The Scotland Act 1998 (Transitory and Transitional Provisions) (Scottish Parliamentary Pension Scheme) Order 1999

Article B2

SCHEDULE 1 SCOTTISH PARLIAMENTARY CONTRIBUTORY PENSION FUND

Management of Fund

1.  The Parliamentary corporation may appoint such person as it thinks fit to acquire assets for and dispose of assets of the Fund on its behalf and in accordance only with such instructions as to investment policy, as it shall from time to time determine and lay down.

2.  The Parliamentary corporation shall review any acquisition or disposal of the assets of the Fund by such person as may be appointed under paragraph 1 and shall do so within six months of the date of any such acquisition or disposal.

3.  Upon a review pursuant to paragraph 3, the Parliamentary corporation may ratify the acquisition or disposal, or may take such other action in respect of it as it thinks fit.

Accounts and actuarial report

4.  The Parliamentary corporation shall keep proper accounts and shall prepare in respect of each financial year of the Fund statements of account in such form and in such manner as the Comptroller and Auditor-General or, in relation to any financial year beginning on or after 1st April 2000, the Auditor General for Scotland may direct.

5.  The Auditor General for Scotland shall examine and certify every statement of account prepared under paragraph 4 of this Schedule and shall lay a copy of every such statement, together with his report on it, before the Parliament.

6.  The Government Actuary shall prepare an actuarial report on the Scheme, including an actuarial valuation of the assets and liabilities of the Fund, as at 6th May 1999 and thereafter at three-yearly intervals and shall send copies of each report to the Parliamentary corporation.

Expenses

7.  The expenses of managing the Fund, including any fee payable to the Comptroller and Auditor General or to the Auditor General for Scotland, and the remuneration and pensions, or contributions towards the pensions, payable to or in respect of staff employed solely in connection with management of the Fund, shall be met out of the Fund.

8.  Section 21(6) of the Scotland Act 1998 shall not apply to expenses to which paragraph 7 applies.

Article F5

SCHEDULE 2 MAXIMUM PENSIONS

1.  In this Schedule, unless the context otherwise requires–

• “index” at any time, means the index of retail prices published by the Office for National Statistics of the Chancellor of the Exchequer, or any successor agreed as appropriate by the Board of Inland Revenue, for the calendar month three months prior to that time;

• “pensionable service” means actual service as a participant;

• “retained benefits” means benefits for a participant derived from–

  (a)

  retirement benefits schemes approved or seeking approval under Chapter I of Part XIV of the Taxes Act 1988 or relevant statutory schemes as defined in section 611A of that Act(1), excluding benefits in respect of service;

  (b)

  funds to which section 608 of the Taxes Act 1988 applies, excluding benefits in respect of service;

  (c)

  retirement benefit schemes which have been accepted by the Board of Inland Revenue as “corresponding” for the purposes of section 596(2)(b) of the Taxes Act 1988(2), excluding benefits in respect of service;

  (d)

  retirement annuity contracts or trust schemes approved under section 620 of the Taxes Act 1988, or personal pension schemes (other than arrangements to which only minimum contributions are paid) which related to relevant earnings from the current employment or previous employments (including periods of self employment whether alone or in partnership);

  (e)

  transfer payments from overseas schemes held in a type of arrangement defined in (a) or (d) above excluding those in respect of service,

  including such benefits which have been transferred to another scheme, whether or not in the United Kingdom, but excluding such benefits which relate to service with an unassociated employer which is concurrent with service:

Provided that–

(i) if the total of the retained benefits is less than a pension of £260 those retained benefits may be disregarded; and

(ii) if the participant’s earnings in the 12 months after entry to the Scheme do not exceed one quarter of the permitted maximum, benefits from those sources, other than those transferred into the Scheme, shall not be classed as retained benefits;

“service” means service as a member of the Parliament or as an office holder, and includes, where appropriate, any increase in reckonable service attributable to sums received by way of transfer value or to the purchase of added years.

2.  This Schedule sets out the maximum pension payable to a person at the relevant date.

3.—(1) On retirement at any time after age 50, except before normal retirement date on grounds of incapacity, a pension of 1/60th of the person’s final salary for each year of service (not exceeding 40 years) or, if greater, the lesser of–

(a) 1/30th of his final salary for each year of service (not exceeding 20 years); and

(b) 2/3rds of his final salary minus the pension value of all retained benefits.

(2) On retirement before the normal retirement date on grounds of incapacity an immediate pension in accordance with sub-paragraph (1) above on the basis of the number of years which would have counted as service had the participant remained in service to the normal retirement date.

(3) On leaving pensionable service before the normal retirement date a deferred pension–

(a) for participants who remain in service, of that proportion of the amount calculated in accordance with sub-paragraph (2) above that the number (not exceeding 40) of years of service completed before leaving pensionable service bears to the potential number (not exceeding 40) of years of service had the participant remained in service to the normal retirement date;

(b) for other participants the amount calculated in accordance with sub-paragraph (1) above,

increased by up to 5% for each complete year, or, if greater, in proportion to any increase in the index which has occurred during the period of deferment.

