Teachers' Superannuation (Additional Voluntary Contributions) Regulations (Northern Ireland) 1996

Citation and commencement

1.—(1) These Regulations may be cited as the Teachers' Superannuation (Additional Voluntary Contributions) Regulations (Northern Ireland) 1996, and shall come into operation in accordance with paragraph (2).

(2) These Regulations shall come into operation on 31st July 1996 and shall have effect from 1st April 1989.

Interpretation

2.—(1) In these Regulations—

“approved scheme” means a retirement benefits scheme approved under Chapter 1 of Part XIV of the Taxes Act;

“authorised insurance company” means 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(1) applies and which is authorised under section 3 or 4 of that Act to carry on long-term insurance business; or

(b)

an EC company as defined by section 2(6) of that Act(2) which is lawfully carrying on long-term insurance business in the United Kingdom;

“child” has the same meaning as in regulation 2(2) of the Teachers' (Compensation for Redundancy and Premature Retirement) Regulations (Northern Ireland) 1991(3);

“comparable Northern Ireland Service” has the same meaning as in regulation 2(1) of the Principal Regulations;

“contributor” is to be construed in accordance with regulation 7;

“the Department” means the Department of Education;

“dependant” in relation to a participator or a contributor means—

(a)

any surviving spouse;

(b)

any person who is a child of a participator or contributor; and

(c)

any person in respect of whom at the time of death of a participator or contributor a nomination under regulation 58 of the Principal Regulations(4) has effect;

“free-standing additional voluntary contributions scheme” means an approved scheme which falls within section 591(2)(h) of the Taxes Act;

“the Index” at any time means the index of retail prices published by the Central Statistical Office 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;

“lump sum death benefit” means a lump sum which will become payable in the event of a person dying while paying regular contributions to provide for it;

“participator” means—

(a)

a contributor who has made a benefits election under regulation 12(5);

(b)

a person who ceased to be a contributor not being a person in respect of whom the Department has paid a transfer value under regulation 11; or

(c)

a person in respect of whom a transfer value has been accepted under regulation 10;

“pension element” shall be construed in accordance with regulation 5(2);

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

“Principal Regulations” means the Teachers' Superannuation Regulations (Northern Ireland) 1977(5);

“reckonable service” shall be construed in accordance with Regulation 3 of the Principal Regulations(6);

“regular contributions” means contributions, paid pursuant to an election under regulation 4(1)(a) or (c);

“retire” means become entitled under regulation 48 of the Principal Regulations(7) to payment of retirement benefits;

“retirement pension” has the meaning given by regulation 12(2);

“retirement benefits scheme” has the meaning given in section 611 of the Taxes Act;

“salary” means—

(a)

in relation to reckonable service the salary calculated in accordance with regulations 9 and 10 of the Principal Regulations; and

(b)

in relation to contributions payable under regulations 27 and 28 of the Principal Regulations(8), the salary determined in accordance with the provisions of those Regulations for the purposes of calculating the said contributions;

“Taxes Act” means the Income and Corporation Taxes Act 1988(9);

“tax year” means the 12 months beginning with 6th April in any year.

(2) For the purposes of these Regulations the pension equivalent of a lump sum shall be calculated by dividing the cash value of the lump sum by 12.

Making and acceptance of elections

3.—(1) Any election under these Regulations shall—

(a) be made by giving written notice to the Department; and

(b) subject to paragraphs (2) and (3), be accepted by it.

(2) An election under these Regulations shall not be accepted by the Department if—

(a) the amount paid in contributions in any tax year pursuant to that election would be such as to cause the total of contributions paid in that tax year pursuant to these Regulations to exceed the limit imposed by regulation 8(3); or

(b) the benefits to be paid as a result of the contributions paid pursuant to that election would be likely to exceed the amount permitted by regulation 14 and the Schedule; or

(c) in the case of an election under regulation 4(1)(c), the amount specified in the election as the amount to be secured is less than the amount specified in regulation 4(2)(d).

(3) An election falling within regulation 17(2) shall not be accepted by the Department if any information required by that regulation is not given.

