The National Health Service Pension Scheme (Additional Voluntary Contributions) Regulations 2000

PART II ADDITIONAL VOLUNTARY CONTRIBUTIONS

Making and acceptance of elections

3.—(1) Subject to paragraph (3), a person in pensionable employment may elect to pay contributions under these Regulations for one or both of the following purposes—

(a) for investment under regulation 7(1) to provide for an annuity payable on retirement; or

(b) in accordance with regulation 7(2) to provide for a lump sum death benefit.

(2) An election under under paragraph (1) may relate to contributions to be paid by, or on behalf of, the contributor, or contributions to be paid by the contributor’s employer, or both.

(3) If the person making an election—

(a) under paragraph (1)(b) is on leave of absence from his employment due to ill health on the date on which the notice of such an election is received by the Secretary of State; or

(b) under paragraph (1)(a) or (b) is not receiving tax relief under section 594(1) of the Taxes Act(1) (exempt statutory schemes) or otherwise in respect of contributions paid under regulation D1 of the Pension Scheme Regulations (contributions by members)(2) on the date on which the notice of such an election is received by the Secretary of State,

such an election shall not have effect.

(4) An election under paragraph (1) shall be made by giving written notice to the Secretary of State which shall specify—

(a) whether the election is with a view to investment under regulation 7(1) of regulation 7(2), or both;

(b) the amount of contributions; and

(c) in relation to contributions for the purpose of investment under regulation 7(1), the authorised fund or funds in which the contributions are to be invested.

(5) The Secretary of State shall not accept an election under paragraph (1)—

(a) where any limit imposed by regulation 4(4) or (5), or 13 (limits on contributions and benefits) would be exceeded; or

(b) in the case of an election for the purposes of paragraph (1)(b), unless he is satisfied that—

(i) the person making the election has complied with the requirements of regulation 16(2) (provision of information); and

(ii) at the time of making an election the person is in good health; and

(iii) there is not reason why his health should prevent him from making contributions.

(6) Subject to paragraph (5)(b) above and regulation 4(4)—

(a) where contributions are paid for the purposes of paragraph (1)(b)—

(i) until the contributor reaches his 60th birthday; and

(ii) on reaching his 60th birthday he continues to be in pensionable employment,

the contributor may elect for further contributions to be paid until he reaches his 61st birthday; and

(b) a person to whom paragraph (a) above applies may continue to elect annually for further contributions to be paid provided he continues to be in pensionable employment.

(7) For the purposes of paragraph (1) or (6) of this regulation, an election shall have effect from the date when it is accepted by the Secretary of State.

(8) The Secretary of State shall notify in writing the person who has made an election under paragraph (1), of the Secretary of State’s acceptance of that election.

Payment and amount of additional voluntary contributions

4.—(1) Contributions under these Regulations may be made by way of—

(a) periodical payments on a weekly, monthly, quarterly, or any other basis, depending upon when the contributor’s salary is paid; or

(b) a single payment.

(2) The contributor’s employer may deduct any amount payable by the contributor from the contributor’s salary.

(3) Deductions from salary made in accordance with paragraph (2) above—

(a) shall commence in respect of the first whole pay period falling after the date when the employer receives authorisation from the authorised provider to make the deductions;

(b) shall be remitted to the Secretary of State—

(i) as soon as is reasonably practicable; or

(ii) in the case of deductions to be made on or after the date on which these Regulations come into force, no later than 7 days after their deduction.

(4) Subject to paragraph (5), in any period of 12 months beginning on 6th April in any year the total contributions payable by the contributor shall not exceed—

(a) 15 per cent. of the amount which represents the contributor’s salary less the total of any contributions paid by the contributor in respect of that year—

(i) to another approved scheme;

(ii) to free-standing additional voluntary contributions scheme; or

(iii) under the Pension Scheme Regulations;

(b) the amount which would be likely to provide benefits of the largest amounts allowed by regulation 13,

whichever is the lesser.

(5) Where an election has been made under regulation 3(1)(b) to provide for a lump sum death benefit, contributions payable by virtue of that election, or of any further election under regulation 3(6) or 5(2)(a), may not, on or after the date on which the Secretary of State accepts the election under regulation 3(1)(b), be of such an amount as to provide for a lump sum death benefit in excess of the amount permitted under paragraph 19(4) of the Schedule.

Variation and cancellation of elections

5.—(1) A contributor who has elected under regulation 3(1)(a) to pay contributions for the purpose of investment under regulation 7(1) may at any time by giving written notice to the Secretary of State—

(a) subject to regulation 4(4), alter the amount of the contributions;

(b) require the whole or part of any future contributions to be invested in some other authorised fund;

(c) require the Secretary of State to realise the whole or part of any investments made and to reinvest the proceeds in some other authorised fund; or

(d) cancel the election.

(2) A contributor who has elected under regulation 3(1)(b) to pay contributions to provide a lump sum death benefit under regulation 7(2) may at any time by giving written notice to the Secretary of State—

(a) subject to regulation 4(4) and (5) and provided the circumstances described in regulation 3(3) do not exist such that the Secretary of State would not accept an election under regulation 3(1)(b), elect that a specified larger sum is to be secured and the contributions increased accordingly; or

(b) cancel the election.

(3) The Secretary of State shall give effect as soon as is reasonably practicable to the terms of any notice given under this regulation.

Circumstances in which elections cease to have effect

6.  An election shall cease to have effect where a contributor—

(a) receives payment of benefits under regulations E1 to E5 or regulation L1, of the Pension Scheme Regulations, except where the contributor is entitled to accrue further benefits in the circumstances described in regulation B3(2) of those Regulations (restriction on further participation in the scheme);

(b) leaves pensionable employment;

(c) ceases to be in pensionable employment by virtue of an election under regulation B4 of the Pension Scheme Regulations (opting-out of the scheme); or

(d) ceases to receive tax relief under section 594(1) of the Taxes Act (exempt statutory schemes) or otherwise in respect of contributions paid under regulation D1 of the Pension Scheme Regulations (contributions by members).

