The Occupational Pension Schemes (Contracted-out Protected Rights Premiums) Regulations 1987

Addition of regulation 23A to the principal Regulations

6.  After regulation 23 of the principal Regulations there shall be inserted the following regulation—

“Miscellaneous provisions affecting contracted-out protected rights premiums

23A.— (1) Subject to paragraphs (3) and (4), where a contracted-out protected rights premium is payable under section 44ZA(4) pursuant to certification by the Board to the Secretary of State under regulation 18(4), the premium shall, for the purpose of extinguishing protected rights and reducing any guaranteed minimum pension to which a person is treated as being entitled, be treated as having been paid, or paid in part in a case to which either paragraphs (6) to (8) apply or paragraph (9) applies, on the date specified in paragraph (2).

(2) The date mentioned in paragraph (1) is whichever is the later of—

(a) the date on which the scheme ceased to be contracted-out; and

(b) any date certified by the Board under regulation 18(4)(c) in relation to the rights mentioned in paragraph (1).

(3) Where a contracted-out protected rights premium has been treated as paid under paragraph (1), the effect of that paragraph shall, except as provided in paragraph (5), be disregarded if—

(a) the Board subsequently approve arrangements for the preservation or transfer of the protected rights, or

(b) the person who is liable to pay the premium fails to do so within the period prescribed by regulation 20(1) or such longer period as the Secretary of State may allow under regulation 20(2).

(4) Where by virtue of the operation of paragraphs (1) and (3) in relation to a person entitled to a benefit specified in section 29(1)(a) an amount of that benefit, as certified by the Secretary of State, was paid to that person which would not otherwise have been paid—

(a) the Secretary of State shall be entitled to recover that amount from the scheme and any amount so recovered shall be paid into the National Insurance Fund; and

(b) the sums payable under the scheme to that person may be reduced by the amount so recovered by the Secretary of State.

(5) Paragraph (3)(b) shall not apply where the Secretary of State is satisfied that the failure to pay was not with the consent or connivance of, or attributable to any negligence on the part of, the person in respect of whom the premium is payable, and where, subject to paragraphs (6) and (8), the scheme, being a scheme which is or has been contracted-out, is being or has been wound up.

(6) In a case where the circumstances specified in paragraph (7)(a) and either (b) or (c) obtain, the contracted-put protected rights premium in question shall be treated as paid under paragraph (1) only in accordance with the provisions of paragraph (8).

(7) The circumstances mentioned in paragraph (6) are that—

(a) a contracted-out protected rights premium has become payable in respect of that person by reason of the withdrawal by the Board of their approval of, or their inability to give their approval to, arrangements for the preservation or transfer of the protected rights in question under section 44ZA;

(b) the scheme is being or has been wound up, its resources are insufficient to meet the cost of that premium, and the Board are satisfied that no arrangements have been made to meet that cost, or, as the case may be, such part of that cost as cannot be met from the resources of the scheme;

(c) the scheme has been wound up and a cash sum in lieu of the protected rights in question has been paid to or for the benefit of the person concerned.

(8) In a case to which paragraph (6) applies, where the Secretary of State is satisfied that the part of the premium that the resources of the scheme are sufficient to meet or the amount of the cash sum referred to in paragraph (7)(c) is less than the value of the protected rights in question, such part of the contracted-out protected rights premium as represents, in the opinion of the Secretary of State, the difference between the lesser and greater amounts shall be treated as having been paid.

(9) Where a person in respect of whom a contracted-out protected rights premium is payable is a person to whom regulation 18(1ZA)(a) applies and that person pays part only of the premium, that part of the premium shall be treated as having been paid under paragraph (1).

(10) Where part of a contracted-out protected rights premium is treated as having been paid under paragraph (1)—

(a) section 44ZA(8) shall be modified so as to have effect as if there were inserted at the end thereof the words and payment of part of the premium shall operate to extinguish such part of those rights as corresponds, in the opinion of the Secretary of State, to that part of the premium and section 44ZA(9)(a) shall have effect as if there were substituted for the words “the premium” the words “that part of the premium which has been paid”; and

(b) in a case to which paragraph (6) applies, section 44ZA shall be modified so as to have effect as if—

(i) in subsection (1) there were inserted after the words “protected rights” the words “or part thereof”,

(ii) in each of paragraphs (a) and (b) of subsection (4) there were inserted after the words “are not” the words “Or are in part only”, and

(iii) in subsection (7) there were inserted after the words “in question” the words “to the extent that those rights are not subject to approved arrangements”.”