a scheme for the payment of pensions and other benefits in respect of a person’s service in the armed forces.

Interpretation

3

(1) In these Regulations, unless the context otherwise requires,—

“the Act” means the Public Service Pensions Act 2013;

“EDP 2014” means the Armed Forces Early Departure Payment Scheme Regulations 2014[^f00002];

“FA 2004” means the Finance Act 2004[^f00003];

“PIA 1971” means the Pensions (Increase) Act 1971[^f00004];

“PSA 1993” means the Pension Schemes Act 1993[^f00005];

“WRPA 1999” means the Welfare Reform and Pension Act 1999[^f00006];

“accrual rate”, in relation to a member’s pensionable earnings, means 1/47th;

“accrued added pension” means— accrued added pension (member), or accrued added pension (member and dependants);

“accrued added pension (member)” has the meaning given in regulation 25 (calculation of amount of accrued pension for the purposes of Parts 4 and 5);

“accrued added pension (member and dependants)” has the meaning given in regulation 25 (calculation of amount of accrued pension for the purposes of Parts 4 and 5);

“accrued club transfer earned pension” has the meaning given in regulation 25 (calculation of amount of accrued pension for the purposes of Parts 4 and 5);

“accrued earned pension” has the meaning given in regulation 25 (calculation of amount of accrued pension for the purposes of Parts 4 and 5);

“accrued pension” has the meaning given in regulation 25 (calculation of amount of accrued pension for the purposes of Parts 4 and 5);

“active member” has the meaning given in section 124(1) of the Pensions Act 1995 and refers to membership of this scheme[^f00007];

“active member’s account” has the meaning given in regulation 29 (establishment of an active member’s account);

“actuarial” means determined by the scheme manager after consultation with the scheme actuary;

“added pension (member and dependants)”, in relation to a scheme year, means an amount calculated in accordance with regulation 32 (account to specify amount of pension for a scheme year);

“added pension” means— added pension (member and dependants); and added pension (member);

“added pension (member)”, in relation to a scheme year, means an amount calculated in accordance with regulation 32 (account to specify amount of pension for a scheme year);

“additional paternity leave” means leave which, in the opinion of the Secretary of State, corresponds to additional paternity leave within the meaning given in regulation 2(1) of the Additional Paternity Leave Regulations 2010[^f00008];

“allocation amount” in relation to a pension means the amount of the pension allocated as a result of the exercise of an allocation election;

“allocation election” means an election under regulation 61 (election to allocate pension);

“amount of credited pension” has the meaning given in regulation 41 (establishment of a pension credit member’s account);

“assumed pay” has the meaning given in regulation 24 (meaning of assumed pay);

“beginning date” means the date of which the pension is treated as beginning for the purpose of section 8(2) or 8(2A) of the PIA 1971;

“cash transfer sum” has the meaning given in section 101AB of the PSA 1993;

“club scheme” means a registered occupational pension scheme that has agreed to make and receive club transfer value payments under the club transfer arrangements;

“club transfer” means a transfer to or from this scheme under the club transfer arrangements;

“club transfer arrangements” means arrangements approved by the scheme manager as providing reciprocal arrangements between this scheme, any connected scheme and other registered occupational pension schemes for making and receiving club transfer value payments;

“club transfer earned pension” means pension attributable to receipt of a club transfer value payment;

“club transfer value payment” means payment of a club transfer value;

“club transfer value”, in relation to an amount of accrued earned pension under this scheme or under another club scheme, means an amount calculated by the scheme manager— in accordance with the club transfer arrangements; and by reference to the guidance and tables provided by the Government Actuary for this purpose that are in use on the date used for the calculation;

“connected scheme” means another statutory pension scheme that is connected with this scheme within the meaning of section 4(6) of the Act;

“commanding officer” is to be read in accordance with section 360 of the Armed Forces Act 2006[^f00009];

“commutation amount” in relation to a pension means the amount of the pension exchanged for a lump sum as a result of the exercise of the option under regulation 59 (general option to exchange part of pension for lump sum) to commute an amount of pension to a lump sum;

“continuous period of pensionable service” has the meaning given in regulation 21 (“pensionable service”);

“deferred added pension” means— deferred added pension (member), or deferred added pension (member and dependants);

“deferred added pension (member)” means an amount calculated in accordance with regulation 35 (account to specify provisional amount of deferred pension);

“deferred added pension (member and dependants)” means an amount calculated in accordance with regulation 35 (account to specify provisional amount of deferred pension);

“deferred club transfer earned pension” means an amount calculated in accordance with regulation 35 (account to specify provisional amount of deferred pension);

“deferred earned pension” means an amount calculated in accordance with regulation 35 (account to specify provisional amount of deferred pension);

“deferred member” has the meaning given in section 124(1) of the Pensions Act 1995[^f00010] and refers to membership of this scheme;

“deferred member’s account” has the meaning given in regulation 34 (establishment of a deferred member’s account);

“deferred pension age” in relation to this scheme is determined in accordance with section 10 of the Act;

“dual capacity member” means a member who falls within regulation 14 (dual capacity membership);

“early payment reduction” means the actuarial reduction that is applied when calculating the annual rate of pension payable to a member of this scheme who has not reached their normal pension age and applies to receive their pension before their deferred pension age;

“earned pension” means the amount of earned pension calculated in accordance with regulation 32 (account to specify amount of pension for a scheme year) by applying the accrual rate to the member’s pensionable earnings for that year;

“earnings adjustments in determining final pensionable earnings” has the meaning given in regulation 77 (earnings adjustments in determining final pensionable earnings);

“eligible child” has the meaning given in regulation 73 (meaning of “eligible child”);

“employment” includes an office or appointment, and related expressions are to be read accordingly;

“final pensionable earnings” has the meaning given in regulation 76 (meaning of ‘final pensionable earnings’);

“full protection” in relation to a person, means a person who remains an active member of a connected scheme by virtue of provisions being made under section 18(5) of the Act;

“guarantee date” has the meaning given in regulation 98 (Interpretation);

“guaranteed minimum” means the guaranteed minimum as defined in sections 14 and 17 of the PSA 1993 (minimum pension for earners, widows and widowers)— as increased in accordance with the requirements of section 109 of that Act (annual increase of minimum pensions); and if a reduction has been made under section 15A of that Act (reduction of guaranteed minimum in consequence of pension debit), as reduced in accordance with that section;

“ill-health pension” means an ill health pension payable under regulation 51, 52 or 56 (entitlement to ill-health pension: active member with permanent serious ill-health, entitlement to ill-health pension: active member with significant impairment of capacity for gainful employment and entitlement to ill-health pension: deferred member with permanent serious ill-health);

“index adjustment”, in relation to an opening balance, means— for any scheme year (other than the opening balance of club transfer earned pension) the percentage increase or decrease for prices or earnings as the scheme manager, after consulting the scheme actuary, may determine to be applicable for any description of pension specified in a Treasury order under section 9(2) of the Act in relation to the previous scheme year; and in relation to the opening balance of club transfer earned pension for any scheme year, means the adjustment that would apply to the opening balance of that amount of earned pension under the sending scheme for the previous scheme year;

“in-service late payment supplement” has the meaning given in regulation 39 (determination of “in-service late payment supplement”);

“last active scheme year” means the scheme year in which an active member ceases to be in pensionable service;

“last day of pensionable service”, in relation to a member, means the last day of the service in respect of which the member’s pensionable earnings are payable;

“late payment supplement” means an additional amount of pension that the scheme manager determines to be appropriate, after consulting the scheme actuary, because— an active member leaves service at or after normal pension age but delays receipt of their pension; or a deferred member or a pension credit member delays receipt of their pension beyond their deferred pension age;

“leaving year” has the meaning given in regulation 26 (calculation of “retirement index adjustment”);

