(This note is not part of the Order)
This Order, which corresponds to provisions of an Order (S.I. 2018/39) made by the Secretary of State for Work and Pensions under section 178 of, and paragraphs 26A(7) and 27(2) and (3) of Schedule 7 to, the Pensions Act 2004 (“the Act”), specifies the levy ceiling and the amount of the standard amount of the compensation cap for use in relation to the Pension Protection Fund in the financial year beginning on 1st April 2018.
The Board of the Pension Protection Fund (“the Board”) is established by section 107 of the Act to provide compensation for members of certain occupational pension schemes in the event of the insolvency of the scheme’s sponsoring employer and the scheme is underfunded at a certain level.
Article 158 of the Pensions (Northern Ireland) Order 2005 (“the 2005 Order”) provides that the Board must impose pension protection levies for each financial year. Article 160 of the 2005 Order provides for the amount to be raised by the pension protection levies, subject to an annual ceiling.
Article 2 of this Order specifies that, for the purposes of Article 160 of the 2005 Order, the levy ceiling for the financial year beginning on 1st April 2018 is £1,024,372,330.
The compensation cap is used by the Board to determine the amount of compensation payable to a person who is under normal pension age on the assessment date (as described in paragraphs 2 and 34 of Schedule 6 to the 2005 Order) and whose compensation is not derived from a pension payable on the grounds of ill health or a survivor’s pension. The compensation cap is used to determine the amount of compensation payable when that amount is restricted in accordance with paragraph 26 of Schedule 6 to the 2005 Order.
Paragraph 26A of Schedule 6 to the 2005 Order sets out the definition of “the compensation cap” for the purposes of paragraph 26 of that Schedule. Article 3 of this Order specifies the standard amount of the compensation cap, for the purposes of paragraph 26A(7)(a) of Schedule 6 to the 2005 Order, as £39,006∙18.
Article 4 of this Order makes a revocation.