Pension Schemes Legislation (Application) Order 2018 Index
c
PENSION SCHEMES LEGISLATION (APPLICATION) ORDER 2018
Index Article Page
1 Title ...... 3 2 Commencement ...... 3 3 Interpretation ...... 3 4 Effect ...... 4 5 Cessation ...... 5 6 Application to the Island of the applied legislation ...... 5
SCHEDULE 1 7 THE OCCUPATIONAL PENSION SCHEMES (POWER TO AMEND SCHEMES TO REFLECT ABOLITION OF CONTRACTING-OUT) REGULATIONS 2015 7
SCHEDULE 2 18 THE PENSIONS ACT 2014 (SAVINGS) ORDER 2015 18
SCHEDULE 3 21 THE OCCUPATIONAL PENSION SCHEMES (SCHEMES THAT WERE CONTRACTED-OUT) (NO.2) REGULATIONS 2015 21
SCHEDULE 4 57 THE PENSIONS ACT 2014 (COMMENCEMENT NO.7) AND (SAVINGS) (AMENDMENT) ORDER 2015 57
SCHEDULE 5 59 THE STATE PENSION AND OCCUPATIONAL PENSION SCHEMES (MISCELLANEOUS AMENDMENTS) REGULATIONS 2016 59
SCHEDULE 6 62 THE PENSIONS ACT 2014 (ABOLITION OF CONTRACTING-OUT FOR SALARY RELATED PENSION SCHEMES) (CONSEQUENTIAL AMENDMENTS AND SAVINGS) ORDER 2016 62
c SD No. 2018/0265 Page 1
Index Pension Schemes Legislation (Application) Order 2018
SCHEDULE 7 74 THE OCCUPATIONAL AND PERSONAL PENSION SCHEMES (MODIFICATION OF SCHEMES - MISCELLANEOUS AMENDMENTS) REGULATIONS 2016 74
SCHEDULE 8 77 THE PENSIONS ACT 2014 (CONTRIBUTIONS EQUIVALENT PREMIUM) (CONSEQUENTIAL PROVISION) AND (SAVINGS) (AMENDMENT) ORDER 2016 77
SCHEDULE 9 85 THE OCCUPATIONAL PENSION SCHEMES AND SOCIAL SECURITY (SCHEMES THAT WERE CONTRACTED-OUT AND GRADUATED RETIREMENT BENEFIT) (MISCELLANEOUS AMENDMENTS) REGULATIONS 2017 85
Page 2 SD No. 2018/0265 c
Pension Schemes Legislation (Application) Order 2018 Article 1
Statutory Document No. 2018/0265 c Pension Schemes Act 1995
PENSION SCHEMES LEGISLATION (APPLICATION) ORDER 2018
Approved by Tynwald: 21st November 2018 Coming into Operation in accordance with article 2
The Treasury makes the following Order under sections 1 and 2 of the Pension Schemes Act 1995.
1 Title This Order is the Pension Schemes Legislation (Application) Order 2018.
2 Commencement If approved by Tynwald, this Order comes into operation on the day after it is approved by Tynwald1.
3 Interpretation (1) In this Order “the applied legislation” means the — (a) the Occupational Pension Schemes (Power to Amend Schemes to Reflect Abolition of Contracting-out) Regulations 20152; (b) the Pensions Act 2014 (Savings) Order 20153; (c) the Occupational Pension Schemes (Schemes that were Contracted-out) (No.2) Regulations 20154; (d) the Pensions Act 2014 (Commencement No.7) and (Savings) (Amendment) Order 20155; (e) the State Pension and Occupational Pension Schemes (Miscellaneous Amendments) Regulations 20166;
1 Tynwald approval is required by section 1(4) of the Pension Schemes Act 1995. 2 S.I. 2015/118. 3 S.I. 2015/1502. 4 S.I. 2015/1677. 5 S.I. 2015/2058 (c.129). 6 S.I. 2016/199. c SD No. 2018/0265 Page 3
Article 4 Pension Schemes Legislation (Application) Order 2018
(f) the Pensions Act 2014 (Abolition of Contracting-out for Salary Related Pension Schemes) (Consequential Amendments and Savings) Order 20167; (g) the Occupational and Personal Pension Schemes (Modification of Schemes - Miscellaneous Amendments) Regulations 20168; (h) the Pensions Act 2014 (Contributions Equivalent Premium) (Consequential Provision) and (Savings) (Amendment) Order 20169; and (i) the Occupational Pension Schemes and Social Security (Schemes that were Contracted-out and Graduated Retirement Benefit) (Miscellaneous Amendments) Regulations 201710. (2) Unless the context otherwise requires or it is expressly provided, a reference in the applied legislation to a provision of any such legislation or of any other legislation applied to the Island by an order under section 1 of the Social Security Act 2000 or section 1 of the Pension Schemes Act 1995 shall be construed as a reference to that legislation as it has effect in the Island.
4 Effect (1) The applied legislation has effect in accordance with paragraphs (2) to (10). (2) The Occupational Pension Schemes (Power to Amend Schemes to Reflect Abolition of Contracting-out) Regulations 2015 have effect from 6 April 2019. (3) The Pensions Act 2014 (Savings) Order 2015 has effect from 6 April 2019. (4) The Occupational Pension Schemes (Schemes that were Contracted-out) (No.2) Regulations 2015 have effect — (a) for all other purposes apart from regulation 33 of those Regulations, from 6 April 2019; and (b) for the purposes of regulation 33 of those Regulations, from 6 April 2022. (5) The Pensions Act 2014 (Commencement No.7) and (Savings) (Amendment) Order 2015 has effect — (a) for the purposes of article 1 of that Order, from 15 January 2019; and (b) for the purposes of article 3 of that Order, from 6 April 2019.
7 S.I. 2016/200. 8 S.I. 2016/231. 9 S.I. 2016/252. 10 S.I. 2017/354.
Page 4 SD No. 2018/0265 c
Pension Schemes Legislation (Application) Order 2018 Article 5
(6) The State Pension and Occupational Pension Schemes (Miscellaneous Amendments) Regulations 2016 have effect from 6 April 2019. (7) The Pensions Act 2014 (Abolition of Contracting-out for Salary Related Pension Schemes) (Consequential Amendments and Savings) Order 2016 has effect — (a) for the purposes of Parts 1 and 2 of that Order, from 6 April 2019; (b) for the purposes of Part 3 of that Order, from 6 April 2020; (c) for the purposes of Part 4 of that Order, from 6 April 2022; and (d) for the purposes of Part 5 of that Order, from 6 April 2024. (8) The Occupational and Personal Pension Schemes (Modification of Schemes - Miscellaneous Amendments) Regulations 2016 have effect from 6 April 2019. (9) The Pensions Act 2014 (Contributions Equivalent Premium) (Consequential Provision) and (Savings) (Amendment) Order 2016 has effect from 6 April 2019. (10) The Occupational Pension Schemes and Social Security (Schemes that were Contracted-out and Graduated Retirement Benefit) (Miscellaneous Amendments) Regulations 2017 have effect from 6 April 2020.
5 Cessation Paragraphs (1), (2), (3A) and (5A) of article 2 of the Pensions Act 2014 (Savings) Order 2015 (as that Order has effect as amended by the Pensions Act 2014 (Commencement No.7) and (Savings) (Amendment) Order 2015 and the Pensions Act 2014 (Contributions Equivalent Premium) (Consequential Provision) and (Savings) (Amendment) Order 2016) cease to have effect on 6 April 2022.
6 Application to the Island of the applied legislation (1) The applied legislation, incorporating the exceptions, adaptations and modifications subject to which it applies to the Island, is set out in the Schedules and applies to the Island as part of the law of the Island. (2) The applied legislation mentioned in — (a) article 3(1)(a) is set out in Schedule 1; (b) article 3(1)(b) is set out in Schedule 2; (c) article 3(1)(c) is set out in Schedule 3; (d) article 3(1)(d) is set out in Schedule 4; (e) article 3(1)(e) is set out in Schedule 5; (f) article 3(1)(f) is set out in Schedule 6; (g) article 3(1)(g) is set out in Schedule 7; (h) article 3(1)(h) is set out in Schedule 8; and c SD No. 2018/0265 Page 5
Article 6 Pension Schemes Legislation (Application) Order 2018
(i) article 3(1)(i) is set out in Schedule 9.
MADE 24TH OCTOBER 2018
A L CANNAN Minister for the Treasury
Page 6 SD No. 2018/0265 c
Pension Schemes Legislation (Application) Order 2018 SCHEDULE 1
SCHEDULE 1
[Article 6(2)(a)]
This Schedule sets out the text of the Occupational Pension Schemes (Power to Amend Schemes to Reflect Abolition of Contracting-Out) Regulations 2015 (SI 2015/118) as applied by this Order, with such exceptions, adaptations and modifications made where necessary, which appear in bold italic type.
STATUTORY INSTRUMENTS
2015 No. 118 PENSIONS The Occupational Pension Schemes (Power to Amend Schemes to Reflect Abolition of Contracting-Out) Regulations 2015
Made - - - - 25th February 2015 Laid before Parliament 4th March 2015 Coming into force - - 6th April 2016
The Secretary of State for Work and Pensions, in exercise of the powers conferred by sections 24(5) and 54(5) and (6), of and paragraphs 2(3) and (4), 4, 6, 10(1), 12, 13, and 14(1) and (2) of Schedule 14 to, the Pensions Act 2014, makes the following Regulations: 1. Citation [...] (1) These Regulations may be cited as the Occupational Pension Schemes (Power to Amend Schemes to Reflect Abolition of Contracting-out) Regulations 2015. (2) Omitted. 2. Interpretation In these Regulations— “the Act” means the Pensions Act 201411; [...] “actuarial valuation” means a written report, prepared and signed by the actuary, valuing the scheme’s assets and calculating its technical provisions; “the actuary” means the actuary appointed in accordance with regulation 10(2); “the amendment date” means the date amendments made using the power take effect; “the calculation date” means the date chosen in accordance with regulation 8(7);
11 2014 c.19 (see SD 2018/0076). c SD No. 2018/0265 Page 7
SCHEDULE 1 Pension Schemes Legislation (Application) Order 2018
“the effective date of an actuarial valuation” means the date by reference to which the assets are valued and the technical provisions are calculated; “the power” means the power under section 24(2) of the Act to amend an occupational pension scheme; [...] “proposed amendments” means the amendments to be certified under paragraph 6(1) of Schedule 14 to the Act; “segregated scheme” means a multi-employer scheme which is divided into two or more sections where — (a) any contributions payable to the scheme by an employer in relation to the scheme, or by a member employed by that employer, are allocated to that employer’s section, and if more than one section applies to an employer, to the section to which the employment relates, and (b) a specified proportion of the assets of the scheme is attributable to each section of the scheme and cannot be used for the purposes of any other section; and “technical provisions” means the amount required, on an actuarial calculation, to make provision for the scheme’s liabilities. 3. Protected persons to whom the power does not apply (Omitted) 3A. Public service pension schemes which may be amended under section 24(2) of the Act (1) The power under section 24(2) of the Act (abolition of contracting-out for salary related schemes etc) may be used by the administrator to amend a scheme to which paragraph 2 of Schedule 1 to the Public Sector Pensions Act 2011 applies (existing schemes to remain under former arrangements: schemes made (or deemed to be made) under the Superannuation Act 1984 by the Department of Infrastructure or the Isle of Man Post Office). (2) In paragraph (1) “administrator”, in relation to the Isle of Man Post Office Superannuation Scheme 1999 (as amended from time to time) or any scheme which replaces that scheme, means the Isle of Man Post Office. 4. Total annual employee contributions of the relevant members (1) For the purposes of paragraph 2(3)(a) of Schedule 14 to the Act (what can the power be used to do?), the “total annual employee contributions of the relevant members” means the total annual amount of employee contributions for the relevant members calculated using the employee contribution rates shown in the schedule of contributions adopted in relation to the scheme [...] as at the calculation date. (2) The actuary is to calculate the increase, due to the proposed amendments, in the total annual employee contributions of the relevant members — (a) estimated to be payable over the period of one year beginning with the calculation date; (b) using the earnings data specified in regulation 7; and (c) in accordance with the requirements in regulation 8.
Page 8 SD No. 2018/0265 c
Pension Schemes Legislation (Application) Order 2018 SCHEDULE 1
(2A) In paragraph (1) “schedule of contributions” means a statement prepared, and from time to time reviewed and if necessary revised, by the trustees or managers of the scheme showing– (a) the rates of contributions payable towards the scheme by or on behalf of the employer and the active members of the scheme; and (b) the dates on or before which such contributions are to be paid. (2B) In paragraph (2A) “active members” is to be construed in accordance with section 124(1) of the Pensions Act 1995. 5. Annual increase in an employer’s national insurance contributions in respect of the relevant members (1) For the purposes of paragraph 2(3)(b) of Schedule 14 to the Act, the “annual increase in an employer’s national insurance contributions in respect of the relevant members” means the increase of 3.7% in the annual amount of national insurance contributions payable by the employer in respect of so much of the earnings of relevant members as exceeds the applicable lower earnings limit but not the upper accrual point (or the prescribed equivalents if the earner is paid otherwise than weekly). (2) The actuary is to calculate the annual increase in the employer’s national insurance contributions in respect of the relevant members — (a) estimated to be payable over the period of one year beginning with the calculation date; (b) using the earnings data specified in regulation 7; and (c) in accordance with the requirements in regulation 8. (3) In this regulation — “the 1992 Act” means the Social Security Contributions and Benefits Act 199212; “applicable” in relation to the lower earnings limit, means the limit or limits in force during the one year after the calculation date; “lower earnings limit” is to be construed in accordance with section 513 of the 1992 Act (earnings limits and thresholds for class 1 contributions); “the prescribed equivalents” — (a) in the context of the lower earnings limit, means the equivalent prescribed under section 5(4) of the 1992 Act, and (b) in the context of the upper accrual point, means the equivalent prescribed in regulation 1114 of the Social Security (Contributions) Regulations 200115 (prescribed equivalents); and “the upper accrual point” has the meaning given by section 122(1)16 of the 1992 Act.
12 1992 c.4 (see SD 505/94). 13 Section 5 was substituted by the Welfare Reform and Pensions Act 1999 (c.30), section 73 and Schedule 9 Part 1 paragraph 1 (see SD 600/00). 14 Regulation 11 was amended by SD’s 54/12, 0010/13 and 2016/0025, 15 SI 2001/1004 (see SD 374/02). 16 Definition of “the upper accrual point” in section 122(1) was inserted by the Pensions Act 2007 (c.22), section 12(3)(a) (see SD 193/09). c SD No. 2018/0265 Page 9
SCHEDULE 1 Pension Schemes Legislation (Application) Order 2018
6. Scheme liabilities in respect of the benefits that accrue annually for or in respect of the relevant members (1) For the purposes of paragraph 2(3)(c) of Schedule 14 to the Act, a “scheme’s liabilities in respect of the benefits that accrue annually for or in respect of the relevant members” means any liabilities which arise by virtue of any rights accruing to future benefits under the scheme rules for or in respect of the relevant members. (2) Where those rights include discretionary benefits, the discretionary benefits are to be taken into account in the same way as in the scheme’s technical provisions — (a) where the calculation date is the same date as the effective date of an actuarial valuation, calculated by reference to that date, or (b) where the calculation date is not the same date as that date, calculated by reference to the date of the most recent actuarial valuation before the calculation date. (3) Where those rights include money purchase benefits, the money purchase benefits are not to be taken into account. (4) The actuary is to calculate the reduction, due to the proposed amendments, in the scheme’s liabilities in respect of the benefits that accrue annually for or in respect of the relevant members — (a) estimated for the period of one year beginning with the calculation date; (b) using the earnings data specified in regulation 7; and (c) in accordance with the requirements of regulation 8. (5) In this regulation, “money purchase benefits” have the meaning given by section 181 of the Pension Schemes Act 1993 (general interpretation)17 . 7. Earnings data (1) The actuary must use earnings data which, except where paragraph (3) applies, is for the period of one year ending with the calculation date. (2) Where paragraph (3) applies, calculations may be made using earnings data which refers to the period of three years ending with the calculation date. (3) This paragraph applies where — (a) the actuary is satisfied that the earnings data for some or all of the relevant members for the period of one year ending with the calculation date is significantly abnormal; and (b) the — (i) principal employer in a case falling within regulation 14 or 15, or (ii) employer or administrator, as applicable, in any other case; writes to the actuary stating that it is also so satisfied. 8. General calculation requirements
17 1993 c.48 (see SD 531/95); the definition of “money purchase benefits” was amended by S.I. 2005/2053 (see SD 745/05) and section 29(1) of the Pensions Act 2011 (c.19) (see SD 0152/12).
Page 10 SD No. 2018/0265 c
Pension Schemes Legislation (Application) Order 2018 SCHEDULE 1
(1) The actuary must comply with the following requirements in carrying out the calculations under regulations 4(2), 5(2) and 6(4). (2) The calculations are to be carried out — (a) as if the proposed amendments took effect on the calculation date; (b) taking account only of the effect of the proposed amendments; (c) at the present value at the calculation date; and (d) where an assumption is used in more than one calculation, using the same assumption for each calculation in which it is used. (3) Any data used in the calculations, other than earnings data, must be data — (a) the actuary considers is relevant; and (b) which — (i) is as at the calculation date, or (ii) refers to the period of one year ending with the calculation date, as the actuary considers appropriate. (4) Calculations must be made using — (a) the methods and assumptions used to calculate the scheme’s technical provisions — (i) where the calculation date is the same date as the effective date of an actuarial valuation, calculated by reference to that date, or (ii) where the calculation date is not the same date as that date, calculated by reference to the date of the most recent actuarial valuation before the calculation date, updated if necessary to reflect market conditions at the calculation date; and (b) any other assumptions which the actuary considers necessary and which are consistent with the assumptions used to calculate the scheme’s technical provisions, updated if necessary to reflect market conditions at the calculation date. (5) Where paragraph (6) applies, the actuary must adjust the requested assumptions to a best estimate basis by removing any margin for prudence provided the actuary is satisfied such adjustments are consistent with the principles that would be used by the trustees or managers of the scheme in calculating a cash equivalent under regulation 7 of the Occupational Pension Schemes (Transfer Values) Regulations 1996 (manner of calculation and verification of cash equivalents)18 at the calculation date. (6) This paragraph applies where the — (a) principal employer in a case falling within regulation 14 or 15; or (b) employer or administrator, as applicable, in any other case, writes to the actuary instructing the actuary to adjust any assumptions (“the requested assumptions”) to remove any margin for prudence.
18 S.I. 1996/1847 (see SD 147/06); regulation 7 was amended by S.I.’s 1997/786 and 2012/692 (see SD 0282/12). c SD No. 2018/0265 Page 11
SCHEDULE 1 Pension Schemes Legislation (Application) Order 2018
(7) Subject to regulation 8(8), the — (a) principal employer in a case falling within regulation 14 or 15; or (b) employer or administrator, as applicable, in any other case, must choose a calculation date which may be any date after 31st December 2014. (8) Where the power is used in relation to the same members in the same scheme on a second or subsequent occasion the calculation date must be the same date as on the first occasion the power was used. (9) In this regulation, “any margin for prudence” means any appropriate margin for adverse deviation from the prudently chosen economic and actuarial assumptions. 9. Further restrictions on the use of the power [...] The power may not be used to make amendments which would remove a power to determine any matter from the trustees or managers of a scheme. 10. Actuary (1) For the purposes of paragraph 6(2)(a) of Schedule 14 to the Act (requirement for actuary’s certificate), “actuary” means a Fellow of the Institute and Faculty of Actuaries. (2) The — (a) principal employer in a case falling within regulation 14 or 15; or (b) employer or administrator, as applicable, in any other case, must appoint an actuary. 11. Requirement for actuary’s certificate (1) Except in a case where regulation 8(8) applies, the actuary must certify whether, in the actuary’s opinion — (a) the proposed amendments comply with paragraph 2(2) of Schedule 14 to the Act; and (b) the calculations have been made in accordance with the requirements of regulations 4(2), 5(2), 6(2) to (4), 7 and 8(2) to (6). (2) In a case where regulation 8(8) applies, the actuary must certify whether, in the actuary’s opinion — (a) all the amendments comply with the requirement in paragraph (1)(a) as if all the amendments are being made on this second or subsequent (as appropriate) occasion; and (b) the calculations have been made in accordance with the requirements in paragraph (1)(b) and regulation 8(8). (3) For the purposes of this regulation, “all the amendments” means the proposed amendments and the amendments made by the previous use, or uses, of the power in relation to the same members in the same scheme as covered by the proposed amendments. (4) The actuary must provide a certificate under this regulation that includes the information specified in the Schedule. (5) The actuary must issue a certificate under this regulation to the trustees or managers of the scheme and —
Page 12 SD No. 2018/0265 c
Pension Schemes Legislation (Application) Order 2018 SCHEDULE 1
(a) the principal employer in a case falling within regulation 14 or 15; or (b) in any other case, the employer or administrator, as applicable, before any amendments are made. 12. Information (1) The trustees or managers of an occupational pension scheme must provide any information reasonably requested by — (a) the principal employer in a case falling within regulation 14 or 15; or (b) in any other case, the employer or administrator, as applicable, in connection with the use of the power. (2) The information must be provided in writing within such reasonable period as agreed with the principal employer, [...] employer or administrator, as applicable. (3) Where the trustees or managers of a scheme have failed to take all reasonable steps to comply with any requirement imposed on them by this regulation, section 10 of the Pensions Act 1995 (civil penalties)19 applies. 13. Segregated schemes with single employer sections (1) This regulation applies to a section of a segregated scheme where there is one employer in relation to that section of the scheme. (2) Section 24 of the Act (abolition of contracting-out for salary related schemes etc) and Schedule 14 to the Act (power to amend schemes to reflect abolition of contracting-out) apply with the following modifications. (3) In section 24(2) the reference to — (a) “an employer” is to be read as a reference to “an employer in relation to a section of an occupational pension scheme”; and (b) “an occupational pension scheme” is to be read as a reference to “that section of an occupational pension scheme”. (4) In Schedule 14 in paragraphs 2(2), 3(1), 9 and 15, references to a “scheme” are to be read as references to a “section of a scheme”. (5) Where these Regulations (apart from this regulation) apply to a section of a segregated scheme where there is one employer in relation to that section of the scheme, they shall apply to that section as if the section were a separate scheme. 14. Non-segregated multi-employer schemes (1) This regulation applies to multi-employer schemes which are not segregated schemes. (2) Section 24 of the Act and Schedule 14 to the Act apply with the following modifications. (3) In section 24(2) the reference to — (a) “an employer” is to be read as a reference to “the principal employer”; and (b) “the employer’s national insurance contributions” is to be read as a reference to “the employers’ national insurance contributions”.
19 1995 c.26 (see SD 501/97); section 10 was inserted by SD 221/05. c SD No. 2018/0265 Page 13
SCHEDULE 1 Pension Schemes Legislation (Application) Order 2018
(4) In Schedule 14 — (a) in paragraph 2(2), references to “the employer’s national insurance contributions” are to be read as references to “the employers’ national insurance contributions”; and (b) in paragraph 2(5), the reference to “the employer is” is to be read as a reference to “the employers are”. 15. Segregated schemes with multi-employer sections (1) This regulation applies to a section of a segregated scheme where there is more than one employer in relation to that section of the scheme. (2) Section 24 of the Act and Schedule 14 to the Act apply with the following modifications. (3) In section 24(2) the reference to — (a) “an employer” is to be read as a reference to “the principal employer in relation to a section of an occupational pension scheme”; (b) “an occupational pension scheme” is to be read as a reference to “that section of an occupational pension scheme”; and (c) “the employer’s national insurance contributions” is to be read as a reference to “the employers’ national insurance contributions”. (4) In Schedule 14 — (a) in paragraph 2(2), references to “the employer’s national insurance contributions” are to be read as references to “the employers’ national insurance contributions”; and (b) in paragraphs 2(2), 3(1), 9 and 15, references to a “scheme” are to be read as references to a “section of a scheme”. (5) Where these Regulations (apart from this regulation) apply to a section of a segregated scheme where there is more than one employer in relation to that section of the scheme, they shall apply to that section as if the section were a separate scheme. 16. Notification of amendment date (1) Following the issue of a certificate by the actuary in accordance with regulation 11(5), the — (a) principal employer in a case falling within regulation 14 or 15; or (b) employer in any other case, must consult the trustees or managers of the scheme about an appropriate amendment date. (2) The principal employer, [...]employer or administrator as applicable, must, as soon as reasonably practicable after consultation, notify the trustees or managers of the scheme of the amendment date. (3) The notification required by paragraph (2) must be in writing. (4) Amendments may not have effect before 6th April 2019.
Signed by authority of the Secretary of State for Work and Pensions
Page 14 SD No. 2018/0265 c
Pension Schemes Legislation (Application) Order 2018 SCHEDULE 1
Steve Webb Minister of State 25th February 2015 Department for Work and Pensions
c SD No. 2018/0265 Page 15
SCHEDULE 1 Pension Schemes Legislation (Application) Order 2018
SCHEDULE Regulation 11
Information to be included in Actuary’s certificate
Name and address of employer/principal employer Name and Scheme Contracted-out Number (SCON(s)) of scheme/section The amendments proposed to be made. Data and assumptions used Calculation date Date of scheme actuarial valuation Any additional assumptions used Any assumptions which the employer or administrator, as applicable, requested were adjusted to remove the margin for prudence What earnings data used: 1 year to calculation date or 3 years to calculation date Other data sources used
Estimates of values of scheme amendments A statement that the Actuary’s estimate of the following values is for the proposed amendments as set out in the certificate and on the basis of the data referred to, the methods and assumptions used to calculate the scheme’s technical provisions and the additional assumptions set out in the certificate.