“member”, in relation to this scheme, means an active member, deferred member, pensioner member or pension credit member;

“non regular permanent staff” means permanent staff of the reserve forces within the meaning of section 6 of the Reserve Forces Act 1996;

“normal pension age”, in relation to this scheme, is determined in accordance with section 10 of the Act;

“occupational pension scheme” has the meaning given in section 1 of the PSA 1993;

“opening balance”, in relation to a description of pension for a scheme year, has the meaning given in regulation 33 (account to specify opening balance and index adjustment);

“ordinary adoption leave” means leave which, in the opinion of the Secretary of State, corresponds to ordinary adoption leave within the meaning given in regulation 2(1) of the Paternity and Adoption Leave Regulations 2002[^f00011];

“ordinary maternity leave” means leave which, in the opinion of the Secretary of State, corresponds to ordinary maternity leave within the meaning of the Maternity and Parental Leave etc. Regulations 1999[^f00012];

“ordinary paternity leave” means leave which, in the opinion of the Secretary of State, corresponds to paternity leave within the meaning of the Paternity and Adoption Leave Regulations 2002;

“pay period” means a period in respect of which a member’s pensionable earnings are payable;

“pension credit” has the meaning given in section 124(1) of the Pensions Act 1995;

“pension credit member”, in relation to this scheme, means a person who has rights under this scheme which are attributable, directly or indirectly, to a pension credit under a pension sharing order following dissolution of marriage or civil partnership;

“pension credit member’s account” has the meaning given in regulation 41 (establishment of a pension credit member’s account);

“pension credit member’s pension” means a pension payable under regulation 47 (pension credit member’s pension);

“pension credit rights” has the meaning given in section 124(1) of the Pension Act 1995;

“pension debit” means a debit under section 29(1)(a) of the WRPA 1999;

“pension debit member” means a person who is a member of this scheme whose benefits or future benefits under this scheme have been reduced under section 31 of the WRPA 1999;

“pensionable earnings” has the meaning given in regulation 23 (pensionable earnings);

“pensionable public service” means pensionable service under— another public service scheme, or a new public body pension scheme;

“pensionable service”, in relation to this scheme, has the meaning given in regulation 21 (pensionable service);

“pensioner member” has the meaning given in section 124(1) of the Pensions Act 1995 and refers to membership of this scheme;

“pensioner member’s account” has the meaning given in regulation 38 (establishment of a pensioner member’s account);

“pension sharing order” means any provision or order specified in section 28 of the WRPA 1999;

“pensions board” has the meaning given in regulation 5 (establishment of pensions board);

“period of earlier service” means a previous continuous period of pensionable service under this scheme;

“person’s first day”, in relation to any scheme employment, has the meaning given in regulation 16(3) (eligibility for active membership);

“personal pension scheme” means a personal pension scheme within the meaning of section 1 of the PSA 1993 which is registered under Chapter 2 of Part 4 of the FA 2004 (registration of pension schemes);

“provisional amount”, in relation to a description of deferred pension, has the meaning given in regulation 35 (account to specify provisional amount of deferred pension);

“public service scheme” means a scheme under section 1 of the Act;

“qualifying scheme” has the meaning given by regulation 22 (qualifying service);

“regular forces” has the same meaning as in the Armed Forces Act 2006[^f00013] (see section 374 of that Act);

“reserve forces” has the same meaning as in the Reserve Forces Act 1996[^f00014] (see section 1(2) of that Act);

“retirement added pension (member)” means an amount calculated in accordance with regulation 40 (account to specify amount of retirement pension);

“retirement added pension (member and dependants)” means an amount calculated in accordance with regulation 40 (account to specify amount of retirement pension);

“retirement added pension” means— retirement added pension (member), and retirement added pension (member and dependants);

“retirement benefits” means retirement benefits payable under Part 5 (Retirement benefits);

“retirement club transfer earned pension” means an amount calculated in accordance with regulation 40 (account to specify amount of retirement pension);

“retirement earned pension” means an amount calculated in accordance with regulation 40 (account to specify amount of retirement pension);

“retirement index adjustment”, in relation to an amount of accrued pension, has the meaning given in regulation 26 (calculation of ‘retirement index adjustment’);

“retirement pension” means— a retirement earned pension; a retirement added pension; and a retirement club transfer earned pension.

“this scheme” means the scheme established by these Regulations;

“scheme actuary” has the meaning given in regulation 113 (appointment of scheme actuary and actuarial valuations);

“scheme administrator” except under regulation 117 (scheme administrator for the purpose of the FA 2004), in relation to a member or a function, means the person responsible for the day to day administration of the scheme in relation to the member or in respect of the function;

“scheme advisory board” has the meaning given in regulation 9 (establishment of scheme advisory board);

“scheme employment” has the meaning given in regulation 13 (description of persons in scheme employment);

“scheme manager” has the meaning given in regulation 4 (scheme manager);

“scheme medical adviser” means the medical adviser appointed by the scheme manager for the time being to provide a consulting service on medical matters relevant to this scheme;

“scheme year” means a period of one year beginning with 1st April and ending 31st March;

“service detention” has the same meaning as in the Armed Forces Act 2006 (see section 374 of that Act);

“sending scheme” means a club scheme which pays a club transfer value;

“statutory maternity pay” means statutory maternity pay with the meaning of the Social Security Contributions and Benefits Act 1992;

“transfer payment” means a transfer value payment or a club transfer value payment;

“transfer value” has the meaning given in Part 8 (Transfers);

“transfer value payment” has the meaning given in regulation 98 (Interpretation);

“transferred pension” means pension attributable to receipt of a transfer value payment calculated in accordance with regulation 32(5) (account to specify amount of pension for a scheme year);

“transition member” means a person— who is a member of a connected scheme by virtue of pensionable service under the connected scheme before 1st April 2015; and who is also a member of this scheme by virtue of pensionable service under this scheme;

“Treasury directions” has the meaning given in regulation 113 (appointment of scheme actuary and actuarial valuation);

“weekly rate”, in relation to a guaranteed minimum pension, has the same meaning as in regulation 55(1) of the Occupational Pension Schemes (Contracting-out) Regulations 1996[^f00015].

(2) In these Regulations—

“each description of deferred pension” means— deferred earned pension, deferred club transfer earned pension, deferred added pension (member and dependants), deferred added pension (member);

“each description of pension” means— an earned pension, a club transfer earned pension, an added pension (member and dependants), an added pension (member), a transferred pension;

“relevant accrued pension” means— for an earned pension or transferred pension, the accrued earned pension, for a club transfer earned pension, the accrued club transfer earned pension, for an added pension (member and dependants), the accrued added pension (member and dependants), and for an added pension (member), the accrued added pension (member);

“relevant deferred pension” means— for an earned pension or transferred pension, the deferred earned pension, for a club transfer earned pension, the deferred club transfer earned pension, for an added pension (member and dependants), the deferred added pension (member and dependants), and for an added pension (member), the deferred added pension (member);

“relevant retirement pension” means— for an earned pension or transferred pension, the retirement earned pension, for a club transfer earned pension, the retirement club transfer earned pension, for an added pension (member and dependants), the retirement added pension (member and dependants), and for an added pension (member), the retirement added pension (member).

PART 2 — Governance

CHAPTER 1 — Scheme Manager and Scheme Pension Board

Scheme manager

4

(1) The Secretary of State is the scheme manager for this scheme.

(2) The scheme manager is responsible for managing this scheme and any connected scheme.

(3) The scheme manager may delegate any functions under these Regulations, including the power to delegate.

(4) The Secretary of State, as the responsible authority, may delegate any functions under these Regulations including the power to delegate.

Establishment of pensions board

5

(1) A pensions board (“the pensions board”) is established.

