Part 2The Board of the Pension Protection Fund
Chapter 3Pension protection
Restrictions on schemes during the assessment period
138Payment of scheme benefits
(1)
Subsections (2) and (3) apply where there is an assessment period in relation to an eligible scheme.
(2)
The benefits payable to or in respect of any member under the scheme rules during the assessment period must be reduced to the extent necessary to ensure that they do not exceed the compensation which would be payable to or in respect of the member in accordance with this Chapter if—
(a)
the Board assumed responsibility for the scheme in accordance with this Chapter, and
(b)
the assessment date referred to in Schedule 7 were the date on which the assessment period began.
(3)
But where, on the commencement of the assessment period—
(a)
a member’s pensionable service terminates, and
(b)
he becomes a person to whom Chapter 5 of Part 4 of the Pension Schemes Act 1993 (c. 48) (early leavers: cash transfer sums and contribution refunds) applies,
no benefits are payable to or in respect of him under the scheme during the assessment period.
(4)
Section 150(5) (retrospective accrual of benefits in certain circumstances) is to be disregarded for the purposes of determining whether a member falls within paragraph (a) or (b) of subsection (3).
(5)
Nothing in subsection (3) prevents the payment of benefits attributable (directly or indirectly) to a pension credit, during the assessment period, in accordance with subsection (2).
(6)
Where at any time during the assessment period the scheme is being wound up, subject to any reduction required under subsection (2) and to subsection (3), the benefits payable to or in respect of any member under the scheme rules during that period are the benefits that would have been so payable in the absence of the winding up of the scheme.
(7)
Subsections (2), (3) and (6) are subject to sections 150(1) to (3) and 154(13) (which provide for the adjustment of amounts paid during an assessment period when that period ends other than as a result of the Board assuming responsibility for the scheme).
(8)
For the purposes of subsections (2) and (3) the trustees or managers of the scheme may take such steps as they consider appropriate (including steps adjusting future payments under the scheme rules) to recover any overpayment or pay any shortfall.
(9)
Section 10 of the Pensions Act 1995 (c. 26) (civil penalties) applies to a trustee or manager of a scheme who fails to take all reasonable steps to secure compliance with subsections (2) and (3).
(10)
Regulations may provide that, where there is an assessment period in relation to an eligible scheme—
(a)
in such circumstances as may be prescribed subsection (2) does not operate to require the reduction of benefits payable to or in respect of any member;
(b)
the commencement of a member’s pension or payment of a member’s lump sum or other benefits is, in such circumstances and on such terms and conditions as may be prescribed, to be postponed for the whole or any part of the assessment period for which he continues in employment after attaining normal pension age.
(11)
For the purposes of subsection (10)—
(a)
“normal pension age”, in relation to an eligible scheme and any pension or other benefit under it, means the age specified in the scheme rules as the earliest age at which the pension or other benefit becomes payable without actuarial adjustment (disregarding any scheme rule making special provision as to early payment on the grounds of ill health), and
(b)
where different ages are so specified in relation to different parts of a pension or other benefit—
(i)
subsection (10) has effect as if those parts were separate pensions or, as the case may be, benefits, and
(ii)
in relation to a part of a pension or other benefit, the reference in that subsection to normal pension age is to be read as a reference to the age specified in the scheme rules as the earliest age at which that part becomes so payable.
(12)
Regulations may provide that, in prescribed circumstances, where—
(a)
a member of the scheme died before the commencement of the assessment period, and
(b)
during the assessment period, a person becomes entitled under the scheme rules to a benefit of a prescribed description in respect of the member,
the benefit, or any part of it, is, for the purposes of subsection (2), to be treated as having become payable before the commencement of the assessment period.
(13)
Nothing in subsection (2) or (3) applies to money purchase benefits.