The Pensions (2012 Act) (Transitional, Consequential and Supplementary Provisions) Regulations (Northern Ireland) 2014

PART 8 N.I. Transfers

Interpretation N.I.

28.  In this Part “ the Transfer Values Regulations” means the Occupational Pension Schemes (Transfer Values) Regulations (Northern Ireland) 1996 M1 .

Marginal Citations

M1 S.R 1996 No. 619; relevant amending provisions are S.R. 2008 Nos. 370 and 388 and S.R. 2012 No. 124

Cash equivalent of cash balance benefits etc treated as money purchase benefits: transitional arrangements N.I.

29.—(1) This regulation applies where—

(a) a member of an occupational pension scheme has, under the applicable rules, accrued rights to cash balance benefits, a defined benefit minimum (in relation to money purchase underpin benefits or cash balance underpin benefits) or top-up benefits, and

(b) the pensionable service of the member has terminated before the appointed day.

(2) Where the conditions specified in paragraph (3) are met—

(a) the cash equivalent of the member's benefits specified in paragraph (1)(a) which were treated as money purchase benefits is to be calculated as if those benefits were money purchase benefits;

(b) the member acquires a right to the cash equivalent of those benefits as if section 90(1)(a) M2 of the 1993 Act (right to cash equivalent) applied;

(c) a member who acquires a right to a cash equivalent of those benefits in accordance with sub-paragraph (b) may require the trustees or managers of the scheme to use the cash equivalent in any of the ways specified in section 91(2) M3 of the 1993 Act (ways of taking right to cash equivalent);

(d) an application to use the cash equivalent in accordance with sub-paragraph (c) must be made to the trustees or managers of the scheme in writing and is subject to the provisions of sections 92 M4 to 95 of the 1993 Act, and

(e) a member may withdraw an application made in accordance with sub-paragraph (d) by giving the trustees or managers of the scheme notice in writing, in accordance with the provisions of section 96 M5 of the 1993 Act (withdrawal of application).

(3) The conditions specified in this paragraph are that before the appointed day—

(a) the trustees or managers of the scheme treated benefits specified in paragraph (1)(a) accrued by a member as if they were money purchase benefits;

(b) the member has made an application to the trustees or managers of the scheme for a written statement of entitlement of the amount of the cash equivalent of those benefits (whether or not the application also relates to other benefits) in accordance with section 89A(1) M6 of the 1993 Act (salary related schemes: right to statement of entitlement), and

(c) the member has been treated as acquiring a right to the cash equivalent of those benefits in accordance with section 90(1)(a) of the 1993 Act (including in a case where section 90(1)(a) of that Act is modified by regulation 19(2)(b) of the Transfer Values Regulations) (hybrid schemes).

(4) Where—

(a) the conditions specified in paragraph (3) are met, and

(b) the trustees or managers of the scheme have (at any time) used the cash equivalent of those benefits treated as money purchase benefits in any of the ways specified in section 91(2) of the 1993 Act,

they are discharged from the obligation to provide the benefits to which that cash equivalent value relates, as if section 95(1) of that Act (trustees' duties after exercise of option) applied.

Marginal Citations

M2 Section 90(1) was amended by Article 150(1) and (2) of the Pensions (Northern Ireland) Order 1995

