The Financial Assistance Scheme Regulations 2005

[F1 PART 8 U.K. Scheme manager functions after a valuation

Textual Amendments

F1 Pts. 7, 8, 9 inserted (2.4.2010) by The Financial Assistance Scheme (Miscellaneous Amendments) Regulations 2010 (S.I. 2010/1149), regs. 1, 14, Sch. 1

Scheme manager calculations after a valuation U.K.

27.— (1) Subject to paragraph (2), where a valuation has been obtained in accordance with regulation 22, the scheme manager shall determine—

(a) the annual rate of annuity (“the notional pension”) which could have been payable from the day determined in accordance with paragraphs (3) and (4) until the day determined in accordance with paragraph (5), if purchased on the calculation date with the asset share determined in accordance with regulation 22(2), in respect of—

(i) each qualifying member of the qualifying pension scheme to whom Part 7 applies; and

(ii) any other person who is not—

(aa) a qualifying member;

(bb) a survivor of a qualifying member; or

(cc) a surviving dependant of a qualifying member,

to whom the scheme, as a result of the death of a qualifying member, has a liability to provide a pension or other benefit which is not a money purchase benefit;

(b) where a qualifying member, who is not a qualifying member by virtue of regulation 15(5), has not died before the calculation date, the benefits that could have been purchased for a survivor and any surviving dependants with the asset share determined in accordance with regulation 22(2);

(c) where a qualifying member to whom Part 7 applies has died before the calculation date, the annual rate of annuity (“the survivor notional pension”) which could have been purchased in respect of each survivor and surviving dependant of that qualifying member with the asset share determined in accordance with regulation 22(2); and

(d) any annual increases to the notional pension and the survivor notional pension which could have been purchased with the asset share determined in accordance with regulation 22(2).

(2) Where the scheme manager is of the opinion that it is not appropriate that a determination in accordance with paragraph (1) is made in relation to a particular person or category of persons, the scheme manager shall not make a determination in accordance with paragraph (1) in relation to such a person or category of persons.

(3) Subject to paragraph (4), the day from which the notional pension could have been payable for the purposes of paragraph (1)(a) is—

(a) where the notional pension is in respect of a qualifying member who, on the calculation date, is neither entitled to an ill health payment nor receiving a present payment from the scheme, the day on which the qualifying member attains normal retirement age;

(b) where the notional pension is in respect of a qualifying member who is not a qualifying member by virtue of regulation 15(5) and who is, on the calculation date, entitled to an ill health payment or receiving a present payment from the scheme, the earlier of—

(i) the day on which the qualifying member began to receive a present payment from the scheme in accordance with scheme rules;

(ii) the day on which the qualifying member attains normal retirement age; and

(iii) the day on which the qualifying member became entitled to an ill health payment;

(c) where the notional pension is in respect of a qualifying member who is a qualifying member by virtue of regulation 15(5), the day on which the qualifying member began to receive a present payment from the scheme in accordance with scheme rules;

(d) where the notional pension is in respect of a person referred to in paragraph (1)(a)(ii), the day on which the liability to provide the pension or other benefit arose; and

(e) where a survivor notional pension is being determined, the day after the day on which the qualifying member died.

(4) Where the day determined in accordance with paragraph (3)(b) or (c) falls before the day on which the qualifying pension scheme began to be wound up, the day for the purposes of paragraph (1)(a) is the day on which the qualifying pension scheme began to be wound up.

(5) The day on which the notional pension ceases to be payable for the purposes of paragraph (1)(a) is the day on which entitlement to a payment would end in accordance with these Regulations.

(6) The scheme manager shall make the determination in paragraph (1) by applying the asset share towards satisfying the amounts mentioned in paragraph (7) and—

(a) if sub-paragraph (a) or (b) of paragraph (7) applies and the asset share is insufficient to satisfy the amounts referred to in that sub-paragraph in full, then the asset share must be applied first towards satisfying the amounts mentioned in paragraph (i) of sub-paragraph (a) or (b), as the case may be; and

(b) if the asset share exceeds the amount needed to satisfy those amounts in full, the remainder shall be applied so as to increase the notional pension.