(4) Benefits are further restricted as necessary to ensure that the participant’s total retirement benefit under the Scheme, from any free standing additional voluntary contributions scheme and from any other additional voluntary contributions does not exceed 1/30th of the permitted maximum for each year of service. For the purpose of this limit service is the aggregate of service provided that the total shall not exceed 20 years. The permitted maximum in this context is that for the year of assessment in which the benefits commence to be paid or, if earlier, are transferred out under article P1 or P2. For the purpose of calculating the total retirement benefit the pension equivalent of benefits in any form other than pension is one 1/12th of its cash value.

Article G1

SCHEDULE 3

PART I COMMUTATION OF PENSIONS

1.—(1) In this Schedule, unless the context otherwise requires–

“N” means in respect of the pension of a person, the period in years and any fraction of a year of his actual reckonable service before the relevant date or (if earlier) his 65th birthday;

“NS” means in respect of the pension of a person, the lesser of 40 years and the period in years and any fraction of a year of his prospective actual reckonable service at the relevant date;

“pension” means a pension, expressed as an annual amount, under Part F (pension entitlement), Part H (early retirement) or Part J (ill-health pensions) as the case may be; and “maximum pension” shall be construed accordingly;

“prospective actual reckonable service” means in respect of a person–

(a)

at a date falling before his 65th birthday, his actual reckonable service before and after that date, assuming continuous actual reckonable service by him from that date until his 65th birthday;

(b)

at a date falling on or after 65th birthday, his actual reckonable service at his 65th birthday;

“retained benefits” has the meaning given in Schedule 2;

“retained lump sum benefits” means retained benefits which are payable as single payments whether by way of commutation of accrued pension rights, refund of contributions or otherwise.

(2) Any reference in this Schedule to the beginning of a period of actual reckonable service of a person means any such beginning on his becoming a participant other than after an interval in his actual reckonable service occurring on a dissolution of the Parliament.

(3) Any reference in this Schedule to a person being or no longer being a participant shall be construed as a reference to whichever of those circumstances is applicable to the calculation of his pension.

Maximum commutation for members (including those retiring on grounds of ill-health)

2.  For the purposes of article G1(4), in the case of a participant entitled to a pension under article F1–

(a) who has no retained lump sum benefits and who either was a member of the Parliament on his 65th birthday or is so entitled by virtue of article J1 or J3 (ill-health pensions), the maximum commutable sum shall be the amount of–

(i) the number of eightieths of his final salary, either specified in the table in Part II of this Schedule in relation to the number of complete years of his actual reckonable service or (if the period of that service includes a fraction of a year) calculated proportionately by reference to the numbers specified in that table; and

(ii) the product of three-eightieths of his final salary and any period, expressed in years and any fraction of a year, determined in respect of him under article P6(2) (transfers from other pension schemes),

subject to a maximum of the amount of 120/80ths of his final salary;

(b) who has retained lump sum benefits, but would otherwise be within sub-paragraph (a) above, the amount of the maximum commutable sum shall be whichever is the greater of–

(i) the amount of 120/80ths of his final salary, less the amount of his retained lump sum benefits; and

(ii) the amount of the product of three-eightieths of his final salary and the aggregate, expressed in years and any fraction of a year subject to a maximum of 40 years, of his actual reckonable service and of any period determined in respect of him under article P6(2) (transfers from other pension schemes).

Maximum commutation for members on early retirement

3.  For the purposes of article G1(4), in the case of a participant entitled to a pension under article H1–

(a) who has no retained lump sum benefits, was no longer a member of the Parliament on his 65th birthday and is not entitled to a pension by virtue of article J1 or J3 (ill-health pensions), the amount of the maximum commutable sum, subject to a maximum of 120/80ths of his final salary, shall be whichever is the greater of–

(i) the amount of the product of N/NS and the number of eightieths of his final salary, either specified in the table in Part II of this Schedule in relation to the number of complete years of his prospective actual reckonable service or (if the period of that service includes a fraction of a year) calculated proportionately by reference to the numbers specified in that table; and

(ii) the amount of the product of three-eightieths of his final salary and the period, expressed in years and any fraction of a year, of his actual reckonable service,

aggregated with the amount referred to in paragraph 2(a)(ii);

(b) who has retained lump sum benefits but would otherwise be within sub-paragraph (a) above, the amount of the maximum commutable sum shall be whichever is the greater of–

(i) the aggregate of–

(a) the amount referred to in sub-paragraph (a)(i) above, subject to a maximum of the product of N/NS and the amount referred to in paragraph 2(b)(i); and

(b) the amount referred to in paragraph 2(a)(ii), subject to a maximum of the amount of 120/80ths of his final salary, less his retained lump sum benefits; and

(ii) the amount referred to in paragraph 2(b)(ii).

