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PART 1N.I.PENSION SCHEME MEMBERSHIP FOR JOBHOLDERS

Modifications etc. (not altering text)

C1Pt. 1 applied (with modifications) (1.7.2012) by The Automatic Enrolment (Offshore Employment) Order 2012 (S.I. 2012/1388), arts. 1(1), 2 (with art. 5)

CHAPTER 1N.I.EMPLOYERS' DUTIES

Quality requirementsN.I.

Quality requirement: UK money purchase schemesN.I.

20—(1) A money purchase scheme that has its main administration in the United Kingdom satisfies the quality requirement in relation to a jobholder if under the scheme—

(a)the jobholder's employer must pay contributions in respect of the jobholder;

(b)the employer's contribution, however calculated, must be equal to or more than 3% of the amount of the jobholder's qualifying earnings in the relevant pay reference period;

(c)the total amount of contributions paid by the jobholder and the employer, however calculated, must be equal to or more than 8% of the amount of the jobholder's qualifying earnings in the relevant pay reference period.

F1(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) A scheme does not fail to satisfy the quality requirement under this section merely because the trustees or managers of the scheme may on any occasion refuse to accept a contribution below an amount prescribed for the purposes of this section on the grounds that it is below that amount.

Textual Amendments

Modifications etc. (not altering text)

Commencement Information

I1S. 20 partly in force; s. 20 in force for certain purposes at Royal Assent see s. 118(2)

I2S. 20 in operation at 30.6.2012 in so far as not already in operation by S.R. 2012/266, art. 2, Sch. Pt. 1

Quality requirement: UK defined benefits schemesN.I.

[F221  A defined benefits scheme that has its main administration in the United Kingdom satisfies the quality requirement in relation to a jobholder if it satisfies the test scheme standard in relation to that jobholder]

Textual Amendments

Modifications etc. (not altering text)

Commencement Information

I3S. 21 partly in force; s. 21 in force for certain purposes at Royal Assent see s. 118(2)

I4S. 21 in operation at 30.6.2012 in so far as not already in operation by S.R. 2012/266, art. 2, Sch. Pt. 1

Test scheme standardN.I.

22—(1) A scheme satisfies the test scheme standard in relation to a jobholder (J) if the pensions to be provided for the relevant members of the scheme are broadly equivalent to, or better than, the pensions which would be provided for them under a test scheme.

[F3(2) Subject to subsection (3), the relevant members are J and all active members who are jobholders of the same employer as J.]

(3) In applying this section the pensions to be provided for relevant members must be considered as a whole.

(4) The Department may by regulations make provision for the manner of, and criteria for, determining whether the pensions to be provided for the relevant members under a scheme are broadly equivalent to, or better than, the pensions which would be provided for them under a test scheme.

(5) Regulations under subsection (4) may provide for the determination to be made in accordance with guidance issued from time to time by the Department.

(6) The Department may by regulations provide that a scheme only satisfies the test scheme standard if the scheme actuary certifies that it does.

(7) Except in prescribed circumstances, the scheme actuary is the actuary appointed under Article 47(1)(b) of the Pensions (Northern Ireland) Order 1995 (NI 22) (in this Act referred to as “the 1995 Order”) (professional advisers) in relation to the scheme.

[F4(8) In the case of a scheme under which a sum of money is made available for the provision of benefits to a relevant member, references in this section to pensions are to be read as references to such sums.]

Textual Amendments

F4S. 22(8) added (2.6.2012 for specified purposes, 30.6.2012 in so far as not already in operation) by Pensions Act (Northern Ireland) 2012 (c. 3), ss. 12(1), 34(1)(3); S.R. 2012/265, art. 2(1)(c)

Commencement Information

I5S. 22 partly in force; s. 22 in force for certain purposes at Royal Assent see s. 118(2)

I6S. 22 in operation at 30.6.2012 in so far as not already in operation by S.R. 2012/266, art. 2, Sch. Pt. 1

Test schemeN.I.

[F523—(1) A test scheme is an occupational pension scheme which satisfies—

(a)the requirement in subsection (2),

(b)the requirement in subsection (4) or requirements prescribed under subsection (6) (as appropriate), and

(c)any further requirements that are prescribed.

(2) The scheme must either—

(a)provide for a member to be entitled to a pension commencing at the appropriate age and continuing for life, or

(b)provide for a sum of money to be made available for the provision of benefits to a member commencing at the appropriate age and continuing for life.

(3) The appropriate age is 65 or any higher age prescribed.

(4) In the case of a scheme that provides entitlement to a pension as mentioned in subsection (2)(a), the annual rate of the pension at the appropriate age must be—

(a)1/120th of average qualifying earnings in the last three tax years preceding the end of pensionable service,

multiplied by

(b)the number of years of pensionable service, up to a maximum of 40.

