PART I GENERAL

Citation, commencement and interpretation

1. —(1) These Regulations may be cited as the Pension Sharing (Pension Credit Benefit) Regulations 2000 and shall come into force on 1st December 2000.

(2) In these Regulations—

• “the 1993 Act" means the Pension Schemes Act 1993 ;

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

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

• [^F1 “the 2004 Act ” means the Pensions Act 2004 ; ^F1]

• ^F2 ...

• ^M7 “the Taxes Act" means the Income and Corporation Taxes Act 1988 ;

• “active member", in relation to an occupational pension scheme, means a person who is in pensionable service under the scheme;

• ^F3 ...

• “base rate" means the base rate for the time being quoted by the reference banks or, where there is for the time being more than one such base rate, the base rate which, when the base rate quoted by each bank is ranked in a descending sequence of seven, is fourth in the sequence;

• [^F4 “categories of benefits” refers to the categories listed in paragraphs (a) to (c) of section 101F(6B) of the 1993 Act; ^F4]

• ^F5 ...

• ^F2 ...

• ^M8 “eligible member" has the meaning given by section 101P(1) of the 1993 Act ;

• “employer" has the meaning given by section 181(1) of the 1993 Act;

• ^F6 ...

• “the Inland Revenue" means the Commissioners of Inland Revenue;

• “member" means a member of an occupational pension scheme or a personal pension scheme and includes an eligible member;

• “money purchase benefits" has the meaning given by section 181(1) of the 1993 Act

• ^M9,F3 ...

• “money purchase scheme" has the meaning given by section 181(1) of the 1993 Act;

• ^M10 “normal benefit age" has the meaning given by section 101B of the 1993 Act ;

• “occupational pension scheme" has the meaning given by section 1 of the 1993 Act;

• ^M11 “overseas arrangement" has the meaning given by regulation 1(2) of the Contracting-out (Transfer and Transfer Payment) Regulations 1996 ;

• ^M12 “overseas scheme" has the meaning given by regulation 1(2) of the Contracting-out (Transfer and Transfer Payment) Regulations 1996 ;

• [^F7 “pension credit benefit” has the meaning given by section 101B of the 1993 Act insofar as that expression is used in Part II of these Regulations; ^F7]

• “pension credit rights" has the meaning given by—

  (a)

  section 101B of the 1993 Act insofar as that expression is used in Part II of these Regulations; and

  (b)

  section 101P of the 1993 Act insofar as that expression is used in Part III of these Regulations;

• ^M13 “pensionable service" has the meaning given by section 124(1) of the Pensions Act 1995 ;

• ^M14 “personal pension scheme" has the meaning given by section 1 of the 1993 Act ;

• ^M15 “principal appointed day" has the meaning given by section 7(2B) of the 1993 Act ;

• “qualifying occupational pension scheme" has the meaning given by section 40(3) of the 1999 Act;

• “qualifying scheme" has the meaning given by section 101P(1) of the 1993 Act;

• [^F8 “the reference banks” means the seven largest persons for the time being who—

  (a)

  have permission under Part 4 of the Financial Services and Markets Act 2000 to accept deposits;

  (b)

  are incorporated in the United Kingdom and carrying on there a regulated activity of accepting deposits; and

  (c)

  quote a base rate in sterling;

  and for the purpose of this definition the size of a person at any time is to be determined by reference to the gross assets denominated in sterling of that person, together with any subsidiary (as defined in section 736 of the Companies Act 1985), as shown in the audited end of year accounts last published before that time. ^F8]

• “Regulatory Authority" means the [^F9 Pensions Regulator ^F9] ;

• “relevant pension" means a pension to which section 40(2) of the 1999 Act applies;

• ^F10 ...

• ^F11 ...

• ^M16 “scheme" has the meaning given by section 101B of the 1993 Act ;

• ^F12 ...

• “transfer credits" means rights allowed to a person under the rules of an occupational or personal pension scheme by reference to a transfer to that scheme of his accrued rights from another scheme (including any transfer credits allowed by that scheme);

• “transfer notice" has the meaning given by section 101F(7) of the 1993 Act;

• [^F13 “the Transfer Values Regulations ” means the Occupational Pension Schemes (Transfer Values) Regulations 1996 ; ^F13]

• “trustees or managers" has the meaning given by section 46(1) of the 1999 Act;

• “valuation date" has the meaning given by section 101J(7) of [^F14 the 1993 Act; ^F14]

• [^F15 “valuation day” has the meaning given in section 29(7) of the 1999 Act. ^F15]

[^F16 (3) The definition of “the reference banks” in paragraph (2) must be read with—

(a) section 22 of the Financial Services and Markets Act 2000;

(b) any relevant order under that section; and

(c) Schedule 2 to that Act. ^F16]

Salary related schemes

^M17 2. For the purposes of Chapter II of Part IVA of the 1993 Act (requirements relating to pension credit benefit—transfer values) and these Regulations, an occupational pension scheme is salary related if it is not a money purchase scheme and it is not a scheme—

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

(b) under the provisions of which no member has accrued rights (other than rights to money purchase benefits).