Election to pay regular and lump sum contributions

4.—(1) A person employed in reckonable service may at any time elect to pay—

(a) regular contributions for investment under regulation 9(1);

(b) a lump sum contribution for investment under regulation 9(1); or

(c) regular contributions to secure the payment of a lump sum death benefit under these Regulations.

(2) An election under paragraph (1) shall specify—

(a) in the case of an election under sub-paragraph (a) or (c), the amount of each regular contribution or, if expressed as a percentage of salary, that percentage.

(b) in the case of an election under sub-paragraph (b) the amount of the contribution;

(c) in the case of an election under sub-paragraph (a) or (b) the fund or funds in which contributions are to be invested; and

(d) in the case of an election under paragraph (1)(c) the amount to be secured which must not be less than £5,000.

Provision for lump sum death benefit

5.—(1) This regulation shall apply where a person elects under regulation 4(1)(c) to pay regular contributions to secure the payment of a lump sum death benefit.

(2) A person who elects to pay regular contributions to secure the payment of a lump sum death benefit may at the same time, or at any time while paying those contributions, elect that if the lump sum becomes payable, the whole or part of it “the pension element” shall be applied by the Department for the purchase of a pension policy from an authorised provider to provide a pension or pensions for one or more dependants.

(3) An election under paragraph (2) shall specify—

(a) for whom a pension is, or pensions are, to be provided;

(b) if more than one pension is to be provided, the proportion of the pension element that is to be applied to the purchase of each of them; and

(c) in respect of every pension to be provided, whether the annual rate of the pension—

(i) is to be fixed; or

(ii) is to vary in accordance with the Index; or

(iii) is to increase yearly by a specified percentage or, if lower than that percentage, by any increase in the Index for the year in question.

(4) Subject to regulation 8(3), a person who has continued to pay regular contributions until he attains his 60th birthday but does not then retire may elect to pay further regular contributions until he attains his 61st birthday to secure the payment of a lump sum death benefit; and so long as he has not retired further elections may be made annually in respect of years commencing on his 61st and subsequent birthdays.

(5) An election made by a person under paragraph (4) shall lapse if the person retires or ceases to be employed in reckonable service during the year in question.

(6) An election under regulation 4(1)(c) or an election under paragraph (4) shall have effect for the purpose of the entitlement to benefit from the date when that election is accepted by the Department.

Variation and cancellation of elections

6.—(1) A contributor who has elected under regulation 4(1)(a) to pay regular contributions may at any time by giving written notice to the Department—

(a) subject to regulation 8(3), alter the amount of the regular contributions;

(b) require any contributions payable pursuant to the election to be invested in future under regulation 9 in a different way;

(c) require the Department to realise any investment and to reinvest the proceeds under regulation 9 in a different way; or

(d) cancel his election under regulation 4(1)((a).

(2) A contributor who has elected under regulation 4(1)(b) to pay a lump sum contribution may at any time by giving written notice to the Department require the Department to realise any investment and to reinvest the proceeds under regulation 9 in a different way.

(3) A contributor who has elected to pay regular contributions under regulation 4(1)(c) may at any time by giving written notice to the Department—

(a) subject to regulation 8(3), elect that a specified larger lump sum is to be secured and the regular contributions increased accordingly; or

(b) if the contributor has made an election under regulation 5(2), cancel it or alter in any specified way the manner in which the pension element is to be applied; or

(c) cancel his election under regulation 4(1)(c).

(4) A person paying further regular contributions pursuant to an election under regulation 5(4) may at any time make an election under regulation 5(2) or do anything authorised by paragraph (3).

(5) The Department shall give effect as soon as is reasonably practicable to the terms of any notice given under this regulation.

Contributor

7.—(1) Subject to paragraph (2), a person is a contributor while an election under regulation 4(1)(a) or (c) has effect or if he has paid a lump sum pursuant to an election under regulation 4(1)(b).

(2) A person who—

(a) has become entitled to retirement benefits under regulation 48 of the Principal Regulations;

(b) has, under regulation 6(1)(d) or (3)(c), cancelled the election to pay regular contributions; or

(c) subject to paragraph (3), has ceased to be employed in reckonable service and is not paying contributions under regulations 27 and 28 of the Principal Regulations (additional contributions for current period),

ceases to be a contributor.

