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Pension Schemes Act 1993

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This is the original version (as it was originally enacted).

60Effect of payment of premiums on rights

(1)Payment of an accrued rights premium shall extinguish the earner’s rights to guaranteed minimum pensions under the scheme.

(2)Payment of a pensioner’s rights premium shall extinguish any right to receive guaranteed minimum pensions under the scheme, whether for the earner (or former earner) or for the earner’s (or former earner's) widow or widower.

(3)Where a contracted-out protected rights premium or a personal pension protected rights premium is paid in respect of a person—

(a)the rights whose cash equivalent is included in the premium shall be extinguished; and

(b)sections 47(2) and (5) and 48(2) shall have effect in relation to that person and a widow or widower of that person as if any guaranteed minimum pension to which that person or any such widow or widower is treated as entitled under those provisions and which derives from the minimum payments, minimum contributions or transfer payment or payments from which those rights derive were reduced by the appropriate percentage.

(4)Payment of a contributions equivalent premium in the circumstances mentioned in section 55(2)(i) shall extinguish the earner’s accrued rights to guaranteed minimum pensions under the relevant scheme.

(5)Payment of a contributions equivalent premium in the circumstances mentioned in section 55(2)(ii) shall extinguish any such accrued rights in respect of the earner’s widow.

(6)Payment of a transfer premium shall extinguish the earner’s accrued rights to guaranteed minimum pensions under the scheme from which his other accrued rights have been transferred.

(7)In subsection (3) “the appropriate percentage” means, subject to the following provisions of this section—

Formula - (X multiplied by 100) divided by Y

where—

  • X is the amount of the contracted-out protected rights premium or, as the case may be, the personal pension protected rights premium together, if the person in respect of whom it falls to be paid gives notice to the prescribed person within the prescribed period—

    (a)

    with the cash equivalent, paid to the Secretary of State within the prescribed period, of any other rights which he has under the scheme and specifies in the notice; and

    (b)

    with the amount of any voluntary contribution paid to the Secretary of State within the prescribed period by, or in respect of, the person concerned; and

  • Y is the cost of providing any guaranteed minimum pension such as is mentioned in subsection (3).

(8)If the appropriate percentage, as calculated under subsection (7), would fall between two whole numbers, it is to be taken to be the lower number.

(9)If it would be over 100, it is to be taken to be 100.

(10)The remainder after the reduction for which subsection (3) provides—

(a)if it would contain a fraction of 1p, is to be treated as the nearest lower whole number of pence; and

(b)if it would be less than a prescribed amount, is to be treated as nil.

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