PART II PENSION CREDIT BENEFIT UNDER OCCUPATIONAL PENSION SCHEMES

[^F17 Pension credit benefit in lump sum form

3. For the purposes of section 101C(2) of the 1993 Act (basic principle as to pension credit benefit), the circumstances in which the trustees or managers of a scheme may provide for payment of pension credit benefit in the form of a lump sum before normal benefit age are—

(a) those which permit payment of a lump sum in accordance with paragraph (a), (b), [^F18 (ba), ^F18] (e), (f) or (g) of the lump sum rule in section 166(1) of the Finance Act 2004 (lump sum rule); or

(b) that the lump sum payment is—

(i) made by a registered pension scheme (within the meaning given in section 150(2) of the Finance Act 2004 (meaning of “pension scheme”));

(ii) a payment that is described in Part 2 of the Registered Pension Schemes (Authorised Payments) Regulations 2009; and

(iii) made to or in respect of a member. ^F17]

Commutation of part of pension credit benefit

^F19 4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Means of assuring pension credit benefit

5. —(1) The prescribed means by which a person’s pension credit benefit under a scheme must be assured for the purposes of section 101D(1)(b) of the 1993 Act (form of pension credit benefit and its alternatives) is by means of a transaction to which section 19 of the 1993 Act (discharge of liability where guaranteed minimum pensions are secured by insurance policies or annuity contracts) applies.

(2) A transaction referred to in paragraph (1) must satisfy the requirements of regulation 12, 13 or 14 (discharge of liability where pension credit benefit or alternative benefits are secured by insurance policies or annuity contracts, conditions on which insurance policies and annuity contracts may be commuted, or other requirements applying to insurance policies and annuity contracts).

(3) Where a transaction referred to in paragraph (1) applies, the insurance policy must be taken out, or the annuity contract must be entered into, with an insurance company which is—

[^F20 (a) a person who has permission under Part 4 of the Financial Services and Markets Act 2000 to effect or carry out contracts of long-term insurance; ^F21 ...

^F21 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ^F20]

[^F22 (4) Paragraph (3)(a) ^F23 ... must be read with—

(a) section 22 of the Financial Services and Markets Act 2000;

(b) any relevant order under that section; and

(c) Schedule 2 to that Act. ^F22]

Alternatives to pension credit benefit

6. —(1) The prescribed alternatives to pension credit benefit which a scheme may provide for the purposes of section 101D(2) of the 1993 Act are described in regulations 7 to 9.

(2) For the purposes of section 101D(4)(b) of the 1993 Act, the cases in which the alternatives described in regulations 7 to 9 may be provided without the consent of the person entitled to the benefit are described in regulations 7(4) and 8(4).

Early retirement or deferred retirement

7. —(1) Subject to paragraph (2), the scheme may provide benefits which are different from those required to constitute pension credit benefit in respect of the—

(a) amount;

(b) recipient; and

(c) time at which the benefits are payable.

[^F24 (2) The benefits referred to in paragraph (1) must include a benefit that is both—

(a) payable to the person entitled to the pension credit benefit; and

(b) not payable before normal benefit age except where the person entitled to the benefit has either—

(i) met the ill-health condition in accordance with paragraph 1 of Schedule 28 to the Finance Act 2004 (registered pension schemes – defined benefits and money purchase arrangements – ill-health condition) immediately before that person became entitled to the benefit; or

(ii) attained normal minimum pension age as defined in section 279(1) of that Act (other definitions). ^F24]

^F24 (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) Benefits consisting of, or including, a benefit that becomes payable to the person entitled to the benefit before normal benefit age may be provided without that person’s consent where—

(a) that person’s earning capacity is destroyed or seriously impaired by [^F25 physical or mental infirmity ^F25] ; and

(b) in the opinion of the trustees or managers of the scheme, the person entitled to the benefit is incapable of deciding whether it is in his interests to consent.