(7) The amounts referred to in paragraph (6) are—

(a) where the notional pension is in respect of a qualifying member who was receiving a present payment from the qualifying pension scheme under the scheme rules before the coming into force of the Financial Assistance Scheme (Miscellaneous Amendments) Regulations 2010—

(i) the pension and other benefits to which the qualifying member was entitled as at the later of—

(aa) the day on which the qualifying member became entitled to present payment of a pension under the scheme rules; or

(bb) the day before the day on which the scheme began to be wound up; and

(ii) annual increases on the amount determined in accordance with paragraph (i);

(b) where the notional pension is in respect of a person referred to in paragraph (1)(a)(ii)—

(i) the pension to which that person was entitled on the day on which the liability to provide the pension or other benefit arose; and

(ii) annual increases on the amount determined in accordance with paragraph (i); and

(c) where the notional pension is in respect of a qualifying member who was not receiving a present payment from the qualifying pension scheme under scheme rules before the coming into force of the Financial Assistance Scheme (Miscellaneous Amendments) Regulations 2010, the annuity which could be purchased in respect the qualifying member including—

(i) the pension and other benefits payable to the qualifying member from the date determined in accordance with paragraph (3);

(ii) benefits which could be purchased for any survivor and surviving dependant of the qualifying member; and

(iii) annual increases on the amounts determined in accordance with paragraphs (i) and (ii).

(8) In determining the amounts mentioned in paragraph (7)(c)(ii), the scheme manager shall have regard to the benefits that would be payable to any survivor or surviving dependant under Schedule 3, or, where the qualifying member is entitled to an ill health payment at the calculation date, under Schedule 5.

(9) The survivor notional pension referred to in paragraph (1)(c) shall be determined by applying the asset share towards satisfying the amounts mentioned in paragraph (10) and—

(a) if sub-paragraph (a) of paragraph (10) applies and the asset share is insufficient to satisfy the amounts referred to in that sub-paragraph in full, then the asset share must be applied first towards satisfying the amounts mentioned in paragraph (i); and

(b) if the asset share exceeds the amount needed to satisfy those amounts in full, the remainder shall be applied so as to increase the survivor notional pension.

(10) The amounts referred to in paragraph (9) are—

(a) where the survivor, surviving dependant or the qualifying member in respect of the survivor or surviving dependant was receiving a present payment from the qualifying pension scheme under scheme rules before the coming into force of the Financial Assistance Scheme (Miscellaneous Amendments) Regulations 2010—

(i) the pension and other benefits to which the survivor or surviving dependant would be entitled as at the day on which the survivor or surviving dependant became entitled to present payment of a pension under the scheme rules; and

(ii) annual increases on the amount determined in accordance with paragraph (i); and

(b) where the survivor, surviving dependant or qualifying member in respect of the survivor or surviving dependant was not receiving a present payment from the qualifying pension scheme under scheme rules before the coming into force of the Financial Assistance Scheme (Miscellaneous Amendments) Regulations 2010, the annuity which could be purchased, including annual increases for the survivor or surviving dependant.

(11) In paragraphs (7)(a)(i) and (10)(a)(i), the pension and other benefits to which the asset share shall be applied in accordance with this regulation are—

(a) the annual rate of pension to which the beneficiary was entitled in accordance with the scheme rules, after any commutation of benefits deriving from the scheme, after the day on which the scheme began to be wound up;

(b) where the beneficiary is a qualifying member, the annual rate of pension to which any survivor or surviving dependant would be entitled in accordance with scheme rules in respect of the qualifying member;

(c) any amount (including any lump sum) payable as a result of a member of the scheme dying within a period specified in the scheme rules which begins on the day on which the member became entitled to a pension from the scheme or, if later, the day on which the pension was first paid; and

(d) any amount which, under the scheme rules, is payable to a beneficiary for a period which is shorter than the period in respect of which the remainder of the pension is payable.

(12) Where the scheme manager is required to determine annual increases for the purposes of this regulation, the scheme manager shall have regard to the way in which annual increases are determined under—

(a) where paragraph (7)(c) or (10)(b) applies and—

(i) the beneficiary is not entitled to an ill health payment at the calculation date, paragraph 6 of Schedule 3; or

(ii) the beneficiary is entitled to an ill health payment at the calculation date, paragraph 6 of Schedule 5;

(b) where paragraph (7)(a) or (10)(a) applies and—

(i) the beneficiary is not entitled to an ill health payment at the calculation date, paragraph 7 of Schedule 4; or

(ii) the beneficiary is entitled to an ill health payment at the calculation date, paragraph 7 of Schedule 6; and

(c) paragraph 4 of Schedule 7, where paragraph (7)(b) applies.