The values for the annual increase in the employer’s national insurance contributions in respect of the earnings of relevant members as exceeds the lower earnings limit but not the upper accrual point the increase in the total annual employee contributions of the relevant members (if applicable) the reduction in the scheme’s liabilities in respect of the benefits that accrue annually for or in respect of the relevant members (if applicable) the sum of the increase in the total annual employee contributions and the reduction in the scheme’s liabilities in respect of the benefits that accrue annually for or in respect of the relevant members (if applicable).
Note: In a case where the power is being used on a second or subsequent occasion, estimates should be for the changes due to all the amendments, those proposed and the amendments made by the previous use or uses of the power.
Certification A statement that, in the actuary’s opinion— The proposed amendments to the scheme/section set out in this certificate comply with paragraph 2(2) of Schedule 14 to the Pensions Act 2014.
Page 16 SD No. 2018/0265 c
Pension Schemes Legislation (Application) Order 2018 SCHEDULE 1
The calculations have been made in accordance with the requirements of regulations 4(2), 5(2), 6(2) to (4), 7 and 8(2) to (6) of the Occupational Pension Schemes (Power to Amend Schemes to Reflect Abolition of Contracting-out) Regulations 2015.
Alternative certification where the power is being used on a second or subsequent occasion A statement that, in the actuary’s opinion— All the amendments to the scheme/section, those proposed and set out in this certificate and those made by the previous use or uses of the power and set out in resolutions (give dates) comply with paragraph 2(2) of Schedule 14 to the Pensions Act 2014. The calculations have been made in accordance with the requirements of regulations 4(2), 5(2), 6(2) to (4), 7, 8(2) to (6) and 8(8) of the Occupational Pension Schemes (Power to Amend Schemes to Reflect Abolition of Contracting-out) Regulations 2015.
Signature:
Date:
Name:
Qualification:
Address:
c SD No. 2018/0265 Page 17
SCHEDULE 2 Pension Schemes Legislation (Application) Order 2018
SCHEDULE 2
[Article 6(2)(b)]
This Schedule sets out the text of the Pensions Act 2014 (Savings) Order 2015 (SI 2015/1502) as applied by this Order, with such exceptions, adaptations and modifications made where necessary, which appear in bold italic type.
STATUTORY INSTRUMENTS
2015 No. 1502 PENSIONS The Pensions Act 2014 (Savings) Order 2015
Made - - - 14th July 2015
The Secretary of State for Work and Pensions makes the following Order in exercise of the powers conferred by section 56(8) of the Pensions Act 201420:
1. Citation [...] and interpretation (1) This Order may be cited as the Pensions Act 2014 (Savings) Order 2015. (2) Omitted. (3) Omitted. (4) In this Order— “the Act” means the Pensions Act 2014; “the 1993 Act” means the Pension Schemes Act 199321; “contracted-out employment” and “contributions equivalent premium” have the meanings given in section 181(1) of the 1993 Act22; “the Department” means the Isle of Man Treasury; “earner” has the meaning given in section 181(1) of the 1993 Act23; [...];
20 2014 c.19 (see SD 2018/0076). 21 1993 c.48 (see SD 531/95). 22 The definition of “contributions equivalent premium” in section 181(1) of the Pensions Schemes Act 1993 (“the 1993 Act”) was amended by paragraph 77(a)(ii) of Schedule 5 to the Pensions Act 1995 (c.26) (see SD 501/97) and is amended by paragraph 43(6) of Schedule 13 to the Pensions Act 2014 (“the Act”) (see SD 2018/0076). 23 The definition of “earner” is amended by paragraph 43(7) of Schedule 13 to the Act.
Page 18 SD No. 2018/0265 c
Pension Schemes Legislation (Application) Order 2018 SCHEDULE 2
“salary related contracted-out scheme” and “the second abolition date” have the meanings given in section 181(1) of the 1993 Act24. Savings 2. (1) The provisions of the 1993 Act specified in paragraph (2) and repealed by paragraphs 5, 8, 9 to 11, 22, 28, 29, 33, 36, 37 and 46(1), (2) and (4) of Schedule 13 to the Act (abolition of contracting-out for salary related schemes) continue to have effect, despite those repeals, for the purposes of allowing or requiring the trustees or managers of a scheme that was a salary related contracted-out scheme, and the Department, to carry out any necessary activity relating to any period of contracted-out employment which occurred before the second abolition date. (2) The provisions are— (a) section 7 (issue of contracting-out certificates)25; (b) section 9 (requirements for certification of schemes: general)26; (c) section 11 (elections as to employment covered by contracting-out certificates); (d) sections 12A to 12D (requirements for certification of occupational pension schemes applying from 6th April 1997)27 (e) sections 34 to 36 (cancellation, variation, surrender and refusal of certificates)28; (f) section 41 (reduced rates of Class 1 contributions)29; (g) section 50 (powers of Department to approve arrangements for scheme ceasing to be certified)30; (h) section 53(3) (supervision: former contracted-out schemes)31; (i) sections 55 to 68 (state scheme premiums)32;
24 The definitions of “salary related contracted-out scheme” and “the second abolition date” in section 181(1) of the 1993 Act are inserted by paragraph 43(2) of Schedule 13 to the Act. 25 Section 7 was amended by section 136 of the Pensions Act 1995 (see SD 501/97), and paragraphs 1 and 2 of Schedule 4, and Part 6 of Schedule 7 to the Pensions Act 2007 (c.22) (see SD 139/09). 26 Section 9 was amended by section 136 of, and paragraph 21 and 24 of Schedule 5 to, the Pensions Act 1995, section 283 of the Pensions Act 2004 (see SD 220/05), and section 14(4) of, and paragraphs 1 and 4 of Schedule 4 to, and Part 6 of Schedule 7 to, the Pensions Act 2007 (see SD 139/09). 27 Sections 12A to 12D were inserted by section 136(5) of the Pensions Act 1995 (see SD 501/97), and amended by S.I. 1997/819 (see SD 502/97), S.I. 2005/2050 (see SD 744/05), paragraph 36 of Schedule 1 to and paragraph 5 of Schedule 5 to, and Part 8 of Schedule 7 to the Pensions Act 2007 (see SD 139/09). 28 Section 34 was amended by paragraph 37 of Schedule 5 to, the Pensions Act 1995, and paragraphs 1 and 15 of Schedule 4 to, and Part 6 of Schedule 7 to, the Pensions Act 2007 (see SD 193/09). 29 Section 41 was amended by section 137(2) of the Pensions Act 1995, paragraph 6 of Schedule 9 to the Welfare Reform and Pensions Act 1999 (c.30) (see SD 600/00), paragraphs 35 and 36 of Schedule 1 to the National Insurance Contributions Act 2002 (c.19) , paragraph 37 of Schedule 1 to the Pensions Act 2007 (see SD 193/09), paragraphs 7 and 10 of Schedule 1, and Schedule 2, to the National Insurance Contributions Act 2008 and S.I. 2011/1036. 30 Section 50 was amended by paragraph 45(b) and (c) of Schedule 5 to the Pensions Act 1995 and S.I. 2006/1009 (see SD 196/07). 31 Section 53(3) was amended by paragraph 48(c) of Schedule 5 to the Pensions Act 1995 and S.I. 2011/1730 (see SD 0927/11). 32 Sections 55 to 68 are repealed by paragraph 37 of Schedule 13 to the Act, although sections 59 and 64 to 66 were repealed by paragraphs 18, 53 and 58 to 60 of Schedule 5 to the Pensions Act 1995. Sections 55 to 58, 60 to 63, 67 and 68 were amended by paragraphs 50 to 52, 54 to 57, and 61 of Schedule 5 to, the Pensions Act 1995, paragraph 7 of Schedule 2 to the Welfare Reform and Pensions Act 1999 (see SD 291/01), paragraph 5 of Schedule 5 to the Child Support, Pensions and Social Security Act 2000 (c.19) c SD No. 2018/0265 Page 19
SCHEDULE 2 Pension Schemes Legislation (Application) Order 2018
(j) Schedule 2, paragraphs 1 to 4, 6 and 8 (certification regulations)33. (3) Section 16(2) of the 1993 Act (revaluation of earnings factors for the purposes of section 14: early leavers etc) continues to have effect, as if that subsection had not been substituted by paragraph 16 of Schedule 13 to the Act, in relation to earners whose service in contracted-out employment ended before the second abolition date. (4) Sections 55 to 68 of the 1993 Act continue to have effect as if they had not been repealed by paragraph 37 of Schedule 13 to the Act, for the purposes of allowing or requiring the trustees or managers of a scheme described in paragraph (5) to elect to pay, and pay, a contributions equivalent premium in relation to members of the scheme whose contracted-out employment ended on or before the second abolition date. (5) A scheme referred to in paragraph (4) is— (a) one which started to wind up before the second abolition date; [...] (b) omitted
Signed by authority of the Secretary of State for Work and Pensions
Altmann Minister of State, 14th July 2015 Department for Work and Pensions
(see SD 379/01), S.I. 2005/2050 (see SD 744/05) and paragraphs 1 and 26 of Schedule 4 to, and Part 6 of Schedule 7 to, the Pensions Act 2007 (see SD 193/09). 33 Part 1 of Schedule 2 was amended by paragraph 84 of Schedule 5 to, and Part 3 of Schedule 7 to, the Pensions Act 1995 and paragraphs 46 and 59 of Schedule 4 to the Pensions Act 2007 (see SD 0927/11).
Page 20 SD No. 2018/0265 c
Pension Schemes Legislation (Application) Order 2018 SCHEDULE 3
SCHEDULE 3
[Article 6(2)(c)]
This Schedule sets out the text of the Occupational Pension Schemes (Schemes that were Contracted-out) (No.2) Regulations 2015 (SI 2015/1677) as applied by this Order, with such exceptions, adaptations and modifications made where necessary, which appear in bold italic type.
STATUTORY INSTRUMENTS
2015 No. 1677 PENSIONS The Occupational Pension Schemes (Schemes that were Contracted-out) (No.2) Regulations 2015
Made - - - - 9th September 2015
Laid before Parliament 16th September 2015
Coming into force in accordance with regulation 1(2)
CONTENTS PART 1 GENERAL 1. Citation [...] 2. Interpretation
PART 2 GENERAL PROVISIONS RELATING TO SCHEMES THAT WERE SALARY RELATED CONTRACTED-OUT SCHEMES 3. Alteration of scheme rules 4. Determination that an earner was in contracted-out employment 5. Provision of information 6. Overseas schemes 7. Restoration of state scheme rights 8. Contributions equivalent premiums: prescribed person 9. Notification of requirement to pay a contributions equivalent premium c SD No. 2018/0265 Page 21
SCHEDULE 3 Pension Schemes Legislation (Application) Order 2018
10. Cases where payment of a contributions equivalent premium is not required 11. Elections to pay contributions equivalent premiums 12. Payment of a contributions equivalent premium 13. Payment in lieu of benefit and delay in refund for the purposes of the employer’s right of recovery 14. Refund of a contributions equivalent premium 15. Continuation of transitional arrangements for schemes that began winding up before 6th April 1997 16. Continuation of savings in respect of state scheme premiums
PART 3 ADDITIONAL REQUIREMENTS IN RELATION TO RIGHTS ATTRIBUTABLE TO CONTRACTED-OUT EMPLOYMENT ON AND AFTER 6TH APRIL 1997 17. Alteration of scheme rules 18. Payment of a lump sum instead of a pension 19. Forfeiture of accrued rights Omitted
PART 4 ADDITIONAL REQUIREMENTS IN RELATION TO GUARANTEED MINIMUM PENSIONS 20. Alteration of scheme rules 21. Circumstances for the purposes of section 17(6) of the 1993 Act in which widower’s, widow’s or surviving civil partner’s guaranteed minimum pension is payable 22. Period for the purposes of section 17(6) of the 1993 Act for which widower’s, widow’s or surviving civil partner’s guaranteed minimum pension is payable 23. Fixed rate revaluation of guaranteed minimum pensions secured by insurance policies or annuity contracts 24. Fixed rate revaluation of guaranteed minimum pensions for early leavers 25. Payment of a lump sum instead of a pension 26. Suspension and forfeiture of guaranteed minimum pension 27. Conversion into other benefits: actuarial equivalence
PART 5 AMENDMENT OF THE OCCUPATIONAL PENSION SCHEMES (CONTRACTING-OUT) REGULATIONS 1996 28. Amendments relating to certification of employments for a period before the second abolition date 29. Amendments relating to cessation of contracting-out before the second abolition date
Page 22 SD No. 2018/0265 c
Pension Schemes Legislation (Application) Order 2018 SCHEDULE 3
PART 6 AMENDMENT OF THE CONTRACTING-OUT (TRANSFER AND TRANSFER PAYMENT) REGULATIONS 1996 30. Revaluation after transfer from another scheme
PART 7 REVOCATION AND SAVINGS OF THE OCCUPATIONAL PENSION SCHEMES (CONTRACTING-OUT) REGULATIONS 1996 31. Revocations taking effect on the second abolition date 32. Saving of provisions relating to the revaluation of Guaranteed Minimum Pensions 33. Revocations taking effect on 6th April 2022
PART 8 PROVISION FOR NORTHERN IRELAND 34. Interpretation of Part 8 (Omitted) 35. Restoration of state scheme rights: Northern Ireland (Omitted) 36. Contributions equivalent premiums: prescribed person in Northern Ireland (Omitted) 37. Notification of requirement to pay a contributions equivalent premium: Northern Ireland (Omitted) 38. Cases where payment of a contributions equivalent premium is not required: Northern Ireland (Omitted) 39. Elections to pay contributions equivalent premiums: Northern Ireland (Omitted) 40. Payment of a contributions equivalent premium: Northern Ireland (Omitted) 41. Payment in lieu of benefit and delay in refund for the purposes of the employer’s right of recovery: Northern Ireland (Omitted) 42. Refund of a contributions equivalent premium: Northern Ireland (Omitted) 43. Continuation of savings in respect of state scheme premiums: Northern Ireland (Omitted) 44. Revocations of the Occupational Pension Schemes (Contracting-Out) Regulations (Northern Ireland) 1996 taking effect on the second abolition date (Omitted)
PART 9 REVOCATION OF PART OF THE OCCUPATIONAL PENSION SCHEMES (SCHEMES THAT WERE CONTRACTED-OUT) REGULATIONS 2015 45. Revocation of part of the Occupational Pension Schemes (Schemes that were Contracted-out) Regulations 2015 Omitted
SCHEDULE 1 - PROVISIONS CONFERRING POWERS EXERCISED IN MAKING THESE REGULATIONS
c SD No. 2018/0265 Page 23
SCHEDULE 3 Pension Schemes Legislation (Application) Order 2018
SCHEDULE 2 - THE LUMP SUM AND LUMP SUM DEATH BENEFIT RULES AND LUMP SUMS AND LUMP SUM DEATH BENEFITS
Page 24 SD No. 2018/0265 c
Pension Schemes Legislation (Application) Order 2018 SCHEDULE 3
The Secretary of State for Work and Pensions makes the following Regulations in exercise of the powers set out in the Schedule. The Secretary of State has consulted such persons as the Secretary of State considers appropriate, in accordance with section 185(1) of the Pension Schemes Act 199334.
Part 1 - General 1. Citation [...] (1) These Regulations may be cited as the Occupational Pension Schemes (Schemes that were Contracted-out) (No.2) Regulations 2015. (2) to (4) Omitted. 2. Interpretation (1) In these Regulations— “the 1993 Act” means the Pension Schemes Act 199335; “the 1995 Act” means the Pensions Act 199536; […] “the 1996 Regulations” means the Occupational Pension Schemes (Contracting-out) Regulations 199637; “administrator” means the person resident in the Island having responsibility for the management of an occupational pension scheme or, in the case of an overseas scheme (within the meaning of regulation 6), the person resident in the Isle of Man who is appointed in accordance with section 1(2)(c) of the Income Tax (Retirement Benefit Schemes) Act 1978; [...] “the Contributions and Benefits Act” means the Social Security Contributions and Benefits Act 199238; “the Department” means the Isle of Man Treasury; [...] “section 9(2B) rights” are—
34 1993 c.48. Relevant amendments are made by paragraph 46 of Schedule 3 to, paragraph 80 of Schedule 5 to, and Part I of Schedule 7 to, the Pensions Act 1995 (c.26). A draft of S.I. 2015/1452 was consulted on and these Regulations are materially identical to S.I. 2015/1452 except for the removal of the provisions in regulation 28 of that Instrument, and that regulation 69B of the Occupational Pension Schemes (Contracting-out) Regulations 1996 is not revoked by this instrument. 35 1993 c.48 (see SD 531/95). 36 1995 c.26 (SD 501/97). 37 S.I. 1996/1172 (see SD 651/97), as amended. 38 1992 c.4 (see SD 505/94). c SD No. 2018/0265 Page 25
SCHEDULE 3 Pension Schemes Legislation (Application) Order 2018
(a) rights to the payment of pensions and accrued rights to pensions (other than rights attributable to voluntary contributions) under a scheme contracted-out by virtue of section 9(2B) of the 1993 Act39, so far as attributable to an earner’s service in contracted-out employment on or after the principal appointed day40; and (b) where a transfer payment has been made to such a scheme, any rights arising under the scheme as a consequence of that payment which are derived directly or indirectly from— (i) such rights as are referred to in paragraph (a) under another scheme contracted-out by virtue of section 9(2B) of the 1993 Act; or (ii) protected rights under another occupational pension scheme or under a personal pension scheme attributable to payments or contributions in respect of employment on or after the principal appointed day where that transfer payment was made before the first abolition date41; “trustees” in relation to a scheme which is not set up or established under a trust, means the managers or administrators of the scheme. (2) For the purposes of these Regulations — (a) any person, government department or public authority who, under or by virtue of Part 1 of the Contributions and Benefits Act is, or is to be treated as, the secondary Class 1 contributor, is to be treated as the employer of the earner in respect of whom the Class 1 contributions are payable; (b) without prejudice to sub-paragraph (a), there is to be treated as the employer of a self-employed earner to whom a scheme that was a salary related contracted-out scheme42 applies any person (other than the self-employed earner), government department or public authority who makes or is liable to make payments towards the resources of the scheme in respect of the self-employed earner (either under actual or contingent legal obligation or in the exercise of power conferred, or duty imposed, on a [...] government department or any other person, being a power or duty which extends to the disbursement or allocation of public money). (3) For the purposes of these Regulations, a payment satisfies “the tax-approved condition” if it is made to the extent permitted — (a) in the case of a retirement benefits scheme approved by the Assessor of Income Tax for the purposes of the Income Tax (Retirement Benefit Schemes) Act 1978; or (b) in the case of an occupational pension scheme approved by the Assessor of Income Tax under section 50C(2) of the Income Tax Act 1970, under the rules of the scheme and in accordance with that approval. (4) Schedule 2 (the lump sum and lump sum death benefit rules and lump sums and lump sum death benefits) has effect to give the meaning of certain terms appearing in these Regulations.
39 Section 9(2B) was inserted by section 136 of the Pensions Act 1995 (c.26) (see SD 501/97). 40 See section 181(1) of the 1993 Act, as amended by paragraph 43 of Schedule 13 to the Pensions Act 2014 (c.19) (see SD 2018/0076) (“the 2014 Act”). 41 See section 7A of the 1993 Act, inserted by paragraph 6 of Schedule 13 to the 2014 Act. 42 See section 7B of the 1993 Act, inserted by paragraph 6 of Schedule 13 to the 2014 Act.
Page 26 SD No. 2018/0265 c
Pension Schemes Legislation (Application) Order 2018 SCHEDULE 3
Part 2 - General provisions relating to schemes that were salary related contracted-out schemes 3. Alteration of scheme rules For the purposes of section 37(1) of the 1993 Act43 (prohibition on alteration of rules of schemes that were contracted-out unless alteration is of a prescribed description), the alterations which are prescribed are any alterations which are allowed by regulations 17 and 20. 4. Determination that an earner was in contracted-out employment (1) This regulation applies where — (a) an earner (“E”) has been in employment, during a period in which employment of the same description as E’s employment was contracted-out44, but E’s employment was not (apart from this regulation) contracted-out in relation to E; and (b) the Department is satisfied — (i) that the employment was not contracted-out in relation to E solely because E was not, during that period, a member of the relevant scheme45; and (ii) that E, during that period, was not a member of that scheme solely because of inadvertence. (2) Where this regulation applies, the Department may determine that E was in contracted- out employment by reference to that scheme during that period. 5. Provision of information (1) The Department [...] may give any information that it could give to the trustees of an occupational pension scheme, under section 156(1) of the 1993 Act46 (information for purposes of contracting-out), to the following persons — (a) an earner, or widow, widower or surviving civil partner of an earner, to whom the information relates; (b) the employer in relation to the contracted-out employment of an earner to whom the information relates; (c) any independent trade union recognised in relation to earners who are members of a scheme that was a salary related contracted-out scheme; and (d) any person who is or who, in the opinion of the Department, is likely to become, responsible for paying guaranteed minimum pensions, or pensions in respect of section 9(2B) rights, in accordance with the pension scheme. (2) Paragraph (1)(c) is subject to the condition that the information to be given is either — (a) as to —
43 Section 37(1) is substituted by paragraph 24 of Schedule 13 to the 2014 Act. 44 See section 8 of the 1993 Act, as amended by paragraph 7 of Schedule 13 to the 2014 Act, for the definition of contracted-out employment. 45 See section 37A(2) of the 1993 Act, inserted by paragraph 25 to the 2014 Act. 46 Section 156 was substituted by section 56 of, and paragraph 9 of Schedule 5 to, the Child Support, Pensions and Social Security Act 2000 (c.19) (see SD 379/01), and amended by S.I. 2011/1730 (see SD 0927/11). c SD No. 2018/0265 Page 27
SCHEDULE 3 Pension Schemes Legislation (Application) Order 2018
(i) the total amount of the guaranteed minimum pensions to which it appears to the Department that all persons entitled under the scheme (whether immediately or prospectively) are so entitled; or (ii) whether the scheme is liable in respect of any section 9(2B) rights; or (b) given with the consent of the earner, widow, widower or surviving civil partner to whom it relates, such consent being given in writing, or by means of an electronic communication in such form as the Department may approve. (3) For the purposes of this regulation, “independent trade union” means an independent trade union which is recognised to any extent for the purpose of collective bargaining. 6. Overseas schemes (1) The rules of an overseas scheme are to provide — (a) that, if the scheme is wound up, the assets of the scheme are to be applied first towards satisfying the amounts of the liabilities mentioned in section 73(4) of the 1995 Act (preferential liabilities on winding up) and, if they are insufficient to satisfy those amounts in full, then — (i) they are to be applied first towards satisfying the amounts of the liabilities mentioned in earlier paragraphs of that subsection before those mentioned in later paragraphs; and (ii) where the amounts of the liabilities mentioned in one of those paragraphs cannot be satisfied in full, all such liabilities are to be satisfied in the same proportions; (b) that not more than 5 per cent of the current market value of the scheme’s resources are invested in a person who is an employer, or connected with an employer, in relation to the scheme if such investments are required to meet the liabilities specified in sub-paragraph (a) and the value of such investments is to be calculated and determined in a manner approved by the Department; and (c) in respect of rights that have accrued as a result of contracted-out employment in the scheme in the Island, for revaluation of accrued rights in accordance with sections 83 to 86 of the 1993 Act47 and for indexation of pensions in accordance with sections 51 to 54 of the 1995 Act48.
47 Sections 83 to 86 were amended by paragraphs 28, 31 and 32 of Schedule 12 to the Welfare Reform and Pensions Act 1999 (c.30) (see SD 291/01), S.I. 2005/2053 (see SD 745/05), section 281 of the Pensions Act 2004 (c.35) (see SD 220/05) (“the 2004 Act”), section 19 of the Pensions Act 2011 (c.19) (see SD 152/12) and SD 2016/0199. 48 Section 51A was inserted by section 51 of the Child Support, Pensions and Social Security Act 2000 (see SD 379/01). Section 51ZA was inserted by section 278 of the 2004 Act (see SD 220/05) and amended by paragraph 8 of Schedule 2 to the Pensions Act 2008 (see SD 851/09). Section 51ZB was inserted by section 21 of the Pensions Act 2011 (see SD 0152/12). Sections 51 to 54 were amended by paragraphs 43, 51 and 52 of Schedule 12 to the Welfare Reform and Pensions Act 1999 (see SD 291/01), section 51 of the Child Support, Pensions and Social Security Act 2000 (see SD 379/01), section 278 of, and Part 1 of Schedule 13 to, the 2004 Act, sections 19 and 21 of the Pensions Act 2011 (see SD 0152/12) and paragraphs 58, 59 and 60 of Schedule 13 to the 2014 Act (see SD 2018/0076).
