Occupational Pension Schemes (Contracting-out) Regulations 1996

PART III E+W+S SALARY-RELATED CONTRACTED-OUT SCHEMES

Further contracting-out conditions for salary-related contracted-out schemes E+W+S

F1 17.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F1 Regs. 16-21 revoked (6.4.2016) by The Occupational Pension Schemes (Schemes that were Contracted-out) (No.2) Regulations 2015 (S.I. 2015/1677), regs. 1(2)(b), 31(b)

Requirement as to resources of the scheme. E+W+S

F1 18.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F1 Regs. 16-21 revoked (6.4.2016) by The Occupational Pension Schemes (Schemes that were Contracted-out) (No.2) Regulations 2015 (S.I. 2015/1677), regs. 1(2)(b), 31(b)

[F2 Lump sum benefits and salary-related contracted-out schemes. E+W+S

F1 19 .]   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F1 Regs. 16-21 revoked (6.4.2016) by The Occupational Pension Schemes (Schemes that were Contracted-out) (No.2) Regulations 2015 (S.I. 2015/1677), regs. 1(2)(b), 31(b)

F2 Reg. 19 substituted (6.4.2002) by The Occupational and Personal Pension Schemes (Contracting-out) (Miscellaneous Amendments) Regulations 2002 (S.I. 2002/681) , regs. 1 , 2(7)

[F3 Payment of a lump sum instead of a pension payable under a relevant scheme E+W+S

F1 20 .]   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F1 Regs. 16-21 revoked (6.4.2016) by The Occupational Pension Schemes (Schemes that were Contracted-out) (No.2) Regulations 2015 (S.I. 2015/1677), regs. 1(2)(b), 31(b)

F3 Reg. 20 substituted (6.4.2006) by Taxation of Pension Schemes (Consequential Amendments of Occupational and Personal Pension Schemes Legislation) Order 2006 (S.I. 2006/744) , arts. 1 , 8(5)

[F4 Suspension of section 9(2B) rights E+W+S

F1 20A .]   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F1 Regs. 16-21 revoked (6.4.2016) by The Occupational Pension Schemes (Schemes that were Contracted-out) (No.2) Regulations 2015 (S.I. 2015/1677), regs. 1(2)(b), 31(b)

F4 Reg. 20A inserted (6.4.2002) by The Occupational and Personal Pension Schemes (Contracting-out) (Miscellaneous Amendments) Regulations 2002 (S.I. 2002/681) , regs. 1 , 2(9)

Payable age in salary-related contracted-out schemes. E+W+S

F1 21.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F1 Regs. 16-21 revoked (6.4.2016) by The Occupational Pension Schemes (Schemes that were Contracted-out) (No.2) Regulations 2015 (S.I. 2015/1677), regs. 1(2)(b), 31(b)

Each part of scheme to comply with section 12A of the 1993 Act. E+W+S

22.—(1) Where a scheme makes provision in relation to earners in one category of employment which differs from provision made in the case of earners in another such category, the Secretary of State must be satisfied that the scheme satisfies section 12A of the 1993 Act in relation to each of the categories of employment which is to be contracted-out.

(2) Where a scheme makes provision in relation to one description of earners within a category of employment which differs from provision made in the case of another description of earners within that category, the Secretary of State must be satisfied that the scheme satisfies section 12A of the 1993 Act in relation to each such description of earners which is to be contracted-out.

