PART VPENSION SHARING

CHAPTER ISHARING OF RIGHTS UNDER PENSION ARRANGEMENTS

Pension debits

Reduction of benefit28.

(1)

Subject to paragraph (2), where a person’s shareable rights under a pension arrangement are subject to a pension debit, each benefit or future benefit—

(a)

to which he is entitled under the arrangement by virtue of those rights, and

(b)

which is a qualifying benefit,

is reduced by the appropriate percentage.

(2)

Where a pension debit relates to the shareable rights under an occupational pension scheme of a person who is in pensionable service under the scheme on the transfer day, each benefit or future benefit—

(a)

to which the person is entitled under the scheme by virtue of those rights, and

(b)

which corresponds to a qualifying benefit,

is reduced by an amount equal to the appropriate percentage of the corresponding qualifying benefit.

(3)

A benefit is a qualifying benefit for the purposes of paragraphs (1) and (2) if the cash equivalent by reference to which the amount of the pension debit is determined includes an amount in respect of it.

(4)

The provisions of this Article override any provision of a pension arrangement to which they apply to the extent that the provision conflicts with them.

(5)

In this Article—

  • “appropriate percentage”, in relation to a pension debit, means—

    1. (a)

      if the relevant order or provision specifies the percentage value to be transferred, that percentage;

    2. (b)

      if the relevant order or provision specifies an amount to be transferred, the percentage which the appropriate amount for the purposes of paragraph (1) of Article 26 represents of the amount mentioned in paragraph (3)(b) of that Article;

  • “relevant order or provision”, in relation to a pension debit, means the pension sharing order or provision on which the debit depends;

  • “transfer day”, in relation to a pension debit, means the day on which the relevant order or provision takes effect.

Effect on contracted-out rights29.

(1)

The Pension Schemes Act shall be amended as follows.

(2)

In section 6 (protected rights), in subsection (1), for

  • “subsections (2) and (3)” there shall be substituted “the following provisions of this section”, and at the end there shall be added—

    “(4)

    Where, in the case of a scheme which makes such provision as is mentioned in subsection (2) or (3), a member’s rights under the scheme become subject to a pension debit, his protected rights shall exclude the appropriate percentage of the rights which were his protected rights immediately before the day on which the pension debit arose.

    (5)

    For the purposes of subsection (4), the appropriate percentage is—

    (a)

    if the order or provision on which the pension debit depends specifies the percentage value to be transferred, that percentage;

    (b)

    if the order or provision on which the pension debit depends specifies an amount to be transferred, the percentage which the appropriate amount for the purposes of paragraph (1) of Article 26 of the Welfare Reform and Pensions (Northern Ireland) Order 1999 (lesser of specified amount and cash equivalent of transferor’s benefits) represents of the amount mentioned in paragraph (3)(b) of that Article (cash equivalent of transferor’s benefits).”.

(3)

After section 11 there shall be inserted—

“Reduction of guaranteed minimum in consequence of pension debit.11A.

(1)

Where—

(a)

an earner has a guaranteed minimum in relation to the pension provided by a scheme, and

(b)

his right to the pension becomes subject to a pension debit,

his guaranteed minimum in relation to the scheme is, subject to subsection (2), reduced by the appropriate percentage.

(2)

Where the earner is in pensionable service under the scheme on the day on which the order or provision on which the pension debit depends takes effect, his guaranteed minimum in relation to the scheme is reduced by an amount equal to the appropriate percentage of the corresponding qualifying benefit.

(3)

For the purposes of subsection (2), the corresponding qualifying benefit is the guaranteed minimum taken for the purpose of calculating the cash equivalent by reference to which the amount of the pension debit is determined.

(4)

For the purposes of this section, the appropriate percentage is—

(a)

if the order or provision on which the pension debit depends specifies the percentage value to be transferred, that percentage;

(b)

if the order or provision on which the pension debit depends specifies an amount to be transferred, the percentage which the appropriate amount for the purposes of paragraph (1) of Article 26 of the Welfare Reform and Pensions (Northern Ireland) Order 1999 (lesser of specified amount and cash equivalent of transferor’s benefits) represents of the amount mentioned in paragraph (3)(b) of that Article (cash equivalent of transferor’s benefits).”.

(4)

In section 43 (entitlement to guaranteed minimum pensions for the purposes of the relationship with social security benefits), at the end there shall be added—

“(6)

For the purposes of section 42, a person shall be treated as entitled to any guaranteed minimum pension to which he would have been entitled but for any reduction under section 11A.”.

(5)

In section 176(1), there shall be inserted at the appropriate place—

““pension debit” means a debit under Article 26(1)(a) of the Welfare Reform and Pensions (Northern Ireland) Order 1999;”.