C6Part III Certification of Pension Schemes and Effects on Members’ State Scheme Rights and Duties
Chapter I Certification
Preliminary
3 Issue of contracting-out and appropriate scheme certificates.
1
Regulations shall provide for the Board to issue certificates stating—
a
that the employment of an earner in employed earner’s employment is contracted-out employment by reference to an occupational pension scheme; or
b
that a personal pension scheme is an appropriate scheme;
and in this Act a certificate under paragraph (a) is referred to as “a contracting-out certificate” and a certificate under paragraph (b) as “an appropriate scheme certificate”.
2
The regulations shall provide for contracting-out certificates to be issued to employers and to specify—
a
the employments which are to be treated, either generally or in relation to any specified description of earners, as contracted-out employments; and
b
the occupational pension schemes by reference to which those employments are to be so treated.
3
An occupational pension scheme is a contracted-out scheme in relation to an earner’s employment if it is for the time being specified in a contracting-out certificate in relation to that employment; and references in this Act to the contracting-out of a scheme are references to its inclusion in such a certificate.
4
A personal pension scheme is an appropriate scheme if there is in force an appropriate scheme certificate issued by the Board in accordance with this Chapter that it is such a scheme.
5
An appropriate scheme certificate for the time being in force in relation to a scheme shall be conclusive that the scheme is an appropriate scheme.
6
Regulations shall provide that any question whether a personal pension scheme is or at any time was an appropriate scheme shall be determined by the Board.
7
Except in prescribed circumstances, no contracting-out certificate or appropriate scheme certificate shall have effect from a date earlier than that on which the certificate is issued.
4 Meaning of “contracted-out employment”, “guaranteed minimum pension” and “minimum payment”.
1
The employment of an earner in employed earner’s employment is “contracted-out employment” in relation to him during any period in which he is under pensionable age and—
a
either—
i
his service in the employment is for the time being service which qualifies him for a guaranteed minimum pension provided by an occupational pension scheme, or
ii
his employer makes minimum payments in respect of his employment to an occupational pension scheme which is contracted-out by virtue of satisfying section 5(3) (in this Act referred to as “a money purchase contracted-out scheme”); and
b
there is in force a contracting-out certificate issued by the Board in accordance with this Chapter stating that the employment is contracted-out employment by reference to the scheme.
2
In this Act—
“guaranteed minimum pension” means any pension which is provided by an occupational pension scheme in accordance with the requirements of sections 9 and 13 to the extent to which its weekly rate is equal to the earner’s or, as the case may be, the earner’s widow’s or widower’s guaranteed minimum as determined for the purposes of those sections respectively; and
“minimum payment”, in relation to an earner’s employment in any tax week, means the rebate percentage of so much of the earnings paid to or for the benefit of the earner in that week as exceeds the current lower earnings limit but not the current upper earnings limit (or the prescribed equivalents if he is paid otherwise than weekly);
and for the purposes of this subsection “rebate percentage” means the sum of the percentages for the time being mentioned in paragraphs (a) and (b) of section 37(1).
3
Regulations may make provision—
a
for the manner in which, and time at which or period within which, minimum payments are to be made;
b
for the recovery by employers of amounts in respect of the whole or part of minimum payments by deduction from earnings;
c
for calculating the amounts payable according to a scale prepared from time to time by the Department or otherwise adjusting them so as to avoid fractional amounts or otherwise facilitate computation;
d
for requiring that the liability in respect of a payment made in a tax week, in so far as the liability depends on any conditions as to a person’s age on retirement, shall be determined as at the beginning of the week or as at the end of it;
e
for securing that liability is not avoided or reduced by the payment of earnings being made in accordance with any practice which is abnormal for the employment in respect of which the earnings are paid;
f
without prejudice to paragraph (e), for enabling the Department, where it is satisfied as to the existence of any practice in respect of the payment of earnings whereby the incidence of minimum payments is avoided or reduced by means of irregular or unequal payments of earnings, to give directions for securing that minimum payments are payable as if that practice were not followed;
g
for the intervals at which, for the purposes of minimum payments, payments of earnings are to be treated as made; and
h
for this section to have effect, in prescribed cases, as if for any reference to a tax week there were substituted a reference to a prescribed period.
4
Any contracting-out certificate for the time being in force in respect of an employed earner’s employment shall be conclusive that the employment is contracted-out employment.
5
Regulations shall provide for the determination by the Board of any question whether an employment is to be treated as contracted-out employment or as to the persons in relation to whom, or the period for which, an employment is to be so treated.
General requirements for certification
5 Requirements for certification of schemes: general.
1
Subject to subsection (4), an occupational pension scheme can be contracted-out in relation to an earner’s employment only if it satisfies subsection (2) or (3).
2
An occupational pension scheme satisfies this subsection only if—
a
it complies in all respects with sections 9 to 20 or, in such cases or classes of case as may be prescribed, with those sections as modified by regulations; and
b
the rules of the scheme applying to guaranteed minimum pensions are framed so as to comply with the relevant requirements.
3
An occupational pension scheme satisfies this subsection only if—
a
the requirements imposed by or by virtue of sections 18 and 22 to 28 and such other requirements as may be prescribed are satisfied in its case; and
b
the rules of the scheme applying to protected rights are framed so as to comply with the relevant requirements.
4
Where there are two or more occupational pension schemes in force in relation to an earner’s employment, none of which can by itself be a contracted-out scheme, the Board may, if they think fit, treat them for contracting-out purposes as a single scheme.
5
A personal pension scheme can be an appropriate scheme only if—
a
the requirements imposed by or by virtue of sections 22 to 28 and such other requirements as may be prescribed are satisfied in its case; and
b
the rules of the scheme applying to protected rights are framed so as to comply with the relevant requirements.
6
In this section “relevant requirements” means—
a
the requirements of any regulations prescribing the form and content of rules of contracted-out or, as the case may be, appropriate schemes; and
b
such other requirements as to form and content (not inconsistent with regulations) as may be imposed by the Board as a condition of contracting-out or, as the case may be, of being an appropriate scheme, either generally or in relation to a particular scheme.
6 Protected rights and money purchase benefits.
1
Subject to subsections (2) and (3), the protected rights of a member of a pension scheme are his rights to money purchase benefits under the scheme.
2
If the rules of an occupational pension scheme so provide, a member’s protected rights are—
a
his rights under the scheme which derive from the payment of minimum payments together with any payments by the Department to the scheme under Article 9 of the M2Social Security (Northern Ireland) Order 1986 in respect of the member;
b
any rights of the member to money purchase benefits which derive from protected rights under another occupational pension scheme or under a personal pension scheme which have been the subject of a transfer payment; and
c
such other rights as may be prescribed.
3
If the rules of a personal pension scheme so provide, a member’s protected rights are—
a
his rights under the scheme which derive from any payment of minimum contributions to the scheme; and
b
any rights of his to money purchase benefits which derive from protected rights under another personal pension scheme or protected rights under an occupational pension scheme which have been the subject of a transfer payment; and
c
such other rights as may be prescribed.
7 Elections as to employments covered by contracting-out certificates.
1
Subject to the provisions of this Part, an employment otherwise satisfying the conditions for inclusion in a contracting-out certificate shall be so included if and so long as the employer so elects and not otherwise.
2
Subject to subsections (3) and (4), an election may be so made, and an employment so included, either generally or in relation only to a particular description of earners.
3
Except in such cases as may be prescribed, an employer shall not, in making or abstaining from making any election under this section, discriminate between different earners on any grounds other than the nature of their employment.
4
If the Board consider that an employer is contravening subsection (3) in relation to any scheme, they may—
a
refuse to give effect to any election made by him in relation to that scheme; or
b
cancel any contracting-out certificate held by him in respect of it.
5
Regulations may make provision—
a
for regulating the manner in which an employer is to make an election with a view to the issue, variation or surrender of a contracting-out certificate;
b
for requiring an employer to give a notice of his intentions in respect of making or abstaining from making any such election in relation to any existing or proposed scheme—
i
to employees in any employment to which the scheme applies or to which it is proposed that it should apply;
ii
to any independent trade union recognised to any extent for the purpose of collective bargaining in relation to those employees;
iii
to the trustees and managers of the scheme; and
iv
to such other persons as may be prescribed;
c
for requiring an employer, in connection with any such notice, to furnish such information as may be prescribed and to undertake such consultations as may be prescribed with any such trade union as is mentioned in paragraph (b)(ii);
d
for empowering the Board to refuse to give effect to an election made by an employer unless they are satisfied that he has complied with the requirements of the regulations;
e
for referring to an industrial tribunal any question—
i
whether an organisation is such a trade union as is mentioned in paragraph (b)(ii), or
ii
whether the requirements of the regulations as to consultation have been complied with.
C18 Determination of basis on which scheme is contracted-out.
1
A contracting-out certificate shall state whether the scheme is contracted-out by virtue of subsection (2) or (3) of section 5.
2
Where a scheme satisfies both of those subsections the employers, in their application for a certificate, shall specify one of those subsections as the subsection by virtue of which they wish the scheme to be contracted-out.
3
A scheme which has been contracted-out by virtue of one of those subsections may not become contracted-out by reason of the other except in prescribed circumstances.
F4 Requirements for certification of occupational pension schemes applying from the principal appointed day
Ss. 8A-8D and cross-heading inserted (6.4.1996 for certain purposes otherwise 6.4.1997 ) by S.I. 1995/3213 (N.I. 22), art. 133(5); S.R. 1996/91, arts. 2(d)(h), Sch. Pt. IV
F18A The statutory standard.
1
Subject to the provisions of this Part, the scheme must, in relation to the provision of pensions for earners in employed earner’s employment, and for their widows or widowers, satisfy the statutory standard.
2
Subject to regulations made by virtue of section 5(2B)(c)(ii), in applying this section regard must only be had to—
a
earners in employed earner’s employment, or
b
their widows or widowers,
collectively, and the pensions to be provided for persons falling within paragraph (a) or (b) must be considered as a whole.
3
For the purposes of this section, a scheme satisfies the statutory standard if the pensions to be provided for such persons are broadly equivalent to, or better than, the pensions which would be provided for such persons under a reference scheme.
4
Regulations may provided for the manner of, and criteria for, determining whether the pensions to be provided for such persons under a scheme are broadly equivalent to, or better than, the pensions which would be provided for such persons under a reference scheme.