Investment of additional voluntary contributions

7.—(1) Any contributions paid in respect of a contributor for investment under this paragraph shall be invested by the Secretary of State in accordance with any notice under regulation 3(4) or 5(1).

(2) Any contributions paid in respect of a contributor to provide for a lump sum death benefit under this paragraph shall be paid by the Secretary of State to an insurance company selected by him so as to secure the payment of a lump sum death benefit of the amount required by any notice under regulation 3(4) or 5(2).

Inward transfers

8.—(1) Where a person who enters pensionable employment has paid contributions to—

(a) a free-standing additional voluntary contributions scheme; or

(b) an approved scheme which provides additional benefits by virtue of additional voluntary contributions but does not fall within section 591(2)(h) of the Taxes Act (discretionary approval),

that person, whether or not he becomes a contributor within the meaning of these Regulations, may, within 12 months of entering pensionable employment, or such longer period as the Secretary of State may in any particular case allow, give written notice to the Secretary of State that he wishes the Secretary of State to accept from the trustees or managers of that scheme a transfer value representing at least the value of the investments derived from his contributions.

(2) Where a transfer value is accepted by the Secretary of State it shall be invested by him, in accordance with the wishes of the person entering pensionable employment, in one or more of the authorised funds.

(3) Where a transfer value is invested under paragraph (2) the person may at any time, by giving written notice to the Secretary of State, require the Secretary of State to realise the whole or part of the sums so invested and to reinvest the proceeds in a different way.

Inward transfers: mis-sold pensions

9.—(1) This regulation shall apply to a person to whom regulation B5 of the Pension Scheme Regulations (opting into the scheme: mis-sold pensions) applies and in respect of whom a transfer payment within the meaning of regulation N3A of those Regulations(3) (transfers in respect of members to whom regulation B5 applies who elect to join or rejoin the scheme) has been paid by a personal pension scheme to the Secretary of State.

(2) Subject to paragraph (3), where, at any time, a person to whom this regulation applies elects to join or rejoin the scheme under regulation B4(5) of the Pension Scheme Regulations (joining or rejoining the scheme after opting-out), that person, whether or not he becomes a contributor within the meaning of these Regulations, may, within 12 months of joining or rejoining the scheme, or such longer period as the Secretary of State may in any particular case allow, give written notice to the Secretary of State that he wishes the Secretary of State to accept a transfer value for the purposes of these Regulations.

(3) For the purposes of paragraph (2), the transfer value shall be of an amount representing the difference between—

(a) the capitalised value of the accrued rights to benefit in the personal pension scheme from which the transfer value is paid which is attributable to contributions made to that scheme by the person referred to in paragraph (1) during his opted-out service; and

(b) the amount referred to in regulation N3A(2)(i) of the Pension Scheme Regulations (transfers in respect of members to whom regulation B5 applies who elect to join or rejoin the scheme).

(4) Where a transfer value is accepted by the Secretary of State it shall be invested by him, in accordance with the wishes of the person referred to in paragraph (1), in one or more of the authorised funds.

(5) Where a transfer value is invested under paragraph (4) that person may at any time, by giving written notice to the Secretary of State, require the Secretary of State to realise the whole or part of the sums so invested and to reinvest the proceeds in a different way.

(6) In this regulation—

“opted-out service” means the period of NHS employment in respect of which the Secretary of State has approved an additional period of pensionable service for the purposes of regulation N3A(2)(i) of the Pension Scheme Regulations; and

“personal pension scheme” has the meaning given by regulation B5(4) of the Pension Scheme Regulations.

Outward transfers

10.—(1) Subject to paragraph (2), the Secretary of State shall, in circumstances where a transfer payment in respect of a person is provided and used in accordance with regulation M1 of the Pension Scheme Regulations (member’s right to transfer or buy-out), pay a transfer value representing the value of the investments made in relation to that person under regulation 7(1), 8(2) or, as the case may be, 9(4) at that person’s option to one of the following schemes in which that person may be participating—

(a) an approved scheme which provides additional benefits by virtue of additional voluntary contributions but does not fall within section 591(2)(h) of the Taxes Act (discretionary approval);

(b) a personal pension scheme; or

(c) any other arrangement which has been approved by the Board of Inland Revenue to accept transfer payments, provided that the transfer value shall not be used to purchase benefits in the form of a tax free lump sum.

(2) Where the Secretary of State is required to make a transfer payment under this regulation, he shall do so by whichever is the earlier of—

(a) the end of the period of 6 months beginning with the guarantee date; or

(b) if the person in respect of whom the transfer payment is to be made—

(i) is no longer making contributions to the National Health Service Pension Scheme on a date prior to his attaining the age of 59 years; and

(ii) made his application for a transfer payment during the period of 6 months beginning with that date,

the date on which he attains the age of 60 years.

(3) In this regulation “the guarantee date” has the meaning given to it in section 93A(2) of the Pension Schemes Act 1993(4) (salary related schemes: right to statement of entitlement).

(1)

Section 594 was amended by section 75 of, and paragraphs 1, 6, 18(1) and (4) of Part I of Schedule 6 to, the Finance Act 1989 (c. 26).

(2)

Regulation D1 was amended by S.I. 1998/2216.

(3)

Regulations B5 and N3A were inserted by S.I. 1997/80.

(4)

Section 93A was inserted by section 153 of the Pensions Act 1995.