(5) Any scheme rule that allows the alternative described in this regulation must require the trustees or managers of the scheme to be reasonably satisfied that, when the benefit of the person entitled to the benefit becomes payable, the total value of the benefits to be provided under this regulation is at least equal to the amount described in regulation 11 (value of alternatives to pension credit benefit).

^F26 (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Bought out benefits

8. —(1) The scheme may provide for benefits different from those required to constitute pension credit benefit to be appropriately secured by a transaction to which section 19 of the 1993 Act applies (discharge of liability where guaranteed minimum pensions are secured by insurance policies or annuity contracts).

(2) Any scheme rule that allows the alternative described in this regulation must require the trustees or managers of the scheme to be reasonably satisfied that, except where paragraph (3) applies, the payment made to the insurance company is at least equal to the amount described in regulation 11.

(3) The exception to paragraph (2) is where the person entitled to the benefit is requiring the trustees or managers to provide the alternative by exercising his right to give a transfer notice under section 101F of the 1993 Act (power to give transfer notice).

(4) A scheme may allow the alternative described in this regulation to be provided without the consent of the person entitled to the pension credit where—

(a) ^M18 the person entitled to the pension credit will be able to assign or surrender the insurance policy or annuity contract on the conditions set out in regulation 3 of the Occupational Pension Schemes (Discharge of Liability) Regulations 1997 (conditions on which policies of insurance and annuity contracts may be assigned or surrendered); and

(b) the requirements of paragraph (5) are satisfied.

(5) The requirements of this paragraph are that—

(a) the scheme is being wound up; or

(b) the trustees or managers of the scheme consider that, in the circumstances, it is reasonable for the scheme to provide the alternative without the consent of the person entitled to the benefit and the requirements of paragraph (6) are satisfied.

(6) The requirements of this paragraph are that all the conditions set out in sub-paragraphs (a) and (b) are satisfied, namely—

(a) the trustees or managers of the scheme give the person entitled to the benefit at least 30 days’ written notice of their intention to take out the insurance policy or enter into the annuity contract unless the person entitled to the benefit exercises a right to give a transfer notice under section 101F of the 1993 Act (the first mentioned notice being [^F27 given in accordance with regulations 26 to 28 (giving information and documents) of the Occupational and Personal Pension Schemes (Disclosure of Information) Regulations 2013 ^F27] or delivered to that person personally); and

(b) when the trustees or managers of the scheme agree with the insurance company to take out the insurance policy or enter into the annuity contract, there is no outstanding transfer notice by the person entitled to the benefit under section 101F of the 1993 Act.

(7) For the purposes of this regulation “appropriately secured" means secured by an insurance policy or annuity contract to which regulation 5 applies.

Money purchase benefits

9. —(1) The scheme may, with the consent of the person entitled to the benefit, provide money purchase benefits instead of all or any of the benefits that constitute pension credit benefit.

(2) Any scheme rule which allows this alternative must require the trustees or managers of the scheme to be reasonably satisfied that the amount allocated to provide money purchase benefits in respect of the person entitled to the benefit is at least equal to the amount described in regulation 11.

Transfer of a person’s pension credit rights without consent

10. —(1) For the purposes of section 101D(4) of the 1993 Act (form of pension credit benefit and its alternatives), the trustees or managers of an occupational pension scheme may provide for a person’s pension credit rights under that scheme to be transferred to another occupational pension scheme without that person’s consent where the conditions set out in paragraphs (2) and either (3) or (7), as the case may be, are satisfied.

(2) The condition set out in this paragraph is that the trustees or managers of the transferring scheme consider that, in the circumstances, it is reasonable for the transfer to be made without the person’s consent and the requirements of paragraph (5) are satisfied.

[^F28 (3) The condition set out in this paragraph is that, subject to paragraph (6)—

(a) the relevant actuary gives a certification, by completing the certificate in the Schedule, in relation to the person’s pension credit rights in the receiving scheme;

(b) the relevant actuary sends that certificate to the trustees or managers of the transferring scheme;

(c) the transfer takes place within 3 months of the date of the relevant actuary’s signature in the certificate; and

(d) there are no significant changes to the benefits, data and documents used in making the certificate (see the benefits, data and documents specified in the certificate) by the date on which the transfer takes place. ^F28]

(4) For the purpose of [^F29 making the certification in paragraph 2 of the certificate in the Schedule ^F29] , the relevant actuary shall, in considering whether there is good cause, have regard to all the circumstances of the case and in particular—

(a) to any established custom of the receiving scheme with regard to the provision of discretionary benefits or increases in benefits; and

(b) to any announcements made with regard to the provision of such benefits under the receiving scheme.