Maximum commutation for office holders (including those retiring on grounds of ill-health)

4.  For the purposes of article G1(4), in the case of a participant entitled to a pension under article F2–

(a) who has no retained lump sum benefits and who either was an office holder on his 65th birthday or is so entitled by virtue of article J1 or J3 (ill-health pensions), the amount of the maximum commutable sum shall be the amount of–

(i) the number of eightieths of his final salary, specified in the table in Part II of this Schedule in relation to the number of years, each beginning on 1st April, during which he had any actual reckonable service; and

(ii) the product of three-eightieths of his final salary and any period, expressed in years and any fraction of a year, determined in respect of him under article P6(3) (transfers from other pension schemes),

subject to a maximum of the amount of 120/80ths of his final salary;

(b) who has retained lump sum benefits, but would otherwise be within sub-paragraph (a) above, the amount of the maximum commutable sum shall be whichever is the greater of–

(i) the amount of 120/80ths of his final salary, less his retained lump sum benefits; and

(ii) the amount of the product of three-eightieths of his final salary and, subject to a maximum of 40 years, the aggregate of–

(a) the number of years, each beginning on 1st April, during which he has any actual reckonable service; and

(b) the number of years (if any) determined in respect of him under article P6(3).

Maximum commutation for office holders on early retirement

5.  For the purposes of article G1(4), in the case of a participant entitled to a pension under article H2–

(a) who has no retained lump sum benefits, was no longer an office holder on his 65th birthday and is not entitled to a pension by virtue of article J1 or J3, the amount of the maximum commutable sum, subject to a maximum of 120/80ths of his final salary, shall be whichever is the greater of–

(i) the amount of the product of N/NS and the number of eightieths of his final salary, specified in the table in Part II of this Schedule in relation to the number of years, each beginning on 1st April, during which any part of his prospective actual reckonable service falls; and

(ii) the amount of the product of three-eightieths of his final salary and the number of years, each beginning on 1st April, during which he has any actual reckonable service,

aggregated with the amount referred to in paragraph 4(a)(ii);

(b) who has retained lump sum benefits but would otherwise be within sub-paragraph (a) of this paragraph, paragraph 3(b) above shall apply in respect of him, as if set out in this paragraph.

Earnings cap

6.  The maximum commutable sum for any participant shall be further limited to an overall maximum of 120/80ths of the permitted maximum.

PART II MAXIMUM COMMUTATION OF PENSIONS

TABLE

Number of years	Number of eightieths
1	3
2	6
3	9
4	12
5	15
6	18
7	21
8	24
9	30
10	36
11	42
12	48
13	54
14	63
15	72
16	81
17	90
18	99
19	108
20 or more	120

Article H1

SCHEDULE 4 PERCENTAGE ABATEMENT OF PENSION ENTITLEMENT

1.  The pension to which a person is entitled by virtue of article H1 shall be abated, having regard to the person’s age and the length of his qualifying period at the date of his application or, if later, such other date as may be there specified, from the date from which that pension is payable by the percentage specified in the table below.

TABLE

Qualifying period (years)
Age pension brought into payment	20 or more	19	18	17	16	15
65	0.0	0.0	0.0	0.0	0.0	0.0
64	0.0	0.0	0.0	0.0	0.0	7.0
63	0.0	0.0	0.0	0.0	7.0	13.7
62	0.0	0.0	0.0	7.0	13.7	19.9
61	0.0	0.0	7.0	13.7	19.9	25.6
60	0.0	7.0	13.7	19.9	25.6	30.8
59	7.0	13.7	19.9	25.6	30.8	35.6
58	13.7	19.9	25.6	30.8	35.6	39.9
57	19.9	25.6	30.8	35.6	39.9	43.7
56	25.6	30.8	35.6	39.9	43.7	47.0
55	30.8	35.6	39.9	43.7	47.0	50.0
54	35.6	39.9	43.7	47.0	50.0	52.8
53	39.9	43.7	47.0	50.0	52.8	55.4
52	43.7	47.0	50.0	52.8	55.4	57.7
51	47.0	50.0	52.8	55.4	57.7	59.7
50	50.0	52.8	55.4	57.7	59.7	61.8

Where the age or the qualifying period is not an exact number of years the percentage abatement shall be obtained by interpolating first for the required age and secondly for the required qualifying period.

Article Q1

SCHEDULE 5 PURCHASE OF ADDED YEARS

1.  In this Schedule, unless the context otherwise requires–

“payment for the purchase of added years” means such a payment whether payable periodically or by way of a single lump sum;

“periodical contributions” means the sums payable by a participating member whose application to purchase added years other than by a single payment has been accepted by the Parliamentary corporation;

“final salary” means a member’s final salary as defined in article F3(2);

“single mandate member” means a participating member who is not in receipt of a salary payable pursuant to a resolution (or combination of resolutions) of either House of Parliament relating to the remuneration of members of that House or under section 1 of the European Parliament (Pay and Pensions) Act 1979(3).

Purchase of added years by periodical contributions

2.—(1) A participating member may apply in writing to the Parliamentary corporation to purchase added years by periodical contributions payable until he attains the age of 65 and the Parliamentary corporation shall accept his application if all the following conditions in respect of that application are satisfied:–

(a) the participating member will not at his next birthday after the date of the application have attained the age of 65;

(b) the participating member has satisfied the Parliamentary corporation, in whatever manner the Parliamentary corporation shall require, that he is in good health;

(c) the number of added years which the participating member has applied to purchase does not exceed the maximum permitted by paragraph 8;

(d) the participating member has supplied to the Parliamentary corporation such information and evidence as it may require and has indicated whether his application is made under this sub-paragraph or sub-paragraph (2) below; and

(e) the participating member is, at the date the Parliamentary corporation receives the application, a single mandate member.