5
Regulations made by virtue of subsection (4) may provide for the determination to be made in accordance with guidance prepared by a prescribed body and approved by the Department.
6
The pensions to be provided for such persons under a scheme are to be treated as broadly equivalent to or better than the pensions which would be provided for such persons under a reference scheme if and only if an actuary (who, except in prescribed circumstances, must be the actuary appointed for the scheme in pursuance of Article 47 of the Pensions (Northern Ireland) Order 1995) so certifies.
F118B Reference scheme.
1
This section applies for the purposes of section 8A.
2
A reference scheme is an occupational pension scheme which—
a
complies with each of subsections (3) and (4), and
b
complies with any prescribed requirements.
3
In relation to earners employed in employed earner’s employment, a reference scheme is one which provides—
a
for them to be entitled to a pension under the scheme commencing at a normal pension age of 65 and continuing for life, and
b
for the annual rate of the pension at that age to be—
i
1/80th of average qualifying earning in the last three tax years preceding the end of service,
multiplied by
ii
the number of years service, not exceeding such number as would produce an annual rate equal to half the earnings on which it is calculated.
4
In relation to widows or widowers, a reference scheme is one which provides—
a
for the widows or widowers of earners employed in employed earner’s employment (whether the earners die before or after attaining the age of 65) to be entitled, except in prescribed circumstances, to pensions under the scheme; and
b
except in prescribed circumstances, for the annual rate of the pensions, at the time when the widows or widowers first become entitled to them, to be—
i
in the case of widows or widowers of persons whose age when they died was, or was greater than, normal pension age, 50 per cent. of the annual rate which a reference scheme is required to provide for persons of that age, and
ii
in the case of widows or widowers of other persons, 50 per cent. of the annual rate which a reference scheme would have been required to provide in respect of the persons’ actual periods of service if those persons had attained that age.
5
For the purposes of this section, an earner’s qualifying earnings in any tax year are 90 per cent. of the amount by which the earner’s earnings—
a
exceed the qualifying earnings factor for that year; and
b
do not exceed the upper earnings limit for that year multiplied by fifty-three.
6
Regulations may modify subsections (2) to (5).
7
In this section—
“normal pension age”, in relation to a scheme, means the age specified in the scheme as the earliest age at which pension becomes payable under the scheme (apart from any special provision as to early retirement on grounds of ill-health or otherwise),
“qualifying earnings factor”, in relation to a tax year, has the meaning given by section 121(1) of the Social Security Contributions and Benefits (Northern Ireland) Act 1992, and
“upper earnings limit”, in relation to a tax year, means the amount specified for that year by regulations made by virtue of section 5(3) of that Act as the upper earnings limit for Class 1 contributions.
F28C Transfer, commutation, etc.
1
Regulations may prohibit or restrict—
a
the transfer of any liability—
i
for the payment of pensions under a relevant scheme, or
ii
in respect of accrued rights to such pensions,
b
the discharge of any liability to provide pensions under a relevant scheme, or
c
the payment of a lump sum instead of a pension payable under a relevant scheme,
except in prescribed circumstances or on prescribed conditions.
2
In this section, “relevant scheme” means a scheme contracted out by virtue of section 5(2B) and references to pensions and accrued rights under the scheme are to such pensions and rights so far as attributable to an earner’s service on or after the principal appointed day.
3
Regulations under subsection (1) may provide that any provision of this Part shall have effect subject to such modifications as may be specified in the regulations.
F38D Entitlement to benefit.
In the case of a scheme contracted out by virtue of section 5(2B), regulations may make provision as to the ages by reference to which benefits under the scheme are to be paid.
Requirements for certification of occupational pension schemes providing guaranteed minimum pensions
9 Minimum pensions for earners.
1
Subject to the provisions of this Part, the scheme must—
a
provide for the earner to be entitled to a pension under the scheme if he attains pensionable age; and
b
contain a rule to the effect that the weekly rate of the pension will be not less than his guaranteed minimum (if any) under sections 10 to 12.
2
In the case of an earner who is a married woman or widow who is liable to pay primary Class 1 contributions at a reduced rate by virtue of section 19(4) of the M3Social Security Contributions and Benefits (Northern Ireland) Act 1992, subject to the provisions of this Part, the scheme must—
a
provide for her to be entitled to a pension under the scheme if she attains pensionable age and does not have a guaranteed minimum under sections 10 to 12; and
b
satisfy such other conditions as may be prescribed.
3
Subject to subsection (4), the scheme must provide for the pension to commence on the date on which the earner attains pensionable age and to continue for his life.
4
Subject to subsection (5), the scheme may provide for the commencement of the earner’s guaranteed minimum pension to be postponed for any period for which he continues in employment after attaining pensionable age.
5
The scheme must provide for the earner’s consent to be required—
a
for any such postponement by virtue of employment to which the scheme does not relate; and
b
for any such postponement after the expiration of five years from the date on which he attains pensionable age.
6
Equivalent pension benefits for the purposes of the former legislation are not to be regarded as constituting any part of the earner’s guaranteed minimum pension.
7
The benefits referred to in subsection (6) are any to which the earner may be immediately or prospectively entitled in respect of a period of employment which—
a
was for him non-participating employment under that legislation; and
b
was not on its termination the subject of any payment in lieu of contributions;
but subsection (6) excludes only so much of those benefits as had to be provided in order that the employment should for that period be treated as non-participating.
8
In this section “the former legislation” means Part III of the M4National Insurance Act (Northern Ireland) 1966 and the previous corresponding enactments.
C710 Earner’s guaranteed minimum.
1
An earner has a guaranteed minimum in relation to the pension provided by a scheme if in any tax week in a relevant year, earnings in excess of the current lower earnings limit (or the prescribed equivalent if he is paid otherwise than weekly) have been paid to or for his benefit in respect of employment which is contracted-out by reference to the scheme.
2
Subject to section 11(1), the guaranteed minimum shall be the weekly equivalent of an amount equal to the appropriate percentage of the total of the earner’s earnings factors for the relevant years, so far as derived from earnings such as are mentioned in subsection (1) upon which primary Class 1 contributions have been paid or treated as paid.
3
In determining the guaranteed minimum in a case where—
a
earnings such as are mentioned in subsection (1) have been paid to a married woman or widow who is liable to pay primary Class 1 contributions at a reduced rate by virtue of section 19(4) of the M5Social Security Contributions and Benefits (Northern Ireland) Act 1992, and
b
the tax week in which those earnings are paid falls in the tax year 1991-92 or any subsequent tax year,
the married woman or widow shall be treated for the purposes of this section as having such earnings factors derived from those earnings as she would have had if primary Class 1 contributions had been payable, and paid, upon them otherwise than at a reduced rate.
4
Where the amount of a person’s earnings for any period is relevant for any purpose of subsection (1) or (2) and the Department is satisfied that records of those earnings have not been maintained or retained or are otherwise unobtainable, it may for that purpose—
a
compute, in such manner as it thinks fit, an amount which shall be regarded as the amount of those earnings; or
b
take their amount to be such sum as it may specify in the particular case.
5
In subsection (2) the “appropriate percentage” means—
a
in respect of the earner’s earnings factors for any tax year not later than the tax year 1987-88—
i
if the earner was not more than 20 years under pensionable age on 6th April 1978, 1.25 per cent.;
ii
in any other case 25/N per cent.;
b
in respect of the earner’s earnings factors for the tax year 1988-89 and for subsequent tax years—
i
if the earner was not more than 20 years under pensionable age on 6th April 1978, 1 per cent.;
ii
in any other case 20/N per cent.;
where N is the number of years in the earner’s working life (assuming he will attain pensionable age) which fall after 5th April 1978.
6
Regulations may prescribe rules as to the circumstances in which earnings factors are derived from earnings for the purposes of subsection (2).
7
For the purposes of subsection (2) the weekly equivalent of the amount there mentioned shall be calculated by dividing that amount by 52.
8
In this section “relevant year” means any tax year in the earner’s working life (not being earlier than the tax year 1978-79).
C211 Increase of guaranteed minimum where commencement of guaranteed minimum pension postponed.
C31
Where in accordance with section 9(4) the commencement of an earner’s guaranteed minimum pension is postponed for any period and there are at least seven complete weeks in that period, his guaranteed minimum in relation to the scheme shall, for each complete week in that period, be increased by one-seventh per cent.—
a
of the amount of that minimum apart from this subsection; or
b
if for that week (or a period which includes that week) a pension is paid to him under the scheme at a weekly rate less than that minimum, of the difference between that pension and that minimum.
2
In subsection (1) “week” means any period of seven consecutive days.
3
Where an earner’s guaranteed minimum pension is increased under subsection (1), the increase of that part of it which is attributable to earnings factors for the tax year 1987-88 and earlier tax years shall be calculated separately from the increase of the rest.
4
Where one or more orders have come into operation under section 105 during the period for which the commencement of a guaranteed minimum pension is postponed, the amount of the guaranteed minimum pension for any week in that period shall be determined as if the order or orders had come into operation before the beginning of the period.
11AF5 Reduction of guaranteed minimum in consequence of pension debit.
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).
12 Revaluation of earnings factors for purposes of s. 10: early leavers, etc.
C81
Subject to subsection (2), for the purpose of section 10(2) the earner’s earnings factor for any relevant year (so far as derived as mentioned in that section) shall be taken to be that factor as increased by the same percentage as that prescribed for the increase of that factor by the last order under Article 23 of the M6Social Security Pensions (Northern Ireland) Order 1975 or section 130 of the M7Social Security Administration (Northern Ireland) Act 1992 to come into operation before the end of the final relevant year.
2
The scheme may provide that the earnings factors of an earner whose service in contracted-out employment by reference to the scheme is terminated before the final relevant year shall be determined for the purposes of section 10(2) by reference to the last such order to come into operation before the end of the tax year in which that service ends (“the last service tax year”).
3
Where a scheme provides as mentioned in subsection (2) the scheme shall provide for the weekly equivalent mentioned in section 10(2) to be increased by at least—
a
5 per cent. compound for each relevant year after the last service tax year; or
b
the amount by which an earnings factor for that year equal to that weekly equivalent would be increased by the last order under Article 23 of the M8 Social Security Pensions (Northern Ireland) Order 1975 or section 130 of the Social M9 Security Administration (Northern Ireland) Act 1992 to come into operation before the end of the final relevant year,
whichever makes the lesser increase; and the provisions included by virtue of this subsection may also conform with such additional requirements as may be prescribed for the purposes of section 51(5).