(5) The requirements of this paragraph are that all the conditions set out in sub-paragraphs (a) and (b) are satisfied, namely—

(a) the trustees or managers of the scheme give the person with pension credit rights at least 30 days’ written notice of their intention to transfer those rights to another occupational pension scheme unless the person with those rights exercises a right to give a transfer notice under section 101F of the 1993 Act (the first mentioned notice being [^F30 given in accordance with regulations 26 to 28 (giving information and documents) of the Occupational and Personal Pension Schemes (Disclosure of Information) Regulations 2013 ^F30] or delivered to that person personally); and

(b) when the trustees or managers of the scheme agree with the trustees or managers of the receiving scheme to transfer those rights, there is no outstanding transfer notice by the person with pension credit rights under section 101F of the 1993 Act.

(6) Paragraph (3) does not apply where the whole of the pension credit rights to be transferred are derived from rights accrued in a money purchase scheme.

(7) The condition set out in this paragraph is that any scheme rule which allows the transfer of a person’s pension credit rights derived from rights accrued in a money purchase scheme without the consent of the person with those rights must require the trustees or managers of the scheme to be reasonably satisfied that the amount transferred is at least equal to the amount described in regulation 11.

(8) In this regulation—

^F32 (9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Value of alternatives to pension credit benefit

11. The amount referred to in regulations 7, 8 and 9 is an amount equal to the value of the benefits (or, where the alternative is provided by way of partial substitute for pension credit benefit, the relevant part of the benefits) that have accured to or in respect of the person entitled to the benefit.

Discharge of liability where pension credit benefit or alternative benefits are secured by insurance policies or annuity contracts

12. The requirements which must be met for the purposes of section 101E(1)(c) of the 1993 Act (discharge of liability where pension credit or alternative benefits are secured by insurance policies or annuity contracts) are those described in regulations 13 and 14.

Conditions on which pension credit benefit secured by insurance policies and annuity contracts may be commuted

13. Pension credit benefit secured by an insurance policy or an annuity contract may be commuted [^F33 in the circumstances described by regulation 3 (pension credit benefit in lump sum form) ^F33] .

Other requirements applying to insurance policies and annuity contracts

14. The requirements described in this regulation are—

(a) that the insurance company with which the insurance policy is taken out or the annuity contract is entered into assumes an obligation to the person entitled to the benefit or to the trustees of a trust for the benefit of the person entitled to the benefit and, if appropriate, dependants of his, to pay the benefits secured by that policy or contract to him or, as the case may be, to dependants of his, or to the trustees of such a trust; and

(b) that the insurance policy or annuity contract contains, or is endorsed with, terms so as to provide for any increase, which would have been applicable as a consequence of section 40 of the 1999 Act (indexation: other pension schemes) had the discharge of liability of the pension credit benefit, or its alternative, not taken place, to apply to the benefits which have become secured or been replaced by that policy or contract.

Further conditions on which liability may be discharged

15. —(1) Subsection (1)(b) of section 101E of the 1993 Act (transactions with the consent of the person entitled to the benefit which discharge liability where pension credit or alternative benefits secured by insurance policies or annuity contracts) shall not apply in the circumstances described in paragraph (2), (3), (4) or (5).

(2) The circumstances described in this paragraph are that—

(a) the person entitled to the benefit is dead and the benefit is payable to a person other than his [^F34 widow, widower or surviving civil partner ^F34] ; and

(b) the arrangement for securing the pension credit benefit or its alternative was made at the request of the person entitled to it.

(3) The circumstances described in this paragraph are that the benefit is provided as an alternative to pension credit benefit by virtue of regulation 8(4) (bought out benefits without consent).

(4) The circumstances described in this paragraph are that—

(a) the scheme is being wound up;

(b) [^F35 sections 73 and 74 of the 1995 Act (preferential liabilities on winding up, and discharge of liabilities by insurance, etc. ) and the Occupational Pension Schemes (Winding Up) Regulations 1996 do not apply; ^F35]

[^F35 the winding up provisions (as defined in section 73B(10)(a) of the 1995 Act) and regulations made under those provisions do not apply; ^F35]

(c) the person entitled to the benefit is able to assign or surrender the insurance policy or the annuity contract; and

(d) the condition set out in section 101E(1)(a) of the 1993 Act is satisfied.

