The Occupational Pension Schemes (Scheme Funding) Regulations 2005

Regulation 19

SCHEDULE 2 MODIFICATIONS OF THE ACT AND REGULATIONS

Multi-employer schemes

1.—(1) Where—

(a) a scheme in relation to which there is more than one employer is divided into two or more sections, and

(b) the provisions of the scheme are such that they meet conditions A and B,

Part 3 of the 2004 Act [F1 , the Funding and Investment Strategy Regulations] and these Regulations shall apply as if each section of the scheme were a separate scheme.

(2) Condition A is that contributions payable to the scheme by an employer, or by a member in employment under that employer, are allocated to that employer's section (or, if more than one section applies to the employer, to the section which is appropriate in respect of the employment in question).

(3) Condition B is that a specified part or proportion of the assets of the scheme is attributable to each section and cannot be used for the purposes of any other section.

(4) In their application to a scheme—

(a) which has been such a scheme as is mentioned in sub-paragraph (1);

(b) which is divided into two or more sections, at least one of which applies only to members who are not in pensionable service under the section;

(c) the provisions of which have not been amended so as to prevent conditions A and B being met in relation to two or more sections, and

(d) in relation to one or more sections of which those conditions have ceased to be met at any time by reason only of there being no members in pensionable service under the section and no contributions which are to be allocated to it,

Part 3 of the 2004 Act [F2 , the Funding and Investment Strategy Regulations] and these Regulations apply as if the section in relation to which those conditions have ceased to be satisfied were a separate scheme.

(5) For the purposes of sub-paragraphs (1) to (4), any provisions of the scheme by virtue of which contributions or transfers of assets may be made to make provision for death benefits are disregarded.

(6) But if sub-paragraph (1) or (4) applies and, by virtue of any provisions of the scheme, contributions or transfers of assets to make provision for death benefits are made to a section (“the death benefits section”) the assets of which may only be applied for the provision of death benefits, the death benefits section is also to be treated as if it were a seperate scheme for the purpose of Part 3 of the 2004 Act [F3 , the Funding and Investment Strategy Regulations] and these Regulations.

(7) For the purpose of this paragraph, any provisions of a scheme by virtue of which assets attributable to one section may on the winding up of the scheme or a section be used for the purposes of another section are disregarded.

(8) In their application in a case of the kind described in sub-paragraph (1) or (4), the forms set out in Schedule 1 are modified as follows—

(a) after “Name of scheme”, there is inserted “ and name of section ”, and

(b) for “scheme” and “scheme's”, wherever else they occur, there is substituted “ section ” and “ section's ”.

Textual Amendments

F1 Words in Sch. 2 para. 1(1) inserted (6.4.2024) by The Occupational Pension Schemes (Funding and Investment Strategy and Amendment) Regulations 2024 (S.I. 2024/462), regs. 1(1), 20(5)

F2 Words in Sch. 2 para. 1(4) inserted (6.4.2024) by The Occupational Pension Schemes (Funding and Investment Strategy and Amendment) Regulations 2024 (S.I. 2024/462), regs. 1(1), 20(5)

F3 Words in Sch. 2 para. 1(6) inserted (6.4.2024) by The Occupational Pension Schemes (Funding and Investment Strategy and Amendment) Regulations 2024 (S.I. 2024/462), regs. 1(1), 20(5)

2.  In the application of section 229 of the 2004 Act to a scheme in relation to which there is more than one employer, references to the employer have effect as if they were references to a person nominated by the employers, or by the rules of the scheme, to act as the employers' representative for the purposes of the section or, if no such nomination is made—

(a) for the purposes of agreement to any of the matters mentioned in subsection (1) of that section, to all of the employers other than any employer who has waived his rights under that sub-section, and

(b) for the purposes of agreement to a modification of the scheme under subsection (2) of that section, to all of the employers.

Frozen or paid-up schemes

[F4 3.— (1) In the application of Part 3 of the 2004 Act and these Regulations to a scheme which has no active members, references to the employer have effect as if they were references to the person who was the employer immediately before the occurrence of the event after which the scheme ceased to have any active members (“the freezing event”).

