The Occupational Pension Schemes (Transfer Values) Regulations 1996

Regulation 7D(1)

[F1 SCHEDULE   1A E+W+S Reductions in initial cash equivalents

Textual Amendments

F1 Schs. 1A-1B inserted (E.W.S.) (1.10.2008) by Occupational Pension Schemes (Transfer Values) (Amendment) Regulations 2008 (S.I. 2008/1050) , reg. 1(1) , Sch. 1

Modifications etc. (not altering text)

C1 Sch. 1A modified by SI 2000/1054 reg. 24(2)(c) (as substituted (E.W.S.) (1.10.2008) by Occupational Pension Schemes (Transfer Values) (Amendment) Regulations 2008 (S.I. 2008/1050), reg. 1(1), Sch. 2 para. 7(c))

1.   In a case where two or more paragraphs of this Schedule apply, they must be applied in the order in which they occur in this Schedule. E+W+S

2 .   In the case of a scheme to which Part 3 of the 2004 Act (scheme funding) applies, the member’s initial cash equivalent may be reduced by the trustees if— E+W+S

(a) the insufficiency conditions are met; F2 ...

(b) the insufficiency report has an effective date which is no earlier than the effective date of the most recent actuarial valuation received by the trustees in accordance with section 224(4) of the 2004 Act (scheme funding); [F3 and

(c) the guarantee date shown in the statement of entitlement is at least one year before the member attains normal pension age in relation to the rights to benefits covered by the statement of entitlement.]

Textual Amendments

F2 Word in Sch. 1A para. 2(a) 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) , 10(2)(a)

F3 Sch. 1A para. 2(c) and word inserted (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) , 10(2)(b)

Modifications etc. (not altering text)

C2 Sch. 1A para. 2 modified by SI 2000/1053 reg. 16(2)(a) (as substituted (E.W.S.) (1.10.2008) by Occupational Pension Schemes (Transfer Values) (Amendment) Regulations 2008 (S.I. 2008/1050) , reg. 1(1) , Sch. 2 para. 6(c) )

3 .   The insufficiency conditions are that the last insufficiency report shows that at the effective date of the report— E+W+S

(a) the scheme had assets that were insufficient to cover the insufficiency report liabilities in respect of all the members; and

(b) the assets were insufficient to cover in full any category of insufficiency report liabilities that is an equivalent category of liabilities for benefits in respect of which the member’s cash equivalent is being calculated.

Modifications etc. (not altering text)

C3 Sch. 1A para. 3(b) modified by SI 2000/1053 reg. 16(2)(b) (as substituted (E.W.S.) (1.10.2008) by Occupational Pension Schemes (Transfer Values) (Amendment) Regulations 2008 (S.I. 2008/1050), reg. 1(1), Sch. 2 para. 6(c))

4 .   If the insufficiency conditions are met the trustees may reduce, by a percentage not exceeding the deficiency percentage, any part of the member’s initial cash equivalent that is payable in respect of such an equivalent category of liabilities as are mentioned in paragraph 3(b). E+W+S

Modifications etc. (not altering text)

C4 Sch. 1A para. 4 modified by SI 2000/1053 reg. 16(2)(c) (as substituted (E.W.S.) (1.10.2008) by Occupational Pension Schemes (Transfer Values) (Amendment) Regulations 2008 (S.I. 2008/1050), reg. 1(1), Sch. 2 para. 6(c))

5 .   The deficiency percentage for any such part of a member’s initial cash equivalent is the percentage by which the insufficiency report shows that the assets were insufficient to cover that category of liabilities. E+W+S

Modifications etc. (not altering text)

C5 Sch. 1A para. 5 modified by SI 2000/1053 reg. 16(2)(d) (as substituted (E.W.S.) (1.10.2008) by Occupational Pension Schemes (Transfer Values) (Amendment) Regulations 2008 (S.I. 2008/1050), reg. 1(1), Sch. 2 para. 6(c))

6.   If, by virtue of regulations made under section 232 of the 2004 Act (power to modify provisions of Part 3), Part 3 of that Act applies to a section of a scheme as if that section were a separate scheme, paragraphs 2 and 3 apply as if that section were a separate scheme and as if the reference to a scheme were accordingly a reference to that section. E+W+S