(2) The pensions board is responsible for assisting the scheme manager in relation to securing compliance with—

(a) these Regulations;

(b) any other legislation relating to the governance and administration of this scheme and any connected scheme; and

(3) The pensions board may determine its own proceedings, subject to the approval of the scheme manager.

Membership of the pensions board

6

(1) The pensions board is to consist of the following who are entitled to vote in its proceedings (“voting members”)—

(a) a chair appointed by the scheme manager; and

(b) at least 6 and no more than 20 persons appointed by the chair with the agreement of the scheme manager.

(2) The voting members must include—

(a) a departmental finance director or similar representative; and

(b) equal numbers of members representing the employer and scheme members.

(3) The chair may appoint up to 4 persons who are not to be entitled to vote in the pensions board proceedings.

(4) The appointment of a person to the pensions board is subject to regulation 8 (conflict of interest: pensions board).

Terms of appointment to pensions board

7

A member of the pensions board is to hold and vacate office in accordance with the terms of appointment as determined by the scheme manager.

Conflict of interest: pensions board

8

(1) The scheme manager must be satisfied that any person to be appointed as a member of the pensions board does not have a conflict of interest.

(2) The scheme manager must be satisfied from time to time that none of the members of the pensions board has a conflict of interest.

(3) If the scheme manager determines that a member of the pensions board has a conflict of interest, the scheme manager must terminate the appointment of the member.

(4) A member of the pensions board or a person proposed to be appointed as such a member must provide the scheme manager with such information as the scheme manager reasonably requires for the purposes of paragraph (1) or (2).

CHAPTER 2 — Scheme Advisory Board

Establishment of scheme advisory board

9

(1) A scheme advisory board (“the scheme advisory board”) is established.

(2) The scheme advisory board is responsible for advising, at the Secretary of State’s request, the Secretary of State in relation to the desirability of changes to this scheme.

(3) The scheme advisory board may determine its own proceedings, subject to the approval of the Secretary of State.

Membership of the scheme advisory board

10

(1) The scheme advisory board is to consist of the following—

(a) a chair appointed by the Secretary of State; and

(b) at least 6 and no more than 20 persons appointed by the chair subject to the approval of the Secretary of State.

(2) The appointment of a person to the scheme advisory board is subject to regulation 12 (conflict of interest: scheme advisory board).

(3) The members of the scheme advisory board may be the same as the members of the scheme pension board.

Terms of appointment to the scheme advisory board

11

A member of the scheme advisory board must hold and vacate office in accordance with the terms of appointment as determined by the Secretary of State.

Conflict of interest: scheme advisory board

12

(1) The Secretary of State must be satisfied that any person to be appointed as a member of the scheme advisory board does not have a conflict of interest.

(2) The Secretary of State must be satisfied from time to time that none of the members of the scheme advisory board has a conflict of interest.

(3) If the Secretary of State determines that a member of the scheme advisory board has a conflict of interest, the Secretary of State must terminate the appointment of the member.

(4) A member of the scheme advisory board or a person proposed to be appointed as such a member must provide the Secretary of State with such information as the Secretary of State reasonably requires for the purposes of paragraph (1) or (2).

PART 3 — Scheme membership

CHAPTER 1 — Scheme employment

Description of persons in scheme employment

13

(1) For the purpose of these Regulations, a person who is in service as specified in paragraph (2), is in scheme employment.

(2) The service referred to in paragraph (1) is as a part of the—

(a) regular forces;

(b) reserve forces;

CHAPTER 2 — Membership

Dual capacity membership

14

(1) For the purpose of these Regulations, a person is a dual capacity member if the person is a member in more than one of the following capacities—

(a) an active member;

(b) a deferred member;

(d) a pension credit member.

(2) In determining whether a person who is an active member is also a pensioner member, the fact that the person is an active member, and the person’s rights in that capacity, are to be disregarded.

(3) In determining whether a person who is an active member or a pensioner member is also a deferred member, the fact that the person is an active member or a pensioner member, and the person’s rights in that capacity, are to be disregarded.

Payments of benefits to dual capacity members

15

(1) This paragraph applies if the member is a dual capacity member.

(2) The general rule is that—

(a) benefits are payable to the member under this scheme as if the member were 2 or more members (so that 2 or more pensions or lump sums are payable in respect of the one member); and

(b) the amounts payable are determined accordingly.

(3) If a person who is a pension credit member is entitled to 2 or more pension credits—

(a) benefits are payable to the person under this scheme as if the person were 2 or more persons, each being entitled to one of the pension credits (so that 2 or more pensions or lump sums are payable to the one pension credit member); and

(b) the amounts of those benefits are determined accordingly.

Eligibility for active membership

16

(1) A person is eligible to be an active member of this scheme if the person is in scheme employment under regulation 13 (descriptions of persons in scheme employment) on or after 1st April 2015 and the terms of the person’s employment do not exclude the person from being an active member of this scheme.

This is subject to paragraph (2).

(2) A person is not eligible to be an active member of this scheme in relation to any scheme employment while the person—

(a) is a member with full protection in a connected scheme in relation to that employment; or

(b) is a member of another pension scheme in relation to that employment and the employer pays contributions to that scheme in respect of a member.

(3) A person who is so eligible becomes an active member of this scheme on the person’s first day of service on or after 1st April 2015 in scheme employment (“the person’s first day”) unless an option to the contrary is exercised.

Deferred membership

17

A person who, on ceasing to be in pensionable service under this scheme, has not reached normal pension age and does not become a pensioner member in respect of that service, becomes a deferred member in respect of that service if—

(a) the person has at least 2 years’ qualifying service; or

(b) a transfer value payment otherwise than from another occupational pension scheme has been accepted in relation to the person under Part 8 (Transfers).

CHAPTER 3 — Membership options

Option not to join scheme

18

(1) A person may, before the end of the period of 3 months beginning with the person’s first day (or such longer period, if any, as the scheme manager considers appropriate), opt not to belong to this scheme.

(2) The option is to be exercised by notice in writing to the person’s commanding officer in such form as the scheme manager requires.

(3) The option has effect from the person’s first day.

Option to leave the scheme

19

(1) A person, who is an active member of this scheme, may opt to cease to be such a member.

(2) The option may only be exercised by notice in writing to the person’s commanding officer in such form as the scheme manager requires.

(3) For the purposes of this regulation, the option is treated as having been exercised on the date on which it is received by the commanding officer.

(4) A member who exercised the option ceases to be an active member at the beginning of—

(a) the first pay period beginning on or after the date on which the option is exercised; or

(b) if the scheme manager considers that period inappropriate, such other pay period as the scheme manager considers appropriate.

Option to join the scheme

20

(1) A person, who is eligible to be an active member of this scheme but is not in pensionable service under this scheme, may opt at any time to become an active member, subject to the following provisions of this regulation.

(2) Unless the scheme manager specifies, a person may only exercise the option under paragraph (1) once during any period of 12 months.

(3) The option may only be exercised by notice in writing to the person’s commanding officer in such form as the scheme manager requires.

(4) For the purposes of this regulation, the option is treated as having been exercised on the date on which it is received by the person’s commanding officer.

(5) A person who exercises the option becomes an active member on the date on which the option is exercised or at such other time as the scheme manager considers appropriate.

CHAPTER 4 — Pensionable service

Pensionable service

21

(1) A member is in pensionable service under this scheme in any period in respect of which the scheme member is—

(a) employed in scheme employment; and

(b) receiving pensionable earnings or assumed pay.

(2) For the purpose of Part 4 (Pensions Accounts), a member is treated as being in a continuous period of pensionable service under this scheme if—

(a) there is no gap in pensionable service; or

(b) any gap in pensionable service does not exceed 5 years.