4
Except in such cases or classes of case as may be prescribed, the provision made by virtue of subsections (2) and (3) must be the same for all members of the scheme.
C85
In this section—
“relevant year” has the meaning given in section 10(8), and
“final relevant year” means the last tax year which is a relevant year in relation to the earner.
13 Minimum pensions for widows and widowers.
1
Subject to the provisions of this Part, the scheme must provide that if the earner dies leaving a widow or widower (whether before or after attaining pensionable age), the widow or widower will be entitled to a guaranteed minimum pension under the scheme.
C92
The scheme must contain a rule to the effect that—
a
if the earner is a man who has a guaranteed minimum under section 10, the weekly rate of the widow’s pension will be not less than the widow’s guaranteed minimum;
b
if the earner is a woman who has a guaranteed minimum under that section, the weekly rate of the widower’s pension will be not less than the widower’s guaranteed minimum.
C93
The widow’s guaranteed minimum shall be half that of the earner.
C94
The widower’s guaranteed minimum shall be one-half of that part of the earner’s guaranteed minimum which is attributable to earnings factors for the tax year 1988-89 and subsequent tax years.
5
The scheme must provide for the widow’s pension to be payable to her for any period for which a Category B retirement pension, widowed mother’s allowance or widow’s pension is payable to her by virtue of the earner’s contributions or for which a Category B retirement pension would be so payable but for section 43(1) of the M10Social Security Contributions and Benefits (Northern Ireland) Act 1992 (persons entitled to more than one retirement pension).
6
The scheme must provide for the widower’s pension to be payable to him in the prescribed circumstances and for the prescribed period.
7
The trustees or managers of the scheme shall supply to the Department any such information as it may require relating to the payment of pensions under the scheme to widowers.
C414 Treatment of insignificant amounts.
1
Where an amount is required to be calculated in accordance with the provisions of section 10(7), 11(1) or 13(2), (3) or (4) and, apart from this subsection, the amount so calculated is less than 0.5p, then, notwithstanding any other provision of this Act, that amount shall be taken to be zero, and other amounts so calculated shall be rounded to the nearest whole penny, taking 0.5p as nearest to the next whole penny above.
2
Where a guaranteed minimum pension is attributable in part to earnings factors for the period before the tax year 1988-89 and in part to earnings factors for that tax year or for that tax year and subsequent tax years, the pension shall be calculated by—
a
applying subsection (1) separately to the amount attributable to the period before the tax year 1988-89 and to the amount attributable to that and subsequent tax years, and
b
aggregating the two amounts so calculated.
15 Discharge of liability where guaranteed minimum pensions secured by insurance policies or annuity contracts.
1
A transaction to which this section applies discharges the trustees or managers of an occupational pension scheme from their liability to provide for or in respect of any person guaranteed minimum pensions—
a
if it is carried out not earlier than the time when that person’s pensionable service terminates; and
b
if and to the extent that it results in guaranteed minimum pensions for or in respect of that person being appropriately secured; and
c
if and to the extent that the requirements set out in paragraph (a), (b) or (c) of subsection (5) are satisfied.
2
This section applies to the following transactions—
a
the taking out of a policy of insurance or a number of such policies;
b
the entry into an annuity contract or a number of such contracts;
c
the transfer of the benefit of such a policy or policies or such a contract or contracts.
3
In this section “appropriately secured” means secured by an appropriate policy of insurance or an appropriate annuity contract, or by more than one such policy or contract.
4
A policy of insurance or annuity contract is appropriate for the purposes of this section if—
a
the insurance company with which it is or was taken out or entered into—
i
is, or was at the relevant time, carrying on ordinary long-term insurance business in the United Kingdom or any other member State; and
ii
satisfies, or at the relevant time satisfied, prescribed requirements; and
b
it may not be assigned or surrendered except on conditions which satisfy such requirements as may be prescribed; and
c
it contains or is endorsed with terms whose effect is that the amount secured by it may not be commuted except on conditions which satisfy such requirements as may be prescribed; and
d
it satisfies such other requirements as may be prescribed.
5
The requirements referred to in subsection (1) are—
a
that the arrangement for securing the amount by means of the policy or contract was made—
i
at the written request of the earner or, if the earner has died, of the earner’s widow or widower; or
ii
with the consent of the earner or the widow or widower given in writing in a prescribed form;
b
that—
i
the case is one such as is mentioned in section 92(2); and
ii
the policy or contract only secures guaranteed minimum pensions;
c
that—
i
the case is not one such as is mentioned in section 92(2); and
ii
such conditions as may be prescribed are satisfied.
6
In subsection (4)(a), “the relevant time” means the time when the policy of insurance was taken out or the annuity contract was entered into or, as the case may be, when the benefit of the policy or contract was transferred.
7
In this section “ordinary long-term insurance business” has the same meaning as in the M11Insurance Companies Act 1982.
16 Transfer of accrued rights.
1
Regulations may prescribe circumstances in which and conditions subject to which—
a
a transfer of or a transfer payment in respect of—
i
an earner’s accrued rights to guaranteed minimum pensions under a contracted-out scheme;
ii
an earner’s accrued rights to pensions under an occupational pension scheme which is not contracted-out, to the extent that those rights derive from his accrued rights to guaranteed minimum pensions under a contracted-out scheme; or
iii
the liability for the payment of guaranteed minimum pensions to or in respect of any person who has become entitled to them,
may be made by an occupational pension scheme to another such scheme or to a personal pension scheme;
b
a transfer of or a transfer payment in respect of an earner’s accrued rights to guaranteed minimum pensions which are appropriately secured for the purposes of section 15 may be made to an occupational pension scheme or a personal pension scheme.
2
Any such regulations may be made so as to apply to earners who are not in employment at the time of the transfer.
3
Regulations under subsection (1) may provide that any provision of this Part (other than sections 14, 15 and 39 to 41, and sections 22 to 29 so far as they apply to personal pension schemes) or of Chapter III of Part IV or Chapter II of Part V shall have effect, where there has been a transfer to which they apply, subject to such modifications as may be specified in the regulations.
4
Regulations under subsection (1) shall have effect in relation to transfers whenever made unless they provide that they are only to have effect in relation to transfers which take place after they come into operation.
5
The power conferred by subsection (1) is without prejudice to the generality of section 177(2) or section 17(5) of the M12Interpretation Act (Northern Ireland) 1954.
6
In the provisions mentioned in subsection (3) “accrued rights”, in relation to an earner, means the rights conferring prospective entitlement under the scheme in question to the pensions to be provided for the earner and the earner’s widow or widower in accordance with sections 9 and 13, and references to an earner’s accrued rights to guaranteed minimum pensions shall be construed accordingly.
17 Commutation, surrender and forfeiture.
1
Where the annual rate of a pension required to be provided by a scheme in accordance with section 9 or 13 would not exceed the prescribed amount and the circumstances are such as may be prescribed, the scheme may provide for the payment of a lump sum instead of that pension.
2
Neither section 9 nor section 13 shall preclude a scheme from providing for the earner’s or the earner’s widow’s or widower’s guaranteed minimum pension to be suspended or forfeited in such circumstances as may be prescribed.
18 Financing of benefits.
The resources of the scheme must be derived in whole or in part from—
a
payments made or to be made by one or more employers of earners to whom the scheme applies, being payments either—
i
under an actual or contingent legal obligation; or
ii
in the exercise of a power conferred, or the discharge of a duty imposed, on a Minister of the Crown, government department or any other person, being a power or duty which extends to the disbursement or allocation of public money; or
b
such other payments by the earner or his employer, or both, as may be prescribed for different categories of scheme.
19 Securing of benefits.
1
The Board must be satisfied that the scheme complies with—
a
regulations prescribing the means by which guaranteed minimum pensions under contracted-out schemes are to be secured (whether irrevocable trust, policy of insurance, annuity contract or other means); and
b
the conditions which are required by the regulations to be satisfied in relation to any means adopted;
and generally as to the arrangements in force or to be in force from time to time for securing those pensions.
2
Subject to subsection (3), the scheme must contain a rule by which any liabilities of the scheme in respect of—
a
guaranteed minimum pensions and accrued rights to guaranteed minimum pensions;
b
any such benefits as are excluded by section 9(6) from earners’ guaranteed minimum pensions;
c
pensions and other benefits (whether or not within paragraph (a) or (b)) in respect of which entitlement to payment has already arisen; and
d
state scheme premiums,
are accorded priority on a winding up over other liabilities under the scheme in respect of benefits attributable to any period of service after the rule has taken effect.
3
The rule may also accord priority, on a winding up occurring after an earner has attained normal pension age, to liabilities of the scheme in respect of pensions and other benefits to which—
a
he will be entitled on ceasing to be in employment, or
b
the earner’s widow or widower or any dependant of the earner’s will be entitled on the earner’s death.
4
Subsections (1) to (3) do not apply to public service pension schemes.
5
The duties imposed on the Board by subsection (1) shall cease to subsist in relation to guaranteed minimum pensions for a member and the member’s widow or widower where a scheme has ceased by virtue of section 15 to be liable to provide those pensions.
6
Subsections (2) and (3) do not apply to schemes falling within any category or description prescribed as being exempt from the requirements of those subsections.
7
If the scheme provides for the payment out of any sum representing the surrender value of a policy of insurance taken out for the purposes of the scheme, it must make provision so that there may be no payment out in relation to guaranteed minimum pensions except in such circumstances as may be prescribed.
20 Sufficiency of resources.
1
The Board must be satisfied that the resources of the scheme are sufficient—
a
for meeting from time to time all claims in respect of guaranteed minimum pensions so far as falling to be met out of those resources, having regard to the expected extent of the scheme’s resources and its other liabilities at any time when claims may be expected to arise; and
b
for paying state scheme premiums in respect of all persons at any time entitled to, or having accrued rights to, guaranteed minimum pensions under the scheme; and
c
for meeting in full in the event of an immediate winding up—
i
the liabilities accorded priority in accordance with section 19(2) and (3), and
ii
the expenses of administration so far as those expenses are payable out of the resources of the scheme.
