11.—(1) If, as a result of a member’s criminal, negligent or fraudulent act or omission, a loss to public funds occurs that arises out of or is connected with the member’s employment relationship with the member’s employer, the Scottish Ministers—
(a)may reduce any pension or other benefit payable to, or in respect of, the member under these Regulations by an amount less than or equal to the loss; or
(b)in a case where the loss equals or exceeds the value of the pension or other benefit, may reduce them to nil or by any amount less than that value.
(2) Sub-paragraph (1) does not apply so far as the pension or other benefit—
(a)is a guaranteed minimum pension; or
(b)arises out of a transfer payment.
(3) If the Scottish Ministers propose to exercise the power under sub-paragraph (1), they must give the member a certificate specifying the amount of the loss to public funds and of the reduction in benefits.
(4) If the amount of the loss is disputed, no reduction may be made under sub-paragraph (1) until the member’s obligation to make good the loss has become enforceable—
(a)under the order of a competent court; or
(b)in consequence of an award of an arbiter to be appointed (failing agreement between the parties) by the sheriff.
(5) If the loss is suffered by an employing authority, the amount of any reduction under sub-paragraph (1) must be paid to that authority.