The Financial Assistance Scheme Regulations 2005

Regulation 4(1)

SCHEDULE 1 U.K. MODIFICATION OF CERTAIN PROVISIONS OF PARTS 1 AND 2 OF THE ACT

Valid from 01/09/2005

1.  In section 68 (power for the Regulator to collect information relevant to the Board of the Pension Protection Fund), for “the Board of the Pension Protection Fund”, substitute “ the scheme manager of the financial assistance scheme which are conferred on him by regulations made under, or by virtue of, section 286 ”. U.K.

Valid from 01/09/2005

2.  In section 85 (disclosure by the Regulator for facilitating the exercise of functions by the Board)— U.K.

(a) for “Section 82 does not preclude” substitute “ Neither section 82 nor Article 77 of the Pensions (Northern Ireland) Order 2005 precludes ”;

(b) for the words “the Board of the Pension Protection Fund to exercise its functions”, substitute “ the scheme manager of the financial assistance scheme to exercise functions conferred on him by regulations made under or by virtue of section 286, and Part 2 of the Pensions (Northern Ireland) Order 2005 shall be read accordingly ”.

Valid from 01/09/2005

3.  In section 88(4) (disclosure of tax information by the Regulator), after “subsection (3)” insert “ or as mentioned in Article 83(3) of the Pensions (Northern Ireland) Order 2005 ”. U.K.

4.  In section 168 (administration of compensation payable by the Board)— U.K.

(a) in subsection (1), for “this Chapter” substitute “ the financial assistance scheme established by regulations under section 286 ”;

(b) for subsection (2), substitute—

“(2) Regulations under subsection (1) may, in particular, make provision—

(a) for the recovery of amounts paid by the scheme manager of the financial assistance scheme in excess of entitlement;

(b) specifying the circumstances in which payments from the financial assistance scheme can be suspended.”; and

(c) omit subsection (3).

5.  In section 190 (information to be provided to the Board etc.)— U.K.

(a) in subsection (1), for paragraphs (a) and (b), substitute—

“(a) to the scheme manager, or

(b) to a person—

(i) with whom the scheme manager has made arrangements for any of his functions to be exercised on his behalf, and

(ii) who is authorised by the scheme manager for the purposes of the regulations,”; and

(b) in subsection (2), for “of entitlement to compensation under Chapter 3 of this Part” substitute “ that a person is entitled to a payment from the financial assistance scheme ”.

Valid from 01/09/2005

6.  In section 191 (notices requiring provision of information to the Board)— U.K.

(a) in subsection (1)(b), for “the Board's” substitute “ the scheme manager's ”;

(b) in subsections (2) and (3), for “the Board”, in each place, substitute “ the scheme manager ”; and

(c) in subsection (3)—

(i) omit “ and ” at the end of paragraph (d);

(ii) after paragraph (d), insert—

“(da) in the case of a wound up scheme, any insurance company (within the meaning in the Financial Assistance Scheme Regulations 2005) which is paying annuities to former members of the scheme, and”; and

(iii) in paragraph (e), for “the Board's” substitute “ the scheme manager's ”.

Valid from 01/09/2005

7.  In section 192 (entry of premises to enable performance of functions by the Board)— U.K.

(a) for “the Board”, in each place, substitute “ the scheme manager ”;

(b) in subsection (1)(f), for “the Board's” substitute “ the scheme manager's ”; and

(c) in subsection (6), for “The Board” substitute “ The scheme manager ”.

Valid from 01/09/2005

8.  In section 194 (warrants to enforce entry of premises and obtaining of documents by, or on behalf, of the Board)— U.K.

(a) for “the Board”, in each place, substitute “ the scheme manager ”;

(b) omit in both places “ , or any corresponding provision in force in Northern Ireland ”;

(c) in subsection (1), after “information on oath” insert “ or, in Northern Ireland, on complaint on oath ”;

(d) in subsection (1)(b), for “the Board's” substitute “ the scheme manager's ”;

(e) in subsection (2)(a), after “the information” insert “ or complaint ”; and

(f) in subsection (6), for “The Board” substitute “ The scheme manager ”.