2
Subsection (1) does not apply to public service schemes and the duties imposed on the Board by that subsection shall cease to subsist in relation to guaranteed minimum pensions for a member and the member’s widow or widower where a scheme has ceased by virtue of section 15 to be liable to provide those pensions.
3
Regulations may provide for subsection (1) to have effect in prescribed cases—
a
with the omission of paragraphs (b) and (c), or
b
with the omission of either of those paragraphs, or
c
with the substitution for both or either of those paragraphs of provisions specified in the regulations.
4
In considering a scheme by reference to the considerations of subsection (1), the Board shall have regard to any investments held for the purposes of the scheme.
Discretionary requirements
21 Power for Board to impose conditions as to investments and resources.
1
The Board may by reference to the considerations of section 20(1) make it a condition of the contracting-out or continued contracting-out of a scheme to which that section applies that—
a
no part, or no more than a specified proportion, of the scheme’s resources shall be invested in investments of a specified class or description; or
b
the whole or a specified proportion of investments of a specified class or description forming part of the scheme’s resources when the condition is imposed shall be realised before the end of a specified period.
2
Where contracting-out or continued contracting-out depends on the Board’s being satisfied as mentioned in section 20(1), the scheme may be contracted-out or continue to be contracted-out, as the case may be, in relation to any employment subject to such conditions as the Board think fit to impose for securing—
a
that they are kept informed about any matters affecting the security of the minimum pensions guaranteed under the scheme;
b
that the resources of the scheme are brought to and maintained at a level satisfactory to the Board.
3
Conditions imposed by the Board for the purpose mentioned in subsection (2)(b) may require steps to be taken, at the instance of the Board, to increase the scheme’s resources at any time after contracting-out, including a time when the scheme has ceased to be contracted-out.
Requirements for certification of occupational and personal money purchase schemes
22 Persons who may establish scheme.
The Department may prescribe descriptions of persons by whom or bodies by which the scheme may be established and, if the Department does so, the scheme may only be established by a person or body of a prescribed description.
23 Identification and valuation of protected rights.
1
Where the rules of the scheme make such provision as is mentioned in section 6(2) or (3), they must also make provision for the identification of the protected rights.
2
The value of such protected rights as are mentioned in section 6(2) or (3) must be calculated in a manner no less favourable than that in which the value of any other rights of the member to money purchase benefits under the scheme are calculated.
3
Subject to subsection (2), the value of protected rights must be calculated and verified in such manner as may be prescribed.
24 Ways of giving effect to protected rights.
1
The rules of the scheme must provide for effect to be given to the protected rights of a member—
a
in any case where subsection (3) so requires, by the purchase of such an annuity as is mentioned in that subsection, and
b
in any other case, in such of the ways permitted by the following subsections as the rules may specify,
and they must not provide for any part of a member’s protected rights to be discharged otherwise than in accordance with those subsections.
2
Effect may be given to protected rights—
a
by the provision by the scheme of a pension which—
i
complies with the pension requirements (within the meaning of section 25(1)), and
ii
satisfies such conditions as may be prescribed; or
b
in such circumstances and subject to such conditions as may be prescribed, by the making of a transfer payment—
i
in the case of an occupational pension scheme, to another occupational pension scheme or to a personal pension scheme, and
ii
in the case of a personal pension scheme, to another personal pension scheme or to an occupational pension scheme,
where the scheme to which the payment is made satisfies such requirements as may be prescribed.
3
Subject to subsections (5) and (7), if—
a
the rules of the scheme do not provide for a pension; or
b
the member so elects,
then, except to the extent that effect is given to protected rights in accordance with subsection (4), effect shall be given to them by the purchase by the scheme of an annuity which—
i
complies with the annuity requirements (within the meaning of section 25(3)), and
ii
satisfies such conditions as may be prescribed.
4
Effect may be given to protected rights by the provision of a lump sum if—
a
the lump sum is payable on a date which is—
i
in the case of an occupational pension scheme, a date not earlier than that on which the member attains the age of 60 nor later than that on which he attains the age of 65, or
ii
in the case of a personal pension scheme, the date on which the member attains pensionable age, or
iii
in either case, such later date as has been agreed by him;
b
the annual rate of a pension under subsection (2) or an annuity under subsection (3) giving effect to the protected rights and commencing on the date on which the lump sum is payable would not exceed the prescribed amount;
c
the circumstances are such as may be prescribed; and
d
the amount of the lump sum is calculated in a manner satisfactory to the Board by reference to the amount of the pension or annuity.
5
If the member has died without effect being given to protected rights under subsection (2), (3) or (4), effect may be given to them in such manner as may be prescribed.
6
No transaction is to be taken to give effect to protected rights unless it falls within this section.
7
Effect need not be given to protected rights if they have been extinguished—
a
in the case of an occupational pension scheme, by the payment of a contracted-out protected rights premium under section 51; or
b
in the case of a personal pension scheme, by the payment of a personal pension protected rights premium under that section.
24AF6 Requirements for interim arrangements.
C51
An interim arrangement must provide for payments to be made to the member, and, where subsection (2) applies, to the member’s widow or widower, throughout the interim period, at intervals not exceeding twelve months.
2
This subsection applies where the member dies during the interim period and is survived by a widow or widower who at the date of the member’s death has not yet attained the age of 75 years.
C53
The aggregate amount of payments made to a person under an interim arrangement in each successive period of twelve months must not be—
a
greater than the annual amount of the annuity which would have been purchasable by him on the relevant reference date, or
b
less than the prescribed percentage of that amount
C54
The percentage prescribed under subsection (3)(b) may be zero.
C55
For the purposes of this section—
a
the annual amount of the annuity which would have been purchasable by a person on any date shall be calculated in the prescribed manner by reference to—
i
the value on that date, determined by or on behalf of the trustees or managers of the scheme, of the person’s protected rights, and
ii
the current published tables of rates of annuities prepared by the Government Actuary for the purposes of section 28A of the Pension Schemes Act 1993, and
b
the relevant reference date is—
i
in relation to payments made to the member during the three years beginning with (and including) the member’s starting date, that date, and in relation to such payments made during each succeeding period of three years, the first day of the period of three years in question, or
ii
where subsection (2) applies, in relation to payments made to the member’s widow or widower during the three years beginning with (and including) the date of the member’s death, that date, and in relation to such payments made during each succeeding period of three years, the first day of the period of three years in question.
24BF9 Information about interim arrangements.
1
The trustees or managers of a personal pension scheme must, if required to do so by the Department, produce any document relevant to—
a
the level of payments made under any interim arrangement, or
b
the value of protected rights to which such an arrangement gives effect,
or otherwise connected with the making of payments under such an arrangement.
2
In this section, “document” includes information recorded in any form, and the reference to the production of a document, in relation to information recorded otherwise than in legible form, is a reference to producing a copy of the information in legible form.
25 The pension and annuity requirements.
1
For the purposes of section 24 a pension complies with the pension requirements if—
a
it commences—
i
in the case of an occupational pension scheme, on a date not earlier than that on which the member attains the age of 60 nor later than that on which he attains the age of 65, or
ii
in the case of a personal pension scheme, on the date on which the member attains pensionable age, or
iii
in either case, on such later date as has been agreed by him,
and continues until the date of his death; and
b
in a case where the member dies while it is payable to him and is survived by a widow or widower—
i
it is payable to the widow or widower in prescribed circumstances and for the prescribed period at an annual rate which at any given time is one-half of the rate at which it would have been payable to the member if the member had been living at that time; or
ii
where that annual rate would not exceed a prescribed amount and the circumstances are such as may be prescribed, a lump sum calculated in a manner satisfactory to the Board is provided in lieu of it.
2
As respects the period of 5 years beginning with the commencement of the pension referred to in subsection (1), that subsection shall have effect in relation to that pension as if the words “at least” were inserted immediately before the words “one-half” in paragraph (b)(i).
3
For the purposes of section 24 an annuity complies with the annuity requirements if—
a
it satisfies the requirements mentioned in subsections (1) and (2) (taking the references in those subsections to pensions as references to annuities); and
b
it is provided by an insurance company which—
i
satisfies prescribed conditions;
ii
complies with such conditions as may be prescribed as to the calculation of annuities provided by it and as to the description of persons by or for whom they may be purchased; and
iii
subject to subsection (4), has been chosen by the member.
4
A member is only to be taken to have chosen an insurance company if he gives notice of his choice to the trustees or managers of the scheme within the prescribed period and in such manner and form as may be prescribed, and with any such supporting evidence as may be prescribed; and, if he does not do so, the trustees or managers may themselves choose the insurance company instead.
26 Securing of liability for protected rights.
1
The Board must be satisfied that the scheme complies with any such requirements as may be prescribed for meeting the whole or a prescribed part of any liability in respect of protected rights under the scheme which the scheme is unable to meet from its own resources—
a
by reason of the commission by any person of a criminal offence;
b
in such other circumstances as may be prescribed.
2
Subsection (1) does not apply to a public service pension scheme.
27 Investment and resources of schemes.
1
The scheme must comply with such requirements as may be prescribed as regards the investment of its resources and with any direction of the Board—
a
that no part, or no more than a specified proportion, of the scheme’s resources shall be invested in investments of a specified class or description;
b
that the whole or a specified proportion of investments of a specified class or description forming part of the scheme’s resources when the direction is given shall be realised before the end of a specified period.
2
The scheme must comply with such requirements as may be prescribed as regards the part—
a
of any payment that is made to the scheme by or on behalf of a member of the scheme;
b
of any income or capital gain arising from the investment of such a payment; or
c
of the value of rights under the scheme,
that may be used—
i
to defray the administrative expenses of the scheme;
ii
to pay commission; or
iii
in any other way which does not result in the provision of benefits for or in respect of members.
3
Subject to subsection (4)—
a
in the case of an occupational pension scheme, all minimum payments and any payments made by the Department under Article 9 of the M13Social Security (Northern Ireland) Order 1986, and
b
in the case of a personal pension scheme, all minimum contributions,
which are paid to a scheme in respect of one of its members must be applied so as to provide money purchase benefits for or in respect of that member, except so far as they are used—
i
to defray the administrative expenses of the scheme; or
ii
to pay commission.
4
If regulations are made under subsection (2), the payments mentioned in paragraph (a) of subsection (3) and the contributions mentioned in paragraph (b) of that subsection may be used in any way which the regulations permit, but not in any way not so permitted except to provide money purchase benefits for or in respect of the member.