Qualifying service

22

(1) In these Regulations, a period of qualifying service is the aggregate of the following periods—

(a) any period on or after 1st April 2015, where the individual is an active member under regulation 16 (eligibility for active membership);

(b) if a transfer value payment or a cash transfer sum has been accepted under Part 8 (Transfers) in respect of rights accrued under another occupational pension scheme, a period equal to the person’s period as an active member in that scheme; and

(c) for a transition member with continuity of service, the person’s continuous period of pensionable service under a connected scheme on or before 31st March 2015.

(2) In paragraph (1)—

(a) a transition member has continuity of service unless the person has a gap in pensionable service exceeding 5 years which—

(i) begins on or before 31st March 2015; and

(ii) ends on the day the person becomes an active member of this scheme;

(b) a period of pensionable public service does not constitute a gap in service.

This is subject to paragraph (4).

(3) The following are not qualifying service—

(a) any pensionable service in respect of which a person’s rights under this scheme are extinguished;

(b) any pensionable service by a person under any connected scheme in respect of which the person’s rights under that scheme are extinguished;

(d) any service from the point when an active member opts out from this scheme until any future point when the member opts back in;

(e) any period of unauthorised absence from scheme employment;

(f) any period of unpaid leave in respect of which the person is not treated as receiving assumed pay;

(g) any period of service detention; and

(h) any period of imprisonment.

(4) Where a person ceases to be eligible for active membership under regulation 16 (eligibility for active membership) for a period of more than 5 years and subsequently rejoins, qualifying service re-starts from the first day of new service in scheme employment.

(5) In determining the period for which an individual ceases to be eligible under paragraph (4) any period where the member was in pensionable public service is to be disregarded.

Pensionable earnings

23

(1) For the purpose of calculating a member’s pension or other benefits, the member’s pensionable earnings are—

(a) basic pay in the service by virtue of which the person is a member for a person of the member’s rank and seniority; and

(b) an other amount if, and to the extent that, the Secretary of State has determined that it is to be treated as pensionable earnings.

This is subject to paragraph (3).

(2) Accordingly, subject to paragraph (1)(b), “pensionable earnings” does not include—

(a) any allowances,

(b) any additional amounts payable in respect of particular qualifications or duties, the location of service or the conditions in which service is temporarily performed, or

(3) “Pensionable earnings” does not include any description of payments that the Secretary of State has determined is not to be treated as pensionable earnings, unless it is expressly provided to the member on the basis that it is pensionable.

Meaning of “assumed pay”

24

(1) For any period in which the circumstances specified in paragraph (2) apply to an active member of this scheme, a member is treated as receiving pay (“assumed pay”) equal to the pensionable earnings that the member would have received if those circumstances had not applied, with such increase, if any, as the scheme manager considers appropriate.

(2) The circumstances are that the member—

(a) is on secondment to a different employer under an arrangement providing for the member to continue to be an active member of this scheme in respect of the member’s service although the member is paid for that service by that employer;

(b) is on ordinary adoption leave, ordinary maternity leave, ordinary paternity leave or on paid additional paternity leave;

(d) is on unpaid leave for a period which the scheme manager has agreed can count for the purpose of this paragraph.

PART 4 — Pension accounts

CHAPTER 1 — Preliminary

Calculation of amount of accrued pension for the purposes of Parts 4 and 5

25

(1) For the purposes of Parts 4 and 5, the amount of accrued pension is calculated in accordance with this regulation.

(2) The amount of accrued earned pension is the sum of the following amounts specified in the active member’s account as at the end of the last day of pensionable service—

(a) the opening balance of earned pension for the last active scheme year and the index adjustment for that opening balance;

(b) the amount of earned pension for the last active scheme year;

(c) the opening balance of transferred pension for the last active scheme year and the index adjustment for that opening balance; and

(d) the amount of transferred pension for the last active scheme year.

(3) The amount of the accrued added pension (member) is the sum of the following amounts specified in the active member’s account as at the end of the last day of pensionable service—

(a) the opening balance of the accrued added pension (member) for the last active scheme year and the index adjustment for that opening balance; and

(b) the amount of accrued added pension (member) for the last active scheme year.

(4) The amount of the accrued added pension (member and dependants) is the sum of the following amounts specified in the active member’s account as at the end of the last day of pensionable service—

(a) the opening balance of accrued added pension (member and dependants) for the last active scheme year and the index adjustment for that opening balance; and

(b) the amount of accrued added pension (member and dependants) for the last active scheme year.

(5) The amount of the accrued club transfer earned pension is the total of the following amounts specified in the active member’s account as at the end of the last day of pensionable service—

(a) for each sending scheme, the sum of the opening balance of the club transfer earned pension for the last active scheme year and the index adjustment for that opening balance; and

(b) for each sending scheme, the amount of club transfer earned pension for the last active scheme year.

Calculation of “retirement index adjustment”

26

(1) For the purpose of this Part, the retirement index adjustment for an amount of accrued pension is an amount calculated as follows—

CHAPTER 2 — Pension accounts: general

Establishment of pension accounts: general

27

(1) The scheme manager must establish and maintain one or more pension accounts for each member of this scheme in accordance with this Part.

(2) A pension account—

(a) may be kept in any form the scheme manager considers appropriate; and

(b) must contain such matters as are required by these Regulations.

(3) References in these Regulations to an amount specified in a pension account are references to the amount that is required by these Regulations to be so specified and not, if different, the amount actually so specified.

Closure and adjustment of pension accounts on transfer out

28

(1) Except as otherwise provided in this regulation, all pension accounts relating to a member must be closed if a transfer payment is made or a cash transfer sum is paid out in respect of a member’s accrued rights under this scheme.

(2) Nothing in paragraph (1) requires the closure of an account that includes amounts to which the transfer payment or cash transfer sum does not relate or is not attributable.

(3) An account that is not closed because of paragraph (2) must be adjusted in such manner as the scheme manager considers appropriate to reflect the extinguishing of rights under this scheme.

(4) Paragraph (1) does not apply to a pension credit member’s account if the transfer payment is made in respect of a member who is both—

(a) a pension credit member; and

(b) an active member, deferred member or pensioner member.

CHAPTER 3 — Active member’s account

Establishment of an active member’s account

29

A pension account must be established for each active member (“the active member’s account”) from the person’s first day.

Receipt of transfer values

30

(1) This regulation applies if a transfer value payment is received from another pension scheme (other than a connected scheme) in relation to an active member of this scheme.

(2) On receipt of the transfer value payment, the active member’s account must be credited with the amount of transferred pension calculated under regulation 109 (amount of transferred pension).

Receipt of club transfer values

31

(1) This regulation applies if a club transfer value payment is received from another club scheme in relation to an active member of this scheme.

(2) On receipt of the club transfer value payment, the active member’s account must be credited with an amount of club transfer earned pension calculated under regulation 111 (amount of club transfer earned pension).

Account to specify amount of pension for a scheme year

32

(1) This regulation applies to every scheme year in which an active member’s account is open.

(2) The active member’s account must specify, in relation to each description of pension, the amount of that pension for the scheme year.

(3) The amount of club transfer earned pension for a scheme year must be specified separately in relation to each sending scheme;

(4) The amount of earned pension for a scheme year is 1/47th of the member’s pensionable earnings for that year.

(5) The amount of transferred pension for a scheme year is the amount which the member is entitled to count under regulation 109 (amount of transferred pension).

(6) The amount of club transfer earned pension for a scheme year is the amount which member is entitled to count under regulation 111 (amount of club transfer earned pension).

(7) The added pension (member) for a scheme year is the sum of the amounts a member is entitled to count under Chapter 1 of Part 7 (Contributions) after exercising an option under regulation 91(1)(a) (member’s option to make periodical contributions to purchase added pension).

(8) The added pension (member and dependants) for a scheme year is the sum of the amounts a member is entitled to count under Chapter 1 of Part 7 (Contributions) after exercising an option under regulation 91(1)(b) (member’s option to make periodical contributions to purchase added pension).

