PART IIIF45 ... STATEMENTS OF ENTITLEMENT AND CALCULATION OF TRANSFER VALUES
F6... statements of entitlement6
F231
Subject to paragraph (1A), the guarantee date in relation to a statement of entitlement must be—
a
within the period of three months beginning with the date of the member’s application F60 ... for a statement of entitlement; or
b
where the trustees are unable to provide a statement of entitlement for reasons beyond their control within the period specified in sub-paragraph (a), within such longer period not exceeding six months beginning with the date of the member’s application as they may reasonably require.
F51A
Where a relevant scheme has received an application, the guarantee date must be either—
a
within the period, or, where applicable, the longer period, set out in paragraph (1); or
b
within a period of three months beginning on the date on which the relevant direction ceases to have effect,
whichever ends later.
1B
In paragraph (1A)—
F38 ...
“relevant scheme” means a scheme which either—
- a
is the subject of a freezing order made under section 23 of the Pensions Act 2004 containing a relevant direction on the date it receives the application; or
- b
becomes the subject of such a freezing order during the period, or, where applicable, the longer period, set out in paragraph (1); and
- a
“relevant direction” means a direction under section 23(4)(g) of the Pensions Act 2004.
F681C
Where a member has transferrable rights in relation to two categories of benefits other than money purchase benefits, the trustees or managers must provide the member with a statement of entitlement setting out a separate cash equivalent in relation to each of the categories of benefits, unless the member’s application relates to one of the categories of benefits only.
2
The guarantee date must be within the period of ten days (excluding Saturdays, Sundays, Christmas Day, New Year’s Day and Good Friday) ending with the date on which the statement of entitlement is provided to the member.
C83
A member who has made an application F37... for a statement of entitlement may not within a period of twelve months beginning on the date of that application make any further such application unless the rules of the scheme provide otherwise or the trustees allow the member to do so.
F194
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F345
In this regulation, “application” means an application for a statement of entitlement made under section 93A(1) of the 1993 Act (right to statement of entitlement: benefits other than money purchase).
Manner of calculation and verification of cash equivalents - general provisionsC2C4C5C10F54 7
1
Subject to paragraphs (4) and (7), cash equivalents are to be calculated and verified—
a
by calculating the initial cash equivalent—
i
ii
F28iii
for collective money purchase benefits, in accordance with regulation 7ZC,
and then making any reductions in accordance with regulation 7D; or
b
in accordance with regulation 7E.
2
The trustees must decide whether to calculate and verify the cash equivalent in accordance with paragraph (1)(a) or (b), but they can only choose paragraph (1)(b) if they have had regard to any requirement for consent to paying a cash equivalent which is higher than the amount calculated and verified in accordance with paragraph (1)(a).
3
The trustees are responsible for the calculation and verification of cash equivalents and initial cash equivalents.
4
Where a member, in relation to whom a cash equivalent is to be calculated and verified, is a member of a scheme modified by—
a
the British Coal Staff Superannuation Scheme (Modification) Regulations 1994; or
b
the Mineworkers’ Pension Scheme (Modification) Regulations 1994,
the cash equivalent of his bonus is to be calculated and verified by the trustees, having obtained the advice of the actuary, to reflect the fact that a reduced bonus, or no bonus, may become payable in accordance with the provisions governing the scheme in question.
5
For the purposes of paragraph (4) “bonus” means any—
a
augmentation of his benefits; or
b
new, additional or alternative benefits,
which the trustees of the scheme in question have applied to the member’s benefits, or granted to him in accordance with the provisions governing that scheme, on the basis of findings as to that scheme’s funding position.
6
Paragraph (7) applies where the cash equivalent is calculated and verified in accordance with paragraph (1)(a).
