Occupational Pension Schemes (Contracting-out) Regulations 1996

Insolvent schemes.

49.—(1) Where paragraph 5(3B) of Schedule 2 to the 1993 Act(1) applies in relation to a member of a contracted-out scheme which is being wound up and the conditions set out in paragraph (3) are satisfied, the member shall be treated as if sections 46 to 48 or, as the case may be, 48A(1) of the 1993 Act(2)—

(a) except as provided in sub-paragraph (b), did not apply; or

(b) in a case where the cash equivalent of the member’s rights is less than the amount required for restoring his state scheme rights, applied only in so far as they extinguish such part of the member’s state scheme rights as, in the opinion of the Secretary of State, corresponds to that shortfall.

(2) For the purposes of paragraph 5(3B)(b) of Schedule 2 to the 1993 Act, the debt due from the trustees of the scheme to the Secretary of State shall be only such part of the amount required for restoring the member’s state scheme rights as does not exceed the amount which, in the opinion of the Secretary of State, is the amount available from the resources of the scheme to meet the liability for the cash equivalent of the member’s rights.

(3) The conditions referred to in paragraph (1) are that—

(a) in the case of a money purchase contracted-out scheme, there has been a determination by the Compensation Board that the conditions set out in section 81(1) of the 1995 Act (cases where compensation provisions apply) are satisfied; and

(b) no later than 3 months after the date on which the trustees notify the member in accordance with regulation 50, or such further period as the Secretary of State may allow in a particular case, the Secretary of State has received from—

(i) the member; or

(ii) where the Secretary of State is satisfied that the member cannot be traced, the trustees,

a written application for the member’s state scheme rights to be restored in accordance with this regulation.

(4) For the purposes of this regulation and paragraph 5(3A) to (3D) of Schedule 2 to the 1993 Act—

(a) the cash equivalent of a member’s rights under a scheme shall be determined—

(i) in the case of a scheme to which section 56 of the 1995 Act applies (minimum funding requirement) as if the requirements of subsection (1) of that section were satisfied; or

(ii) in the case of a money purchase scheme, as if there had been no reduction in the value of its assets attributable to an act or omission constituting a prescribed offence for the purposes of section 81(1)(c) of that Act;

(b) the extent (if any) to which the resources of the scheme are insufficient to meet that cash equivalent shall be determined—

(i) on the assumption that those resources include any payment to the trustees under the compensation provisions; and

(ii) where section 73 of the 1995 Act (preferential liabilities on winding up) applies, in accordance with the requirements of that section;

(c) the amount required for restoring the member’s state scheme rights shall be an amount determined in accordance with regulations made under paragraph 5(3C)(c) of Schedule 2 to the 1993 Act.

(5) In this regulation “Compensation Board” and “compensation provisions” have the same meaning as in section 124 of the 1995 Act.

(1)

Sub-paragraphs (3A) to (3E) were inserted in paragraph 5 of Schedule 2 by section 141(2) of the Pensions Act 1995.

(2)

Section 48A was inserted by section 140 of the Pensions Act 1995.