7.   In a case where a contributions equivalent premium has been paid in respect of a member in accordance with section 55 of the 1993 Act (payment of state scheme premiums on termination of certified status), the initial cash equivalent must be reduced (to nil if need be) to the extent that it represents the member’s accrued rights which have been extinguished by virtue of section 60 of the 1993 Act (effect of payment of premiums on rights) by payment of that premium. E+W+S

Modifications etc. (not altering text)

C6 Sch. 1A para. 9 modified by SI 2000/1054 reg. 24(2)(f) (as substituted (E.W.S.) (1.10.2008) by Occupational Pension Schemes (Transfer Values) (Amendment) Regulations 2008 (S.I. 2008/1050), reg. 1(1), Sch. 2 para. 7(c))

[F4 8.   Where— E+W+S

(1) The cash equivalent shown in a member’s statement of entitlement—

(i) relates to safeguarded benefits, as defined in [clause 48(8)] of the Pension Schemes Act 2015; and

(ii) is to be used for acquiring transfer credits in relation to safeguarded benefits under the rules of another scheme; and

(2) The receiving scheme has undertaken to provide benefits at least equal in value to the benefits represented by that cash equivalent on payment of a lesser sum (including nil),

the initial cash equivalent may be reduced so that the cash equivalent is that lesser sum.]

Textual Amendments

F4 Sch. 1A para. 8 substituted (6.4.2015) by The Occupational and Personal Pension Schemes (Transfer Values) (Amendment and Revocation) Regulations 2015 (S.I. 2015/498), regs. 1(2), 10(3)

F5 9 .   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E+W+S

Textual Amendments

F5 Sch. 1A para. 9 omitted (6.4.2012) by virtue of The Pensions Act 2008 (Abolition of Protected Rights) (Consequential Amendments) Order 2011 (S.I. 2011/1246), arts. 1(2)(a), 14(4)

10.   Where all or any of a member’s benefits have been appropriately secured, the initial cash equivalent in respect of those benefits must be reduced so that the cash equivalent is nil. E+W+S

11.   For the purposes of paragraph 10, “appropriately secured” means the same as in section 19 of the 1993 Act (discharge of liability where guaranteed minimum pensions secured by insurance policies or annuity contracts), except that a policy of insurance or annuity contract which is taken out or entered into with an authorised friendly society (as defined for the purposes of regulation 6 of the Occupational Pension Schemes (Preservation of Benefit) Regulations 1991 (means of assuring short service benefit)), but which otherwise satisfies the conditions for being appropriate for the purposes of section 19 of that Act, is to be treated as if it were appropriate for the purposes of that section provided the terms of such policy or contract are not capable of being amended, revoked or rescinded. E+W+S

12 .   Where a scheme has (in the case of a cash equivalent mentioned in section 93A of the 1993 Act, before the guarantee date) begun to be wound up, an initial cash equivalent may be reduced to the extent necessary for the scheme to comply with the winding up provisions (as defined in section 73B(10)(a) of the 1995 Act) and regulations made under those provisions. E+W+S

Modifications etc. (not altering text)

C7 Sch. 1A para. 12 modified by SI 2000/1054 reg. 24(2)(g) (as substituted (E.W.S.) (1.10.2008) by Occupational Pension Schemes (Transfer Values) (Amendment) Regulations 2008 (S.I. 2008/1050), reg. 1(1), Sch. 2 para. 7(c))

C8 Sch. 1A para. 12 modified by SI 2000/1052 reg. 4(4)(e) (as substituted (E.W.S.) (1.10.2008) by Occupational Pension Schemes (Transfer Values) (Amendment) Regulations 2008 (S.I. 2008/1050), reg. 1(1), Sch. 2 para. 5(b))

13.   If, by virtue of regulations made under section 73B(4)(b)(i) of the 1995 Act (sections 73 and 73A: supplementary) 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 12 applies as if that section were a separate scheme and as if the references to a scheme were accordingly references to that section. E+W+S

14.   Where all or any of the benefits to which an initial cash equivalent 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, the initial cash equivalent of the benefits so surrendered, commuted or forfeited must be reduced so that the cash equivalent is nil. E+W+S

15.   The trustees may reduce an initial cash equivalent to reflect any reasonable administration costs were the member to leave the scheme and must offset against these costs any reasonable administrative savings.] E+W+S