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The Occupational Pension Schemes (Preservation of Benefit) Regulations 1991

Changes over time for: The Occupational Pension Schemes (Preservation of Benefit) Regulations 1991 (without Schedules)

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Version Superseded: 06/04/2014

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Citation, commencement and interpretationE+W+S

1.—(1) These Regulations may be cited as the Occupational Pension Schemes (Preservation of Benefit) Regulations 1991.

(2) These Regulations come into force on 28th February 1991.

[F1(3) In these Regulations, unless the context otherwise requires—

“the Act” means the Pension Schemes Act 1993;

“the 1995 Act” means the Pensions Act 1995;

[F2“European pensions institution” has the meaning given in section 293(8) of the Pensions Act 2004;]

“scheme” means an occupational pension scheme.]

Textual Amendments

F1Reg. 1(3) substituted (6.4.97) by S.I. 1996/2131, reg. 2(2)

Meaning of “employer”E+W+S

2.—(1) This regulation applies for the purposes of [F3Chapter I of Part IV of the Act] (occupational pension schemes).

(2) In relation to an employed earner, “employer” means the secondary contributor in relation to any payment of earnings in respect of the employment concerned.

(3) In relation to a self-employed earner, “employer” means any other person, government department, public authority or body of persons who has made, or is to make, payments to the scheme in respect of the earner.

(4) In this regulation, “employed earner” and “self-employed earner” mean the same as in section 2 of the Social Security Act 1975 (categories of earners) and “secondary contributor” means the same as in section 4 of that Act (Class 1 contributions-incidence).

Textual Amendments

Meaning of “member” and “prospective member”E+W+S

3.—(1) This regulation applies for all the purposes of [F4Chapter I of Part IV of the Act].

[F5(2) There are to be regarded as members of an occupational pension scheme any persons who—

(a)are in pensionable service under the scheme;

(b)have rights under the scheme by virtue of such pensionable service; or

(c)have rights under the scheme by virtue of having been allowed transfer credits under the scheme.

(3) There are to be regarded as prospective members of an occupational pension scheme—

(a)any persons who are able, at their own option, to become members of the scheme, and

(b)any persons who under the terms of their contracts of service and the scheme rules will become so able, if they continue in the same employment for a sufficiently long period.]

Textual Amendments

F5Reg. 3(2)(3) substituted (28.9.92) by S.I. 1992/1531, reg. 34

Benefits included in supplementary creditsE+W+S

4.—(1) For the purposes of [F6section 75(1)(c) of the Act], in the circumstances set out in paragraph (2) below, “supplementary credits” include any increase of benefit or additional benefit that is of an amount, or at a rate, unrelated to length of pensionable service or to the number or amount of contributions paid by or for the member.

(2) The circumstances referred to in paragraph (1) are that the member becomes entitled to the increase of benefit or additional benefit in consequence of a provision made by or under the scheme after he becomes a member of it and before his pensionable service terminates.

Textual Amendments

Short service benefit in lump sum formE+W+S

[F75.  For the purposes of section 71(6) of the Act (basic principle as to short service benefit), the circumstances in which the trustees or managers of a scheme may provide for payment of short service benefit in the form of a lump sum before normal pension age are that the payment of a lump sum—

(a)to the member is permitted in accordance with paragraph (a), (b), (e), (f) or (g) of the lump sum rule in section 166(1) of the Finance Act 2004 (lump sum rule); or

(b)is—

(i)made by a registered pension scheme (within the meaning given in section 150(2) of the Finance Act 2004 (meaning of “pension scheme”));

(ii)a payment that is described in Part 2 of the Registered Pension Schemes (Authorised Payments) Regulations 2009; and

(iii)made to or in respect of a member.]

Textual Amendments

Means of assuring short service benefitE+W+S

6.—(1) For the purposes of [F8section 73(1) of the Act], short service benefit that is not payable directly out of the resources of the scheme may be assured to the member by means of a transaction to which [F9section 19 of the Act] (extinguishment of liability of scheme for pensions secured by insurance policies or annuity contracts) applies, and which satisfies the requirements of paragraph (2) of this regulation F10....