(3) For the purposes of this regulation a person who—

(a) has ceased to be employed in reckonable service; and

(b) has re-entered reckonable service within 3 months,

shall be treated as having continued to be employed in reckonable service.

Payment of contributions and amount of regular contributions

8.—(1) Regular contributions shall be paid to the Department at intervals of one month.

(2) Payment of regular contributions under paragraph (1) shall be effected by deduction by the contributor’s employer of the appropriate amounts from the contributor’s salary and such deductions shall—

(a) commence to be made from the salary in respect of the first whole pay period falling after the date on which the employer receives authorisation to make them; and

(b) be remitted by that employer to the Department within 14 days after their deduction.

(3) The total of contributions paid in any tax year shall not exceed the lesser of

where—

• A is 15 per cent of the person’s salary for that year;

• B is the total of any contributions paid by him in the year to another approved scheme;

• C is the total of the contributions paid by him in the year under the Principal Regulations; and

• D is the amount which would be likely to provide benefits of the largest amounts permitted by regulation 14 and the Schedule.

Investment of contributions

9.—(1) Any contributions paid by a contributor for investment under this regulation in accordance with any notice under regulation 4(2) or 6(1) or (2) shall be invested by the Department in one or more of the funds authorised by it for the purposes of these Regulations managed by an authorised insurance company selected by it.

(2) Regular contributions to secure the payment of a lump sum death benefit shall be invested by the Department with an authorised insurance company selected by it so as to secure the payment of a lump sum death benefit of the amount required by any notice under regulation 4(2) or 6(3).

Inward transfers

10.—(1) Where a person who enters employment in reckonable service has during previous employment paid contributions to—

(a) a free-standing additional voluntary contribution scheme; or

(b) an approved scheme which provides additional benefits through additional voluntary contributions paid by that person but does not fall within section 591(2)(h) of the Taxes Act, that person whether or not he becomes a contributor, may give written notice to the Department that he wishes the Department to accept from the trustees or managers of such a scheme a transfer value representing the value of the investments from his contributions.

(2) Where a transfer value is accepted by the Department it shall be invested by it, in accordance with the wishes of the person entering employment in reckonable service, in one or more of the funds authorised by the Department for the purposes of these Regulations managed by an authorised insurance company selected by it.

Outward transfers

11.—(1) Subject to paragraph (2), the Department shall, on application by a person who has ceased to be a contributor by virtue of regulation 7(2)(c), pay a transfer value representing the value of investments made under regulation 9(1) or 10(2) to one of the following schemes in which the person may be participating:—

(a) an approved scheme which provides additional benefits but does not fall within section 591(2)(h) of the Taxes Act; or

(b) a personal pension scheme; or

(c) any other approved scheme, provided the trustees or managers certify that the transfer value shall not be used to purchase benefits in the form of a tax-free lump sum.

(2) A transfer value shall not be payable under paragraph (1) unless one is payable in respect of that person under regulation 75 of the Principal Regulations(10).

Retirement and dependants' pensions

12.—(1) The benefits that may be provided on retirement in accordance with this regulation under a pension policy purchased as described in paragraph (7) are a retirement pension and one or more dependants' pensions.

(2) A retirement pension is a pension commencing not earlier than the date of retirement and is payable to the participator for life.

(3) A dependants' pension is a pension which would become payable to a dependant on the death of the participator after his retirement and is payable during the life of that dependant, except that, in the case of a dependant who is a child, it shall cease to be payable when that person ceases to be a child.

(4) A pension policy purchased as described in paragraph (7) shall not provide for any retirement pension or dependants' pension capable in whole or in part of surrender, commutation or assignment (except as provided by paragraphs (9) and (10)).

(5) Not earlier than one month before retirement, a participator, by giving written notice to the Department, shall make a benefits election which shall specify—

(a) whether a retirement pension is to be provided;

(b) for whom, if anyone, dependants' pensions are to be provided;

(c) if more than one pension is to be provided, either—

(i) the proportion of the amount secured by the investments made under regulation 9(1) or 10(2) which is to be applied to the purchase of each of them; or

(ii) the dependants' pensions to be provided expressed as a percentage of the retirement pension;

(d) in respect of every pension to be provided, whether the annual rate of the pension—

(i) is to be fixed; or

(ii) is to vary in accordance with the Index; or

(iii) is to increase yearly by a specified percentage or, if lower than that percentage, by an increase in the Index for the year in question; and

(e) the authorised provider who is to provide each pension.