Account to specify opening balance and index adjustment

33

(1) This regulation applies to every scheme year in which an active member’s account is open.

(2) The active member’s account must specify, for each description of pension, the opening balance for the scheme year and the index adjustment for the opening balance.

(3) In these Regulations, “opening balance” in relation to a description of pension—

(a) for the scheme year immediately following the scheme year in which the active member’s account is established, means the amount of that pension for the previous scheme year as at the end of the previous scheme year; and

(b) for any subsequent scheme year, means the sum of the following amounts—

(i) the opening balance of that pension for the previous scheme year and the index adjustment for that opening balance; and

(ii) the amount of that pension for the previous scheme year as at the end of the previous scheme year.

CHAPTER 4 — Deferred member’s account

Establishment of a deferred member’s account

34

When an active member ceases to be in pensionable service and becomes a deferred member in relation to rights accrued in that service—

(a) the active member’s account for that service must be closed; and

(b) a pension account for the deferred member must be established (“the deferred member’s account”).

Account to specify provisional amount of deferred pension

35

(1) The deferred member’s account must specify, for each description of pension, the provisional amount of the relevant deferred pension.

(2) The provisional amount of deferred earned pension is the sum of the amount of accrued earned pension and the retirement index adjustment for that amount.

(3) The provisional amount of the deferred club transfer earned pension is the sum of the amount of accrued club transfer earned pension and the retirement index adjustment for that amount.

(4) The provisional amount of deferred added pension (member) is the sum of the amount of accrued added pension (member) and the retirement index adjustment for that amount.

(5) The provisional amount of deferred added pension (member and dependants) is the sum of the amount of accrued added pension (member and dependants) and the retirement index adjustment for that amount.

(6) The retirement index adjustment is not to be applied to an amount of accrued pension if a transfer value payment is made or a cash transfer sum is paid out in respect of the member’s right to that accrued pension before the end of the last active scheme year.

Adjustment of provisional amount of deferred pension on retirement

36

When a deferred member becomes entitled under regulation 44 (retirement before reaching normal pension age – deferred members) to the payment of a retirement pension, the deferred member’s account must specify for the provisional amount of each description of deferred pension—

(a) the early payment reduction (if any);

(b) the late payment supplement (if any);

(d) the allocation amount (if any).

Treatment of deferred member’s account on return to pensionable service

37

(1) When a deferred member re-enters pensionable service not later than 5 years after the date on which a period of earlier service ceased—

(a) the deferred member’s account must be closed and it must be treated as if it were never established;

(b) the active member’s account must be re-established; and

(c) entries must be made in the active member’s account as if, during the period in which the deferred member’s account was open, the member—

(i) was in pensionable service; but

(ii) received no pensionable earnings.

(2) When a deferred member re-enters pensionable service more than 5 years after the date on which a period of earlier service ceased—

(a) the deferred member’s account must remain open; and

(b) an active member’s account must be established from the first day for the new period of pensionable service.

CHAPTER 5 — Pensioner member’s account

Establishment of a pensioner member’s account

38

(1) When an active member becomes entitled to the immediate payment of a retirement earned pension under regulation 43 (retirement on or after reaching normal pension age – active members) or an ill-health pension under regulation 51 or 52 (entitlement to ill-health pension: active member with permanent serious ill-health and entitlement to ill-health pension: active member with significant impairment of capacity for gainful employment)—

(a) the active member’s account must be closed; and

(b) a pension account for the pensioner member must be established (the pensioner member’s account).

(2) When a deferred member becomes entitled to the payment of a retirement earned pension under regulation 44 (retirement before reaching normal pension age – deferred members) or an ill-health pension under regulation 56 (entitlement to ill-health pension: deferred member with permanent serious ill-health)—

(a) the deferred member’s account must be closed; and

(b) a pension account for the pensioner member must be established (“the pensioner member’s account”).

Determination of “in-service late payment supplement”

39

(1) This regulation applies for any period an active member remains in service subsequent to the scheme year in which the member reaches normal pension age.

(2) The scheme manager, having regard to the guidance from the scheme actuary, must determine the in-service late payment supplement for each amount of accrued pension specified in the pensioner member’s account.

(3) In these Regulations, “in-service late payment supplement” means an additional amount of pension determined by reference to the period in service after an active member has reached normal pension age.

Account to specify amount of retirement pension

40

(1) The pensioner member’s account must specify, for each description of pension, the amount of the relevant retirement pension.

(2) The retirement earned pension is the sum of the amount of accrued earned pension and the retirement index adjustment for that amount.

(3) The retirement club transfer earned pension is the sum of the amount of accrued club transfer pension and the retirement index adjustment for that amount.

(4) The retirement added pension (member) is the sum of the amount of accrued added pension (member) and the retirement index adjustment for that amount.

(5) The retirement added pension (member and dependants) is the sum of the amount of accrued added pension (member and dependants) and the retirement index adjustment for that amount.

(6) The pension member’s account must specify for each amount of retirement pension—

(a) the early payment reduction (if any) specified in that account in relation to the relevant accrued pension;

(b) the in-service late payment supplement (if any);

(d) the commutation amount (if any); and

(e) the allocation amount (if any).

(7) When a pensioner member re-enters pensionable service—

(a) the pensioner member’s account must remain open; and

(b) an active member’s account must be established for the new period of service.

CHAPTER 6 — Pension credit member’s account

Establishment of a pension credit member’s account

41

(1) A pension account must be established for each pension credit member (“the pension credit member’s account”).

(2) When a pension credit member becomes entitled to the payment of a pension under regulation 47 (pension credit member’s pension), the pension credit member’s account must specify the amount of credited pension, and for that amount—

(a) the early payment reduction (if any); and

(b) the commutation amount (if any).

(3) In this regulation, “amount of credited pension” means an amount such that the value of the pension credit member’s right under this scheme (as calculated in accordance with regulations made under paragraph 5(b) of Schedule 5 to the WRPA 1999) equals the member’s pension credit under section 29(1)(b) of that Act.

Separate accounts for dual capacity pension credit member

42

(1) If a pension credit member is also an active member, a deferred member or a pensioner member, the pension credit member’s account is in addition to the other account or accounts to be established under this Part in respect of the member in the other capacity.

(2) If a pension credit member has rights under this scheme which are attributable, directly or indirectly, to pension credit derived from the rights of more than one pension debit member of this scheme, a separate account is to be established under this regulation in respect of the pension credit attributable to the rights of each such pension debit member.

PART 5 — Retirement benefits

CHAPTER 1 — Retired member benefits

Retirement on or after reaching normal pension age – active members

43

(1) A member is entitled to the immediate payment for life of a retirement pension under this scheme if—

(a) the member ceases to be in pensionable service under this scheme at or after reaching normal pension age; and

(b) the member has not made a claim for a pension under regulation 44 (retirement before reaching normal pension age – deferred members) in respect of that service.

(2) But a member is not so entitled unless—

(a) the member has claimed payment of the pension; and

(i) the member has at least 2 years’ qualifying service; or

(ii) a transfer value payment otherwise than from another occupational pension scheme has been accepted in relation to the member under Part 8 (Transfers).

(3) A member, who is entitled to a retirement earned pension under this regulation, is entitled to immediate payment for life of—

(a) a retirement added pension, if the retirement account specifies an amount of retirement added pension; and

(b) a retirement club transfer earned pension, if the retirement account specifies an amount of club transfer earned pension.

(4) The claim for payment of a pension under this regulation must be made by notice in writing to the scheme administrator in such form as the scheme manager requires.

(5) In the event that the member delays making a claim under this regulation after reaching the normal pension age the in-service late payment supplement or the late payment supplement (as applicable) will apply to the account of the member.