(2) A person shall cease to be treated as an employer under [F5 sub-paragraph (1)] if after the freezing event he ceases to be treated as a former employer under regulation 9 of the Occupational Pension Schemes (Employer Debt) Regulations 2005.]

Textual Amendments

F4 Sch. 2 para. 3 substituted (6.4.2008) by Occupational Pension Schemes (Employer Debt and Miscellaneous Amendments) Regulations 2008 (S.I. 2008/731), regs. 2(1), 20 (with reg. 2(3)-(8))

F5 Words in Sch. 2 para. 3(2) substituted (6.4.2010) by The Occupational Pension Schemes (Employer Debt and Miscellaneous Amendments) Regulations 2010 (S.I. 2010/725), regs. 1(2), 21

[F6 Employers in periods of grace

Textual Amendments

F6 Sch. 2 para. 3A inserted (27.1.2012) by The Occupational Pension Schemes (Employer Debt and Miscellaneous Amendments) Regulations 2011 (S.I. 2011/2973), regs. 1(2), 15

3A.— (1) This paragraph applies where an employer is treated under regulation 6A(1) of the Occupational Pension Schemes (Employer Debt) Regulations 2005 (employment-cessation events: periods of grace) as if it employed at least one person who is an active member of a scheme.

(2) Where this paragraph applies, Part 3 of the 2004 Act (scheme funding) and these Regulations are modified so that references to “employer” include a reference to the employer referred to in sub-paragraph (1).

(3) This paragraph ceases to apply where the period of grace referred to in regulation 6A of the Occupational Pension Schemes (Employer Debt) Regulations 2005 in respect of the employer comes to an end in accordance with that regulation.]

[F7 Period of grace followed by a deferred debt arrangement

Textual Amendments

F7 Sch. 2 paras. 3B-3D inserted (6.4.2018) by The Occupational Pension Schemes (Employer Debt and Miscellaneous Amendments) Regulations 2018 (S.I. 2018/237), regs. 1(2), 12(2)

3B.— (1) This paragraph applies where an employer is treated under regulation 6A(1) of the Occupational Pension Schemes (Employer Debt) Regulations 2005 (employment-cessation events: periods of grace) as if it employed at least one person who is an active member of a scheme.]

[F7 Employers in deferred debt arrangements

3C.— (1) This paragraph applies where a deferred employer is treated under regulation 6F(4) of the Occupational Pension Schemes (Employer Debt) Regulations 2005 (deferred debt arrangement) as if it employed at least one person who is an active member of a scheme.

(2) Where this paragraph applies, Part 3 of the 2004 Act and these Regulations are modified so that references to “employer” include a reference to a deferred employer.

(3) This paragraph ceases to apply where the deferred debt arrangement referred to in regulation 6F of the Occupational Pension Schemes (Employer Debt) Regulations 2005 in respect of the deferred employer comes to an end in accordance with that regulation.

Employers in deferred debt arrangements

3D.   For the purposes of paragraphs 3B and 3C—

“deferred debt arrangement” and “deferred employer” have the meanings given in regulation 2(1) (interpretation) of the Occupational Pension Schemes (Employer Debt) Regulations 2005.

Schemes covering United Kingdom and foreign employment

4.— (1) This paragraph applies in the cases described in sub-paragraphs (2) and (3).

(2) The first case referred to in sub-paragraph (1) is where a scheme—

(a) has its main administration in the United Kingdom;

(b) applies to members in employment in the [F8 United Kingdom] and members in employment outside the [F8 United Kingdom];

(c) is divided into two or more sections, and

(d) makes provision whereby—

(i) different sections of the scheme apply to members in employment in the [F9 United Kingdom] and to members in employment outside the [F9 United Kingdom];

(ii) contributions payable to the scheme in respect of a member are allocated to the section applying to that member's employment, and

(iii) a specified part or proportion of the assets of the scheme is attributable to each section and cannot be used for the purposes of any other section.

(3) The second case referred to in sub-paragraph (1) is where a scheme—

(a) has its main administration outside the [F10 United Kingdom];

(b) applies to members in employment in the United Kingdom and members in employment outside the United Kingdom;

(c) is divided into two or more sections, and

(d) makes provision whereby—

(i) different sections of the scheme apply to members in employment in the United Kingdom and to members in employment outside the United Kingdom;

(ii) contributions payable to the scheme in respect of a member are allocated to the section applying to that member's employment, and

(iii) a specified part or proportion of the assets of the scheme is attributable to each section and cannot be used for the purposes of any other section.