(2) A transaction satisfies the requirements of this paragraph if—

(a)it results in the member’s short service benefit being secured by one or more policies of insurance or annuity contracts that are appropriate for the purposes of [F9section 19 of the Act]; and

(b)the member will be able to assign or surrender the insurance policies or annuity contracts on the conditions set out in [F11regulation 3 of the Occupational Pension Schemes (Discharge of Liability) Regulations 1997] (conditions on which policies of insurance and annuity contracts may be assigned or surrendered).

(3) For the purposes of paragraph (2) of this regulation, a policy of insurance or annuity contract which is taken out or entered into with an authorised friendly society, but which otherwise satisfies the conditions for being “appropriate” for the purposes of [F9section 19 of the Act], is to be treated as if it were appropriate for the purposes of that section [F12provided the terms of such policy or contract are not capable of being amended, revoked or rescinded].

(4) In this regulation—

[F13“friendly society” has the same meaning as in the Friendly Societies Act 1992 (including any society which by virtue of section 96(2) of that Act is to be treated as a registered friendly society within the meaning of that Act);

“authorised friendly society” means a friendly society which is authorised under section 32 of the Friendly Societies Act 1992 to carry on long term business under any of the Classes specified in Head A of Schedule 2 to that Act.]

Textual Amendments

F10Words in reg. 6(1) omitted (1.2.96) by virtue of S.I. 1995/3067, reg. 2(2)

F11Words in reg. 6(2)(b) substituted (6.4.97) by S.I. 1997/786, sch. 1, para. 3(2)

F12Words in reg. 6(3) inserted (7.2.95) by S.I. 1995/35, reg. 8(a)

F13Words in reg. 6(4) substituted (7.2.95) by S.I. 1995/35, reg. 8(b)

Alternatives to short service benefitE+W+S

7.—(1) For the purposes of [F14section 73(2) of the Act], a scheme may, instead of providing short service benefit, provide any of the alternatives to short service benefit described in regulations 8 to 10 below.

(2) The alternatives described in regulations 8 to 10 may be provided by way of complete or partial substitute for short service benefit, but (except in the cases specifically referred to) only with the member’s consent.

F15(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F16(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F15Reg. 7(3) omitted (6.4.97) by virtue of S.I. 1996/2131, reg. 1, 2(4)

F16Reg. 7(4) omitted (6.4.97) by virtue of S.I. 1996/2131, reg. 1, 2(4)

Early retirement or deferred retirementE+W+S

8.—(1) The scheme may provide benefits that are different from those required to constitute short service benefit as regards amount, recipient and the time at which they are payable. The benefits must, however, include a benefit that is payable to the member.

[F17(2) The member’s benefit must not be payable before normal pension age except in the circumstances where the member has either—

(a)met the ill-health condition specified in paragraph 1 of Schedule 28 to the Finance Act 2004 (registered pension schemes – defined benefits and money purchase arrangements – ill health condition) immediately before he became entitled to the benefit under the scheme; or

(b)attained normal minimum pension age as defined in section 279 of that Act (other definitions).]

(3) Benefits consisting of, or including, a benefit that becomes payable to the member before normal pension age may be provided without the member’s consent where—

(a)the member’s earning capacity is destroyed or seriously impaired by physical or mental infirmity, and

(b)in the opinion of the trustees or managers of the scheme, the member is incapable of deciding whether it is in his interests to consent.

(4) Any scheme rule that allows the alternative described in this regulation must require the trustees or managers of the scheme to be reasonably satisfied that, when the member’s benefit becomes payable, the total value of the benefits to be provided under this regulation is at least equal to the amount described in regulation 11.

Textual Amendments

Bought out benefitsE+W+S

9.—(1) The scheme may provide for benefits different from those required to constitute short service benefit to be appropriately secured by a transaction to which [F18section 19 of the Act] applies (extinguishment of liability of scheme for pensions secured by insurance policies or annuity contracts)F19....

(2) Any scheme rule that allows the alternative described in this regulation must require the trustees or managers of the scheme to be reasonably satisfied that, except where paragraph (3) below applies, the payment made to the insurance company is at least equal to the amount described in regulation 11.

(3) The exception to paragraph (2) is where the member is requiring the trustees or managers to provide the alternative by exercising a right to a cash equivalent, as described in [F20Chapter IV of Part IV of the Act] (transfer values).

(4) A scheme may allow the alternative described in this regulation to be provided without the member’s consent where—

(a)the member will be able to assign or surrender the insurance policy or annuity contract on the conditions set out in [F21regulation 3 of the Occupational Pension Schemes (Discharge of Liability) Regulations 1997] (conditions on which policies of insurance and annuity contracts may be assigned or surrendered); and

(b)the requirements of paragraph (5) are satisfied.

