C1C2C4Part I Occupational pensions

Annotations:
Modifications etc. (not altering text)
C4

Pt. I: Pensions Act 2004 (c.35), Pt. 3 construed as one with Pt. I of this Act (4.12.2005 for specified purposes, 30.12.2005 in so far as not already in force) by Pensions Act 2004 (c. 35), ss. 233, 322(1) (with s. 313); S.I. 2005/3331, art. 2(1)(a)(b), Sch. Pt. 1

Indexation

C351ZBF1Meaning of “cash balance benefit”

1

For the purposes of section 51(7)(a), a pension provided to or in respect of a member of an occupational pension scheme is a “cash balance benefit” if conditions 1 and 2 are met.

2

Condition 1 is that the rate of the pension is calculated by reference to a sum of money (“the available sum”) which is available under the scheme for the provision of benefits to or in respect of the member.

3

Condition 2 is that under the scheme—

a

there is a promise about the amount of the available sum, but

b

there is no promise about the rate or amount of the benefits to be provided.

4

The promise mentioned in subsection (3)(a) includes in particular a promise about the change in the value of, or the return from, payments made under the scheme by the member or by any other person in respect of the member.

5

The promise mentioned in subsection (3)(b) includes a promise that—

a

the amount of the available sum will be sufficient to provide benefits of a particular rate or amount;

b

the rate or amount of a benefit will represent a particular proportion of the available sum.

6

But a pension is not prevented from being a cash balance benefit merely because under the scheme there is a promise that—

a

the rate or amount of a benefit payable in respect of a deceased member will be a particular proportion of the rate or amount of a benefit which was (or would have been) payable to the member;

b

the amount of a lump sum payable to a member, or in respect of a deceased member, will represent a particular proportion of the available sum.