PART 2 Schemes not in wind up

3 Schemes not in wind up
1 Subject to paragraph (2) and regulations 12 to 14, the prescribed requirements for the purposes of section 37(3)(b) (payment of surplus to employer) are that the scheme is not in wind up, and—
(a) it is a scheme which—
(i) is subject to Part 3 of the 2004 Act (scheme funding); and
(ii) is not a regulatory own funds scheme; or
(b) it is a scheme that is an earmarked scheme.
2 A scheme to which—
(a) paragraph (1)(a) applies must also comply with regulations 4 to 7 and 9 to 11; or
(b) paragraph (1)(b) applies must also comply with regulation 8.

4 Schemes that are subject to Part 3 of the 2004 Act – determination of assets and liabilities
1 In the case of a scheme to which regulation 3(1)(a) applies, where the trustees propose to make a payment to the employer, either—
(a) the written valuation of the scheme's assets and liabilities required under section 37(3)(a) of the 1995 Act shall be prepared in accordance with this regulation and regulations 5 and 6; or
(b) where—
(i) an actuarial valuation has been prepared for the purposes of Part 3 of the 2004 Act ; and
See section 224(2)(a) of the Pensions Act 2004. Part 3 of the Pensions Act 2004 is modified by S.I. 2005/3377 and 3380.
(ii) this valuation is valid for the purposes of regulation 9,
the trustees may use this valuation for the purposes of regulation 7(1) and section 37(3)(a), (“a Part 3 valuation”).
2 Where trustees use a Part 3 valuation—
(a) the value to be placed on the scheme's liabilities shall be the value placed by the actuary on the scheme's liabilities for the purposes of the actuary's estimate of the solvency of the scheme included in that valuation, in accordance with—
(i) regulation 7(6)(a)(i) and (ii); or
(ii) regulation 7(6)(b),
as the case may be, of the Occupational Pension Schemes (Scheme Funding) Regulations 2005 (actuarial valuations and reports); and
S.I. 2005/3377.
(b) the value to be placed on the scheme's assets shall be the value placed by the actuary on the scheme's assets for the purposes of the actuary's estimate of the solvency of the scheme included in that valuation.
3 Subject to paragraph (7), the assets of the scheme to be taken into account for the purposes of the written valuation specified in paragraph (1)(a) are the assets attributed to the scheme in the relevant accounts, excluding—
(a) any resources invested (or treated as invested by section 40 of the 1995 Act) in contravention of section 40(1) of the 1995 Act (restriction on employer-related investments);
(b) any amount treated as a debt under section 228(3) of the 2004 Act (failure to make payments) which is unlikely to be recovered without disproportionate cost or within a reasonable time; and
(c) where it appears to the actuary that the circumstances are such that it is appropriate to exclude them, any rights under an insurance policy.
4 Subject to paragraph (6), the liabilities of the scheme to be taken into account for the purposes of the actuarial valuation specified in paragraph (1)(a) are any liabilities—
(a) in relation to a member of the scheme by virtue of—
(i) any right that has accrued to or in respect of him to future benefits under the scheme rules; or
(ii) any entitlement to the present payment of a pension or other benefit which he has under the scheme rules; and
(b) in relation to the survivor of a member of the scheme, by virtue of any entitlement to benefits, or right to future benefits which he has under the scheme rules in respect of the member.
5 For the purposes of paragraph (4)—
“right” includes a pension credit right; and
“the survivor” of a member is a person who—
(a) is the widow, widower or surviving civil partner of the member; or
(b) has survived the member and has any entitlement to benefit, or right to future benefits, under the scheme in respect of the member.
6 Where rights under an insurance policy are excluded under paragraph (3)(c), the liabilities secured by the policy shall be disregarded for the purposes of paragraph (4).
7 Where arrangements are being made by the scheme for the transfer to or from it of accrued rights and any pension credit rights, until such time as the trustees or managers of the scheme to which the transfer is being made (“the receiving scheme”) have received assets of the full amount agreed by them as consideration for the transfer, it shall be assumed—
(a) that those rights have not been transferred; and
(b) that any assets transferred in respect of the transfer of those rights are assets of the scheme making the transfer, and not the receiving scheme.

5 Schemes that are subject to Part 3 of the 2004 Act – valuation of assets and liabilities
1 In the case of a valuation specified in regulation 4(1)(a) and subject to paragraph (2), the value to be given to the assets of a scheme for the purposes of section 37(3)(a) of the 1995 Act (payment of surplus to employer) is the value given to those assets in the relevant accounts, less the amount of the external liabilities.
2 The value to be given to any rights under an insurance policy not excluded under regulation 4(3) is the value the actuary considers appropriate in the circumstances of the case on the effective date.
3 The value to be placed on the liabilities of the scheme shall be the actuary's estimate of the value of the liabilities of the scheme on the effective date.
4 In paragraph (3), “estimate of the value of the liabilities of the scheme” means—
(a) an estimate by the actuary of the cost of purchasing annuities, of the type described in section 74(3)(c) of the 1995 Act (discharge of liabilities by purchase of annuities satisfying prescribed requirements) and on terms consistent with those in the available market, which would be sufficient to satisfy the liabilities taken into account under regulation 4(4); and
Section 74(3)(c) was amended by S.I. 2001/3649.
(b) other expenses which, in the opinion of the actuary, would be likely to be incurred in connection with the winding up of the scheme.
5 Where the actuary considers that it is not practicable to make an estimate in accordance with paragraph (4)(a), he shall make an estimate of the value of the liabilities of the scheme on the effective date, in such manner as the actuary considers appropriate in the circumstances of the case.
6 Where the actuary's estimate of the liabilities of the scheme is made under paragraph (5), the valuation must include a brief account of the principles adopted in making the estimate.
7 In paragraph (1), “the external liabilities” of a scheme are such liabilities of the scheme (other than liabilities within regulation 4(4)) as are shown in the net assets statement in the relevant accounts, and their amount shall be taken to be the amount shown in that statement in respect of them.
8 The assets of the scheme shall be valued, and the amount of the liabilities determined, by reference to the effective date.