28 Suspension or forfeiture.
Except in such circumstances as may be prescribed, the rules of the scheme must not permit the suspension or forfeiture of a member’s protected rights or of payments giving effect to them.
28AF7 Discharge of protected rights on winding up: insurance policies.
1
Where an occupational pension scheme is being wound up and such conditions as may be prescribed are satisfied, effect may be given to the protected rights of a member of the scheme (in spite of section 24) by—
a
taking out an appropriate policy of insurance, or a number of such policies, under which the member is the beneficiary, or
b
assuring the benefits of a policy of insurance, or a number of such policies, to the member, where the policy assured is an appropriate policy.
2
A policy of insurance is appropriate for the purposes of this section if—
a
the insurance company with which it is or was taken out or entered into—
i
is, or was at the time when the policy was taken out or (as the case may be) the benefit of it was assured, carrying on ordinary long-term insurance business (within the meaning of the Insurance Companies Act 1982) in the United Kingdom or any other member State, and
ii
satisfies, or at that time satisfied, prescribed requirements, and
b
it may not be assigned or surrendered except on conditions which satisfy such requirements as may be prescribed,
c
it contains or is endorsed with terms whose effect is that the amount secured by it may not be commuted except on conditions which satisfy such requirements as may be prescribed, and
d
it satisfies such other requirements as may be prescribed.
29 Tax requirements to prevail over certification requirements.
Nothing in sections 22 to 28 shall be taken to prejudice any requirements with which a scheme must comply if it is to qualify for tax-exemption or tax-approval.
29AF10 Appropriate schemes: “Blowing the whistle”.
1
If any person acting as an auditor or actuary of an appropriate scheme has reasonable cause to believe that—
a
any requirement which, in the case of the scheme, is required by section 5(5)(a) to be satisfied is not satisfied, and
b
the failure to satisfy the requirement is likely to be of material significance in the exercise by the Department of any of its functions relating to appropriate schemes,
that person must immediately give a written report of the matter to the Department.
2
No duty to which a person acting as auditor or actuary of an appropriate scheme is subject shall be regarded as contravened merely because of any information or opinion contained in a written report under this section.
Cancellation, variation, surrender and refusal of certificates
30 Cancellation, variation, surrender and refusal of certificates.
1
Regulations shall provide for the cancellation, variation or surrender of any contracting-out certificate or appropriate scheme certificate, or the issue of an amended certificate—
a
in the case of a contracting-out certificate, on any change of circumstances affecting the treatment of an employment as contracted-out employment; and
b
in the case of an appropriate scheme certificate, on any relevant change of circumstances.
2
Regulations may enable the Board to cancel or vary a contracting-out certificate where—
a
they have reason to suppose that any employment to which it relates ought not to be treated as contracted-out employment in accordance with the certificate; and
b
the employer does not show that it ought to be so treated.
3
Where—
a
by or by virtue of any provision of this Part the contracting-out of a scheme in relation to an employment depends on the satisfaction of a particular condition, or
b
by or by virtue of any provision of sections 22 to 28 a scheme’s being an appropriate scheme depends on the satisfaction of a particular condition,
the continued contracting-out of the scheme or, as the case may be, the scheme’s continuing to be an appropriate scheme shall be dependent on continued satisfaction of the condition; and if the condition ceases to be satisfied, that shall be a ground (without prejudice to any other) for the cancellation or variation of the contracting-out or appropriate scheme certificate.
4
A contracting-out certificate in respect of any employment may be withheld or cancelled by the Board if they consider that there are circumstances which make it inexpedient that the employment should be or, as the case may be, continue to be, contracted-out employment by reference to the scheme, notwithstanding that the relevant scheme is one that they would otherwise treat as proper to be contracted-out in relation to all earners in that employment.
5
An appropriate scheme certificate may be withheld or cancelled by the Board if they consider that there are circumstances which make it inexpedient that the scheme should be or continue to be an appropriate scheme, notwithstanding that they would otherwise issue such a certificate or not cancel such a certificate.
6
Without prejudice to their powers apart from this subsection, the Board may withhold or cancel a contracting-out certificate in respect of a scheme if they consider that the rules of the scheme are such that persons over particular ages may be prevented from participating in the scheme.
7
Without prejudice to the previous provisions of this section—
a
non-compliance with any such condition as is mentioned in subsection (1) of section 21 shall be a ground on which the Board may withhold or cancel a contracting-out certificate in respect of any employment within the application of the scheme; and
b
non-compliance with any such condition as is mentioned in subsection (2) of that section shall be a ground on which the Board may cancel a contracting-out certificate issued in respect of any such employment.
8
Except in prescribed circumstances, no cancellation, variation or surrender of a contracting-out certificate or appropriate scheme certificate shall have effect from a date earlier than that on which the cancellation, variation or surrender is made.
31 Surrender and cancellation of contracting-out certificates: issue of further certificates.
1
This section applies in any case where—
a
a contracting-out certificate (“the first certificate”) has been surrendered by an employer or cancelled by the Board; and
b
at any time before the end of the period of 12 months beginning with the date of the surrender or cancellation, that or any connected employer makes an election under section 7 in respect of any employment which was specified by virtue of section 3(2)(a) in the first certificate, with a view to the issue of a further contracting-out certificate.
2
This section applies whether or not the scheme specified in the first certificate in relation to the employment concerned is the same as the scheme which would be specified in the further certificate if it were issued.
3
The Board shall not give effect to the election referred to in subsection (1) by issuing a further certificate unless they consider that, in all the circumstances of the case, it would be reasonable to do so.
4
Regulations may make such supplemental provision in relation to cases falling within this section as the Department considers necessary or expedient.
5
For the purposes of subsection (1)—
a
an employment (“the second employment”) in respect of which an election of the kind referred to in subsection (1)(b) has been made; and
b
an employment (“the first employment”) which was specified by virtue of section 3(2)(a) in the first certificate,
shall be treated as one employment if, in the opinion of the Board—
i
they are substantially the same, however described; or
ii
the first employment falls wholly or partly within the description of the second employment or the second employment falls wholly or partly within the description of the first employment.
6
Regulations shall prescribe the cases in which employers are to be treated as connected for the purposes of this section.
32 Surrender and cancellation of contracting-out certificates: cancellation of further certificates.
1
This section applies in any case where—
a
a contracting-out certificate (“the first certificate”) has been surrendered by an employer or cancelled by the Board;
b
a further contracting-out certificate (“the further certificate”) has been issued, after the surrender or cancellation of the first certificate but before the end of the period of 12 months beginning with the date of the surrender or cancellation, in respect of any employment which was specified by virtue of section 3(2)(a) in the first certificate; and
c
the Board have formed the opinion that had they been aware of all the circumstances of the case at the time when the further certificate was issued they would have been prevented by section 31(3) from issuing it.
2
This section applies whether or not the scheme specified in the first certificate in relation to the employment concerned is the same as the scheme specified in the further certificate.
3
The Board may, before the end of the period of 12 months beginning with the date on which the further certificate was issued, cancel that certificate.
4
Where a contracting-out certificate is cancelled under subsection (3) the provisions of this Act and of any regulations and orders made under it shall have effect as if the certificate had never been issued.
5
Regulations may make such supplemental provision in relation to cases falling within this section as the Department considers necessary or expedient.
6
Without prejudice to subsection (5), regulations may make provision, in relation to any case in which the Board have cancelled a contracting-out certificate under subsection (3), preventing the recovery by the employer concerned (whether by deduction from emoluments or otherwise) of such arrears which he is required to pay to the Department in respect of an earner’s liability under section 6(3) of the M1Social Security Contributions and Benefits (Northern Ireland) Act 1992 as may be prescribed.
7
For the purposes of subsection (1)—
a
an employment (“the second employment”) in respect of which a further contracting-out certificate of the kind referred to in subsection (1)(b) has been issued; and
b
an employment (“the first employment”) which was specified by virtue of section 3(2)(a) in the first certificate,
shall be treated as one employment if, in the opinion of the Board—
i
they are substantially the same, however described; or
ii
the first employment falls wholly or partly within the description of the second employment or the second employment falls wholly or partly within the description of the first employment.
Alteration of scheme rules after certification
33 Alteration of rules of contracted-out schemes.
1
Subject to subsection (2), where a contracting-out certificate has been issued, no alteration of the rules of the relevant scheme shall be made so as to affect any of the matters dealt with in this Part (other than sections 14, 15 and 39 to 41, and sections 22 to 29 so far as they apply to personal pension schemes) or Chapter III of Part IV or Chapter II of Part V without the consent of the Board.
C102
Subsection (1) does not apply—
a
b
to an alteration of a prescribed description.
3
Subject to subsection (4), any alteration to which subsection (1) applies shall be void if it is made without the consent of the Board.
4
A consent given by the Board for the purposes of this section shall, if and to the extent that the Board so direct, operate so as to validate with retrospective effect any alteration of the rules which would otherwise be void under this section.
5
This section shall continue in force in relation to a scheme after it has ceased to be contracted-out so long as—
a
any person is entitled to receive, or has accrued rights to, a guaranteed minimum pension under the scheme, or
b
any person has protected rights under it or is entitled to any benefit giving effect to protected rights under it.
6
The reference in subsection (5) to a person entitled to receive a guaranteed minimum pension includes a reference to a person so entitled by virtue of being the widower of an earner only in such cases as may be prescribed.
34 Alteration of rules of appropriate schemes.
1
Where an appropriate scheme certificate has been issued, no alteration of the rules of the relevant scheme shall be made so as—
a
to affect any of the matters dealt with in sections 22 to 29; or
b
to cause the scheme to take a different permitted form from that previously taken,
unless—
i
the Board have given their consent to the alteration; and
ii
notice of intention to apply for their consent was given in accordance with the requirements mentioned in subsection (7) or was so given except in so far as the Board dispenses with the necessity for such a notice.
2
Subsection (1) does not apply to an alteration of a prescribed description.
3
Subject to subsection (4), any alteration to which subsection (1) applies shall be void if it is made without the conditions mentioned in subsection (1) being satisfied.
4
A consent given by the Board for the purposes of this section shall, if and to the extent that the Board so direct, operate so as to validate with retrospective effect any alteration of the rules which would otherwise be void under this section.