F627
Where the cash equivalent relates to more than one of the benefits specified in paragraphs (1)(a)(i) to (1)(a)(iii), the initial cash equivalent is to be calculated—
a
for the portion falling within paragraph (1)(a)(i), in accordance with regulations 7A and 7B;
b
for the portion falling within paragraph (1)(a)(ii), in accordance with regulation 7C; and
c
for the portion falling within paragraph (1)(a)(iii), in accordance with regulation 7ZC.
Manner of calculation of initial cash equivalents for salary related benefits F55other than cash balance benefits not calculated by reference to final salaryC4C5C107A
1
For salary related benefits F1other than cash balance benefits in respect of which the available sum is not calculated by reference to final salary, the initial cash equivalent is to be calculated—
a
on an actuarial basis; and
b
in accordance with paragraph (2) and regulation 7B.
2
3
For the purposes of paragraph (2), the trustees must determine the extent—
a
of any options the member has which would increase the value of his benefits under the scheme;
b
of any adjustments they decide to make to reflect the proportion of members likely to exercise those options; and
c
to which any discretionary benefits should be taken into account, having regard to any established custom for awarding them and any requirement for consent before they are awarded.
F41Initial cash equivalents for salary related benefits F35other than cash balance benefits not calculated by reference to final salary: assumptions and guidanceC4C5C107B
1
The trustees must calculate the initial cash equivalent for salary related benefits F66other than cash balance benefits in respect of which the available sum is not calculated by reference to final salary—
a
by using the assumptions determined under this regulation; and
b
where the scheme falls within paragraph (6), in accordance with the guidance referred to in that paragraph.
2
Having taken the advice of the actuary, the trustees must determine the economic, financial and demographic assumptions.
3
In determining the demographic assumptions, the trustees must have regard to—
a
the main characteristics of the members of the scheme; or
b
where the members of the scheme do not form a large enough group to allow demographic assumptions to be made, the characteristics of a wider population sharing similar characteristics to the members.
4
F48Except where the scheme falls within paragraph (6), the trustees must have regard to the scheme’s investment strategy when deciding what assumptions will be included in calculating the discount rates in respect of the member.
5
The trustees must determine the assumptions under this regulation with the aim that, taken as a whole, they should lead to the best estimate of the initial cash equivalent.
F326
A scheme falls within this paragraph if it is a public service pension scheme in respect of which guidance has been prepared, and from time to time revised, by the Treasury for calculating the discount rates.
Manner of calculation of initial cash equivalents for money purchase benefits F2(other than collective money purchase benefits)F40and cash balance benefits not calculated by reference to final salaryC4C5C107C
1
2
The initial cash equivalent is the realisable value F50at the date of calculation of any benefits to which the member is entitled.
3
The trustees must calculate that realisable value—
a
in accordance with the scheme rules; and
b
in a manner which is—
i
approved by the trustees; and
ii
consistent with F52Chapter 1 of Part 4ZA of the 1993 Act.
4
F33The realisable value must include—
a
for money purchase benefits, any increases to the benefits resulting from a payment of interest made in accordance with the scheme rules; or
b
for cash balance benefits—
i
any interest (including notional interest) which, in accordance with the scheme rules, applies to the available sum in respect of which the benefits are calculated;
ii
any guarantee which, in accordance with the scheme rules, applies to the available sum in respect of the benefits or to the contributions made by the member or by another person in respect of the member;
iii
any options the member has which would increase the value of the member’s benefits under the scheme (adjusted to reflect the proportion of members the trustees determine are likely to exercise those options); and
iv
any discretionary benefits which the trustees determine should be taken into account, having regard to any established custom for awarding the benefits and any requirement for consent before they are awarded.
F51Manner of calculation of initial cash equivalents for collective money purchase benefits7ZC
1
For collective money purchase benefits, the initial cash equivalent is the realisable value of the member’s share at the date of calculation of the available assets of the collective money purchase scheme, and is to be calculated—
a
on an actuarial basis;
b
using assumptions determined in accordance with this regulation; and
c
in accordance with the scheme rules, to the extent that they are consistent with sub-paragraphs (a) and (b).