(5) The circumstances described in this paragraph are that—

(a) the trustees or managers of the scheme consider that, in the circumstances, it is reasonable for the scheme to provide the alternative without the consent of the person entitled to the benefit;

(b) the trustees or managers of the scheme give the person entitled to the benefit at least 30 days’ written notice of their intention to take out the insurance policy or enter into the annuity contract, unless the person entitled to the benefit exercises a right to give a transfer notice under section 101F of the 1993 Act (power to give transfer notice) (the first mentioned notice being [^F36 given in accordance with regulations 26 to 28 (giving information and documents) of the Occupational and Personal Pension Schemes (Disclosure of Information) Regulations 2013 ^F36] or delivered to that person personally); and

(c) when the trustees or managers of the scheme agree with the insurance company to take out the insurance policy or enter into the annuity contract, there is no outstanding transfer notice given by the person entitled to the benefit under section 101F of the 1993 Act.

(6) The payment made to the insurance company in the circumstances described in paragraph (5) must be at least an amount equal to the value of the pension credit benefit which has accrued to the person entitled to the benefit at the date the payment is made.

PART III TRANSFER VALUES

Transfer payments in respect of safeguarded rights—general

^F37 16. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Transfer payments to money purchase contracted-out schemes and appropriate schemes

^F38 17. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Transfer payments to salary related contracted-out schemes

^F39 18. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Transfer payments to overseas schemes or overseas arrangements

^F40 19. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Requirements to be met by annuities

^M20 20. [^F41 The prescribed ^F41] requirements referred to in section 101F(2)(b) of the 1993 Act (cash equivalent to be used for purchasing annuities) are those specified in regulation 15(2) to (7) of the Pension Sharing (Implementation and Discharge of Liability) Regulations 2000 (disqualification as a destination for pension credit—annuity contracts and insurance policies).

Requirements of other pension arrangements

21. —(1) The prescribed requirements referred to in section 101F(2)(c) and (3)(b) of the 1993 Act (cash equivalent of [^F42 pension credit rights ^F42] to be used to subscribe to other pension arrangements which satisfy prescribed requirements) are that the pension arrangement to which it is proposed to subscribe—

(a) is an overseas arrangement[^F43 or ^F43] ;

^F44 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(c) if the scheme from which rights are transferred is of a kind described in any of sub-paragraphs (a) to (e) of paragraph (2), satisfies the requirements of the Inland Revenue.

(2) The kinds of scheme mentioned in paragraph (1)(c) are—

(a) a scheme which is approved by the Inland Revenue for the purposes of Chapter I of Part XIV of the Taxes Act (pension schemes, social security benefits, life annuities etc : retirement benefit schemes);

(b) a scheme which is being considered for approval by the Inland Revenue for the purposes of Chapter I of Part XIV of the Taxes Act;

(c) ^M21 a relevant statutory scheme as defined in section 611A(1) (definition of relevant statutory scheme) of the Taxes Act;

(d) a fund to which section 608 of the Taxes Act (superannuation funds approved before 6th April 1980) applies; and

(e) a scheme which is approved by the Inland Revenue under Chapter IV of Part XIV of the Taxes Act.

(3) The prescribed circumstances referred to in section 101F(2)(c) and (3)(b) of the 1993 Act are those referred to in [^F45 paragraph (1)(c) ^F45] .

Requirements to be met by an eligible scheme

22. —(1) The prescribed requirements referred to in section 101F(6)(b) of the 1993 Act (references to an eligible scheme which satisfies the prescribed requirements) are that—

^F46 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) ^F47,F47 if the scheme from which pension credit rights are transferred or from which a transfer payment of such rights is made is of a kind described in ... paragraph (2) of regulation 21, the eligible scheme to which pension credit rights are transferred or to which a transfer payment in respect of those rights is made is [^F48 also ^F48] of a kind described in paragraph (2) ... of regulation 21.

(2) In this regulation “eligible scheme" means a scheme described in section 101F(6) of the 1993 Act.

[^F49 Written statement of the amount of the cash equivalent of the member’s pension credit rights ^F49]

23. —(1) Subject to paragraph (2), for the purposes of subsection (2)(a) of section 101H of the 1993 Act ( [^F50 benefits other than money purchase: statements of entitlement ^F50] ), the prescribed period beginning with the date of the eligible member’s application under that section for a [^F51 written statement of the amount of the cash equivalent of the member’s pension credit rights ^F51] is a period of 3 months.