5
This section shall continue in force in relation to a scheme after it has ceased to be an appropriate scheme so long as any person has protected rights under the scheme.
6
The reference in subsection (1)(b) to a permitted form is to one of the following forms, namely—
a
an arrangement for the issue of insurance policies or annuity contracts;
b
c
an arrangement for the investment of contributions in an interest-bearing account (including shares in or deposits with a building society (within the meaning of the M19Building Societies Act 1986)).
7
The requirements referred to in subsection (1)(ii) are—
a
that the notice is given in writing—
i
to any member of the scheme who has protected rights under it; and
ii
to any earner who has given a notice under section 40(1) jointly with the managers or trustees of the scheme, being a notice which has not been cancelled,
by sending it to his last known address; and
b
that the notice specifies—
i
the name of the scheme,
ii
the nature of the proposed alteration and its effect on the persons to whom the notice is given, and
iii
the date on which it is proposed that the alteration should take effect (which must not be less than 3 months after that on which the notice is given).
General regulations as to administration of Part III
35 General power to make regulations.
Schedule 1 shall have effect for enabling regulations to be made in relation to the operation and administration of this Part, and Part I of that Schedule has effect as respects occupational pension schemes, and Part II of that Schedule as respects personal pension schemes.
Chapter II Reduction in State Scheme Contributions and Social Security Benefits for Members of Certified Schemes
Preliminary
36 Scope of Chapter II.
This Chapter has effect for the purpose—
a
of reducing the rates at which certain national insurance contributions are payable by or in respect of earners whose employment is contracted-out by reference to contracted-out occupational pension schemes;
b
of providing for contributions to be paid by the Department in respect of earners who are members of appropriate personal pension schemes; and
c
of making provision concerning the payment of certain social security benefits payable in respect of members and former members of such schemes.
Reduced rates of state scheme Class 1 contributions
37 Reduced rates of Class 1 contributions for earners in contracted-out employment.
1
Where the earnings paid to or for the benefit of an earner in any tax week are in respect of an employment which is contracted-out employment at the time of the payment, the amount of a Class 1 contribution in respect of so much of the earnings paid in that week as exceeds the current lower earnings limit but not the current upper earnings limit for that week (or the prescribed equivalents if he is paid otherwise than weekly) shall be reduced—
a
in the case of a primary Class 1 contribution, by an amount equal to 1.8 per cent. of that part of those earnings; and
b
in the case of a secondary Class 1 contribution, by an amount equal to 3 per cent. of that part of those earnings.
2
Where—
a
an earner has ceased to be employed in an employment; and
b
earnings are paid to him or for his benefit within the period of 6 weeks, or such other period as may be prescribed, from the day on which he so ceased,
that employment shall be treated for the purposes of subsection (1) as contracted-out employment at the time when the earnings are paid if it was contracted-out employment in relation to the earner when he was last employed in it.
3
This section shall not affect the amount of any primary Class 1 contribution which is payable at a reduced rate by virtue of regulations under section 19(4) of the M20Social Security Contributions and Benefits (Northern Ireland) Act 1992 (reduced rates for married women and widows).
38 Alteration of rates of contributions under s. 37.
1
Whenever the Secretary of State makes an order under section 42 of the M21Pension Schemes Act 1993 altering, with effect from any date, either or both of the contracted-out percentages for the time being applying under section 41 of that Act, the Department may make a corresponding order for Northern Ireland altering, with effect from the same date, either or both of the contracted-out percentages applying under section 37.
2
An order under subsection (1) may contain consequential provisions altering any percentage for the time being specified in paragraph 2(3) of Schedule 3 as that percentage applies in relation to earnings paid or payable on or after the day as from which the order is to have effect.
F14 Reduced rates of contributions, and rebates, for members of money purchase contracted-out schemes
S. 38A and the cross-heading inserted (14.3.1996 for certain purposes and 6.4.1996 for other specified purposes otherwise 6.4.1997) by S.I. 1995/3213 (N.I. 22), art. 134(4); S.R. 1996/91, art. 2(a)(d), Sch. Pts. I IV; S.R. 1997/192, art. 2(b)
38AF15 Reduced rates of Class 1 contributions and rebates.
1
Subsections (2) and (3) apply where—
a
the earnings paid to or for the benefit of an earner in any tax week are in respect of an employment which is contracted-out employment at the time of the payment, and
b
the earner’s service in the employment is service which qualifies him for a pension provided by a money purchase contracted-out scheme.
2
The amount of a Class 1 contribution in respect of so much of the earnings paid in that week in respect of that employment as exceeds the current lower earnings limit but not the current upper earnings limit for that week (or the prescribed equivalents if he is paid otherwise than weekly) shall be reduced by an amount equal to the appropriate flat-rate percentage of that part of those earnings.
3
The Department shall, except in prescribed circumstances or in respect of prescribed periods, pay in respect of that earner and that tax week to the trustees or managers of the scheme or, in prescribed circumstances, to a prescribed person, the amount by which—
a
the appropriate age-related percentage of that part of those earnings,
exceeds
b
the appropriate flat-rate percentage of that part of those earnings.
4
Regulations may make provisions—
a
as to the manner in which and time at which or period within which payments under subsection (3) are to be made,
b
for the adjustment of the amount which would otherwise be payable under that subsection so as to avoid the payment of trivial or fractional amounts,
c
for earnings to be calculated or estimated in such manner and on such basis as may be prescribed for the purpose of determining whether any, and if so what, payments under subsection (3) are to be made.
5
If the Department pays an amount under subsection (3) which it is not required to pay or is not required to pay to the person to whom, or in respect of whom, the Department pays it, the Department may recover it from any person to whom, or in respect of whom, the Department paid it.
6
Where—
a
an earner has ceased to be employed in an employment, and
b
earnings are paid to him or for his benefit within the period of six weeks, or such other period as may be prescribed, from the day on which he so ceased,. that employment shall be treated for the purposes of this section as contracted-out employment at the time when the earnings are paid if it was contracted-out employment in relation to the earner when he was last employed in it
7
Subsection (3) of section 37 applies for the purposes of this section as it applies for the purposes of that.
38BF16 Determination and alteration of rates of contributions, and rebates, applicable under section 38A.
Whenever the Secretary of State makes an order under section 42B of the Pension Schemes Act 1993, (determination and alteration of reduced rates of primary and secondary Class 1 contributions for members of money purchase contracted-out schemes), the Department may make a corresponding order for Northern Ireland.
Minimum contributions: members of appropriate personal pension schemes
39 Payment of minimum contributions to personal pension schemes.
1
Subject to the following provisions of this Part, the Department shall, except in such circumstances as may be prescribed, pay minimum contributions in respect of an employed earner for any period during which the earner—
a
is over the age of 16 but has not attained pensionable age;
b
is not a married woman or widow who has made an election which is still operative that her liability in respect of primary Class 1 contributions shall be a liability to contribute at a reduced rate; and
c
is a member of an appropriate personal pension scheme which is for the time being the earner’s chosen scheme.
2
Subject to subsection (3), minimum contributions in respect of an earner shall be paid to the trustees or managers of the earner’s chosen scheme.
3
In such circumstances as may be prescribed minimum contributions shall be paid to a prescribed person.
4
Where the condition mentioned in subsection (1)(a) or (c) ceases to be satisfied in the case of an earner in respect of whom the Department is required to pay minimum contributions, the duty of the Department to pay them shall cease as from a date determined in accordance with regulations.
5
If the Department pays an amount by way of minimum contributions which it is not required to pay, the Department may recover it—
a
from the person to whom the Department paid it, or
b
from any person in respect of whom the Department paid it.
6
If the Department pays in respect of an earner an amount by way of minimum contributions which the Department is required to pay, but does not pay it to the trustees or managers of the earner’s chosen scheme, the Department may recover it from the person to whom the Department paid it or from the earner.
40 Earner’s chosen scheme.
1
Where an earner and the trustees or managers of an appropriate personal pension scheme have jointly given notice to the Department, in such manner and form and with such supporting evidence as may be prescribed—
a
that the earner is, or intends to become, a member of the scheme and wishes minimum contributions in respect of him to be paid to the scheme under section 39;
b
that the trustees or managers have agreed to accept him as a member of the scheme and to receive such minimum contributions in respect of him,
that scheme is the earner’s chosen scheme for the purposes of section 39 as from a date determined in accordance with regulations and specified in the notice, unless at that date some other appropriate scheme is the earner’s chosen scheme for those purposes.
2
Either an earner or the trustees or managers of the scheme may cancel a notice under subsection (1) by giving notice to that effect to the Department at such time and in such manner and form as may be prescribed.
3
When a notice under subsection (2) is given, the scheme ceases to be the earner’s chosen scheme as from a date determined in accordance with regulations and specified in the notice.
41 Amount of minimum contributions.
1
Subject to subsection (2), in relation to any tax week falling within a period for which the Department is required to pay minimum contributions in respect of an earner, the amount of those contributions shall be an amount equal to the aggregate amount of the reductions in Class 1 contributions which would fall to be made under section 37(1) if any employment of his which is not contracted-out were contracted-out employment.
2
Where—
a
subsection (1) applies;
b
the tax year in which the tax week falls ends before such date as may be prescribed; and
c
the earner was over the age of 30 on the 6th April with which the tax year began,
there shall be added to the amount payable under that subsection an amount equal to 1 per cent. of so much of those earnings as respects which those reductions would fall to be made.
3
Regulations may make provision—
a
for earnings to be calculated or estimated in such manner and on such basis as may be prescribed for the purpose of determining whether any, and if so what, minimum contributions are payable in respect of them;
b
for the adjustment of the amount which would otherwise be payable by way of minimum contributions so as to avoid the payment of trivial or fractional amounts;
c
for the intervals at which, for the purposes of minimum contributions, payments of earnings are to be treated as made;
d
for the manner in which an earner’s age is to be verified for the purposes of subsection (2);
e
for this section to have effect in prescribed cases as if for any reference to a tax week there were substituted a reference to a prescribed period, and for the references to a tax week in section 37(1) to have effect accordingly so far as they apply for the purposes of this section;
f
as to the manner in which and time at which or period within which minimum contributions are to be made.
41AF12 Alteration of rates of minimum contributions under section 41.