Requirements for meeting the statutory standard. E+W+S

23.  For the purposes of section 12A(4) of the 1993 Act (regulations may provide for the manner of, and criteria for, determining whether pensions are broadly equivalent to those under a reference scheme) in determining whether the pensions provided under the scheme are broadly equivalent to or better than those which would be provided under a reference scheme, the actuary—

[F5 (a) must comply with any standards adopted or prepared, and from time to time revised, by [F6 the Financial Reporting Council Limited] which are relevant to the matters specified in section 12A(4) of the 1993 Act;]

(b) may not certify that the pensions to be provided by the scheme for earners in employed earner’s employment and their [F7 widows, widowers or surviving civil partners] collectively are broadly equivalent to or better than those which would be provided for such persons under a reference scheme if the pensions to be provided for more than 10 per cent. of such earners or their [F7 widows, widowers or surviving civil partners] are not broadly equivalent to the pensions which would be provided for them under a reference scheme;

(c) must have regard to the pensions to be provided under the scheme for the persons specified in section 12A(1) of the 1993 Act who are in the scheme at the date from which the certificate has effect;

(d) must not have regard to any pensions to be provided under the scheme [F8 in respect of—

(i) earners who are not in contracted-out employment, F9 ...

F9 ( ii ) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

(e) must not have regard to any money purchase benefits; F10 ...

(f) may have regard to the payment of a lump sum [F11 but may not have regard to any payment of a lump sum made as a result of the death of an earner]; [F12 and

(g) must take no account of any provision made by the scheme for the suspension, in the circumstances specified in regulation 20A(2), [F13 (as it had effect immediately before the second abolition date)] of benefits derived from section 9(2B) rights.]

[F14 (h) must not have regard to any discretionary benefits; and

(i) must comply with the further requirements set out in Schedule 3.]

Textual Amendments

F5 Reg. 23(a) substituted (1.10.2011) by The Occupational Pension Schemes (Contracting-out) Amendment Regulations 2011 (S.I. 2011/1294) , regs. 1(2) , 2(2)(a)

F6 Words in reg. 23(a) substituted (9.8.2012) by The Occupational and Personal Pension Schemes (Prescribed Bodies) Regulations 2012 (S.I. 2012/1817) , reg. 1 , Sch. para. 2(b)

F7 Words in reg. 23(b) substituted (5.12.2005) by Civil Partnership (Contracted-out Occupational and Appropriate Personal Pension Schemes) (Surviving Civil Partners) Order 2005 (S.I. 2005/2050) , art. 1(3) , Sch. 2 para. 10

F8 Words in reg. 23(d) substituted (1.12.2000) by The Pension Sharing (Contracting-out) (Consequential Amendments) Regulations 2000 (S.I. 2000/2975) , regs. 1 , 2(4)

F9 Reg. 23(d)(ii) and preceding word omitted (6.4.2009) by virtue of Pensions Act 2008 (Abolition of Safeguarded Rights) (Consequential) Order 2009 (S.I. 2009/598) , arts. 1 , 3(3)

F10 Word in reg. 23(e) omitted (6.4.2002) by virtue of The Occupational and Personal Pension Schemes (Contracting-out) (Miscellaneous Amendments) Regulations 2002 (S.I. 2002/681) , regs. 1 , 2(10)(a)

F11 Words in reg. 23(f) inserted (1.10.2011) by The Occupational Pension Schemes (Contracting-out) Amendment Regulations 2011 (S.I. 2011/1294) , regs. 1(2) , 2(2)(b)

F12 Reg. 23(g) inserted (6.4.2002) by The Occupational and Personal Pension Schemes (Contracting-out) (Miscellaneous Amendments) Regulations 2002 (S.I. 2002/681) , regs. 1 , 2(10)(b)

F13 Words in reg. 23(g) inserted (6.4.2016) by The Occupational Pension Schemes (Schemes that were Contracted-out) (No.2) Regulations 2015 (S.I. 2015/1677), regs. 1(2)(b), 28(9)

F14 Reg. 23(h)(i) added (1.10.2011) by The Occupational Pension Schemes (Contracting-out) Amendment Regulations 2011 (S.I. 2011/1294) , regs. 1(2) , 2(2)(c)

Circumstances when actuary other than actuary appointed under section 47 of the 1995 Act may certify broad equivalence. E+W+S

24.  For the purposes of section 12A(6) of the 1993 Act (scheme actuary appointed under section 47 of the 1995 Act to certify whether pensions are broadly equivalent to or better than those in a reference scheme except in prescribed circumstances) the prescribed circumstances are where a scheme is not required to appoint an actuary for the scheme under section 47 of the 1995 Act.