(2) A participating member may, within the period of 12 months immediately following the date when he commenced a period of service as a single mandate member, or within such longer period as the Parliamentary corporation may in special circumstances allow, apply in writing to the Parliamentary corporation to purchase added years by the payment of periodical contributions for a period of four or five years and the Parliamentary corporation shall accept his application if, at the date when the Parliamentary corporation receives the application, the participating member has not reached the age of 65 and if the conditions mentioned in sub-paragraph (1)(b), (c) and (d) above are satisfied in respect of that application.

3.  An application by a participating member to purchase added years shall be irrevocable on and from the date when the Parliamentary corporation accepts it.

4.  Where an application by a participating member to purchase added years by periodical contributions is accepted by the Parliamentary corporation–

(a) those periodical contributions shall, subject to the provisions of paragraph 5, be payable–

(i) in the case of an application under paragraph 2(1), from the date of the participating member’s birthday next following the receipt by the Parliamentary corporation of his application and until the participating member attains the age of 65; and

(ii) in the case of an application under paragraph 2(2), for whichever of the periods of four or five years the participating member has chosen for the payment of periodical contributions beginning on such date not later than two months from the date of acceptance of the application as the Parliamentary corporation shall specify by notice in writing to the participating member;

(b) periodical contributions by a participating member for the added years shall be payable by deductions from his salary or, in the case of arrears, in such manner as the Parliamentary corporation may require; and

(c) the periodical contributions payable by a participating member for the added years shall be calculated in accordance with tables prepared from time to time by the Government Actuary.

Interrupted service

5.—(1) If a participating member dies or ceases to be a member of the Parliament because of ill-health in circumstances to which article J1 applies and he–

(a) has applied to purchase added years by periodical contributions; and

(b) has been notified in writing by the Parliamentary corporation that his application has been accepted,

no further periodical contributions will be payable from the day following the date of his death or from the day following the date he ceases to be a member of the Parliament, as the case may be, and any added years that he has applied to purchase by periodical contributions shall be credited in full as reckonable service as a participating member.

(2) If a participating member who has applied to purchase added years by periodical contributions and whose application has been accepted by the Parliamentary corporation ceases to be a member of the Parliament in circumstances to which article J1 does not apply, or if a participating member ceases to be a single mandate member, no such periodical contributions shall be payable by him from the day following the date when he so ceases but his reckonable service as a single mandate member shall in respect of each application be increased by–

Where–

• A is the number of added years he applied to purchase by periodical contributions;

• B is the period (expressed to the nearest day) during which periodical contributions have been paid;

• C is the total period during which periodical contributions would have been payable in accordance with paragraph 4(a).

(3) If a member to whom sub-paragraph (2) above has applied subsequently commences a further period of service as a single mandate member before he has attained the age of 65, in circumstances in which the periods together constitute an aggregate period of reckonable service as a single mandate member, then subject to sub-paragraphs (4) and (6) below, he may give notice to the Parliamentary corporation in writing within the period of three months beginning with the date upon which he commenced the further period of service that he intends to resume payment of his periodical contributions in respect of the added years for which he was making periodical contributions in his immediately preceding period of service and such periodical contributions shall then be payable from the date when he commenced the further period of service as a participating member and shall continue until he attains the age of 65 at the rate or rates applicable during that immediately preceding period.

(4) Where a participating member who ceased to pay periodical contributions by reason only of his ceasing to serve as a member of the Parliament or as a single mandate member, but subsequently became a single mandate member again and resumed the purchase of added years by periodical contributions in accordance with sub-paragraph (3) above thereafter becomes entitled to a pension under article F1, his reckonable service as a single mandate member shall be increased in accordance with sub-paragraph (2) above except that C shall be read as the total period during which he would have paid periodical contributions for those added years if his service as a single mandate member had been continuous.

(5) If a participating member to whom sub-paragraph (2) above has applied subsequently commences a further period of service as a single mandate member before he has attained the age of 65, in circumstances in which the periods together constitute an aggregate period of reckonable service, then subject to sub-paragraphs (4) and (6) of this paragraph, he may, if, in consequence of his break in service as a single mandate member, there has been a reduction in the number of added years which he is able to purchase in full, with the agreement of the Parliamentary corporation and, subject to the provisions of paragraphs 2(a)(ii) and 8(1), apply to purchase by periodical contributions payable until he attains the age of 65 some or all of the number of added years comprised in that reduction at the rate applicable to the participating member’s birthday next following the receipt by the Parliamentary corporation of his application.

(6) Sub-paragraphs (3), (4) and (5) above shall not apply where the application to purchase added years before the participating member ceased to be a member of the Parliament or a single mandate member was made under paragraph 2(2).

Purchase of added years by lump sum

6.—(1) Subject to sub-paragraph (2) below, a participating member may apply in writing to the Parliamentary corporation to purchase added years by a lump sum payment.