Page 28 SD No. 2018/0265 c
Pension Schemes Legislation (Application) Order 2018 SCHEDULE 3
(2) In this regulation “overseas scheme” means an occupational pension scheme that was a salary related contracted-out scheme and that has its main administration outside the Island, but does not include a scheme that was contracted-out in Great Britain by virtue of satisfying section 9(2) of the 1993 Act49 as it had effect in Great Britain before the second abolition date (within the meaning given in section 7A of the 1993 Act as it has effect in Great Britain). 7. Restoration of state scheme rights (1) This regulation applies where paragraph 5(3B) of Schedule 2 to the 1993 Act50 (state scheme premiums: schemes which were being wound up before the second abolition date) applies in relation to a member of a scheme that was a contracted-out scheme and that was being wound up before the second abolition date if, by virtue of that provision — (a) the member was treated as if sections 46 to 48 or 48A(1) of the 1993 Act51 (effect of entitlement to guaranteed minimum pensions on payments of social security benefits) did not apply; or (b) in a case where the cash equivalent of the member’s rights was less than the amount required for restoring their state scheme rights, the member was treated as if sections 46 to 48 or 48A(1) of the 1993 Act applied only in so far as they extinguish such part of the member’s state scheme rights as, in the opinion of the Department, corresponded to that shortfall. (2) Where this regulation applies, the member is to continue to be treated as mentioned in paragraph (1)(a) or, as the case may be, (1)(b). 8. Contributions equivalent premiums: prescribed person (1) For the purposes of section 55(2) of the 1993 Act52 (which requires the prescribed person to pay a contributions equivalent premium in the case mentioned in section 55(2B) of that Act53 and enables them to elect to do so in certain other cases) the prescribed person is — (a) omitted; [...] (b) [...] the trustees of the scheme. (2) Omitted. 9. Notification of requirement to pay a contributions equivalent premium
49 Section 9(2) was substituted by section 136 of the 1995 Act. 50 Paragraph 5(3B) was inserted by section 141 of the 1995 Act. 51 Sections 46 to 48 were amended by paragraph 56 of Schedule 1 to the Social Security (Incapacity for Work) Act 1994 (c.18) (see SD 531/95), paragraph 44 of Schedule 5 to, and paragraph 22 of Schedule 4 to, the 1995 Act, section 32 of, and paragraph 18 of Schedule 8 to, the Welfare Reform and Pensions Act 1999 (see SD 600/00), S.I. 2005/2050 (see SD 774/05), section 14 of the Pension Act 2007 (c.22) (see SD 193/09), SD 2016/0199, paragraph 71 of Schedule 12 to the 2014 Act. Section 48A was inserted by section 140 of the 1995 Act, and amended by section 38 of the Child Support, Pensions and Social Security Act 2000 (c.19) (see SD 379/01), paragraphs 35 and 39 of Schedule 1 to, the National Insurance Contributions Act 2002 (c.19) (see SD 802/09), paragraph 23 of Schedule 4 to, the Pensions Act 2007 (c.22) (see SD 193/09). 52 Section 55 is repealed by paragraph 37 of Schedule 13 to the 2014 Act, but saved for certain purposes, see S.I. 2015/1502 (see Schedule 2 to this Order). Section 55(2) was substituted by section 141 of the 1995 Act, and amended by paragraph 7 of Schedule 2 to the Welfare Reform and Pensions Act 1999 (see SD 291/01), and paragraphs 1 and 26 of Schedule 4 to, and Part 6 of Schedule 7 to, the Pensions Act 2007 (see SD 193/09). 53 Section 55(2B) was inserted by paragraph 7(1)(c) of Schedule 2 to the Welfare Reform and Pensions Act 1999 (see SD 291/01). c SD No. 2018/0265 Page 29
SCHEDULE 3 Pension Schemes Legislation (Application) Order 2018
(1) Where a contributions equivalent premium is required to be paid in respect of an earner by virtue of section 55(2) of the 1993 Act (payment of state scheme premiums on termination of certified status), the trustees of the scheme are to notify the Department of that fact in such form as the Department may reasonably require for the purpose of identifying the earner. (2) Such notification is to be given — (a) where the scheme is being wound up, within the period of two years starting with the date the scheme started to wind up; and (b) where the earner ceased to serve in employment which was contracted-out employment for any other reason mentioned in section 55(2A) of the 1993 Act54, within the period starting one month before and ending six months after the date on which the earner so ceased. (3) The Department may in any particular case or class of case extend the period within which notification is to be given if it appears to it that notification could not reasonably have been given within the period specified in paragraph (2). 10. Cases where payment of a contributions equivalent premium is not required (1) Section 55(2B) of the 1993 Act (by virtue of which a contributions equivalent premium must be paid in any case where the earner has no accrued right to benefit under the scheme) does not apply if any of the following paragraphs of this regulation apply. (2) This paragraph applies where — (a) the earner’s service in the employment ceased on the earner’s death; and (b) the earner left a surviving spouse or civil partner who is not entitled to any of the following benefits — (i) a widowed mother’s allowance under section 37 of the Contributions and Benefits Act55; (ii) a widow’s pension under section 38 of that Act56; (iii) a widowed parent’s allowance under section 39A of that Act57; (iv) a bereavement support payment under section 30 of the Pensions Act 201458.
54 Subsection (2A) was inserted by section 141 of the 1995 Act, and amended by paragraph 7 of Schedule 2 to the Welfare Reform and Pensions Act 1999 (see SD 291/01), and by S.I. 2005/2050 (see SD 744/05). 55 Section 37 was amended by paragraph 18 of Schedule 24 to the Civil Partnership Act 2004 (c.33) (see SD 654/05), paragraphs 1 and 2 of Schedule 1 to the Child Benefit Act 2005 (c.6) (see SD 29/07) and SD 2016/0193. 56 Section 38 was amended by paragraph 19 of Schedule 24 to the Civil Partnership Act 2004 (see SD 654/05), paragraph 40 of Schedule 1 to the Pensions Act 2007 (c.22) (see SD 193/09) and SD 2016/0193. 57 Section 39A was inserted by section 55(2) of the Welfare Reform and Pensions Act 1999 (see SD 600/00), and amended by paragraph 20 of Schedule 24 to the Civil Partnership Act 2004 (see SD 654/05), paragraphs 1 and 3 of Schedule 1 to the Child Benefit Act 2005 (see SD 29/07), paragraphs 2 and 12 of Schedule 16 to the 2014 Act and SD 2016/0193. 58 2014 c.19 (see SD 2018/0076).
Page 30 SD No. 2018/0265 c
Pension Schemes Legislation (Application) Order 2018 SCHEDULE 3
(3) This paragraph applies where the earner is a woman who has made, or is treated as having made, an election under regulations made under section 19(4) of the Contributions and Benefits Act (general power to regulate liability for contributions)59, which has not been revoked, that her liability in respect of primary Class 1 contributions is to be at a reduced rate. (4) This paragraph applies where, on termination of an earner’s pensionable service, the earner elects to acquire a right to a cash transfer sum in accordance with section 101AB(1)(a) of the 1993 Act60 (right to cash transfer sum and contribution refund). 11. Elections to pay contributions equivalent premiums (1) Subject to paragraph (2), the obligation under section 57(2) of the 1993 Act61 (not to discriminate between different earners when making or abstaining from making elections to pay contributions equivalent premiums) does not apply to cases where — (a) an earner’s rights are transferred in accordance with regulations made under section 37A of the 1993 Act62 (transfer of liabilities etc.: schemes contracted-out on or after 6th April 1997); (b) the earner is a woman who has made, or is treated as having made, an election under regulations made under section 19(4) of the Contributions and Benefits Act, which has not been revoked, that her liability in respect of primary Class 1 contributions is to be at a reduced rate; (c) on the death of an earner, there arose an entitlement to a widow’s, widower’s or surviving civil partner’s pension which comprises amounts of pension which accrued by reference both to the earner’s service in employment which was not contracted-out and to service in employment which was contracted-out; (d) the earner — (i) has completed less than two years qualifying service for the purposes of Chapter 1 of Part IV of the 1993 Act (preservation); and (ii) has made an election under the rules of the scheme to preserve the earner’s accrued rights; or (e) any liability to provide pensions to an earner has been discharged in accordance with regulations made under section 12C (transfer, commutation etc.) or 37A of the 1993 Act63 (as it had effect before the second abolition date). (2) An employer is not to discriminate between different earners falling within the same class of case mentioned in paragraph (1). (3) An election under section 55(2) of the 1993 Act is to be notified to the Department in such form as it may reasonably require for the purpose of identifying the earner to whom the election relates. (4) Such notification is to be given —
59 Section 19(4) was amended by paragraphs 1 and 5 of Schedule 1 to the National Insurance Contributions Act 2002 (c.19) (see SD 802/09). 60 Section 101AB was inserted by section 264 of the 2004 Act. 61 Section 57 is repealed by paragraph 37 of Schedule 13 to the 2014 Act, but saved for certain purposes see S.I. 2015/1502 (see Schedule 2 to this Order). 62 Section 37A is inserted by paragraph 25 of Schedule 13 to the 2014 Act. 63 Section 12C is repealed by paragraph 11 of Schedule 13 to the 2014 Act, but saved for certain purposes see S.I. 2015/1502 (see Schedule 2 to this Order). c SD No. 2018/0265 Page 31
SCHEDULE 3 Pension Schemes Legislation (Application) Order 2018
(a) where the scheme is being wound up, within the period of two years starting with the date the scheme started to wind up; (b) where the earner ceased to serve in employment which was contracted-out employment for any other reason mentioned in section 55(2A) of the 1993 Act, within the period starting one month before and ending six months after the date on which the earner so ceased. (5) The Department may in any particular case or class of case extend the period within which notification of an election is to be given if it appears to it that notification could not reasonably have been given within the period specified in paragraph (4). 12. Payment of a contributions equivalent premium (1) A contributions equivalent premium which the trustees are required or have elected to pay is to be paid on or before — (a) the day six months after the date of termination of contracted-out employment in respect of which the premium is payable; or (b) the day one month after the day on which the Department send to the trustees a notice certifying the amount of the premium payable, whichever is the later. (2) Omitted. (3) On an application made to it for that purpose, the Department may in any particular case or class of case extend the period within which a premium is to be paid under paragraph (1) or (2) — (a) if it is satisfied that the circumstances are such that payment of the premium could not reasonably be required to be made within the period specified in that paragraph, by a period not exceeding six months; and (b) if it is satisfied that to require earlier payment would be prejudicial to the interests of the earner in respect of whom the premium is payable or of the generality of the members of the scheme, by such further period as it considers reasonable. (4) Where the amount of any contributions equivalent premium which is payable does not exceed £17, the trustees are not liable to pay it and, accordingly, if it is not paid, it is to be treated as paid for the purposes of section 48A(2) (additional pension and other benefits) and section 6064 (effect of payment of premiums on rights) of the 1993 Act. (5) Any liability for a contributions equivalent premium is a liability to make payment out of the resources of the scheme. 13. Payment in lieu of benefit and delay in refund for the purposes of the employer’s right of recovery (1) For the purposes of section 61(10) of the 1993 Act65 (payments in lieu of benefit) a payment in lieu of benefit is to include a payment made or to be made out of the resources of the scheme towards the provision of deferred benefits for the earner.
64 Section 60 is repealed by paragraph 37 of Schedule 13 to the 2014 Act, but saved for certain purposes, see S.I. 2015/1502 (see Schedule 2 to this Order). Section 60 was amended by paragraph 54 of Schedule 5 to the 1995 Act, and S.I. 2005/2050 (see SD 744/05). 65 Section 61 is repealed by paragraph 37 of Schedule 13 to the 2014 Act, but saved for certain purposes, see S.I. 2015/1502 (see Schedule 2 to this Order). Section 61 was amended by paragraph 55 of Schedule 5
Page 32 SD No. 2018/0265 c
Pension Schemes Legislation (Application) Order 2018 SCHEDULE 3
(2) The following provisions of this regulation apply, for the purpose of enabling any right of recovery conferred by section 61 of the 1993 Act to be exercised, where an employed earner (or, by virtue of a connection with the earner, any other person) is entitled to a refund of any payments made under a scheme that was contracted-out in respect of the earner towards the provision of benefits under the scheme (“the refund”). (3) Subject to paragraph (4), where a contributions equivalent premium falls to be paid in respect of the earner under the 1993 Act and the person liable for the refund has been given a notice of delay in accordance with paragraph (5), that person is not to make the refund in whole or in part until after the end of the period of four weeks starting with — (a) the date of payment of the contributions equivalent premium; or (b) the last day of the prescribed period for payment of that premium, whichever occurs first. (4) Paragraph (3) does not apply to so much, if any, of the refund as exceeds the amount certified by the Department under section 63(1)(d) of the 1993 Act66 (certification of amount attributable to reductions of contributions). (5) A notice of delay is a notice in writing given by the trustees of the scheme concerned, relating either to a particular case or to a class of case and containing the following particulars — (a) the name of the earner or such particulars as will sufficiently identify the class of case concerned; (b) such particulars as will sufficiently identify the refund or refunds concerned; and (c) a memorandum in a form approved by the Department giving brief particulars of the effect of paragraphs (3) and (4). (6) Where the trustees of a scheme have given a notice of delay, they are to inform the person to whom the notice was given of the end date of the period during which they may not make a refund to which the notice applies. 14. Refund of a contributions equivalent premium (1) The Department is to refund a contributions equivalent premium if — (a) it was paid in error; (b) the Department is satisfied that a transfer of the earner’s accrued rights will be made in accordance with regulations made under section 2067 (transfer of accrued rights) or section 37A of the 1993 Act; or
to the 1995 Act, paragraph 5 of Schedule 5 to the Child Support, Pensions and Social Security Act 2000 (see SD 379/01), and paragraphs 9 and 12 of Schedule 12 to the 2004 Act. 66 Section 63 is repealed by paragraph 37 of Schedule 13 to the 2014 Act, but saved for certain purposes, see S.I. 2015/1502 (see Schedule 2 to this Order). Section 63 was amended by paragraph 57 of Schedule 5 to the 1995 Act and paragraph 5 of Schedule 5 to the Child Support, Pensions and Social Security Act 2000 (see SD 379/01). 67 Section 20 was amended by section 56 of, and paragraph 2 of Schedule 5 to, the Child Support, Pensions and Social Security Act 2000 (see SD 379/01), S.I 2005/2050 (see SD 744.05), S.I. 2011/1730 (see SD 0927/11), and is amended by paragraph 18 of Schedule 13 to the 2014 Act. c SD No. 2018/0265 Page 33
SCHEDULE 3 Pension Schemes Legislation (Application) Order 2018
(c) the scheme is one under which a member may qualify for benefits by virtue of service either in employed earner’s employment or as a self-employed earner (within the meaning of section 2 of the Contributions and Benefits Act) or both and the Department is satisfied that the earner in respect of whom the premium was paid has completed a period of membership of the scheme as a self-employed earner which, when aggregated with service in employed earner’s employment, amounts to not less than two years. (2) Where a contributions equivalent premium is refunded under paragraph (1), the earner’s accrued rights under the scheme, which were extinguished by payment of the premium, are to be restored. (3) A refund under this regulation is only to be made if an application is made in writing in such form as the Department may reasonably require for that purpose, or by means of an electronic communication in such form as the Department may approve. (4) In paragraph (1)(a), “error” means an error which — (a) was made at the time of payment; and (b) relates to some present or past matter. (5) Where — (a) an earner has been employed concurrently in two or more contracted-out employments, on the termination of one or more of which a contributions equivalent premium has been paid; and (b) the aggregate amount of any such payments has the effect that the Manx National Insurance Fund has gained, by reference to any employment in respect of which such a payment has been made, a greater amount than it would have gained from Class 1 contributions under the Contributions and Benefits Act if those employments had not been contracted-out, there is to be paid out of the Manx National Insurance Fund to the earner (or to the earner’s estate) an amount which bears the same proportion to the amount of the excess as the reduction under section 41(1A) of the 1993 Act68 (as it had effect immediately before the second abolition date) (reduced rates of Class 1 contributions) in the normal percentage of primary Class 1 contributions bears to the total reduction under subsections (1A) and (1B)69 of that section in the total normal percentage of Class 1 contributions. (6) The Department is also to refund a contributions equivalent premium if it is satisfied that — (a) where it was paid in the circumstances mentioned in section 55(2A)(a), (b), (d) or (e) of the 1993 Act, the person in respect of whom it was paid has died, without leaving a widow, widower or surviving civil partner, on or before the later of the days mentioned in sub-paragraphs (a) and (b) respectively of regulation 12(1); or
68 Section 41 is repealed by paragraph 29 of Schedule 13 to the 2014 Act, but saved for certain purposes, see S.I. 2015/1502 (see Schedule 2 to this Order). Subsection (1A) was inserted by section 137 of the 1995 Act, and substituted by paragraph 6 of Schedule 9 to the Welfare Reform and Pensions Act 1999 (see SD 600/00), and amended by paragraphs 35 and 36 of Schedule 1 to the National Insurance Contributions Act 2002 (see SD 802/09). 69 Subsection (1B) was inserted by section 137 of the 1995 Act, and substituted by paragraph 6 of Schedule 9 to the Welfare Reform and Pensions Act 1999 (see SD 600/00).
Page 34 SD No. 2018/0265 c
Pension Schemes Legislation (Application) Order 2018 SCHEDULE 3
(b) where it was paid in the circumstances mentioned in section 55(2A)(c) of the 1993 Act, there are no accrued rights to guaranteed minimum pensions or section 9(2B) rights under the scheme in question in respect of the widow, widower or surviving civil partner in question. 15. Continuation of transitional arrangements for schemes that began winding up before 6th April 1997 Where a scheme that was a salary related contracted-out scheme began winding up before the principal appointed day — (a) regulation 40 (priorities on the winding-up of a scheme) of the Occupational Pension Schemes (Contracting-out) Regulations 198470 continues to have effect in relation to that scheme; and (b) the resources of the scheme must be sufficient to meet the liabilities specified in section 24(1)(c) of the 1993 Act71 (as it had effect on the day the scheme began winding up), such resources being calculated, determined and verified in a manner approved by the Department. 16. Continuation of savings in respect of state scheme premiums The following continue to have effect in relation to any state scheme premium (payment required to be made under section 55(1) of the 1993 Act) which was paid before the principal appointed day — (a) regulations 18 to 26, 34, 44, 45, 47, 48 and 49 of the Occupational Pension Schemes (Contracting-out) Regulations 1984; (b) the Occupational Pension Schemes (Contracted-out Protected Rights Premiums) Regulations 198772.
Part 3 - Additional requirements in relation to rights attributable to contracted-out employment on and after 6th April 1997 17. Alteration of scheme rules (1) The rules of a scheme may be altered in relation to section 9(2B) rights only if — (a) following the alteration, the scheme provides benefits for the earner and for the earner’s widow, widower or surviving civil partner, in respect of the period of pensionable service to which the alteration relates, that are at least equal to the benefits that would have been provided by a reference scheme (within the meaning of section 12B(2) of the 1993 Act73 (reference scheme) as it had effect immediately before the second abolition date); (b) to (d) omitted. (2) and (3) Omitted. 18. Payment of a lump sum instead of a pension
70 S.I. 1984/380. See S.I. 1996/1172 (see SD 651/97), regulation 73, for previous transitional arrangements. 71 Section 24 was repealed by paragraphs 18 and 32 of Schedule 5 to the 1995 Act. 72 S.I. 1987/1103. See S.I. 1996/1172, regulation 77, for previous savings. 73 Section 12B is repealed by paragraph 11 of Schedule 13 to the 2014 Act, but saved for certain purposes, see S.I. 2015/1502 (see Schedule 2 to this Order). Section 12B was inserted by section 136 of the 1995 Act. There are amendments not relevant to these regulations. c SD No. 2018/0265 Page 35
SCHEDULE 3 Pension Schemes Legislation (Application) Order 2018
(1) A relevant scheme74 may not provide for the payment of a lump sum instead of a pension that is attributable to section 9(2B) rights, unless the payment to be made satisfies the tax-approved condition and the payment is — (a) permitted by the lump sum rule in paragraph 1 of Schedule 2 and qualifies as — (i) a pension commencement lump sum for the purposes of paragraph 3 of that Schedule [...]; (ii) a serious ill-health lump sum for the purposes of paragraph 6 of that Schedule; (iii) omitted; (iv) a trivial commutation lump sum for the purposes of paragraph 7 of that Schedule; or (v) a winding-up lump sum for the purposes of paragraph 8 of that Schedule; or (b) permitted by the lump sum death benefit rule in paragraph 2 of Schedule 2 and qualifies as a trivial commutation lump sum death benefit for the purposes of paragraph 10 of that Schedule [...]; [...] (c) omitted (2) Where, under the scheme — (a) an earner qualifies for a lump sum payment on the ground of serious ill-health; and (b) the earner’s widow, widower or surviving civil partner qualifies for a pension (“a survivor’s pension”), the scheme is to continue to provide for a survivor’s pension notwithstanding the payment of a lump sum to the earner. 19. Forfeiture of accrued rights Omitted.
Part 4 - Additional requirements in relation to guaranteed minimum pensions 20. Alteration of scheme rules The rules of a scheme may be altered in relation to a guaranteed minimum under section 1475 (earner’s guaranteed minimum) or 1776 (minimum pensions for widows and widowers) of the 1993 Act only if the alteration would not —
74 See section 37A(2) of the 1993 Act, inserted by the 2014 Act. 75 Section 14 is amended by paragraph 15 of Schedule 13 to the 2014 Act. 76 Section 17 is amended by paragraph 17 of Schedule 13 to the 2014 Act, paragraph 1 of Schedule 5 to the Child Support, Pensions and Social Security Act 2000 (see SD 379/01), section 284(2) of the 2004 Act (see SD 220/05), S.I. 2005/2050 (see SD 744/05), section 14(2) of the Pensions Act 2007 (see SD 193/09), SD 2016/0193 and SD 2016/0199.
Page 36 SD No. 2018/0265 c
Pension Schemes Legislation (Application) Order 2018 SCHEDULE 3
(a) affect any of the matters dealt with in Part III of the 1993 Act (schemes that were contracted-out etc. and effects on members’ state scheme rights), or any regulations made under that Part, that relate to guaranteed minimum pensions, in a manner that would or might adversely affect any entitlement or accrued rights of any member of the scheme acquired before the alteration takes effect; (b) affect any of the matters dealt with in sections 87 to 92 of the 1993 Act77 (protection of increases in guaranteed minimum pensions) or sections 109 and 110 of that Act78 (annual increases of guaranteed minimum pensions) or any matters dealt with in regulations made under any of those provisions. 21. Circumstances for the purposes of section 17(6) of the 1993 Act in which widower’s, widow’s or surviving civil partner’s guaranteed minimum pension is payable (1) In addition to providing for a widower’s, widow’s or surviving civil partner’s pension to be payable in the circumstances specified in section 17(4A) of the 1993 Act79, a scheme that was a salary related contracted-out scheme is to make provision for such a pension to be payable if — (a) the widower, widow or surviving civil partner and the earner were both over pensionable age when the earner died; (b) the widower, widow or surviving civil partner is either residing with a child, or is entitled to child benefit in respect of a child, who is — (i) a child of the widower, widow or surviving civil partner and the earner; (ii) a child in respect of whom the earner was, immediately before the earner’s death, entitled to child benefit, or would have been so entitled, if the child had not been absent from the Island; or (iii) if the widower, widow or surviving civil partner and the earner were residing together immediately before the earner’s death, a child in respect of whom the widower, widow or surviving civil partner was, at that time, entitled to child benefit, or would have been so entitled, if the child had not been absent from the Island; or (c) the widower, widow or surviving civil partner attained the age of 45 — (i) before the earner died; or (ii) during a period when the circumstances mentioned in sub-paragraph (b) existed. (2) For the purposes of this regulation “child benefit” has the same meaning as in the Contributions and Benefits Act80.
77 Section 87 was amended by paragraph 28 of Schedule 4 to the Pensions Act 2007 (see SD 193/09) and is amended by paragraph 38 of Schedule 13 to the 2014 Act. Other amendments to sections 87 to 92 are made by S.I. 2005/2050 (see SD 744/05). 78 Section 109 was substituted by SD 0614/12. Section 109(3A) is amended by paragraph 40 of Schedule 13 to the 2014 Act. Section 110 was amended by section 53(4) of the 1995 Act and by S.I. 2005/2050 (see SD 744/05). 79 Paragraph (4A) of section 17 was inserted by paragraph 1(1) of Schedule 5 to the Child Support, Pensions and Social Security Act 2000 (see SD 379/01) and amended by S.I. 2005/2050 (see SD 744/05) and SD 2016/0193. 80 See section 141. c SD No. 2018/0265 Page 37
SCHEDULE 3 Pension Schemes Legislation (Application) Order 2018
22. Period for the purposes of section 17(6) of the 1993 Act for which widower’s, widow’s or surviving civil partner’s guaranteed minimum pension is payable (1) Where a pension is payable by virtue of regulation 21(1)(a), the scheme is to make provision for the pension to be payable for the remainder of the widower’s, widow’s or surviving civil partner’s life. (2) Subject to paragraph (4), where a pension is payable by virtue of regulation 21(1)(b) but not by virtue of regulation 21(1)(a) or (c), the scheme is to make provision for the pension to be payable for the period during which the circumstances described in regulation 21(1)(b) continue to exist. (3) Subject to paragraph (4), where a pension is payable by virtue of regulation 21(1)(c), but not by virtue of regulation 21(1)(a), the scheme is to make provision for the pension to be payable for the remainder of the widower’s, widow’s or surviving civil partner’s life. (4) Subject to paragraph (5), there is excluded from the periods prescribed by paragraphs (2) and (3) any period — (a) after the widower or widow has remarried whilst under pensionable age, or the surviving civil partner has married whilst under that age; (b) after the formation of a civil partnership by the widower or widow whilst under pensionable age, or the formation of a subsequent civil partnership by the surviving civil partner whilst under that age; (c) during which the widower, widow or surviving civil partner is under pensionable age and he or she and another person are living together as a married couple; (d) after the widower, widow or surviving civil partner has attained pensionable age if, immediately before he or she attained that age, he or she and another person were living together as a married couple. (5) The following provisions do not apply where a man became a widower before 5th December 2005 — (a) paragraph (4)(a) so far as it relates to a marriage or remarriage involving two people of the same sex; (b) paragraph (4)(b); and (c) paragraphs (4)(c) and (4)(d) so far as they relate to the living together of two people of the same sex. 23. Fixed rate revaluation of guaranteed minimum pensions secured by insurance policies or annuity contracts A scheme may make provision by virtue of section 16(2) of the 1993 Act81 (revaluation of earnings factors for the purposes of section 14: early leavers etc.) for those of its members whose guaranteed minimum pensions are, or are to be, appropriately secured (within the meaning of section 19(3) of the 1993 Act), even though the same provision is not made for other members of the scheme. 24. Fixed rate revaluation of guaranteed minimum pensions for early leavers
81 Section 16(2) is substituted by paragraph 16 of Schedule 13 to the 2014 Act. Section 16(2) is saved for certain purposes by S.I. 2015/1502 (see Schedule 2 to this Order).