Retirement before reaching normal pension age – deferred members

44

(1) A member, who is not entitled to immediate payment of a pension under regulation 43 (retirement on or after reaching normal pension age – active members), is entitled to the immediate payment for life of a retirement earned pension under this scheme if the member—

(a) has reached the age of 55;

(b) has ceased to be in pensionable service under this scheme; and

(2) But a member is not so entitled unless—

(a) the member has at least 2 years’ qualifying service; or

(b) a transfer value payment otherwise than from another occupational pension scheme has been accepted in relation to the member under Part 8 (Transfers).

(3) A member, who is entitled to a retirement earned pension under this regulation, is entitled to immediate payment for life of—

(a) a retirement added pension, if the deferred member’s account specifies a provisional amount of deferred added pension; and

(b) a retirement club transfer earned pension, if the retirement account specifies a provisional amount of deferred club transfer earned pension.

(4) The claim for payment of a pension under this regulation must be made by notice in writing to the scheme administrator in such form as the scheme manager requires.

(5) The early payment reduction is to apply to the pension amount of the member in the event that the pension is to come into payment before the member’s deferred pension age.

(6) The late payment supplement is to apply to the pension amount of the member in the event that the pension is to come into payment after the member’s deferred pension age.

Annual rate of pension payable to active member who becomes pensioner member

45

(1) This regulation applies when an active member becomes entitled under regulation 43 (retirement on or after reaching normal pension age – active members) to the immediate payment of a retirement earned pension.

(2) The annual rate of the retirement earned pension payable to the retired member is determined by—

(a) taking the amount of retirement earned pension specified in the retirement account;

(b) adding the in-service late payment supplement (if any) specified in that account in relation to that amount;

(d) subtracting the commutation amount (if any) specified in that account in relation to that amount; and

(e) subtracting the allocation amount (if any) specified in that account in relation to that amount.

(3) If a retirement added pension (member and dependants) is payable to the member, the annual rate of that pension is determined by—

(a) taking the amount of retirement added pension (member and dependants) specified in the retirement account;

(b) adding the late payment supplement (if any) specified in that account in relation to that amount;

(d) subtracting the allocation amount (if any) specified in that account in relation to that amount.

(4) If a retirement added pension (member) is payable to the member, the annual rate of that pension is determined by—

(a) taking the amount of retirement added pension (member) specified in the retirement account;

(b) adding the late payment supplement (if any) specified in that account in relation to that amount;

(5) If a retirement club transfer earned pension is payable to the member, the annual rate of the pension is determined by—

(a) taking the amount of club transfer earned pension specified in the retirement account; and

(b) applying the provisions of regulation 45(2)(b) to (e) to that amount.

Annual rate of pension payable to deferred member who becomes pensioner member

46

(1) This regulation applies when a deferred member becomes entitled under regulation 44 (retirement before reaching normal pension age – deferred members) to the immediate payment of a retirement pension.

(2) The annual rate of the retirement earned pension payable to the member is determined by—

(a) taking the provisional amount of the member’s deferred earned pension specified in the deferred member’s account;

(b) adding the late payment supplement( if any) specified in that account in relation to that amount;

(d) subtracting the commutation amount (if any) specified in that account in relation to that amount; and

(e) subtracting the allocation amount (if any) specified in that account in relation to that amount.

(3) If a retirement added pension (member and dependants) is payable to the member, the annual rate of this pension is determined by—

(a) taking the provisional amount of the member’s deferred added pension (member and dependants) specified in the deferred member’s account;

(b) adding the late payment supplement (if any) specified in that account in relation to that amount;

(d) subtracting the commutation amount (if any) specified in that account in relation to that amount; and

(e) subtracting the allocation amount (if any) specified in that account in relation to that amount.

(4) If a retirement added pension (member) is payable to the member, the annual rate of that pension is determined by—

(a) taking the provisional amount of the member’s deferred added pension (member) specified in the deferred member’s account;

(b) adding the late payment supplement (if any) specified in that account in relation to that amount;

(d) subtracting the commutation amount (if any) specified in that account in relation to that amount.

(5) If a retirement club transfer pension is payable to the member the annual rate of that pension is determined by—

(a) taking the provisional amount of the member’s deferred club transfer earned pension specified in the deferred member’s account; and

(b) applying the provisions of regulation 46(2)(b) to (e) to that amount.

CHAPTER 2 — Benefits for pension credit and pension debit members

Pension credit member’s pension

47

(1) A pension credit member is entitled to the immediate payment for life of a pension credit member’s pension under this scheme—

(i) when a pension credit member reaches deferred pension age; or

(ii) if it is later, when the pension sharing order under which the member is entitled to the pension credit takes effect; and

(b) the pension credit member has claimed payment of the pension.

(2) The claim for payment of a pension must be made by notice in writing to the scheme administrator in such form as the scheme manager requires.

(3) A pension credit member who has reached 55, but has not reached deferred pension age, may claim early payment of the pension credit member’s pension by written notice to the scheme administrator.

(4) The notice must—

(a) be in such form as the scheme manager requires; and

(b) specify the date on which the pension is to become payable (“payable date”).

(5) A pension credit member who claims early payment of a pension credit member’s pension is entitled to the immediate payment for life of that pension on that payable date.

(6) The early payment reduction is to apply to the pension account of a pension credit member in the event that the pension comes into payment before the pension credit member’s deferred pension age.

(7) The late payment supplement is to apply to the pension account of a pension credit member in the event that the pension comes into payment after the pension credit member’s deferred pension age.

Annual rate of pension credit member’s pension

48

The annual rate of the pension credit member’s pension is determined by—

(a) taking the amount of credited pension specified in the pension credit member’s account;

(b) adding the late payment supplement (if any) specified in that account in relation to that amount;

(d) subtracting the commutation amount (if any) specified in that account in relation to that amount.

Pension credit member’s rights

49

(1) If regulation 7(5) of the Pension Sharing (Pension Credit Benefit) Regulations 2000[^f00016] (early or deferred retirement) applies, the scheme manager must be reasonably satisfied that the requirements of that regulation have been met.

(2) Benefits that are attributable to a pension credit are not to be aggregated with any other benefits to which the pension credit member is entitled under this scheme.

Reduction in pension debit member’s benefits

50

The benefits to which a pension debit member is entitled under this scheme are subject to the reduction to be made under section 31 of the WRPA 1999.

CHAPTER 3 — Ill-health benefits

Entitlement to ill-health pension: active member with permanent serious ill-heath

51

(1) An active member who has not reached normal pension age is entitled to immediate payment of an ill-health pension if—

(a) in the opinion of the scheme manager, the member has suffered a permanent breakdown in health involving incapacity for any gainful full time employment;

(b) the scheme manager has received evidence from a registered medical practitioner that the member is, and will continue to be, incapable of carrying on their occupation because of physical or mental impairment;

(c) the member has at least 2 years’ qualifying service or a transfer value payment otherwise than from another occupational pension scheme has been accepted in relation to the member under Part 8 (Transfers);

(d) the member is not entitled to an ill-health pension under regulation 52(1) (entitlement to ill-health pension: active member with significant impairment of capacity for gainful employment); and

(e) the scheme manager has agreed to the member becoming so entitled.

(2) For the purpose of these Regulations, a member’s breakdown in health is “permanent” if the scheme manager is of the opinion that the breakdown will continue until the member reaches normal pension age.

(3) A member entitled to immediate payment of an ill-health pension is entitled to an added pension of any description if the retirement account specifies an accrued added pension of that description.

(4) The annual rate of an ill-health pension and any added pension payable under this regulation is calculated in accordance with regulation 54 (annual rate of ill-health pension: active members with permanent serious ill-health).