(6) In the case of a retirement pension, the election made in accordance with paragraph (5) may also specify that if the participator dies within the period of 5 years beginning when the retirement pension commences the balance that would have been payable during the remainder of that period if the pension had continued at the rate in force at the time of the participator’s death is to be paid as a lump sum to his personal representatives.

(7) Subject to paragraphs (9) and (10), upon receipt of an election in accordance with paragraph (5) the Department shall, as soon as is reasonably practicable, realise the investments made under regulation 9(1) or 10(2) and apply the amount obtained for the purchase of a pension policy from an authorised provider chosen by the participator to provide the benefits specified in that election.

(8) Subject to paragraphs (9) and (10), if no benefits election under paragraph (5) has been made six months after the participator retires the Department may realise the investments made under regulation 9(1) or 10(2) and apply the amount obtained for the purchase of a pension policy from an authorised insurance company selected by it to provide such benefits as appear to the Department to be suitable.

(9) If the participator dies before retirement, or after retirement but before a policy such as is mentioned in paragraph (7) is purchased, the Department shall as soon as reasonably practicable realise the investments made under regulation 9(1) or 10(2) and pay the amount obtained to the personal representatives of the participator as a lump sum.

(10) In the case of a retirement pension, where there are exceptional circumstances of serious ill-health affecting the participator, the Department may realise the investments without purchasing any pension and in that event shall pay the amount obtained to him as a lump sum.

(11) If the annual rate of the retirement pension purchased in accordance with paragraph (7) or (8), when aggregated with the annual rate of any pensions payable and the annual equivalent of any lump sums payable to the participator under the Principal Regulations arising from the participator’s employment in reckonable service, does not exceed any amount prescribed by regulations for the time being in force under section 17(1) of the Pension Schemes (Northern Ireland) Act 1993(11), the authorised provider may discharge the liability for payment of the benefits under the pension policy by payment of a lump sum representing their capital value.

Lump sum death benefit

13.—(1) Where a contributor who is paying regular contributions to secure payment of a lump sum death benefit dies when no election under regulation 5(2) has effect, the Department shall pay the lump sum secured by those contributions to his personal representatives.

(2) Where on the death of a contributor an election under regulation 5(2) has effect—

(a) the department shall apply the pension element by purchasing a pension policy from the authorised provider determined in accordance with paragraph (3) or (4) to provide the pension or pensions in accordance with the terms of that election; and

(b) the Department shall pay any balance of the lump sum death benefit to his personal representatives.

(3) Any dependant for whom a pension is to be provided pursuant to paragraph (2) who has attained the age of 18 years at the date of death of the contributor may within six months of the date of death of the contributor make an election specifying the authorised provider by whom the pension is to be provided and where such an election is made the Department shall apply the pension element for the purchase of that pension from that authorised provided.

(4) Where no election has been made pursuant to paragraph (3) the Department shall purchase a pension policy from an authorised insurance company selected by it.

(5) If at the time of the death of the contributor any person specified in a notice of election given under regulation 5(3) had died or ceased to be a dependant, the proportion of the lump sum death benefit that was to have been applied to the purchase of a pension for that person shall be paid to the personal representatives of the contributor.

Benefit limits

14.—(1) The Schedule has effect for limiting the benefits that may be paid under these Regulations.

(2) The maximum annual rate of a retirement pension or dependant’s pension ascertained from the Schedule may be increased by up to 3 per cent for each complete year that has elapsed, or in proportion to the increase in the Index that has occurred since payment of the pension became payable, if greater.

Repayment of investments in certain cases

15.—(1) In the case of a person who—

(a) ceases to be employed in reckonable service; and

(b) is entitled to receive a return of contributions under regulation 42 of the Principal Regulations; and

(c) has applied for and received such a return of contributions,

the Department shall make arrangements for that person to receive a lump sum representing the total realisable value of the investments made by the Department in respect of that person under regulation 9(1) or 10(2).