Page 38 SD No. 2018/0265 c
Pension Schemes Legislation (Application) Order 2018 SCHEDULE 3
(1) This regulation applies where a scheme provides, in accordance with section 16(2) of the 1993 Act (as substituted by paragraph 16 of Schedule 13 to the Pensions Act 2014), for a person’s earnings factors to be determined for the purposes of section 14(2) of the 1993 Act by reference to the last order to come into force under section 148 of the Social Security Administration Act 199282 as it has effect in Great Britain before the end of the last service tax year. (2) Omitted (3) The scheme may make provision which is different to that made by virtue of paragraph (2) with respect to — (a) members whose rights to guaranteed minimum pensions under the scheme arise in respect of a transfer or transfer payment made in accordance with section 20(1) of the 1993 Act83 or regulations made under that provision; (b) members whose guaranteed minimum pensions are, or are to be, appropriately secured within the meaning of section 19(3) of the 1993 Act. 25. Payment of a lump sum instead of a pension (1) The scheme may provide for the payment of a lump sum instead of a pension that the scheme is required to provide in accordance with section 1384 or 17 of the 1993 Act if — (a) a guaranteed minimum pension has become payable (but see also paragraph (3)); and (b) the payment of a lump sum satisfies the tax-approved condition and the payment fulfils the conditions in paragraph (2). (2) The conditions are that the payment is — (a) permitted by the lump sum rule in paragraph 1 of Schedule 2 and qualifies as — (i) a trivial commutation lump sum for the purposes of paragraph 7 of that Schedule [...]; or (ii) a winding-up lump sum for the purposes of paragraph 8 of that Schedule; or (b) permitted by the lump sum death benefit rule in paragraph 2 of Schedule 2 and qualifies as a trivial commutation lump sum death benefit for the purposes of paragraph 10 of that Schedule [...]; [...] (c) omitted (3) The condition in paragraph (1)(a) does not apply in cases where — (a) the scheme is being wound up or an earner retires before pensionable age; (b) a premium under section 55(2) of the 1993 Act (contributions equivalent premium) has been paid or treated as paid or the scheme has made the provision mentioned in section 16(2) and (3)85 of the 1993 Act; and
82 1992 c.5. 83 Section 20(1) is amended by paragraph 18 of Schedule 13 to the 2014 Act, and was amended by paragraph 2 of Schedule 5 to the Child Support, Pensions and Social Security Act 2000 (see SD 379/01). 84 Section 13 is amended by paragraph 14 of Schedule 13 to the 2014 Act, and was amended by section 14 of the Pensions Act 2007 (see SD 193/09). 85 Section 16(3) was amended by paragraph 28(a) of Schedule 5 to the 1995 Act. c SD No. 2018/0265 Page 39
SCHEDULE 3 Pension Schemes Legislation (Application) Order 2018
(c) the conditions in paragraph (4) are met. (4) The conditions are — (a) the aggregate amount of the benefits that have accrued to the earner at the date of winding-up or, as the case may be, of the earner’s retirement, increased — (i) in accordance with section 16(2) and (3) of the 1993 Act; or (ii) in a case where section 16(2) and (3) applies, to the amount that would have been payable at pensionable age, is to be treated as the amount of benefits currently payable to the earner under the scheme; (b) in the case of an earner who retires before normal pension age, commutation is not permitted before the date on which benefits become payable to the earner under the scheme’s early retirement provisions; (c) in cases where the earner is a member of more than one scheme relating to the same employment, all those schemes are being wound up or, as the case may be, the earner is treated by all those schemes as having retired and, in each case, all those schemes have paid a contributions equivalent premium or have made the provisions mentioned in section 16(2) and (3) of the 1993 Act. (5) Subject to paragraph (6), the scheme may provide for the payment of a lump sum instead of a pension that the scheme is required to provide in accordance with section 13 or 17 of the 1993 Act if the payment — (a) satisfies the tax-approved condition; (b) is permitted by the lump sum rule in paragraph 1 of Schedule 2; and (c) qualifies as a serious ill-health lump sum for the purposes of paragraph 6 of that Schedule [...]. (6) Where — (a) under the scheme, an earner qualifies for a lump sum payment on the ground of serious ill-health; and (b) the scheme also provides for the payment of a guaranteed minimum pension to the widow, widower or surviving civil partner of the earner (“a survivor’s pension”), the scheme is to continue to include provision for a survivor’s pension notwithstanding the payment of a lump sum to the earner. 26. Suspension and forfeiture of guaranteed minimum pension (1) The scheme may provide for an earner’s or an earner’s widow’s, widower’s or surviving civil partner’s guaranteed minimum pension to be suspended if — (a) the person entitled to payments giving effect to those rights (“the pensioner”) is, in the opinion of the trustees of the scheme, unable to act by reason of mental disorder, and there is provision in the scheme that requires that, in those circumstances, sums equivalent to the guaranteed minimum pension — (i) must be paid or applied for the maintenance of the pensioner, except in so far as they are not, in the opinion of the trustees, required for that purpose;
Page 40 SD No. 2018/0265 c
Pension Schemes Legislation (Application) Order 2018 SCHEDULE 3
(ii) may, in so far as they are not in the opinion of the trustees required for the maintenance of the pensioner, be paid or applied for the maintenance of any dependants of the pensioner; (iii) must, in so far as such sums are not in the opinion of the trustees required for the maintenance of the pensioner or of any dependant of the pensioner, be held by the trustees for the pensioner until the pensioner is again able to act, or if the pensioner dies before that happens, for the pensioner’s estate; (b) the pensioner is in prison or detained in legal custody and there is provision in the scheme for sums equivalent to the guaranteed minimum pension to be paid or applied during such circumstances for the maintenance of such one or more of the pensioner’s dependants as the trustees of the scheme may in their discretion determine; (c) the earner is re-employed by the employer by whom the earner was previously employed in contracted-out employment in respect of which the guaranteed minimum pension became payable and there is provision in the scheme for the guaranteed minimum pension that becomes payable when the suspension is lifted to be increased in accordance with section 15(1) of the 1993 Act. (2) The scheme may provide for an earner’s or an earner’s widow’s, widower’s or surviving civil partner’s guaranteed minimum pension (whether current or prospective) to be forfeited if — (a) the person entitled to that pension has been convicted of — (i) an offence of treason; or (ii) one or more offences under the Official Secrets Acts 1911 to 198986 for which the person has been sentenced on the same occasion to a term of imprisonment of, or to two or more consecutive terms amounting in aggregate to, at least ten years; (b) in the case of a widow’s, widower’s or surviving civil partner’s guaranteed minimum pension, the earner by reference to whose contracted-out employment that pension is payable has been convicted of an offence of treason, or has been convicted of an offence or offences and has been sentenced to a term or terms of imprisonment as set out in subparagraph (a)(ii); (c) in the case of a guaranteed minimum pension payable under a scheme for members of Her Majesty’s forces, being a scheme for which the Secretary of State is responsible, the person entitled to that pension or, as the case may be, the member of the forces whose widow, widower or surviving civil partner is currently or prospectively entitled to that pension has, in the opinion of the Secretary of State, committed an act which is gravely prejudicial to the defence, security or other interests of the State; (d) in the case of any payment of guaranteed minimum pension for which a claim has not been made, a period of at least eight years has elapsed from the date on which that payment became due;
86 1911 c.28; 1920 (c.75); 1939 (c.121); 1989 (c.6). c SD No. 2018/0265 Page 41
SCHEDULE 3 Pension Schemes Legislation (Application) Order 2018
(e) in the case of a widow’s, widower’s or surviving civil partner’s guaranteed minimum pension, that person is convicted of the offence of murder or manslaughter of the earner by reference to whose contracted-out employment that pension is payable, or any other offence of which unlawful killing of that member is an element. (3) For the purposes of paragraph (2)(e), “unlawful killing” includes unlawfully aiding, abetting, counselling or procuring the death of a person. 27. Conversion into other benefits: actuarial equivalence (1) For the purposes of Condition 1 of section 24B of the 1993 Act87 (the conversion conditions), actuarial equivalence is to be determined in accordance with this regulation. (2) The trustees are responsible for determining actuarial equivalence. (3) In determining actuarial equivalence, the trustees must — (a) obtain advice from the actuary appointed for the scheme in accordance with section 17(1)(b) of the Retirement Benefits Schemes Act 2000 (“the actuary”) about what assumptions are appropriate at the conversion date; (b) consider that advice; (c) decide what assumptions are appropriate at the conversion date and, if the trustees later think it is necessary, change that decision; and (d) arrange for the actuary to calculate the actuarial values of the post-conversion benefits and the pre-conversion benefits in accordance with paragraph (4). (4) In calculating the actuarial values mentioned in paragraph (3)(d), the actuary must — (a) use the assumptions chosen by the trustees under paragraph (3)(c); and (b) ignore the value of any — (i) benefits that have been commuted; (ii) amounts that have been paid in respect of any benefits; (iii) amounts in respect of any benefits that, before the conversion date, became due to be paid; and (iv) discretionary benefits that might be awarded in the future. (5) When the actuarial values mentioned in paragraph (3)(d) have been calculated, the actuary must send the trustees a certificate if the post-conversion benefits are actuarially at least equivalent to the pre-conversion benefits. (6) The certificate is to — (a) state that — (i) the calculations have been completed; and (ii) the post-conversion benefits are actuarially at least equivalent to the pre- conversion benefits; and (b) be sent to the trustees no later than three months after the calculations have been completed.
87 Section 24B was inserted by section 14 of the Pensions Act 2007 (see SD 193/09).
Page 42 SD No. 2018/0265 c
Pension Schemes Legislation (Application) Order 2018 SCHEDULE 3
Part 5 - Amendment of the Occupational Pension Schemes (Contracting- out) Regulations 1996 28. Amendments relating to certification of employments for a period before the second abolition date (1) The 1996 Regulations are amended as follows. (2) In regulation 1(2) (interpretation) — (a) in the definition of “the 1993 Act”, at the end insert “as it had effect immediately before the second abolition date88 (except where otherwise stated)”; (b) for the definition of “overseas scheme”89 substitute — ““overseas scheme” means an occupational pension scheme which has its main administration outside the Isle of Man but does not include a scheme which was contracted-out in Great Britain by virtue of satisfying section 9(2) of the 1993 Act as it had effect in Great Britain;”; and (c) in paragraph (b)(ii) of the definition of “section 9(2B) rights”90, before “abolition date” insert “first”. (3) In regulation 3 (notices by employers of intended election), in paragraph (2)(b) after “specify the date” insert “(being a date before the second abolition date)”. (4) In regulation 6 (information to be included in an election) — (a) in paragraph (1)(d), after “shall have effect” insert “(being a date before the second abolition date)”; and (b) in paragraph (3), for sub-paragraph (a) substitute — “(a) [...] written confirmation or evidence that the actuary is satisfied that the resources of the scheme are sufficient to meet the requirement prescribed in regulation 18 (as it had effect immediately before the second abolition date) (requirement as to resources of the scheme); and” (5) In regulation 8 (issue of contracting-out certificates) — (a) in paragraph (2)(d) after the words [...] “is to have effect,” insert “, being a date before the second abolition date”; and (b) after paragraph (2) insert — “(3) The Department is not to issue a contracting-out certificate unless it considers it appropriate to do so and the scheme satisfied any contracting-out conditions or requirements which applied to the scheme from the date on which the certificate is to have effect.”. (6) In regulation 9(5)(b) (notice of date from which variation or surrender of a contracting- out certificate is to have effect), after “specify the date” insert “(being a date before the second abolition date)”.
88 See section 7A of the 1993 Act, inserted by paragraph 6 of Schedule 13 to the 2014 Act. 89 This definition was substituted by SD 2016/0017. 90 This definition was substituted by S.I. 1997/786 (see SD 207/00) and amended by S.I. 1999/3198 (see SD 267/00) and 2011/1246 (see SD 0927/11). c SD No. 2018/0265 Page 43
SCHEDULE 3 Pension Schemes Legislation (Application) Order 2018
(7) In regulation 10 (special provision with regard to elections for the issue, variation or surrender of certificates where the employment remains contracted out) — (a) in the heading after “where” insert “(before the second abolition date)”; (b) in paragraph (1)91 — (i) omit “regulation 71 (elections for replacement certificates by salary- related schemes during transitional period) and to”; and (ii) in sub-paragraph (c) at the end insert “when the election takes effect”; and (c) in paragraph (3)(c), after “the date” insert “(being a date before the second abolition date)”. (8) In regulation 15 (further information and change of circumstances), omit “or an employer to whom such a certificate has been issued”. (9) Omitted 29. Amendments relating to cessation of contracting-out before the second abolition date (1) The 1996 Regulations are amended as follows. (2) In regulation 4492 (notifications to the Department) — (a) in paragraph (1) — (i) after “treated as terminated” insert “before the second abolition date”; and (ii) after “regulation 43” insert “(as it had effect immediately before that date)”; (b) in paragraph (2) for “A notification required to be given under paragraph (1) may be given at any time within the period of one month before the expected date of termination but if not so given” substitute “If a notification required to be given under paragraph (1) was not given before the expected date of termination it”; (c) in paragraph (4) after “any case where” insert “, before the second abolition date,”; and (d) in paragraph (7) — (i) for “to whom a contracting-out certificate has been issued” substitute “to whom a contracting-out certificate was issued”; and (ii) for “relates” in both places where it occurs, substitute “related”. (3) In regulation 4593 (approval of arrangements for schemes ceasing to be contracted- out) — (a) in paragraph (1) — (i) omit the words from the beginning to “principal appointed day),”; and (ii) after “arrangements” in the final place where it occurs, insert “for cessation of contracting-out before the second abolition date”;
91 Paragraph (1) was amended by S.I. 2011/1245 and 2011/1246 (see SD 0927/11). 92 Regulation 44 was amended by S.I. 2011/1246 (see SD 0927/11). 93 Regulation 45 was amended by S.I. 1997/819 (see SD 267/00) and S.I.s 2005/2050 (see SD 744/05), 2011/1245 and 2011/1246 (see SD 0927/11).
Page 44 SD No. 2018/0265 c
Pension Schemes Legislation (Application) Order 2018 SCHEDULE 3
(b) in paragraph (2) for “section 12C of the 1993 Act (transfer or discharge of section 9(2B) rights)” substitute “section 37A of the 1993 Act (transfer of liabilities etc.: schemes contracted-out on or after 6th April 1997)”; and (c) in paragraph (3)(a), after “the scheme must” in the first place in which those words appear insert “, until the second abolition date,”. (4) In regulation 4694 (supervision of schemes that have ceased to contract out), in the heading at the end insert “before the second abolition date”. (5) In regulation 47 (circumstances in which the Department may vary or cancel a contracting-out certificate) — (a) in paragraph (1) — (i) for “applies” substitute “applied”; and (ii) after “from such date” insert “(being a date before the second abolition date)”; and (b) in paragraph (2)(a) and (b), before “salary-related contracted-out scheme” insert “scheme that was a”. (6) In regulation 76(1) (prevention of recovery by employers of Class 1 contributions where certificate cancelled under section 36(3) of the 1993 Act) at the end insert “before the second abolition date”. (7) In regulation 78 (revocations), for “73 and 77” substitute “15 and 16 of the Occupational Pension Schemes (Schemes that were Contracted-out) (No.2) Regulations 2015”.
Part 6 - Amendment of the Contracting-out (Transfer and Transfer Payment) Regulations 1996 30. Revaluation after transfer from another scheme (1) The Contracting-out (Transfer and Transfer Payment) Regulations 199695 are amended as follows. (2) Omitted (3) After regulation 13A (modification of section 12C of the 1993 Act), insert the following — “13B. Modification of section 16: revaluation after transfer from another scheme (1) This regulation applies where the following conditions are satisfied — (a) on or after 5th April 1983, a transfer of the earner’s accrued rights to guaranteed minimum pensions under a scheme (“scheme A”) was made (under or by virtue of section 20(1) of the 1993 Act) to another scheme (“scheme B”) that was at the time a contracted-out scheme; (b) the earner commenced employment that was contracted-out by reference to scheme B;
94 Regulation 46 was amended by S.I. 1997/819 (see SD 267/00) and S.I. 2011/1246 (see SD 0927/11). 95 S.I. 1996/1462 (see SD 23/98). Regulation 13A was inserted by S.I. 1997/786 (see SD 207/00). c SD No. 2018/0265 Page 45
SCHEDULE 3 Pension Schemes Legislation (Application) Order 2018
(c) by virtue of section 14(1) of the 1993 Act, as modified by regulation 12(a), the calculation, under the provisions of scheme B, of the earner’s guaranteed minimum pension for the purposes of section 14(2) falls to include earnings factors arising out of contracted-out employment in any period of linked qualifying service96 that was contracted-out employment by reference to scheme A; and (d) either — (i) scheme B provides for the earnings factors to be increased at the rate by which they fell to be increased under the provisions of scheme A, or would have fallen to be increased under the provisions of that scheme relating to an earner whose pensionable service under the scheme terminated before the earner attained pensionable age; (ii) if scheme A provided for those earning factors to be increased by reference to orders under section 148 of the Social Security Administration Act 1992 as it has effect in Great Britain, scheme B provides for them to be increased in accordance with the provisions of section 16(2) and (3) of the 1993 Act; (iii) if scheme A provided for those earnings factors to be increased in accordance with the provisions of section 16(2) and (3) of the 1993 Act, scheme B includes provision for them to be increased by reference to orders under section 148 of the Social Security Administration Act 1992 as it has effect in Great Britain from the date of termination of the earner’s pensionable service under the scheme; or (iv) if a transfer of the earner’s accrued rights to scheme B is not one to which paragraph (iii) applies and those rights were previously being increased at a rate calculated by reference to orders under section 148 of the Social Security Administration Act 1992 as it has effect in Great Britain, scheme B includes provision for those earnings factors to be increased at a rate calculated otherwise than by reference to orders under that section. (2) In paragraph (1), references to earnings factors include the weekly equivalent mentioned in section 14(2) of the 1993 Act. (3) Where this regulation applies section 16(1) of the 1993 Act applies as if there were added at the end “or, in respect of the earner’s earnings factor (or the weekly equivalent mentioned in section 14(2)) for any relevant year in a period of linked qualifying service, shall be taken to be that factor (or weekly equivalent) as increased in accordance with the provisions of the scheme under regulations made under subsection (3)”. (4) Where this regulation applies, the modifications of section 16(2) and (3) contained in paragraph (5) apply where earnings factors of an earner whose accrued rights to guaranteed minimum pensions, including such rights derived from linked qualifying service, have been transferred under or by virtue of section 20(1) of the 1993 Act to another scheme that was contracted-out.
96 See section 179 of the 1993 Act.
Page 46 SD No. 2018/0265 c
Pension Schemes Legislation (Application) Order 2018 SCHEDULE 3
(5) The modifications referred to in paragraph (4) are that section 16(2) and (3) of the 1993 Act applies as if it permitted that scheme to provide for those earnings factors to be determined for the purpose of section 14(2) of the 1993 Act without reference to any order coming into force under section 148 of the Social Security Administration Act 1992 as it has effect in Great Britain — (a) where such earnings factors had previously fallen to be determined by reference to orders under section 148 of the Social Security Administration Act 1992 as it has effect in Great Britain, after the relevant year in which the earner’s pensionable service under the scheme, from which those rights were transferred, was terminated; or (b) in any other case, in and after the relevant year in which that service was terminated, and as if section 16(3) of the 1993 Act had effect accordingly, save, in a case to which paragraph (b) applies, for treating the reference to the amount of the increase in section 16(3) as a reference to the amount by which the earnings factors relevant to the weekly equivalent would be increased.”.
Part 7 - Revocation and savings of the Occupational Pension Schemes (Contracting-out) Regulations 1996 31. Revocations taking effect on the second abolition date The following provisions of the 1996 Regulations are revoked — (a) regulation 11; (b) regulations 16 to 21; (c) regulations 41 to 43; (d) regulation 48(5) and (7); (e) regulations 49 to 61; (f) regulation 62 (but see regulation 32); (g) regulation 63; (h) regulations 65 and 66 (but see regulation 32); (i) regulations 67 to 69A; (j) regulations 70, 71, 73 and 74; (k) regulations 76A and 76B; (l) regulation 77. 32. Saving of provisions relating to the revaluation of Guaranteed Minimum Pensions
c SD No. 2018/0265 Page 47
SCHEDULE 3 Pension Schemes Legislation (Application) Order 2018
Regulations 62 (fixed rate revaluation of guaranteed minimum pensions for early leavers)97, 65 (modification of section 16 of the 1993 Act) and 66 (circumstances in which the modifications in regulation 65 apply) of the 1996 Regulations are saved for the purposes of an earner whose service in contracted-out employment ended before the second abolition date. 33. Revocations taking effect on 6th April 2022 The following provisions of the 1996 Regulations are revoked — (a) regulations 12 to 14; (b) regulation 48(1) to (4); (c) omitted.
Part 8 - Provision for Northern Ireland 34. Interpretation of Part 8 (Omitted) 35. Restoration of state scheme rights: Northern Ireland (Omitted) 36. Contributions equivalent premiums: prescribed person in Northern Ireland (Omitted) 37. Notification of requirement to pay a contributions equivalent premium: Northern Ireland (Omitted) 38. Cases where payment of a contributions equivalent premium is not required: Northern Ireland (Omitted) 39. Elections to pay contributions equivalent premiums: Northern Ireland (Omitted) 40. Payment of a contributions equivalent premium: Northern Ireland (Omitted) 41. Payment in lieu of benefit and delay in refund for the purposes of the employer’s right of recovery: Northern Ireland (Omitted) 42. Refund of a contributions equivalent premium: Northern Ireland (Omitted) 43. Continuation of savings in respect of state scheme premiums: Northern Ireland (Omitted) 44. Revocations of the Occupational Pension Schemes (Contracting-Out) Regulations (Northern Ireland) 1996 taking effect on the second abolition date (Omitted)
Part 9 - Revocation of part of the Occupational Pension Schemes (Schemes that were Contracted-out) Regulations 2015 45. Revocation of part of the Occupational Pension Schemes (Schemes that were Contracted-out) Regulations 2015 (Omitted)
Signed by authority of the Secretary of State for Work and Pensions
Altmann Minister of State,
97 Regulation 62 was amended by S.Is. 2002/681 (see SD 151/03), 2007/814 (SD 369/07), 2011/1245 (SD 0927/11) and 2012/542 (SD 0282/12).
Page 48 SD No. 2018/0265 c
Pension Schemes Legislation (Application) Order 2018 SCHEDULE 3
9th September 2015 Department for Work and Pensions
c SD No. 2018/0265 Page 49
SCHEDULE 3 Pension Schemes Legislation (Application) Order 2018
Schedule 1- Provisions conferring powers exercised in making these Regulations Preamble The following provisions of the 1993 Act — section 798 section 999 section 11(5)100 section 12A(4)101 section 12D102 section 16(3) and (4) section 17(6) section 20(1) and (3)103 section 21(1) and (2)104 section 24C105 section 25(2)106 section 34107 section 36(6)108
98 Section 7 was amended by section 136 of the 1995 Act, and sections 15(3)(a) and 27(2) of, and paragraphs 1 and 2 of Schedule 4 to, and Part 6 of Schedule 7 to, the Pensions Act 2007. Section 7 is repealed by paragraph 5 of Schedule 13 to the 2014 Act, but saved for certain purposes see S.I. 2015/1502. 99 Section 9 was amended by section 136 of, and paragraph 21 of Schedule 5 to, the 1995 Act, paragraph 35 of Schedule 1 to the Social Security Contributions (Transfer of Functions, etc.) Act 1999, section 283 of the 2004 Act, S.I. 2006/745 and sections 15(3)(a) and 27(2) of, and paragraphs 1 and 4 of Schedule 4 to, and Part 6 of Schedule 7 to, the Pensions Act 2007. Section 9 is repealed by paragraph 9 of Schedule 13 to the 2014 Act, but saved for certain purposes see S.I. 2015/1502. 100 Section 11(5) was amended by paragraph 37 of Schedule 1 to the Social Security Contributions (Transfer of Functions, etc.) Act 1999, and section 1(2)(a) of the Employment Rights (Dispute Resolution) Act 1998 (c.8). Section 11 is repealed by paragraph 9 of Schedule 13 to the 2014 Act, but saved for certain purposes see S.I. 2015/1502. 101 Section 12A was inserted by section 136 of the 1995 Act, and amended by S.I. 2005/2050, and paragraph 5 of Schedule 5, and Part 8 of Schedule 7 to the Pensions Act 2007. It is repealed by paragraph 11 of Schedule 13 to the 2014 Act, but saved for certain purposes see S.I. 2015/1502. 102 Section 12D was inserted by section 136 of the 1995 Act. It is repealed by paragraph 11 of Schedule 13 to the 2014 Act, but saved for certain purposes see S.I. 2015/1502. 103 Section 20(1) was amended by paragraph 2 of Schedule 5 to the Child Support, Pensions and Social Security Act 2000. Section 20(3) was amended by sections 15(3)(a) and 27(2) of, and paragraphs 46 and 48 of Schedule 4 to, and Part 7 of Schedule 7 to, the Pensions Act 2007, and S.I. 2011/1730. 104 Section 21 was amended by section 284(1) of the 2004 Act and S.I. 2005/2050. 105 Section 24C was inserted by section 14(3) of the Pensions Act 2007. 106 Section 25(2) was substituted by paragraph 33(b) of Schedule 5 to the 1995 Act, and amended by paragraph 40 of Schedule 1 to the Social Security Contributions (Transfer of Functions, etc.) Act 1999. 107 Section 34 is repealed by paragraph 22 of Schedule 13 to the Pensions Act 2014, but saved for certain purposes see S.I. 2015/1502. It was amended by section 151 of the 1995 Act, paragraph 45 of Schedule 1 to the Social Security Contributions (Transfer of Functions etc.) Act 1999, sections 15(3)(a) and 27(2) of, and paragraphs 1 and 15 of Schedule 4 to, and Part 6 of Schedule 7 to, the Pensions Act 2007. 108 Section 36 is repealed by paragraph 22 of Schedule 13 to the Pensions Act 2014, but saved for certain purposes see S.I. 2015/1502. Section 36(6) was amended by S.I. 1996/1172.
