The Occupational Pension Schemes (Transfer Values) Regulations 1996

Regulations 7D(2) and 7E(4)

[F1 SCHEDULE 1B E+W+S Insufficiency Reports

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

1.   Where the trustees have requested an insufficiency report under regulation 7D(2) or 7E(4), the actuary is responsible for the preparation of the report. E+W+S

2.   The insufficiency report must contain— E+W+S

(a) a comparison, as at the effective date of the report, between the insufficiency report liabilities of all members and the market value of the assets of the scheme; and

(b) a statement of any allowance the actuary makes under paragraph 3.

3.   The actuary may deduct from the assets of the scheme an allowance which— E+W+S

(a) is of such amount as he considers reasonable in the circumstances of the scheme; and

(b) represents the expenses associated with wind up.

4.   Where it appears to the actuary that the circumstances are such that it is appropriate, he may exclude any rights under an insurance policy from the scheme assets. E+W+S

5.   Where rights under an insurance policy are excluded under paragraph 4, the liabilities secured by the policy must be disregarded for the purposes of the insufficiency report. E+W+S

6.   The value of any rights under an insurance policy included in the scheme assets must be the value the actuary considers appropriate. E+W+S

7.   The insufficiency report liabilities are— E+W+S

(a) for active members with vested rights, calculated and verified in accordance with regulations 7 to 7E and Schedule 1A as appropriate except that—

(i) paragraphs 2 to 6 of Schedule 1A are to be disregarded;

(ii) references to “guarantee date” are to be taken to mean the effective date of the report; and

(iii) it is to be assumed that the member ceases pensionable service on the effective date;

(b) for deferred members, calculated and verified in accordance with regulations 7 to 7E and Schedule 1A as appropriate except that—

(i) paragraphs 2 to 6 of Schedule 1A are to be disregarded; and

(ii) references to “guarantee date” are to be taken to mean the effective date of the report;

(c) for pensioner members, calculated and verified in accordance with regulations 7 to 7C as appropriate except that references to “guarantee date” are to be taken to mean the effective date of the report;

(d) for members over normal pension age not in receipt of a pension, calculated and verified—

(i) in the same way as those of pensioner members; and

(ii) on the assumption that the member’s pension comes into payment on the effective date of the report;

(e) for pension credit members, calculated and verified in accordance with regulations 7 to 7E and Schedule 1A as appropriate except that—

(i) paragraphs 2 to 6 of Schedule 1A are to be disregarded; and

(ii) references to “guarantee date” are to be taken to mean the effective date of the report; and

(f) for members with unvested rights, equal to the amount of the unvested contributions and the actuary is to assume that the member ceases pensionable service on the effective date of the report.

8.   When preparing the insufficiency report— E+W+S

(a) the actuary must make estimates comparing the relevant assets with the relevant liabilities of the scheme in respect of each category of liability;

(b) for the purposes of sub-paragraph (a), the actuary may use one or more categories of liability;

(c) where the actuary uses more than one category, he must have regard to the priority order on winding up specified in section 73(3) of the 1995 Act (preferential liabilities on winding up); and

(d) in determining the extent and content of the category or categories of liabilities, the actuary may use such approximations as he considers reasonable.

9.   In this Schedule— E+W+S

“relevant assets” means, subject to paragraphs 2(b) to 6, for a particular category of liability, the market value of the scheme assets, less the total of the relevant liabilities for all categories with greater priority under the priority order and are not to exceed the maximum of the relevant liabilities for that category.

“relevant liabilities” means, for a particular category of liability, the sum of all insufficiency report liabilities falling into that category.]