The Occupational Pension Schemes (Transfer Values) (Amendment) Regulations 2008

EXPLANATORY NOTE

(This note is not part of the Regulations )

These Regulations make amendments to provisions about the calculation and verification of transfer values (the amount that may be transferred from one pension scheme to another). They set out the new manner for calculating and verifying cash equivalents and cash transfer sums.

Regulation 2 amends the interpretation provisions in the Occupational Pension Schemes (Transfer Values) Regulations 1996 (S.I. 1996/1847) (“the principal Regulations”).

Regulation 3 amends regulation 6 of the principal Regulations to specify the guarantee date (the date by reference to which the value of the cash equivalent is calculated).

Regulation 4 substitutes new regulations 7 to 7E for regulations 7 and 8 of the principal Regulations. These new regulations prescribe the manner by which cash equivalent transfer values are calculated and verified. The trustees or managers of a pension scheme are required to calculate the cash equivalent in accordance with the rules in new regulations 7 to 7D or by any other method that produces a higher figure (new regulation 7E).

The new rules inserted by regulation 4 are also used in modified form for the purposes of (a) other Regulations which deal with cash equivalents and (b) calculating and verifying the cash transfer sums for pension sharing Regulations. Both these modified forms are set out in Schedule 2 to these Regulations.

Regulations 5 and 7 amend respectively regulation 11 of, and Schedule 1 to, the principal Regulations. They modify the information that members of certain pension schemes are entitled to receive from the trustees or managers of the scheme. In particular, they ensure that members are aware that advice is available when making transfers from one pension scheme to another.

Regulation 6 amends regulation 12 of the principal Regulations to reflect the new definition of “insurance policy” (paragraph (a)) and correct a minor technical error (paragraph (b)).

Regulation 8 introduces the Schedules to these Regulations.

Schedule 1 inserts two new Schedules into the principal Regulations. New Schedule 1A contains the circumstances in which an initial cash equivalent transfer value must or may be reduced. New Schedule 1B makes provisions about actuaries preparing insufficiency reports for trustees or managers of pension schemes.

Schedule 2 sets out amendments to the provisions of—

• The Personal Pension Schemes (Transfer Values) Regulations 1987 (S.I. 1987/1112).

• The Personal and Occupational Pension Schemes (Protected Rights) Regulations 1996 (S.I. 1996/1537).

• The Pensions on Divorce etc. (Provision of Information) Regulations 2000 (S.I. 2000/1048).

• The Pensions on Divorce etc. (Charging) Regulations 2000 (S.I. 2000/1049).

• The Pension Sharing (Valuation) Regulations 2000 (S.I. 2000/1052).

• The Pension Sharing (Implementation and Discharge of Liability) Regulations 2000 (S.I. 2000/1053).

• The Pension Sharing (Pension Credit Benefit) Regulations 2000 (S.I. 2000/1054).

• The Occupational Pension Schemes (Early Leavers: Cash Transfer Sums and Contribution Refunds) Regulations 2006 (S.I. 2006/33).

• The Occupational Pension Schemes (Modification of Schemes) Regulations 2006 (S.I. 2006/759).

An Impact Assessment of the effect these Regulations will have on the costs of business, charities and the voluntary sector has been made. Copies of the Impact Assessment are available in the libraries of both Houses of Parliament. Copies may be obtained from the Department for Work and Pensions, Better Regulation Unit, 4th Floor, Adelphi, 1-11 John Adam Street, London WC2N 6HT.