The Electricity Supply Pension Scheme (Transfer Date Amendments) Regulations 1990

Explanatory Note

(This note is not part of the Regulations)

These Regulations–

(a) define certain responsibilities of the constituent bodies of the electricity supply industry in England and Wales in relation to the Electricity Supply Pension Scheme (“the Scheme”), and make certain amendments to the Scheme, with effect before the transfer date (as defined in section 95(1) of the Electricity Act 1989, and as appointed by order under section 65(1) of that Act); and

(b) make further amendments to the Scheme with effect from the transfer day, and require successor companies (being the companies nominated by order under sections 65(2) and 66(3) of the 1989 Act) to participate in and be bound by the terms of the Scheme.

Regulations 1 to 5 come into force on 30th March 1990. Regulation 1 provides for the citation and commencement of the Regulations, and regulation 2 provides for interpretation. Words and phrases which are defined in the Scheme (subject in certain cases to the amendments made by the Electricity Supply Pension Scheme (Eligible Persons) Regulations 1990 S.I. 1990/164) have the same meaning when used in the Regulations. Regulation 3(1) defines the responsibilities of the existing constituent bodies of the electricity supply industry for contributions and payments to the Scheme in respect of the persons therein mentioned, and regulation 3(2) requires the Electricity Council to take the steps therein set out to attribute to those bodies the appropriate proportion of the Scheme’s fund in respect of those persons.

Regulation 4 introduces the amendments to the Scheme set out in Part I of the Schedule. The amendments insert a number of new definitions into the Scheme.

Regulation 5(1) provides for the functions of the Electricity Council under the Scheme to be transferred to the Co-ordinator (as defined in Part I of the Schedule), and regulation 5(2) makes a consequential amendment to the Scheme.

Regulation 6 comes into force on 31st March 1990. Regulation 6(1) and (2) introduces the amendments to the Scheme set out in Parts II and III of the Schedule, and regulation 6(3) obliges each Original Principal Employer (as defined in Part I of the Schedule) to participate in and be bound by the terms of the Scheme.

The effect of the amendments to the Scheme set out in Parts II and III of the Schedule is as follows–

(a) paragraph 1 of Part II substitutes a new Clause 2 (“Nature of the Scheme”) for the previous Clause 2 of the Scheme. This new clause sets out the basic nature of the Scheme as a contributory pension scheme; provides that each Group stands alone in relation to its contributions and benefits; and prevents cross-subsidies and cross-guarantees as between Groups;

(b) paragraph 2 introduces a new Clause 2A (“Transfer of Functions”) which enables the Co-ordinator and the Principal Employers to transfer their respective functions to each other from time to time; enables another corporate body to be substituted as the Co-ordinator from time to time; and permits a Principal Employer to transfer its functions under the Scheme to another Employer;

(c) paragraph 3 introduces a new Clause 2B (“Participation of New Employers”). Sub-clauses (1) and (2) provide that on an amalgamation of Original Principal Employers their successor or successors are obliged to participate or continue participating in the Scheme. Sub-clause (3) enables a new employer to participate in the Scheme as a Principal Employer or, if it is in the same financial group as an existing Principal Employer, as its Participating Subsidiary; and sub-clause (4) enables a subsidiary of an existing Principal Employer to participate in the Scheme as its Participating Subsidiary. Sub-clause (5) provides that as from the transfer date each Original Principal Employer will apply to become a member of the Co-ordinator and that any person who subsequently becomes a Principal Employer shall so apply. In each case, participation is subject to the approval of the Board of Inland Revenue and, in certain cases, to the consent of other parties;

(d) paragraph 4 introduces an amendment to Clause 13(1) which gives responsi bility to Principal Employers to set the level of additional contributions which may be payable under the Scheme by themselves and their Participating Subsidiaries;