(2) The Parliamentary corporation shall accept an application to purchase added years under this paragraph if all the following conditions in respect of that application are satisfied:–

(a) the participating member has not reached the age of 65;

(b) the participating member applies to the Parliamentary corporation within the period of 12 months immediately following the date when he commenced a period of service as a single mandate member or within such longer period as the Parliamentary corporation may in special circumstances allow;

(c) the participating member has not applied to the Parliamentary corporation under article J1 for an early pension because of ill-health;

(d) the number of added years which the member applies to purchase does not exceed the maximum permitted by paragraph 8;

(e) the participating member has supplied to the Parliamentary corporation such information and evidence as it may require; and

(f) the participating member is, at the date the Parliamentary corporation receives the application, a single mandate member.

(3) A participating member who has applied to purchase added years under paragraph 2(2) and to whom paragraph 5(2) applies may, in respect of any such application if–

(a) in consequence of his ceasing to be a member of the Parliament or a single mandate member, there has been a reduction in the number of added years which he is able to purchase in full;

(b) the conditions of sub-paragraph (2)(c), (d) and (e) of this paragraph are satisfied in respect of the application made under this sub-paragraph; and

(c) the application under this sub-paragraph is made within three months of his ceasing to be a participating member of the Parliament or a single mandate member,

apply in writing to the Parliamentary corporation to purchase by a lump sum payment some or all of the number of added years comprised in that reduction at the rate applicable at the member’s birthday next following the receipt by the Parliamentary corporation of the application.

Lump sum payments

7.—(1) Any participating member who has applied to the Parliamentary corporation to purchase added years by a lump sum payment shall, within the period of six months commencing on the date when his application is accepted by the Parliamentary corporation, make the lump sum payment which shall be calculated by reference to a member’s salary at the time when his application was received by the Parliamentary corporation and in accordance with tables to be prepared from time to time by the Government Actuary and the amount of his reckonable service as a single mandate member shall be increased accordingly with effect from the date on which the lump sum payment is received by the Parliamentary corporation.

(2) If, after an application to purchase added years by lump sum payment has been made by a participating member and accepted by the Parliamentary corporation, the payment is not received by the Parliamentary corporation within the period of six months mentioned in sub-paragraph (1) above, the application to purchase shall cease to be valid.

Limits on purchase of added years

8.—(1) Subject to sub-paragraph (2) below, the amount of a participating member’s periodical contributions for the purchase of added years, when aggregated with his contributions as a participating member under article D1 and any other additional voluntary contributions, shall not in any tax year exceed 15% of his member’s salary or, if that salary exceeds the permitted maximum, 15% of the permitted maximum.

(2) Sub-paragraph (1) above shall not apply to the purchase of added years by periodical contributions payable for a period of four years in accordance with paragraph 4(1)(b), and for the purpose of the calculation referred to in sub-paragraph (1) such periodical contributions shall be disregarded.

(3) If a participating member applies to the Parliamentary corporation to purchase added years by periodical contributions, the annual amount of periodical contributions payable by him in accordance with paragraph 4(a)(i), or for a period of five years in accordance with paragraphs 2(2) and 4(a)(ii), shall not be such as to exceed, at any time during the period such periodical contributions would be so payable, the amount (if any) by which for the time being–

(i) the annual amount of his periodical contributions referred to in sub-paragraph (3) of this paragraph (if any), aggregated with the annual amount of his contributions as a participating member under article D1 and any other additional voluntary contributions,

is less than–

(ii) the limit under sub-paragraph (1) of this paragraph.

(4) Subject to sub-paragraph (1) above, the maximum added years that a participating member may purchase both by lump sum payment and by periodical contributions shall be calculated so that his pension under one or both of articles F1 and F2, when aggregated with the pension equivalent of any lump sum under article G1 and any pension under the AVC Scheme or any additional voluntary contributions scheme, shall not exceed whichever may be appropriate of the limits set out in Schedule 2.

Further applications to purchase added years

9.  Subject to the provisions of this Schedule, the Parliamentary corporation may accept more than one application from a participating member to purchase added years by the payment of periodical contributions or lump sum payments.

General

10.  The provisions of this Schedule are without prejudice to any maximum pension imposed in relation to a participating member by article F5 and Schedule 2 (maximum pensions payable).

Article R1

SCHEDULE 6 ADDITIONAL VOLUNTARY CONTRIBUTIONS

Interpretation

1.—(1) In this Schedule, unless the context otherwise requires–

“approved scheme” means a retirement benefits scheme approved under Chapter I of Part XIV of the Taxes Act 1988 or such other legislation as may be in force from time to time in respect of such approval;

“contributor” means a participant who is admitted to the AVC Scheme in accordance with paragraph 3(1);

“dependant” of a contributor means the contributor’s spouse and any eligible child of the contributor;

“free-standing additional voluntary contribution scheme” means an additional voluntary contribution scheme which is an approved scheme to which an employer does not contribute;

“index” has the same meaning as in Schedule 2;

“maximum pension” shall be construed in accordance with Schedule 2;

“pensionable service” has the same meaning as in Schedule 2;

“personal pension scheme” means a scheme approved under Chapter IV of Part XIV of the Taxes Act 1988;

“retained benefits” has the same meaning as in Schedule 2;

“retained death benefits” means any lump sum benefits payable on the contributor’s death derived from the sources set out in the definition of “retained benefits” in Schedule 2, but if the total of retained death benefit is less than £2,500 it may be disregarded:

Provided that benefits representing a return of the contributor’s own contributions plus interest thereon and benefits derived from a return of funds under retirement annuity contracts approved under section 620 of the Taxes Act 1988 or personal pension schemes may be ignored for this purpose;

“retirement benefits scheme” means a scheme within the meaning of section 611 of the Taxes Act 1988;

“service” has the same meaning as in Schedule 2.