(5) The requirements of this paragraph are that—

(a)the scheme is being wound up; or

(b)the member has less than “5 years’ qualifying service” (as defined in paragraph 7 of Schedule 16 [F22to the Social Security Act 1973] immediately before the coming into force of section 10 of the M1 Social Security Act 1986 (changes to preservation requirements)) and the requirements of paragraph (6) are satisfied; or

(c)[F23the trustees or managers of the scheme] consider that, in the circumstances, it is reasonable for the scheme to provide the alternative without the member’s consent and the requirements of paragraph (6) are satisfied.

(6) The requirements of this paragraph are that all the conditions set out in [F24sub-paragraphs (b), (c) and (d)] are satisfied, namely—

F25(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b)the insurance policy is taken out or the annuity contract entered into more than 12 months after the member’s pensionable service terminates;

(c)the trustees or managers of the scheme give the member at least 30 days’ written notice of their intention to take out the insurance policy or enter into the annuity contract unless the member exercises a right to a cash equivalent, as described in [F20Chapter IV of Part IV of the Act] (the notice being sent to the member at his last known address or delivered to the member personally); and

(d)when the trustees or managers of the scheme agree with the insurance company to take out the insurance policy or enter into the annuity contract, there is no outstanding application by the member for a cash equivalent.

(7) For the purposes of this regulation, “appropriately secured” means the same as in [F18section 19 of the Act] except that a policy of insurance or annuity contract which is taken out or entered into with an “authorised friendly society” (as defined for the purposes of regulation 6), but which otherwise satisfies the conditions for being “appropriate” for the purposes of [F18section 19], is to be treated as if it were appropriate for the purposes of that section.

Textual Amendments

F19Words in reg. 9(1) omitted (1.2.96) by virtue of S.I. 1995.3067, reg. 2(3)

F21Words in reg. 9(4)(a) substituted (6.4.97) by S.I. 1997/786, sch. 1, para. 3(2)

F23Words in reg. 9(5)(c) substituted (6.4.97) by S.I. 1996/2131, reg. 2(3)

Marginal Citations

M11986 c. 50. s. 10 came into force on 6th April 1988

Money purchase benefitsE+W+S

10.—(1) The scheme may provide money purchase benefits instead of all or any of the benefits that constitute short service benefit.

(2) Any scheme rule that allows this alternative must require the trustees or managers of the scheme to be reasonably satisfied that the amount allocated to provide money purchase benefits in respect of the member is at least equal to the amount described in regulation 11. The scheme rule must also require the trustees or managers of the scheme to calculate the money purchase benefits, when they become payable, either on the basis of actuarial advice or in accordance with the terms of an insurance policy or annuity contract in which the amount allocated to provide the benefits is invested.

Value of alternatives to short service benefitE+W+S

11.—(1) The amount referred to in regulations 8, 9, and 10 is an amount equal to the value of the benefits (or, where the alternative is provided by way of partial substitute for short service benefit, the relevant part of the benefits) that have accrued to or in respect of the member under the applicable rules.

(2) For the purposes of this regulation, “the applicable rules” means the same as in [F26section 94(2) of the Act] (revaluation of pensions and transfer values).

Textual Amendments

[F27Further alternative to short service benefit - transfer to an overseas arrangementE+W+S

11A.—(1) For the purposes of section 73(2) of the Act (alternatives to short service benefit) a scheme may, instead of providing short service benefit, provide for the member’s accrued rights to be transferred, if the member consents, to an overseas arrangement.

(2) For the purposes of paragraph (1) “overseas arrangement” means a scheme or arrangement, other than an occupational pension scheme, which—

(a)has effect, or is capable of having effect, so as to provide benefits on termination of employment or on death or retirement to or in respect of earners; [F28and]

F29( b ). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(c)is administered wholly or primarily outside the United Kingdom.]

Textual Amendments

F27Reg. 11A inserted (6.4.97) by S.I. 1996/2131, reg. 2(6)

[F30Further alternative to short service benefit – transfer to a European pensions institution without consentE+W+S

11B.—(1) For the purposes of section 73(2)(b) and (4)(b) of the Act (prescribed alternatives to short service benefit), a scheme may, instead of providing short service benefit, provide for the transfer of the member’s accrued rights to a European pensions institution without the member’s consent where the conditions in paragraphs (2) and (3) of regulation 12 are satisfied.