(4) Where this paragraph applies, Part 3 of the 2004 Act [F11 , the Funding and Investment Strategy Regulations] and these Regulations shall apply as if each section of the scheme were a separate scheme.

Textual Amendments

F8 Words in Sch. 2 para. 4(2)(b) substituted (31.12.2020) by The Occupational and Personal Pension Schemes (Amendment etc.) (EU Exit) Regulations 2019 (S.I. 2019/192), regs. 1, 28(3)(a); 2020 c. 1, Sch. 5 para. 1(1)

F9 Words in Sch. 2 para. 4(2)(d)(i) substituted (31.12.2020) by The Occupational and Personal Pension Schemes (Amendment etc.) (EU Exit) Regulations 2019 (S.I. 2019/192), regs. 1, 28(3)(a); 2020 c. 1, Sch. 5 para. 1(1)

F10 Words in Sch. 2 para. 4(3)(a) substituted (31.12.2020) by The Occupational and Personal Pension Schemes (Amendment etc.) (EU Exit) Regulations 2019 (S.I. 2019/192), regs. 1, 28(3)(a); 2020 c. 1, Sch. 5 para. 1(1)

F11 Words in Sch. 2 para. 4(4) inserted (6.4.2024) by The Occupational Pension Schemes (Funding and Investment Strategy and Amendment) Regulations 2024 (S.I. 2024/462), regs. 1(1), 20(5)

5.— (1) This paragraph applies in the case described in sub-paragraph (2).

(2) The case referred to in sub-paragraph (1) is where a scheme either—

(a) satisfies the criteria in sub-paragraphs (a) and (b) of paragraph 4(2), but is not divided into sections in the manner described in sub-paragraphs (c) and (d) of that paragraph, or

(b) satisfies the criteria in sub-paragraphs (a) and (b) of paragraph 4(3), but is not divided into sections in the manner described in sub-paragraphs (c) and (d) of that paragraph,

and part of the scheme is or was treated as a separate scheme under section 611(3) of the Income and Corporation Taxes Act 1988 M1 .

(3) Where this paragraph applies, Part 3 of the 2004 Act [F12 , the Funding and Investment Strategy Regulations] and these Regulations shall apply as if the separated parts of the scheme were separate schemes.

Textual Amendments

F12 Words in Sch. 2 para. 5(3) inserted (6.4.2024) by The Occupational Pension Schemes (Funding and Investment Strategy and Amendment) Regulations 2024 (S.I. 2024/462), regs. 1(1), 20(5)

Marginal Citations

M1 1988 c. 1; section 611 is repealed by Part 3 of Schedule 42 to the Finance Act 2004 with effect from 6th April 2006.

Schemes undertaking cross-border activities

F13 6.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F13 Sch. 2 para. 6 omitted (31.12.2020) by virtue of The Occupational and Personal Pension Schemes (Amendment etc.) (EU Exit) Regulations 2019 (S.I. 2019/192), regs. 1, 28(3)(b); 2020 c. 1, Sch. 5 para. 1(1)

Schemes with a partial guarantee by a public authority

7.   Where such a guarantee has been given as is mentioned in regulation 17(1)(a)(ii) in respect of only part of a scheme, Part 3 of the 2004 Act [F14 , the Funding and Investment Strategy Regulations] and these Regulations shall apply as if that part and the other part of the scheme were separate schemes.

Textual Amendments

F14 Words in Sch. 2 para. 7 inserted (6.4.2024) by The Occupational Pension Schemes (Funding and Investment Strategy and Amendment) Regulations 2024 (S.I. 2024/462), regs. 1(1), 20(5)

Schemes relating to certain defence contractors

8.— (1) This paragraph applies in the case of a scheme under which variations to the rate of contributions payable towards the scheme by the employer are subject, either in particular cases or generally, to the consent of—

(a) the Secretary of State for Defence;

(b) a person duly authorised by him, or

(c) a company of which the Secretary of State for Defence or a nominee of his is a shareholder, or a subsidiary (within the meaning of section 736 of the Companies Act 1985 M2 ) of such a company.