(13) For the purposes of this regulation—

(a) a qualifying member is treated as receiving a present payment from a pension scheme before the coming into force of the Financial Assistance Scheme (Miscellaneous Amendments) Regulations 2010, notwithstanding that no payment has been received, if, prior to the coming into force of those Regulations—

(i) the qualifying member was entitled to payment under the scheme rules;

(ii) the trustees or managers of the scheme received confirmation from the qualifying member that payment should commence; and

(iii) the qualifying member’s entitlement became payable, as a result of (i) and (ii) being satisfied; and

(b) a survivor or surviving dependant is treated as receiving a present payment from a pension scheme before the coming into force of the Financial Assistance Scheme (Miscellaneous Amendments) Regulations 2010, notwithstanding that no payment has been received, if, prior to the coming into force of those Regulations, the beneficiary was entitled to ongoing payments as a result of the death of the qualifying member.

(14) This regulation is subject to regulation 28.

Determination of certain asset shares, notional pensions and survivor notional pensions U.K.

28.— (1) Where regulation 22(3) applies in any case, the scheme manager shall determine the asset share for the purposes of these Regulations in respect of any person to which that regulation applies, having regard to such matters as it considers relevant.

(2) Where regulation 27(2) applies in any case, the scheme manager shall determine the notional pension or survivor notional pension for the purposes of these Regulations in respect of any person to which that regulation applies, having regard to such matters as it considers relevant.

(3) Paragraph (4) applies where—

(a) a qualifying member commutes a portion of their pension from the qualifying scheme for a lump sum after the calculation date and before the day on which the transfer notice is given; and

(b) a qualifying member, prior to attaining normal retirement age or becoming entitled to an ill health payment, begins to receive a present payment from the qualifying scheme after the calculation date and before the day on which the transfer notice is given.

(4) Where this paragraph applies, the scheme manager may redetermine the notional pension having regard to—

(a) where paragraph (3)(a) applies, the amount of the lump sum;

(b) where paragraph (3)(b) applies—

(i) the qualifying member’s normal retirement age; and

(ii) the date on which the qualifying member began to receive a present payment from the scheme; and

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

Transfer notice U.K.

29.— (1) Where a valuation has become binding under regulation 26 and the scheme manager is satisfied that it is an appropriate time for the notice to be given, the scheme manager must give the trustees or managers of the qualifying pension scheme a notice (a “transfer notice”).

(2) Where a transfer notice is given under this regulation the scheme manager—

(a) must give a copy of the transfer notice to the Regulator; and

(b) may give a copy of the transfer notice to any other person to whom, in the opinion of the scheme manager, the transfer notice is relevant.

(3) Where the trustees or managers have been discharged from their obligations to provide pensions or other benefits to or in respect of any persons in accordance with section 161 as modified, the scheme manager shall notify those persons, or where such person has an appointed representative, that appointed representative within 28 days of the transfer notice being given.

Terms and conditions of contracts U.K.

30.— (1) Where a transfer notice has been given to the trustees or managers of a qualifying pension scheme and the scheme manager considers that a contract relating to the property, rights and liabilities of the scheme contains terms or conditions that the scheme manager considers onerous, the scheme manager may—

(a) disapply any such term or condition; or

(b) substitute for the term or condition, a term or condition that the scheme manager considers to be reasonable.

(2) Where—

(a) any rights or liabilities under a relevant contract of insurance are transferred to the Secretary of State by virtue of section 161 of, and Schedule 6 to, the Pensions Act as modified; and

(b) as a result of the transfer, the Secretary of State is required, by reason of a term of that contract, to pay a specified amount or specified amounts to a specified person who, immediately before the time the transfer notice was given, was a member of the scheme or a person entitled to benefits in respect of such a member,

the scheme manager may modify that term of the contract so that any benefit under that contract shall be payable to the Secretary of State.]