The Occupational Pension Schemes (Transfer Values and Miscellaneous Amendments) Regulations (Northern Ireland) 2003

Statutory Rules of Northern Ireland

2003 No. 337

PENSIONS

The Occupational Pension Schemes (Transfer Values and Miscellaneous Amendments) Regulations (Northern Ireland) 2003

Made

16th July 2003

Coming into operation

4th August 2003

The Department for Social Development, in exercise of the powers conferred on it by sections 93(1), (2)(b) and (3)(c), 97I, 97L(1) and (2)(b), 177(2) to (4) and 178(3) of the Pension Schemes (Northern Ireland) Act 1993(1) and Articles 21(1)(c), 27(1), 42(1) and 73(4) of, and paragraph 8(1) of Schedule 5 to, the Welfare Reform and Pensions (Northern Ireland) Order 1999(2), and now vested in it(3), and of all other powers enabling it in that behalf, hereby makes the following Regulations:

Citation, commencement and interpretation

1.—(1) These Regulations may be cited as the Occupational Pension Schemes (Transfer Values and Miscellaneous Amendments) Regulations (Northern Ireland) 2003 and shall come into operation on 4th August 2003.

(2) The Interpretation Act (Northern Ireland) 1954(4) shall apply to these Regulations as it applies to an Act of the Assembly.

Amendment of the Occupational Pension Schemes (Transfer Values) Regulations

2.—(1) The Occupational Pension Schemes (Transfer Values) Regulations (Northern Ireland) 1996(5) shall be amended in accordance with paragraphs (2) and (3).

(2) In regulation 1(2) (interpretation) after the definition of “cash equivalent” there shall be inserted the following definition –

• ““effective date” in regulation 8(4) and (4A) means the date as at which the assets and liabilities are valued;”.

(3) In regulation 8 (further provisions as to calculation of cash equivalents and increases and reductions of cash equivalents (other than guaranteed cash equivalents)) for paragraph (4) there shall be substituted the following paragraphs –

“(4) Subject to paragraphs (4A) and (4B), where a scheme to which Article 56 (minimum funding requirement) applies had, at the effective date of the actuary’s latest report to the trustees before the guarantee date in accordance with “Retirement Benefit Schemes – Transfer Values (GN 11)”(6) published by the Institute of Actuaries and the Faculty of Actuaries and current at the guarantee date, assets that were not sufficient to pay the full amount of the cash equivalent in respect of all members, the trustees may reduce each part of the cash equivalent as shown in that report by an amount that is no greater than the percentage by which the assets are shown in that report as being insufficient to pay the full amount of the corresponding part of the cash equivalent in respect of all members.

(4A) In the case of a scheme to which Article 56 applies which had, at the effective date of the latest actuarial valuation under Article 57 (valuation and certification of assets and liabilities) before the guarantee date, assets that were not sufficient to pay the minimum amount of the cash equivalent in respect of the liabilities referred to in Article 73(3) (preferential liabilities on winding up)(7), the trustees may reduce each part of the minimum amount of the cash equivalent, as calculated under regulation 7(3)(b)(iv)(8) by a percentage that is no greater than the percentage which is the difference between –

(a) 100 per cent., and

(b) the percentage of the liabilities mentioned in the sub-paragraph of Article 73(3) corresponding to that part which the actuarial valuation shows the scheme assets as being sufficient to satisfy.

(4B) The amount of any cash equivalent after the reduction mentioned in paragraph (4) shall not be less than the minimum amount required under regulation 7(3)(b)(iv) to satisfy the liabilities referred to in Article 73(3).”.

Amendment of the Pensions on Divorce etc. (Provision of Information) Regulations

3.  In regulation 4(2)(c) of the Pensions on Divorce etc. (Provision of Information) Regulations (Northern Ireland) 2000(9) (provision of information in response to a notification that a pension sharing order or provision may be made) after “regulation 8(4),” there shall be inserted “(4A), (4B),”.

Amendment of the Pension Sharing (Valuation) Regulations

4.—(1) The Pension Sharing (Valuation) Regulations (Northern Ireland) 2000(10) shall be amended in accordance with paragraphs (2) and (3).

