The Pension Protection Fund (Entry Rules) Regulations 2005

Schemes which are not eligible schemes E+W+S

2.—(1) For the purposes of section 126(1)(b) of the Act (eligible schemes), an occupational pension scheme is not an eligible scheme if it is—

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

(b) a scheme which is made under section 7 of the Superannuation Act 1972 M1 (superannuation of persons employed in local government service etc) which provides pensions to persons employed in local government service;

(c) a scheme which is made under section 2 of the Parliamentary and Other Pensions Act 1987 M2 (power to provide for pensions for Members of the House of Commons etc);

(ca) [F1 a scheme, provision for which is made by virtue of section 81(3) of the Scotland Act 1998 (remuneration of members of the Parliament and Executive);]

(d) a scheme in respect of which a relevant public authority has given a guarantee or made any other arrangements for the purposes of securing that the assets of the scheme are sufficient to meet its liabilities;

(e) F2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(f) a scheme which provides relevant benefits within the meaning of section 612(1) of the 1988 Act (interpretation) [F3 but which is neither a [F4 tax registered scheme] nor] a relevant statutory scheme within the meaning of section 611A of that Act M3 (definition of relevant statutory scheme);

[F5 (fa) a tax registered scheme which, immediately before 6th April 2006, was a former approved superannuation fund within the meaning of paragraph 1(1)(b) of Schedule 36 to the Finance Act 2004 (deemed registration of existing schemes);]

(g) a scheme—

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

(ii) which [F6 was not contracted-out at any time before the second abolition date]; and

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

(h) a scheme—

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

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

(i) a scheme with such a superannuation fund as is mentioned in section 615(6) of [F7 the 1988 Act]M4 (exemption from tax in respect of certain pensions);

(j) a scheme which does not have its main place of administration registered in the United Kingdom;

(k) a scheme with fewer than two members;

(l) a scheme with fewer than twelve members where all the members are trustees of the scheme and either—

[F8 (i) the provisions of the scheme provide that any decision made by the trustees is made by the unanimous agreement of the trustees who are members of the scheme; or]

(ii) the scheme has a trustee who is independent in relation to the scheme for the purposes of section 23 of the 1995 Act M5 (power to appoint independent trustees) and is registered in the register maintained by the Authority in accordance with regulations made under subsection (4) of that section;

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

[F9 (i) the provisions of the scheme provide that any decision made by the company in its capacity as trustee is made by the unanimous agreement of the directors of that company who are members of the scheme; or]

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

(n) the Chatsworth Settlement Estate Pension Scheme [F10 and];

F11 (o) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(p) a scheme which, on or after the day appointed for the purposes of section 126(2) of the ActM6 , does not have an employer in relation to the scheme and which has not been authorised under section 153 of the Act (closed schemes) to continue as a closed scheme.

[F12 (1A) Paragraph (1)(d) shall not apply in relation to a scheme where—

(a) the scheme was in existence immediately prior to IP completion day; and

(b) the application of paragraph (1)(d) immediately prior to IP completion day would have given rise to State aid that was incompatible with the internal market within the meaning of Article 107 of the Treaty as it had effect in the United Kingdom immediately prior to IP completion day.]

(2) Except as otherwise provided in [F13 paragraphs (3) and (4)] of this regulation, an occupational pension scheme which would be an eligible scheme but for this paragraph is not an eligible scheme where, at any time, the trustees or managers of the scheme enter into a legally enforceable agreement F14 ... the effect of which is to reduce the amount of any debt due to the scheme F15 ... under section 75 of the 1995 Act which may be recovered by, or on behalf of, those trustees or managers.