Entitlement to ill-health pension: active member with significant impairment of capacity for gainful employment

52

(1) An active member who has not reached normal pension age is entitled to the immediate payment of an ill-health pension if—

(a) in the opinion of the scheme manager—

(i) the member has suffered a breakdown in health, as a result of which, their capacity for any gainful employment is significantly impaired; and

(ii) the breakdown will continue until the member reaches normal pension age;

(b) the scheme manager has received evidence from a registered medical practitioner that the member is, and will continue to be, incapable of any gainful employment because of physical or mental impairment;

(c) the member has at least 2 years’ qualifying service or a transfer value payment otherwise than from another occupational pension scheme has been accepted in relation to the member under Part 8 (Transfers);

(d) the member is not entitled to an ill-health pension under regulation 51(1) (entitlement to ill-health pension: active member with permanent serious ill-health); and

(e) the scheme manager has agreed to the member becoming so entitled.

(2) A member entitled to immediate payment of an ill-health pension is entitled to—

(a) an added pension of any description if the retirement account specifies an accrued added pension of that description; and

(b) a retirement club transfer earned pension, if the retirement account specifies a club transfer earned pension.

(3) The annual rate of an ill-health pension and any added pension payable under this regulation is to be calculated in accordance with regulation 55 (annual rate of ill-health pension: active members with significant impairment of capacity for gainful employment).

Deferment of accrued earned pension attributable to a transfer payment

53

(1) In respect of any amount of accrued pension specified in the active member’s account as at the end of the last day of pensionable service which is attributable to a transfer value payment or cash transfer sum (“payment”) accepted in relation to the member under Part 8 (Transfers) in the 24 months before the relevant day and the scheme manager so directs, these Regulations apply as if the member had become a deferred member in respect of the rights that accrued in that service by virtue of that payment.

(2) Accordingly where paragraph (1) applies—

(a) for the purpose of calculating the provisional amount of deferred added earned pension under regulation 35 (account to specify provisional amount of deferred pension), the amount of accrued earned pension is only the amount attributable to that transferred payment; and

(b) for the purpose of calculating the amount of retirement earned pension or any club transfer earned pension under regulation 40 (account to specify amount of retirement pension), the amount of accrued pension is—

(i) the amount specified in the active member’s account as at the end of the last day of pensionable service, less

(ii) the amount attributable to that payment.

(3) In paragraph (1), “the relevant day” means the day on which the scheme manager provided their opinion, mentioned in either regulation 51 (entitlement to ill-health pension: active member with permanent serious ill-health) or regulation 52 (entitlement to ill-health pension: active member with significant impairment of capacity for gainful employment), by virtue of which the member is entitled to the ill-health pension.

Annual rate of ill-health pension: active members with permanent serious ill-health

54

(1) The annual rate of an ill-health pension payable under regulation 51 (entitlement to ill-health pension: active member with permanent serious ill-health) is calculated in accordance with regulation 45 (annual rate of pension payable to active member who becomes pensioner member), in the same way as the annual rate of retirement earned pension is calculated, but—

(a) the references to the member’s retirement earned pension are taken to be references to the enhancement value of the earnings-related part of that pension; and

(b) the early payment reduction is not subtracted.

(2) In this regulation—

“the earnings-related part”, in relation to the member’s retirement earned pension, means the proportion of that pension not attributable to a transferred pension;

“the enhancement value” means multiplying A by B where— A is the member’s retirement earned pension divided by the sum of— for all years up to the last active scheme year, the number of scheme years (or parts of scheme years) for which amounts of earned pension were specified in the active member’s account; and in the last active scheme year, the number of calendar days (expressed as a proportion of a year), where the member was eligible for active membership; and B is the greater of— the number of years (or parts of years) up to a maximum of 25 years which would have remained, if the active member had continued in scheme employment up to normal pension age; or X plus N (both expressed as a number of years), where X is the sum of— for all years up to the last active year, the number of scheme years (or parts of scheme years) for which amounts of earned pension were specified in the active member’s account; and in the last active scheme year, the number of calendar days (expressed as a proportion of a year), where the member was eligible for active membership; and N is half of the number of years (or parts of years) from the last day of pensionable service until normal pension age.

(3) The annual rate of any added pension payable under regulation 51 (entitlement to ill-health pension: active member with permanent serious ill-health) is calculated in accordance with regulation 45 (annual rate of pension payable to active member who becomes pensioner member) in the same way as the annual rate of retirement added pension is calculated, but any early payment reduction is not subtracted.

(4) The annual rate of any club transfer pension payable under regulation 51 is calculated in accordance with regulation 45 in the same way as the annual rate of club transfer pension is calculated.

Annual rate of ill-health pension: active members with significant impairment of capacity for gainful employment

55

(1) The annual rate of an ill-health pension payable under regulation 52 (entitlement to ill-health pension: active member with significant impairment of capacity for gainful employment) is calculated in accordance with regulation 45 (annual rate of pension payable to active member who becomes pensioner member), in the same way as the annual rate of retirement earned pension is calculated, but—

(a) the references to the member’s retirement earned pension are taken to be references to the enhancement value of the earnings-related part of that pension; and

(b) the early payment reduction is not subtracted.

(2) In this regulation—

“the earnings-related part”, in relation to the member’s retirement earned pension, means the proportion of that pension not attributable to a transferred pension;

“the enhancement value” means the value arrived at by multiplying A by B, where— A is the member’s retirement earned pension divided by the sum of— for all years up to the last active scheme year, the number of scheme years (or parts of scheme years) for which amounts of earned pension were specified in the active member’s account; and in the last active scheme year, the number of calendar days (expressed as a proportion of a year), where the member was eligible for active membership; and B is X plus N, where— X is the sum of— for all years up to the last active scheme year, the number of scheme years (or parts of scheme years) for which amounts of earned pension were specified in the active member’s account; and in the last active scheme year, the number of calendar days (expressed as a proportion of a year), where the member was eligible for active membership; and N is one-third of the number of years (or part of years) from the last day of pensionable service until normal pension age (both X and N to be expressed as a number of years).

(3) The annual rate of any added pension payable under regulation 52 (entitlement to ill-health pension: active member with significant impairment of capacity for gainful employment) is calculated in accordance with regulation 45 (annual rate of pension payable to active member who becomes pensioner member) in the same way as the annual rate of retirement added pension is calculated.

(4) The annual rate of any club transfer pension payable under regulation 52 is calculated in accordance with regulation 45 in the same way as the annual rate of retirement club transfer pension is calculated.

Entitlement to ill-health pension: deferred member with permanent serious ill-health

56

(1) A deferred member, who has not reached deferred pension age, is entitled to immediate payment of an ill-health pension if—

(a) the member makes a claim to the scheme administrator for immediate payment of the pension;

(b) the member has at least 2 years’ qualifying service or a transfer value payment otherwise than from another occupation pension scheme has been accepted in relation to the member under Part 8 (Transfers);

(c) in the opinion of the scheme manager, after consulting the scheme medical adviser, the member has suffered a permanent breakdown in health involving incapacity for any gainful full-time employment; and

(d) the scheme manager has agreed to the member becoming so entitled.

(2) For the purpose of these Regulations, a member’s breakdown in health is “permanent” if the scheme manager is of the opinion that the breakdown will continue until the member reaches deferred pension age.

(3) A member entitled to immediate payment of an ill-health pension is entitled to—

(a) an added pension of any description if the retirement account specifies an accrued pension of that description; and

(b) a retirement club transfer earned pension, if the retirement account specifies a club transfer earned pension.

(4) The annual rate of an ill-health pension, any added pension and any club transfer pension payable under this regulation is calculated in accordance with regulation 46 (annual rate of pension payable to deferred member who becomes a pensioner member) but without subtracting the early payment reduction.