(2) In regulation 1(2) (interpretation) after the definition of “the Department” there shall be inserted the following definition –

• ““effective date” in regulation 5(3) and (3A) means the date as at which the assets and liabilities are valued;”.

(3) In regulation 5 (occupational pension schemes: further provisions as to the calculation of cash equivalents and increases and reductions of cash equivalents) for paragraph (3) there shall be substituted the following paragraphs –

“(3) Subject to paragraphs (3A), (3B) and (6), where a scheme to which Article 56 applies had, at the effective date of the actuary’s latest report to the trustees or managers before the valuation day in accordance with “Retirement Benefit Schemes – Transfer Values (GN 11)” published by the Institute of Actuaries and the Faculty of Actuaries and current at the valuation day, assets that were not sufficient to pay the full amount of the cash equivalent in respect of all members of the scheme, the trustees or managers may reduce each part of the cash equivalent as shown in that report by an amount that is no greater than the percentage by which the assets are shown in that report as being insufficient to pay the full amount of the corresponding part of the cash equivalent in respect of all members of the scheme.

(3A) Subject to paragraph (6), in the case of a scheme to which Article 56 applies which had, at the effective date of the latest actuarial valuation under Article 57 before the valuation day, assets that were not sufficient to pay the minimum amount of the cash equivalent in respect of the liabilities referred to in Article 73(3), the trustees or managers may reduce each part of the minimum amount of the cash equivalent, as calculated under regulation 4(3)(b)(iii)(11) by a percentage that is no greater than the percentage which is the difference between –

(a) 100 per cent., and

(b) the percentage of the liabilities mentioned in the sub-paragraph of Article 73(3) corresponding to that part which the actuarial valuation shows the scheme assets as being sufficient to satisfy.

(3B) The amount of any cash equivalent after the reduction mentioned in paragraph (3) shall not be less than the minimum amount required under regulation 4(3)(b)(iii) to satisfy the liabilities referred to in Article 73(3).”.

Amendment of the Pension Sharing (Implementation and Discharge of Liability) Regulations

5.—(1) The Pension Sharing (Implementation and Discharge of Liability) Regulations (Northern Ireland) 2000(12) shall be amended in accordance with paragraphs (2) and (3).

(2) In regulation 1(2) (interpretation) after the definition of “base rate” there shall be inserted the following definition –

• ““effective date” in regulation 16(2) and (2A) means the date as at which the assets and liabilities are valued;”.

(3) In regulation 16 (adjustments to amount of pension credit – occupational pension schemes which are underfunded on the valuation day) for paragraph (2) there shall be substituted the following paragraphs –

“(2) Subject to paragraphs (2A) and (2B), where a scheme to which Article 56 of the 1995 Order (minimum funding requirement) applies had, at the effective date of the actuary’s latest report to the trustees or managers of the scheme before the valuation day in accordance with “Retirement Benefit Schemes – Transfer Values (GN 11)” published by the Institute of Actuaries and the Faculty of Actuaries and current at the valuation day, assets that were not sufficient to pay the full amount of the cash equivalent in respect of all members of the scheme, the lesser amount referred to in paragraph 8(1) of Schedule 5 may be determined for the purposes of that paragraph by reducing the amount of the pension credit which relates to the liabilities referred to in Article 73(3) of the 1995 Order by an amount that is no greater than the percentage by which the assets are shown in that report as being insufficient to pay the full amount of the corresponding part of the cash equivalent to all members of the scheme.

(2A) Where a scheme to which Article 56 of the 1995 Order applies had, at the effective date of the latest actuarial valuation under Article 57 of the 1995 Order (valuation and certification of assets and liabilities) before the valuation day, assets that were not sufficient to pay the minimum amount of the cash equivalent in respect of the liabilities referred to in Article 73(3) of the 1995 Order in respect of all members of the scheme, the lesser amount referred to in paragraph 8(1) of Schedule 5 may be determined by reducing the amount of the pension credit that relates to those liabilities by an amount which is no greater than the percentage which is the difference between –

(a) 100 per cent., and

(b) the percentage of the pension credit which the actuarial valuation shows the scheme assets as being sufficient to satisfy.