(2) For the purposes of paragraph (1) of this regulation, references in paragraphs (2), (3) and (4A) of regulation 12 to “receiving scheme” are to be read as “receiving European pensions institution”.

(3) Where it is proposed that a member’s accrued rights are to be transferred in accordance with this regulation, information about the proposed transfer and details of the value of the rights to be transferred (including rights in respect of death in service benefits and survivors’ benefits) shall be furnished to the member not less than one month before the date on which the proposed transfer is due to take place.]

Textual Amendments

Transfer of member’s accrued rights without consentE+W+S

12.—(1) For the purposes of [F31section 73(4) of the Act], a scheme may provide for the member’s accrued rights to be transferred to another occupational pension scheme (as described in [F31[F32section 73(2)(a)(i)] of the Act]) without the member’s consent where—

(a)the scheme is being wound up and the transfer is to another scheme that applies to employment with the same employer; or

(b)the conditions set out in paragraphs (2) and (3) of this regulation are satisfied.

[F33(1A)  For the purposes of section 73(4) of the Act , a scheme may provide for a transfer payment to be made to another occupational or personal pension scheme (as described in section 73(2)(a)(i) of the Act ) without the member’s consent where the conditions set out in paragraph (6) of this regulation are satisfied. ]

[F34(2) The condition set out in this paragraph is that the rights of a member are being transferred from the transferring scheme to the receiving scheme and either—

(a)the transferring scheme and the receiving scheme [F35relate to persons who are or have been in] employment with the same employer; or

(b)the transferring scheme and the receiving scheme [F36relate to persons who are or have been in] employment with different employers, the member concerned is one of a group in respect of whom transfers are being made from the transferring scheme to the receiving scheme, and either—

(i)the transfer is a consequence of a financial transaction between the employers; or

(ii)the employers are companies or partnerships bearing a relationship to each other such as is described in [F37regulation 64(2) of the Occupational Pension Schemes (Contracting-out) Regulations 1996 (meaning of expression “connected employer”).]]

[F38(3) The condition set out in this paragraph is that—

(a)the relevant actuary gives a certification, by completing the certificate in Schedule 3, in relation to the members’ rights in the receiving scheme;

(b)the relevant actuary sends that certificate to the trustees or managers of the transferring scheme;

(c)the transfer takes place within 3 months of the date of the relevant actuary’s signature in the certificate; and

(d)there are no significant changes to the benefits, data and documents used in making the certificate (see the benefits, data and documents specified in the certificate) by the date on which the transfer takes place.]

[F39(4) For the purposes of [F40making the certification in paragraph 1 of the certificate in Schedule 3], where long service benefit in the transferring scheme is related to a member’s earnings at, or in a specified period before, the time when he attains normal pension age then, in the case of a member in pensionable service at the date of transfer, the value of the rights to be transferred shall be based on pensionable service (including any transfer credits) in the transferring scheme up to that date and projected final pensionable earnings.

(4A) For the purposes of [F41making the certification in paragraph 2 of the certificate in Schedule 3], the [F42relevant actuary] shall, in considering whether there is good cause, have regard to all the circumstances of the case and in particular—

(a)to any established custom of the receiving scheme with regard to the provision of discretionary benefits or increases in benefits; and

(b)to any announcements made with regard to the provision of such benefits under the receiving scheme.]

[F43(4B) Where it is proposed that a member’s accrued rights are to be transferred in accordance with this regulation, information about the proposed transfer and details of the value of the rights to be transferred (including rights in respect of death in service benefits and survivors' benefits) shall be furnished to the member not less than one month before the proposed transfer is due to take place.]

[F44(5) In this regulation “the relevant actuary” means—

(a)where the transferring scheme is a scheme for which an actuary is required under section 47 of the Pensions Act 1995 to be appointed, the individual for the time being appointed in accordance with subsection (1) of that section as actuary for that scheme;

(b)in any other case, a Fellow of the [F45Institute and Faculty of Actuaries] or a person with other actuarial qualifications who is approved by the Secretary of State, at the request of the trustees or managers of the scheme, as being a proper person to act for the purposes of this regulation in connection with the scheme.]

