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

PART III PROVISION OF BENEFITS

Retirement and dependants' pensions

11.—(1) Subject to paragraph (7) and regulation 15(10) and (11), the proceeds of any investment made under regulation 7(1), 8(2) or 9(4) may be used only for the purchase from an insurance company of an annuity which complies with the requirements of paragraph (2).

(2) An annuity complies with the requirements of this paragraph if—

(a) it provides a retirement pension which commences not earlier than the date of the participator’s retirement and is payable to him for life;

(b) any dependant’s pension which is payable under it is payable only on the death of the participator after his retirement and is payable to the dependant for life, except that in the case of a dependant who is a child to whom Part H of the Pension Scheme Regulations (child allowance) applies it shall cease to be payable when that person ceases to be a dependent child within the meaning of those Regulations; and

(c) it is not capable in whole or in part of surrender, assignment or commutation.

(3) Not earlier than 3 months before the date of his retirement, a participator, by giving written notice to the Secretary of State, shall make a benefits election which shall specify—

(a) whether only a retirement pension is to be provided;

(b) for whom, if anyone, a dependant’s pension is to be provided;

(c) if more than one pension is to be provided; either—

(i) the proportion of the amount secured by the total investments made under regulation 7(1), 8(2) or 9(4) that is to be applied to the purchase of each of them; or

(ii) the dependants' pensions to be provided expressed as a percentage of the retirement pension;

(d) in respect of every pension to be provided, whether the annual rate of the pension—

(i) is to be fixed; or

(ii) is to vary in accordance with the Index; or

(iii) is to increase yearly by a specified percentage or, if lower than that percentage, by the increase in the Index for the year in question; and

(e) the authorised provider who is to provide each pension.

(4) In the case of a retirement pension, the notice of election under paragraph (3) may also specify that if the participator dies within the period of 5 years beginning with the date with which the retirement pension commences, the balance that would have been payable during the remainder of that period, if the pension had continued at the rate in force at the time of the participator’s death, is to be paid as a lump sum in accordance with regulation 15(3).

(5) Upon receipt of a notice of election under paragraph (3) the Secretary of State shall, as soon as reasonably practicable, realise the investments made under regulation 7(1), 8(2) or 9(4) and apply the proceeds to the purchase of an annuity from the authorised provider specified in the notice of election.

(6) Notwithstanding whether benefits to which a participator may be entitled under Part E or regulation L1 of the Pension Scheme Regulations (benefits for members or preserved pension) are payable, where a participator’s date of retirement falls on or after 1st December 1999 and he has—

(a) reached the age of 75; and

(b) failed to give a notice of election under paragraph (3) on or before the date of his 75th birthday,

the Secretary of State may realise the investments made under regulation 7(1), 8(2) or 9(4) and apply the proceeds to the purchase of a pension policy from an insurance company in order to provide such benefits as appear to him to be suitable.

(7) Where the participator dies before retirement, or dies after retirement but before an annuity such as is mentioned in paragraph (5) is acquired, the investments made under regulation 7(1), 8(2) or 9(4) shall be realised and shall be payable as a lump sum in accordance with regulation 15(3), subject to any limit imposed by regulation 13 and paragraph 19 of the Schedule.

(8) If the benefits provided by the annuity purchased in accordance with paragraph (5), when aggregated with the benefits payable under the Pension Scheme Regulations arising from the participator’s pensionable service, do not exceed any amount prescribed by regulations for the time being in force under section 21(1) of the Pension Schemes Act 1993 (commutation, surrender and forfeiture), the authorised provider may discharge the liability for payment of the benefits under the annuity by payment of a lump sum representing their capital value in accordance with regulation 15(4).

Lump sums on death

12.—(1) Subject to paragraph (2), where a contributor who has elected under regulation 3(1)(b) to pay contributions to provide for a lump sum death benefit dies, the lump sum shall be payable.

(2) Any lump sum payable under paragraph (1) shall not exceed the amount permitted under paragraph 19(4) of the Schedule.

Benefit limits

13.—(1) The Schedule shall have effect for limiting the benefits that may be paid under these Regulations.

(2) The maximum annual rate of a retirement pension or dependant’s pension ascertained from the Schedule may be increased—

(a) by 3 per cent. for each completed year that has elapsed; or

(b) if a greater increase results, in proportion to the increase in the Index that has occurred,

since the date on which the pension became payable.

(3) The Secretary of State shall comply with the requirements of regulation 5 of the Retirement Benefits Schemes (Restriction on Discretion to Approve) (Additional Voluntary Contributions) Regulations 1993(1) (restriction on discretion to approve—other schemes), and where, within the meaning of those Regulations, the scheme is the “leading scheme” in relation to a member, with the requirements of regulation 6 of those Regulations (calculation of surplus funds) so far as they concern “main schemes” for the purposes of those Regulations.

(1)

S.I. 1993/3016 as amended by S.I. 1999/1964.