(2B) The amount of any cash equivalent after the reduction mentioned in paragraph (2) shall not be less than the minimum amount that is required under regulation 4(3)(b)(iii) of the Pension Sharing (Valuation) Regulations (Northern Ireland) 2000 (occupational pension schemes: manner of calculation and verification of cash equivalents) to satisfy the liabilities referred to in Article 73(3) of the 1995 Order.”.

Amendment of the Pension Sharing (Pension Credit Benefit) Regulations

6.—(1) The Pension Sharing (Pension Credit Benefit) Regulations (Northern Ireland) 2000(13) shall be amended in accordance with paragraphs (2) and (3).

(2) In regulation 1(2) (interpretation) after the definition of “the Department” there shall be inserted the following definition –

• ““effective date” in regulation 27(4) and (4A) means the date as at which the assets and liabilities are valued;”.

(3) In regulation 27 (increases and reductions of cash equivalents before a statement of entitlement has been sent to the eligible member) for paragraph (4) there shall be substituted the following paragraphs –

“(4) Subject to paragraphs (4A) and (4B), where a scheme to which Article 56 applies had, at the effective date of the actuary’s latest report to the trustees or managers of the scheme before the date by reference to which the cash equivalent is determined under section 97F(4) (power to give transfer notice)(14) in accordance with “Retirement Benefit Schemes – Transfer Values (GN 11)” published by the Institute of Actuaries and the Faculty of Actuaries and current at that date, assets that were not sufficient to pay the full amount of the cash equivalent in respect of all members, the trustees or managers may reduce each part of the cash equivalent as shown in that report that relates to the liabilities referred to in Article 73(3) by an amount that is no greater than the percentage by which the assets are shown in that report as being insufficient to pay the full amount of the corresponding part of the cash equivalent in respect of all members.

(4A) Where a scheme to which Article 56 applies had, at the effective date of the latest actuarial valuation under Article 57 (valuation and certification of assets and liabilities) prior to the date by reference to which the cash equivalent is determined under section 97F(4), assets that were not sufficient to pay the minimum amount of the cash equivalent in respect of the liabilities referred to in Article 73(3) in respect of all members, each respective part of the cash equivalent that relates to those liabilities may be reduced by an amount that is no greater than the percentage which is the difference between –

(a) 100 per cent., and

(b) the percentage of the liabilities mentioned in the sub-paragraph of Article 73(3) corresponding to that part which the actuarial valuation shows the scheme assets as being sufficient to satisfy.

(4B) The amount of any cash equivalent after the reduction mentioned in paragraph (4) shall not be less than the minimum amount that is required under regulation 24(3)(b)(iv) (manner of calculation and verification of cash equivalents) to satisfy the liabilities referred to in Article 73(3).”.

Sealed with the Official Seal of the Department for Social Development on 16th July 2003.

L.S.

John O'Neill

Senior Officer of the

Department for Social Development

Explanatory Note

(This note is not part of the Regulations.)

These Regulations amend the Occupational Pension Schemes (Transfer Values) Regulations (Northern Ireland) 1996 (“the principal Regulations”). They also make various consequential amendments to the Pensions on Divorce etc. (Provision of Information) Regulations (Northern Ireland) 2000 (“the Provision of Information Regulations”), the Pension Sharing (Valuation) Regulations (Northern Ireland) 2000 (“the Valuation Regulations”), the Pension Sharing (Implementation and Discharge of Liability) Regulations (Northern Ireland) 2000 (“the Implementation and Discharge of Liability Regulations”) and the Pension Sharing (Pension Credit Benefit) Regulations (Northern Ireland) 2000 (“the Pension Credit Benefit Regulations”).

Regulation 1 provides for citation, commencement and interpretation.

Regulation 2 amends regulations 1 and 8 of the principal Regulations. Regulation 2(2) inserts a definition of “effective date” into regulation 1(2) of the principal Regulations so as to make further provision for the interpretation of the Regulations. Regulation 2(3) substitutes regulation 8(4) of the principal Regulations with paragraphs (4), (4A) and (4B).