[F46(6) The conditions set out in this paragraph are that—

(a)the transferring scheme is or has been a stakeholder pension scheme, within the meaning of section 1 of the Welfare Reform and Pensions Act 1999 or Article 3 of the Welfare Reform and Pensions (Northern Ireland) Order 1999, and the receiving scheme is such a scheme;

(b)the transferring scheme has commenced winding-up; and

(c) the transfer payment is of an amount at least equal to the cash equivalent of the member’s rights under the scheme, as calculated and verified in a manner consistent with regulations made under section 97 of the 1993 Act (calculation of cash equivalents). ]

Textual Amendments

F32Words in reg. 12(1) substituted (1.2.96) by S.I. 1995/3067, reg. 2(4)

F34Reg. 12(2) substituted (28.9.92) by S.I. 1992/1531, reg. 35

F37Words in reg. 12(2)(b)(ii) substituted (6.4.97) by S.I. 1996/2131, reg. 2(7)(a)

F39Reg. 12(4) and Reg. 12(4A) substituted (1.9.93) for reg. 4 by S.I. 1993/1822, reg. 2(a)

F43Reg. 12(4B) inserted (6.4.97) by S.I. 1996/2131, reg. 2(7)(b)

Benefits attributable to waiting periodsE+W+S

13.—(1) This regulation applies where—

(a)an earner in relevant employment is required to complete a period of service (“waiting period”) before joining the scheme, and

(b)if the earner joins the scheme, a specific part of long service benefit willF47... be attributable to the waiting period.

(2) Where this regulation applies, the preservation requirements are modified so that—

(a)the waiting period is treated as pensionable service,

(b)the earner is treated as a member during that period, and

(c)the part of long service benefit that willF48... be attributable to the waiting period is treated as accruing at such a rate as to accrue in full over the whole of the waiting period.

(3) This paragraph applies where the rate at which long service benefit is treated as accruing during the waiting period is lower than the rate at which the rest of long service benefit accrues. In such circumstances short service benefit must be computed on the basis of uniform accrual (in accordance with [F49section 74(6) of the Act]) except that the scheme may provide for short service benefit to be computed on the same basis as long service benefit (in accordance with [F49section 74(1) of the Act]) where [F50the waiting period does not exceed 2 years.]

Textual Amendments

F47Words in reg. 13(1)(b) omitted (6.4.97) by virtue of S.I. 1996/2131, reg. 2(8)(a)

F48Words in reg. 13(2)(c) omitted (6.4.97) by virtue of S.I. 1996/2131, reg. 2(8)(a)

F50Words in reg. 13(3) substituted (6.4.97) by S.I. 1996/2131, reg. 2(8)(b)

Computation of benefit-money purchase benefitsE+W+S

14.—(1) This regulation applies to “money purchase benefits”, as defined in section 66 of M2 the Social Security Pensions Act 1975(interpretation).

(2) This paragraph applies where long service benefit is related to bonuses which have been declared at, or before, the time when the member attains normal pension age. In such circumstances short service benefit that is computed on the same basis as long service benefit (in accordance with paragraph 10(1) of Schedule 16) must be correspondingly related to bonuses which have been declared at, or before, the time when the member’s pensionable service terminates.

(3) This paragraph applies where long service benefit is related to the value of securities at, or in a specified period before, the time when the member attains normal pension age. In such circumstances short service benefit that is computed on the same basis as long service benefit (in accordance with paragraph 10(1) of Schedule 16) must be correspondingly related to the value of securities at, or in the same period before, the time when the member’s pensionable service terminates. But, if the trustees or managers of the scheme so decide before, or not more than one month after, the member’s pensionable service terminates, short service benefit may be correspondingly related to the value of securities at, or in the same period before, the time when the benefit becomes payable.

(4) This paragraph applies where the rate at which long service benefit accrues increases after a certain age or length of service (for example, because the employer contributes more to the scheme in respect of older members). In such circumstances short service benefit must be computed on the basis of uniform accrual (in accordance with paragraph 11 of Schedule 16) except that the scheme may provide for short service benefit to be computed on the same basis as long service benefit (in accordance with paragraph 10(1) of Schedule 16) where the Occupational Pensions Board consider it is reasonable to do so.

Marginal Citations

M21975 c. 60. The definition of "money purchase benefits" was inserted by paragraph 11 of Schedule 2 to the Social Security Act 1986 (c. 50).