Page 50 SD No. 2018/0265 c
Pension Schemes Legislation (Application) Order 2018 SCHEDULE 3 section 37(1) section 37A(1)(c) section 50(1B)109 section 51(2) and (4) section 53(3)110 section 55(2), (2B) and (2C) section 56(2)111 section 57(1) and (2) section 61(7) and (11) section 155112 section 156(2)113 section 181(1) and (2)114 section 182(2) and (3) section 183(1)115 Schedule 2, Part I116. [...] The following provisions of the 1995 Act — section 92(6) section 174(3).
Schedule 2 - The lump sum and lump sum death benefit rules and lump sums and lump sum death benefits Regulation 2(3)
109 Section 50 is repealed by paragraph 33 of Schedule 13 to the 2014 Act, but saved for certain purposes see S.I. 2015/1502. Section 50(1B) was inserted by paragraph 45(b) of Schedule 5 to the 1995 Act. 110 Section 53(3) is repealed by paragraph 36 of Schedule 13 to the 2014 Act, but saved for certain purposes see S.I. 2015/1502. It was amended by paragraph 48(c) of Schedule 5 to the 1995 Act, paragraph 52 of Schedule 1 to the Social Security Contributions (Transfer of Functions, etc.) Act 1999, and S.I. 2011/1730. 111 Section 56 is repealed by paragraph 37 of Schedule 13 to the 2014 Act, but saved for certain purposes see S.I. 2015/1502. Section 56(2) was amended by paragraph 51(a) of Schedule 5 to the 1995 Act, and paragraph 54 of Schedule 1 to the Social Security Contributions (Transfer of Functions, etc.) Act 1999. 112 Section 155 was amended by paragraph 65 of Schedule 5 to the 1995 Act, paragraph 59 of Schedule 1 to the Social Security Contributions (Transfer of Functions, etc.) Act 1999, and S.I. 2011/1730. 113 Section 156 was substituted by paragraph 9 of Schedule 5 to the Child Support, Pensions and Social Security Act 2000, and amended by S.I. 2011/1730. 114 Section 181(2) was amended by paragraph 44(b) of Schedule 3 to the 1995 Act. 115 Section 183(1) was amended by paragraph 79 of Schedule 5, paragraph 15(a) of Schedule 6, and Parts 3 and 4 of Schedule 7, to the 1995 Act. 116 Paragraphs 1 to 4 and 6 to 8 of Part I of Schedule 2 are repealed by, and paragraph 5 of that Part is amended by, paragraph 46 of Schedule 13 to the 2014 Act, but saved for certain purposes see S.I. 2015/1502. Part 1 of Schedule 2 was amended by section 141 of, and paragraph 84 of Schedule 5, and Part 3 of Schedule 7 to, the 1995 Act, and paragraphs 46 and 59 of Schedule 4 to the Pensions Act 2007. c SD No. 2018/0265 Page 51
SCHEDULE 3 Pension Schemes Legislation (Application) Order 2018
Part 1 – The lump sum and lump sum death benefit rules Lump sum rule 1. (1) This is the rule relating to the payment of lump sums by an occupational pension scheme to a member of the scheme ("the lump sum rule"). (2) Under the lump sum rule no lump sum may be paid other than — (a) a pension commencement lump sum, (b) a serious ill-health lump sum, (c) a trivial commutation lump sum, or (d) a winding-up lump sum. (3) A person becomes entitled to a lump sum under an occupational pension scheme — (a) in the case of a pension commencement lump sum, immediately before the person becomes entitled to the pension in connection with which it is paid, and (b) in any other case, when the person acquires an actual (rather than a prospective) right to receive the lump sum. Lump sum death benefit rule 2. (1) This is the rule relating to the payment of lump sum death benefits by an occupational pension scheme in respect of a member of the scheme ("the lump sum death benefit rule"). (2) Under the lump sum death benefit rule no lump sum death benefit may be paid other than a trivial commutation lump sum death benefit. (3) In this Part "lump sum death benefit" means a lump sum payable on the death of the member. Part 2 - Lump sums and lump sum death benefits Lump sums Pension commencement lump sum 3. (1) For the purposes of this Part a lump sum is a pension commencement lump sum if — (a) the member becomes entitled to it in connection with his becoming entitled to a scheme pension, (b) it does not exceed the permitted maximum, (c) it is paid within the period of three months beginning with the day on which the member becomes entitled to it, (d) it is paid when the member has reached the age of 50 (or the ill-health condition is satisfied (see sub-paragraph (4)), and (e) it is paid when the member has not reached the age of 75.
Page 52 SD No. 2018/0265 c
Pension Schemes Legislation (Application) Order 2018 SCHEDULE 3
(2) But if a lump sum falling within sub-paragraph (1) exceeds the permitted maximum, the excess is not a pension commencement lump sum (but see paragraph 9). (3) Paragraphs 4 and 5 define the permitted maximum. (4) For the purposes of sub-paragraph (1)(d) the ill-health condition is satisfied if — (a) the administrator has received evidence from a registered medical practitioner that the member is (and will continue to be) incapable of carrying on the member's occupation because of physical or mental impairment, and (b) the member has in fact ceased to carry on the member's occupation. “Permitted Maximum”: general 4. If paragraph 5 does not apply, the permitted maximum is in the case of a payment made by a retirement benefits scheme within the meaning given by section 13(1) of the Income Tax (Retirement Benefit Schemes) Act 1978 the higher of — (a) the maximum amount under section 1(3)(d) of that Act (conditions for approval of retirement benefits schemes) in accordance with the scheme’s approval under section 1 of that Act; (b) the amount of any lump sum referred to in section 2(2)(ee) of that Act in accordance with the scheme’s approval by virtue of section 2 of that Act (discretionary approval); or (c) any other amount by way of concession operated by the Assessor of Income Tax. “Permitted Maximum” disqualifying pension credits 5. (1) If sub-paragraph (2) applies, the permitted maximum is nil. (2) This sub-paragraph applies if all the member's rights under the arrangement under which the member becomes entitled to the relevant pension are attributable to a disqualifying pension credit. (3) A pension credit is disqualifying if, when the member becomes entitled to it, the person subject to the corresponding pension debit has an actual (rather than a prospective) right to payment of a pension under the relevant arrangement. (4) The relevant arrangement is the arrangement to which the pension sharing order or provision, by virtue of which the member becomes entitled to the pension credit, relates. Serious ill-health lump sum 6. For the purposes of this Part a lump sum is a serious ill-health lump sum if — (a) before it is paid the administrator has received evidence from a registered medical practitioner that the member is expected to live for less than one year, (b) it does not exceed the permitted maximum (see paragraphs 4 and 5), (c) it extinguishes the member's entitlement to benefits under the arrangement, and (d) it is paid when the member has not reached the age of 75.
c SD No. 2018/0265 Page 53
SCHEDULE 3 Pension Schemes Legislation (Application) Order 2018
Trivial commutation lump sum 7. (1) A lump sum is a trivial commutation lump sum if — (a) it does not exceed the commutation limit (see sub-paragraph (2)), (b) it does not exceed the permitted maximum (see paragraphs 4 and 5), (c) it extinguishes the member's entitlement to benefits under the pension scheme, and (d) it is paid when the member has reached the age of 55 but has not reached the age of 75. (2) The commutation limit is £100,000 less the sum of any other trivial commutation lump sums — (a) paid to the member in the period of 12 months in the immediate past, or (b) payable to the member at the same time. (3) For the purposes of determining whether or not the commutation limit under sub- paragraph (2) is exceeded under this paragraph, any scheme pension which the member is in receipt of shall be taken to be a lump sum with a value equal to 20 x the annual rate of that pension on that date. Winding-up lump sum 8. (1) For the purposes of this Part a lump sum is a winding-up lump sum if — (a) the pension scheme is an occupational pension scheme, (b) the pension scheme is being wound-up, (c) the member's employer meets the conditions in sub-paragraph (4), (d) it extinguishes the member's entitlement to benefits under the pension scheme, and (e) it is paid when the member has not reached the age of 75. (2) But if a lump sum falling within sub-paragraph (1) exceeds £100,000 when the lump sum is paid, the excess is not a winding-up lump sum (but see paragraph 9). (3) For the purposes of determining whether or not the commutation limit is exceeded under this paragraph, any scheme pension which the member is in receipt of shall be taken to be a lump sum with a value equal to 20 x the annual rate of that pension on that date. (4) The conditions are that the employer — (a) has made contributions under the pension scheme in respect of the member, (b) is not making contributions under any other pension scheme in respect of the member, and (c) undertakes to the Department not to make such contributions during the period of one year beginning with the day on which the lump sum is paid. Interpretation: “authorised lump sum”
Page 54 SD No. 2018/0265 c
Pension Schemes Legislation (Application) Order 2018 SCHEDULE 3
9. (1) Where by virtue of paragraph 3(2) or 8(2) an excess is not an authorised lump sum of one description, that does not prevent the excess being an authorised lump sum of another description. (2) Here "authorised lump sum" means a lump sum authorised to be paid by the lump sum rule (see paragraph 1 of Part 1). Lump sum death benefit Trivial commutation lump sum death benefit 10. (1) A lump sum death benefit is a trivial commutation lump sum death benefit if — (a) the member had not reached the age of 75 at the date of the member's death, (b) it is paid to a dependant entitled under the pension scheme to pension death benefit in respect of the member, (c) it is paid before the day on which the member would have reached the age of 75, and (d) it extinguishes the dependant's entitlement under the pension scheme to a pension payable on the death of the member and a lump sum payable on the death of the member in respect of the member. (2) But if the amount of a lump sum falling within sub-paragraph (1) exceeds £100,000, the excess is not a trivial commutation lump sum death benefit. (3) For the purposes of determining whether or not the commutation limit is exceeded under this paragraph, any scheme pension which the member is in receipt of shall be taken to be a lump sum death benefit with a value equal to 20 x the annual rate of that pension on that date. Interpretation 11. (1) For the purposes of paragraph 10, each of the following persons is a “dependant” of the member — (a) a person who was married to, or the civil partner of, the member at the date of the member's death (b) a child of the member if the child — (i) has not reached the age of 23, or (ii) has reached that age and, in the opinion of the administrator, was at the date of the member's death dependent on the member because of physical or mental impairment, or (c) a person who was not married to, or the civil partner of, the member at the date of the member's death and is not a child of the member if, in the opinion of the administrator, at the date of the member's death — (i) the person was financially dependent on the member,
c SD No. 2018/0265 Page 55
SCHEDULE 3 Pension Schemes Legislation (Application) Order 2018
(ii) the person's financial relationship with the member was one of mutual dependence, or (iii) the person was dependent on the member because of physical or mental impairment. (2) "Pension death benefit" means a pension payable on the death of the member (other than a member's pension payable after the member's death in the circumstances mentioned in sub-paragraph (3). (3) The circumstances are those where — (a) the member dies before the end of the period of 10 years beginning with the day on which the member became entitled to a scheme pension, and (b) payment of the scheme pension continues to be made to any person until the end of that period.
Page 56 SD No. 2018/0265 c
Pension Schemes Legislation (Application) Order 2018 SCHEDULE 4
SCHEDULE 4
[Article 6(2)(d)]
This Schedule sets out the text of the Pensions Act 2014 (Commencement No.7) and (Savings) (Amendment) Order 2015 (S.I. 2015/2058 (c. 129)) as applied by this Order, with such exceptions, adaptations and modifications made where necessary, which appear in bold italic type.
STATUTORY INSTRUMENTS
2015 No. 2058 (C. 129) PENSIONS The Pensions Act 2014 (Commencement No.7) and (Savings) (Amendment) Order 2015
Made - - - - 16th December 2015
The Secretary of State for Work and Pensions makes the following Order in exercise of the powers conferred by section 56(1), (4), (7) and (8) of the Pensions Act 2014: 1. Citation [...] (1) This Order may be cited as the Pensions Act 2014 (Commencement No.7) and (Savings) (Amendment) Order 2015. (2) Omitted
(3) Omitted
2. Commencement of provisions (Omitted) 3. Amendment of the Pensions Act 2014 (Savings) Order 2015
(1) The Pensions Act 2014 (Savings) Order 2015117 is amended as follows. (2) In article 1 (citation, commencement and interpretation)— (a) omitted; [...] (b) in paragraph (4), after the definition of “earner”, insert— ““reference scheme minimum benefit” means a salary related benefit which is defined by reference to section 12B of the 1993 Act (reference scheme)118 and which, under the
117 S.I. 2015/1502 (see Schedule 2 to this Order). 118 Sections 12A to 12D were inserted by section 136(5) of the Pensions Act 1995 (c.26) (see SD 501/97), and amended by S.I. 1997/819 (see SD 502/97), S.I. 2005/2050 (see SD 744/05), paragraph 36 of Schedule 1 to, and paragraph 5 of Schedule 5 to, and Part 8 of Schedule 7 to, the Pensions Act 2007 (c.22) (see SD 193/09). c SD No. 2018/0265 Page 57
SCHEDULE 4 Pension Schemes Legislation (Application) Order 2018
provisions of the scheme, will be provided as a minimum pension payable to the member;”. (3) In article 2 (savings)— (a) in paragraph (1), omit “33,”; (b) in paragraph (2), omit sub-paragraph (g); (c) after paragraph (2), insert— “(2A) Sections 12A to 12D of the 1993 Act (requirements for certification of occupational pension schemes applying from 6th April 1997) continue to have effect, as if the repeals made by paragraphs 10 and 11 of Schedule 13 to the Act had not been made, in relation to a scheme that was a salary related contracted- out scheme and which provides a reference scheme minimum benefit in order to meet the statutory standard in section 12A, and in relation to the period of a member’s contracted-out employment which ended before or on the second abolition date.”; (d) after paragraph (3), insert— “(3A) Section 50 of the 1993 Act (powers of Department to approve arrangements for scheme ceasing to be certified)119 continues to have effect, as if that section had not been repealed by paragraph 33 of Schedule 13 to the Act, in relation to a salary related contracted-out scheme which ceased to be such a scheme before the second abolition date.”; and (e) after paragraph (5) insert– “(6) Section 87(1)(a) of the 1993 Act (general protection principle)120 continues to have effect, as if sub-paragraph (i) had not been substituted by paragraph 38 of Schedule 13 to the Act, in relation to earners whose service in contracted-out employment ended before the second abolition date.”.
Signed by authority of the Secretary of State for Work and Pensions
Altmann Minister of State, 16th December 2015 Department for Work and Pensions
119 Section 50 was amended by paragraph 45(b) and (c) of Schedule 5 to the Pensions Act 1995 (c.26) (see SD 501/97) and S.I. 2011/1730 (see SD 0927/11). 120 Section 87(1)(a) was amended by paragraph 28 of Schedule 4 to the Pensions Act 2007 (see SD 193/09).
Page 58 SD No. 2018/0265 c
Pension Schemes Legislation (Application) Order 2018 SCHEDULE 5
SCHEDULE 5
[Article 6(2)(e)]
This Schedule sets out the text of the State Pension and Occupational Pension Schemes (Miscellaneous Amendments) Regulations 2016 (SI 2016/199) as applied by this Order, with such exceptions, adaptations and modifications made where necessary, which appear in bold italic type.
STATUTORY INSTRUMENTS
2016 No. 199 SOCIAL SECURITY PENSIONS The State Pension and Occupational Pension Schemes (Miscellaneous Amendments) Regulations 2016
Made - - - - 22nd February 2016 Coming into force in accordance with regulation 1(2) to (4)
The Secretary of State for Work and Pensions makes the following Regulations in exercise of the powers conferred by sections 24B(5) and 181(1) of the Pension Schemes Act 1993 and sections 10, 18(2), (3) and (4), 20, 22(1) and 54(5) and (6) of the Pensions Act 2014. In relation to regulation 6, the Secretary of State has consulted such persons as the Secretary of State considers appropriate, in accordance with section 185(1) of the Pension Schemes Act 1993. The remainder of these Regulations have not been referred to the Social Security Advisory Committee because they are made before the end of the period of six months beginning with the coming into force of the provisions of the Pensions Act 2014 under which they are made. A draft of these Regulations has been laid before Parliament in accordance with section 186(3)(a) of the Pension Schemes Act 1993 and section 54(2)(a) and (b) of the Pensions Act 2014 and approved by resolution of each House of Parliament.
1. Citation [...] (1) These Regulations may be cited as the State Pension and Occupational Pension Schemes (Miscellaneous Amendments) Regulations 2016. (2) to (5) Omitted. 2. to 5. Omitted 6. Amendments relating to occupational pension schemes and contracting-out
c SD No. 2018/0265 Page 59
SCHEDULE 5 Pension Schemes Legislation (Application) Order 2018
(1) Regulation 69B of the Occupational Pension Schemes (Contracting-out) Regulations 1996 (conversion of guaranteed minimum pensions into other benefits: survivors’ benefits)121 is revoked. (2) Omitted. (3) After regulation 27 of the Occupational Pension Schemes (Schemes that were Contracted-out) (No. 2) Regulations 2015 (conversion into other benefits: actuarial equivalence)122, insert — “27A. Conversion into other benefits: survivors’ benefits (1) For the purposes of Condition 4 of section 24B of the 1993 Act, the circumstances in which, and periods during which, the converted scheme must provide survivors’ benefits are the circumstances set out in paragraph (2) and the periods set out in paragraph (3). (2) The circumstances are — (a) an earner’s pre-conversion benefits include a guaranteed minimum pension; and (b) the scheme before conversion provided that — (i) if the earner died (whether before or after attaining pensionable age) leaving a widow, widower or surviving civil partner, the widow, widower or surviving civil partner would be entitled to a guaranteed minimum pension; and (ii) in a case where section 17(6) of the 1993 Act (minimum pensions for widows, widowers and surviving civil partners)123 applies, a widower’s, widow’s or surviving civil partner’s guaranteed minimum pension would be payable in the circumstances set out in regulation 21(1). (3) The periods are — (a) for widows, widowers and surviving civil partners, any period mentioned in section 17(4A)(a), (aa), (ab) or (b) of the 1993 Act124; (b) subject to paragraph (4), for widows, widowers and surviving civil partners whose entitlement by virtue of the earner’s contributions to a widowed parent’s allowance or bereavement allowance has come to an end at a time after the widow, widower or surviving civil partner attained the age of 45, so much of the period beginning with the time when that entitlement came to an end as neither — (i) comprises a period during which the widow, widower or surviving civil partner and another person are living together as a married couple; nor (ii) falls after the time of any —
121 S.I. 1996/1172 (see SD 651/97). Regulation 69B was inserted by S.I. 2009/846 (see SD 750/09) and amended by SD’s 2016/0193 and 0224. 122 S.I. 2015/1677 (see Schedule 3 to this Order). 123 Section 17(6) was amended by paragraph 1(3) of Schedule 5 to the Child Support, Pensions and Social Security Act 2000 (c.19) (see SD 379/01), S.I. 2005/2050 (see SD 744/05) and SD’s 2016/0193 and 0199. 124 Section 17(4A) was inserted by paragraph 1(1) of Schedule 5 to the Child Support, Pensions and Social Security Act 2000 and amended by paragraph 17(2) of Schedule 13 to the Pensions Act 2014 (see SD 2018/0076) and SD 2016/0193.
Page 60 SD No. 2018/0265 c
Pension Schemes Legislation (Application) Order 2018 SCHEDULE 5
(aa) marriage; or (bb) formation of a civil partnership, by the widow, widower or surviving civil partner which takes place after the earner’s death; (c) for widows whose spouse was a man, any period for which a widowed mother’s allowance or widow’s pension is payable to the widow by virtue of the earner’s contributions; and (d) for widowers, widows whose spouse was a woman and surviving civil partners, any period for which a scheme must make provision for the payment of a widow’s, widower’s or surviving civil partner’s pension, by virtue of section 17(6) of the 1993Act and regulation 22. (4) For the purposes of paragraph (3)(b), the following provisions do not apply where the earner died before 5th December 2005 — (a) paragraph (3)(b)(i) so far as it relates to the living together of two people of the same sex; (b) paragraph (3)(b)(ii)(aa) so far as it relates to a marriage involving two people of the same sex; and (c) paragraph (3)(b)(ii)(bb).”.
Signed by authority of the Secretary of State for Work and Pensions.
Altmann Minister of State, Department for Work and Pensions 22nd February 2016
c SD No. 2018/0265 Page 61
SCHEDULE 6 Pension Schemes Legislation (Application) Order 2018
SCHEDULE 6
[Article 6(2)(f)]
This Schedule sets out the text of the Pensions Act 2014 (Abolition of Contracting-out for Salary Related Pension Schemes) (Consequential Amendments and Savings) Order 2016 (SI 2016/200) as applied by this Order, with such exceptions, adaptations and modifications made where necessary, which appear in bold italic type.
STATUTORY INSTRUMENTS
2016 No. 200 PENSIONS The Pensions Act 2014 (Abolition of Contracting-out for Salary Related Pension Schemes) (Consequential Amendments and Savings) Order 2016
Made - - - - 24th February 2016
Laid before Parliament 1st March 2016
Coming into force in accordance with article 1
The Secretary of State for Work and Pensions makes the following Order in exercise of the powers conferred by sections 53 and 54(5) and (6) of the Pensions Act 2014.
Part 1 - General 1. Citation [...] (1) This Order may be cited as the Pensions Act 2014 (Abolition of Contracting-out for Salary Related Pension Schemes) (Consequential Amendments and Savings) Order 2016. (2) to (5) Omitted
Part 2 - Amendments coming into force on 6th April 2019 2. Amendment of the Occupational Pension Schemes (Preservation of Benefit) Regulations 1991 (1) The Occupational Pension Schemes (Preservation of Benefit) Regulations 1991125 are amended as follows. (2) In regulation 12 (transfer of member’s accrued rights without consent) —
125 S.I. 1991/167 (see GC 494/92).
Page 62 SD No. 2018/0265 c
Pension Schemes Legislation (Application) Order 2018 SCHEDULE 6
(a) for paragraph (2)(b)(ii)126 substitute — “(ii) the employers are companies or partnerships bearing a relationship to each other in one of the ways described in paragraph (2A).”; and (b) after paragraph (2) insert — “(2A) The relationships between the employers referred to in paragraph (2)(b)(ii) are — (a) the employers are members of a group of companies consisting of a holding company and one or more subsidiaries within the meaning of section 1 of the Companies Act 1974 (holding and subsidiary companies); (b) the employers are — (i) an employer who is the principal employer for the purposes of the scheme in accordance with the scheme rules, or who is the employer who has power to act on behalf of all employers in the scheme in relation to the scheme rules; and (ii) an employer subject to the rules of the scheme; or (c) the employers are partnerships having at least half of their partners in common.”. (3) In regulation 24 (schemes funded by level annual premiums), after paragraph (3)127 insert — “(3A) For the purposes of paragraph (3)(a), any alteration of the scheme which arises solely from the abolition of contracting-out for salary related schemes under the Pensions Act 2014128 does not constitute a material alteration.”. 3. Amendment of the Occupational Pension Schemes (Contracting-out) Regulations 1996 In regulation 1(2) (interpretation) of the Occupational Pension Schemes (Contracting-out) Regulations 1996129, in the definition of “section 9(2B) rights”130 — (a) in paragraph (a), for “contracted-out by virtue of section 9(2B) of the 1993 Act” substitute “that was a salary-related contracted-out scheme131”; (b) in paragraph (b), in the introductory words —
126 Paragraph (2) was substituted by S.I. 1992/1531 (see GC 494/92), and sub-paragraph (2)(b) was amended by S.I. 1996/2131 (see SD 341/98). 127 Paragraph (3) was amended by S.I. 1996/2131 (see SD 341/98). 128 See section 24(1) of, and Schedule 13 to, the Pensions Act 2014 (“the 2014 Act”) (see SD 2018/0076). 129 S.I. 1996/1172 (see SD 651/97). 130 This definition was substituted by S.I. 1997/786 (see SD 207/00) and amended by S.I. 1999/3198 (see SD 267/00), S.I. 2011/1246 (see SD 0927/11) and S.I. 2015/1677 (see Schedule 3 to this Order). 131 See section 7B of the Pension Schemes Act 1993 (c.48) (“the 1993 Act”) inserted by paragraph 6 of Schedule 13 to the 2014 Act for the definition of “salary related contracted-out scheme”. c SD No. 2018/0265 Page 63
SCHEDULE 6 Pension Schemes Legislation (Application) Order 2018
(i) after “has been made” insert “(other than a payment made in accordance with regulation 10 (transfers payments to occupational and personal pension schemes in respect of section 9(2B) rights) of the Contracting-out (Transfer and Transfer Payment) Regulations 1996132)”; and (ii) after “such a scheme,” insert “whether before or after the second abolition date133,”; and (c) in paragraph (b)(i), for “contracted-out by virtue of section 9(2B) of that Act” substitute “that was a salary-related contracted-out scheme”. 4. Amendment of the Contracting-out (Transfer and Transfer Payment) Regulations 1996 (1) The Contracting-out (Transfer and Transfer Payment) Regulations 1996134 are amended as follows. (2) In regulation 1(2) (interpretation) — (a) in the definition of “connected employer transfer” and “connected employer transfer payment”135 — (i) after sub-paragraph (b)(ii), omit the words from “and, in this definition” to the end of that paragraph; and (ii) before the words “salary-related contracted-out scheme”, in each case where they occur, insert “scheme that was a”; (b) omitted (c) in the definition of “the principal appointed day”, for “7(2B)” substitute “181(1)”; (d) omit the definition of “salary-related contracted-out scheme”136; and (e) for the definition of “section 9(2B) rights”137, substitute — ““section 9(2B) rights” has the meaning given in regulation 2(1) of the Occupational Pension Schemes (Schemes that were Contracted-out) (No.2) Regulations 2015138;”. (3) In regulation 3 (transfers of guaranteed minimum pensions to salary-related contracted- out schemes) — (a) in the heading, before “salary-related” insert “schemes that were”; (b) in the opening words, before “salary-related” insert “scheme that was a”; and (c) in paragraph (c), omit the words from the beginning to “the receiving scheme,”.