(5) Section 13(1) (qualifying earnings) applies for the purposes of subsection (4) as if the reference to a pay reference period were a reference to a tax year.

(6) In the case of a scheme that provides for a sum of money to be made available as mentioned in subsection (2)(b), regulations must prescribe requirements relating to that sum.]

Textual Amendments

F5S. 23 substituted (2.6.2012 for specified purposes, 30.6.2012 in so far as not already in operation) by Pensions Act (Northern Ireland) 2012 (c. 3), ss. 12(2), 34(1)(3); S.R. 2012/265, art. 2(1)(c)

Commencement Information

I7S. 23 partly in force; s. 23 in force for certain purposes at Royal Assent see s. 118(2)

[F6Alternative quality requirements for UK defined benefits schemesN.I.

23A—(1) The Department may by regulations provide that a defined benefits scheme that has its main administration in the United Kingdom satisfies the quality requirement in relation to a jobholder if any one or more of the following is satisfied—

(a)the scheme is of a prescribed description and satisfies the quality requirement under section 20 in relation to that jobholder;

(b)the cost of providing the benefits accruing for or in respect of the relevant members over a relevant period would require contributions to be made of a total amount equal to at least a prescribed percentage of the members' total relevant earnings over that period;

(c)in the case of each of at least 90% of the relevant members, the cost of providing the benefits accruing for or in respect of the member over a relevant period would require contributions to be made of a total amount equal to at least a prescribed percentage of the member's total relevant earnings over that period.

(2) For this purpose—

“contributions” means contributions to the scheme by, or on behalf or in respect of, a relevant member;

“relevant earnings” means earnings of a prescribed description;

“relevant members” means members of the scheme of a prescribed description;

“relevant period” means a period specified in or determined in accordance with the regulations.

(3) A percentage prescribed under subsection (1)(b) or (c) must be at least 8%.

(4) Regulations under subsection (1)(b) or (c) may make provision—

(a)about how to calculate whether the requirement is satisfied, including provision requiring the calculation to be made in accordance with prescribed methods or assumptions;

(b)requiring benefits of a prescribed description to be disregarded in determining whether the requirement is satisfied;

(c)that a scheme only satisfies the requirement if the scheme actuary certifies that it does; and for this purpose “scheme actuary” has the prescribed meaning.

(5) Section 13(3) (meaning of “earnings”) applies for the purposes of this section as it applies for the purposes of that section.]

Textual Amendments

Quality requirement: UK hybrid schemesN.I.

24—(1) A hybrid scheme that has its main administration in the United Kingdom satisfies the quality requirement in relation to a jobholder if it satisfies the requirements mentioned in whichever of these is the appropriate paragraph—

(a)the requirements for a money purchase scheme under section 20, subject to any prescribed modifications;

(b)the requirements for a defined benefits scheme under sections 21 to [F723A ] , subject to any prescribed modifications.

(2) Which paragraph of subsection (1) is appropriate for any hybrid scheme is to be determined by rules made by the Department.

(3) The rules may provide for different paragraphs to be appropriate for different provisions of a scheme.

(4) The rules may provide for the paragraphs to be appropriate as alternatives, for any scheme or any provisions of a scheme.

Textual Amendments

Modifications etc. (not altering text)

C4S. 24 applied (with modifications) (1.7.2012) by The Occupational and Personal Pension Schemes (Automatic Enrolment) Regulations (Northern Ireland) 2010 (S.R. 2010/122), regs. 1(1), 45(5)(6) (as amended (1.7.2012) by S.R. 2012/237, regs. 1(1)(b), 2(2))

Commencement Information

I8S. 24 partly in force; s. 24 in force for certain purposes at Royal Assent see s. 118(2)

I9S. 24 in operation at 30.6.2012 in so far as not already in operation by S.R. 2012/266, art. 2, Sch. Pt. 1

Quality requirement: non-UK occupational pension schemesN.I.

25  The Department may by regulations make provision as to the quality requirement to be satisfied in the case of an occupational pension scheme within section 18(b) or (c).

Commencement Information

I10S. 25 partly in force; s. 25 in force for certain purposes at Royal Assent see s. 118(2)

Quality requirement: UK personal pension schemesN.I.

26—(1) This section applies to a personal pension scheme if the operation of the scheme—

(a)is carried on in such a way as to be a regulated activity for the purposes of the Financial Services and Markets Act 2000 (c. 8), and

(b)is carried on in the United Kingdom by a person who is in relation to that activity an authorised person or an exempt person under section 19 of that Act.

(2) The scheme satisfies the quality requirement in relation to a jobholder if the following conditions are satisfied.