Whenever the Secretary of State makes an order under section 45A of the Pension Schemes Act 1993 (determination and alteration of rates of contributions to personal pension schemes) the Department may make a corresponding order for Northern Ireland.
41BF13 Money purchase and personal pension schemes: verification of ages
1
Regulations may make provision for the manner in which an earner’s age is to be verified in determining the appropriate age-related percentages for the purposes of section 38A and 41(1).
2
Information held by the Department as to the age of any individual may, whether or not it was obtained in pursuance of regulations under subsection (1), be disclosed by the Department—
a
to the trustees or managers of a money purchase contracted-out scheme or an appropriate personal pension scheme, and
b
to such other persons as may be prescribed,
in connection with the making of payments under section 38A(3) or the payment of minimum contributions.
Effect of entitlement to guaranteed minimum pensions on payment of social security benefits
42 Effect of entitlement to guaranteed minimum pensions on payment of social security benefits.
1
Where for any period a person is entitled both—
a
to a Category A or Category B retirement pension, a widowed mother’s allowance, a widow’s pension or a widower’s invalidity pension under the M22Social Security Contributions and Benefits (Northern Ireland) Act 1992; and
b
to one or more guaranteed minimum pensions,
the weekly rate of the benefit mentioned in paragraph (a) shall for that period be reduced by an amount equal—
i
to its additional pension, or
ii
to the weekly rate of the pension mentioned in paragraph (b) (or, if there is more than one such pension, their aggregate weekly rates),
whichever is the less.
2
Where for any period—
a
a person is entitled to one or more guaranteed minimum pensions;
b
he is also entitled to an invalidity pension under section 33 of the M23Social Security Contributions and Benefits (Northern Ireland) Act 1992; and
c
the weekly rate of his invalidity pension includes an additional pension such as is mentioned in section 44(3)(b) of that Act,
for that period section 34 of that Act shall have effect as if the following subsection were substituted for subsection (5)—
5
In this section “the relevant amount” means an amount equal to the aggregate of—
a
the additional pension; and
b
the weekly rate or aggregate weekly rates of the guaranteed minimum pension or pensions,
reduced by the amount of any reduction in the weekly rate of the invalidity pension made by virtue of section 42(1) of the Pension Schemes (Northern Ireland) Act 1993.
3
Where for any period—
a
a person is entitled to one or more guaranteed minimum pensions;
b
he is also entitled to an invalidity pension under section 33 of the Social Security Contributions and Benefits (Northern Ireland) Act 1992; and
c
the weekly rate of his invalidity pension does not include an additional pension such as is mentioned in section 44(3)(b) of that Act,
for that period the relevant amount shall be deducted from the appropriate weekly rate of invalidity allowance and he shall be entitled to invalidity allowance only if there is a balance after the deduction and, if there is such a balance, at a weekly rate equal to it.
4
Where for any period—
a
a person is entitled to one or more guaranteed minimum pensions;
b
he is also entitled to a Category A retirement pension under section 44 of the Social Security Contributions and Benefits (Northern Ireland) Act 1992; and
c
the weekly rate of his pension includes an additional pension such as is mentioned in section 44(3)(b) of that Act,
for that period section 47 of that Act shall have effect as if the following subsection were substituted for subsection (3)—
3
In subsection (2) above “the relevant amount” means an amount equal to the aggregate of—
a
the additional pension; and
b
the weekly rate or aggregate weekly rates of the guaranteed minimum pension or pensions,
reduced by the amount of any reduction in the weekly rate of the Category A retirement pension made by virtue of section 42(1) of the Pension Schemes (Northern Ireland) Act 1993.
5
Where for any period—
a
a person is entitled to one or more guaranteed minimum pensions;
b
he is also entitled to a Category A retirement pension under section 44 of the M24Social Security Contributions and Benefits (Northern Ireland) Act 1992; and
c
the weekly rate of his Category A retirement pension does not include an additional pension such as is mentioned in subsection (3)(b) of that section,
for that period the relevant amount shall be deducted from the amount that would otherwise be the increase under section 47(1) of that Act and the pensioner shall be entitled to an increase under that section only if there is a balance remaining after that deduction and, if there is such a balance, of an amount equal to it.
6
Where for any period—
a
a person is entitled to one or more guaranteed minimum pensions;
b
he is also entitled—
i
to an invalidity pension under section 33 of the Social Security Contributions and Benefits (Northern Ireland) Act 1992;
ii
to a Category A retirement pension under section 44 of that Act; or
iii
to a Category B retirement pension under section 49 of that Act; and
c
the weekly rate of the pension includes an additional pension such as is mentioned in section 44(3)(b) of that Act,
for that period paragraph 3 of Schedule 7 to that Act shall have effect as if the following sub-paragraph were substituted for sub-paragraph (3)—
3
In this paragraph “the relevant amount” means an amount equal to the aggregate of—
a
the additional pension; and
b
the weekly rate or aggregate weekly rates of the guaranteed minimum pension or pensions,
reduced by the amount of any reduction in the weekly rate of the pension made by virtue of section 42(1) of the Pension Schemes (Northern Ireland) Act 1993.
7
Where for any period—
a
a person is entitled to one or more guaranteed minimum pensions;
b
he is also entitled to any of the pensions under the Social Security Contributions and Benefits (Northern Ireland) Act 1992 mentioned in subsection (6)(b); and
c
the weekly rate of the pension does not include an additional pension such as is mentioned in section 44(3)(b) of that Act,
for that period the relevant amount shall be deducted from the amount that would otherwise be the increase under paragraph 3 of Schedule 7 to that Act and the beneficiary shall be entitled to an increase only if there is a balance after that deduction and, if there is such a balance, only to an amount equal to it.
8
In this section “the relevant amount” means an amount equal to the weekly rate or aggregate weekly rates of the guaranteed minimum pension or pensions—
a
in the case of subsection (3), reduced by the amount of any reduction in the weekly rate of the invalidity pension made by virtue of subsection (1); and
b
in the case of subsection (5), reduced by the amount of any reduction in the weekly rate of the Category A retirement pension made by virtue of subsection (1);
and references in this section to the weekly rate of a guaranteed minimum pension are references to that rate without any increase under section 11(1).
9
Where subsection (3) applies, section 34(7) of the M25Social Security Contributions and Benefits (Northern Ireland) Act 1992 shall have effect as if for the words “subsection (4) above” there were substituted the words “
section 42(3) of the Pension Schemes (Northern Ireland) Act 1993
”
.
43 Further provisions concerning entitlement to guaranteed minimum pensions for the purposes of s. 42.
1
The reference in section 42(1) to a person entitled to a guaranteed minimum pension shall be construed as including a reference to a person so entitled by virtue of being the widower of an earner in any case where he is entitled to a widower’s invalidity pension, but where he is entitled to any other benefit that reference shall be so construed only if—
a
at the time of the earner’s death she and her husband had both attained pensionable age; or
b
he is also entitled to a Category A retirement pension by virtue of section 41(7) of the Social Security Contributions and Benefits (Northern Ireland) Act 1992.
2
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—
a
if its commencement had not been postponed, as mentioned in section 9(4); or
b
if there had not been made a transfer payment or transfer under regulations made by virtue of section 16 as a result of which—
i
he is no longer entitled to guaranteed minimum pensions under the scheme by which the transfer payment or transfer was made, and
ii
he has not become entitled to guaranteed minimum pensions under the scheme to which the transfer payment or transfer was made.
3
Where—
a
guaranteed minimum pensions provided for a member or the member’s widow or widower under a contracted-out scheme have been wholly or partly secured as mentioned in subsection (3) of section 15; and
b
either—
i
the transaction wholly or partly securing them was carried out before 1st January 1986 and discharged the trustees or managers of the scheme as mentioned in subsection (1) of that section; or
ii
it was carried out on or after that date without any of the requirements specified in subsection (5)(a) to (c) of that section being satisfied in relation to it and the scheme has been wound up; and
c
any company with which any relevant policy of insurance or annuity contract was taken out or entered into is unable to meet the liabilities under policies issued or securities given by it; and
d
the combined proceeds of—
i
any relevant policies and annuity contracts, and
ii
any cash sums paid or alternative arrangements made under the M26Policyholders Protection Act 1975,
are inadequate to provide the whole of the amount secured,
the member and the member’s widow or widower shall be treated for the purposes of section 42 as only entitled to such part (if any) of the member’s or, as the case may be, the member’s widow’s or widower’s guaranteed minimum pension as is provided by the proceeds mentioned in paragraph (d).
4
A policy or annuity is relevant for the purposes of subsection (3) if taking it out or entering into it constituted the transaction to which section 15 applies.
5
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—
a
if a lump sum had not been paid instead of that pension under provisions included in a scheme by virtue of section 17(1); or
b
if that pension had not been forfeited under provisions included in a scheme by virtue of section 17(2).
44 Reduced benefits where minimum payments or minimum contributions paid.
1
Subject to subsection (3), this subsection applies where for any period—
a
minimum payments have been made in respect of an earner to an occupational pension scheme which is a money purchase contracted-out scheme in relation to the earner’s employment, or
b
minimum contributions have been paid in respect of an earner under section 39.
2
Where subsection (1) applies then, for the purposes of section 42—
a
the earner shall be treated, as from the date on which he reaches pensionable age, as entitled to a guaranteed minimum pension at a prescribed weekly rate arising from that period in that employment;
b
in prescribed circumstances if the earner dies after reaching pensionable age any widow or widower of the earner shall be treated as entitled to a guaranteed minimum pension at a rate equal to one-half of the rate prescribed under paragraph (a); and
c
in prescribed circumstances if the earner dies before reaching pensionable age any widow or widower of the earner shall be treated as entitled to a guaranteed minimum pension at a prescribed weekly rate arising from that period;
and where subsection (1)(b) applies, paragraphs (a) to (c) of this subsection apply also for the purposes of sections 34(4) and 47(2) of the M27Social Security Contributions and Benefits (Northern Ireland) Act 1992 and paragraph 3(2) of Schedule 7 to that Act, but with the omission from paragraph (a) of the words “in that employment”.
3
Where the earner is a married woman or widow, subsection (1) shall not have effect by virtue of paragraph (a) of that subsection in relation to any period during which there is operative an election that her liability in respect of primary Class 1 contributions shall be a liability to contribute at a reduced rate.
4
The power to prescribe a rate conferred by subsection (2)(a) includes power to prescribe a nil rate.
