The Retirement Benefits Schemes (Restriction on Discretion to Approve) (Additional Voluntary Contributions) Regulations 1993

Calculation of surplus funds

6.—(1) As soon as possible following receipt of the benefit certificate or, where the leading scheme is the main scheme in relation to the employee, as soon as possible after the relevant date referred to in regulation 5(3), the administrator of the leading scheme in relation to the employee (“the leading administrator”) shall calculate, in relation to each kind of benefit to be provided by every approved freestanding additional voluntary contributions scheme which, in return for contributions paid while the employee was a member of the main scheme, provides benefits which are additional to those provided by the main scheme, the amount (if any) of any over–provision in relation to that kind of benefit at that relevant date.

(2) Where that calculation shows that there is an over–provision in relation to that kind of benefit, the leading administrator shall notify the employee or his personal representative that he may elect within the period of three months following the date of the notification to use the over–provision–

(a) to have a benefit provided of a kind not already provided by the scheme, or

(b) in the case of a benefit consisting of a pension, to have the pension increased annually by reference to increases not exceeding the increases in the general index of retail prices (for all items) published by the Central Statistical Office of the Chancellor of the Exchequer or at a rate not exceeding the rate of three per cent. with yearly rests, or

(c) to have the benefit increased by taking final remuneration to be another of the amounts referred to in regulation 5(4)(f), or

(d) to have the amount of the accumulated funds of the scheme which, in the opinion of the leading administrator, are not required to secure payment of that kind of benefit (in this regulation referred to as “surplus funds”) repaid to him, or

(e) to have any combination of those courses followed.

(3) If, at the end of the period of three months referred to in paragraph (2), the employee or his personal representative has not notified the leading administrator that he has elected to use the over–provision in one of the ways described in sub–paragraphs (a) to (e) of that paragraph, the leading administrator shall assume that he has elected to use it in the way described in sub–paragraph (d) of that paragraph.

(4) As soon as possible after notification to him of any election to use the over– provision in one of the ways described in sub–paragraphs (a) to (e) of paragraph (2), or after the expiry of the period of three months referred to in that paragraph, the leading administrator shall notify the administrator of each freestanding additional voluntary contributions scheme referred to in paragraph (1) of the amount of that kind of benefit which is to be provided under that scheme and that any surplus funds are to be repaid to the employee or his personal representative.

(5) Where the leading scheme in relation to the employee is a freestanding additional voluntary contributions scheme, the leading administrator shall notify the administrator of the main scheme of the total amount of each kind of benefit which is to be provided under every freestanding additional voluntary contributions scheme to which the employee has contributed in respect of an employment with a relevant employer.

(6) For the purposes of this regulation there is an over–provision in relation to a kind of benefit where–

(a) in the case of a benefit consisting of a pension where a lump sum is not also payable otherwise than by commutation, the amount of pension which is payable to the employee or will be so payable in the first year for which it is payable (on the assumption that the employee survives to the end of that year) under–

(i) every scheme established by a relevant employer of the employee or to which a relevant employer is a contributor, and

(ii) every approved freestanding additional voluntary contributions scheme to which the employee has contributed in respect of an employment with a relevant employer,

exceeds the amount certified under regulation 5(3), or calculated by the leading administrator, to be the maximum amount of pension which can be paid in that year under the main scheme in relation to that employee;

(b) in the case of a benefit consisting of a pension and a lump sum which is payable otherwise than by commutation, the amount of pension and pension equivalent which is payable to the employee, or will be so payable in the first year for which the pension is payable (on the assumptions that the employee survives to the end of that year and that pension equivalent is, or will be, payable as such) under every scheme referred to in paragraphs (i) and (ii) of sub–paragraph (a) exceeds the amount certified under regulation 5(3), or calculated by the leading administrator, to be the maximum amount of pension and pension equivalent which can be paid under the main scheme in relation to the employee;

(c) in the case of a benefit consisting of a pension which is, or will be, payable to the widow or widower of the employee, the amount of pension which is or will be payable in the first year following the death of the employee under every scheme referred to in paragraphs (i) and (ii) of sub–paragraph (a) exceeds the amount which can be certified under regulation 5(4)(e) as the maximum amount of pension which can be paid to the widow or widower of that employee;

(d) in the case of a benefit consisting of a lump sum payable on the death of the employee, the amount payable under every scheme referred to in paragraphs (i) and (ii) of sub–paragraph (a) exceeds the amount which can be certified under regulation 5(4)(g) as the maximum amount which can be paid.

(7) In paragraph (6), “pension” and “pension equivalent” have the meanings given by regulation 5(5)(a) and (b) respectively and in sub–paragraph (a)(i) of that paragraph “scheme” has the meaning given by regulation 5(5)(d).