Computation of benefit-earnings related benefitsE+W+S

15.  Where long service benefit is related to a member’s earnings during a specified period and the member’s pensionable service is less than that period, the scheme must provide for short service benefit to be correspondingly related to the member’s earnings during the whole of the member’s pensionable service.

Computation of benefit-uniform accrualE+W+S

16.—(1) This regulation applies where short service benefit is computed on the basis of uniform accrual, in accordance with [F51section 74(6) of the Act].

(2) Where this regulation applies long service benefit at the time when the member’s pensionable service terminates is to be calculated on the assumption that the member’s earnings would have remained constant from the time when pensionable service terminates until normal pension age.

(3) For the purpose of computing a member’s short service benefit, the trustees or managers of the scheme may make such assumptions as [F52they] consider reasonable as to—

(a)the level at which the member’s earnings would have remained constant,

(b)the dates on which bonuses would have been declared and the rates of those bonuses, and

(c)the value of, and the rate of interest on, securities.

Textual Amendments

F52Words in reg. 16(3) substituted (6.4.97) by S.I. 1996/2131, reg. 2(11)

Computation of benefit-roundingE+W+S

17.—(1) For the purpose of computing short service benefit on the basis of uniform accrual (in accordance with [F53section 74(6) of the Act]), a scheme may provide for both the periods mentioned in that paragraph (the period of pensionable service and the period from the beginning of that service to the time when the member would attain normal pension age) to be calculated to the nearest, next highest, or next lowest whole month.

(2) For the purpose of calculating the proportion of purchased credits that must be included in short service benefit (in accordance with [F54section 75(3) of the Act]), a scheme may provide for both the periods mentioned in [F54section 75(4)(b) of the Act] (the period between the time when the first payment became due and the termination of the member’s pensionable service, and the whole period over which payment was to be made) to be calculated to the nearest, next highest, or next lowest whole month.

(3) For the purpose of calculating the proportion of bonus credits, or credits for which payment is to be made by deduction from some benefit, that must be included in short service benefit (in accordance with [F55section 75(5) of the Act]), a scheme may provide for both the periods described in paragraph (4) to be calculated to the nearest, next highest, or next lowest whole month. Where applicable, the scheme must make the same provision for the purpose of calculating the amount of any relevant deduction.

(4) The periods referred to in paragraph (3) are—

(a)the period over which, on the assumption referred to in [F56section 75(5)(a) of the Act], the credits would have accrued in full, and

(b)the period between the time when any credit was awarded and the termination of the member’s pensionable service.

(5) Where a scheme provides for rounding as described in this regulation, it must provide for both the periods referred to in each paragraph to be rounded in the same way.

Textual Amendments

Commutation of benefitE+W+S

F5718.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F57Reg. 18 revoked (6.4.97) by S.I. 1996/2131, reg. 2(12)

Widows, widowers[F58, surviving civil partners] and dependantsE+W+S

19.  This regulation applies to schemes that provide long service benefit payable to a person other than the member only if the person is married to, [F59in a civil partnership with,] or dependent on, the member when the member reaches normal pension age. These schemes are required to provide short service benefit payable to the person concerned only if the person was also married to, or (as the case may be) [F60in a civil partnership with, or] dependent on, the member when the member’s pensionable service terminated.

Textual Amendments

Deductions from short service benefitE+W+S

20.—(1) This regulation applies where a scheme provides that, in computing the amount of long service benefit payable to any person, a deduction will be made, either to take account of benefits payable to that person under the M3 Social Security Act 1975 or otherwise.

(2) Where this regulation applies, the scheme may provide for a corresponding deduction from short service benefit.F61...

F62(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F61Words in reg. 20(2) omitted (6.4.97) by virtue of S.I. 1996/2131, reg. 2(13)(a)

F62Reg. 20(3) omitted (6.4.97) by virtue of S.I. 1996/2131, reg. 2(13)(b)

Marginal Citations

Breaks in pensionable serviceE+W+S

21.—(1) In the case of a member whose pensionable service has been broken, the preservation requirements are modified as described in this regulation. For this purpose, a member’s pensionable service is broken if, after it terminates, the member returns to pensionable service under the same scheme.