2
Having taken the advice of the actuary, the trustees must—
a
determine the economic, financial and demographic assumptions; and
b
calculate the initial cash equivalent by using the assumptions so determined.
3
In determining the demographic assumptions, the trustees must have regard to—
a
the main characteristics of the members of the scheme; or
b
where the members of the scheme do not form a large enough group to allow demographic assumptions to be made, the characteristics of a wider population sharing similar characteristics to the members.
4
The trustees must have regard to the scheme’s investment strategy when deciding what assumptions will be included in calculating the discount rates in respect of the member.
5
The trustees must determine the assumptions under this regulation with the aim that, taken as a whole, they should lead to the best estimate of the initial cash equivalent.
6
In this regulation, “the available assets of the collective money purchase scheme” has the meaning given by section 2(2) of the Pension Schemes Act 2021 “the available assets of the scheme”.
Reductions to initial cash equivalents7D
1
F8For salary-related benefits an initial cash equivalent may, or as the case may be must, be reduced in accordance with Schedule 1A (reductions in initial cash equivalents).
F392
For the purposes of paragraph (1) the trustees may—
a
request an insufficiency report from the actuary in accordance with Schedule 1B (insufficiency reports); or
b
treat the actuary’s last relevant GN11 report as an insufficiency report.
3
For money purchase benefits, an initial cash equivalent may, or as the case may be, must be reduced in accordance with F61paragraphs 7, 10, 11, 14 and 15 of Schedule 1A (reductions in initial cash equivalents).
Alternative manner of calculating and verifying cash equivalents7E
C12C9C111
This regulation applies where the trustees have decided to calculate and verify the cash equivalent in accordance with regulation 7(1)(b).
C12C9C112
The cash equivalent is to be calculated and verified in such manner as may be approved by the trustees.
C12C9C113
The cash equivalent must be higher than it would be if it was calculated and verified in accordance with regulation 7(1)(a).
4
For the purposes of calculating and verifying the cash equivalent, the trustees may request an insufficiency report from the actuary in accordance with Schedule 1B.
5
The trustees may treat the actuary’s last relevant GN11 report as an insufficiency report.
Increases and reductions of F47cash equivalents shown in the statement of entitlement9
F181
This regulation applies to a cash equivalent in respect of transferrable rights in relation to categories of benefits other than money purchase benefits where a statement of entitlement has been sent to a member of a salary related scheme by the trustees of the scheme.
2
Where all or any of the benefits to which a F24cash equivalent shown in the statement of entitlement relates have been surrendered, commuted or forfeited before the date on which the trustees do what is needed to carry out what the member requires, that part of the F24cash equivalent shown in the statement of entitlement which relates to the benefits so surrendered, commuted or forfeited shall be reduced to nil.
3
Where a scheme has on or after the guarantee date begun to be wound up, a F46cash equivalent shown in the statement of entitlement may be reduced to the extent necessary for the scheme to comply with F57the winding up provisions (as defined in section 73B(10)(a) of the 1995 Act) and regulations made under those provisions .
4
If, by virtue of regulations made F11under section 73B(4)(b)(i) of the 1995 Act by virtue of section 73B(5) of that Act, the winding up provisions (as so defined) apply to a section of a scheme as if that section were a separate scheme, paragraph (3) shall apply as if that section were a separate scheme and as if the references therein to a scheme were accordingly references to that section.
5
6
In a case where two or more of the paragraphs of this regulation fall to be applied to a calculation, they shall be applied in the order in which they occur in this regulation except that where paragraph (5) falls to be applied it shall be applied as at the date on which it is established that the F25cash equivalent shown in the statement of entitlement falls short of or exceeds the proper amount.
Increases of cash equivalents on late payment10
1
Subject to paragraph (2), if the trustees of a scheme, having received an application under section 95 of the 1993 Act, fail to do what is needed to carry out what the member requires within six months of the appropriate date the member’s cash equivalent, as calculated in accordance with regulations 7 to 9, shall be increased by the amount, if any, by which that cash equivalent falls short of what it would have been if the appropriate date had been the date on which the trustees carry out what the member requires.
