Pension Schemes Act 1993

71 Basic principle as to short service benefit.E+W+S

(1)A scheme must make such provision that where a member’s pensionable service is terminated before normal pension age and—

(a)he has at least 2 years’ qualifying service,

[F1(aa)he has at least 30 days' qualifying service and, if he were entitled to benefit because of this paragraph, all of it would necessarily be money purchase benefit,] or

(b)a transfer payment in respect of his rights under a personal pension scheme has been made to the scheme,

he is entitled to benefit consisting of or comprising benefit of any description which would have been payable under the scheme as long service benefit, whether for himself or others, and calculated in accordance with this Chapter.

(2)The benefit to which a member is entitled under subsection (1) is referred to in this Act as “short service benefit”.

[F2(3)Subject to [F3subsections (4) and (5A)], short service benefit must be made payable as from an age which is no greater than—

(a)the age of 65, or

(b)if in the member’s case normal pension age is greater than 65, normal pension age.]

(4)Short service benefit payable on or in respect of the member’s death after normal pension age must be made payable as from his death or within such time after it as long service benefit payable on or in respect of his death would be payable.

(5)In applying subsections (3) and (4), no regard is to be had to the operation of any scheme rule, taking effect at any time after termination of the member’s pensionable service, as to what is normal pension age under the scheme.

[F4(5A)Subsection (3) does not apply in relation to a scheme under section 1 of the Public Service Pensions Act 2013.]

(6)A scheme must not provide for payment of short service benefit in the form of a lump sum at any time before normal pension age, except in such circumstances as may be prescribed.

(7)In subsection (1) “2 years’ qualifying service” means 2 years (whether a single period of that duration or two or more periods, continuous or discontinuous, totalling 2 years) in which the member was at all times employed either—

(a)in pensionable service under the scheme; or

(b)in service in employment which was contracted-out by reference to the scheme; or

(c)in linked qualifying service under another scheme.

(8)For the purposes of subsection (7), no regard shall be had to whether or not the service was of the same description in the whole of the 2 years.

(9)A period of service previously terminated is not to count towards the 2 years’ qualifying service unless it counts towards qualification for long service benefit, and need then count only to the same extent and in the same way.

[F5(10)Subsections (7) to (9) apply, with the substitution for references to 2 years of references to 30 days, for determining whether a person has at least 30 days' qualifying service for the purposes of subsection (1).

(11)Subsection (1)(aa) does not apply in relation to a person's membership of a scheme if any period of relevant service began before the day on which section 36 of the Pensions Act 2014 came into force (whether or not it also ended before that date).

“Relevant service” means service that counts towards the 30 days' qualifying service for the purposes of subsection (1).]

Textual Amendments

F1S. 71(1)(aa) inserted (1.10.2015) by Pensions Act 2014 (c. 19), ss. 36(2), 56(1); S.I. 2015/134, art. 2(3)

F2S. 71(3) substituted (6.4.2005) by Pensions Act 2004 (c. 35), ss. 263(1), 322(1) (with s. 313); S.I. 2005/275, art. 2(7), Sch. Pt. 7

F3Words in s. 71(3) substituted (1.4.2014 for specified purposes) by Public Service Pensions Act 2013 (c. 25), s. 41(2), Sch. 8 para. 19(2) (with Sch. 11 para. 8); S.I. 2014/839, art. 4(3)

F4S. 71(5A) inserted (1.4.2014 for specified purposes) by Public Service Pensions Act 2013 (c. 25), s. 41(2), Sch. 8 para. 19(3) (with Sch. 11 para. 8); S.I. 2014/839, art. 4(3)

F5S. 71(10)(11) inserted (1.10.2015) by Pensions Act 2014 (c. 19), ss. 36(3), 56(1); S.I. 2015/134, art. 2(3)

Modifications etc. (not altering text)

C1S. 71 modified (27.4.2005) by The Occupational and Personal Pension Schemes (Pension Liberation) Regulations 2005 (S.I. 2005/992), regs. 1(1), 2(2)(3)

C2Ss. 69-76 modified (30.12.2005) by The Occupational Pension Schemes (Cross-border Activities) Regulations 2005 (S.I. 2005/3381), regs. 1, 14, Sch. 2 para. 3

C3Ss. 71, 72, 74, 75 modified (1.4.2015) by The Police Pensions (Consequential Provisions) Regulations 2015 (S.I. 2015/370), regs. 1(2), 16

C4Ss. 71, 72, 74, 75 modified (1.4.2015) by The Police Pensions (Consequential Provisions) (Scotland) Regulations 2015 (S.S.I. 2015/118), regs. 1(3), 16(2) (with reg. 16(1))