(3) The first condition is that all of the benefits that may be provided to the jobholder under the scheme are money purchase benefits.

(4) The second condition is that, in relation to the jobholder, there is an agreement between the provider of the scheme and the employer under which—

(a)the employer must pay contributions in respect of the jobholder;

(b)the employer's contribution, however calculated, must be equal to or more than 3% of the amount of the jobholder's qualifying earnings in the relevant pay reference period.

(5) In subsection (6), “shortfall” means the difference (if any) between—

(a)the employer's contribution in respect of the jobholder under the agreement referred to in subsection (4), and

(b)8% of the amount of the jobholder's qualifying earnings in the relevant pay reference period.

(6) The third condition is that if there is a shortfall there is an agreement between the provider of the scheme and the jobholder under which the jobholder must pay contributions which, however calculated, are equal to or more than the shortfall.

(7) The fourth condition is that, in relation to the jobholder, there are direct payment arrangements (within the meaning of section 107A of the Pension Schemes Act) between the jobholder and the employer.

F8(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(9) A scheme does not fail to satisfy the quality requirement under this section merely because the provider of the scheme may on any occasion refuse to accept a contribution below an amount prescribed for the purposes of this section on the grounds that it is below that amount.

Textual Amendments

Commencement Information

I11S. 26 partly in force; s. 26 in force for certain purposes at Royal Assent see s. 118(2)

I12S. 26 in operation at 30.6.2012 in so far as not already in operation by S.R. 2012/266, art. 2, Sch. Pt. 1

Quality requirement: other personal pension schemesN.I.

27  The Department may by regulations make provision as to the quality requirement to be satisfied in the case of a personal pension scheme to which section 26 does not apply.

Commencement Information

I13S. 27 partly in force; s. 27 in force for certain purposes at Royal Assent see s. 118(2)

[F9Certification that quality requirement or alternative requirement is satisfied]N.I.

F1028—(1) The Department may by regulations provide that, subject to provision within subsection (6)(f), a scheme to which this section applies is to be taken to satisfy the relevant quality requirement in relation to [F11each of an employer's relevant jobholders ] if a certificate given in accordance with the regulations is in force in relation to the employer.

[F12(1A) In this section—

(a)“relevant jobholder” means a jobholder to whom the certificate in question applies;

(b)a reference to a scheme includes a reference to part of a scheme.]

(2) The certificate must [F13state—

(a)that], in relation to [F14relevant jobholders ] of the employer who are active members of the scheme, the scheme is in the opinion of the person giving the certificate able to satisfy the relevant quality requirement throughout the certification period[F15, or

(b)that, in relation to those jobholders, the scheme is in that person's opinion able to satisfy a prescribed alternative requirement throughout the certification period.]

(3) This section applies to—

(a)a money purchase scheme to which section 20 applies;

(b)a personal pension scheme to which section 26 applies;

(c)a hybrid scheme, to the extent that requirements within section 24(1)(a) apply.

[F16(3A) This section also applies to—

(a)a money purchase scheme that is an occupational pension scheme within section 18(b);

(b)a personal pension scheme of a prescribed description for which provision is made under section 27;

(c)a hybrid scheme that is an occupational pension scheme within section 18(b), to the extent prescribed.]

[F17(3B) This section also applies to a defined benefits scheme that has its main administration in the United Kingdom and is of a description prescribed under section 23A(1)(a).]

(4) The “relevant quality requirement”—

(a)for a scheme within subsection (3)(a), means the quality requirement under section 20;

(b)for a scheme within subsection (3)(b), means the quality requirement under section 26;

(c)for a scheme within paragraph (c) of subsection (3), means the requirements mentioned in that paragraph.

[F18(d)for a scheme within subsection (3A), means a prescribed requirement.]

[F19(e)for a scheme within subsection (3B), means the quality requirement under section 23A(1)(a).]

(5) Regulations may make further provision in relation to certification under this section.

(6) Regulations may in particular make provision—

(a)as to the period for which a certificate is in force (the “certification period”);

(b)as to the persons by whom a certificate may be given;

(c)as to procedures in connection with certification or where a certificate has been given;

(d)requiring persons to have regard to guidance issued by the Department;

(e)requiring an employer to calculate the amount of contributions that a scheme, and any [F20contribution agreements] , required to be paid by or in respect of [F21any relevant jobholder] in the certification period;

(f)as to cases where the requirements of a scheme, and any [F22contribution agreements] , as to payment of contributions by or in respect of [F23relevant jobholders] of an employer did not satisfy prescribed conditions.

(7) Provision within subsection (6)(f) includes in particular provision for a scheme not to be treated by virtue of regulations under this section as having satisfied the relevant quality requirement unless prescribed steps are taken (which may include the making of prescribed payments).