[F16 (2A) Except as otherwise provided in paragraphs (3) and (4) of this regulation, an occupational pension scheme which becomes an eligible scheme in accordance with regulation 43(1)(b) of the Pensions Act 2011 (Transitional, Consequential and Supplementary Provisions) Regulations 2014 (eligibility: schemes treated as money purchase schemes) is not an eligible scheme if—

(a) the trustees or managers of the scheme during the period beginning with the appointed day and ending immediately before 1st April 2015 have entered into a legally enforceable agreement; and

(b) the effect of that agreement (at any time) is to reduce the amount of any debt due to the scheme under section 75 of the 1995 Act (deficiencies in the assets) which may be recovered by, or on behalf of, the trustees or managers of the scheme.]

(3) [F17 paragraphs (2) and (2A)] shall not apply where—

(a) before the beginning of an assessment period—

(i) the trustees or managers of the scheme enter into a legally enforceable agreement F18 ... the effect of which is to reduce the amount of the debt due to the scheme F19 ... under [F20 section 75] of the 1995 Act which may be recovered by, or on behalf of, those trustees or managers;

(ii) the value of the scheme's assets would be sufficient to secure benefits for or in respect of members of the scheme which correspond to the amount of compensation which would be payable in relation to the scheme in accordance with the pension compensation provisions if the Board were to assume responsibility for the scheme in accordance with Chapter 3 of Part 2 of the Act (pension protection);

(iii) an individual appointed to act as the actuary in relation to the scheme (“the actuary”) has provided the Board with a written estimate of the current value of the assets and the protected liabilities of the scheme together with a statement about the effect which the agreement would have on the value of the scheme's assets as recorded in that estimate; and

(iv) the Board has determined to validate the estimate and statement provided;

(b) before the beginning of an assessment period, the trustees or managers of the scheme enter into a legally enforceable agreementF21 ..., as part of an arrangement under section 425 of the Companies Act 1985 M7 (power of company to compromise with creditors or members), the effect of which is to reduce the amount of the debt due to the scheme F22 ... under [F23 section 75] of the 1995 Act which may be recovered by, or on behalf of, those trustees or managers; or

(c) after the beginning of an assessment period, or a further assessment periodM8 , the Board F24 ... and has entered into a legally enforceable agreement F25 ... on behalf of the trustees or managers of the scheme the effect of which is to reduce the amount of the debt due to the scheme F26 ... under [F27 section 75] of the 1995 Act which may be recovered by, or on behalf of, those trustees or managers.

[F28 (4) [F29 paragraphs (2) and (2A)] shall not apply in relation to an eligible scheme where before the beginning of an assessment period in relation to the scheme any of the following is in place—

(a) a scheme apportionment arrangement under the Occupational Pension Schemes (Employer Debt) Regulations 2005;

(b) a regulated apportionment arrangement under those Regulations;

(c) a withdrawal arrangement under those Regulations;

(d) an approved withdrawal arrangement under those Regulations.]

[F30 (e) a restructuring within regulation 6ZB or 6ZC of those Regulations.]

[F31 (f) a flexible apportionment arrangement within regulation 6E of those Regulations.]

(5) Where the Board has determined to validate or not to validate an estimate and statement provided to it by the actuary under paragraph (3)(a)(iii), it must issue a notice to this effect (“a validation notice”) and must give a copy of that notice to—

(a) the trustees or managers of the scheme,

(b) the actuary, [F32 and]

[F33 (c) the Regulator.]

F33 (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6) A notice issued by the Board under paragraph (5) shall be in writing and shall contain the following information—

(a) the name or type of the notice issued;

(b) the date on which the notice is issued;

(c) the date on which the Board received the estimate and statement from the actuary;

(d) the Board's determination to validate or not to validate the estimate and statement received from the actuary;

(e) a statement of reasons for the Board's determination;

(f) the address for communications at which the Board may be contacted in connection with the issue of the notice;

(g) whether the issue of the notice by the Board is a reviewable matter and, if so, the time limit for applying for a review of or appeal against the issue of the notice;

(h) the date on which the notice issued will become binding; and

(i) whether or not the notice issued contains any restricted information and, if so, the nature of the restrictions.