Valid from 01/09/2005

9.  In section 195(1)(b) (offence of providing false or misleading information to the Board), for the words from “by the Board” to the end of that paragraph substitute “ by the scheme manager for the purposes of exercising his functions. ”. U.K.

Valid from 01/09/2005

10.  In section 196 (use of information by the Board)— U.K.

(a) for “the Board”, in each place, substitute “ the scheme manager ”; and

(b) for “its functions”, in each place, substitute “ his functions ”.

Valid from 01/09/2005

11.  In section 197 (restricted information)— U.K.

(a) in subsections (1) and (3), after “the Board”, in each place, insert “ or the scheme manager ”;

(b) in subsection (4), after “its functions” insert “ or by the scheme manager in the exercise of his functions ”;

(c) in subsection (6)(a), after “that section” insert “ (disregarding any modifications of that section made by the Financial Assistance Scheme Regulations 2005) ”; and

(d) after subsection (6), insert—

“(6A) Information which—

(a) is obtained under section 191 by a person authorised under subsection (2)(b) of that section, but

(b) if obtained by the scheme manager, would be restricted information,

is treated for the purposes of subsections (1) and (3) and sections 198 to 201 and 203 as restricted information which the person has received from the scheme manager.”.

Valid from 01/09/2005

12.  In section 198 (disclosure by the Board of restricted information for facilitating exercise of functions by the Board)— U.K.

(a) at the end of subsection (1), add “ or the scheme manager to exercise his functions ”;

(b) in subsection (2)—

(i) after “its functions”, insert “ or the scheme manager properly to exercise any of his functions ”; and

(ii) after “the Board”, in the second place, insert “ or, as the case may be, the scheme manager ”; and

(c) in subsection (3)—

(i) after “the Board”, in both places, insert “ or, as the case may be, the scheme manager ”; and

(ii) for “he” substitute “ that person ”.

Valid from 01/09/2005

13.  In section 200(1) (disclosure by the Board of restricted information for facilitating the exercise of functions by other supervisory authorities)— U.K.

(a) after “the Board”, in the first place, insert “ or the scheme manager ”; and

(b) after “the Board”, in the second place, insert “ or, as the case may be, the scheme manager ”.

Valid from 01/09/2005

14.  In section 201 (other permitted disclosures of restricted information by the Board)— U.K.

(a) in subsection (1)—

(i) after “the Board”, in the first place, insert “ or the scheme manager ”;

(ii) after “the Board”, in the second place, insert “ or, as the case may be, the scheme manager ”;

(b) in subsection (2), after “the Board”, in both places, insert “ or the scheme manager ”;

(c) in subsection (2)(d), for “it has a right” substitute “ the Board or the scheme manager has a right ”;

(d) in subsection (8), for “with the consent of the Board” substitute—

“(a) in a case where the disclosure under that subsection was made by the Board, with the consent of the Board, and

(b) in a case where the disclosure under that subsection was made by the scheme manager, with his consent”;

(e) for subsection (9)(a), substitute—

“(a) in a case where the disclosure under that subsection was made by the Board, with the consent of the Board,

(aa) in a case where the disclosure under that subsection was made by the scheme manager, with his consent, and”; and

(f) in subsection (10)—

(i) after “its” insert “ or his ”;

(ii) after “the Board” insert “ or, as the case may be, the scheme manager ”; and

(iii) after “it” insert “ or him ”.

15.  In section 203 (provision of information to members of schemes etc. by the Board)— U.K.

(a) in subsection (1), after “the Board” insert “ or the scheme manager ”;

(b) in subsections (3)(c), (5)(b) and (c) and (6)(c), after “the Board”, in each place, insert “ or, as the case may be, the scheme manager ”;

(c) after “the Board's”, in each place, insert “ or the scheme manager's ”;

(d) omit “ or ” at the end of subsection (1)(b)(ii) and insert after that sub-paragraph—

“(iia) relating to any determination made in relation to the financial assistance scheme, or”;

(e) in subsection (2), after “Chapter 3” insert “ or, as the case may be, to a payment from the financial assistance scheme ”;

(f) in subsection (4)—

(i) in paragraph (a), after “who is” insert “ or was ”;

(ii) in paragraph (b), after “member” insert “ or former member ”; and

(g) after subsection (6)(a)(iv), insert—

“(v) in the case of a wound up scheme, any insurance company (within the meaning in the Financial Assistance Scheme Regulations 2005) which is paying annuities to former members of the scheme,”.