(2) In this Schedule, “final remuneration” means the greater of–

(a) the highest emoluments of a person as a member of the Parliament and/or as an office holder which are assessable to income tax under Case I or II of Schedule E and upon which tax liability has been determined for any period of 12 months in the 5 years preceding the relevant date, and

(b) the yearly average of the total emoluments of a person as a member of the Parliament and/or as an office holder which are assessable to income tax under Case I or II of Schedule E and upon which tax liability has been determined for any 3 or more consecutive years ending not earlier than 10 years before the relevant date:

• Provided that–

  (i)

  where final remuneration is computed by reference to any year other than the last complete year ending on the relevant date, the contributor’s remuneration (as calculated in (a) above) or total emoluments (for the purposes of (b) above) of any year may be increased in proportion to any increase in the index from the last day of that year up to the relevant date;

  (ii)

  an early retirement pension in payment by virtue of Part H of this Scheme may not be included in final remuneration;

  (iii)

  a contributor in receipt of a much reduced remuneration by reason of incapacity for more than 10 years up to the relevant date may calculate final remuneration under (a) or (b) above with the final remuneration calculated at the cessation of normal pay and increased in accordance with the index;

  (iv)

  final remuneration shall not exceed the permitted maximum.

  For the purposes of providing immediate benefits at the relevant date it is permitted to calculate final remuneration on the appropriate basis above using remuneration assessable to tax under Case I or II of Schedule E and upon which tax liability has not been determined. On determination of this liability final remuneration shall be recalculated. If this results in a lower final remuneration then benefits in payment shall be reduced as necessary. Where final remuneration is greater it is possible to augment the benefits in payment. Such augmentation, however, must take the form of an annuity.

• Where immediate benefits are not being provided or where a transfer payment is to be made in respect of accrued pension benefits then final remuneration may only be calculated using remuneration assessable to income tax under Case I or II of Schedule E and upon which tax liability has been determined.

Administration

2.—(1) Paragraphs 4 and 5 of Schedule 1 shall have effect for the purposes of the AVC Scheme.

(2) The Parliamentary corporation shall be responsible for the discharge of all duties imposed on the administrator of an AVC Scheme under Chapter I of Part XIV of the Taxes Act 1988.

(3) Any sums received by the Parliamentary corporation by virtue of the AVC Scheme shall be paid into a suspense account or accounts used for the purpose of the AVC Scheme.

AVC contributors

3.—(1) Subject to sub-paragraphs (2) and (3) below, any participant may become a contributor to the AVC Scheme by making written application in such form as the Parliamentary corporation shall require and by having such application accepted.

(2) A contributor may not make any contributions to the AVC Scheme after he has ceased to be a participant, but may make a further application under sub-paragraph (1) above if he again becomes a participant.

(3) The Parliamentary corporation may, with effect from such date as it may determine, close the AVC Scheme to participants who are not contributors to the AVC Scheme at that date.

Contributions

4.—(1) A contributor may make contributions to the AVC Scheme of such amount within limits imposed by the Board of Inland Revenue, at such times and in such manner as may be specified by the Parliamentary corporation, with the approval of the institution with which the contributions are to be invested.

(2) A contributor’s contributions to the AVC Scheme in any tax year must not exceed whichever is the smaller of–

(a) such amount determined by the Parliamentary corporation on a basis acceptable to the Board of Inland Revenue as is likely to provide benefits equal to the limits set out in paragraph 10; or

(b) that percentage of the contributor’s total salary which, together with any other contributions made by the contributor to any scheme (including this Scheme) providing benefits in respect of service, will bring the total of contributions to 15% of that salary, or where his annual salary exceeds the permitted maximum, to 15% of that permitted maximum.

(3) In sub-paragraph (2)(b) above, a contributor’s total salary means–

(a) in respect of a contributor who is a participating member and not a participating office holder, a member’s salary;

(b) in respect of a contributor who is both a participating member and a participating office holder, a member’s salary and his office holder’s salary;

(c) in respect of a contributor who is a participating office holder and not a member of the Parliament, his office holder’s salary.

(4) A transfer value to the AVC Scheme shall only be accepted by the Parliamentary corporation if it is from either–

(a) a free-standing additional voluntary contributions scheme, which is not an appropriate personal pension scheme which satisfies the requirements prescribed under sections 9(3) and (5), 26 and 31(2) of the Pension Schemes Act 1993(4); or

(b) an additional voluntary scheme which is an approved scheme:

Provided that, in either case–

(i) it is certified by the administrator of that scheme to represent only the realisable value of the contributor’s own contributions to that scheme; and

(ii) acceptance will not cause the contributor’s benefits to exceed the limits set out in paragraph 10.