132 S.I. 1996/1462 (see SD 23/98). Regulation 10 was substituted by S.I. 2011/1245 (see SD 0927/11) and is amended by article 4(7) of this instrument. 133 See section 7A of the 1993 Act inserted by paragraph 6 of Schedule 13 to the 2014 Act for the definition of “second abolition date”. 134 S.I. 1996/1462 (see SD 651/97). 135 These definitions were substituted by S.I. 2013/459 (see SD 0141/13). 136 A scheme that was a contracted-out scheme is now defined in the 1993 Act. See sections 7B and 181(1), inserted by the 2014 Act. 137 This definition was substituted by S.I. 1997/786 (see SD 207/00) and amended by S.I. 1999/3198 (see SD 267/00) and S.I. 2011/1246 (SD 0927/11). 138 S.I. 2015/1677 (see Schedule 3 to this Order) as amended by article 28 of this instrument.
Page 64 SD No. 2018/0265 c
Pension Schemes Legislation (Application) Order 2018 SCHEDULE 6
(4) In regulation 5 (transfer payments in respect of guaranteed minimum pensions to occupational and personal pension schemes)139, in the opening words, omit “a salary-related contracted-out scheme,” (5) In regulation 7(1) (transfers of liability in respect of section 9(2B) rights – general)140, in sub-paragraphs (a) and (b) — (a) after “from a” insert “scheme that was a”; and (b) omit “(or a scheme which was formerly a salary-related contracted-out scheme)”. (6) In regulation 8 (transfer payments to salary-related contracted-out schemes in respect of section 9(2B) rights) — (a) in the heading, before “salary-related” insert “schemes that were”; (b) in the opening words, for “salary-related contracted-out scheme” substitute “scheme that was a salary-related contracted-out scheme which was contracted- out by virtue of section 9(2B) of the 1993 Act”; and (c) in paragraph (c)141, for the words from “which is contracted-out” to the end of that paragraph substitute “which was contracted-out in relation to the receiving scheme on or after the principal appointed day.”. (7) In regulation 10 (transfer payments to occupational and personal pension schemes in respect of section 9(2B) rights)142, in the opening words, omit “a salary-related contracted-out scheme,”. (8) In regulation 12 (modifications of Part III of the 1993 Act on transfers of and transfer payments in respect of guaranteed minimum pensions from occupational pension schemes) — (a) in the opening words, before “salary-related contracted-out scheme” insert “scheme that was a”; (b) subject to article 5(1), omit paragraph (a); and (c) subject to article 5(1), in paragraph (b), for “any other” substitute “a”. (9) In regulation 13 (modifications of Part III of the 1993 Act on transfers from policies of insurance or annuity contracts) — (a) in the opening words, before “salary-related contracted-out scheme” insert “scheme that was a”; (b) subject to article 5(2), omit paragraph (a); and (c) subject to article 5(2), in paragraph (b)143 omit the words from the beginning to “to the receiving scheme,”. (10) Omit regulation 13A (modification of section 12C of the 1993 Act where transfer payments are made to salary-related contracted-out schemes)144. (11) In Schedule 1 (further conditions for transfers of guaranteed minimum pensions) —
139 Regulation 5 was substituted by S.I. 2011/1245 (see SD 0927/11). 140 Regulation 7(1) was amended by S.I. 1997/786 (see SD 207/00). 141 Regulation 8(c) was amended by S.I. 1997/786 (see SD 207/00). 142 Regulation 10 was substituted by 2011/1245 (see SD 0927/11). 143 Regulation 13(b) was amended by S.I. 1997/786 (see SD 207/00) 144 Regulation 13A was inserted by S.I. 1997/786 (see SD 207/00) and amended by S.I. 2011/1246 (see SD 0927/11). c SD No. 2018/0265 Page 65
SCHEDULE 6 Pension Schemes Legislation (Application) Order 2018
(a) for the heading to Part I substitute “Further Conditions for Transfer to a Scheme that was a Salary-related Contracted-out Scheme of Accrued Rights to Guaranteed Minimum Pensions”; (b) in paragraph 2, omit sub-paragraph (a) and the “but” immediately following it; and (c) for the heading to Part II substitute “Further Conditions for Transfer from an Appropriate Policy to a Scheme that was a Salary-related Contracted-out Scheme of Accrued Rights to Guaranteed Minimum Pensions”. (12) In Schedule 2 (modifications of Part III of the 1993 Act) — (a) in paragraphs 1 and 6145 in the definition of “guaranteed minimum pension”, for “by an occupational pension scheme” substitute “by a scheme that was a salary- related contracted-out scheme”; (b) in paragraphs 3 and 7, for “is contracted-out” substitute “was contracted-out”; (c) subject to article 5(1), omit paragraph 3; and (d) subject to article 5(2), omit paragraph 7. 5. Saving of the Contracting-out (Transfer and Transfer Payment) Regulations 1996 (1) Regulation 12(a) and (b) of, and paragraph 3 of Schedule 2 to, the Contracting-out (Transfer and Transfer Payment) Regulations 1996 (“the Transfer Regulations”) continue to have effect as if the amendments made by article 4(8)(b) and (c), and (12)(c) of this Order had not been made, in relation to a transfer of accrued rights to guaranteed minimum pensions of an earner who was in employment which was contracted-out by reference to the receiving scheme, where that transfer occurred before the second abolition date. (2) Regulation 13(a) and (b) of, and paragraph 7 of Schedule 2 to, the Transfer Regulations continue to have effect as if the amendments made by article 4(9)(b) and (c) and (12)(d) of this Order had not been made, in relation to a transfer of accrued rights to guaranteed minimum pensions from an appropriate policy where the earner was in employment which was contracted-out by reference to the receiving scheme and the transfer occurred before the second abolition date. (3) For the purposes of this article — “accrued rights” has the meaning given in section 20(6) (transfer of accrued rights) of the Pension Schemes Act 1993 (“the 1993 Act”)146; “appropriate policy” means a policy of insurance or an annuity contract as described in section 19(4) (discharge of liability where guaranteed minimum pensions are secured by insurance policies or annuity contracts) of the 1993 Act147; “employment which was contracted-out” is to be construed in accordance with section 8(1) (meaning of “contracted-out employment etc.) of the 1993 Act148; “guaranteed minimum pension” has the meaning given in section 8(2) of the 1993 Act149;
145 Paragraphs 1 and 6 were substituted by S.I. 1997/786 (see SD 207/00). 146 1993 c.48 (see SD 531/95). Section 20(6) was amended by S.I. 2005/2050 (see SD 744/05). 147 Section 19(4) was amended by SD’s 0353/13 and 13/06. 148 Section 8(1) was substituted by paragraph 7(1) of Schedule 13 to the 2014 Act. 149 Section 8(2) was amended by paragraph 7(4) of Schedule 13 to the 2014 Act.
Page 66 SD No. 2018/0265 c
Pension Schemes Legislation (Application) Order 2018 SCHEDULE 6
“the second abolition date” has the meaning given in section 181(1) (general interpretation) of the 1993 Act150. 6. Amendment of the Occupational Pension Schemes (Indexation) Regulations 1996 In regulation 1(2) (interpretation) of the Occupational Pension Schemes (Indexation) Regulations 1996151 — (a) omit the definition of “abolition date”; (b) after the definition of “appointed day” insert — ““the first abolition date” has the meaning given in section 181(1) of the Pension Schemes Act 1993152;”; (c) in the definition of “protected rights”, before “abolition date” insert “first”; and (d) for the definition of “section 9(2B) rights” substitute — ““section 9(2B) rights” has the meaning given in regulation 2(1) of the Occupational Pension Schemes (Schemes that were Contracted-out) (No.2) Regulations 2015;”. 7. Amendment of the Occupational Pension Schemes (Transfer Values) Regulations 1996 In regulation 13(a) (extension of time for payment of cash equivalents) of the Occupational Pension Schemes (Transfer Values) Regulations 1996153, for sub-paragraph (ii) substitute — “(ii) the scheme has ceased to be a contracted-out scheme in the 12 month period ending on the date of the application (whether by virtue of the abolition of contracting-out for salary related schemes under the Pensions Act 2014 or otherwise),”. 8. Amendment of the Social Security (Contracting-out and Qualifying Earnings Factor) Regulations 1996 In regulation 2(2) (modification of the application of section 44(5) of the Contributions and Benefits Act) of the Social Security (Contracting-out and Qualifying Earnings Factor) Regulations 1996154 — (a) for “a tax week is” substitute “a tax week was”; and (b) in both places where it occurs, after “sections 41” insert “(as it had effect before the second abolition date)”. 9. Amendment of the Occupational Pension Schemes (Winding Up) Regulations 1996 (1) The Occupational Pension Schemes (Winding Up) Regulations 1996155 are amended as follows.
150 The definition of “second abolition date” is inserted into section 181(1) by paragraph 43(2) of the 2014 Act 151 S.I. 1996/1679 (see SD 341/98). The definitions of “abolition date” and “protected rights” were inserted by S.I. 2011/1246 (see SD 0927/11). The definition of “section 9(2B) rights” was inserted by S.I. 2005/704 (see SD 437/05) and amended by S.I. 2011/1246 (see SD 0927/11). 152 The definition of “the first abolition date” is inserted by paragraph 43(2) of Schedule 13 to the 2014 Act. 153 S.I. 1996/1847 (see SD 147/06). 154 S.I. 1996/2477 (see SD 561/99). 155 S.I. 1996/3126 (see SD 149/06). c SD No. 2018/0265 Page 67
SCHEDULE 6 Pension Schemes Legislation (Application) Order 2018
(2) In regulation 8 (requirements to be satisfied by transferee schemes, annuities etc.) — (a) in paragraph (5), before “contracted-out scheme” insert “scheme that was a”; and (b) for paragraph (7)(a)156, substitute — “(a) regulation 18 or 25 of the Occupational Pension Schemes (Schemes that were Contracted-out) (No.2) Regulations 2015 (payment of a lump sum instead of a pension);”. (3) In regulation 10(3) (disapplication of section 38) in the definition of “relevant lump sum retirement benefits scheme”, in paragraph (b), for “is not contracted-out” substitute “was not contracted-out at any time before the second abolition date”. 10. Amendment of the Occupational Pension Schemes (Deficiency on Winding Up etc.) Regulations 1996 (Omitted) 11. Amendment of the Pensions Act 1995 (Commencement No. 10) Order 1997 (Omitted) 12. Amendment of the Occupational Pension Schemes (Discharge of Liability) Regulations 1997 (1) The Occupational Pension Schemes (Discharge of Liability) Regulations 1997157 are amended as follows. (2) In regulation 1(2) (interpretation) in the definition of “relevant scheme”, for “section 12C” substitute “section 37A158”. (3) In regulation 8(b) (prohibition and restriction of the discharge of liability to provide pensions under a relevant scheme), for the words from “or Part V” until the end of that paragraph substitute “, regulations 45 or 46 (as they had effect at the time of approval of arrangements for the scheme ceasing to be contracted-out) of the Occupational Pension Schemes (Contracting-out) Regulations 1996159, or regulations 6, 17 or 20 of the Occupational Pension Schemes (Schemes that were Contracted-out) (No.2) Regulations 2015 apply”. (4) In regulation 9(3) (circumstances in which liability to provide pensions under a relevant scheme may be discharged), for “is to cease” substitute “has ceased”. (5) In regulation 11(3)(e)(ii) (conditions on which liability to provide pensions under a relevant scheme may be discharged), for “section 12C(1)” substitute “section 37A(1)”. 13. Amendment of the Occupational Pension Schemes (Contracting-out) (Amount Required for Restoring State Scheme Rights and Miscellaneous Amendment) Regulations 1998 (1) The Occupational Pension Schemes (Contracting-out) (Amount Required for Restoring State Scheme Rights and Miscellaneous Amendment) Regulations 1998160 are amended as follows. (2) Omitted
156 Paragraphs (6) to (10) were inserted by S.I. 2005/706. Paragraph (7) was amended by S.I. 2009/615 (see SD 0153/12). 157 S.I. 1997/784 (see SD 144/99). 158 Section 37A is inserted by paragraph 25 of Schedule 13 to the 2014 Act. 159 S.I. 1996/1172 (see SD 651/97). Regulations 45 and 46 were amended by S.I. 1997/819 (see SD 267/00), S.I. 2005/2050 (see SD 744/05), S.I. 2011/1245 and S.I. 2011/1246 (see SD 0927/11) and S.I. 2015/1677 (see Schedule 3 to this Order). 160 S.I. 1998/1397 (see SD 207/00).
Page 68 SD No. 2018/0265 c
Pension Schemes Legislation (Application) Order 2018 SCHEDULE 6
(3) In regulation 2 (determination of the amount required for restoring State scheme rights), for “contracted-out occupational pension scheme which is being wound up” substitute “scheme which was a contracted-out occupational pension scheme and which started to wind up before the second abolition date”. (4) Omitted 14. Amendment of the Occupational Pension Schemes (Validation of Rule Alterations) Regulations 1998 (Omitted) 15. Amendment of the Social Security and Child Support (Decisions and Appeals) Regulations 1999 (Omitted) 16. Amendment of the Pension Sharing (Implementation and Discharge of Liability) Regulations 2000 (1) The Pension Sharing (Implementation and Discharge of Liability) Regulations 2000161 are amended as follows. (2) In regulation 1(2) (interpretation) — (a) after the definition of “base rate” insert — ““contracted-out” is to be construed in accordance with section 7B(2) (meaning of “contracted-out scheme” etc.) of the 1993 Act;” and (b) for the definition of “section 9(2B) rights” substitute — ““section 9(2B) rights” has the meaning given in regulation 2(1) of the Occupational Pension Schemes (Schemes that were Contracted-out) (No.2) Regulations 2015;”. (3) In regulation 3(a) (circumstances in which an application for an extension of the implementation period may be made), for sub-paragraph (ii) substitute — “(ii) the scheme has ceased to be a contracted-out scheme in the 12 month period ending on the date of the application (whether by virtue of the abolition of contracting-out for salary related schemes under the Pensions Act 2014 or otherwise);”. 17. Amendment of the Pension Sharing (Pension Credit Benefit) Regulations 2000 (1) The Pension Sharing (Pension Credit Benefit) Regulations 2000162 are amended as follows. (2) In regulation 1(2) (interpretation), omit the definition of “salary related contracted-out scheme”. (3) In regulation 26(a) (extension of time limits for payment of cash equivalents), for subparagraph (ii) substitute — “(ii) the scheme has ceased to be a contracted-out scheme in the 12 month period ending on the date of the application (whether by virtue of the abolition of contracting-out for salary related schemes under the Pensions Act 2014 or otherwise);”. 18. Amendment of the Social Security (Contracting-out and Qualifying Earnings Factor and Revision of Relevant Provisions) Regulations 2000
161 S.I. 2000/1053 (see SD 381/01). 162 S.I. 2000/1054 (see SD 381/01). c SD No. 2018/0265 Page 69
SCHEDULE 6 Pension Schemes Legislation (Application) Order 2018
In regulation 2(2) (modification of the application of section 44(5A) of the 1992 Act) of the Social Security (Contracting-out and Qualifying Earnings Factor and Revision of Relevant Provisions) Regulations 2000163 — (a) in both places where it occurs, for “is reduced” substitute “was reduced”; (b) after “section 41” insert “(as it then had effect)”; and (c) after “sections 41” insert “(as it then had effect)”. 19. Amendment of the Additional Pension and Social Security Pensions (Home Responsibilities) (Amendment) Regulations 2001 (1) The Additional Pension and Social Security Pensions (Home Responsibilities) (Amendment) Regulations 2001164 are amended as follows. (2) In regulation 1(2) (interpretation) — (a) for the definition of “contributions equivalent premium” substitute — ““contributions equivalent premium” has the meaning given in section 181(1) (general interpretation) of the Pension Schemes Act 1993165;”; (b) after the definition of “the Administration Act” insert — ““appropriate personal pension scheme” means an appropriate scheme within the meaning of section 7B(6) (meaning of “contracted-out scheme” etc.) of the Pension Schemes Act 1993;”; (c) after the definition of “contributions equivalent premium” insert — ““money purchase contracted-out scheme” has the meaning given in section 7B(5) of the Pension Schemes Act 1993;”; and (d) after the definition of “non-contracted-out employment” insert — ““salary related contracted-out scheme” has the meaning given in section 7B(4) of the Pension Schemes Act 1993;”. (3) In regulation 2(a) (calculation of additional pension where contributions equivalent premium paid or treated as paid), after “regulations made thereunder” insert “(as they then had effect)”. 20. Amendment of the Pension Protection Fund (Entry Rules) Regulations 2005 (Omitted) 21. Amendment of the Transfer of Employment (Pension Protection) Regulations 2005 (Omitted) 22. Amendment of the Occupational Pension Schemes (Employer Debt) Regulations 2005 (Omitted) 23. Amendment of the Occupational Pension Schemes (Winding up etc.) Regulations 2005 (Omitted) 24. Amendment of the Pensions Regulator (Contribution Notices and Restoration Orders) Regulations 2005 (Omitted)
163 S.I. 2000/2736 (see SD 560/01). 164 S.I. 2001/1323 (see SD 559/01). 165 The definition of “contributions equivalent premium” is amended by paragraph 43(6) of Schedule 13 to the 2014 Act.
Page 70 SD No. 2018/0265 c
Pension Schemes Legislation (Application) Order 2018 SCHEDULE 6
25. Amendment of the Financial Assistance Scheme Regulations 2005 (Omitted) 26. Amendment of the Occupational Pension Schemes (Cross-border Activities) Regulations 2005 (Omitted) 27. Amendment of the Employers’ Duties (Registration and Compliance) Regulations 2010 (Omitted) 28. Amendment of the Occupational Pension Schemes (Schemes that were Contracted- out) (No.2) Regulations 2015 In regulation 2(1) (interpretation) of the Occupational Pension Schemes (Schemes that were Contracted-out) (No.2) Regulations 2015166, in the definition of “section 9(2B) rights” — (a) for “contracted-out by virtue of section 9(2B) of the 1993 Act” in both places where it occurs, substitute “that was a salary related contracted-out scheme”; and (b) in paragraph (b), in the introductory words — (i) after “has been made” insert “(other than a payment made in accordance with regulation 10 (transfers payments to occupational and personal pension schemes in respect of section 9(2B) rights) of the Contracting-out (Transfer and Transfer Payment) Regulations 1996)”; and (ii) after “such a scheme,” insert “whether before or after the second abolition date,”.
Part 3 - Amendments coming into force on 6th April 2020 29. Amendment of the Occupational Pension Schemes (Transfer Values) Regulations 1996 In regulation 13 of the Occupational Pension Schemes (Transfer Values) Regulations 1996 — (a) that regulation becomes paragraph (1) of regulation 13; and (b) for sub-paragraph (a)(ii)167 of that paragraph substitute — “(ii) the scheme ceased to be a contracted-out scheme in the 12 month period ending on the second abolition date, and the trustees of the scheme are seeking to reach an agreement with the Department as to the scheme’s liabilities for guaranteed minimum pensions or section 9(2B) rights of members [...] but such agreement has not yet been reached;”; [...] (c) omitted 30. Amendment of the Pension Sharing (Implementation and Discharge of Liability) Regulations 2000 (1) The Pension Sharing (Implementation and Discharge of Liability) Regulations 2000 are amended as follows. (2) In regulation 1(2)168, in the appropriate places insert —
166 S.I. 2015/1677 (see Schedule 3 to this Order). 167 Sub-paragraph (ii) was substituted by article 7 of this instrument. c SD No. 2018/0265 Page 71
SCHEDULE 6 Pension Schemes Legislation (Application) Order 2018
““guaranteed minimum pension” has the meaning given in section 8(2) (meaning of “contracted-out employment” etc.) of the 1993 Act;”; [...] [...] ““the second abolition date” has the meaning given in section 181(1) (general interpretation) of the 1993 Act;”. (3) In regulation 3(a), for sub-paragraph (ii)169 substitute — “(ii) the scheme ceased to be a contracted-out scheme in the 12 month period ending on the second abolition date, and the trustees or managers of the scheme are seeking to reach an agreement with the Department as to the scheme’s liabilities for guaranteed minimum pensions or section 9(2B) rights of members [...] but such agreement has not yet been reached;”. 31. Amendment of the Pension Sharing (Pension Credit Benefit) Regulations 2000 In regulation 26 (extension of time limits for payment of cash equivalents) of the Pension Sharing (Pension Credit Benefit) Regulations 2000 — (a) that regulation becomes paragraph (1) of regulation 26; (b) for sub-paragraph (a)(ii)170 of that paragraph substitute — “(ii) the scheme ceased to be a contracted-out scheme in the 12 month period ending on the second abolition date, and the trustees or managers have not yet reached an agreement with the Department as to the scheme’s liabilities for guaranteed minimum pensions or section 9(2B) rights;”; and (c) after paragraph (1) insert — “(2) In this regulation — [...] “section 9(2B) rights” has the meaning given in regulation 2(1) of the Occupational Pension Schemes (Schemes that were Contracted-out) (No.2) Regulations 2015.” 32. Amendment of the Occupational [...] Pension Schemes (Disclosure of Information) Regulations 1996 In Schedule 1 (basic information) to the Occupational [...] Pension Schemes (Disclosure of Information) Regulations 1996171, omit paragraph 10172.
Part 4 - Revocations coming into force on 6th April 2022
168 Regulation 1(2) was amended by S.I. 2000/2691 (see SD 561/01), S.I. 2007/60 (see SD 279/07), SD 152/06 and S.I. 2009/598 (see SD 93/10). The definition of “section 9(2B) rights” in regulation 1(2) is amended by article 16(2)(b) of this instrument. 169 Sub-paragraph (ii) was substituted by article 16(3) of this instrument. 170 Sub-paragraph (ii) was substituted by article 17(3) of this instrument. 171 S.I. 1996/1655 (see SD 192/98). 172 Paragraph 10 was amended by S.I. 2011/1245 (see SD 0927/11).
Page 72 SD No. 2018/0265 c
Pension Schemes Legislation (Application) Order 2018 SCHEDULE 6
33. Revocation of the Occupational Pension Schemes (Modification of the Pension Schemes Act 1993) Regulations 1998 [...] The Occupational Pension Schemes (Modification of the Pension Schemes Act 1993) Regulations 1998173 [...] are revoked.
Part 5 - Amendments coming into force on 6th April 2024 34. Amendment of the Occupational Pension Schemes (Transfer Values) Regulations 1996 In regulation 13(1)(a) of the Occupational Pension Schemes (Transfer Values) Regulations 1996174, omit sub-paragraph (ii). 35. Amendment of the Occupational Pension Schemes (Discharge of Liability) Regulations 1997 (1) The Occupational Pension Schemes (Discharge of Liability) Regulations 1997 are amended as follows. (2) In regulation 9175 — (a) in paragraph (1), for “either in paragraph (2) or (3)” substitute “in paragraph (2)”; and (b) omit paragraph (3). (3) In regulation 11(1)176, after “regulation 9(2)(b)” omit “and (3)”. 36. Amendment of the Pension Sharing (Implementation and Discharge of Liability) Regulations 2000 (1) The Pension Sharing (Implementation and Discharge of Liability) Regulations 2000 are amended as follows. (2) In regulation 1(2), omit the definitions of “contracted-out”, “guaranteed minimum pension”[...] and “the second abolition date”177. (3) In regulation 3(a), omit sub-paragraph (ii)178. 37. Amendment of the Pension Sharing (Pension Credit Benefit) Regulations 2000 In regulation 26(1)(a) of the Pension Sharing (Pension Credit Benefit) Regulations 2000, omit sub-paragraph (ii)179.
Signed by authority of the Secretary of State for Work and Pensions
Altmann Minister of State, 24th February 2016 Department for Work and Pensions
173 S.I. 1998/1466 (see SD 561/99). 174 Regulation 13 is amended by articles 7 and 29 of this instrument. 175 Regulation 9 is amended by article 12 of this instrument. 176 Regulation 11 is amended by article 12 of this instrument. 177 These definitions are inserted by articles 16 and 30 of this instrument. 178 Regulation 3(a)(ii) is amended by article 30 of this instrument. 179 Regulation 26(a)(ii) is amended by article 17 and 31 of this instrument. c SD No. 2018/0265 Page 73
SCHEDULE 7 Pension Schemes Legislation (Application) Order 2018
SCHEDULE 7
[Article 6(2)(g)]
This Schedule sets out the text of the Occupational and Personal Pension Schemes (Modification of Schemes - Miscellaneous Amendments) Regulations 2016 (S.I. 2016/231) as applied by this Order, with such exceptions, adaptations and modifications made where necessary, which appear in bold italic type.
STATUTORY INSTRUMENTS
2016 No. 231 PENSIONS The Occupational and Personal Pension Schemes (Modification of Schemes - Miscellaneous Amendments) Regulations 2016
Made - - - - 24th February 2016 Laid before Parliament 1st March 2016 Coming into force - - 6th April 2016
The Secretary of State for Work and Pensions, in exercise of the powers conferred by sections 37(1) and 181(1) of the Pension Schemes Act 1993, sections 68(2)(e) and 124(1) of the Pensions Act 1995, and sections 259(1) and 318(1) of the Pensions Act 2004 makes the following Regulations.