[^F52 (1A) Where an eligible member has transferrable rights under Part IVA of the 1993 Act in relation to two categories of benefits other than money purchase benefits, the trustees or managers must provide the member with a written statement setting out a separate cash equivalent in relation to each of the categories of benefits, unless the member’s application relates to one of the categories of benefits only. ^F52]

^F53,F54 (2) Where the trustees or managers of the scheme are for reasons beyond their control unable within the period referred to in paragraph (1) ... to calculate the cash equivalent, the prescribed period is such longer period as they may reasonably require ..., provided that such longer period does not exceed 6 months beginning with the date of the eligible member’s application.

(3) For the purposes of subsection (2)(b) of section 101H of the 1993 Act, the prescribed period is the period of 10 days (excluding Saturdays, Sundays, Christmas Day, New Year’s Day and Good Friday) ending with the date on which the [^F55 written statement ^F55] is provided to the eligible member.

(4) For the purposes of subsection (3) of section 101H of the 1993 Act, an eligible member who has made an application under section 101H(1) of the 1993 Act for a [^F56 written statement ^F56] may not, within a period of 12 months beginning on the date of that application, make any further such application unless the rules of the scheme provide otherwise or the trustees or managers allow him to do so.

Manner of calculation and verification of cash equivalents

[^F57 24. —(1) Subject to paragraph (2), cash equivalents are to be calculated and verified in accordance with regulations 7 to 7E of the Transfer Values Regulations as appropriate.

(2) When calculating and verifying the cash equivalent, those Regulations are to be read as if—

(a) in regulation 1(2) (interpretation), there were inserted at the appropriate alphabetical places—

“ “eligible member” has the meaning given by section 101P(1) of the 1993 Act (interpretation); ” ; and

“ “valuation date” has the meaning given by section 101J(7) of the 1993 Act (time for compliance with transfer notice); ” ;

(b) in regulation 7(1) (manner of calculation and verification of cash equivalents – general provisions) , for “paragraphs (4) and (7)” there were substituted “paragraphs (4), (7) and (8)”;

(c) in regulations 7 to 7C and Schedule 1A, references to “member” were references to “eligible member”;

(d) after regulation 7(7), there were inserted—

“ (8) Cash equivalents are to be calculated and verified in relation to the valuation date. ” ;

(e) in regulation 7A(2), the reference to “guarantee date” was a reference to “valuation date”;

(f) [^F58 paragraph 7 ^F58] of Schedule 1A were omitted; and

(g) in paragraph 12 of Schedule 1A, the words “a cash equivalent mentioned in section 93A of the 1993 Act, before the guarantee date” were “a cash equivalent such as is mentioned in section 101H of the 1993 Act, before the valuation date”. ^F57]

Time period for notification to the Regulatory Authority of failure by the trustees or managers of an occupational pension scheme to comply with a transfer notice

25. The period prescribed for the purpose of section 101J(4)(a) of the 1993 Act (time for compliance with transfer notice) is the period of 21 days beginning with the day immediately following the end of the period for compliance specified in section 101J(1) of that Act.

Extension of time limits for payment of cash equivalents

26. [^F59—(1)^F59] The Regulatory Authority may grant an extension of the period mentioned in section 101J(1)(a) [^F60 or (b) ^F60] of the 1993 Act to the trustees or managers of an occupational pension scheme if the trustees or managers have within that period applied to the Regulatory Authority for an extension and—

(a) the Regulatory Authority is satisfied that—

(i) the scheme is being wound up or is about to be wound up;

^F61 (ii) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(iii) the interests of the members of the scheme generally will be prejudiced if the trustees or managers do what is needed to carry out what is required within that period;

(iv) the eligible member has not taken all such steps as the trustees or managers can reasonably expect in order to satisfy them of any matter which falls to be established before they can properly carry out what the eligible member requires;

(v) the trustees or managers have not been provided with such information as they reasonably require properly to carry out what the eligible member requires; or

(vi) the eligible member’s [^F62 written statement ^F62] has been reduced or increased under [^F63 regulation 28 ^F63] or the eligible member has disputed the amount of the cash equivalent;

(b) ^M22 the provisions of section 53 of the 1993 Act (supervision: former contracted-out schemes) apply; or

(c) an application has been made for an extension on one or more of the grounds specified in paragraph (a) or (b) and the Regulatory Authority’s consideration of the application cannot be completed before the end of the period mentioned in section 101J(1)(a) [^F60 or (b) ^F60] of the 1993 Act.