(8) In subsection (6) [F24“contribution agreements” means—

(a)the agreement] required, in the case of a scheme within subsection (3)(b), by section 26(4) and any agreement required, in the case of such a scheme, by section 26(6).[F25, or

(b)any agreement of the same or a similar kind that is required, in the case of a scheme within subsection (3A)(b), by regulations under section 27.]

(9) The Department may by order repeal this section.

Textual Amendments

F9S. 28 heading substituted (2.6.2012 for specified purposes, 7.6.2012 in so far as not already in operation) by Pensions Act (Northern Ireland) 2012 (c. 3), ss. 13(2), 34(1)(3); S.R. 2012/233, art. 2(1)(b)

F11Words in s. 28(1) substituted (2.6.2012 for specified purposes, 7.6.2012 in so far as not already in operation) by Pensions Act (Northern Ireland) 2012 (c. 3), ss. 13(3), 34(1)(3); S.R. 2012/233, art. 2(1)(b)

F12S. 28(1A) inserted (2.6.2012 for specified purposes, 7.6.2012 in so far as not already in operation) by Pensions Act (Northern Ireland) 2012 (c. 3), ss. 13(4), 34(1)(3); S.R. 2012/233, art. 2(1)(b)

F13Words in s. 28(2) substituted (2.6.2012 for specified purposes, 7.6.2012 in so far as not already in operation) by Pensions Act (Northern Ireland) 2012 (c. 3), ss. 13(5)(a), 34(1)(3); S.R. 2012/233, art. 2(1)(b)

F14Words in s. 28(2) substituted (2.6.2012 for specified purposes, 7.6.2012 in so far as not already in operation) by Pensions Act (Northern Ireland) 2012 (c. 3), ss. 13(5)(b), 34(1)(3); S.R. 2012/233, art. 2(1)(b)

F15S. 28(2)(b) and preceding word added (2.6.2012 for specified purposes, 7.6.2012 in so far as not already in operation) by Pensions Act (Northern Ireland) 2012 (c. 3), ss. 13(5)(c), 34(1)(3); S.R. 2012/233, art. 2(1)(b)S.R. 2012/233, art. 2(1)(b)

F16S. 28(3A) inserted (2.6.2012 for specified purposes, 7.6.2012 in so far as not already in operation) by Pensions Act (Northern Ireland) 2012 (c. 3), ss. 14(2), 34(1)(3); S.R. 2012/233, art. 2(1)(c)

F18S. 28(4)(d) added (2.6.2012 for specified purposes, 7.6.2012 in so far as not already in operation) by Pensions Act (Northern Ireland) 2012 (c. 3), ss. 14(3), 34(1)(3); S.R. 2012/233, art. 2(1)(c)

F20Words in s. 28(6)(e) substituted (2.6.2012 for specified purposes, 7.6.2012 in so far as not already in operation) by Pensions Act (Northern Ireland) 2012 (c. 3), ss. 14(4), 34(1)(3); S.R. 2012/233, art. 2(1)(c)

F21Words in s. 28(6)(e) substituted (2.6.2012 for specified purposes, 7.6.2012 in so far as not already in operation) by Pensions Act (Northern Ireland) 2012 (c. 3), ss. 13(6)(a), 34(1)(3); S.R. 2012/233, art. 2(1)(b)

F22Words in s. 28(6)(f) substituted (2.6.2012 for specified purposes, 7.6.2012 in so far as not already in operation) by Pensions Act (Northern Ireland) 2012 (c. 3), ss. 14(4), 34(1)(3); S.R. 2012/233, art. 2(1)(c)

F23Words in s. 28(6)(f) substituted (2.6.2012 for specified purposes, 7.6.2012 in so far as not already in operation) by Pensions Act (Northern Ireland) 2012 (c. 3), ss. 13(6)(b), 34(1)(3); S.R. 2012/233, art. 2(1)(b)

F24Words in s. 28(8) substituted (2.6.2012 for specified purposes, 7.6.2012 in so far as not already in operation) by Pensions Act (Northern Ireland) 2012 (c. 3), ss. 14(5)(a), 34(1)(3); S.R. 2012/233, art. 2(1)(c)

F25S. 28(8)(b) and preceding word added (2.6.2012 for specified purposes, 7.6.2012 in so far as not already in operation) by Pensions Act (Northern Ireland) 2012 (c. 3), ss. 14(5)(b), 34(1)(3); S.R. 2012/233, art. 2(1)(c)

Commencement Information

I14S. 28 partly in force; s. 28 in force for certain purposes at Royal Assent see s. 118(2)

I15S. 28 in operation at 8.6.2012 in so far as not already in operation by S.R. 2012/236, art. 2(b)