Section 29: Definition of money purchase benefits
157.Section 29 amends the definition of “money purchase benefits” in the PSA 1993 and equivalent definitions in the PA 2008 and the Building Societies Act 1986. In each case the effect is that, in order for a benefit to qualify as a money purchase benefit, the amount or rate of the benefit must be calculated only by reference to assets which must necessarily suffice to provide the benefit. If any other factor such as a guaranteed investment return or other guarantee of the amount were used at any time to calculate the benefit, it is not a money purchase benefit. The aim is to ensure that only benefits which cannot develop a deficit in funding can be money purchase benefits.
158.In the case of a scheme pension in payment, the pension must be backed by an annuity contract or insurance policy to be a money purchase benefit.
159.Deductions permitted by statute, such as a lien in respect of loss resulting from a criminal or negligent act, would not affect the classification of the benefit.
160.Subsections (7) and (8) provide retrospective effect to the new definitions in the PSA 1993 and the PA 2008.
