The Occupational Pension Schemes (Winding up, etc.) Regulations (Northern Ireland) 2005

Explanatory Note

(This note is not part of the Regulations.)

These Regulations are made as a consequence of provisions in the Pensions (Northern Ireland) Order 2005 (“the 2005 Order”) and relate to the winding up of occupational pension schemes. Regulations 3 to 13 and most of the amendments made by the other provisions do not apply in the case of schemes that have begun to wind up before 6th April 2005.

Regulation 3 provides that Article 73 of the Pensions (Northern Ireland) Order 1995 (“the 1995 Order”) does not apply to schemes that are excluded from being eligible schemes for the purposes of Part III of the 2005 Order. Before the amendments to Article 73 of the 1995 Order by the 2005 Order that Article applied only to schemes to which Article 56 of the 1995 Order (which relates to minimum funding) applied. This disapplication will have a similar effect.

Regulation 4 modifies provisions relating to pension compensation so that when they apply for determining the corresponding PPF liability by reference to which the liabilities within Article 73(4)(b) of the 1995 Order are capped, they apply differently from the way in which they apply for determining compensation from the Pension Protection Fund.

Regulation 5 provides that where a person’s pensionable service ceases when the scheme begins to be wound up, he is treated as having opted for a contribution refund under Chapter 5 of Part IV of the Pension Schemes (Northern Ireland) Act 1993 (“the 1993 Act”).

Regulations 6 and 7 prescribe when trustees or managers of schemes are required to adjust entitlements to discretionary awards and to survivors' benefits when schemes are winding up. If winding up is backdated, affected adjustments must also take effect from the earlier date.

Regulation 8 makes provision where a scheme to which Article 73 of the 1995 Order applies is being wound up, and after the winding up begins someone becomes entitled to payment of benefits in respect of the member. It excludes from the effects of the winding up provisions the liability for the benefits which would have been paid before the winding up began if they had been paid without delay on the member’s death.

Regulation 9 substitutes regulation 4 of the Occupational Pension Schemes (Winding Up) Regulations (Northern Ireland) 1996 (“the Winding Up Regulations”) which contains provisions about the calculation of the value or amount of scheme assets and liabilities.

Regulation 10 modifies Articles 73 to 74 of the 1995 Order where liabilities of a scheme are discharged during an assessment period by virtue of regulations under Article 119(4) of the 2005 Order. (An assessment period is defined in Article 116 of that Order as the period beginning with an insolvency event occurring in relation to a scheme’s employer and ending with either the Board of the Pension Protection Fund assuming responsibility for the scheme or ceasing to be involved with it.) Regulation 10 ensures that Articles 73 to 73B of the 1995 Order do not apply to such discharged liabilities, but that they are treated as fully discharged under Article 74 of the 1995 Order.

Regulation 11 prescribes the circumstances in which liabilities are treated as discharged under Article 74 of the 1995 Order where a scheme is winding up and the trustees have provided for the discharge by payment of a cash sum. The circumstances prescribed are where the payment is a contribution refund paid to an early leaver under Chapter 5 of Part IV of the 1993 Act or the payment of a trivial commutation lump sum or a winding up lump sum.

Regulation 12 ensures that the rules in Article 121 of the 1995 Order will apply in future to determine when a scheme begins to be wound up, instead of the slightly different rules in regulation 2 of the Winding Up Regulations.

Regulation 13 provides that the same rules apply for the purposes of these Regulations as apply for the Winding Up Regulations for treating as separate schemes sections of multi-employer schemes, the guaranteed and unguaranteed parts of partially government guaranteed schemes and sections of schemes that only apply to members in employment inside or, as the case may be, outside the United Kingdom.

Regulation 14 introduces the Schedule, Part 1 of which amends the Winding Up Regulations, and Part 2 of which amends other Regulations. These amendments are consequential on the changes made by Article 247 of the 2005 Order, the provisions of these Regulations or the Finance Act 2004.

Regulation 15 amends provisions in the Occupational Pension Schemes (Transfer Values) Regulations (Northern Ireland) 1996 which relate to the valuation of the cash equivalent of a member’s benefits and the circumstances in which a scheme may reduce that cash equivalent. The amendments are made as a consequence of the need to amend references to provisions relating to winding up because of their amendment by the 2005 Order.

Regulations 16 to 18 make amendments to the Pension Sharing (Valuation) Regulations (Northern Ireland) 2000, the Pension Sharing (Implementation and Discharge of Liability) Regulations (Northern Ireland) 2000 and the Pension Sharing (Pension Credit Benefit) Regulations (Northern Ireland) 2000 corresponding to those made by regulation 15. These amendments affect the valuation of the pension rights of a party to a marriage that is dissolved or annulled for the purpose of transferring a part of their value to the other party as a pension credit, the valuation of a pension credit for the purposes of the scheme obliged to give effect to it as benefits under the scheme or wishing to discharge its liability for it, and the valuation of the pension credit where the person entitled to it wishes to have it transferred to another scheme.

Article 247 of the 2005 Order, which amends some of the enabling provisions under which these Regulations are made, was brought into operation, for the purpose only of authorising the making of regulations, on 25th February 2005 and for all other purposes on 6th April 2005, by virtue of the Pensions (2005 Order) (Commencement No. 1 and Consequential and Transitional Provisions) Order (Northern Ireland) 2005 (S.R. 2005 No. 48 (C. 5)).

As these Regulations make in relation to Northern Ireland only provision corresponding to provision contained in regulations made by the Secretary of State for Work and Pensions in relation to Great Britain, the requirement to consult under Article 117(1) of the 1995 Order does not apply by virtue of paragraph (2)(e) of that Article.