(2) If paragraph (3) applies to the break and the member’s pensionable service is again terminated before normal pension age, the period of pensionable service previously terminated, and any linked qualifying service in relation to that period, must count towards the 2 years’ qualifying service whether or not it counts towards qualification for long service benefit. [F63section 71(9) of the Act] is modified accordingly.

(3) This paragraph applies to the break in pensionable service if one or more of the following conditions is satisfied—

(a)the break does not exceed one month;

(b)the break corresponds to the member’s absence from work wholly or partly because of pregnancy or confinement, the member returns to work after the break in exercise of a right under section 45(1) of the M4Employment Protection (Consolidation) Act 1978 (right to return to work) and the member returns to pensionable service no later than one month after returning to work;

(c)the break corresponds to the member’s absence from work in furtherance of a “trade dispute”, as defined in section 19(2)(b) of the M5 Social Security Act 1975 (loss of employment due to stoppage of work).

(4) If paragraph (5) applies to the break and the member’s pensionable service is again terminated before normal pension age, the scheme must provide for the member to be entitled to short service benefit in respect of pensionable service after the break whether or not the conditions described in [F64section 71(1) of the Act] are satisfied. [F64Section 71(1) of the Act] is modified accordingly.

(5) This paragraph applies to the break in pensionable service if the member became entitled to short service benefit when his pensionable service previously terminated. This paragraph does not apply, however, if all the member’s accrued rights in respect of the period before the break have been—

(a)transferred to another scheme as described in [F65section 73(2) of the Act];

(b)“appropriately secured” by a transaction to which [F66section 19 of the Act] applies (extinguishment of liability of scheme for pensions secured by insurance policies or annuity contracts) F67...; or

(c)extinguished by payment of a state scheme premium under [F68Chapter III of Part III of the Act] or by payment of a lump sum.

(6) A scheme may provide that, when the member returns to pensionable service under the scheme, the member’s pensionable service before and after the break be treated as continuous so that the whole period qualifies the member for long service benefit under the scheme. The scheme will not then be required to provide short service benefit in respect of the period before the break.

(7) For the purposes of this regulation, “appropriately secured” means the same as in [F69section 19 of the Act] except that a policy of insurance or annuity contract which is taken out or entered into with an “authorised friendly society” (as defined for the purposes of regulation 6), but which otherwise satisfies the conditions for being “appropriate” for the purposes of [F69section 19], is to be treated as if it were appropriate for the purposes of that section.

Textual Amendments

F67Words in reg. 21(5)(b) omitted (1.2.96) by virtue of S.I. 1995/3067, reg. 2(5)

Marginal Citations

Postponement or suspension of benefitE+W+S

22.—(1) The preservation requirements are modified as described in this regulation where—

(a)a scheme provides for payment of long service benefit to be postponed, or suspended, for any period after normal pension age during which the member is in service in relevant employment (whether or not that service qualifies the member for additional benefits under the scheme); and

(b)a member continues in, or returns to, service in relevant employment after becoming entitled to short service benefit under the scheme.

(2) The scheme may provide for payment of short service benefit to be postponed, or suspended, for any period after normal pension age during which the member is in service in relevant employment. [F70Section 71(3) of the Act] is modified accordingly.

Textual Amendments

Refunds of additional voluntary contributionsE+W+S

F7123.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

Schemes funded by level annual premiumsE+W+S

24.  —

Schemes with an overseas elementE+W+S

25.—(1) This regulation applies to schemes with an overseas clement, that is to say, schemes established, or relating to employment, or with parties domiciled, resident or carrying on business, in any part of the world outside the United Kingdom, or otherwise not confined in their operation to the United Kingdom.

(2) [F72Sections 69 to 80 of the Act are] modified in relation to a scheme with an overseas element, so that the preservation requirements apply to the scheme only if the scheme is established in the United Kingdom or has an appointed representative in the United Kingdom.

(3) In the case of a scheme with any overseas element to which the preservation requirements apply, [F73section 71(1) of the Act] is modified so that the scheme is required to provide short service benefit only for those members whose pensionable service terminates while they are in employment in the United Kingdom.

