PART 1
Meaning of “cash balance benefit”2
1
For the purposes of these Regulations, a benefit is a “cash balance benefit” if conditions 1 and 2 are met.
2
Condition 1 is that a sum of money (“the available sum”) is available under the scheme for the provision of the benefit to or in respect of the member.
3
Condition 2 is that under the scheme—
a
there is a promise about the amount of the available sum, but
b
there is no promise about the rate or amount of any pension to be provided from the available sum.
4
The promise mentioned in paragraph (3)(a) includes in particular a promise about the change in the value of, or the return from, payments made under the scheme by the member or by any other person in respect of the member.
5
The promise mentioned in paragraph (3)(b) includes a promise that—
a
the amount of the available sum will be sufficient to provide a pension of a particular rate or amount, and
b
the rate or amount of a pension will represent a particular proportion of the available sum.
6
But a benefit is not prevented from being a cash balance benefit merely because under the scheme there is a promise that—
a
the rate or amount of the benefit payable in respect of a deceased member will be a particular proportion of the rate or amount of the benefit which was (or would have been) payable to the member, or
b
the amount of a lump sum payable to a member, or in respect of a deceased member, will represent a particular proportion of the available sum.