The Pension Protection Fund (Modification) (Amendment) Regulations (Northern Ireland) 2017

Statutory Rules of Northern Ireland

2017 No. 59

Pensions

The Pension Protection Fund (Modification) (Amendment) Regulations (Northern Ireland) 2017

Made

15th March 2017

Coming into operation in accordance with regulation 1

The Department for Communities(1) makes the following Regulations in exercise of the powers conferred by Articles 154(2) and 287(2) and (3) of, and paragraph 26(9) of Schedule 6 to, the Pensions (Northern Ireland) Order 2005(2) and section 49(8) of the Pensions Act (Northern Ireland) 2015(3).

Citation, commencement and effect

1.—(1) These Regulations may be cited as the Pension Protection Fund (Modification) (Amendment) Regulations (Northern Ireland) 2017 and shall come into operation on 6th April 2017.

(2) For the purposes of regulation 2(a) to (c), these Regulations are to be treated as having effect from 6th April 2005.

(3) The remaining provisions of these Regulations take effect from 6th April 2017.

Amendment of the Pension Protection Fund (Compensation) Regulations

2.  In regulation 20 of the Pension Protection Fund (Compensation) Regulations (Northern Ireland) 2005(4) (application of compensation cap where compensation becomes payable on different dates)—

(a) for sub-paragraph (6A) (as inserted by regulation 20(3)) substitute—

“(6A) Where sub-paragraph (6B) or sub-paragraph (6BA) applies to a person, sub-paragraphs (6C) and (6D) apply (instead of sub-paragraph (1)) in relation to the entitlements referred to in the sub-paragraph which applies to him.”;

(b) for sub-paragraph (6B) (as inserted by regulation 20(3)) substitute—

“(6B) This sub-paragraph applies if—

(a) a person becomes entitled to relevant compensation in respect of a benefit (“benefit A”) that is attributable to a pension credit from a transferor, and

(b) before the person becomes entitled to relevant compensation in respect of benefit A, he has become entitled to—

(i) relevant compensation in respect of one or more other benefits under the scheme or a connected occupational pension scheme that are also attributable to a pension credit from the same transferor (“benefit or benefits C”), or

(ii) one or more lump sums under the scheme or a relevant connected occupational pension scheme (“sum or sums L”) that are also attributable to a pension credit from the same transferor.”;

(c) after sub-paragraph (6B) (as substituted by regulation 2(b) of these Regulations) insert—

“(6BA) This paragraph applies if—

(a) a person becomes entitled to relevant compensation in respect of a benefit (“benefit A”) that is attributable to the person’s pensionable service, and

(b) before the person becomes entitled to relevant compensation in respect of benefit A, he has become entitled to—

(i) relevant compensation in respect of one or more other benefits under the scheme or a connected occupational pension scheme that are also attributable to his pensionable service (“benefit or benefits C”), or

(ii) one or more lump sums under the scheme or a relevant connected occupational pension scheme (“sum or sums L”) that are also attributable to his pensionable service.

(6BB) For the purposes of sub-paragraphs (6B)(b)(ii) and (6BA)(b)(ii), a scheme is a relevant connected compensation pension scheme if it is an eligible scheme when the person becomes entitled to the relevant compensation in respect of benefit A.”;

(d) after sub-paragraph (6G) (as inserted by regulation 20(3)) insert—

“(6GA) Where sub-paragraph (6B) or (6BA) applies, “the compensation cap” has the meaning given by paragraph 26A, except that the reference in sub-paragraph (2) of that paragraph to the length of the person’s pensionable service is to be treated as if it were a reference to the total length of the person’s pensionable service at the time when he becomes entitled to the relevant compensation in respect of benefit A.”.

Amendment of the Pension Protection Fund (General and Miscellaneous Amendments) Regulations

3.  In regulation 9A(3) of the Pension Protection Fund (General and Miscellaneous Amendments) Regulations (Northern Ireland) 2006(5) (PPF money purchase lump sums), for “£2,000” substitute “£10,000”.

Sealed with the Official Seal of the Department for Communities on 15th March 2017

(L.S.)

