Pensions Act 2004

This section has no associated Explanatory Notes

11(1)Compensation is payable in accordance with this paragraph where a person who, under the admissible rules, is (immediately before the assessment date) an active member of the scheme has not, before that date, attained normal pension age in respect of his rights under the admissible rules of the scheme to a pension.E+W+S

(2)If the active member survives to attain normal pension age in respect of that pension (“the pension”), he is entitled to periodic compensation in respect of the pension commencing at that age and continuing for life.

(3)The annual rate of the periodic compensation is 90% of the aggregate of—

(a)the protected notional pension, and

(b)any increases under paragraph 28 (annual increases in periodic compensation).

(4)In sub-paragraph (3) “the protected notional pension” means the aggregate of—

(a)the accrued amount, and

(b)the revaluation amount for the revaluation period (see paragraph 12).

(5)Subject to sub-paragraphs (6) and (7), the accrued amount is—

where—

AR is the active member’s annual accrual rate in respect of the pension under the admissible rules,

PE is the active member’s annual pensionable earnings in respect of the pension under the admissible rules, and

PS is the active member’s pensionable service in respect of the pension under the admissible rules in years (including any fraction of a year).

(6)If the accrual rates or pensionable earnings differ in respect of different parts of the active member’s pensionable service relating to the pension, an amount is calculated in accordance with the formula in sub-paragraph (5) in respect of each of those parts and the accrued amount is the aggregate of those amounts.

For this purpose the references in sub-paragraph (5) to the active member’s pensionable service, accrual rate and pensionable earnings are to be read as references to the part of his pensionable service in question and to his accrual rate and pensionable earnings in respect of that part.

(7)In any case where the Board is satisfied that it is not possible to identify one or more of the elements of the formula in sub-paragraph (5), the Board may, having regard to the admissible rules, determine how the accrued amount is to be calculated.

(8)This paragraph is subject to—

  • paragraph 20 (compensation in respect of scheme right to transfer payment or contribution refund),

  • paragraph 24 (commutation),

  • [F1paragraph 25E (terminal illness lump sum),]

  • paragraph 26 (compensation cap), and

  • paragraph 30 (power of Secretary of State to change percentage rates by order).

Textual Amendments

F1Words in Sch. 7 para. 11(8) inserted (1.4.2009) by Pensions Act 2008 (c. 30), s. 149(1), Sch. 8 para. 4; S.I. 2009/809, art. 2(1)(b)(i)

Modifications etc. (not altering text)

C9Sch. 7 para. 11 modified by S.I. 2005/670, reg. 26(2) (as inserted (6.4.2010) by The Pension Protection Fund (Miscellaneous Amendments) Regulations 2010 (S.I. 2010/560), regs. 1(2)(b), 4(4))

C10Sch. 7 para. 11 modified by S.I. 2005/670, reg. 27(2) (as inserted (6.4.2010) by The Pension Protection Fund (Miscellaneous Amendments) Regulations 2010 (S.I. 2010/560), regs. 1(2)(b), 4(4))

Commencement Information

I1Sch. 7 para. 11 in force at 6.4.2005 by S.I. 2005/275, art. 2(7), Sch. Pt. 7