(2) Where this paragraph applies, sections 224(7) and 229 of the 2004 Act shall apply as if references to the employer were both to the employer and the Secretary of State for Defence or, in a case where the consent of a company is required, both to the employer and that company.

Marginal Citations

M2 1985 c. 6; section 736 was substituted by section 144(1) of the Companies Act 1989 (c. 40).

Schemes under which the rates of contributions are determined by the trustees or managers or by the actuary

9.— (1) In the case of a scheme under which—

(a) the rates of contributions payable by the employer are determined by the trustees or managers without the agreement of the employer, and

(b) no person other than the trustees or managers is permitted to reduce those rates or to suspend payment of contributions,

section 229 of the 2004 Act and regulation 13 shall apply as if they were subject to the modifications set out in sub-paragraphs (2) and (3), and the reference to section 229 in paragraph 8(2) above shall be read as a reference to that section as modified by sub-paragraph (2).

(2) The modifications of section 229 of the 2004 Act are as follows—

(a) in the heading, for “agreement of the employer” there is substituted “ consultation or agreement ”;

(b) in subsection (1), for “obtain the agreement of the employer to” there is substituted “ consult the employer regarding ”;

(c) in subsection (2), for the words before “(if the employer agrees)” there is substituted “ After consulting the employer regarding any such matter, the trustees or managers may ”;

(d) subsection (5) is omitted, and

(e) in subsection (6), for “(1), (4) or (5)” there is substituted “ (1) or (4) ”.

(3) The modifications of regulation 13 are as follows—

(a) in the heading, for “obtaining employer's agreement” there is substituted “ consulting employer ”, and

(b) in the text, for “obtain the agreement of the employer to” there is substituted “ consult the employer regarding ”.

(4) Where the power of the trustees or managers to determine the rates of contributions payable by the employer without the employer's agreement is subject to conditions, the modifications provided for in sub-paragraphs (2) and (3) have effect only in circumstances where the conditions are satisfied.

(5) In the case of a scheme under which[F15 any of] the rates of contributions payable by the employer are determined by the actuary without the agreement of the employer, section 227(6) of the 2004 Act shall apply as if it required that, in addition to the matters specified there, the actuary's certificate must state that [F16 any such rates forming part of] the schedule of contributions are not lower than the rates he would have provided for if he, rather than the trustees or managers of the scheme, had the responsibility of preparing or revising the schedule, the statement of funding principles and any recovery plan.

(6) In the case to which sub-paragraph (5) applies, regulation 10(6) and Schedule 1 apply as if the form of certification of the adequacy of the rates of contributions shown in the schedule of contributions included an additional statement that— “ I also certify that [F17 any rates of contributions forming part of this schedule which the scheme requires me to determine] are not lower than I would have provided for had I had responsibility for preparing or revising the schedule, the statement of funding principles and any recovery plan ”.

(7) Where the power of the actuary to determine[F18 any of] the rates of contributions payable by the employer without the employer's agreement is subject to conditions, the modifications provided for in sub-paragraphs (5) and (6) have effect only in circumstances where the conditions are satisfied.

(8) In the case of a scheme to which paragraph 8 applies, the references to the employer's agreement in sub-paragraphs (4), (5) and (7) of this paragraph shall be read as if the extended meaning of “employer” given by paragraph 8(2) applied.

Textual Amendments

F15 Words in Sch. 2 para. 9(5) inserted (6.4.2009) by Occupational, Personal and Stakeholder Pensions (Miscellaneous Amendments) Regulations 2009 (S.I. 2009/615), regs. 1(2), 18(3)(a)(i)

F16 Words in Sch. 2 para. 9(5) substituted (6.4.2009) by Occupational, Personal and Stakeholder Pensions (Miscellaneous Amendments) Regulations 2009 (S.I. 2009/615), regs. 1(2), 18(3)(a)(ii)

F17 Words in Sch. 2 para. 9(6) substituted (6.4.2009) by Occupational, Personal and Stakeholder Pensions (Miscellaneous Amendments) Regulations 2009 (S.I. 2009/615), regs. 1(2), 18(3)(b)

F18 Words in Sch. 2 para. 9(7) inserted (6.4.2009) by Occupational, Personal and Stakeholder Pensions (Miscellaneous Amendments) Regulations 2009 (S.I. 2009/615), regs. 1(2), 18(3)(c)

Schemes which are not required to appoint an actuary

10.   Where a scheme is exempt from the application of section 47(1)(b) of the 1995 Act (requirement to appoint a scheme actuary) by virtue of regulations made under subsection (5) of that section, Part 3 of the 2004 Act [F19 , the Funding and Investment Strategy Regulations] and these Regulations shall apply as if references to the actuary were to an actuary authorised by the trustees or managers to provide such valuations and certifications as may be required under that Part and these Regulations.