Scheme manager’s review of ill-health awards

57

(1) This regulation applies if—

(a) a member is entitled to a pension under regulation 51, 52 or 56 (entitlement to ill-health pension: active member with permanent serious ill-health; entitlement to ill-health pension: active member with significant impairment of capacity for gainful employment; or entitlement to ill-health pension: deferred member with permanent serious ill-health); and

(b) it appears to the scheme manager, after consulting the scheme medical adviser, that there is evidence that the scheme manager would not be of the same opinion as to the member’s condition if the scheme manger reconsidered the question, as the opinion by virtue of which the entitlement arose.

(2) The scheme manager may review the member’s condition under this regulation.

(3) No review is to be made under paragraph (2) after—

(a) the member, in receipt of a pension under regulation 51 or 52 (entitlement to ill health pension: active member with permanent serious ill-health; or entitlement to ill-health pension: active member with significant impairment of capacity for gainful employment) has reached normal pension age; or

(b) the member, in receipt of a pension under regulation 56 (entitlement to ill-health pension deferred member with permanent serious ill-health) has reached deferred pension age.

(4) If on any such review, in the case of a member who is entitled to a pension under regulation 51 (entitlement to ill-health pension: active member with permanent serious ill-health), the scheme manager is of the opinion that—

(a) the member has not suffered such a breakdown as is mentioned in regulation 51, but

(b) the member meets the condition in regulation 52,

the scheme manager may determine that the member is to cease to be entitled to a pension under regulation 51 and to become entitled to a pension under regulation 52 at the end of the period of 3 months beginning with the date on which that determination is made.

(5) If on any review under paragraph (2), in the case of a member who is entitled to a pension under regulation 52, the scheme manager is of the opinion that the member has not suffered such a breakdown as is mentioned in regulation 52, the scheme manager may determine that the member is to cease to be entitled to a pension under regulation 52 at the end of the period of 3 months beginning with the date on which that determination is made.

(6) If on any review under paragraph (2), in the case of a member who is entitled to a pension under regulation 56 (entitlement to ill-health pension: deferred member with permanent serious ill-health), the scheme manager is of the opinion that the member has not suffered such a breakdown as is mentioned in regulation 56, the scheme manager may determine that the member is to cease to be entitled to a pension under regulation 56 at the end of the period of 3 months beginning with the date on which that determination is made.

(7) If on any review under paragraph (2), the scheme manager proposes a change of pension payments, the scheme manager must—

(a) notify the member in writing that the scheme manager proposes to make such a change;

(b) include the reason for the scheme manger’s decision; and

(i) the arrangements established by the scheme manager for the resolution of disputes relating to this scheme that are in force at the time the notification is given; and

(ii) Part 10 of the PSA 1993 (investigations: the Pensions Ombudsman).

Member’s request for review of ill-health awards

58

(1) This regulation applies if a member—

(a) is entitled to a pension under regulation 52 (entitlement to ill-health pension: active member with significant impairment of capacity for gainful employment); or

(b) has received a lump sum under regulation 19 of the EDP 2014 (lump sum awards: incapacity for armed forces service).

(2) The member may request a review of the member’s condition under this regulation—

(a) at any time before the fifth anniversary of the day on which the member became entitled to the pension or lump sum; or

(b) after that time if, in the opinion of the scheme manager, the circumstances are exceptional.

(3) The request must be made by notice in writing to the scheme administrator in such form as the scheme manager requires, including reasons for the review.

(4) If a member requests a review of their condition under this regulation, the scheme manager must—

(a) review the question whether the member has suffered a permanent breakdown in health involving incapacity for any gainful employment in relation to regulation 51 (entitlement to ill-health pension: active member with permanent serious ill-health); and

(b) if the scheme manager is of the opinion that the member has suffered such a breakdown, determine whether—

(i) the member had suffered such a breakdown at the time when the member became entitled to the pension under regulation 52; or

(ii) the condition, by virtue of which the member became so entitled, has deteriorated so that the member suffered such a breakdown later.

(5) If on any review under paragraph (4), the scheme manager is of the opinion that the member—

(a) has suffered such a breakdown as is mentioned in paragraph (4)(a); and

(b) had done so at the time when the member became entitled to the pension under regulation 52,

then the member’s entitlement under regulation 52 ceases and regulation 51 applies as if the conditions mentioned in that regulation were met at the time the member ceased to be in service by virtue of which the member was eligible to be an active member of this scheme, and accordingly the member immediately becomes entitled to payment of such an amount as is specified in paragraph (6).

(6) The amount referred to in paragraph (5) is such an amount as represents the difference between the pension payments that have been made to the member under regulation 52 and those to which the member was actually entitled under regulation 51.

(7) If on any review under paragraph (4), the scheme manager is of the opinion that—

(a) the member has suffered such a breakdown as is mentioned in paragraph (4)(a), but

(b) the condition by virtue of which the member became entitled to the pension under regulation 52 has deteriorated so that the member suffered such a breakdown later,

then the member’s entitlement to a pension under regulation 52 ceases and the member is entitled to a pension calculated under regulation 51 from the date on which the review was requested.

(8) If a member within paragraph (1)(b) requests a review of the member’s condition under this rule, the Secretary of State must—

(a) review the question whether the member has suffered a breakdown in health as a result of which the member’s capacity for gainful employment is significantly impaired; and

(b) if, the Secretary of State is of the opinion that the member has suffered such a breakdown, determine whether—

(i) the member had suffered such a breakdown at the time when the member became entitled to payment of the lump sum under EDP 2014 regulation 19, or

(ii) the condition by virtue of which the member became so entitled has deteriorated so that the member suffered such a breakdown later.

(9) If—

(a) on any review under paragraph (8), the Secretary of State is of the opinion that the member—

(i) has suffered such a breakdown as is mentioned in paragraph (8)(a); and

(ii) had done so at the time when the member became entitled to payment of the lump sum under EDP 2014 regulation 19; and

(b) the conditions in regulation 52(1)(b) and (c) are met then regulation 52 applies from the time when the conditions in 52(1)(a) are first met, and accordingly the member is entitled to a pension under that regulation payable from that time and the scheme manager may set off against such entitlement the amount of the lump sum paid under EDP 2014 regulation 19.

(10) If—

(a) on any review under paragraph (8), the Secretary of State is of the opinion that—

(i) the member has suffered such a breakdown as is mentioned in paragraph (8)(a), but

(ii) the condition by virtue of which the member became entitled to payment of the lump sum under EDP 2014 regulation 19 has deteriorated so that the member suffered such a breakdown later, and

(b) the conditions in regulation 52(1)(b) and (c) are met,

then regulation 52 applies from the date when the ill-health condition (as defined in paragraph 1 of Schedule 28 to the FA 2004) is first met, and accordingly the member is entitled to a pension under that regulation payable from that date.

CHAPTER 4 — Options

General option to exchange part of the pension for lump sum

59

(1) A member may opt to exchange part of a pension to which the member would otherwise be entitled for a lump sum.

(2) If a member so opts, for every £1 by which the amount of the member’s annual rate of pension is reduced, the member is to be paid a lump sum of £12.

(3) A member may not exchange pension for lump sum under this regulation to the extent that it would result in a scheme chargeable payment for the purpose of Part 4 of the FA 2004 (see section 241 of that Act).

(4) This regulation does not apply to a pension derived from pension credit rights if the pension debit member from whose rights the pension is derived has exercised the option before the date on which the pension sharing order takes effect.

(5) The option under this regulation must be exercised by notice in writing to the scheme administrator in such form as the scheme manager requires no earlier than 6 months and no later than 1 month before the first pension payment is made.

(6) An option exercised under paragraph (1) must apply to added pension and earned pension to which a member is entitled in equal proportions.

Option for members in serious ill-health to exchange whole pension for lump sum

60

(1) An active member, deferred member or pension credit member may opt to exchange the whole of the member’s pension under this Part for a lump sum if the scheme manager—

(a) is satisfied that the member is expected to live for less than 12 months; and

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