[^F64 (2) In this regulation—

“scheme reconciliation service” means the service set up by HMRC which allows schemes to compare the scheme’s records of members who have been contracted-out, and the value of members’ guaranteed minimum pensions, with HMRC’s records of the same, with a view to removing any errors in the scheme’s or HMRC’s records;

“section 9(2B) rights” has the meaning given in regulation 2(1) of the Occupational Pension Schemes (Schemes that were Contracted-out) (No.2) Regulations 2015 . ^F64]

Increases and reductions of cash equivalents before a statement of entitlement has been sent to the eligible member

^F65 27. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Increases and reductions of cash equivalents once the [^F66 written statement ^F66] has been sent to the eligible member

28. —(1) This regulation applies to a cash equivalent when a [^F67 written statement ^F67] has been sent to an eligible member[^F68 by the trustees or managers of a scheme ^F68] .

(2) Where all or any of the benefits to which the cash equivalent relates have been surrendered, commuted or forfeited before the date on which the trustees or managers do what is needed to carry out what the eligible member requires, that part of the cash equivalent which relates to the benefits so surrendered, commuted or forfeited shall be reduced to nil.

(3) Where a scheme has on or after the valuation date begun to be wound up, a cash equivalent may be reduced to the extent necessary for the scheme to comply with [[^F69,F70 sections 73 to 74 of the 1995 Act ^F70] and regulations made under those provisions ^F69] .

(4) If, by virtue of [^F71 regulations made under section 73B(4)(b)(i) of the 1995 Act by virtue of section 73B(5) of that Act, the winding up provisions (as so defined) apply ^F71] to a section of a scheme as if that section were a separate scheme, paragraph (3) shall apply as if that section were a separate scheme and as if the references therein to a scheme were accordingly references to that section.

(5) If an eligible member’s cash equivalent falls short of or exceeds the amount which it would have been had it been calculated in accordance with Chapter II of Part IVA of the 1993 Act and these Regulations it shall be increased or reduced to that amount.

(6) In a case where two or more of the paragraphs of this regulation fall to be applied to a calculation, they shall be applied in the order in which they occur in this regulation except that where paragraph (5) falls to be applied it shall be applied as at the date on which it is established that the cash equivalent falls short of or exceeds the proper amount.

Increases of cash equivalents on late payment

^F72 29. —(1) Subject to paragraph (2), if the trustees or managers of a scheme, having received an application under section 101F(1) of the 1993 Act (power to give transfer notice), fail to comply with the transfer notice within 6 months of the valuation date, the eligible member’s cash equivalent, as calculated in accordance with regulations 24 ... and 28, shall be increased by the amount, if any, by which that cash equivalent falls short of what it would have been if the valuation date had been the date on which the trustees or managers carry out what the eligible member requires.

^F72 (2) If the trustees or managers of a scheme, having received an application under section 101H of the 1993 Act, fail without reasonable excuse to do what is needed to carry out what the eligible member requires within 6 months of the valuation date, the eligible member’s cash equivalent, as calculated in accordance with regulations 24 ... and 28, shall be increased by—

(a) the interest on that cash equivalent calculated on a daily basis over the period from the valuation date to the date on which the trustees or managers carry out what the eligible member requires, at an annual rate of one per cent. above base rate; or, if it is greater,

(b) the amount, if any, by which that cash equivalent falls short of what it would have been if the valuation date had been the date on which the trustees or managers carry out what the eligible member requires.

Personal pension schemes: increases and reductions of cash equivalents

30. —(1) If the whole or any part of the cash equivalent of the [^F73 pension credit rights ^F73] under section 101F of the 1993 Act has been surrendered, commuted or forfeited before the date on which the trustees or managers comply with the transfer notice, the cash equivalent shall be reduced in proportion to the reduction in the total value of the benefits.

(2) If the trustees or managers of a personal pension scheme, having received a transfer notice under section 101F(1) of the 1993 Act, fail without reasonable excuse to comply with the transfer notice within 6 months of the valuation date, the eligible member’s cash equivalent shall be increased by—

(a) ^M23 the interest on that cash equivalent, calculated on a daily basis over the period from the date the notice is given until the date on which the trustees or managers carry out what the eligible member requires, at the same rate as that payable for the time being on judgment debts by virtue of section 17 of the Judgments Act 1838 ; or, if it is greater,

(b) the amount, if any, by which that cash equivalent falls short of what it would have been if the date on which the transfer notice is given had been the date on which the trustees or managers comply with it.

Civil Penalties

^M24 31. Where section 10 of the 1995 Act (civil penalties) applies by virtue of section 101H(4) or section 101J(4)(b) of the 1993 Act, the maximum amount for the purposes of section 10(1) of the 1995 Act shall be £1,000 in the case of an individual, and £10,000 in any other case.