M3 Section 91(2) was amended by Article 133 of S.I. 2001/3649

M4 Section 92 was amended by paragraph 53 of Schedule 3 to the Pensions (Northern Ireland) Order 1995, paragraph 25 of Schedule 9 and Part 1 of Schedule 10 to the Welfare Reform and Pensions (Northern Ireland) Order 1999, Part 6 of Schedule 6 to the Pensions Act (Northern Ireland) 2008, paragraph 14 of the Schedule to S.R. 2005 No. 434 and Article 4 of S.R. 2012 No. 124. Section 93 was amended by paragraph 6 of Schedule 4 to the Pensions (Northern Ireland) Order 1995 and paragraphs 5 and 7 of Schedule 5 to the Child Support, Pensions and Social Security Act (Northern Ireland) 2000. Section 94 was amended by paragraph 7 of Schedule 4 to the Pensions (Northern Ireland) Order 1995, paragraph 26 of Schedule 9 to the Welfare Reform and Pensions (Northern Ireland) Order 1999 and paragraph 5 of Schedule 5 and Part 3 of Schedule 9 to the Child Support, Pensions and Social Security Act (Northern Ireland) 2000. Section 95 was amended by paragraph 8 of Schedule 4 to the Pensions (Northern Ireland) Order 1995, paragraph 10 of Schedule 10 and Schedule 11 to the Pensions (Northern Ireland) Order 2005 and Article 4 of S.R. 2012 No. 124

M5 Section 96 was amended by paragraph 27 of Schedule 9 to the Welfare Reform and Pensions (Northern Ireland) Order 1999

M6 Section 89A was inserted by Article 149 of the Pensions (Northern Ireland) Order 1995 and amended by paragraph 23 of Schedule 9 to the Welfare Reform and Pensions (Northern Ireland) Order 1999

Statement of entitlement in relation to cash balance benefits etc treated as money purchase benefits: periods before the appointed day N.I.

30.—(1) Where the conditions specified in paragraph (2) are met—

(a) section 89A(1) of the 1993 Act does not, in relation to any period before the appointed day, require the trustees or managers of an occupational pension scheme to provide a statement of entitlement in respect of cash balance benefits, a defined benefit minimum (in relation to money purchase underpin benefits or cash balance underpin benefits) or top-up benefits which were treated as money purchase benefits;

(b) section 89A(4) of the 1993 Act does not apply in relation to a failure to provide a statement of entitlement occurring before the appointed day, and

(c) regulation 6(3) of the Transfer Values Regulations (guaranteed statements of entitlement) does not prevent the member making a further application under section 89A(1) of the 1993 Act for a statement of entitlement within a period of 12 months beginning on the date of an application by the member where the condition specified in paragraph (2)(a) of this regulation applies.

(2) The conditions specified in this paragraph are that before the appointed day—

(a) the trustees or managers of an occupational pension scheme have not, on the application of a member of the scheme made in accordance with section 89A(1) of the 1993 Act, provided the member with a statement of entitlement of the amount of the cash equivalent of cash balance benefits, a defined benefit minimum (in relation to money purchase underpin benefits or cash balance underpin benefits) or top-up benefits which have accrued to or in respect of the member under the applicable rules, and

(b) the trustees or managers of the scheme did not provide a statement of entitlement because, at the time that they received the application, those benefits were treated by the trustees or managers as money purchase benefits.

Amendment of the Transfer Values Regulations N.I.

31.—(1) The Transfer Values Regulations are amended in accordance with paragraphs (2) to (7).

(2) In regulation 1(2) (interpretation)—

(a) after the definition of “base rate” insert—

““cash balance benefit” has the meaning given by regulation 2 of the Pensions (2012 Act) (Transitional, Consequential and Supplementary Provisions) Regulations (Northern Ireland) 2014;”;

(b) after the definition of “effective date”M7 insert—

““final salary”, in relation to a member to or in respect of whom benefits under a pension scheme are payable, means the member's pensionable earnings, or highest, average or representative pensionable earnings, in a specified period ending at, or defined by reference to, the time when the member's pensionable service in relation to that scheme ends;”;

(c) after the definition of “member”M8 insert—

““pensionable earnings”, in relation to a member of a pension scheme, means earnings by reference to which benefits under the scheme are calculated;”.