Investment of contributions

5.—(1) Each contributor’s contributions shall be invested in such investments as the Parliamentary corporation may from time to time determine, save that such contributions may not be used for the purpose of making any loan whatsoever.

(2) Without prejudice to the generality of sub-paragraph (1) above, the Parliamentary corporation, in accordance with a contributor’s instructions, may invest the contributor’s contributions–

(a) in an insurance policy or policies taken out with an insurance company, being a United Kingdom office or branch of an insurance company to which Part II of the Insurance Companies Act 1982(5) applies and which is authorised under section 3 or 4 of that Act to carry on ordinary long-term insurance business; or

(b) in a deposit account or accounts with a building society authorised by virtue of Part II of the Building Societies Act 1986(6).

(3) The Parliamentary corporation shall, as soon as practicable, invest the contributions, with the institution and in the manner chosen by the contributor, in order to provide benefits which fall within the scope of paragraph 6.

(4) The investments made in respect of a contributor with an institution may be realised and reinvested at the request of the contributor with that or any other institution determined by the Parliamentary corporation, in such amounts, at such times and in such manner as may be specified by the Parliamentary corporation, with the approval of the institutions concerned.

Benefits which may be provided

6.—(1) Subject to the limits set out in paragraph 10, a contributor shall be entitled to whatever benefits are secured by the contributions paid by him, and by any transfer value accepted under paragraph 4(4).

(2) The benefits normally permitted are–

(a) a lump sum payable on the death of the contributor;

(b) a return of the contributor’s contributions in respect of retirement benefits to the extent of the total realisable value of the investments made by the Parliamentary corporation with the contributions made by the contributor, payable either on the death of the contributor before retirement or in the circumstances referred to in paragraph 9;

(c) on the death of the contributor before retirement, a pension payable to the contributor’s spouse throughout the remainder of his or her lifetime;

(d) on the death of the contributor after retirement, a pension payable to one or more dependants throughout the remainder of their lifetime (save that, in the case of a child not falling within article K2(6)(c), the pension shall only be payable until the child reaches the age of 17 or, if later, until the child ceases to be within his period of full-time education or training as defined in article M6(2); and

(e) a pension payable to the contributor from the contributor’s retirement throughout the remainder of his or her lifetime, under which–

(i) payments may be guaranteed to be payable for up to 10 years after retirement in any event; or

(ii) payments may be guaranteed to be payable for up to 5 years after retirement with any balance in respect of any period between death and the expiry of the period of 5 years being paid in one lump sum on death.

(3) Pensions may be level in payment, increase at a fixed rate, vary in line with the index or with the value of units in a unit trust, managed fund or insurance company fund or be provided on a with-profits basis.

(4) In the case of benefits payable at or after a contributor’s retirement, the choice of which of the above types of benefit shall be payable shall be made by the contributor at retirement.

Payment of lump sums on death

7.—(1) Any lump sum payable on a contributor’s death shall be paid or applied (by way of settlement or otherwise) within 2 years of the contributor’s death by the Parliamentary corporation to or for the benefit of any one or more of–

(a) any individual nominated by the contributor in writing;

(b) the contributor’s dependants, children, parents, grandparents and descendants of such persons; and

(c) the contributor’s executors.

(2) The decision as to which individual or individuals should receive part or all of the lump sum and how much each shall receive shall be at the discretion of the Parliamentary corporation.

(3) Any part of the lump sum which has not been so paid or applied within 2 years of the contributor’s death shall be paid to the contributor’s executors.

(4) For the purposes of this paragraph, a lump sum includes a refund of contributions.

Purchase of pensions

8.—(1) On or before the date of his retirement, the contributor shall specify in writing to the Parliamentary corporation the pension or pensions which are to be purchased on his behalf or on behalf of his dependants.

(2) The Parliamentary corporation shall purchase the pension or pensions specified under sub-paragraph (1) above from such insurer or friendly society as the Parliamentary corporation may determine from time to time or as the contributor may in writing specify, being either–

(a) a company which is a United Kingdom branch or office of an insurance company to which Part II of the Insurance Companies Act 1982 applies and which is authorised under section 3 or 4 of that Act to carry on ordinary long-term insurance business; or

(b) a friendly society authorised to carry on business under Part IV of the Friendly Societies Act 1992(7).

(3) Where a contributor elects for the purchase of pensions to be provided by such insurer or friendly society as he may specify under sub-paragraph (2) above, (not being an insurer or friendly society determined by the Parliamentary corporation), the making of that election shall have the effect of discharging any liability of the Parliamentary corporation to pay those pensions to or in respect of that contribution.