(7) The Board's determination to validate or not to validate the estimate and statement provided to it by the actuary under paragraph (3)(a)(iii) above does not take effect—

(a) until—

(i) the Board has issued a notice under paragraph (5) relating to the determination, and

(ii) the period within which the issue of that notice may be reviewed by virtue of Chapter 6 of Part 2 of the Act (reviews, appeals and maladministration) has expired, and

(b) if the issue of the notice was so reviewed, until—

(i) the review and any reconsideration,

(ii) any reference to the PPF Ombudsman in respect of the issue of the notice, and

(iii) any appeal against his determination or directions,

has been finally disposed of.

[F34 (8) In this regulation—

[F35 “contracted-out” is to be construed in accordance with section 7B(2) (meaning of “contracted-out scheme” etc.) of the Pension Schemes Act 1993;]

“PPF Ombudsman” has the meaning given in section 209 of the Act (the Ombudsman for the Board of the Pension Protection Fund); and

[F36 “the second abolition date” has the meaning given in section 181(1) (general interpretation) of the Pension Schemes Act 1993;]

“the Treaty” means the Treaty on the Functioning of the European Union.]

[F37 (9) In their application to a segregated scheme, paragraphs (2) to (7) shall have effect as if each section of the scheme were a separate scheme.]

Textual Amendments

F1 Reg. 2(1)(ca) inserted (1.9.2009) by The Occupational Pension Schemes (Scottish Parliamentary Pensions Act 2009) Regulations 2009 (S.I. 2009/1906), reg. 1, Sch. para. 2

F2 Reg. 2(1)(e) revoked (1.4.2005) by The Occupational Pension Schemes and Pension Protection Fund (Amendment) Regulations 2005 (S.I. 2005/993), regs. 1(1), 4(a)(i)

F3 Words in reg. 2(1)(f) substituted (1.4.2005) by The Occupational Pension Schemes and Pension Protection Fund (Amendment) Regulations 2005 (S.I. 2005/993), regs. 1(1), 4(a)(ii)

F4 Words in reg. 2(1)(f) substituted (6.4.2006) by The Pension Protection Fund (General and Miscellaneous Amendments) Regulations 2006 (S.I. 2006/580), regs. 1(1)(b), 21(3)(a)

F5 Reg. 2(1)(fa) inserted (6.4.2007) by The Pension Protection Fund (Miscellaneous Amendments) Regulations 2007 (S.I. 2007/782), regs. 1(1), 2(2)(a)

F6 Words in reg. 2(1)(g)(ii) substituted (6.4.2016) by The Pensions Act 2014 (Abolition of Contracting-out for Salary Related Pension Schemes) (Consequential Amendments and Savings) Order 2016 (S.I. 2016/200), arts. 1(2), 20(a)

F7 Words in reg. 2(1)(i) substituted (1.4.2005) by The Occupational Pension Schemes and Pension Protection Fund (Amendment) Regulations 2005 (S.I. 2005/993), regs. 1(1), 4(a)(iii)

F8 Reg. 2(1)(l)(i) substituted (6.4.2007) by The Pension Protection Fund (Miscellaneous Amendments) Regulations 2007 (S.I. 2007/782), regs. 1(1), 2(2)(b)

F9 Reg. 2(1)(m)(i) substituted (6.4.2007) by The Pension Protection Fund (Miscellaneous Amendments) Regulations 2007 (S.I. 2007/782), regs. 1(1), 2(2)(c)

F10 Word in reg. 2(1)(n) inserted (6.4.2006) by The Pension Protection Fund (General and Miscellaneous Amendments) Regulations 2006 (S.I. 2006/580), regs. 1(1)(b), 21(3)(b)

F11 Reg. 2(1)(o) omitted (6.4.2006) by virtue of The Pension Protection Fund (General and Miscellaneous Amendments) Regulations 2006 (S.I. 2006/580), regs. 1(1)(b), 21(3)(c)

F12 Reg. 2(1A) substituted (31.12.2020) by The State Aid (Revocations and Amendments) (EU Exit) Regulations 2020 (S.I. 2020/1470), reg. 1(2), Sch. 2 para. 9(2) (with Sch. 3)

