The Occupational Pension Schemes (Pensions Compensation Provisions) Regulations 1997

Amount of compensation E+W+S

5.—(1) If the Board decide to make a payment or payments to the trustees in accordance with section 83, the amount of any such payment or (if there is more than one) the aggregate must be determined in accordance with paragraph (2).

(2) [F1 The amount or, as the case may be, the aggregate, shall not exceed the aggregate specified in section 83(3)], less the amount of any payment already made under section 84 (payments made in anticipation), except to the extent that any such payment has been recovered by the Board.

(3) For the purposes of section 83(3)(a) (compensation not to exceed F2 ... the shortfall at the application date), and subject to paragraph (4), the amount of the shortfall at the application date shall be calculated in accordance with the formula—

where—

(a)P is

(i)the value of the assets as stated in the audited accounts which most immediately precede the loss, adjusted by the auditor so as to take into account subsequent alterations in their value (if any) which occur prior to the application date, but disregarding the alteration in their value attributable to the loss itself, or

(ii)if there are no such audited accounts, the value of the assets on such date as immediately precedes the loss, as reported by the auditor, adjusted in the same manner as for the calculation under head (i), and

(b)Q is the value of the assets immediately before the application date, as reported by the auditor;and the same principles are used to value the assets for the purposes of P and Q.

(4) In the case of an ear-marked scheme, the amount of the shortfall at the application date for the purposes of section 83(3)(a), shall be calculated in accordance with the formula—

where—

(a)P is the value of the assets on such date as immediately precedes the loss, adjusted so as to take into account the loss and other alterations in their value (if any) between that date and the application date, as certified by the relevant insurer,

(b)R is the value of the assets constituting the loss on such date as immediately precedes its occurrence adjusted so as to reflect any alteration in the value of those assets which would have occurred had they remained in the scheme until immediately before the application date, or certified by the relevant insurer,

(c)Q is the value of the assets immediately before the application date, as certified by the relevant insurer,and the same principles are used to value the assets for the purposes of P, R and Q.

F3 (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6) For the purposes of [F4 section 83(3)(b)] —

[F5 (a) the prescribed rate of interest shall be the base rate plus 2 per cent.;]

(b) the prescribed period by reference to which the rate of interest specified in sub-paragraph (a) is calculated shall commence on the application date and end on the settlement date.

Textual Amendments

F1 Words in reg. 5(2) substituted (16.12.2004) by The Pensions Act 2004 (Commencement No. 1 and Consequential and Transitional Provisions) Order 2004 (S.I. 2004/3350), art. 3(2)(a)

F2 Words in reg. 5(3) omitted (23.4.2001) by virtue of The Occupational Pension Schemes (Pensions Compensation Provisions) Amendment Regulations 2001 (S.I. 2001/1218), regs. 1, 2(3)(a)

F3 Reg. 5(5) omitted (16.12.2004) by virtue of The Pensions Act 2004 (Commencement No. 1 and Consequential and Transitional Provisions) Order 2004 (S.I. 2004/3350), art. 3(2)(b)

F4 Words in reg. 5(6) substituted (16.12.2004) by The Pensions Act 2004 (Commencement No. 1 and Consequential and Transitional Provisions) Order 2004 (S.I. 2004/3350), art. 3(2)(c)

F5 Reg. 5(6)(a) substituted (23.4.2001) by The Occupational Pension Schemes (Pensions Compensation Provisions) Amendment Regulations 2001 (S.I. 2001/1218), regs. 1, 2(3)(c)