These Regulations are consequential upon section 24(1) of, and Schedule 13 to, the Pensions Act 2014 and are made before the end of the period of six months beginning with the date those provisions come into force.
1. Citation [...] (1) These Regulations may be cited as the Occupational and Personal Pension Schemes (Modification of Schemes - Miscellaneous Amendments) Regulations 2016. (2) Omitted. 2. Amendment of the Occupational Pension Schemes (Modification of Schemes) Regulations 1996 After regulation 7A (modification of schemes: abolition of protected rights) of the Occupational Pension Schemes (Modification of Schemes) Regulations 1996180 insert— “7B. Modification of schemes: revaluation of guaranteed minimum pensions (1) The trustees of a trust scheme may by resolution passed before 6th April 2019 modify the scheme for the purposes of —
180 S.I. 1996/2517 (see SD 399/06).
Page 74 SD No. 2018/0265 c
Pension Schemes Legislation (Application) Order 2018 SCHEDULE 7
(a) revaluing earnings factors for the purposes of section 14 (earner’s guaranteed minimum pension) of the 1993 Act in accordance with section 16(2) (revaluation of earnings factors for the purposes of section 14: early leavers etc.) of that Act as substituted by paragraph 16 of Schedule 13 to the Pensions Act 2014; and (b) where the scheme contains a rule or provision that would require or permit the increases referred to in section 16(3) of the 1993 Act to be applied to an earner whose service in contracted-out employment ceased on the second abolition date with effect from a relevant year before the last service tax year, disapplying that rule or provision to the extent that it does not require or permit such increases. (2) Modifications made by resolution under paragraph (1)— (a) must only have effect from 6th April 2019 or such later date as may be specified; and (b) may have effect from a date before the resolution is passed. (3) In this regulation— “contracted-out employment” has the meaning given in section 8 (meaning of “contracted-out employment” etc.) of the 1993 Act181;
“earnings factors” has the meaning given in section 181(1) (general interpretation) of the 1993 Act;
“last service tax year” has the meaning given in section 16(2) of the 1993 Act as substituted by paragraph 16 of Schedule 13 to the Pensions Act 2014;
“relevant year” has the meaning given in section 16(5) of the 1993 Act182;
“the second abolition date” has the meaning given in section 181(1) of the 1993 Act183.”.
3. Amendment of the Occupational and Personal Pension Schemes (Consultation by Employers and Miscellaneous Amendment) Regulations 2006 (Omitted) 4. Amendment of the Occupational Pension Schemes (Schemes that were Contracted- out) (No.2) Regulations 2015 In regulation 20 (alteration of scheme rules) of the Occupational Pension Schemes (Schemes that were Contracted-out) (No.2) Regulations 2015184— (a) in the opening words, omit “would not”; and (b) for paragraphs (a) and (b) substitute— “(a) would not—
181 Section 8 is amended by paragraph 7 of Schedule 13 to the Pensions Act 2014 (c.19) (see SD 2018/0076) (“the 2014 Act”). 182 The definition of “relevant year” in section 16(5) was substituted by paragraph 4 of Schedule 2 to the Welfare Reform and Pensions Act 1999 (c. 30) (see SD 291/01). 183 The definition of “the second abolition date” was inserted by paragraph 43(2) of Schedule 13 to the 2014 Act. 184 S.I. 2015/1677 (see Schedule 3 to this Order). c SD No. 2018/0265 Page 75
SCHEDULE 7 Pension Schemes Legislation (Application) Order 2018
(i) affect any of the matters dealt with in Part III of the 1993 Act (schemes that were contracted-out etc. and effects on members’ state scheme rights), or any regulations made under that Part, that relate to guaranteed minimum pensions, in a manner that would or might adversely affect any entitlement or accrued rights of any member of the scheme acquired before the alteration takes effect; (ii) affect any of the matters dealt with in sections 87 to 92 of the 1993 Act185 (protection of increases in guaranteed minimum pensions) or sections 109 and 110 of that Act186 (annual increases of guaranteed minimum pensions) or any matters dealt with in regulations made under any of those provisions; or (b) is made for either or both of the purposes referred to in regulation 7B(1) (modification of schemes: revaluation of guaranteed minimum pensions) of the Occupational Pension Schemes (Modification of Schemes) Regulations 1996.”.
Signed by authority of the Secretary of State for Work and Pensions
Altmann Minister of State, 24th February 2016 Department for Work and Pensions
185 Section 87 was amended by paragraph 28 of Schedule 4 to the Pensions Act 2007 (see SD 193/09) and is amended by paragraph 38 of Schedule 13 to the 2014 Act. Other amendments to sections 87 to 92 are made by S.I. 2005/2050 (see SD 744/05). 186 Section 109 was substituted by SD 0614/12 and section 109(3A) is amended by paragraph 40 of Schedule 13 to the 2014 Act. Section 110 was amended by section 53(4) of the 1995 Act (see SD 501/97) and by S.I. 2005/2050 (see SD 744/05).
Page 76 SD No. 2018/0265 c
Pension Schemes Legislation (Application) Order 2018 SCHEDULE 8
SCHEDULE 8
[Article 6(2)(h)]
This Schedule sets out the text of the Pensions Act 2014 (Contributions Equivalent Premium) (Consequential Provision) and (Savings) (Amendment) Order 2016 (SI 2016/252) as applied by this Order, with such exceptions, adaptations and modifications made where necessary, which appear in bold italic type.
STATUTORY INSTRUMENTS
2016 No. 252 PENSIONS The Pensions Act 2014 (Contributions Equivalent Premium) (Consequential Provision) and (Savings) (Amendment) Order 2016
Made - - - - 24th February 2016
Laid before Parliament 2nd March 2016
Coming into force - - 6th April 2016
The Secretary of State for Work and Pensions, in exercise of the powers conferred by sections 53(1) and (2), 54(5) and (6) and 56(8) of the Pensions Act 2014, makes the following Order.
1. Citation [...] (1) This Order may be cited as the Pensions Act 2014 (Contributions Equivalent Premium) (Consequential Provision) and (Savings) (Amendment) Order 2016. (2) Omitted. 2. Interpretation In this Order — “the 1992 Act” means the Social Security Contributions and Benefits Act 1992187; “the 1993 Act” means the Pension Schemes Act 1993188; […]
187 1992 c.4 (see SD 505/94). 188 1993 c.48 (see SD 531/95). c SD No. 2018/0265 Page 77
SCHEDULE 8 Pension Schemes Legislation (Application) Order 2018
“contracted-out employment” has the meaning given by section 8 (meaning of “contracted-out employment”, “guaranteed minimum pension” and “minimum payment”)189 of the 1993 Act; “contracted-out occupational pension scheme” is a scheme which satisfied the requirements in section 7B (meaning of “contracted-out scheme” and “appropriate scheme”, etc.)190 of the 1993 Act; “the Department” means the Isle of Man Treasury; “guaranteed minimum pension” has the meaning given by section 8 of the 1993 Act; “normal pension age” has the meaning given by section 180 (normal pension age) of the 1993 Act; “pensionable age” has the meaning given by section 181 (general interpretation)191 of the 1993 Act; “relevant person” means — (a) omitted; [...] (b) [...] the trustees or managers of the scheme; and “the second abolition date” has the meaning given by section 7A192 of the 1993 Act. 3. Payment of contributions equivalent premium in respect of earners in formerly contracted-out schemes (1) Where a scheme ceases to be a contracted-out occupational pension scheme on the second abolition date, the relevant person may, upon the occurrence of a relevant event, elect to pay a premium in respect of a relevant member and must do so if paragraph (6) applies. (2) A premium paid under paragraph (1) is to be known as a “contributions equivalent premium”. (3) A “relevant member” is a member who — (a) was serving in contracted-out employment by reference to the scheme immediately prior to the second abolition date; and (b) unless the relevant event is an event of the description listed in paragraph (5)(d), at the date of the relevant event, has served for less than two years in that employment. (4) A “relevant event” is an event which —
189 Section 8 was amended by paragraph 23 of Schedule 5 and part 7 of Schedule 7 to the Pensions Act 1995 (c.26) (see SD 501/97), paragraph 1 of Schedule 1 to S.I. 2005/2050 (see SD 744/05), paragraphs 1, 2, 3, 7(1) and (4), 46 and 47 of Schedule 4 and part 7 of Schedule 7 to the Pensions Act 2007 (c.22) (see SD 193/09) (with the savings detailed in part 3 of Schedule 4 of that Act), SD 2016/0199 and paragraphs 1, 2 and 7 of Schedule 13 to the Pensions Act 2014 (see SD 2018/0076). 190 Section 7B was inserted by paragraphs 1 and 6 of Schedule 13 to the Pensions Act 2014 (see SD 2018/0076). 191 The definition of “pensionable age” in section 181 was substituted by paragraph 17 of Schedule 4 to the Pensions Act 1995 (see SD 501/97). 192 Section 7A was inserted by paragraphs 1 and 6 of Schedule 13 to the Pensions Act 2014 (see SD 2018/0076).
Page 78 SD No. 2018/0265 c
Pension Schemes Legislation (Application) Order 2018 SCHEDULE 8
(a) occurs before the member attains the scheme’s normal pension age or (if earlier) the end of the tax year preceding that in which the earner attains pensionable age; and (b) is of a description listed in paragraph (5). (5) For the purposes of paragraph (4), a relevant event occurs when — (a) the member’s service in the employment ceases otherwise than on the member’s death; (b) the member ceases to be a member of the scheme otherwise than on the member’s death; (c) the member’s service in the employment ceases on the member’s death and the member dies leaving a widow, widower or surviving civil partner; or (d) the scheme begins to be wound up. (6) This paragraph applies if — (a) at the date of the relevant event, the member has no accrued right to any benefit under the scheme; and (b) none of paragraphs (7), (8) or (9) applies. (7) This paragraph applies where — (a) the member’s service in the employment ceases on the member’s death; and (b) the member leaves a surviving spouse or civil partner who is not entitled to any of the following benefits — (i) a widowed mother’s allowance under section 37 of the 1992 Act (widowed mother’s allowance: deaths before 9 April 2001)193; (ii) a widow’s pension under section 38 of the 1992 Act (widow’s pension: deaths before 9 April 2001)194; (iii) a widowed parent’s allowance under section 39A of the 1992 Act (widowed parent’s allowance)195; (iv) a bereavement allowance under section 39B of the 1992 Act (bereavement allowance where no dependent children)196; or
193 Section 37 was amended by paragraph 18(1) and (2) of Schedule 24 and Schedule 30 to the Civil Partnership Act 2004 (c.33) (see SD 654/05), paragraphs 1 and 2 of Schedule 1 to the Child Benefit Act 2005 (c.6) (see SD 29/07) and paragraphs 2 and 10 of Schedule 16 to the Pensions Act 2014 (see SD 2018/0076) and SD 2016/0193. 194 Section 38 was amended by paragraph 19(1) and (2) of Schedule 24 and Schedule 30 to the Civil Partnership Act 2004 (see SD 654/05), paragraph 40 of Schedule 1 to the Pensions Act 2007 (see SD 193/09) and paragraphs 2 and 11 of Schedule 16 to the Pensions Act 2014 (see SD 2018/076) and SD 2016/0193. 195 Section 39A was inserted by section 55(2) of the Welfare Reform and Pensions Act 1999 (c.30) (see SD 600/00) and amended by paragraph 20(1) to (6) of Schedule 24 and Schedule 30 to the Civil Partnership Act 2004 (see SD 654/05), paragraphs 1 and 3 of Schedule 1 to the Child Benefit Act 2005 (see SD 29/07) and paragraphs 2 and 12 of Schedule 16 to the Pensions Act 2014 (see SD 2018/0076) and SD 2016/0193. 196 Section 39B was inserted by section 55(2) of the Welfare Reform and Pensions Act 1999 (see SD 600/00) and amended by paragraph 21(1) to (5) of Schedule 24 and Schedule 30 to the Civil Partnership Act 2004 (see SD 654/05) and SD 2016/0193. c SD No. 2018/0265 Page 79
SCHEDULE 8 Pension Schemes Legislation (Application) Order 2018
(v) a bereavement support payment under section 30 of the Pensions Act 2014 (bereavement support payment). (8) This paragraph applies where the member is a woman who has made, or is treated as having made, an election under regulations made under section 19(4)197 of the 1992 Act (general power to regulate liability for contributions), which has not been revoked, that her liability in respect of primary Class 1 contributions shall be at a reduced rate. (9) This paragraph applies where, on the termination of pensionable service, the member elects to acquire a right to a cash transfer sum in accordance with section 101AB(1)(a)198 of the 1993 Act (right to cash transfer sum and contribution refund). 4. Supplementary provision about contributions equivalent premiums paid under article 3 (1) A contributions equivalent premium payable under article 3 shall be paid by the relevant person to the Department on or before whichever is the later of — (a) the day which falls 6 months after — (i) [...]; [...] (ii) the day on which the relevant event occurred [...]; and (b) the day which falls one month after the day on which the Department sends to the relevant person a notice certifying the amount of the contributions equivalent premium payable. (2) Where the amount of the contributions equivalent premium does not exceed £17, the relevant person is not liable to pay it, but it is to be treated as paid for the purposes of section 48A(2)199 (additional pension and other benefits) and section 60200 (effect of payment of premiums on rights) of the 1993 Act. (3) Any liability for a contributions equivalent premium is a liability to make payment out of the resources of the scheme [...]. (4) The Department is to refund a contributions equivalent premium if — (a) it was paid in error; (b) the Department is satisfied that a transfer of the member’s accrued rights will be made in accordance with regulations made under section 20201 (transfer of accrued rights) or section 37A202 (transfer of liabilities, etc: schemes contracted- out on or after 6 April 1997) of the 1993 Act; or
197 Section 19(4) was amended by paragraphs 1 and 5(1) and (4) of Schedule 1 to the National Insurance Contributions Act 2002 (c.19) (see SD 802/09). 198 Section 101AB was inserted by section 264 of the 2004 Act (see SD 220/05). 199 Section 48A was inserted by section 140(1) of the Pensions Act 1995 (see SD 501/97) and amended by section 38(1) of the Child Support, Pensions and Social Security Act 2000 (c.19) (see SD 379/01), paragraphs 35 and 39 of Schedule 1 to the National Insurance Contributions Act 2002 (see SD 802/09), paragraphs 1 and 23 of Schedule 4 to the Pensions Act 2007 (with the savings detailed in part 3 of that Schedule) (see SD 193/09) and paragraphs 1 and 31 of Schedule 13 to the Pensions Act 2014 (see SD 2018/0076). 200 Section 60 is repealed by paragraphs 1 and 37 of Schedule 13 to the Pensions Act 2014 (see SD 2018/0076), but saved for certain purposes (see S.I. 2015/1502 (see Schedule 2 to this Order) as amended by article 5 of this Order). Section 60 was amended by paragraph 54 of Schedule 5 and Part 3 of Schedule 7 to the Pensions Act 1995 and by paragraph 17 of Schedule 1 to S.I. 2005/2050 (see SD 744/05). 201 Section 20 was amended by section 56 of, and paragraph 2 of Schedule 5 to, the Child Support, Pensions and Social Security Act 2000 (see SD 379/01), S.I 2005/2050 (see SD 744/05), paragraphs 46
Page 80 SD No. 2018/0265 c
Pension Schemes Legislation (Application) Order 2018 SCHEDULE 8
(c) the scheme is one under which a member may qualify for benefits by virtue of service either in employed earner’s employment or as a self-employed earner (within the meaning of section 2 of the 1992 Act (categories of earners)) or both, and the Department is satisfied that the member in respect of whom the contributions equivalent premium was paid has completed a period of membership of the scheme as a self-employed earner which, when aggregated with service in employed earner’s employment, amounts to not less than two years. (5) Where a contributions equivalent premium is refunded under paragraph (4), the member’s accrued rights under the scheme, which were extinguished by payment of the premium203, are to be restored. (6) A refund under this article is only to be made if an application is made in writing in such form as the Department may reasonably require for that purpose, or by means of an electronic communication in such form as the Department may approve. (7) In paragraph (4)(a), “error” means an error which — (a) was made at the time of payment; and (b) relates to some present or past matter. (8) Where — (a) an earner has been employed concurrently in two or more contracted-out employments, on the termination of one or more of which a contributions equivalent premium has been paid; and (b) the aggregate amount of any such payments has the effect that the Manx National Insurance Fund has gained, by reference to any employment in respect of which such a payment has been made, a greater amount than it would have gained from Class 1 contributions under the 1992 Act if those employments had not been contracted-out, there is to be paid out of the Manx National Insurance Fund to the earner (or to the earner’s estate) an amount which bears the same proportion to the amount of the excess as the reduction under section 41(1A) of the 1993 Act204 (as it had effect immediately before the second abolition date) (reduced rates of Class 1 contributions) in the normal percentage of primary Class 1 contributions bears to the total reduction under subsections (1A) and (1B)205 of that section in the total normal percentage of Class 1 contributions.
and 48 of Schedule 4 and Part 7 of Schedule 7 to the Pension Act 2007 (see SD 193/09) and is amended by paragraph 18 of Schedule 13 to the Pensions Act 2014 (see SD 2018/0076). 202 Section 37A was inserted by paragraphs 1 and 25 of Schedule 13 to the Pensions Act 2014 (see SD 2018/0076). 203 Under section 60 of the Pension Schemes Act 1993 (as modified by article 2(5F) of S.I. 2015/1502 (see Schedule 2 to this Order), as amended by article 5 of this Order), payment of a contributions equivalent premium extinguishes the earner’s (or the earner’s survivor’s) accrued rights to any guaranteed minimum pension or pension under the scheme attributable to the amount of the premium. 204 Section 41 is repealed by paragraph 29 of Schedule 13 to the Pensions Act 2014 (see SD 2018/0076), but saved for certain purposes, see S.I. 2015/1502 (see Schedule 2 to this Order). Subsection (1A) was inserted by section 137 of the Pensions Act 1995 (see SD 501/97), and substituted by paragraph 6 of Schedule 9 to the Welfare Reform and Pensions Act 1999 (see SD 600/00) and amended by paragraphs 35 and 36 of Schedule 1 to the National Insurance Contributions Act 2002 (see SD 802/09). 205 Subsection (1B) was inserted by section 137 of the Pensions Act 1995, and substituted by paragraph 6 of Schedule 9 to the Welfare Reform and Pensions Act 1999 (see SD 600/00). c SD No. 2018/0265 Page 81
SCHEDULE 8 Pension Schemes Legislation (Application) Order 2018
(9) The Department is also to refund a contributions equivalent premium if it is satisfied that — (a) where it was paid in the circumstances mentioned in article 3(5)(a), (b) or (d), the relevant member has died, without leaving a widow, widower or surviving civil partner, on or before the later of the days mentioned in paragraph (1)(a) and (b); or (b) where it was paid in the circumstances mentioned in article 3(5)(c), there are no accrued rights to guaranteed minimum pensions or section 9(2B) rights under the scheme in question in respect of the widow, widower or surviving civil partner in question. (10) In paragraph (9) “section 9(2B) rights” has the meaning given in regulation 2(1) of the Occupational Pension Schemes (Schemes that were Contracted-out) (No. 2) Regulations 2015206 (interpretation). 5. Amendment of the Pensions Act 2014 (Savings) Order 2015 (1) The Pensions Act 2014 (Savings) Order 2015207 is amended as follows. (2) Omitted. (3) In article 2 (savings) — (a) in paragraph (1) omit “, 37”; (b) in paragraph (2) omit sub-paragraph (i); (c) in paragraph (4) after “employment ended” omit “on or”; and (d) after paragraph (3A)208 insert — “(5A) Sections 55 to 68 of the 1993 Act (state scheme premiums)209 continue to have effect as if they had not been repealed by paragraph 37 of Schedule 13 to the 2014 Act (abolition of contracting-out for salary related schemes) for the purposes of allowing action to be taken by the Department and the trustees or managers of a scheme in relation to the payment of a contributions equivalent premium in respect of an earner to whom section 55(2)(a) to (c) applied before the second abolition date. (5B) Sections 56 to 68 of the 1993 Act additionally continue to have effect as if they had not been repealed by paragraph 37 of Schedule 13 to the 2014 Act insofar as necessary for the purposes of article 3 of the Pensions Act 2014 (Contributions Equivalent Premium) (Consequential Provision) and (Savings) (Amendment) Order 2016 with the modifications specified in paragraphs (5C) to (5F).
206 S.I. 2015/1677 (see Schedule 3 to this Order) as amended by S.I. 2016/200 (see Schedule 6 to this Order). 207 S.I. 2015/1502 (see Schedule 2 to this Order) as amended by S.I. 2015/2058 (see Schedule 4 to this Order). 208 Paragraph (3A) inserted by article 3 of S.I. 2015/2058 (c.129). 209 Sections 55 to 68 are repealed by paragraph 37 of Schedule 13 to the Pensions Act 2014 (see SD 2018/0076), although sections 59 and 64-66 were repealed by paragraphs 18, 53 and 58 to 60 of Schedule 5 to the Pensions Act 1995 (see SD 501/97). Sections 55 to 58, 60 to 63, 67 and 68 were amended by paragraphs 50 to 52, 54 to 57, and 61 of Schedule 5 to, the Pensions Act 1995 (see SD 501/97), paragraph 5 of Schedule 5 to the Child Support, Pensions and Social Security Act 2000 (c.19) (see SD 3749/01), S.I. 2005/2050 (see SD 744/05) and paragraphs 1 and 26 of Schedule 4 to, and Part 6 of Schedule 7 to, the Pensions Act 2007 (see SD 193/09).
Page 82 SD No. 2018/0265 c
Pension Schemes Legislation (Application) Order 2018 SCHEDULE 8
(5C) In section 56 (provisions supplementary to s55) — (a) omit subsection (2); (b) in subsection (4) for the wording following paragraph (b) substitute — “the earner’s length of service in employment for the purposes of article 3(3)(b) of the Pensions Act 2014 (Contributions Equivalent Premium) (Consequential Provision) and (Savings) (Amendment) Order 2016 shall include any period of linked qualifying service which was contracted-out employment by reference to the other scheme.”; (c) in subsection (6) for “section 55(2A)” substitute “article 3(5) of the Pensions Act 2014 (Contributions Equivalent Premium) (Consequential Provision) and (Savings) (Amendment) Order 2016”; (d) omitted […] (e) omitted (5D) In section 57 (elections to pay contributions equivalent premiums) — (a) for subsection (1) substitute — “(1) Where the relevant person is required to make a contributions equivalent premium or elects to do so under article 3 of the Pensions Act 2014 (Contributions Equivalent Premium) (Consequential Provision) and (Savings) (Amendment) Order 2016, the relevant person must notify the Department in writing in such form as the Department may reasonably require for the purpose of identifying the earner to whom the election relates. (1A) Such notification must be given — (a) where the circumstances specified in article 3(5)(d) of that Order apply, within the period of two years starting with the date the scheme began to be wound up; or (b) where the circumstances specified in article 3(5)(a), (b) or (c) apply, within the period beginning one month before, and ending 6 months after, the date on which the earner’s service in employment in relation to the scheme or membership of the scheme ceased. (1B) In this section the “relevant person” means — (a) omitted [...] (b) [...] the trustees or managers of the scheme.”; (b) in subsection (2) for “prescribed person” substitute “relevant person”; and (c) omit subsection (4).
c SD No. 2018/0265 Page 83
SCHEDULE 8 Pension Schemes Legislation (Application) Order 2018
(5E) In section 58(7) (amount of premiums payable under s. 55) for “section 55(2)” substitute “article 3 of the Pensions Act 2014 (Contributions Equivalent Premium) (Consequential Provision) and (Savings) (Amendment) Order 2016”. (5F) In section 60 (effect of payment of premium on rights) — (a) in subsection (4) for “section 55(2A)(a) and (b), (d) and (e)” substitute “article 3(5)(a), (b) and (d) of the Pensions Act 2014 (Contributions Equivalent Premium) (Consequential Provision) and (Savings) (Amendment) Order 2016”; and (b) in subsection (5) for “section 55(2A)(c)” substitute “article 3(5)(c) of the Pensions Act 2014 (Contributions Equivalent Premium) (Consequential Provision) and (Savings) (Amendment) Order 2016”.”.
Signed by authority of the Secretary of State for Work and Pensions
Altmann Minister of State, 24th February 2016 Department for Work and Pensions
Page 84 SD No. 2018/0265 c
Pension Schemes Legislation (Application) Order 2018 SCHEDULE 9
SCHEDULE 9
[Article 6(2)(i)]
This Schedule sets out the text of the Occupational Pension Schemes and Social Security (Schemes that were Contracted-out and Graduated Retirement Benefit) (Miscellaneous Amendments) Regulations 2017 (SI 2017/354) as applied by this Order, with such exceptions, adaptations and modifications made where necessary, which appear in bold italic type.
STATUTORY INSTRUMENTS
2017 No. 354 PENSIONS SOCIAL SECURITY The Occupational Pension Schemes and Social Security (Schemes that were Contracted-out and Graduated Retirement Benefit) (Miscellaneous Amendments) Regulations 2017
Made - - - - 9th March 2017
Laid before Parliament 13th March 2017
Coming into force - - 6th April 2017
The Secretary of State for Work and Pensions makes the following Regulations in exercise of the powers conferred by sections 62(1)(a) and (c) and 175(3) and (4) of the Social Security Contributions and Benefits Act 1992, sections 16(3) and (4), 17(6), 20(1) and (3), 55(2C), 56(2), 57(1) and (2), 181(1), 182(2) and (3) and 183(1) of the Pension Schemes Act 1993 and sections 51(2C), 52(2), 53(1) and (2), 176(1), 177(2) to (4) and 178(1) of the Pension Schemes (Northern Ireland) Act 1993. In accordance with section 185(1) of the Pension Schemes Act 1993, and for the purposes of regulations 2 and 4, the Secretary of State has consulted such persons as the Secretary of State considers appropriate. The Social Security Advisory Committee has agreed that the proposals in respect of regulation 3 of these Regulations should not be referred to it.