The new regulation 8(4) of the principal Regulations applies to occupational pension schemes to which the minimum funding requirement in Article 56 of the Pensions (Northern Ireland) Order 1995 (“the Order”) applies. Where such a scheme is not sufficiently funded to meet the full amount of the cash equivalent in respect of all of its members, as determined by the actuary for the purposes of the last report to the trustees or managers of the scheme before the guarantee date under the actuarial guidance note entitled “Retirement Benefit Schemes – Transfer Values (GN 11)”, regulation 8(4) enables the trustees or managers to reduce the amount of a cash equivalent. The amount of the reduction must be no greater than the amount by which the actuary’s report shows the scheme assets as being insufficient to pay the minimum amount of the cash equivalent in respect of all scheme members. Regulation 8(4B) of the principal Regulations provides that the amount of the cash equivalent after the reduction must not be less than the minimum amount which is required under regulation 7 of the principal Regulations to satisfy the liabilities referred to in Article 73(3) of the Order. Regulation 8(4A) of the principal Regulations enables the trustees or managers of occupational pension schemes to which the minimum funding requirement applies to reduce the minimum amount of the cash equivalent by a percentage which is no greater than the percentage by which the scheme was not, by reference to its last minimum funding valuation under Article 57 of the Order, able to pay the minimum amount of the cash equivalent that is required under regulation 7 of the principal Regulations in respect of the preferential liabilities on winding up.

Regulation 3 amends regulation 4(2)(c) of the Provision of Information Regulations so that it also refers to regulation 8(4A) and (4B) of the principal Regulations.

Regulations 4, 5 and 6 amend the Valuation Regulations, the Implementation and Discharge of Liability Regulations and the Pension Credit Benefit Regulations respectively so as to make similar provision to that made by regulation 2 of these Regulations.

As these Regulations make, in so far as they are made under Part V of the Welfare Reform and Pensions (Northern Ireland) Order 1999, in relation to Northern Ireland only provision corresponding to provision contained in regulations made by the Secretary of State for Work and Pensions in relation to Great Britain, there is no requirement for consultation under Article 73(9) of that Order.

(1)

1993 c. 49; sections 97I and 97L were inserted by Article 34 of the Welfare Reform and Pensions (Northern Ireland) Order 1999 (S.I. 1999/3147 (N.I. 11)); section 178(3) was amended by paragraph 37 of Schedule 1 to, and paragraph 14 of Schedule 4 to, the Pensions (Northern Ireland) Order 1995 (S.I. 1995/3213 (N.I. 22)) and paragraph 31 of Schedule 9 to the Welfare Reform and Pensions (Northern Ireland) Order 1999

(2)

S.I. 1999/3147 (N.I. 11)

(3)

See Article 8(b) of S.R. 1999 No. 481

(4)

1954 c. 33 (N.I.)

(5)

S.R. 1996 No. 619; relevant amending regulations are S.R. 1997 No. 160

(6)

Copies of the publication “Retirement Benefit Schemes – Transfer Values (GN 11)” may be obtained from the Faculty of Actuaries, Maclaurin House, 18 Dublin Street, Edinburgh EH1 3PP and the Institute of Actuaries, Staple Inn Hall, High Holborn, London WC1V 7QJ or downloaded from the website www.actuaries.org.uk

(7)

Article 73(3) was amended by Article 35(1) of the Welfare Reform and Pensions (Northern Ireland) Order 1999 and modified by regulation 3 of S.R. 1996 No. 621 (as amended by regulation 9 of S.R. 1999 No. 486 and regulation 4 of S.R. 2000 No. 335)

(8)

Regulation 7(3) was amended by S.R. 1997 No. 160

(9)

S.R. 2000 No. 142; relevant amending regulations are S.R. 2000 No. 335

(10)

S.R. 2000 No. 144; relevant amending regulations are S.R. 2000 No. 335

(11)

Regulation 4 was amended by S.R. 2000 No. 335

(12)

S.R. 2000 No. 145, to which there are amendments not relevant to these regulations

(13)

S.R. 2000 No. 146; relevant amending regulations are S.R. 2000 No. 335

(14)

Section 97F was inserted by Article 34 of the Welfare Reform and Pensions (Northern Ireland) Order 1999