Leaving the AVC Scheme

9.—(1) A contributor may cease to participate in the AVC Scheme at any time before benefits provided under paragraph 6 are taken by requiring the Parliamentary corporation (in such manner as may, subject to sections 95 and 96 of the Pension Schemes Act 1993, be specified by the Parliamentary corporation) to do one or more of the following as appropriate:–

(a) to transfer the value of the contributor’s accrued benefits to an approved scheme of a subsequent employer, or to a personal pension scheme subject, in each case, to that scheme being willing to accept the transfer value and meeting the prescribed requirements referred to in section 95(2) of the Pension Schemes Act 1993 (and in each case the Parliamentary corporation shall certify to the receiving scheme that the whole of the transfer value represents the realisable value of the contributor’s contributions and that all of it must be used to secure a non-commutable pension) and after it has made such a transfer the Parliamentary corporation will be discharged from any obligation to provide any benefits to which the transfer value relates;

(b) to use the value of the contributor’s accrued benefits to purchase one or more insurance policies of the type described in section 95(2)(c) of the Pension Schemes Act 1993;

(c) if the contributor’s aggregate period of reckonable service as a participant, including any service whilst a member of a previous employer’s pension scheme from which a transfer value has been paid to the Scheme (including a transfer value to the AVC Scheme), totals less than 2 years, to pay the contributor the value of his accrued benefits after deduction of any tax payable by the Parliamentary corporation.

(2) For the purposes of this paragraph, the value of a contributor’s accrued benefits shall be the total realisable value of the investments made by the Parliamentary corporation with the contributions paid by the contributor.

Maximum benefits

10.—(1) The lump sum benefit (exclusive of any refund of the contributor’s own contributions and any transfer value received by the AVC Scheme in respect of the contributor plus interest if any) payable under the AVC Scheme on the death of a contributor while in service or (having left service with a deferred pension) before the commencement of the contributor’s pension shall not, when aggregated with all other like benefits under the Scheme, personal pension schemes, free-standing additional voluntary contribution schemes and retained death benefits, exceed whichever is appropriate of–

(a) 4 times final remuneration at the date of death; or

(b) 4 times final remuneration at the date of leaving service,

and any remuneration in excess of the permitted maximum shall be disregarded.

(2) A contributor’s pension payable under the AVC Scheme, when aggregated with any other pensions and the pension equivalent of any lump sums under the rest of the Scheme and any pension under a free-standing additional voluntary contributions scheme in respect of service, shall not exceed such maximum pension as it calculated in respect of that contributor in accordance with Schedule 2.

(3) Any pensions for dependants payable under the AVC Scheme, when aggregated with any pension payable to dependants under Part K or under a free-standing additional voluntary contributions scheme, shall not exceed an amount equal to two-thirds of the maximum pension–

(a) payable to the contributor at the date of the contributor’s death (including any pension increases given under sub-paragraph (5) below), or

(b) being a deferred benefit, payable to the contributor at normal retirement date, or

(c) prospectively payable to the contributor who dies in service had the contributor remained in service up to normal retirement date at the rate of pay in force immediately before the contributor’s death, or

(d) prospectively payable to the contributor who dies in service after normal retirement date before taking any benefit under the rest of the Scheme on the basis that the contributor had retired on the day before he died,

and, in whichever case applies, the maximum pension shall be calculated as if the contributor had no retained benefits.

(4) Where a contributor chooses as a benefit an index-linked pension, the maximum amount of the pension ascertained in accordance with sub-paragraph (3) or (4) above may be increased by up to 5% for each complete year, or, if greater, in proportion to any increase in the index which has occurred since payment of the pension commenced.

Surplus monies

11.  The Parliamentary corporation shall comply with the requirements of regulation 5 (restriction on discretion to approve - other schemes) of the Retirement Benefits Schemes (Restriction on Discretion to Approve) (Additional Voluntary Contributions) Regulations 1993(8) and, where the AVC Scheme is the leading scheme in relation to a contributor, with the requirements of regulation 6 (calculation of surplus funds) of those Regulations so far as they concern main schemes.

Surrender at the request of the Parliamentary corporation

12.—(1) The Parliamentary corporation may require an institution with which contributions have been invested under the AVC Scheme to surrender the whole or part of the value of such contributions.

(2) If, pursuant to sub-paragraph (1) above, the Parliamentary corporation requires a surrender of the whole or part of the value of contributions, it shall reinvest such contributions in accordance with paragraph 5.

(3) If, on or before the date when the Parliamentary corporation exercises its right under sub-paragraph (1) above, a request has been received from a contributor under paragraph 5(4), the Parliamentary corporation may give effect to such request.

Taxation

13.  Whenever the Parliamentary corporation as administrator of the AVC Scheme is liable for any tax in respect of any payment made to any person under this Schedule, it may deduct sums equal in total to such tax from any payments made to such person in such manner as it considers proper.

Expenses

14.—(1) The expenses of establishing and administering the AVC Scheme shall be borne by the Fund.

(2) Section 21(6) of the Scotland Act 1998 shall not apply to expenses to which sub-paragraph (1) above applies.

(1)

Section 611A was inserted by the Finance Act 1989 (c. 26), Schedule 6, paragraphs 15 and 18(1).

(2)

Section 596(2) was amended by the Finance Act 1989, Schedule 9, paragraphs 8(1), (2)(b) and 18(1).

(3)

1979 c. 50.

(4)

1993 c. 48; section 9(3) was amended by the Pensions Act 1995 (c. 26), section 136(4), Schedule 5, paragraph 24 and Schedule 7, Part III.

(5)

1982 c. 50.

(6)

1986 c. 60.

(7)

1992 c. 40.

(8)

S.I. 1993/3016.