16.  In section 204 (interpretation of sections 190 to 203)— U.K.

(a) after subsection (2), insert—

“(2A) The “scheme manager” is the person who manages the financial assistance scheme.

(2B) The “financial assistance scheme” is the scheme established by regulations under section 286.”; and

(b) after subsection (3), add—

“(4) Where the scheme manager has functions in relation to a scheme which is wound up, any reference to a trustee, manager, professional adviser or employer in relation to the scheme is to be read as reference to a person who held that position in relation to the scheme before it wound up.”.

Valid from 01/09/2005

Regulations 17 and 18(5)

SCHEDULE 2 U.K. DETERMINATION OF ANNUAL AND INITIAL PAYMENTS

Introductory U.K.

1.—(1) This Schedule applies for the purposes of determining the amount of an annual payment or of an initial payment payable to or in respect of qualifying members of qualifying pension schemes.

(2) In this Schedule—

“the certification date” means the date in respect of which the trustees or managers of the qualifying pension scheme have certified that the information relating to the qualifying member's actual pension is correct;

“guaranteed minimum pension” has the meaning given in section 8(2) of the 1993 Act;

“scheme rules” means the rules of the qualifying pension scheme.

(3) Paragraphs 2 to 5 are subject to paragraphs 6 to 9.

Actual pension U.K.

2.—(1) In this Schedule, “ actual pension” means, subject to sub-paragraph (3), the annual rate of annuity which has, or could have been, purchased for the beneficiary as at the certification date with the assets available to discharge the liability of the scheme to him after that liability has, or had been, determined.

(2) The liability of the scheme to the beneficiary shall be determined for the purposes of sub-paragraph (1)—

(a) in accordance with section 73 of the 1995 Act; or

(b) where that section does not apply, in accordance with the scheme rules.

(3) The annual rate of annuity which can be purchased for the beneficiary for the purposes of sub-paragraph (1) with the assets referred to in that sub-paragraph, shall be determined—

(a) where the beneficiary is, or was, a member of the qualifying pension scheme, having regard to the amount which would, or has already, come into payment to him from the scheme when the qualifying member attains, or attained, his normal retirement age;

(b) where the beneficiary is a survivor of a member of that scheme, having regard to the annual rate of annuity which will come into payment to him immediately on the purchase of the annuity from the assets of the scheme;

(c) on the basis that benefits payable to survivors and increases in the annual rate of annuity in payment are no more generous than provided in relation to pensions under the scheme rules; and

(d) on the basis that there has been no commutation of benefits deriving from the scheme.

(4) Where the scheme manager is satisfied that it is not possible for him to determine the annual rate of annuity for the purposes of sub-paragraph (1) having regard to the information available to him, he shall determine the annual rate of annuity on the basis of the sum which would discharge the liability of the scheme to the beneficiary and to such other matters as he considers relevant.

Qualifying members receiving pensions from the qualifying pension scheme U.K.

3.—(1) This paragraph applies where immediately before a qualifying pension scheme began to wind up, a qualifying member was entitled to present payment of a pension under the scheme rules.

(2) The annual payment payable to a qualifying member to whom this paragraph applies shall be—

(expected pension x 0.8) — actual pension.

(3) In this paragraph, “expected pension” means the annual rate of the pension which would have been in payment to the qualifying member in respect of rights accrued in a qualifying pension scheme as at the certification date if the scheme had not started to wind up.

Active and deferred members U.K.

4.—(1) This paragraph applies in respect of a qualifying member of a qualifying pension scheme who immediately before a qualifying pension scheme began to wind up, was an active member or a deferred member of that scheme.

(2) The annual payment payable to a qualifying member to whom this paragraph applies shall be—

(expected pension x 0.8) — actual pension.