F8 Effect of reduced contributions and rebates on social security benefits
S. 44A and cross-heading inserted (6.4.1996 for certain purposes otherwise 6.4.1997) by S.I. 1995/3213 (N.I. 22), art. 137(1); S.R. 1996/91, art. 2(d), Sch. Pt. IV; S.R. 1997/192, art. 2(b)
44AF17 Additional pension and other benefits.
1
In relation to any tax week there—
a
the amount of a Class 1 contribution in respect of the earnings paid to or for the benefit of an earner in that week is reduced under section 37 or 38A, or
b
an amount is paid under section 41(1) in respect of the earnings paid to or for the benefit of an earner,
section 44(6) of the Social Security Contributions and Benefits (Northern Ireland) Act 1992 (earnings factors for additional pension) shall have effect, except in prescribed circumstances, as if no primary Class 1 contributions had been paid or treated as paid upon those earnings for that week and section 45A of that Act did not apply (where it would, apart from this subsection, apply).
2
Where the whole or part of a contributions equivalent premium has been paid or treated as paid in respect of the earner, the Department may make a determination reducing or eliminating the application of subsection (1).
3
Subsection (1) is subject to regulations under paragraph 5(3A) to (3E) of Schedule 1.
4
Regulations may, so far as is required for the purpose of providing entitlement to additional pension (such as is mentioned in section 44(3)(b) of the Social Security Contributions and Benefits (Northern Ireland) Act 1992) but to the extent only that amount of additional pension is attributable to provision made by regulations under section 45(5) of that Act, disapply subsection (1).
5
In relation to earners where, by virtue of subsection (1), section 44(6) of Social Security Contributions and Benefits (Northern Ireland) Act 1992 has effect, in any tax year, as mentioned in that subsection in relation to some but not all of their earnings, regulations may modify the application of section 44(5) of that Act.
Married women and widows
45 Married women and widows.
The Department may make regulations modifying sections 37, 38, 42(1), 43(2) and (5) and 44 in such manner as it thinks proper, in their application to women who are or have been married.
Chapter III Termination of Contracted-out or Appropriate Scheme Status: State Scheme Premiums
Approval of arrangements for schemes ceasing to be certified
46 Powers of Board to approve arrangements for scheme ceasing to be certified.
1
In the case of an occupational pension scheme or a personal pension scheme which is or has been certified as a contracted-out or, as the case may be, an appropriate scheme, the Board may, for the event of, or in connection with, its ceasing to be such a scheme, approve any arrangements made or to be made in relation to the scheme, or for its purposes, for the preservation or transfer—
a
in the case of an occupational pension scheme other than a money purchase contracted-out scheme—
i
of earners’ accrued rights to guaranteed minimum pensions under the scheme;
ii
of the liability for the payment of guaranteed minimum pensions under the scheme in respect of persons who have then become entitled to receive them;
b
in the case of a money purchase contracted-out scheme or a personal pension scheme, of protected rights under the scheme.
2
If the scheme ceases to be a contracted-out scheme or an appropriate scheme (whether by being wound up or otherwise) and the Board either—
a
have withdrawn their approval of previously approved arrangements relating to it; or
b
have declined to approve arrangements relating to it,
the Board may issue a certificate to that effect.
3
A certificate issued under subsection (2)(a) or (b) shall be cancelled by the Board if they subsequently approve the arrangements.
4
Regulations may provide that where the Board have approved arrangements under subsection (1) in respect of an occupational pension scheme (other than a money purchase scheme) any provision of this Part (other than sections 14, 15, 22 to 29 and 39 to 41) or Chapter III of Part IV or Chapter II of Part V shall have effect subject to such modifications as may be specified in the regulations.
5
Any such regulations shall have effect in relation to arrangements whenever approved, unless they provide that they are only to have effect in relation to arrangements approved after they come into operation.
6
It is hereby declared that an approval of arrangements relating to an occupational pension scheme which is not a money purchase contracted-out scheme may be withdrawn at any time, notwithstanding that the scheme has been wound up.
7
For the purposes of this Chapter an earner’s accrued rights or, as the case may be, a person’s guaranteed minimum pension rights or protected rights are subject to approved arrangements if—
a
the Board have approved arrangements under subsection (1) (either before or after the scheme ceased to be certified as contracted-out or, as the case may be, as an appropriate scheme) which operate as respects him and the rights in question, and
b
they have not since withdrawn their approval of those arrangements.
47 Calculation of guaranteed minimum pensions preserved under approved arrangements.
1
This section applies where—
a
an earner’s guaranteed minimum pension rights or accrued rights to guaranteed minimum pensions under a scheme are subject to approved arrangements, and
b
one or more of the five tax years ending with the tax year in which the scheme ceases to be contracted-out is a relevant year in relation to the earner.
2
Where this section applies then, except in such circumstances as may be prescribed, section 12(1) shall have effect, subject to the following provisions, that is to say—
a
any earnings factor shall be taken to be that factor as increased by the last order under Article 23 of the M28Social Security Pensions (Northern Ireland) Order 1975 or section 130 of the M29Social Security Administration (Northern Ireland) Act 1992 to come into operation before those five tax years; and
b
any relevant earnings factors derived from contributions or earnings in respect of any year (“the relevant contributions year”) shall be treated as increased by 12 per cent. compound for each of those five tax years, other than any of those years which—
i
constitutes or begins before the relevant contributions year, or
ii
begins after the final relevant year in relation to the earner.
3
Subsection (2) shall not apply in any case where its application would result in the amount of the guaranteed minimum being greater than it would have been apart from that subsection.
4
Regulations may provide that subsections (1) to (3) shall have effect with prescribed modifications in relation to a scheme which, immediately before it ceased to be contracted-out, contained provisions authorised by section 12(2).
5
In this section “relevant year” and “final relevant year” have the same meanings as in section 12.
Supervision of formerly certified schemes
48 Supervision of schemes which have ceased to be certified.
1
Section 49 shall apply for the purpose of making provision for securing the continued supervision of occupational pension schemes as respects which subsection (2) applies and section 50 shall apply for the purpose of making corresponding provision in relation to personal pension schemes as respects which subsection (3) applies.
2
This subsection applies as respects any occupational pension scheme, other than a public service pension scheme, where—
a
the scheme has ceased to be a contracted-out scheme otherwise than by being wound up; and
b
there has not been a payment of a premium under section 51(1) in respect—
i
of each person entitled to receive, or having accrued rights to, guaranteed minimum pensions under the scheme; or
ii
of each person who has protected rights under it or is entitled to any benefit giving effect to protected rights under it.
3
This subsection applies as respects any personal pension scheme where—
a
the scheme has ceased to be an appropriate scheme otherwise than by being wound up; and
b
there has not been a payment of a premium under section 51(1) in respect of each person who has protected rights under it or is entitled to any benefit giving effect to protected rights under it.
4
Section 49 shall continue to apply so long as there is any such person as is mentioned in paragraph (b)(i) or (ii) of subsection (2) (but, where by virtue of section 15 a scheme has ceased to be liable to provide guaranteed minimum pensions for a member and the member’s widow or widower, the duties imposed on the Board by section 49 shall cease to subsist in relation to those pensions), and section 50 shall continue to apply so long as there is any such person as is mentioned in paragraph (b) of subsection (3).
5
For the purposes of subsections (2) and (4) a person in respect of whom a premium is not payable by virtue of regulation 17(2A) of the M30Occupational Pension Schemes (Contracting-out) Regulations (Northern Ireland) 1985 shall not be treated as such a person as is mentioned in paragraph (b)(ii) of subsection (2).
6
For the purposes of subsections (3) and (4) a person in respect of whom a premium is not payable by virtue of regulation 3 of the M31Personal Pension Schemes (Personal Pension Protected Rights Premiums) Regulations (Northern Ireland) 1987 shall not be treated as such a person as is mentioned in paragraph (b) of subsection (3).
49 Supervision: former contracted-out schemes.
1
The Board shall be under a duty to satisfy themselves as to—
a
the matters in respect of which they are required to be satisfied for contracting-out purposes under sections 19(1) and 20(1) or, as the case may be, under section 26(1); and
b
the soundness and adequacy of any investments held for the purposes of the scheme (so far as relevant to the considerations of section 20(1)).
2
Where the scheme was contracted-out subject to such conditions as are referred to in section 21(1) and (2) those conditions shall continue to be binding, notwithstanding that there is no contracting-out certificate in force.
3
Subsection (1) does not apply in the case of any scheme as to which the Board have issued a certificate under subsection (2) of section 46 which has not been cancelled under subsection (3) of that section.
4
If it appears to the Board that there has been, or is likely to be, a breach of any rule of the scheme relating to the matters dealt with in sections 5(2) and 9 to 21 or, as the case may be, sections 5(3) and 22 to 28, the Board may take such steps as they think expedient with a view to remedying or preventing the breach.
5
For that purpose they may themselves take any proceedings for enforcement of the rules which would be open to a person—
a
as an actual or prospective beneficiary under the scheme, or
b
as one of its trustees or managers, or
c
as being otherwise concerned with the scheme or its benefits,
and may assume the conduct of proceedings for enforcement brought by any such person.
50 Supervision: former appropriate personal pension schemes.
1
The Board shall be under a duty to satisfy themselves as to the matters in respect of which they are required to be satisfied under section 26(1) for the purposes of determining whether a personal pension scheme should be or continue to be an appropriate scheme.
2
Subsection (1) does not apply in the case of any scheme as to which the Board have issued a certificate under subsection (2) of section 46 which has not been cancelled under subsection (3) of that section.
3
If it appears to the Board that there has been, or is likely to be, a breach of any rule of the scheme relating to the matters dealt with in sections 5(5) and 22 to 28, the Board may take such steps as they think expedient with a view to remedying or preventing the breach, and section 49(5) applies for that purpose as it applies for the purpose there mentioned.
Pt. 3: power to modify conferred (1.6.1996 for certain purposes otherwise 6.4.1997) by S.I. 1995/3213 (N.I. 22), art. 146(1); S.R. 1996/91, art. 2(f); S.R. 1997/192, art. 2
Pt. 3: power to transfer functions conferred (1.4.1999) by 1999 c. 2, s. 23(1)(2)(6); S.I. 1999/527, art. 2(b), Sch. 2