SCHEDULE 2THE CALCULATION OF TRANSFER PAYMENTS AND OF SERVICE TO BE CREDITED IN RESPECT OF TRANSFER PAYMENTS MADE TO THE SECRETARY OF STATE UNDER REGULATIONS 23 AND 80

Regulations 23 and 80(1)

PART 1—CALCULATION OF TRANSFER PAYMENT

1

Subject to the provisions of paragraphs 2, 3, 5 and 6, a transfer payment to be made in accordance with the provisions of regulation 80 in respect of a person shall be—

a

the capitalised value of his accrued rights and any associated rights under the Pensions (Increase) Act 1971 and the Pensions (Increase) Act 1974(16), less a sum, if any, in respect of any state scheme premium which the Secretary of State has paid and not recovered in respect of a period of service included in the valuation of those rights; together with

b

where the transfer payment is, without reasonable excuse, not made within 6 months of the material date and it is not to be made to a statutory scheme (or a scheme being treated by the Secretary of State as a statutory scheme for the purposes of this Schedule)—

i

interest, if any, calculated on a daily basis over the period from the material date to the date on which the transfer payment is made, at the rate set out in regulation 4(4)(a) of the Occupational Pension Schemes (Transfer Values) Regulations 1985(17); or, if it is greater,

ii

the amount by which the transfer payment falls short of what it would have been if the material date had been the date on which the transfer payment was made.

2

Where, prior to the last date on which he is required to make a transfer payment under these Regulations, the Secretary of State has directed that a person’s benefits under these Regulations shall be forfeited in whole or part, any transfer payment payable in respect of that person shall be reduced in proportion to the reduction in the total value of the benefits or shall be withheld, as the case may be.

3

Where a person requests that a transfer payment be made to a superannuation scheme—

a

which is not contracted out within the meaning of section 32 of the Pensions Act(18); and

b

the trustees or managers of that scheme are able or willing to have transferred to it only the liability for a member’s accrued rights other than his and his widow’s rights to guaranteed minimum pensions; and

c

he does not require the Secretary of State to use that portion of his transfer payment that represents his guaranteed minimum pensions in one of the ways specified in paragraph 13(2) of Schedule 1A to the Pensions Act, then his transfer payment shall be reduced by the deduction of an amount sufficient for the Secretary of State for Social Services to meet his liability in respect of that person’s and his widow’s guaranteed minimum pensions.

4

In this Schedule—

a

“accrued rights” means the rights which have accrued in respect of a person under these Regulations at the material date, or which would have accrued in respect of him if the period of service necessary to satisfy the requirements of regulation 10(1)(a)(iv) had been the period which he had completed at that date;

b

“capitalised value” means the capitalised value at the material date as determined by the Secretary of State, having regard to investment conditions and the contingencies on which benefits are, or are to be, payable under these Regulations;

c

“material date” means the date on which the person left employment in which he was an officer or, if it is later, the date on which he made an application for a transfer payment which he has not subsequently withdrawn; and

d

“state scheme premium” means a state scheme premium or a transfer premium under Part III of the Pensions Act.

5

Where one or more transfer payments have been made to the Secretary of State in respect of a member, any transfer payment made by him shall be at least equal to the aggregate of those transfer payments and any contributions made by that person under regulation 9, 27 or 29, except where it falls to be made to a statutory scheme (or a scheme being treated by the Secretary of State as a statutory scheme for the purposes of this Schedule).

6

A transfer payment made under this Schedule shall be at least equal in amount to the cash equivalent, if any, to which a person would otherwise be entitled under Part II of Schedule 1A to the Pensions Act.

PART II—CALCULATION OF CREDITED SERVICE AND CREDITED PRACTITIONER'S REMUNERATION

7

Where a transfer payment has been made to, and accepted by, the Secretary of State, there shall be credited to the officer in respect of whom the payment was made—

a

in the case of an officer who is not a practitioner, a period of contributing service calculated in accordance with paragraph 8; and

b

in the case of an officer who is a practitioner, a period of contributing service and an associated amount of remuneration calculated in accordance with paragraph 9.

8

For the purposes of paragraph 7(a) (contributing service to be credited to an officer who is not a practitioner)—

a

where the transfer payment—

i

is made by the trustees or managers of a statutory scheme, or any other scheme which is at the appropriate date treated by the Secretary of State as a statutory scheme for the purposes of this Schedule;

ii

represents all of the officer’s accrued rights in that scheme; and

iii

has been calculated in a manner consistent with the methods adopted and assumptions made by the Secretary of State in determining the amount of transfer payments to be made to schemes which are, or which fall to be treated as, statutory schemes under Part I of this Schedule,

the period of contributing service to be credited to the officer shall be equal to the period of service which, if used to calculate a transfer payment to a superannuation scheme which is, or which falls to be treated as, a statutory scheme under Part I of this Schedule, would produce an amount equal to the transfer payment received by the Secretary of State; and in making the calculation regard shall be had to the officer’s age, rate of pensionable pay, marital status and, in addition, to any other factor notified to the Secretary of State by the trustees or managers of the scheme making the payment as having been taken into account in determining its amount; and

b

in any other case, the period of contributing service credited to the officer shall be calculated in a manner consistent with the methods adopted and assumptions made by the Secretary of State in determining the amount of transfer payments to be made to superannuation schemes (which do not fall to be treated as statutory schemes) under Part I of this Schedule, due allowance being given for expected increases in the average remuneration of an officer of the same age as the officer in question between the appropriate date and the date on which the particular officer in respect of whom the transfer payment was made would attain the age of 60 years.

9

1

For the purposes of paragraph 7(b), the period of contributing service credited to an officer who is a practitioner shall be equal to—

a

in the case of a transfer payment made by an insurance company—

i

where the payment is in respect of all of the officer’s rights as secured by the appropriate policy, the period of service which gave rise to such of his accrued rights which were initially secured by it, and

ii

where the payment represents part only of his rights, that period of service, reduced proportionally, and

b

in any other case, the period of service which was taken into account by the trustees or managers of the superannuation scheme making the payment in determining the amount of it.

2

For the purposes of paragraph 7(b)—

a

the amount of associated remuneration to be credited to an officer who is a practitioner shall be of an amount which, using the rate of pension accrual applicable to an officer who is not such a practitioner, would produce an accrued pension under these Regulations equal in value to the transfer payment received by the Secretary of State, and the manner in which that amount is calculated shall be consistent with the methods to be adopted and the assumptions to be made by the Secretary of State—

i

in a case where the transfer payment is made by a scheme which is a statutory scheme, or any other scheme which is at the appropriate date treated by the Secretary of State as a statutory scheme for the purposes of this Schedule, under paragraph 8(a), and

ii

in any other case under paragraph 8(b);

b

remuneration credited in accordance with head (a) of this sub-paragraph shall be added to the officer’s remuneration for the financial year in which the appropriate date falls, and in this regard no account shall be taken of the limit on the remuneration of dental practitioners mentioned in regulation 68; and

c

no remuneration other than that specified in this sub-paragraph shall be credited to the officer as a result of the contributing service credited to him in consequence of the transfer payment in question.

10

In this Part of this Schedule—

a

“appropriate date” means the date on which the person in respect of whom the transfer payment is made became such an officer or, if the transfer payment is received more than 12 months after that date, the date on which it is received; and

b

“associated remuneration” means the amount of remuneration to be credited to an officer who is a practitioner and which is associated with the period of contributing service credited to that officer as a result of a transfer payment.