The Pension Sharing (Implementation and Discharge of Liability) Regulations (Northern Ireland) 2000

Disqualification as a destination for pension credit — annuity contracts and insurance policies

15.—(1) The circumstances referred to in paragraph 7(4) of Schedule 5 (circumstances in which an annuity contract or insurance policy is disqualified as a destination for a pension credit) are where the requirements specified in paragraphs (2) to (7) are not satisfied.

(2) The annuity contract or insurance policy must provide that that contract or policy, as the case may be, may not be assigned or surrendered unless—

(a) the person entitled to the pension credit, or

(b) if the person entitled to the pension credit has died, his widow or widower,

has consented to the assignment or surrender.

(3) The benefits previously secured by the annuity contract or insurance policy become secured, or are replaced by benefits which are secured by another qualifying arrangement.

(4) The annuity contract or insurance policy, as the case may be, must provide that the benefits secured by that contract or policy may be commuted if either—

(a) the conditions set out in paragraph (5) are satisfied, or

(b) the conditions set out in paragraph (6) are satisfied.

(5) The conditions referred to in paragraph (4)(a) are—

(a) the benefits secured by the annuity contract or insurance policy have become payable, and the aggregate of those benefits does not exceed £260 per annum;

(b) an actuary certifies that the methods and assumptions to be used to calculate any benefit in a lump sum form will result in the benefit being broadly equivalent to the annual amount of benefits which would have been payable in pension benefits, and

(c) all of the interest of the person entitled to a pension credit under the annuity contract or insurance policy is discharged upon payment of a lump sum.

(6) The conditions referred to in paragraph (4)(b) are—

(a) the benefits secured by the annuity contract or insurance policy have become payable and the person entitled to the pension credit requests or consents to the commutation;

(b) the person entitled to the pension credit is suffering from serious ill health prior to normal benefit age, and

(c) the insurance company with which the annuity contract is entered into, or with which the insurance policy is taken out, assumes an obligation to pay the benefits secured by the annuity contract or insurance policy to—

(i) the person entitled to the pension credit;

(ii) the trustees of a trust for the benefit of the person entitled to the pension credit, or

(iii) the trustees of a trust for the benefit of the dependants of the person entitled to the pension credit.

(7) The annuity contract or insurance policy must contain, or be endorsed with terms so as to provide for any increase in accordance with regulation 32 of the Pension Sharing (Pension Credit Benefit) Regulations (Northern Ireland) 2000(1) (increase of relevant pension) which would have been applied to the benefits which have become secured or been replaced by the annuity contract or insurance policy had the discharge of liability not taken place.

(8) In this regulation—

“serious ill health” means ill health which is such as to give rise to a life expectancy of less than one year from the date on which commutation of the benefits secured by the annuity contract or insurance policy is applied for.

(1)

S.R. 2000 No. 146