PART IV INDEXATION

Increase of relevant pension

[^F74 32. —(1) Subject to regulations 33 and 34, a relevant pension shall be increased each year by either the appropriate percentage, or, where the rules of an occupational pension scheme require the relevant pension to be increased at intervals of not more than 12 months, the relevant percentage.

(2) A relevant pension shall not be increased under paragraph (1) if, under the rules of the occupational pension scheme, it is for the time being increased, and since the relevant date has always been increased, at intervals of not more than 12 months by at least—

(a) the percentage increase in the retail prices index for the reference period, being a period determined, in relation to each periodic increase, under the rules of the scheme; or

(b) if lower, the default percentage for that period.

(3) In paragraph (2), “the relevant date” means—

(a) 1st January 2011 or, if later, the date on which the relevant pension became a pension in payment; or

(b) if the relevant pension was transferred to the occupational pension scheme from another occupational pension scheme as a pension in payment after 1st January 2011, the date of the transfer.

(4) If the relevant pension was transferred to the occupational pension scheme as mentioned in paragraph (3)(b), paragraph (2) does not apply to the relevant pension unless, immediately before the transfer, paragraph (2) (read with this paragraph if relevant) applied to the relevant pension by reference to the scheme from which it was transferred.

(5) In this regulation the default percentage for a period is the percentage for that period which corresponds to—

(a) 5 per cent. per annum in a case where—

(i) the relevant pension is in payment before 6th April 2005; or

(ii) the relevant pension is not in payment before 6th April 2005 but the entitlement to the relevant pension credit arose before that day;

(b) 2.5 per cent. per annum in a case where the entitlement to the relevant pension credit arises on or after 6th April 2005.

(6) This regulation does not apply to a relevant pension provided to give effect to eligible pension credit rights of a member under a qualifying occupational pension scheme which—

(a) is a cash balance benefit; and

(b) first comes into payment on or after 6th April 2013.

(7) In this regulation—

“appropriate percentage” means—

for the latest revaluation period specified in the order under paragraph 2 of Schedule 3 to the 1993 Act (revaluation of accrued pension benefits) which is in force at the time of the increase (expressions used in this definition having the same meaning as in that paragraph);

“cash balance benefit” has the same meaning as in section 51ZB of the 1995 Act;

“consumer prices index” means—

“relevant percentage” means—

“retail prices index” means—

Annual increase in rate of pension: qualifying occupational and personal pension schemes

33. —(1) The first increase required by regulation 32 in the rate of a relevant pension must take effect not later than the first anniversary of the date on which the pension is first paid; and subsequent increases must take effect at intervals of not more than 12 months.

(2) Where the first such increase takes effect on a date when the pension has been in payment for a period of less than 12 months, the increase must be of an amount at least equal to one twelfth of the amount of the increase so required (apart from this paragraph) for each complete month in that period.

Effect of increase above the statutory requirement: qualifying occupational pension schemes

34. —(1) Where in any tax year the trustees or managers of a qualifying occupational pension scheme make an increase in a member’s pension which is a relevant pension, not being an increase required by regulation 32, they may deduct the amount of the increase from any increase which but for this paragraph, they would be required to make under that regulation in the next tax year.

(2) Where in any tax year the trustees or managers of such a scheme make an increase in a member’s pension which is a relevant pension, and part of the increase is not required by regulation 32, they may deduct that part of the increase from any increase which, but for this paragraph, they would be required to make under that regulation in the next tax year.

(3) Where by virtue of paragraph (1) or (2) any such pension is not required to be increased in pursuance of regulation 32, or not by the full amount that it otherwise would be, its amount shall be calculated for any purposes as if it had been increased in pursuance of regulation 32 or, as the case may be, by that full amount.

Definition of eligible pension credit rights

[^F75 35. —(1) For the purposes of section 40(3) of the 1999 Act, pension credit rights are eligible if they fall within paragraph (2) and are not excluded by paragraph (3).

(2) Pension credit rights are within this paragraph if—

(a) they are derived from rights attributable to pensionable service on or after 6th April 1997 of the member whose pension rights were the subject of a pension sharing order or provision; ^F76 ...

^F76 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) Excluded pension credit rights are—

(a) rights to pensions which are money purchase benefits and which become pensions in payment on or after 6th April 2005; or

(b) rights derived from additional voluntary contributions. ^F75]

Regulation 10(3)

[^F77 SCHEDULE Actuary’s certificate

Given for the purposes of regulation 10(3) of the Pension Sharing (Pension Credit Benefit) Regulations 2000. ^F77]

Explanatory Note

(This note is not part of the Regulations)