F13 Words in reg. 2(2) substituted (1.4.2005) by The Occupational Pension Schemes and Pension Protection Fund (Amendment) Regulations 2005 (S.I. 2005/993), regs. 1(1), 4(a)(iv)

F14 Words in reg. 2(2) omitted (24.8.2005) by virtue of The Pension Protection Fund (Entry Rules) Amendment Regulations 2005 (S.I. 2005/2153), regs. 1(1), 2(3)(a)

F15 Words in reg. 2(2) omitted (24.8.2005) by virtue of The Pension Protection Fund (Entry Rules) Amendment Regulations 2005 (S.I. 2005/2153), regs. 1(1), 2(3)(b)

F16 Reg. 2(2A) inserted (24.7.2014) by The Pensions Act 2011 (Transitional, Consequential and Supplementary Provisions) Regulations 2014 (S.I. 2014/1711), regs. 1(1), 58(3) (with regs. 6, 41, 44(1), 47(1), 69(2), 72(1), 76(1)); coming into force immediately after s. 29 of 2011 c 19 - see S.I. 2014/1683, art. 2

F17 Words in reg. 2(3) substituted (24.7.2014) by The Pensions Act 2011 (Transitional, Consequential and Supplementary Provisions) Regulations 2014 (S.I. 2014/1711), regs. 1(1), 58(4) (with regs. 6, 41, 44(1), 47(1), 69(2), 72(1), 76(1)); coming into force immediately after s. 29 of 2011 c 19 - see S.I. 2014/1683, art. 2

F18 Words in reg. 2(3)(a)(i) omitted (24.8.2005) by virtue of The Pension Protection Fund (Entry Rules) Amendment Regulations 2005 (S.I. 2005/2153), regs. 1(1), 2(3)(a)

F19 Words in reg. 2(3)(a)(i) omitted (24.8.2005) by virtue of The Pension Protection Fund (Entry Rules) Amendment Regulations 2005 (S.I. 2005/2153), regs. 1(1), 2(3)(b)

F20 Words in reg. 2(3)(a)(i) substituted (24.8.2005) by The Pension Protection Fund (Entry Rules) Amendment Regulations 2005 (S.I. 2005/2153), regs. 1(1), 2(3)(d)

F21 Words in reg. 2(3)(b) omitted (24.8.2005) by virtue of The Pension Protection Fund (Entry Rules) Amendment Regulations 2005 (S.I. 2005/2153), regs. 1(1), 2(3)(a)

F22 Words in reg. 2(3)(b) omitted (24.8.2005) by virtue of The Pension Protection Fund (Entry Rules) Amendment Regulations 2005 (S.I. 2005/2153), regs. 1(1), 2(3)(b)

F23 Words in reg. 2(3)(b) substituted (24.8.2005) by The Pension Protection Fund (Entry Rules) Amendment Regulations 2005 (S.I. 2005/2153), regs. 1(1), 2(3)(d)

F24 Words in reg. 2(3)(c) omitted (24.8.2005) by virtue of The Pension Protection Fund (Entry Rules) Amendment Regulations 2005 (S.I. 2005/2153), regs. 1(1), 2(3)(c)(i)

F25 Words in reg. 2(3)(c) omitted (24.8.2005) by virtue of The Pension Protection Fund (Entry Rules) Amendment Regulations 2005 (S.I. 2005/2153), regs. 1(1), 2(3)(c)(ii)

F26 Words in reg. 2(3)(c) omitted (24.8.2005) by virtue of The Pension Protection Fund (Entry Rules) Amendment Regulations 2005 (S.I. 2005/2153), regs. 1(1), 2(3)(b)

F27 Words in reg. 2(3)(c) substituted (24.8.2005) by The Pension Protection Fund (Entry Rules) Amendment Regulations 2005 (S.I. 2005/2153), regs. 1(1), 2(3)(e)