2
If the trustees of a scheme, having received an application under section 95 of the 1993 Act, fail without reasonable excuse to do what is needed to carry out what the member requires within six months of the appropriate date the member’s cash equivalent, as calculated in accordance with regulations 7 to 9, shall be increased by—
C13C3 a
interest on that cash equivalent calculated on a daily basis over the period from the appropriate date to the date on which the trustees carry out what the member requires, at an annual rate of one per cent. above base rate; or, if it is greater,
b
the amount, if any, by which that cash equivalent falls short of what it would have been if the appropriate date had been the date on which the trustees carry out what the member requires.
DisclosureC1C6 11
F31
Subject to paragraphs (1A) and (1B), a member to whom paragraph (1C) applies is entitled to receive from the trustees, on request, the information mentioned in Schedule 1 in writing.
F641A
Paragraph (1) does not apply where the request is made within 12 months of the last occasion that such information was provided to the member.
1B
Information provided under paragraph (1) is to be provided by the trustees as soon as reasonably practicable, and in any event within three months after the date that the member makes the request.
F151C
This paragraph applies—
a
to a member who is currently accruing rights to one of the categories of benefits; and
b
to a member who is no longer accruing rights to money purchase benefits unless, in respect of those benefits, a crystallisation event under section 93(7) has occurred.
F142
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F633
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4
The trustees must ensure that a statement of entitlement F17provided under section 93A of the 1993 Act is accompanied by—
a
the information mentioned in Schedule 1 in relation to any cash equivalent of or transfer value in relation to the member’s money purchase benefits (if any) under the scheme, calculated by reference to the guarantee date;
b
a statement in writing—
F4 i
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ii
indicating whether, and if so for what reasons and by what amount, the member’s F16initial has been reduced under F36Schedule 1A and if any such reduction has been made the statement shall indicate the paragraph of F36Schedule 1A which has been relied upon and shall give an estimate of the date (if any) by which it will be possible to make available a F27cash equivalent shown in the statement of entitlementF10in relation to each of the categories of benefits which is not so reduced,
F20iia
indicating the amount of the cash equivalent which is attributable to each of the categories of benefits included in the statement of entitlement;
iii
explaining the terms and effect of regulation 6(3) (no right to make an application for a guaranteed statement of entitlement within 12 months of the last such application),
iv
v
F42c
the information mentioned in paragraph 3 of Schedule 1.
F674A
For the purposes of paragraph (4)(b)(vi), the question whether a scheme has begun to wind up shall be determined in accordance with section 124(3A) to (3D) of the 1995 Act.
5
Where a F7cash equivalent shown in the statement of entitlement is reduced or increased under regulation 9, the trustees must notify the member of that fact in writing within ten days (excluding Saturdays, Sundays, Christmas Day, New Year’s Day and Good Friday) and such notification must—
a
state the reasons for and the amount of the reduction or increase;
b
indicate the paragraph of regulation 9 which has been relied upon; and
c
state that the member has a further three months, beginning with the date on which the member is informed of the reduction or increase, to make a written application to take the guaranteed cash equivalent as so reduced or increased.
6
Where any person fails to comply with any requirement imposed upon that person by this regulation, the Regulatory Authority may F43by notice in writing require that person to pay, within 28 days, a penalty which—
a
in the case of an individual, shall not exceed £1,000; and
b
in any other case, shall not exceed £10,000.
F217
The trustees may provide any information or notification under this regulation in accordance with regulations 26 to 28 of the Occupational and Personal Pension Schemes (Disclosure of Information) Regulations 2013 (giving information and documents).
Word in Pt. III omitted (6.4.2015) by virtue of The Occupational and Personal Pension Schemes (Transfer Values) (Amendment and Revocation) Regulations 2015 (S.I. 2015/498), regs. 1(2), 4(2)