Thomas O’Reilly

A senior officer of the Department for Communities

EXPLANATORY NOTE

(This note is not part of the Regulations)

The Board of the Pension Protection Fund (“the Board”) is established by section 107 of the Pensions Act 2004 (c. 35) to provide compensation for members of certain occupational pension schemes in the event of the insolvency of the scheme’s sponsoring employer and where the pension scheme is underfunded at a certain level. Paragraphs 26 and 26A of Schedule 6 to the Pensions (Northern Ireland) Order 2005 (“the Order”) make provision for the amount of such compensation to be subject to a cap in certain cases.

Regulation 20 of the Pension Protection Fund (Compensation) Regulations (Northern Ireland) 2005 (“the Compensation Regulations”) modifies paragraph 26 of Schedule 6 to the Order so that where compensation is paid by the Board in successive tranches, or the person entitled to the compensation has on a previous occasion become entitled to one or more lump sums from the scheme in question or from connected schemes, the restriction applies by aggregating the annual values of the former benefits or lump sums with the benefits payable in the latest tranche.

Regulation 2(a) to (c) of these Regulations amends the modifications made by regulation 20 of the Compensation Regulations so that, for the purpose of the compensation cap two or more scheme benefits are only added together where they are either all attributable to the person’s pensionable service or all attributable to a pension credit arising from a divorce or dissolution settlement.

By virtue of section 49(8) of the Pensions Act (Northern Ireland) 2015 (“the 2015 Act”), the amendments made by regulation 2(a) to (c) have retrospective effect and are to be treated as having effect from 6th April 2005, which is the date on which the Compensation Regulations came into operation.

Regulation 2(d) of these Regulations further amends regulation 20 of the Compensation Regulations so as to make provision for how the increased compensation cap for long service of 20 years or more introduced by the 2015 Act is to be calculated where a person has previously become entitled to compensation under the scheme or a connected scheme.

Regulation 3 of these Regulations amends regulation 9A of the Pension Protection Fund (General and Miscellaneous Amendments) Regulations (Northern Ireland) 2006 in relation to the discharge by the Board of liabilities in respect of money purchase benefits by payment of a lump sum, where the value of a person’s money purchase benefits does not exceed a specified maximum. The amendment increases that maximum value from £2,000 to £10,000.

The Pensions (2015 Act) (Commencement No. 5) Order (Northern Ireland) 2017 (S.R. 2017 No. 44 (C. 5)) provides for the coming into operation of Schedule 20 to the 2015 Act, which amends paragraph 26(9) of Schedule 6 to the Order, one of the enabling provisions under which these Regulations are made, on 6th April 2017.

As these Regulations, in so far as they are made under the Order, make in relation to Northern Ireland only provision corresponding to provision contained in regulations made by the Secretary of State for Work and Pensions in relation to Great Britain, the requirement for consultation does not apply by virtue of Article 289(2)(e) of the Order.

An assessment of the impact of the introduction of the Pension Protection Fund increased cap for long service is included in the Regulatory Impact Assessment which accompanied the 2015 Act, a copy of which has been laid in the Business Office and the Library of the Northern Ireland Assembly. Copies of the Assessment are available from the Department for Communities, Social Security Policy and Legislation Division, Level 8, Causeway Exchange, 1-7 Bedford Street, Belfast BT2 7EG or from the website: https://www.communities-ni.gov.uk/articles/pension-information.

(1)

See section 1(7) of the Departments Act (Northern Ireland) 2016 (c. 5 (N.I.))

(2)

S.I. 2005/255 (N.I. 1); Article 154 was amended by Article 6 of S.R. 2012 No. 124; paragraph 26 of Schedule 6 was amended by paragraph 23(9) of Schedule 4 to the Pensions Act (Northern Ireland) 2012 (c .3 (N.I.)) and (with retrospective effect) by section 49 of the Pensions Act (Northern Ireland) 2015 (c .5 (N.I.)) and is amended by paragraphs 2 and 5 of Schedule 20 to that Act with effect from 6th April 2017

(3)

2015 c. 5 (N.I.)

(4)

S.R. 2005 No. 149

(5)

S.R. 2006 No. 155; regulation 9A was inserted by regulation 9(5) of S.R. 2013 No. 95 and amended by regulation 6(3) of S.R. 2016 No. 165