Requirements for a reference scheme. E+W+S

25.   A reference scheme is a scheme which, in addition to complying with the requirements of section 12B(3) and (4) of the 1993 Act, complies with the requirements of Chapter II of Part IV of the 1993 Act (revaluation of benefits in the case of scheme members who leave pensionable service before attaining normal pension age) and section 51 of the 1995 Act (indexation of pensions).

[F15 Reference scheme: circumstances in which widows', widowers' or surviving civil partners' pensions need not be payable E+W+S

26.— (1) For the purposes of section 12B(4)(a) of the 1993 Act (reference scheme to provide widows', widowers' and surviving civil partners' pensions except in prescribed circumstances), and subject to paragraph (2), the prescribed circumstances are where—

(a) the scheme member marries or forms a civil partnership after having received benefits under the scheme;

(b) the widow, widower or surviving civil partner of the scheme member—

(i) remarries or, as the case may be, marries;

(ii) forms a civil partnership or, as the case may be, forms a subsequent civil partnership [F16 or;]

(iii) [F17 lives together [F18 with another person as if they were a married couple or civil partners,]]

after having received benefits under the scheme;

(c) the widow, widower or surviving civil partner of the scheme member is at the time of the member’s death [F19 living together [F20 with another person, whom he or she is not married to or in a civil partnership with, as if they were a married couple or civil partners.]]

(2) [F21 The following provisions do not apply where the scheme member died before 5th December 2005—

(a) paragraph (1)(b)(i) so far as it relates to a marriage or remarriage involving two people of the same sex;

(b) paragraph (1)(b)(ii); and

(c) paragraph (1)(b)(iii) and (1)(c) so far as they relate to the living together of two people of the same sex.]]

Textual Amendments

F15 Reg. 26 substituted (5.12.2005) by Civil Partnership (Contracted-out Occupational and Appropriate Personal Pension Schemes) (Surviving Civil Partners) Order 2005 (S.I. 2005/2050), art. 1(3), Sch. 2 para. 11

F16 Word in reg. 26(1)(b)(ii) inserted (13.3.2014) (EW) by The Marriage (Same Sex Couples) Act 2013 (Consequential Provisions) Order 2014 (S.I. 2014/107) , art. 1(2) , Sch. 1 para. 17(3)(a), and word in reg. 26(1)(b)(ii) inserted (16.12.2014) (S) by The Marriage and Civil Partnership (Scotland) Act 2014 and Civil Partnership Act 2004 (Consequential Provisions and Modifications) Order 2014 (S.I. 2014/3229) , art. 1(2) , Sch. 6 para. 12(3)(a)

F17 Reg. 26(1)(b)(iii) substituted for 26(1)(iii)(iv) (13.3.2014) (EW) by The Marriage (Same Sex Couples) Act 2013 (Consequential Provisions) Order 2014 (S.I. 2014/107) , art. 1(2) , Sch. 1 para. 17(3)(a), and reg. 26(1)(b)(iii) substituted for reg. 26(1)(iii)(iv) (16.12.2014) (S) by The Marriage and Civil Partnership (Scotland) Act 2014 and Civil Partnership Act 2004 (Consequential Provisions and Modifications) Order 2014 (S.I. 2014/3229) , art. 1(2) , Sch. 6 para. 12(3)(a)

F18 Words in reg. 26(1)(b)(iii) substituted (2.12.2019) by The Civil Partnership (Opposite-sex Couples) Regulations 2019 (S.I. 2019/1458), reg. 1(2), Sch. 3 para. 48(a)

