SCHEDULES

F3C1C2C8C3C9C10 SCHEDULE 6PENSION COMPENSATION PROVISIONS

Annotations:
Amendments (Textual)
F3

mod. by SR 2005/171

Modifications etc. (not altering text)

Compensation cap

C726

1

Where—

a

a person becomes entitled to relevant compensation in respect of a benefit ( “benefit A”) under the scheme, and

b

F8sub-paragraph (2)(a), (b) or (c) applies,

the amount of the compensation must be restricted in accordance with sub-paragraph (3).

2

For the purposes of sub-paragraph (1)—

a

this paragraph applies if—

i

the annual value of benefit A exceeds the compensation cap, and

ii

F9neither of paragraphs (b) and (c) applies, and

b

this paragraph applies if—

F10zi

benefit A is attributable to the person's pensionable service,

i F1

at the same time as the person becomes entitled to relevant compensation in respect of benefit A he also becomes entitled to relevant compensation in respect of one or more other benefits F11that are attributable to his pensionable service under the scheme or a connected occupational pension scheme ( “benefit or benefits B”), and

ii

the aggregate of the annual values of benefit A and benefit or benefits B exceeds the compensation capF12, and

c

this paragraph applies if—

i

benefit A is attributable to a pension credit from a transferor,

ii

at the same time as the person becomes entitled to relevant compensation in respect of benefit A he also becomes entitled to relevant compensation in respect of one or more other benefits that are—

iia

under the scheme or a connected occupational pension scheme, and

iib

attributable to a pension credit from the same transferor,(“benefit or benefits B”), and

iii

the aggregate of the annual values of benefit A and benefit or benefits B exceeds the compensation cap.

3

Where the relevant compensation in respect of benefit A is required to be restricted in accordance with this sub-paragraph—

a

if that compensation is within sub-paragraph (4)(a), the protected pension rate for the purposes of paragraph 3(3)(a) is the cap fraction of the rate determined in accordance with paragraph 3(5);

b

if that compensation is within sub-paragraph (4)(b), the protected notional pension for the purposes of paragraph 11(3)(a) is the cap fraction of the rate determined in accordance with paragraph 11(4);

c

if that compensation is within sub-paragraph (4)(c), the protected amount for the purposes of paragraph F414(3)(a) is the cap fraction of the amount determined in accordance with paragraph 14(4);

d

if that compensation is within sub-paragraph (4)(d), the protected pension rate for the purposes of paragraph 15(3)(a) is the cap fraction of the rate determined in accordance with paragraph 15(4);

e

if that compensation is within sub-paragraph (4)(e), the protected amount for the purposes of paragraph F519(3)(a) is the cap fraction of the amount determined in accordance with paragraph 19(4).

4

For the purposes of this paragraph “relevant compensation” means—

a

periodic compensation under paragraph 3 (in a case to which sub-paragraph (7) of that paragraph applies),

b

periodic compensation under paragraph 11,

c

compensation under paragraph 14,

d

periodic compensation under paragraph 15, or

e

compensation under paragraph 19.

5

For the purposes of this paragraph, “the cap fraction” means—

CVmath

where—

C is the compensation cap, and

V is the annual value of benefit A or, in a case to which sub-paragraph (2)(b) F13or (c) applies, the aggregate of the annual values of benefit A and benefit or benefits B.

6

For the purposes of this paragraph the “annual value” of a benefit in respect of which a person has become entitled to relevant compensation means—

a

if the relevant compensation is within sub-paragraph (4)(a) and neither paragraph (b) nor (c) applies, the amount of the protected pension rate for the purposes of paragraph 3(3)(a);

b

if the relevant compensation is within sub-paragraph (4)(a) and is in respect of a pension of which a portion has been commuted for a lump sum, the amount which would have been the protected pension rate for those purposes had that portion not been commuted;

c

if the relevant compensation is within sub-paragraph (4)(a) and the person became entitled to a relevant lump sum under the scheme at the same time as he became entitled to the pension to which that compensation relates, an amount equal to the aggregate of—

i

the protected pension rate for the purposes of paragraph 3(3)(a), and

ii

the annualised value of the relevant lump sum;

d

if the relevant compensation is within sub-paragraph (4)(b), the amount of the protected notional pension for the purposes of paragraph 11(3)(a);

e

if the relevant compensation is within sub-paragraph (4)(c), the annualised value of the protected amount for the purposes of paragraph F614(3)(a);

f

if the relevant compensation is within sub-paragraph (4)(d), the amount of the protected pension rate for the purposes of paragraph 15(3)(a);

g

if the relevant compensation is within sub-paragraph (4)(e), the annualised value of the protected amount for the purposes of paragraph F719(3)(a);

and for the purposes of determining the annual value of a benefit any reduction required to be made by this paragraph is to be disregarded.

