The Occupational Pension Schemes (Qualifying Service—Consequential and Other Provisions) Regulations 1987

Statutory Instruments

1987 No. 1106

PENSIONS

The Occupational Pension Schemes (Qualifying Service—Consequential and Other Provisions) Regulations 1987

Made

25th June 1987

Laid before Parliament

6th July 1987

Coming into force

6th April 1988

The Secretary of State for Social Services, in exercise of the powers conferred upon him by sections 64(1A)(a) and 99(1) and (3) of, and paragraphs 9(2) and (3), 21, 22 and 26 of Schedule 16 to, the Social Security Act 1973 (1), section 168(1) of, and Schedule 20 to, the Social Security Act 1975(2), and sections 43(4) and 52C(4) and (5) of, and paragraph 20 of Schedule 1A to, and paragraph 6 of Schedule 2 to, the Social Security Pensions Act 1975(3), and of all other powers enabling him in that behalf, after considering the report of the Occupational Pensions Board on the proposals submitted to them(4), hereby makes the following Regulations:—

Citation, commencement and interpretation

1.—(1) These Regulations may be cited as the Occupational Pension Schemes (Qualifying Service—Consequential and Other Provisions) Regulations 1987 and shall come into force on 6th April 1988.

(2) In these Regulations—

“the Contracting-out Regulations”means the Occupational Pension Schemes (Contracting-out) Regulations 1984(5);

“the Preservation Regulations”means the Occupational Pension Schemes (Preservation of Benefit) Regulations 1984(6);

“the Discharge Regulations”means the Occupational Pension Schemes (Discharge of Liability) Regulations 1985(7); and

“the Revaluation Regulations”means the Occupational Pension Schemes (Revaluation) Regulations 1985(8).

Amendment of the Contracting-out Regulations

2.—(1) The Contracting-out Regulations shall be amended in accordance with the provisions of this regulation.

(2) In regulation 19(1)(d), the words“is under the age of 26 or”shall be omitted and for“5”there shall be substituted“2”.

(3) In regulation 24(3)(e), for“5”there shall be substituted“2”.

Amendment of the Preservation Regulations

3.—(1) The Preservation Regulations shall be amended in accordance with the provisions of this regulation.

(2) In regulation 12(4), after sub-paragraph (a), there shall be inserted the following sub-paragraph—

“(aa) for the alternative mentioned in paragraph (1)(e) to be substituted for short service benefit without the member’s consent in any case where the conditions specified in paragraph (4A) are satisfied;”.

(3) After paragraph (4) of regulation 12 there shall be inserted the following paragraph—

“(4A) The conditions referred to in paragraph (4)(aa) are—

(a) that the short service benefit is not, and does not include, protected rights (within the meaning given to that expression by Schedule 1 to the Social Security Act 1986(9), whether or not as modified under section 32(2B) of the Pensions Act(10));

(b) that the member has at least 2 years' qualifying service but has not 5 years' qualifying service (within the meaning given to that expression by paragraph 7 of Schedule 16 immediately before the coming into force of section 10 of the Social Security Act 1986);

(c) that the insurance policy is taken out or the annuity contract entered into more than 12 months after the member’s service in relevant employment is terminated;

(d) that at least 30 days before the insurance policy is taken out or the annuity contract entered into, the trustees or managers of the scheme have sent by post to the member at his last known address, or delivered personally to him, a written notice that it is their intention to take it out or enter into it unless, before the date of expiry of the notice or, if it is later, the first anniversary of the date on which the member’s service in relevant employment was terminated, the member has made an application (which he has not subsequently withdrawn) to the trustees or managers of the scheme under paragraph 16 of Schedule 1A to the Pensions Act (transfer values);

(e) that when the trustees or managers of the scheme enter into an agreement with an insurance company to take out the insurance policy or enter into the annuity contract, the member has not made an application in writing to the trustees or managers of the scheme under paragraph 16 of Schedule 1A to the Pensions Act, or if he has made such an application he has withdrawn it under paragraph 17 of that Schedule; and

(f) that the insurance policy or annuity contract is so framed that it may be assigned or surrendered on the conditions set out in regulation 2 of the Occupational Pension Schemes (Discharge of Liability) Regulations 1985.”.

(4) In regulations 14(d)(i), 17(3)(b)(iii) and (4) and 21(3)(b), for“5”there shall be substituted“2”.

Amendment of the Discharge Regulations

4.—(1) The Discharge Regulations shall be amended in accordance with the provisions of this regulation.

(2) In regulation 4 (c)(ii), for“5”there shall be substituted“2”.

(3) In regulation 5(b)(ii), after“12(4)(a)”there shall be inserted“or (aa)”.