F19 Words in reg. 26(1)(c) substituted for reg. 26(1)(c)(i)(ii) (13.3.2014) (EW) by The Marriage (Same Sex Couples) Act 2013 (Consequential Provisions) Order 2014 (S.I. 2014/107) , art. 1(2) , Sch. 1 para. 17(3)(b), and words in reg. 26(1)(c) substituted for reg. 26(1)(c)(i)(ii) (16.12.2014) (S) by The Marriage and Civil Partnership (Scotland) Act 2014 and Civil Partnership Act 2004 (Consequential Provisions and Modifications) Order 2014 (S.I. 2014/3229) , art. 1(2) , Sch. 6 para. 12(3)(b)

F20 Words in reg. 26(1)(c) substituted (2.12.2019) by The Civil Partnership (Opposite-sex Couples) Regulations 2019 (S.I. 2019/1458), reg. 1(2), Sch. 3 para. 48(b)

F21 Reg. 26(2) substituted (13.3.2014) (EW) by The Marriage (Same Sex Couples) Act 2013 (Consequential Provisions) Order 2014 (S.I. 2014/107) , art. 1(2) , Sch. 1 para. 17(3)(c), and reg. 26(2) substituted (16.12.2014) (S) by The Marriage and Civil Partnership (Scotland) Act 2014 and Civil Partnership Act 2004 (Consequential Provisions and Modifications) Order 2014 (S.I. 2014/3229) , art. 1(2) , Sch. 6 para. 12(3)(c)

Modification applying to public service pension schemes. E+W+S

27.  In the case of schemes which are public service pension schemes, section 9(2B) of the 1993 Act (requirements for salary-related contracted out schemes in relation to service on or after the principal appointed day) is modified by omitting paragraph (b) (a requirement that the restrictions on employer-related investments apply to the scheme and the scheme complies with those restrictions).

Service in a salary-related contracted-out scheme that does not qualify for further benefits E+W+S

28.—(1) This regulation applies in cases in which any description of benefit under a salary-related contracted-out scheme is subject to a limit (however imposed) operating so as to prevent service beyond a particular length from qualifying for further benefits.

(2) Subject to the following provisions of this regulation, in cases to which this regulation applies the employment of an earner in employed earner’s employment shall be treated as contracted-out employment in relation to him, notwithstanding that his further service in the employment does not qualify him for further benefits under the scheme, where the following conditions are satisfied, namely that—

(a) the earner’s service in employed earner’s employment has qualified him for benefit up to a limit imposed by the scheme; and

(b) the annual rate of the benefit by way of pension for which that service has qualified him is not less than half the pensionable earnings on which it is calculated; and

(c) the total benefits payable under the scheme (other than benefits attributable to voluntary contributions within the meaning of section 111 of the 1993 Act) are the same as or more favourable than the guaranteed minimum pension and any benefits arising in respect of section 9(2B) rights to which the earner would be entitled in respect of service in that employment and any linked qualifying service during which the earner was in contracted-out employment and any periods of service in that employment which would be contracted-out employment by virtue of this regulation.

(3)  For the purposes of paragraph (2)(c) “total benefits" includes benefits which have accrued to the earner in respect of service in employment whether or not contracted-out employment and whether with the same or another employer, except any part of such benefits which consists of equivalent pension benefits for the purposes of Part III of the National Insurance Act 1965 M1 .

Marginal Citations

M1 1965 c.51 . The relevant provisions were repealed by the Social Security Act 1973 (c.38) but continued in force by S.I. 1974/2057 .

Schemes which cannot be certified under section 9(2B) of the 1993 Act. E+W+S

29.  For the purposes of section 9(2B)(d) of the 1993 Act (prescribed class or description of schemes which may not be salary-related contracted-out schemes) the prescribed schemes are—

[F22 (a) a scheme which is not registered under section 153 of the Finance Act 2004, unless it is, or was formerly, a relevant statutory scheme.]

(b) a money purchase scheme.

Textual Amendments

F22 Reg. 29(a) substituted (6.4.2006) by The Taxation of Pension Schemes (Consequential Amendments of Occupational and Personal Pension Schemes Legislation) Order 2006 (S.I. 2006/744) , arts. 1 , 8(7)