The Occupational Pension Schemes (Contracting-out) (Amendment) Regulations 2009

EXPLANATORY NOTE

(This note is not part of the Regulations)

These Regulations amend the Occupational Pension Schemes (Contracting-out) Regulations 1996 (S.I. 1996/1172) (“the 1996 Regulations”).

Guaranteed minimum pensions (“GMPs”) can be converted into other pension benefits under new provisions introduced by section 14 of the Pensions Act 2007 (c.22). These Regulations relate to two conditions in connection with that conversion.

Regulation 2(2) inserts a new regulation 69A into the 1996 Regulations. It makes provision for how trustees are to determine whether the value of a pension scheme member’s benefits after the conversion of their GMPs are actuarially at least equivalent to their value before the conversion. The trustee must take advice from the actuary and decide the assumptions to be used. The assumptions should be appropriate at the date on which the conversion takes effect. The actuary must use the assumptions and ignore certain amounts to calculate the actuarial values of the benefits. If the benefits are actuarially at least equivalent, the actuary must send the trustees a certificate.

Regulation 2(2) inserts a new regulation 69B into the 1996 Regulations. It prescribes the circumstances in which, and the periods during which, survivors’ benefits must be provided after conversion. The circumstances and periods are the same as the requirements for survivors’ benefits in existing legislation on GMPs.

An assessment of the impact on private and voluntary sector pension schemes of the provisions in these regulations is included in the impact assessment that accompanied the Pensions Act 2007. Copies of that assessment are available in the libraries of both Houses of Parliament and may also be obtained from the Better Regulation Unit of the Department for Work and Pensions, level 4, the Adelphi, 1-11 John Adam Street, London WC2N 6HT or from the DWP website: http://www.dwp.gov.uk/resourcecentre/ria.asp.