F28 Reg. 2(4) substituted (6.4.2008) by The Occupational Pension Schemes (Employer Debt and Miscellaneous Amendments) Regulations 2008 (S.I. 2008/731), regs. 2(1), 18 (with reg. 2(3)-(8))

F29 Words in reg. 2(4) substituted (24.7.2014) by The Pensions Act 2011 (Transitional, Consequential and Supplementary Provisions) Regulations 2014 (S.I. 2014/1711), regs. 1(1), 58(4) (with regs. 6, 41, 44(1), 47(1), 69(2), 72(1), 76(1)); coming into force immediately after s. 29 of 2011 c 19 - see S.I. 2014/1683, art. 2

F30 Reg. 2(4)(e) inserted (6.4.2010) by The Occupational Pension Schemes (Employer Debt and Miscellaneous Amendments) Regulations 2010 (S.I. 2010/725), regs. 1(2), 3(3)

F31 Reg. 2(4)(f) inserted (27.1.2012) by The Occupational Pension Schemes (Employer Debt and Miscellaneous Amendments) Regulations 2011 (S.I. 2011/2973), regs. 1(2), 3(3)

F32 Word in reg. 2(5)(b) added (24.8.2005) by The Pension Protection Fund (Entry Rules) Amendment Regulations 2005 (S.I. 2005/2153), regs. 1(1), 2(3)(f)(i)

F33 Reg. 2(5)(c) substituted for reg. 2(5)(c)-(d) (24.8.2005) by The Pension Protection Fund (Entry Rules) Amendment Regulations 2005 (S.I. 2005/2153), regs. 1(1), 2(3)(f)(ii)

F34 Reg. 2(8) substituted (8.3.2010) by The Pension Protection Fund and Occupational Pension Schemes (Miscellaneous Amendments) Regulations 2010 (S.I. 2010/196), regs. 1, 3(2)(b)

F35 Words in reg. 2(8) inserted (6.4.2016) by The Pensions Act 2014 (Abolition of Contracting-out for Salary Related Pension Schemes) (Consequential Amendments and Savings) Order 2016 (S.I. 2016/200), arts. 1(2), 20(b)(ii)

F36 Words in reg. 2(8) inserted (6.4.2016) by The Pensions Act 2014 (Abolition of Contracting-out for Salary Related Pension Schemes) (Consequential Amendments and Savings) Order 2016 (S.I. 2016/200), arts. 1(2), 20(b)(i)

F37 Reg. 2(9) added (24.8.2005) by The Pension Protection Fund (Entry Rules) Amendment Regulations 2005 (S.I. 2005/2153), regs. 1(1), 2(3)(g)

Commencement Information

I1 Reg. 2 wholly in force at 6.4.2005; reg. 2 not in force at made date; reg. 2 in force at 1.4.2005 for certain purposes and reg. 2 in force at 6.4.2005 in so far as not already in force see reg. 1(2)(a)(b)

Marginal Citations

M1 1972 c. 11.

M2 1987 c. 45.

M3 Section 611A of the Income and Corporation Taxes Act 1988 was inserted by section 75 of, and paragraphs 1, 15 and 18(1) of Part 1 of Schedule 6 to, the Finance Act 1988 (c. 36).

M4 Section 615(6) of the Income and Corporation Taxes Act 1988 has effect in relation to trust based occupational pension schemes established in respect of persons wholly employed in a trade or undertaking outside of the United Kingdom.

M5 Section 23 of the 1995 Act is substituted by section 36(3) of the Pensions Act 2004.

M6 See Article 2 of the Pension Protection Fund (Eligible Schemes) Appointed Day Order 2005 (S.I. 2005/599) which provides that the day appointed is 6th April 2005.

M7 1985 c. 6. Section 425 was amended by section 248(3) of, and paragraphs 3 and 5 of Schedule 17 to, the Enterprise Act 2002 (c. 40).

M8 See section 159 of the Pensions Act 2004 which makes provision in respect of further assessment periods in respect of schemes which are authorised under section 153 of that Act to continue as closed schemes.