SCHEDULE 2Scheme flexibilities
PART 4Election to buy out the standard reduction
CHAPTER 1General
When the standard reduction applies29
1
The standard reduction applies in respect of a member (P) to a maximum of 3 years from age 65 to P’s normal pension age (“the maximum”).
2
If a retirement pension becomes payable to P on or after P reaches 65, the standard reduction applies to a proportion of the time left until P reaches normal pension age, as determined by the scheme manager.
Determination of the buy-out value30
1
The buy-out value is an amount determined by the scheme manager.
2
If an additional pension election or a faster accrual election is subsequently made in respect of a person (P), the scheme manager may—
a
re-determine the buy-out value; and
b
send a written notice to P stating the re-determined buy-out value.
CHAPTER 2Making a buy-out election
Eligible to make buy-out election31
1
A member (P) who has a normal pension age over 65 may elect to pay contributions to buy out the standard reduction (“buy-out election”) for a period of up to 3 years.
2
A buy-out election has effect from the day on which the scheme manager accepts the election.
3
A buy-out election ceases to have effect when the earliest of the following occurs—
a
P reaches normal pension age;
b
a retirement pension other than a phased retirement pension becomes payable to P;
c
P revokes the election or is taken to revoke the election.
4
A buy-out election may only be made within 6 months after P enters pensionable service under this scheme.
5
When making a buy-out election, P must be—
a
in pensionable service; and
b
under normal pension age.
6
P may by written notice to the scheme manager vary a buy-out election if P’s normal pension age changes before a retirement pension becomes payable to P.
Making a buy-out election32
1
A buy-out election made by a member (P) must state the number of years in respect of which the standard reduction is to be bought out.
2
A buy-out election must be made by written notice to the scheme manager.
3
The notice of election must specify—
a
if P is in more than one eligible employment, the name of the employer who is to deduct the contributions;
b
P’s name;
c
P’s date of birth;
d
P’s normal pension age;
e
the date on which P entered pensionable service;
f
P’s annual rate of pensionable earnings.
4
The scheme manager may ask P to provide further information.
Accepting a buy-out election33
1
The scheme manager may accept a buy-out election by giving written notice to the person who made the election (P).
2
The notice must state the buy-out value.
3
A buy-out election is accepted when P receives notice that the scheme manager has accepted the election.
CHAPTER 3Payment of buy-out contributions
Determination of contributions payable34
1
The scheme manager must determine the amount of the monthly payments to be paid in respect of a buy-out election.
2
The scheme manager—
a
may determine the amount of the monthly payments by reference to the number of years stated in the buy-out election and the length of the contributions payment period; and
b
may exercise the functions under this paragraph so as to re-determine the amount of the monthly payments during the contributions payment period.
3
Unless the scheme manager re-determines the amount, monthly payments following a gap in service not exceeding 5 years are the same as before the gap.
Payment of buy-out contributions35
1
P must—
a
make the first monthly payment within 2 months after the end of the month in which a buy-out election is accepted; and
b
continue to make the monthly payments until the end of the contributions payment period.
2
The final monthly payment is due in the month before the buy-out period has effect.
3
If the scheme manager re-determines the amount of the monthly payment during the contributions payment period, P must pay the re-determined amount from the beginning of the next financial year.
4
P is taken to revoke a buy-out election if—
a
a monthly payment is missed; and
b
the payment is not made within 3 months after P receives a written demand from the scheme manager.
Monthly payments during gap in service36
1
A member (P) who has a gap in service during the contributions payment period may choose to resume monthly payments on re-entering pensionable service.
2
P is taken to revoke a buy-out election if P’s gap in service exceeds 5 years.
CHAPTER 4Revocation and refund
Revoking a buy-out election37
1
A member (P) may revoke a buy-out election at any time before the end of the contributions payment period.
2
If P revokes a buy-out election or is taken to revoke a buy-out election—
a
P’s monthly payments cease to be payable on the date of revocation; and
b
when a retirement pension becomes payable to P, the standard reduction applies to a proportion of the maximum as determined by the scheme manager.
3
In determining the proportion, the scheme manager must take into account—
a
the number of monthly payments made; and
b
the number of years stated in the buy-out election.
4
If P revokes the election or is taken to revoke a buy-out election, P may not make a subsequent buy-out election.
5
A revocation must be by written notice to the scheme manager.
6
A revocation has effect from the date it is received by the scheme manager (“date of revocation”).
Member leaves all pensionable service before qualifying for retirement benefits38
1
This paragraph applies if a member (P) leaves all pensionable service under this scheme before qualifying for retirement benefits in respect of that service.
2
If this paragraph applies, any monthly payments made before the last day of pensionable service must be refunded to P.