F2F17

In this paragraph—

  • “annualised value” of a lump sum or amount means the annualised actuarially equivalent amount of that sum or amount determined in accordance with actuarial factors published by the Board;

  • F15“the compensation cap” has the meaning given by paragraph 26A;

and for the purposes of this paragraph, except in prescribed circumstances, the scheme is connected with another occupational pension scheme if the same person is or was an employer in relation to both schemes.

8

For the purposes of sub-paragraph (6)(c) a lump sum under the scheme is a relevant lump sum if the person's entitlement to the lump sum—

a

is attributable to his pensionable service, and

b

did not arise by virtue of any provision of the admissible rules of the scheme making special provision as to early payment of pension on grounds of ill health.

C49

Regulations may provide for this paragraph F14and paragraph 26A to apply with prescribed modifications where a person becomes entitled to relevant compensation in respect of a benefit and he has previously—

a F1

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

b F1

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

10

Regulations may prescribe sums which are to be disregarded for the purposes of this paragraph.

F1626A

1

This paragraph gives the meaning of “the compensation cap” for the purposes of paragraph 26.

2

The amount of the compensation cap for a person depends on theperson's age and length of pensionable service at the time when the person first becomes entitled to the relevant compensation.

3

“The compensation cap” for a person who has 20 or fewer years of pensionable service at that time is the standard amount.

4

“The compensation cap” for a person who has more than 20 years of pensionable service at that time is—

a

the standard amount, plus

b

for each additional year, an amount found by multiplying the standard amount by 3%.

5

A person has an “additional year” for each whole year of pensionable service that exceeds 20 years of pensionable service.

6

If the total amount calculated under sub-paragraph (4)(b) would exceed the standard amount, it is to be treated as being equal to the standard amount.

C5C67

In sub-paragraphs (3) and (4) “the standard amount”—

a

for a person who is 65 years old at the relevant time, means the amount specified by the Department by order, and

b

for a person of any other age at the relevant time, means the amount specified under paragraph (a) as adjusted in accordance with actuarial adjustment factors published by the Board.

8

A person credited with a length of notional pensionable service because of pension credit rights is to be treated for the purposes of this paragraph as having pensionable service of that length (in addition to any pensionable service that the person is treated as having under sub-paragraph (9)).

9

In any case where the Board is satisfied that, under the admissible rules, a person is entitled to benefits that are not attributable to a particular period of pensionable service, the Board may for the purposes of this paragraph treat the person as having a length of pensionable service to reflect those benefits (which is in addition to any other pensionable service that the person has).

10

In any case where the Board is satisfied that it is not possible to identify the length of some or all of a person's pensionable service under the admissible rules, the Board may, having regard to those rules, determine its length for the purposes of this paragraph.

11

Where a person becomes entitled to relevant compensation in respect of benefits under two or more connected occupational pension schemes at the same time, this paragraph applies in relation to the relevant compensation in respect of each benefit as if—

a

a reference to the length of the person's pensionable service were a reference to the total length of the person's pensionable service under all of the schemes (counting any period of overlap once only), and

b

sub-paragraphs (9) and (10) apply for the purposes of working out the length of the person's pensionable service in respect of each scheme as if a reference to the admissible rules were to the admissible rules of that scheme.

12

When applying this paragraph in relation to relevant compensation in respect of a benefit, ignore any pensionable service that relates to a benefit that is not from the same source.

13

For the purposes of sub-paragraph (12)—

a

benefits attributable to a person's pensionable service under a scheme are from the same source as benefits attributable to the person's pensionable service under that or a connected occupational pension scheme,

b

benefits under a scheme which are attributable to a pension credit from a transferor are from the same source as benefits under that or a connected occupational pension scheme which are attributable to a pension credit from the same transferor, and

c

benefits are not otherwise from the same source.

14

Expressions used in this paragraph have the same meaning as in paragraph 26.