(3) In sub-paragraph (2), “expected pension” means, subject to sub-paragraph (4), the aggregate of—

(a) the annual rate of the pension to which the qualifying member would have been entitled in accordance with the scheme rules had he attained his normal retirement age when the pensionable service relating to the pension ended;

(b) the revaluation amount for the first revaluation period (see sub-paragraphs (5) and (6)); and

(c) the revaluation amount for the second revaluation period (see sub-paragraphs (7) to (11)).

(4) In any case where the scheme manager is satisfied, having regard to the information available to him, that it is not possible for him to identify any one of the elements in sub-paragraph (3), he may determine how the annual payment is to be calculated having regard to such matters as he considers relevant.

(5) The first revaluation period is the period beginning on the day on which the qualifying member's pensionable service ended and ending on the day before the day on which the scheme began to wind up.

(6) The revaluation amount for the first revaluation period is the amount by which the annual rate of the pension under sub-paragraph (3)(a) would fall to be revalued—

(a) in relation to any guaranteed minimum pension, in accordance with section 16 of the 1993 Act, having regard to the relevant scheme rules; and

(b) in relation to the remainder of the pension, in accordance with Chapter 2 of Part 4 of the 1993 Act.

(7) The second revaluation period is the period beginning on the day on which the scheme began to wind up and ending on the certification date.

(8) The revaluation amount for the second revaluation period is, subject to sub-paragraph (12)—

(a) where that period is less than one month, nil; or

(b) in any other case, the revaluation percentage of the aggregate of the annual rate of the pension under sub-paragraph (3)(a) and the revaluation amount for the first revaluation period under sub-paragraph (6).

(9) In sub-paragraph (8), “the revaluation percentage” means the lesser of—

(a) the percentage increase in the general level of prices in Great Britain during the second revaluation period determined in accordance with sub-paragraph (7); and

(b) the maximum revaluation rate.

(10) The method for determining the percentage increase in the general level of prices in Great Britain during the second revaluation period is—

where—

A is the level of the retail prices index for the month which falls two months before the month in which the certification date falls;

B is the level of the retail prices index for the month two months before the month during which the relevant qualifying pension scheme began to wind up.

(11) In sub-paragraph (9)(b), “the maximum revaluation rate” in relation to the second revaluation period is—

(a) if that period is a period of 12 months, 5%; or

(b) in any other case, the percentage that would be the percentage mentioned in sub-paragraph (9)(a) had the general level of prices in Great Britain increased at the rate of 5% compound per annum during that period.

(12) In determining the revaluation amount for the second revaluation period in accordance with sub-paragraphs (8) to (11), no revaluation shall be made in respect of any benefits which are not subject to revaluation under the scheme rules.

Survivors of qualifying members U.K.

5.—(1) This paragraph applies where, immediately before a qualifying pension scheme began to wind up, a qualifying member—

(a) was entitled to present payment of a pension under the scheme rules and that pension was attributable—

(i) to the member's pensionable service; or

(ii) (directly or indirectly) to a pension credit to which the member became entitled under section 29(1)(b) of the Welfare Reform and Pensions Act 1999 M1 ; or

(b) was an active member or a deferred member of that scheme,

and that member dies on or after the day on which the scheme began to wind up.

(2) The annual payment payable to the survivor of a qualifying member to whom this paragraph applies shall be determined in accordance with sub-paragraph (3) or (6).

(3) Where the qualifying member dies on or before the certification date, the annual payment payable to his survivor shall be—

(4) In sub-paragraph (3), “expected pension” shall, subject to sub-paragraph (5), be determined—

(a) where the qualifying member was entitled to present payment of a pension under the scheme rules immediately before his death, in accordance with paragraph 3(3); or

(b) where the qualifying member was an active member or a deferred member of a qualifying pension scheme immediately before his death, in accordance with paragraph 4(3).

(5) In any case where the scheme manager is satisfied that it is not possible for him to identify either or both elements of the formula in sub-paragraph (3), he may determine how the annual payment is to be calculated having regard to the scheme rules and such other matters as he considers relevant.

(6) Where the qualifying member dies after the certification date, the annual payment payable to his survivor shall be—

(a) one-half of the annual payment which was payable to that member in accordance with paragraph 3 or 4 immediately before his death; or

(b) where the annual payment was not payable to that member immediately before his death, one-half of the annual payment which would have been payable to him in accordance with paragraph 3 or 4 had he attained the age of 65 immediately before his death.