Textual Amendments

F19 Words in Sch. 2 para. 10 inserted (6.4.2024) by The Occupational Pension Schemes (Funding and Investment Strategy and Amendment) Regulations 2024 (S.I. 2024/462), regs. 1(1), 20(5)

Schemes with fewer than 100 members

11.— (1) This paragraph applies in the case of a scheme which—

(a) had fewer than 100 members on the effective date of its last actuarial valuation;

(b) is not exempted from the application of Part 3 of the 2004 Act by regulation 17(1), and

(c) is not a scheme in relation to which the application of that Part of the Act is modified by paragraph 6 of this Schedule.

(2) Where this paragraph applies—

(a) section 224(1)(a) of the 2004 Act shall apply as if it required the trustees or managers of the scheme to obtain an actuarial valuation the effective date of which is not more than three years after that of the last such valuation, and an actuarial report for any intervening year at any time in which the scheme had 100 or more members, and

(b) section 224(3) of that Act shall apply as if—

(i) all but paragraph (b) were omitted, and

(ii) that paragraph required that the effective date of any actuarial report must be an anniversary of the effective date of the last actuarial valuation.

Schemes subject to a change of circumstances affecting the certification of the schedule of contributions

12.— (1) In circumstances where the actuary considers that, because of the possibility of significant changes in the value of the assets of the scheme or in the scheme's technical provisions since the effective date of the last actuarial valuation, he is unable to certify the schedule of contributions in the terms set out in paragraph (b) of section 227(6) of the 2004 Act, that paragraph applies as if it provided for a statement that the rates shown in that schedule are such that—

(a) where the statutory funding objective was not met on the effective date of the last actuarial valuation, the statutory funding objective could have been expected on that date to be met by the end of the period specified in the recovery plan, or

(b) where the statutory funding objective was met on the effective date of the last actuarial valuation, the statutory funding objective could have been expected on that date to continue to be met for the period for which the schedule is to be in force.

(2) In circumstances where the statutory funding objective was met on the effective date of the last actuarial valuation but the actuary considers that, having regard to—

(a) the rates of contributions payable towards the scheme since that date, or

(b) the rates of contributions payable since that date taken together with the possibility of significant changes in the value of the assets of the scheme or in the scheme's technical provisions,

he is unable to certify the schedule of contributions in the terms set out in paragraph (b)(ii) of section 227(6) of the 2004 Act, that paragraph applies as if it provided for a statement that the rates shown in that schedule are such that the statutory funding objective could have been expected on that date to be met by the end of the period for which the schedule is to be in force.

(3) In the case to which sub-paragraph (1) applies, regulation 10(6) and Schedule 1 apply as if the alternative statements in the form of certification of the adequacy of the rates of contributions shown in the schedule of contributions were as follows—

““the statutory funding objective could have been expected on [effective date of valuationon which the schedule is based] to be met by the end of the period specified in the recovery plan.

the statutory funding objective could have been expected on [effective date of valuationon which the schedule is based] to continue to be met for the period for which the schedule is to be in force.”.

(4) In the case to which sub-paragraph (2) applies, regulation 10(6) and Schedule 1 apply as if the alternative statements in the form of certification of the adequacy of the rates of contributions shown in the schedule of contributions were replaced by the following statement— “the statutory funding objective could have been expected on [effective date of valuationon which the schedule is based] to be met by the end of the period for which the schedule is to be in force. ”.

(5) Where paragraph 6 of this Schedule applies, sub-paragraphs (1) and (3) of this paragraph apply as if the references to the period specified in the recovery plan were to the period of two years from the effective date of the last actuarial valuation.]