1. Citation [...] (1) These Regulations may be cited as the Occupational Pension Schemes and Social Security (Schemes that were Contracted-out and Graduated Retirement Benefit) (Miscellaneous Amendments) Regulations 2017.
c SD No. 2018/0265 Page 85
SCHEDULE 9 Pension Schemes Legislation (Application) Order 2018
(2) to (4) Omitted. 2. Amendment of the Contracting-out (Transfer and Transfer Payment) Regulations 1996 In regulation 13B(1) (modification of section 16: revaluation after transfer from another scheme) of the Contracting-out (Transfer and Transfer Payment) Regulations 1996210, after “This regulation applies” insert “where an earner’s service in contracted-out employment211 ended on the second abolition date212 and”. 3. Amendment of the Social Security (Graduated Retirement Benefit) Regulations 2005 (Omitted) 4. Amendment of the Occupational Pension Schemes (Schemes that were Contracted- out) (No.2) Regulations 2015 (1) The Occupational Pension Schemes (Schemes that were Contracted-out) (No.2) Regulations 2015213 are amended as follows. (2) In regulation 2 (interpretation)214 — (a) after the definition of “administrator” insert — ““bereavement support payment” means the benefit described in section 30 (bereavement support payment) of the Pensions Act 2014215;”; (b) omitted. (3) For regulation 9(3) (notification of requirement to pay a contributions equivalent premium) substitute — “(3) The Department may in any particular case or class of case extend the period within which notification is to be given — (a) if it appears to the Department that notification could not reasonably have been given within the period specified in paragraph (2); or (b) if — (i) the trustees are seeking to reach, or have reached, an agreement with the Department as to the scheme’s liabilities for guaranteed minimum pensions or section 9(2B) rights of members [...]; and (ii) as a result of doing so, the Department and the trustees agree that a premium is payable.”. (4) For regulation 11(5) (elections to pay contributions equivalent premiums) substitute —
210 S.I. 1996/1462 (see SD 23/98). Regulation 13B was inserted by S.I. 2015/1677 (see Schedule 3 to this Order). 211 The definition of “contracted-out employment” in section 8 of the Pension Schemes Act 1993 (c. 48) (see SD 531/95) was amended by the Pensions Act 2007 (c. 22) (see SD 193/09) and the Pensions Act 2014 (c. 19) (see SD 2018/0076). 212 The definition of “the second abolition date” in section 7A of the Pension Schemes Act 1993 (c. 48) (see SD 531/95) was inserted by paragraphs 1 and 6 of Schedule 13 to the Pensions Act 2014 (c. 19) (see SD 2018/0076). 213 S.I. 2015/1677 (see Schedule 3 to this Order); relevant amending instrument is S.I. 2016/200 (see Schedule 6 to this Order) 214 There are amendments to regulation 2 that are not relevant to these Regulations. 215 2014 c. 19 (see SD 2018/0076).
Page 86 SD No. 2018/0265 c
Pension Schemes Legislation (Application) Order 2018 SCHEDULE 9
“(5) The Department may in any particular case or class of case extend the period within which notification of an election is to be given — (a) if it appears to the Department that notification could not reasonably have been given within the period specified in paragraph (4); or (b) if — (i) the trustees are seeking to reach, or have reached, an agreement with the Department as to the scheme’s liabilities for guaranteed minimum pensions or section 9(2B) rights of members [...]; and (ii) as a result of doing so, the Department and the trustees agree that a premium is payable.”. (5) In regulation 12(3) (payment of a contributions equivalent premium) — (a) after sub-paragraph (a) omit “and”; (b) after sub-paragraph (b) insert — “; and (c) if — (i) the trustees are seeking to reach, or have reached, an agreement with the Department as to the scheme’s liabilities for guaranteed minimum pensions or section 9(2B) rights of members [...]; and (ii) as a result of doing so, the Department and the trustees agree that a premium is payable, by such further period as it considers reasonable.”. (6) In regulation 21(1) (circumstances for the purposes of section 17(6) of the 1993 Act in which widower’s, widow’s or surviving civil partner’s guaranteed minimum pension is payable) — (a) after sub-paragraph (b) omit “or”; (b) after sub-paragraph (c) insert — “(d) the widower, widow or surviving civil partner is entitled to a bereavement support payment by virtue of the earner’s contributions; or (e) the widower, widow or surviving civil partner was entitled to a bereavement support payment by virtue of the earner’s contributions but that entitlement came to an end at a time after the widower, widow or surviving civil partner attained the age of 45.”. (7) In regulation 22 (period for the purposes of section 17(6) of the 1993 Act for which widower’s, widow’s or surviving civil partner’s guaranteed minimum pension is payable) — (a) after paragraph (3) insert — “(3A) Where a pension is payable by virtue of regulation 21(1)(d) but not by virtue of regulation 21(1)(a), (b), (c) or (e), the scheme is to make provision for the pension to be payable for the period during which the circumstances described in regulation 21(1) (d) continue to exist.
c SD No. 2018/0265 Page 87
SCHEDULE 9 Pension Schemes Legislation (Application) Order 2018
(3B) Subject to paragraph (4A), where a pension is payable by virtue of regulation 21(1)(e) but not by virtue of regulation 21(1)(a), (b), (c) or (d), the scheme is to make provision for the pension to be payable for the remainder of the widower’s, widow’s or surviving civil partner’s life.”; (b) for paragraphs (4) and (5) substitute — “(4) Subject to paragraph (5), there is excluded from the periods prescribed by paragraphs (2) and (3) any period — (a) after the time of any — (i) marriage; or (ii) formation of a civil partnership, by the widower, widow or surviving civil partner whilst under pensionable age216 and which takes place after the earner’s death; or (b) during which the widower, widow or surviving civil partner is under pensionable age and he or she and another person are living together as a married couple; or (c) after the widower, widow or surviving civil partner has attained pensionable age if, immediately before he or she attained that age, he or she and another person were living together as a married couple. (4A) Subject to paragraph (5), there is excluded from the period prescribed by paragraph (3B) any period — (a) after the time of any — (i) marriage; or (ii) formation of a civil partnership, by the widower, widow or surviving civil partner which takes place after the earner’s death; or (b) during which the widower, widow or surviving civil partner and another person are living together as a married couple. (5) The following provisions do not apply where a man became a widower before 5th December 2005 — (a) paragraphs 4(a)(i) and (4A)(a)(i) so far as they relate to a marriage involving two people of the same sex; (b) paragraphs 4(a)(ii) and (4A)(a)(ii); and (c) paragraphs (4)(b), (4)(c) and (4A)(b) so far as they relate to the living together of two people of the same sex.”. (8) After regulation 24(1) (fixed rate revaluation of guaranteed minimum pensions for early leavers) insert —
216 The definition of “pensionable age” in section 181 of the Pension Schemes Act 1993 (c. 48) (see SD 531/95) was substituted by paragraph 17 of Schedule 4 to the Pensions Act 1995 (see SD 501/97).
Page 88 SD No. 2018/0265 c
Pension Schemes Legislation (Application) Order 2018 SCHEDULE 9
“(2) Subject to paragraph (3), in a case to which this regulation applies, the scheme is to provide for the weekly equivalent mentioned in section 14(2) of the 1993 Act to be increased, in relation to the period of service in respect of which accrued rights to a guaranteed minimum pension have been acquired under, or transferred to, the scheme, by at least — (a) omitted; (b) 3.5 per cent compound, where the period of pensionable service217 under the scheme terminates on or after 6th April 2019.”. (9) to (11) Omitted.
Signed by authority of the Secretary of State for Work and Pensions
Richard Harrington Parliamentary Under Secretary of State 9th March 2017 Department for Work and Pensions
217 “Pensionable service” is defined in section 70(2) of the Pension Schemes Act 1993 (c. 48) (see SD 531/95). c SD No. 2018/0265 Page 89
Explanatory Note Pension Schemes Legislation (Application) Order 2018
EXPLANATORY NOTE (This note is not part of the Order)
Section 1 of the Pension Schemes Act 1995 (an Act of Tynwald) enables the Treasury by order to apply to the Island, as part of the law of the Island and incorporating such exceptions, adaptations and modifications as may be specified by the order, any legislation to which that section applies.
Section 1 of that Act applies to (inter alia) the Pensions Act 2014 (an Act of the United Kingdom Parliament) and to any statutory instrument made or having effect as if made under that Act.
This Order applies to the Island the legislation referred to in article 3(1) of the Order, the provisions of which are summarised in the following paragraphs and relate to, or are connected with, the abolition of contracting-out on the “second abolition date” (6 April 2019).
The Occupational Pension Schemes (Power to Amend Schemes to Reflect Abolition of Contracting-Out) Regulations 2015 (S.I. 2015/118)
Section 24(2) of the Pensions Act 2014 as it has effect in the Island (“the 2014 Act”) gives employers sponsoring contracted-out salary related occupational pension schemes, and administrators in relation to contracted-out public service pension schemes, a power to amend the scheme rules to reflect the abolition of contracting-out for these schemes (“the power”). Amendments may be made to increase employee contributions or alter the future accrual of benefits, or do both, for or in respect of some or all of the scheme members. But the extent to which the scheme rules may be amended using this power is limited by reference to the increase in the sponsoring employer’s national insurance contributions due to the abolition of contracting-out.
These Regulations set out the detail of how the power may be used, in particular how an actuary is to calculate and certify that the value of the proposed amendments is not greater than the increase in the employer’s national insurance contributions.
Regulation 3A describes which public sector pension schemes may be amended under section 24(2) of the 2014 Act. Regulation 4 defines what is meant by the “total annual employee contributions of the relevant members” and specifies how the actuary is to calculate this amount. Regulations 5 and 6 define what is meant by “annual increase in an employer’s national insurance contributions in respect of the relevant members” and a “scheme’s liabilities in respect of the benefits that accrue annually for or in respect of the relevant members” respectively and similarly provide for calculation of these amounts.
Regulation 7 sets out what earnings data should be used in the calculations. Regulation 8 sets out further requirements for how the actuary is to carry out the calculations, and for the use of other data and actuarial methods and assumptions when making the
Page 90 SD No. 2018/0265 c
Pension Schemes Legislation (Application) Order 2018 Explanatory Note calculations required when using the power. Regulation 8(8) provides that when an employer or administrator is using the power to make scheme amendments on a second or subsequent occasion the calculation date must be the same as the original calculation date.
Regulation 9 imposes a restriction on the type of amendments that may be made. An employer or administrator may not make an amendment that would take the power to determine any matter away from the trustees or managers of the scheme.
Regulation 10 describes the category of person who may act as the actuary appointed by the employer or administrator, and regulation 11 sets out what the actuary must certify before any proposed amendments may take effect. The Schedule sets out the information that must be included in the certificate that the actuary must provide to the trustees or managers and sponsoring employer, administrator or principal employer in a multi-employer scheme. Regulation 12 imposes an obligation on the trustees or managers of a scheme to provide any information requested by the sponsoring employer, principal employer or administrator in connection with the use of the power.
Regulations 13 to 15 modify certain provisions in the 2014 Act and these Regulations as these apply to multi-employer schemes. In respect of sections of a multi-employer scheme that have a single sponsoring employer, each section is to be treated as a separate scheme and each employer may make amendments. In schemes which are not segregated, or sections of schemes which have more than one employer, the principal employer in relation to the scheme or section may make the amendments.
Regulation 16 provides that the employer, principal employer or administrator must consult with the scheme trustees or managers about an appropriate date for the amendments to take effect and after consultation notify them of the amendment date. No amendments made using the power can take effect before 6 April 2019, when contracting-out for salary related occupational pension schemes is due to be abolished.
The Pensions Act 2014 (Savings) Order 2015 (S.I. 2015/1502)
This Order saves certain provisions of Part 3 of the Pensions Act 1993 as it has effect in the Island (“the 1993 Act”) repealed by Schedule 13 of the 2014 Act, which abolishes contracting-out for salary related schemes.
Article 2(1) and (2) saves for three years from the second abolition date (6 April 2022), those provisions of the 1993 Act which relate to certification of contracted-out schemes, cancellation of certificates, the national insurance rebate, Treasury supervision of contracted-out schemes and state scheme premiums, in order to require or allow schemes and the Treasury to carry out necessary tasks relating to a period of contracted-out employment which occurred before the second abolition date (6 April 2019).
Article 2(3) saves section 16(2) of the 1993 Act in relation to an earner whose service in contracted-out employment ended before the section abolition date. c SD No. 2018/0265 Page 91
Explanatory Note Pension Schemes Legislation (Application) Order 2018
Article 2(4) and (5) saves sections 55 to 68 of the 1993 Act to allow a contributions equivalent premium to be paid after 6 April 2022 in circumstances where the scheme started to wind up before the second abolition date (6 April 2019).
The Occupational Pension Schemes (Schemes that were Contracted-out) (No.2) Regulations 2015 (S.I. 2015/1677)
The 2014 Act makes amendments to existing UK primary legislation as it has effect in the Island to abolish contracting-out of the state additional pension for salary related pension schemes. These Regulations revoke and replace most of the Occupational Pension Schemes (Contracting-out) Regulations 1996 as they have effect in the Island (“the 1996 Regulations”) in consequence of provision made by the 2014 Act.
Much of the provision made by the 1996 Regulations is revoked with effect from the second abolition date (6 April 2019) by regulation 31.
Some provisions of the 1993 Act and the 1996 Regulations will remain in force until 6 April 2022, in accordance with savings provisions contained in the Pensions Act 2014 (Savings) Order 2015 (see Schedule 2 to this Order). In particular, provisions relating to the issue, variation and surrender of contracting-out certificates remain in force to enable the Treasury to issue certificates relating to a period before the second abolition date, and to deal with any variation or surrender of such a certificate which is to take effect from a date preceding that date. Provisions relating to schemes which have ceased to contract-out before the second abolition date also remain in force, to ensure that the Treasury is notified of the termination of contracted-out employment in these circumstances and that earner’s pension rights are protected.
Provisions of the 1996 Regulations which are to continue to have effect after the second abolition date are, where necessary, amended by regulations 28 and 29 to reflect the abolition of contracting-out.
Provisions of the 1996 Regulations which are to continue to apply indefinitely to pension schemes which were contracted-out prior to the second abolition date are re- enacted, with modifications reflecting the abolition of contracting-out, in these Regulations. Part 2 contains provisions relating to all pension schemes which were salary related contracted-out schemes, Part 3 carries forward additional requirements relating to section 9(2B) rights and Part 4 continues additional requirements in relation to guaranteed minimum pensions. “Section 9(2B) rights” are rights attributable to employment which was contracted-out on and after 6 April 1997 under section 9(2B) of the 1993 Act. Guaranteed minimum pensions relate to contracted-out employment before that date where, under scheme rules, the weekly rate of the pension is to be not less than the guaranteed minimum under sections 14 to 16 of the 1993 Act.
In Part 2, regulation 3 imposes limitations on the alteration of scheme rules, regulation 4 deals with correction of errors as to whether an earner was in contracted-out employment, regulation 5 provides for the disclosure of certain information by the Treasury and regulation 6 continues requirements as to the rules of overseas schemes. Regulation 7 provides for restoration of rights in the State scheme where a scheme is
Page 92 SD No. 2018/0265 c
Pension Schemes Legislation (Application) Order 2018 Explanatory Note insolvent and regulations 8 to 14 carry forward provisions relating to contributions equivalent premiums. Under the savings provisions contained within Pensions Act 2014 (Savings) Order 2015 (see Schedule 2 to this Order and article 5), these provisions apply only in relation to schemes which ceased to be contracted-out before 6 April 2019 and, after 6 April 2022, only in relation to such schemes which are winding up. Regulations 15 and 16 carry forward certain transitional provisions and savings from the 1996 Regulations.
In Part 3, regulation 17 sets out the circumstances in which scheme rules may be altered in relation to section 9(2B) rights and regulation 18 carries forward requirements for the payment of lump sums and commutation of benefits.
In Part 4, regulation 20 continues limitations on the alteration of scheme rules in relation to guaranteed minimum pensions and regulations 21 and 22 carry forward requirements as to the payment of pensions to surviving spouses and civil partners. Regulations 23 and 24 deal with revaluation of guaranteed minimum pensions (GMPs) and regulation 25 describes the circumstances in which a lump sum may be paid instead of a pension. Provision as to suspension and forfeiture of guaranteed minimum pensions is carried forward by regulation 26; regulation 27 deals with conversion of guaranteed minimum pensions into other benefits.
Part 6 carries forward modifications of section 16 in relation to revaluation after transfer from another scheme previously located in the 1996 Regulations, by inserting those provisions into the Contracting-out (Transfer and Transfer Payment) Regulations 1996 as they have effect in the Island.
Part 7 provides for revocations and savings of the 1996 Regulations. Regulations 62, 65 and 66 of the 1996 Regulations are saved for the purposes of maintaining the current provisions for fixed rate revaluation of GMPs where an earner ceased contracted-out employment before the second abolition date.
The Pensions Act 2014 (Commencement No.7) and (Savings) (Amendment) Order 2015 (S.I. 2015/2058) (C.129)
This Order makes amendments to the Pensions Act 2014 (Savings) Order 2015 (see Schedule 2 to this Order). Sections 12A to 12D of the Pensions Act 1993 as it has effect in the Island (“the 1993 Act”) are saved in relation to a former salary related contracted-out scheme which operates a reference scheme minimum benefit which is defined by reference to section 12B of the 1993 Act. Section 50 of the 1993 Act is saved for a period of 3 years in relation to salary related contracted-out schemes that ceased to be such schemes before the second abolition date (6 April 2019). Section 87(1)(a) of the 1993 Act is saved in relation to an earner whose service in contracted-out employment ended before 6 April 2019.
The State Pension and Occupational Pension Schemes (Miscellaneous Amendments) Regulations 2016 (S.I. 2016/199)
c SD No. 2018/0265 Page 93
Explanatory Note Pension Schemes Legislation (Application) Order 2018
Regulation 6 amends the Occupational Pension Schemes (Schemes that were Contracted-out) (No.2) Regulations 2015 as they have effect in the Island (see Schedule 3 to this Order) (“the Contracted-out Regulations”). The amendment sets out the requirements for the provision of survivors’ benefits to members of a former contracted-out pension scheme who have accrued rights to a guaranteed minimum pension (“GMP”), where the scheme has converted GMPs into other benefits. The requirements are the same as the requirements for survivors’ benefits in legislation governing the provision of GMPs (see sections 13 to 25 of the Pension Schemes Act 1993). This amendment is made as a consequence of the abolition of contracting-out. It replaces regulation 69B of the Occupational Pension Schemes (Contracting-out) Regulations 1996, which is revoked by regulation 6 of these Regulations.
The Pensions Act 2014 (Abolition of Contracting-out for Salary Related Pension Schemes) (Consequential Amendments and Savings) Order 2016 (S.I. 2016/200)
This Order makes consequential amendments to subordinate legislation as it has effect in the Island in connection with the abolition of contracting-out of the additional state pension for salary related pension schemes under the 2014 Act.
In particular, references to a salary related contracted-out scheme are amended to refer to a scheme that was a salary related contracted-out scheme. This term is defined in section 7B of the 1993 Act, which was inserted by the 2014 Act. The Order also amends references to provisions of the 1993 Act which are repealed by the 2014 Act and to the Occupational Pension Schemes (Contracting-out) Regulations 1996, which are revoked and replaced (subject to savings) by the Occupational Pension Schemes (Schemes that were Contracted-out) (No.2) Regulations 2015 (see Schedule 3 to this Order).
Article 2(3) amends regulation 24 of the Occupational Pension Schemes (Preservation of Benefit) Regulations 1991 as they have effect in the Island to clarify that a salary related scheme ceasing to contract-out on the second abolition date (6 April 2019) does not constitute a “material alteration” of the scheme for the purposes of that regulation.
Article 3 amends the definition of “section 9(2B) rights” in the Occupational Pension Schemes (Contracting-out) Regulations 1996 as they have effect in the Island and article 28 amends the same definition within the Occupational Pension Schemes (Schemes that were Contracted-out) (No.2) Regulations 2015 as they have effect in the Island to ensure consistency between the two definitions and to take account of the changes to the transfer provisions made by article 4.
Article 4 omits certain provisions of the Contracting-out (Transfer and Transfer Payment) Regulations 1996 as they have effect in the Island relating to transfers and transfer payments of pension rights between schemes which are both contracted-out. These provisions continue to have effect under article 5 in relation to transfers which occurred before the second abolition date.
Articles 29, 30 and 31 amend respectively the Occupational Pension Schemes (Transfer Values) Regulations 1996, the Pension Sharing (Implementation and Discharge of Liability) Regulations 2000 and the Pension Sharing (Pension Credit Benefit)
Page 94 SD No. 2018/0265 c
Pension Schemes Legislation (Application) Order 2018 Explanatory Note
Regulations 2000 as all of those Regulations have effect in the Island to allow for the time for relevant payments to be paid to be extended by the Treasury where the scheme is still seeking to reach an agreement with the Treasury, following the abolition of contracting-out, as to the scheme’s liabilities for guaranteed minimum pensions and section 9(2B) rights. These provisions are then revoked from 6th April 2024 by articles 34, 36 and 37 respectively.
Article 32 removes the requirement for schemes to provide information as to what employment is contracted-out employment under the scheme, from 6 April 2020.
Article 33 revokes the Occupational Pension Schemes (Modification of the Pension Schemes Act 1993) Regulations 1998 from 6 April 2022.
The Occupational and Personal Pension Schemes (Modification of Schemes - Miscellaneous Amendments) Regulations 2016 (S.I. 2016/231)
These Regulations make changes to two sets of regulations as a consequence of provisions which abolishes contracting-out for salary related occupational pension schemes from “the second abolition date” (6 April 2019).
Regulation 2 amends the Occupational Pension Schemes (Modification of Schemes) Regulations 1996 as they have effect in the Island to provide a power for such schemes to modify their scheme rules to take account of changes made to section 16(2) of the Pension Schemes Act 1993 by Schedule 13 of the 2014 Act. Schemes may use this power to make changes to have effect from the second abolition date.
Regulation 4 amends the Occupational Pension Schemes (Schemes that were Contracted-out) (No.2) Regulations 2015 as they have effect in the Island so that changes made using the power provided for in regulation 2 is a permitted change to scheme rules which govern guaranteed minimum pensions.
Pensions Act 2014 (Contributions Equivalent Premium) (Consequential Provision) and (Savings) (Amendment) Order 2016 (S.I. 2016/252)
This Order makes provision for the payment of contributions equivalent premiums (“CEP”) following the ending of contracting-out.
Before 6 April 2019 members of occupational pension schemes could be contracted-out of the additional state pension.
Under section 55 of the Pension Schemes Act 1993, a member who had been contracted out of the additional state pension could be bought back into the additional state pension via payment of a CEP if they had less than 2 years’ pensionable service when they died or left the scheme or ceased to be contracted-out, or when the scheme wound up. Subject to certain exceptions, schemes were required to pay the CEP in respect of such members if they had no accrued rights in the scheme at that point.
c SD No. 2018/0265 Page 95
Explanatory Note Pension Schemes Legislation (Application) Order 2018
Article 3 makes provision in relation to the payment of CEPs in respect of those members who are in contracted-out employment immediately before the ending of contracting-out on 6 April 2019. Under article 3, CEPs may be paid if the scheme subsequently begins to be wound up, or if the member dies or leaves the scheme prior to completing 2 years’ service. CEPs are required to be paid in these circumstances if the member has no accrued rights in the scheme at that point.
Article 4 makes supplementary provision in relation to practical aspects of CEP payments made under article 3, such as timing for notification and payment and refunds. These mirror provisions made for CEP payments which arise under section 55 of the Pension Schemes Act 1993.
Article 5 amends the Pensions Act 2014 (Savings) Order 2015 (see Schedule 1 to this Order), making clear that sections 55 to 68 of the Pension Schemes Act 1993 are saved insofar as necessary for action to be taken in relation to the payment of a CEP where the criteria for payment were satisfied before the ending of contracting out. Sections 56 to 68 are additionally saved with modifications for the purposes of CEPs which are payable as a result of article 3.
The Occupational Pension Schemes and Social Security (Schemes that were Contracted-out and Graduated Retirement Benefit) (Miscellaneous Amendments) Regulations 2017 (SI 2017/354)
These Regulations make amendments to secondary legislation relating to the abolition of contracting-out of the additional State Pension for salary related pension schemes. They also make amendments to secondary legislation to carry over the fixed rate of revaluation of guaranteed minimum pensions for those leaving pensionable service from the Occupational Pension Schemes (Contracting-out) Regulations 1996 as they have effect in the Island.
Regulation 2 makes amendments to the Contracting-out (Transfer and Transfer Payment) Regulations 1996 as they have effect in the Island to state that those regulations apply to salary related pension schemes that ceased to contract out on the second abolition date (6 April 2019).
Regulation 4 makes the following amendments to the Occupational Pension Schemes (Schemes that were Contracted-out) (No.2) Regulations 2015 (see Schedule 2 to this Order). It enables the Treasury to extend the deadline for late notification and payment of a contributions equivalent premium where a scheme has reconciled its records with the Treasury. Further, it provides that a guaranteed minimum pension can also be paid to an earner’s survivor where such a person is entitled to bereavement support payment and defines the period for which the guaranteed minimum pension can be paid in this situation. It also provides that the fixed rate of revaluation of guaranteed minimum pensions for those leaving pensionable service after 6 April 2019 is 3.5 per cent.
Page 96 SD No. 2018/0265 c