(3) In regulation 7 M9 (manner of calculation and verification of cash equivalents – general provisions)–—

(a) in paragraph (1)(a)(i) after “salary related benefits” insert “ other than cash balance benefits in respect of which the available sum is not calculated by reference to final salary ”;

(b) in paragraph (1)(a)(ii) after “money purchase benefits” insert “ and cash balance benefits in respect of which the available sum is not calculated by reference to final salary ”;

(c) for paragraph (5) substitute—

“(5) Where a portion of the cash equivalent relates to a benefit specified in paragraph (1)(a)(i) and a portion relates to a benefit specified in paragraph (1)(a)(ii), the initial cash equivalent is to be calculated—

(a) for the portion falling within paragraph (1)(a)(i), in accordance with regulations 7A and 7B M10 ; and

(b) for the portion falling within paragraph (1)(a)(ii), in accordance with regulation 7C M11 .”.

(4) In regulation 7A (manner of calculation of initial cash equivalents for salary related benefits)—

(a) in the heading at the end insert “ other than cash balance benefits not calculated by reference to final salary ”;

(b) in paragraph (1) after “salary related benefits” insert “ other than cash balance benefits in respect of which the available sum is not calculated by reference to final salary ”.

(5) In regulation 7B (initial cash equivalents for salary related benefits: assumptions and guidance)—

(a) in the heading after “salary related benefits” insert “ other than cash balance benefits not calculated by reference to final salary ”;

(b) in paragraph (1) after “salary related benefits” insert “ other than cash balance benefits in respect of which the available sum is not calculated by reference to final salary ”.

(6) In regulation 7C (manner of calculation of initial cash equivalents for money purchase benefits)—

(a) in the heading at the end insert “ and cash balance benefits not calculated by reference to final salary ”;

(b) in paragraph (1) after “For” insert “ cash balance benefits in respect of which the available sum is not calculated by reference to final salary and ”;

(c) for paragraph (4) substitute—

“(4) The realisable value must include—

(a) for money purchase benefits, any increases to the benefits resulting from a payment of interest made in accordance with the scheme rules; or

(b) for cash balance benefits—

(i) any interest (including notional interest) which, in accordance with the scheme rules, applies to the available sum in respect of which the benefits are calculated;

(ii) any guarantee which, in accordance with the scheme rules, applies to the available sum in respect of the benefits or to the contributions made by the member or by another person in respect of the member;

(iii) any options the member has which would increase the value of the member's benefits under the scheme (adjusted to reflect the proportion of members that the trustees determine are likely to exercise those options); and

(iv) any discretionary benefits which the trustees determine should be taken into account, having regard to any established custom for awarding the benefits and any requirement for consent before they are awarded.”.

(7) In regulation 7D (reductions to initial cash equivalents)—

(a) in paragraph (1) for “An initial” substitute “ For salary-related benefits an initial, ”;

(b) for paragraphs (2) and (3) substitute—

“(2) For the purposes of paragraph (1), the trustees may—

(a) request an insufficiency report from the actuary in accordance with Schedule 1B M12 (insufficiency reports); or

(b) treat the actuary's last relevant GN11 report as an insufficiency report.

(3) For money purchase benefits, an initial cash equivalent may, or as the case may be, must be reduced in accordance with paragraphs 7 to 11, 14 and 15 of Schedule 1A M13 (reductions in initial cash equivalents).”.

Marginal Citations

M7 The definition of “effective date” was substituted by regulation 2(d) of S.R. 2008 No. 370

M8 The definition of “member” was substituted by regulation 2(f) of S.R. 2008 No. 370

M9 Regulations 7 to 7E were substituted for regulations 7 and 8 by regulation 4 of S.R. 2008 No. 370

M10 Regulation 7B was amended by regulation 3(2) of S.R. 2008 No. 388

M11 Regulation 7C was amended by regulation 3(3) of S.R. 2008 No. 388

M12 Schedule 1B was inserted by Schedule 1 to S.R. 2008 No. 388

M13 Schedule 1A was inserted by regulation 8 of S.R. 2008 No. 388 and paragraph 9 was omitted by Article 14(3) of S.R. 2012 No. 124 with effect from 6th April 2012