2005 No. 649
The Transfer of Employment (Pension Protection) Regulations 2005
Made
Laid before Parliament
Coming into force
The Secretary of State for Work and Pensions, in exercise of the powers conferred upon him by sections 258(2)(c)(ii) and (7), 315(2) and 318(1) of the Pensions Act 2004 M1 and all other powers enabling him in that behalf, by this instrument, which contains regulations made before the end of the period of six months beginning with the coming into force of the provisions by virtue of which they are made M2, hereby makes the following Regulations:
See section 317(2)(c) of the Pensions Act 2004 which provides that the Secretary of State must consult such persons as he considers appropriate before making regulations by virtue of the provisions of that Act (other than Part 8). This duty does not apply where regulations are made before the end of six months beginning with the coming into force of the provisions of that Act by virtue of which the regulations are made.
Citation, commencement, application and interpretation1
1
These Regulations may be cited as the Transfer of Employment (Pension Protection) Regulations 2005 and shall come into force on 6th April 2005.
2
These Regulations apply in the case of a person (“the employee”) in relation to whom section 257 of the Act (conditions for pension protection) applies, that is to say a person who, in the circumstances described in subsection (1) of that section, ceases to be employed by the transferor of an undertaking or part of an undertaking and becomes employed by the transferee.
F13
In these Regulations—
“the Act” means the Pensions Act 2004;
“remuneration period” means a period in respect of which the employee is paid remuneration.
4
In calculating the amount of the employee’s remuneration for the purposes of these Regulations—
a
only payments made in respect of basic pay shall be taken into account and bonus, commission, overtime and similar payments shall be disregarded; and
b
no account shall be taken of any deductions which are made in respect of tax, national insurance or pension contributions.
5
In calculating the amount of a transferee’s pension contributions for the purposes of these Regulations in the case of a scheme which is contracted-out by virtue of section 9 of the Pension Schemes Act 1993, minimum payments within the meaning of that Act shall be disregarded.
F2Requirements where the transferee’s pension scheme is not a money purchase scheme2
1
In a case where these Regulations apply, and the transferee is the employer in relation to a pension scheme which is not a money purchase scheme, that scheme complies with section F5258(2)(c) of the Act (alternative standard for a scheme which is not a money purchase scheme) if it provides either—
a
for members to be entitled to benefits the value of which equals or exceeds 6 per cent. of pensionable pay for each year of employment together with the total amount of any contributions made by them, and, where members are required to make contributions to the scheme, for them to contribute at a rate which does not exceed 6 per cent. of their pensionable pay; or
b
for the transferee to make relevant contributions to the scheme on behalf of each employee of his who is an active member of it.
2
In this regulation—
“pensionable pay” means that part of the remuneration payable to a member of a scheme by reference to which the amount of contributions and benefits are determined under the rules of the scheme.
F3“relevant contributions” means contributions—
- a
made by the transferee in respect of each remuneration period in respect of which the employee contributes to the scheme; and
- b
the amount of which is—
- i
where the employee’s contributions are less than 6 per cent. of the employee’s remuneration, not less than the contributions made by the employee; or
- ii
where the employee’s contributions equal or exceed 6 per cent. of the employee’s remuneration, not less than 6 per cent. of that remuneration.
- i
- a
F4Requirements where the transferee’s pension scheme is a money purchase scheme or stakeholder pension scheme3
1
In a case where these Regulations apply, the transferee’s contributions are relevant contributions for the purposes of subsection (2)(b) (money purchase scheme) and subsections to (5) (stakeholder pension scheme) of section 258 of the Act if—
a
the contributions are made in respect of each remuneration period in respect of which the employee contributes to the scheme; and
b
paragraph (2) or (3) is satisfied.
2
This paragraph is satisfied if the amount contributed by the transferee in respect of each remuneration period is—
a
where the employee’s contributions are less than 6 per cent. of the employee’s remuneration, an amount not less than the contributions made by the employee;
b
where the employee’s contributions equal or exceed 6 per cent. of the employee’s remuneration, an amount not less than 6 per cent. of that remuneration.
3
This paragraph is satisfied if—
a
in respect of the remuneration period immediately before the relevant time—
i
the transferor had been required to make contributions; and
ii
those contributions had been solely for the purpose of producing money purchase benefits for the employee; and
b
the amount contributed by the transferee is not less than the amount the transferor had been required to contribute.
Signed by authority of the Secretary of State for Work and Pensions.
2004 c. 35; section 318(1) is cited for the definitions of “prescribed” and “regulations”.