http://www.legislation.gov.uk/id/uksi/1996/1847

http://www.legislation.gov.uk/uksi/1996/1847/part/VI

The Occupational Pension Schemes (Transfer Values) Regulations 1996

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Statute Law Database

PENSIONS

2024-05-16

Expert Participation

2022-08-01

These Regulations replace the Occupational Pension Schemes (Transfer Values) Regulations 1985 which are now revoked. The Regulations supplement the changes introduced by the Pensions Act 1995 to Chapter IV of Part IV of the Pension Schemes Act 1993. They also consolidate and amend the 1985 Regulations. Provisions carried forward from the 1985 Regulations are amended to take into account new provisions introduced by the 1995 Act and changes made by the 1995 Act to parts of the 1993 Act other than Chapter IV of Part IV. Provisions carried forward from the 1985 Regulations which have been amended substantively for other reasons are contained in regulation 8(3) (requirement to obtain actuary’s report before directing that cash equivalents not take account of discretionary benefits), regulation 10 (requirement to increase cash equivalent if paid late) and regulation 11 (disclosure requirements and penalties).The regulations made by virtue of sections 152 to 154 of and Schedule 6 to the Pensions Act 1995 are made within six months of those provisions coming into force and as a consequence there is no requirement to consult. As regards those regulations which are neither made only for the purpose of consolidation nor under the 1995 Act, the Occupational Pensions Board has agreed that proposals to make such regulations need not be referred to them.Part II of the Regulations provides restrictions on the right to take a cash equivalent if the member’s pensionable service terminated before 1st January 1986 or if the member terminates his or her pensionable service while still in employment to which the scheme applies.Part III of the Regulations concerns the new requirements relating to guaranteed statements of entitlement for members of salary related occupational pension schemes. Part III also deals with the way in which cash equivalents are to be calculated. Regulation 6 sets out the time limits within which the guarantee date in respect of a guaranteed statement of entitlement must fall and within which the statement must be provided to the member. Regulations 7 to 10 provide how cash equivalents are to be calculated and the circumstances in which they can be increased or reduced. Regulation 11 consolidates (with minor amendments) provisions relating to estimates of cash equivalents which were previously contained in the Occupational Pension Schemes (Disclosure of Information) Regulations 1986. Regulation 11 also contains further disclosure requirements. Penalties are imposed for breaches of any of the requirements of regulation 11.Part IV of the Regulations sets out the requirements which a pension scheme must satisfy if a cash equivalent is to be used for acquiring transfer credits in it or rights under it, the requirements which an annuity must satisfy if a cash equivalent is to be used for purchasing it and the requirements which an overseas arrangement or a self-employed pension arrangement must satisfy if a cash equivalent is to be used for subscribing to it.Part V of the Regulations provides for the Regulatory Authority to extend the statutory time limits for payment of cash equivalents on the application of the trustees or managers of the scheme in question.Part VI of the Regulations modifies the Pension Schemes Act 1993 in certain circumstances. Regulation 14 modifies section 94(1)(aa) to extend the period within which a member may apply to take his or her guaranteed cash equivalent where that member has been informed that that guaranteed cash equivalent is to be increased or reduced or where the member has disputed the amount of the cash equivalent. Regulation 19 modifies certain provisions of Chapter IV of Part IV in relation to a scheme which provides or may provide both salary related and money purchase benefits. Regulations 15 to 18 carry forward provisions previously contained in the Occupational Pension Schemes (Transfer Values) Regulations 1985.Part VII of the Regulations sets out the penalties that apply for breaches of obligations imposed by section 93A (obligation to provide guaranteed statements of entitlement within certain time limits) and section 99(2) (obligation to pay cash equivalent within certain time limits) of the 1993 Act.Part VIII of the Regulations contains revocations and transitional provisions.An assessment of the compliance cost for employers of the measures arising from the Pensions Act 1995, including these Regulations, has been placed in the libraries of both Houses of Parliament. Copies can be obtained by post from the Department of Social Security, Private Pensions Directorate, 11th floor, The Adelphi, 1-11 John Adam Street, London WC2N 6HT.

PART VI MODIFICATION OF THE 1993 ACT

F6Extension of time within which member may exercise option to take a cash equivalent shown in the statement of entitlement14

1

This regulation applies where—

a

the member disputes the amount of the cash equivalent shown in the statement of entitlement within three months beginning with the guarantee date; or

b

the member’s cash equivalent shown in the statement of entitlement has been reduced or increased under regulation 9, including where the member disputes the basis or amount of the increase or reduction within three months beginning with the date that the member is informed in writing that the cash equivalent has been reduced or increased.

2

Where this regulation applies—

a

if the member has made an application to take the cash equivalent under section 95(1) of the 1993 Act, that application lapses;

b

the time for making a fresh application to take the cash equivalent under section 95(1) is extended so that the time is three months beginning with the date on which the member is informed in writing of—

i

the reduced or increased cash equivalent; or, if later,

ii

where the cash equivalent shown in the statement of entitlement has been disputed, the finally determined cash equivalent following the dispute, even where the cash equivalent has not changed; and

c

the time specified in section 99(2)(a) (trustees’ duties after exercise of option) is extended so that the time is six months beginning with the date on which the member is informed in writing of—

i

the reduced or increased cash equivalent; or, if later,

ii

where the cash equivalent shown in the statement of entitlement has been disputed, the finally determined cash equivalent following the dispute, even where the cash equivalent has not changed.

Cases where normal pension age is earlier than 6015

In their application to a member of a scheme whose normal pension age is earlier than 60, section F193(4)(b) of the 1993 Act (scope of F8Chapter 1 of Part 4ZA) shall have effect as if the words “at least one year" were omitted and F2section 95(1A)(b) of that Act shall have effect as if the references in them to normal pension age were references to the age of 60.

Accrued rights, or liabilities in respect of accrued rights, transferred without consent16

1

This regulation applies where—

a

a member has acquired a right under section 94 of the 1993 Act to a cash equivalent but has not exercised the option conferred by section 95 of that Act; and

b

the member’s accrued rights have been transferred to another scheme without that member’s consent.

2

Where this regulation applies, F3Chapter 1 of Part 4ZA of the 1993 Act shall have effect as if the member’s right to a cash equivalent of the benefits in respect of which a transfer or transfer payment has been made existed in relation to the receiving scheme instead of the transferring scheme.

Schemes with an overseas element17

1

This regulation applies to schemes with any overseas element, as described in section 165(6) of the 1993 Act (requirements as to preservation of benefit under occupational pension schemes).

2

Where this regulation applies, F4Chapter 1 of Part 4ZA of the 1993 Act applies to schemes with any overseas element only to the extent that the requirements specified in or under sections 71 to 82 of the 1993 Act (the preservation requirements) apply to the scheme.

Termination of pensionable service in certain circumstances to be disregardedF5 18

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Hybrid schemesF7 19

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