Regulations 17A(8) and 17B(6)

“SCHEDULE 2ADETERMINATION OF ILL HEALTH AND INTERIM ILL HEALTH PAYMENTS

Introductory

1. This Schedule applies for the purposes of determining the amount of an ill health payment or an interim ill health payment payable to or in respect of qualifying members of qualifying pension schemes who are unable to work due to ill health and are likely to continue to be so unable to work until normal retirement age.

Amount of an ill health payment

2.—(1) The amount of an ill health payment payable to a qualifying member of a qualifying pension scheme shall be—

(2) The amount of an ill health payment payable to a survivor of a qualifying member of a qualifying pension scheme shall be—

(a)one-half of the ill health payment which was payable to the qualifying member in accordance with sub-paragraph (1) immediately before his death where—

(i)that member was in receipt of an ill health payment at the time of his death; or

(ii)that member was in receipt of an interim ill health payment and dies on or after the date on which the liabilities of the scheme in respect of that member are discharged (whether by entry into an annuity contract or by other means); or

(b)where the qualifying member was in receipt of an interim ill health payment at the time of his death and dies before the date on which the liabilities of the scheme in respect of that member are discharged—

(3) In this paragraph—

“A” means the amount of expected pension which would be determined in accordance with Schedule 2 if—

(a)

the beneficiary were entitled to an annual payment; and

(b)

the modifications in paragraph 6 applied;

“B” means the amount of actual pension which would be determined in accordance with Schedule 2 if—

(a)

the beneficiary were entitled to an annual payment; and

(b)

the modifications in paragraph 6 applied; and

“C” means the actuarial factor, determined in accordance with paragraph 5, to be applied.

(4) This paragraph is subject to paragraphs 4 and 7.

Amount of an interim ill health payment

3.—(1) The amount of an interim ill health payment payable to a qualifying member of a qualifying pension scheme shall be—

(2) The amount of an interim ill health payment payable to a survivor of a qualifying member of a qualifying pension scheme shall be—

(3) In this paragraph—

“A” means the amount of expected pension which would be determined in accordance with Schedule 2 if—

(a)

the beneficiary were entitled to an initial payment; and

(b)

the modifications in paragraph 6 applied;

“C” means the actuarial factor, determined in accordance with paragraph 5, to be applied;

“D” means the amount of interim pension which would be determined in accordance with Schedule 2 if—

(a)

the qualifying member were entitled to an initial payment; and

(b)

the modifications in paragraph 6 applied; and

“E” means the amount of interim pension payable to the survivor which would be determined in accordance with Schedule 2 if—

(a)

the survivor were entitled to an initial payment; and

(b)

the modifications in paragraph 6 applied.

(4) This paragraph is subject to paragraphs 4 and 7.

Revaluation

4.—(1) Where there is a period of one month or more between the certification date and the date on which the ill health payment or interim ill health payment is first payable to a qualifying member of a qualifying pension scheme in accordance with regulation 17A or 17B, the amount determined in accordance with paragraph 2(1) or 3(1) before the actuarial factor “C” is applied shall be increased by the appropriate revaluation percentage of that amount.

(2) In sub-paragraph (1) the “appropriate revaluation percentage” means the lesser of—

(a)the percentage increase in the general level of prices in Great Britain during the period referred to in sub-paragraph (1); and

(b)the maximum revaluation rate.

(3) 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 the month in which the ill health payment or interim ill health payment is first payable to the qualifying member under regulation 17A or 17B; and

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

(4) In sub-paragraph (2)(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 (2)(a) had the general level of prices in Great Britain increased at the rate of 5% compound per annum during that period.

Actuarial reduction

5. The actuarial factor to be applied in paragraphs 2 and 3 shall be determined by the scheme manager, having regard to—

(a)the age of the qualifying member;

(b)the normal retirement age of the qualifying member; and

(c)such other matters as the scheme manager considers relevant.

Modifications to Schedule 2

6. The following modifications to Schedule 2 apply for the purposes of paragraphs 2 and 3 of this Schedule—

(a)for paragraphs 4(5)(b) and 5(8)(b) substitute—

“(b)ending on the day before the day on which the scheme began to wind up.”;

(b)in paragraph 4(7)(b)(ii) for “annual payment in accordance with regulation 17(2) or (3)” substitute “ill health payment in accordance with regulation 17A(1)”;

(c)for paragraph 5(10)(b) substitute—

“(b)ending on the day from which the qualifying member became entitled to an ill health payment in accordance with regulation 17A(1).”;

(d)omit paragraphs 7 and 9; and

(e)for paragraph 10(ba) substitute—

“(ba)for “regulation 17A(1)”, in each place it occurs, substitute “regulation 17B(2)”;

(bb)for “ill health payment”, in each place it occurs, substitute “interim ill health payment”;

(bc)for paragraph 4(7)(b) substitute—

(“b)ending on the day from which the qualifying member is entitled to an interim ill health payment in accordance with regulation 17B(2).”.

Cap on expected pension and actual pension

7.—(1) Where the amount of a qualifying member’s expected pension determined in accordance with paragraph 2 or 3 multiplied by 0.9 exceeds £26,000, the amount of the ill health payment or interim ill health payment payable to, or in respect of, that member under paragraph 2 or 3 shall be determined on the basis that the product of that calculation was £26,000.

(2) Where the amount of a qualifying member’s actual pension or interim pension determined in accordance with this Schedule exceeds—

(a)the amount of the qualifying member’s expected pension determined in accordance with paragraph 2 or 3 multiplied by 0.9; or

(b)£26,000,

no ill health payment or interim ill health payment shall be payable to, or in respect of, that member.

Rounding

8. Where the amount of an ill health payment or interim ill health payment determined in accordance with this Schedule results in a fraction of a penny, that fraction shall be treated as a penny.”.