(4) After paragraph (b) of regulation 5, there shall be inserted the word“or”and the following paragraph—

“(c) (i) the earner died when he had, in relation to the scheme, at least 2 years' qualifying service (within the meaning of paragraph 7 of Schedule 16 to the Social Security Act 1973) but not 5 years' qualifying service (within the meaning given to that expression by paragraph 7 of Schedule 16 to the Social Security Act 1973 immediately before the coming into force of section 10 of the Social Security Act 1986),

(ii) benefit which is or includes a guaranteed minimum pension is payable to the earner’s widow or widower,

(iii) the arrangement for securing the benefit by means of the policy or contract was made without the consent of the widow or widower, and

(iv) at least 30 days before the policy is taken out or the contract entered into the trustees or managers of the scheme sent by post to the widow or widower at her or his last known address, or delivered personally to her or him, a written notice of their intention to take it out or enter into it.”.

Amendment of the Revaluation Regulations

5.—(1) The Revaluation Regulations shall be amended in accordance with the provisions of this regulation.

(2) In regulations 1(2) and 6, and in the heading to regulation 6, for the words“5 years' qualifying service”(wherever occurring) there shall be substituted the words“2 years' qualifying service”.

Purpose prescribed under section 64(1A)(a) of the Social Security Act 1973

6.  A purpose prescribed under section 64(1A)(a) of the Social Security Act 1973 (powers of Occupational Pensions Board to authorise modification of occupational pension schemes) is that of enabling the scheme—

(a) to make provision for the alternative mentioned in regulation 12(1)(e) of the Preservation Regulations to be substituted for short service benefit without the member’s consent in cases where the conditions specified in regulation 12(4A) of those regulations are satisfied; and

(b) to make provision for a benefit payable to a member’s widow or widower to be secured by means of a policy of insurance or annuity contract without the widow’s or widower’s consent in cases where the conditions specified in regulation 5(c) of the Discharge Regulations are satisfied.

Signed by authority of the Secretary of State for Social Services.

Nicholas Scott

Minister of State,

Department of Health and Social Security

25th June 1987

Explanatory Note

(This note is not part of the Regulations)

Section 10 of the Social Security Act 1986 (c. 50) makes amendments to Schedule 16 to the Social Security Act 1973 so that members of occupational pension schemes have the benefit of the“preservation requirements”set out in the latter Act after 2, instead of 5, years' qualifying service.

Most of the provisions of these Regulations make amendments of other regulations which are consequential upon section 10, and regulation 2(2) also removes, from the regulation it amends, some wording which refers to the earner’s being under the age of 26.

Regulation 3(2) and (3) makes amendments so that where a member’s service in employment to which a scheme applies is terminated when he has at least 2, but less than 5, years' qualifying service, and other specified conditions are satisfied, benefits under an insurance policy or annuity contract different from those required to constitute short service benefit (as defined in Schedule 16 to the Social Security Act 1973) may be substituted for his short service benefit without his consent.

Regulation 4(4) makes amendments so that where a member dies when he has at least 2, but less than 5, years' qualifying service, and other specified conditions are satisfied, the trustees or managers of the scheme may be discharged of their liability to provide for the member’s widow or widower a benefit which is or includes a guaranteed minimum pension by substituting benefits under an insurance policy or annuity contract.

Regulation 6 enables the Occupational Pensions Board to authorise the modification of an occupational pension scheme to enable it (if its rules would not otherwise allow it) to take advantage of the provisions of regulations 3(2) and (3) and 4(4).

The report of the Occupational Pensions Board on the draft of these Regulations, dated 3rd February 1987, is contained in Command Paper (Cmnd 165) published by Her Majesty’s Stationery Office.

(1)

1973 c. 38; subsection (1A) was added to section 64 by section 86(1) of, and paragraph 3 of Schedule 10, to the Social Security Act 1986 (c. 50). See definition of“prescribe”in section 99(1) and explanation of the meaning of“regulations”in section 99(3).

(2)

1975 c. 14. See definitions of“prescribe”and“regulations”in Schedule 20. Section 168(1) applies, by virtue of section 66(2) of the Social Security Pensions Act 1975 (c. 60), to the exercise of certain powers conferred by that Act.

(3)

1975 c. 60. Section 52C and Schedule 1A were inserted by the Social Security Act 1985 (c. 53), section 2 and Schedule 1.

(4)

See section 68(1) and (2) of the Social Security Act 1973 and section 61(2) and (3) of the Social Security Pensions Act 1975; sections 68(1) and 61(2) are amended in ways not relevant to these Regulations.

(5)

S.I. 1984/380; the relevant amending instrument is S.I. 1986/317.

(6)

S.I. 1984/614, to which there are amendments not relevant to these Regulations.

(7)

S.I. 1985/1929, amended by S.I. 1986/2171.

(8)

S.I. 1985/1930, amended by S.I. 1986/751.

(9)

1986 c. 50.

(10)

Subsection (2B) was inserted into section 32 by the Social Security Act 1986 (c. 50), section 6 and Schedule 2, paragraph 5.