(4) For the purposes of this regulation—

(a)a scheme has an appointed representative in the United Kingdom if there is a person resident in the United Kingdom who is appointed for tax purposes in relation to the scheme or who performs one or more functions thatF74... would normally be performed by a trustee or manager of the scheme;

(b)a member’s employment outside the United Kingdom is to be treated as employment in the United Kingdom if the most recent payment of earnings in respect of that employment gave rise to liability for primary Class I contributions, or would have done so had the level of earnings not been below the lower earnings limit; and

(c)“Class 1 contributions” means the same as in section 1(2) of the M6Social Security Act 1975 (outline of contributory system) and “lower earnings limit” means the same as in section 4(1) of that Act (Class 1 contributions-incidence).

Textual Amendments

F74Words in reg. 25(4)(a) omitted (6.4.97) by virtue of S.I. 1996/2131, reg. 2(15)

Marginal Citations

Transfers to overseas schemesE+W+S

F7526.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F75Reg. 26 revoked (6.4.97) by S.I. 1996/2131, reg. 2(16)

Specific provisions to be included in scheme rulesE+W+S

27.—(1) Except where paragraph (2) applies, a scheme is not to be treated as conforming with the preservation requirements unless it contains express rules to the effect (but not necessarily in the words) of the following provisions of [F76Chapter I of Part IV of the Act], to the extent that they apply to the scheme concerned, namely—

(a)[F76section 71(1)] (members who must be entitled to short service benefit);

(b)[F76section 71(3) and (4)] (age or time at which short service benefit must be made payable);

(c)[F76section 74] (computation of benefit);

(d)[F76section 75] (supplementary credits to be included in short service benefit); and

(e)[F76section 76] (pension increases).

(2) A scheme that is constituted or amended by an interim trust deed or other interim instrument or agreement [F77shall be treated] as satisfying the preservation requirements if both the following conditions are satisfied, namely—

(a)the instrument or agreement constituting or amending the scheme requires the trustees or managers of the scheme to operate it in accordance with the preservation requirements; and

(b)[F78members and prospective members have been notified] of the general effect of the definitive provisions of the scheme that will give effect to the provisions of [F76Chapter I of Part IV of the Act] referred to in paragraph (1) above.

Textual Amendments

F77Words in reg. 27(2) substituted (6.4.97) by S.I. 1996/2131, reg. 2(17)(a)

F78Words in reg. 27(2)(b) substituted (6.4.97) by S.I. 1996/2131, reg. 2(17)(b)

[F79Information to be furnished to early leaversE+W+S

27A.—(1) The trustees or managers of any scheme must furnish in writing the information specified in paragraph (2)—

(a)as of course to any person as soon as practicable and, in any event, within 2 months after he or his employer has notified the trustees that his pensionable service has terminated; and

(b)to any member or prospective member on request (not being a request made less than 12 months after the last occasion on which such information was furnished to him) as soon as practicable and, in any event, within 2 months after he requests it.

(2) The information referred to in paragraph (1) is information as to the rights and options (if any) available to a member whose pensionable service terminates before he attains normal pension age.

(3) The trustees or managers of any scheme must furnish in writing the information specified in paragraph (4) on request (not being a request made—

(a)after such information has already been furnished to the same person in a case where the information was that no refund of contributions would be available in any circumstances; or

(b)less than 12 months after the last occasion on which such information was furnished to the same person, in any other case), to any person who has paid contributions to the scheme which have not been refunded, as soon as practicable and, in any event, within 2 months after he requests it.

(4) The information referred to in paragraph (3) is information as to whether a refund of contributions is available or would be available in any circumstances, and in either case, an estimate of the amount of the refund and an explanation of the method of calculating it.

Textual Amendments

F79Reg. 27A and Reg. 27B inserted (6.4.97) by S.I. 1996/2131, reg. 2(18)

Offence and penaltiesE+W+S

27B.  Where a person fails, without reasonable excuse, to comply with any requirement imposed on him by regulation 12(4B)(requirement to provide information regarding a transfer of accrued rights without consent) or 27A, the [F80Regulatory Authority may by notice in writing] require him to pay, within 28 days, a penalty which—

(a)in case of an individual, shall not exceed £1, 000; and

(b)in any other case, shall not exceed £10,000.]

Textual Amendments

F79Reg. 27A and Reg. 27B inserted (6.4.97) by S.I. 1996/2131, reg. 2(18)

Related amendments to other RegulationsE+W+S

28.  F81....

Textual Amendments

RevocationsE+W+S

29.  The Regulations specified in column 1 of Schedule 2 are revoked to the extent specified in column 2 of that Schedule.

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

Nicholas Scott

Minister of State,

Department of Social Security

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