6 Prescribed persons for the purposes of section 37(3)(a) of the 1995 Act
The classes of prescribed person for the purposes of section 37(3)(a) of the 1995 Act are in the case of a scheme that is subject to Part 3 of the 2004 Act (scheme funding)—
(a) where the scheme is a scheme for which an actuary is required to be appointed under section 47(1)(b) of the 1995 Act (professional advisers), the actuary appointed under that section; or
(b) where it is a scheme which is exempt from the application of section 47(1)(b) of the 1995 Act by virtue of regulations made under subsection (5) of that section, a Fellow of the Institute and Faculty of Actuaries.
(i) a Fellow of the Faculty of Actuaries ; or
The Faculty of Actuaries is located at Faculty of Actuaries, Maclaurin House, 18 Dublin Street, Edinburgh EH1 3PP.
(ii) a Fellow of the Institute of Actuaries .
The Institute of Actuaries is located at Institute of Actuaries, Staple Inn Hall, High Holborn, London WC1V 7QJ.
Words in reg. 6(b) substituted (6.4.2012) by The Pensions (Institute and Faculty of Actuaries and Consultation by Employers – Amendment) Regulations 2012 (S.I. 2012/692), regs. 1(2), 16

7 Schemes that are subject to Part 3 of the 2004 Act – valuation certificate and amount of payment to employer
1 Where a written valuation prepared in accordance with regulation 4(1) shows that the value of the assets of the scheme is greater than the value of the scheme's liabilities, the prescribed person shall prepare a valuation certificate in the form prescribed in Schedule 1.
2 Where paragraph (1) applies, the maximum payment that may be made to the employer is, in the case of a valuation prepared in accordance with—
(a) regulation 4(1)(a), the amount by which the value of the scheme's assets exceeds the value of the scheme's liabilities at the effective date of the valuation; or
(b) regulation 4(1)(b), the amount of the excess of the scheme's assets over its liabilities specified in the actuary's estimate of the solvency of the scheme prepared in accordance with regulation 7(4)(b) of the Occupational Pension Schemes (Scheme Funding) Regulations 2005.

8 Earmarked schemes
1 In the case of a scheme to which regulation 3(1)(b) applies, a payment may only be made to the employer where all liabilities accruing in respect of a member, beneficiary or his estate have been—
(a) secured by the purchase of one or more insurance policies; or
(b) paid in full.
2 Where paragraph (1) applies, the maximum payment that may be made to the employer is a payment no greater than the excess of the scheme assets in relation to that member after all the liabilities accruing in respect of that member have been secured or paid in full.

9 Period for which a valuation certificate is to remain in force
A valuation certificate shall remain in force—
(a) in the case of a scheme that falls within regulation 3(1)(a) for fifteen months where the valuation is prepared pursuant to Part 3 of the 2004 Act; or
(b) twelve months in all other cases,
from the effective date of the valuation.

10 Notification to members
1 Where the trustees of a scheme to which regulation 3(1)(a) applies propose to make a payment under section 37(1)(a) of the 1995 Act, the prescribed requirements in accordance with which the notice referred to in section 37(3)(g) of the 1995 Act must be given are—
(a) that the trustees of the scheme must make a written statement that they have decided to make such a payment;
(b) that the amount of the proposed payment must be stated;
(c) that the date that the payment is to be made which is—
(i) not later than the last day on which the valuation certificate is valid for the purposes of section 37(4)(e) of the 1995 Act; and
(ii) at least three months after the day the information is sent to the members or survivors,
must be stated; and
(d) that the notice must provide that the member may, within one month of the date of the notice, request a copy of the relevant valuation certificate prepared in accordance with regulation 7(1).
2 Where a member requests a copy of the relevant valuation certificate under paragraph (1)(d), the trustees of the scheme shall provide this information within one month from the date that the request is received by them.
3 A notice under section 37(3)(g) of the 1995 Act does not have to be given to any excluded person.
4 The trustees of the scheme may give the notice mentioned in paragraph (1) and provide a copy of the relevant valuation certificate mentioned in paragraph (2) in accordance with regulations 26 to 28 of the Occupational and Personal Pension Schemes (Disclosure of Information) Regulations 2013 (giving information and documents).
Reg. 10(4) added (6.4.2014) by The Occupational and Personal Pension Schemes (Disclosure of Information) Regulations 2013 (S.I. 2013/2734), reg. 1(1), Sch. 9 para. 16(2)

11 Notification to the Regulator
Where the trustees of a scheme to which regulation 3(1)(a) applies have made a payment in accordance with section 37(1)(a) of the 1995 Act, they shall notify the Regulator that the payment has been made by no later than one week after the day on which the payment was made.