Marginal Citations

M1 1999 c. 30.

Exclusion of certain benefits U.K.

6.—(1) No account shall be taken of the benefits specified in sub-paragraph (2) when determining, for the purposes of this Schedule—

(a) the assets available to be used to discharge a liability of a qualifying pension scheme;

(b) the liabilities of such a scheme; and

(c) the annual rate of pension from such a scheme.

(2) The specified benefits are—

(a) money purchase benefits;

(b) benefits derived from the payment of voluntary contributions where, on the winding up of the scheme, the assets of the scheme have first been applied to satisfy liabilities in respect of those benefits; and

(c) any guaranteed minimum pension where an accrued rights premium or a pensioner's right's premium was paid in respect of the qualifying member.

(3) In sub-paragraph (2)(c), “accrued rights premium” and “pensioner's right's premium” respectively have the meaning given in section 55(6)(a) and (b) of the 1993 Act as in force before 6^th April 1997 M2 .

Marginal Citations

M2 Section 55 is repealed in part and amended by the 1995 Act, sections 141 and 151 and Schedule 5, paragraph 50.

Cap on expected pension and actual pension U.K.

7.—(1) Where the amount of a qualifying member's expected pension determined in accordance with the previous provisions of this Schedule multiplied by 0.8, exceeds £12,000, the amount of the annual payment payable to, or in respect of, that member under paragraphs 3 to 5 shall be determined on the basis that the product of that calculation was £12,000.

(2) Where the amount of a qualifying member's actual pension determined in accordance with paragraph 2 exceeds—

(a) the amount of a qualifying member's expected pension determined in accordance with the previous provisions of this Schedule multiplied by 0.8; or

(b) £12,000,

no annual payment shall be payable to, or in respect of, that member.

De minimis rule U.K.

8.  Where the amount of an annual payment determined in accordance with the previous provisions of this Schedule would, but for this paragraph—

(a) in the case of paragraphs 3 and 4, be less than £520;

(b) in the case of paragraph 5, be less than £260,

the amount of that payment shall be nil.

Revaluation U.K.

9.—(1) The amount of the annual payment shall be determined in accordance with the preceding paragraphs of this Schedule on the basis of the circumstances applying as at the certification date.

(2) Where there is a period of one month or more between the certification date and the date on which the annual payment is first payable to the beneficiary in accordance with regulation 17, the annual payment shall be increased by the appropriate revaluation percentage of that amount.

(3) In sub-paragraph (2), “the appropriate revaluation percentage” means the lesser of—

(a) the percentage increase in the general level of prices in Great Britain during the second revaluation period determined in accordance with paragraph 4(7); and

(b) the maximum revaluation rate.

(4) The method for determining the percentage increase in the general level of prices in Great Britain during that period is—

where—

A is the level of the retail prices index for the month which falls two months before in which the annual payment is first payable to the beneficiary under regulation 17;

B is the level of the retail prices index for the month two months before the month in which the certification date falls.

(5) In sub-paragraph (3)(b), “the maximum revaluation rate” in relation to that period is—

(a) if that period is a period of 12 months, 5%; and

(b) in any other case, the percentage that would be the percentage mentioned in sub-paragraph (3)(a) had the general level of prices in Great Britain increased at the rate of 5% compound per annum during that period.

Initial payments U.K.

10.  The preceding provisions of this Schedule shall apply for the purposes of determining the amount of an initial payment with the following modifications—

(a) for paragraph 2, substitute—

“Interim pension

2.   In this Schedule, “interim pension” means the annual rate of pension in payment or proposed to be paid to the qualifying member from the assets of the qualifying pension scheme of which he is a member, on or after the time when the scheme began to wind up but before the day on which the scheme's liabilities to the member were discharged.”;

(b) for “actual pension”, in each place, substitute “ interim pension ”;

(c) for “0.8”, in each place, substitute “ 0.6 ”.

Rounding U.K.

11.  Where the amount of an annual payment or an initial payment determined in accordance with this Schedule results in a fraction of a penny, that fraction shall be treated as a penny.