The Pension Protection Fund (Hybrid Schemes) (Modification) Regulations 2005

Explanatory Note

(This note is not part of the Regulations)

These Regulations modify how the provisions of Part 2 of the Pensions Act 2004 (“the Act”) operate in relation to hybrid schemes. Part 2 of the Act makes provision in respect of the Board of the Pension Protection Fund (“the Board”), which is established under section 107 of the Act.

Regulation 2 prescribes the circumstances in which, and the conditions subject to which, the prohibition in section 135(4) on transferring, or making transfer payments in respect of, any member’s rights and discharging any liability to, or in respect of, a member, does not apply.

Regulation 3(1) modifies section 134 of the Act to provide for the Board to give directions to a relevant person (defined in section 134(3) of the Act) regarding the exercise of his powers during an assessment period (see section 132 of the Act) in respect of discharging liabilities of the scheme which relate to money purchase benefits. Regulation 3(2) and (3) modifies Schedule 7 so that compensation is not payable under paragraph 20 in relation to benefits or contributions that relate to money purchase benefits. Regulation 3(2) and (4) allows the Board to repay a person’s contributions to the scheme in respect of a pension or a lump sum (which are not money purchase benefits) in certain cases.

As these Regulations are made before the expiry of the period of six months beginning with the coming into force of the provisions of the 2004 Act by virtue of which they are made, the requirement of the Secretary of State to consult such persons as he considers appropriate does not apply.

A full regulatory impact assessment has not been produced for this Instrument as it has no impact on the costs of business.