(2) There shall be deducted from any lump sum payable under paragraph (1) the amount of tax chargeable under section 598 of the Taxes Act.

Payment by the Department

16.—(1) Where pursuant to an election made under regulation 12(5) or 13(3) the Department purchases a pension policy from an authorised provider other than an authorised insurance company selected by it, the Department shall not, except in the circumstances described in paragraph (2), be liable for payment of any pension under that policy.

(2) Where pursuant to an election under regulation 5(2) or 12(5) or pursuant to regulation 12(8) or 13(4) the Department purchases a pension policy from an authorised insurance company selected by it the Department shall be liable to make to the person entitled to it any payment of pension under the policy which has not been made by that authorised insurance company.

(3) If when a participator dies a lump sum would have been payable under regulation 13 but the whole or part of that sum cannot be paid under that regulation by reason of regulation 14 and paragraph 14 of the Schedule the Department shall pay to the participator’s personal representatives the amount which cannot be paid under regulation 13, so far as it does not exceed the prescribed amount, but subject to any deduction of tax under paragraph (7).

(4) If by reason of regulation 14 and the Schedule a pension provided under regulation 12 is not payable in full, the Department shall pay to the participator an amount, or aggregate of amounts, not exceeding the prescribed amount, out of the investments realised by virtue of regulation 12(7) which would otherwise have been applicable to the purchase of the pension but subject to any deduction of tax under paragraph (7).

(5) In paragraphs (3) and (4) the reference to the prescribed amount is to an amount calculated in accordance with the method for the time being specified in regulations made for the purposes of section 591 of the Taxes Act as the method to be used for calculating the amount of any surplus funds.

(6) The amount of any tax chargeable under the Taxes Act on payments made under these Regulations shall be deducted by the Department before payment to the participator or his personal representatives as the case may be.

Information

17.—(1) Any person making an election under these Regulations and the employer of such person shall give the Department such information as it may reasonably require for the purposes of its functions under these Regulations.

(2) A person making—

(a) an election under regulation 4(1)(c) or 5(4) to secure the payment of a lump sum death benefit; or

(b) an election under regulation 6(3)(a); or

(c) an election under regulation 6(4) corresponding to one that could have been made under regulation 6(3)(a),

shall, in particular, give to the Department such information about his health as it may reasonably require.

Payments in respect of deceased persons

18.—(1) This regulation applies where a person dies and the total of—

(a) any sums that were due to the person under these Regulations; and

(b) any sums payable under these Regulations to the person’s personal representatives does not exceed £5,000.

(2) Where this regulation applies the Department may, without requiring the production of proof of title, pay the amount due under paragraph (1)(a) and (b)—

(a) to the deceased’s personal representatives; or

(b) to the person, or to or among any one or more of any persons, appearing to it to be beneficially entitled to the estate and any person to whom such a payment is made, and not the Department, shall thereafter be liable to account for any amount so paid.

Determination of questions

19.  All questions arising under these Regulations shall be determined by the Department and a determination by it is final.

Retrospective effect

20.—(1) Subject to paragraph (3), any sum paid to the Department by a teacher while employed in reckonable service in anticipation of these Regulations shall be treated as if it had been paid under these Regulations.

(2) A sum is one paid in anticipation of these Regulations if—

(a) it was paid after 2nd February 1989 and before 31st July 1996 on the understanding that if these Regulations providing for additional voluntary contributions were made it would be treated as such a contribution; and

(b) it would not, if these Regulations had been in operation throughout the tax year ending with 5th April 1989, have exceeded the limit imposed by regulation 8(3).

(3) Nothing in this regulation shall be taken to have imposed on the Department any obligation to make any investment before 1st April 1989, but—

(a) an investment so made shall be treated as having been made under these Regulations; and

(b) if any investment was so made and an event on which a benefit would have been payable occurred before the commencement of these Regulations, the benefit shall be paid to the person entitled thereto.

Sealed with the Official Seal of the Department of Education for Northern Ireland on

L.S.

D. Woods

Assistant Secretary

27th June 1996.

The Department of Finance and Personnel hereby consents to the foregoing Regulations.

Sealed with the Official Seal of the Department of Finance and Personnel on

L.S.

J. G. Sullivan

Assistant Secretary

27th June 1996.