The Pension Protection Fund (Compensation) Regulations (Northern Ireland) 2005

Application of compensation cap where compensation becomes payable on different dates

20.—(1) Paragraph 26 of Schedule 6 (compensation cap) applies with the modification specified in paragraph (3) where a person becomes entitled to relevant compensation in respect of a benefit (“benefit A”) and he has previously –

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

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

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

(3) For the purposes of paragraph (1), paragraph 26 of Schedule 6 shall have effect as if after sub-paragraph (6) there were inserted –

“(6A) Where sub-paragraph (6B) applies, sub-paragraphs (6C) and (6D) apply instead of sub-paragraph (1).

(6B) This sub-paragraph applies if, before the person becomes entitled to relevant compensation in respect of benefit A, he has –

(a) become entitled to relevant compensation in respect of one or more other benefits under the scheme or a connected occupational pension scheme (“benefit or benefits C”), or

(b) become entitled to one or more lump sums under the scheme or a relevant connected occupational pension scheme (“sum or sums L”),

and for the purposes of paragraph (b) a scheme is a relevant connected occupational pension scheme if it is an eligible scheme when the person becomes entitled to the relevant compensation in respect of benefit A.

(6C) If the previous aggregate cap percentage is or exceeds 100, no relevant compensation is payable in respect of benefit A.

(6D) If the previous aggregate cap percentage is less than 100 –

(a) the amount of the compensation in respect of benefit A, and

(b) the amount of any payments by way of periodic compensation for benefit or benefits C that are payable on or after the assessment date for the relevant compensation in respect of benefit A,

must be restricted in accordance with sub-paragraph (6H).

(6E) For the purposes of this paragraph, “the previous aggregate cap percentage” means the aggregate of –

(a) the cap percentage for the relevant compensation in the case of each of benefit or benefits C, and

(b) the cap percentage in the case of each of sum or sums L.

(6F) For the purposes of this paragraph, “the cap percentage”, in the case of any relevant compensation or lump sum, means –

where –

• AAV is the appropriate annual value, and

• ACC is the appropriate compensation cap.

(6G) “the appropriate annual value” means –

(a)

in the case of each of benefit A, benefit or benefits B and benefit or benefits C, the annual value of that benefit at the time when the relevant compensation becomes or, in the case of periodic compensation, first becomes payable, and

(b)

in the case of each of sum or sums L –

(i)

if the person became entitled to that sum on or after 6th April 2005, the annualised value of that sum at the time that sum became payable, and

(ii)

otherwise, the annualised value of that sum on 6th April 2005 (calculated on the assumption that on that date the person was the same age as when he became entitled to that sum);

“the appropriate compensation cap” means –

(a)

in the case of each of benefit A, benefit or benefits B and benefit or benefits C, the compensation cap at the time when the person becomes entitled to relevant compensation in respect of the benefit, and

(b)

in the case of each of sum or sums L –

(i)

if the person became entitled to that sum on or after 6th April 2005, the compensation cap at the time when he became so entitled, and

(ii)

otherwise, the compensation cap on 6th April 2005.

In sub-paragraph (6F) –

(6H) Where sub-paragraph (6D) applies –

(a) the relevant compensation in respect of benefit A is required to be restricted in accordance with sub-paragraph (3), but taking references in that sub-paragraph to the cap fraction as references to the revised cap fraction, and

(b) the amount of any payments by way of periodic compensation for benefit or benefits C payable on or after the assessment date for the relevant compensation in respect of benefit A is required to be restricted to the revised cap fraction of the amount that would be payable apart from this sub-paragraph.

(6I) For the purposes of this paragraph, “the revised cap fraction” means –

• 100/the aggregate cap percentage.

(6J) For the purposes of this paragraph, “the aggregate cap percentage” means the aggregate of –

(a) the previous aggregate cap percentage,

(b) the cap percentage for the relevant compensation in the case of benefit A, and

(c) in a case within sub-paragraph (2)(b)(i), the cap percentage for the relevant compensation in the case of each of benefit or benefits B.”.