(e) paragraph 5 substitutes a new Clause 14, (“Valuation of the Scheme”) for the existing Clause 14. Sub-clause (1) provides that an actuarial valuation should be carried out at least every three-and-a-half years, valuing the assets and liabilities in respect of the Members and Former Members associated with each Group separately; and sub-clause (2) provides that the valuation should be delivered to the Co-ordinator, the Principal Employers and the Trustees, who may make recommendations thereon if they so wish. Sub-clause (3) permits any Principal Employer at any time to instruct the Scheme’s actuary to prepare a separate valuation in respect of its own Group. Sub-clause (4) provides that if a deficit arises in relation to any Group, the relevant Principal Employer and its Participating Subsidiaries will be liable to make good such deficit on a basis acceptable to the Co-ordinator, acting on the advice of the Scheme’s actuary; and sub-clauses (5) and (6) provide that if a surplus arises in relation to any Group or Groups and this ultimately gives rise to any loss of tax relief to the Fund, the tax relief so lost will be set against the part of the Fund associated with the Principal Employer or Principal Employers concerned;

(f) paragraph 6 substitutes a new Clause 41 (“Amendment of the Scheme”) for the existing Clause 41. Sub-clause (1) provides that the Scheme may be amended by deed subject to the limitations set out in the Clause; and sub-clause (2) sets out certain limitations governing all amendments to the Scheme. Sub-clause (3) provides that all the Principal Employers can together amend or authorise the Co-ordinator to amend the Scheme as applicable to each of them. Sub-clauses (4) and (5) provide that each Principal Employer can amend the Scheme insofar as it relates to its own Group, subject to certain additional limitations as regards the scope of such amendments; sub-clause (4) also sets out a mechanism and timetable for Principal Employers' proposed amendments to be submitted to and approved by the Secretary (as defined in the Scheme) or challenged by the Co-ordinator as falling outside the scope of permitted amendments. Sub-clauses (6) and (7) require the Secretary to notify the Co-ordinator and all the Principal Employers of any amendment he considers should be made to avoid the Scheme losing its Inland Revenue approval or contracted-out status and provide that the Co-ordinator has power to make such amendments on behalf of any Principal Employer which fails to do so; and sub-clause (8) provides for certified copies of any deed amending the Scheme to be delivered to the appropriate persons;

(g) paragraph 7 effects a renumbering of existing Clauses to facilitate the introduction of new Clauses 42 and 42A. Paragraph 8 introduces a new Clause 42 (“Initiation of Partial Discontinuance Provisions”) which sets out the provisions regarding the initiation of partial discontinuance of the Scheme. Sub-clause (1) provides for partial discontinuance of the Scheme to be commenced only by a notice to be given to an Employer by the Trustees, and only in circumstances where that Employer is in liquidation (otherwise than for reconstruction or amalgamation) or where its continued participation in the Scheme would prejudice Inland Revenue approval of the Scheme. Sub-clause (2) provides that where the Employer in respect of which the partial discontinuance is to take place is a Principal Employer, the Scheme will also be discontinued as regards that Principal Employer’s Participating Subsidiaries unless they themselves become Principal Employers or Participating Subsidia ries of other Principal Employers; and sub-clause (3) provides that where the Employer in respect of which the partial discontinuance is taking place is a Participating Subsidiary, its Principal Employer may elect to be treated for the purposes of the Scheme as the last employer of the members and former members concerned. Sub-clause (4) provides that such a partial discontinuance will not affect any pre-existing liabilities to the Scheme of the Employer concerned;

(h) paragraph 9 introduces a new Clause 42A (“Initiation of Total Discontinuance Provisions”). Sub-clauses (1) and (2) provide that all (but not some only) of the Original Principal Employers participating in the Scheme can together resolve to wind up the Scheme totally, by giving notice to the Trustees of not less than 180 days expiring on a 31st March; and sub-clause (3) is in similar terms to Clause 42(4);

(i) paragraphs 10 and 11 introduce a number of new definitions into the Scheme and effect substitutions for the existing defined terms “Board” and “Boards”, which appear throughout the Scheme; and

(j) Part III of the Schedule effects certain substitutions for the term “the Co-ordinator” as inserted throughout the Scheme by regulation 5(2).

The Scheme, and information about the Scheme, is available in accordance with the provisions of the Occupational Pension Schemes (Disclosure of Information) Regulations 1986 (S.I. 1986/1046).