The Occupational Pension Schemes (Miscellaneous Amendments) Regulations 1988

Explanatory Note

(This note is not part of the Regulations)

These Regulations make miscellaneous amendments to various regulations about occupational pension schemes.

The Occupational Pension Schemes (Preservation of Benefit) Regulations 1984. These are amended so as to apply the provisions about alternatives to short service benefit in regulation 12 to benefits for dependants as well as to the scheme member’s personal benefit (regulation 2(2) to (5)). Regulation 19 (preservation of benefit on winding up of schemes) is amended so that it specifically applies to cases where the member is already in receipt of pension or has only preserved rights to benefit (regulation 2(6)).

The Occupational Pension Schemes (Transfer Values) Regulations 1985. Regulation 3 is amended to provide that the cash equivalents of accrued rights under the Local Government superannuation schemes shall be calculated and verified in a manner approved by the Government Actuary or by an actuary authorised by him (regulation 3(2)(b)). The provision of regulation 3(3) whereby, in the case of a money purchase contracted-out scheme, an actuary is required to calculate and verify the cash equivalent of rights to money purchase benefits only if the calculation involves estimating the value of benefit is extended to all money purchase benefits (regulation 3(2)(c)). Regulation 4(1) (cash equivalents to be calculated by reference to discretionary increases in benefits) is amended so as to apply where the increase is at the discretion of either the trustees or the employer (regulation 3(3)(a)). New provisions are inserted into regulation 4 so that where a contributions equivalent premium or an accrued rights premium has been paid in respect of a member, his cash equivalent shall be reduced to the extent that it represents his accrued rights to a guaranteed minimum pension under the scheme and to discharge trustees from the obligation to provide a cash equivalent where they have “bought out” a member’s benefits without his consent, but only if they have complied with the conditions of the Occupational Pension Schemes (Preservation of Benefit) Regulations 1984 as to giving the member an opportunity to make alternative arrangements (regulation 3(3)(b)). Regulation 6, which confers a right to a cash equivalent in the receiving scheme to which a member’s rights are transferred, is extended to apply to all cases in which a member’s rights may be transferred without his consent (regulation 3(4)). A new regulation 7 is inserted to provide that in the case of a scheme with an overseas element the provisions of Schedule 1A to the Social Security Pensions Act 1975 relating to transfer values apply only to the extent that the provisions about preservation of benefit apply under regulation 21 of the Occupational Pension Schemes (Preservation of Benefit) Regulations 1984, and a new regulation 8 provides that for the purposes of the cash equivalent provisions of that Schedule certain short breaks in service shall not be regarded as terminating pensionable service (regulation 3(5)).

The Occupational Pension Schemes (Discharge of Liability) Regulations 1985. These are amended to reflect the requirement on occupational pension schemes, imposed by section 37A of the Social Security Pensions Act 1975, to revalue guaranteed minimum pensions in payment in respect of rights accruing after 6th April 1988 (regulation 4).

The Occupational Pension Schemes (Revaluation) Regulations 1985. New regulations are inserted to provide for the manner in which the revaluation provisions of Schedule 1A to the Social Security Pensions Act 1975 are to apply in cases where the scheme’s normal pension age is lower than state pension age and for cases where a lump sum has been paid to a member in respect of service before 6th April 1975; to permit a degree of rounding of periods of pensionable service; make the same provision for schemes with an overseas element and in respect of termination of pensionable service as is made in the case of the transfer value requirements (regulation 5).

The Occupational Pension Schemes (Auditors) Regulations 1987; The Occupational Pension Schemes (Managers) Regulations 1986 and The Occupational Pension Schemes (Disclosure of Information) Regulations 1986. These are all amended so as to modify the requirements for disclosure of information about schemes in the case of schemes with an overseas element (regulations 6, 7 and 8).

The report of the Occupational Pensions Board on the draft of these Regulations which had been referred to them, together with a statement showing why the regulations give effect to the Board’s recommendations only in part, is contained in Command Paper No. 338 published by Her Majesty’s Stationery Office.