The Pensions (2008 No. 2 Act) (Abolition of Protected Rights) (Consequential Provisions) Order (Northern Ireland) 2012

EXPLANATORY NOTE

(This note is not part of the Order)

This Order amends certain provisions of primary and subordinate legislation in consequence of section 85 of the Pensions (No. 2) Act (Northern Ireland) 2008. Section 85 abolishes the protected rights of members of pension schemes contracted-out on a defined contributions basis, from the contracted-out abolition date (the date for the coming into operation of section 13(1) of the Pensions Act (Northern Ireland) 2008). Section 13(1) comes into operation on 6th April 2012 by virtue of the Pensions (2008 Act) (Commencement No. 3) Order (Northern Ireland) 2012 (S.R. 2012 No. 115 (C. 11)).

This Order also provides for transitional provisions for the 3 years following abolition.

References to, and provisions which relate to, protected rights are either omitted, or where appropriate, replaced with references to protected rights as they existed prior to the abolition date.

Article 4(8) and (9) amends the Pension Schemes (Northern Ireland) Act 1993 to provide that Her Majesty’s Revenue and Customs can set a minimum level below which they will not pay an age-related payment or minimum contributions to an individual, where it would cost more to administer than the payment is worth.

Article 7 repeals and amends certain amending provisions of the Pensions Act (Northern Ireland) 2008 before their commencement.

Articles 8 and 18 provide for changes to the disclosure of information requirements that schemes must comply with in relation to their contracting-out status. Schemes are required to provide a one-off statement to members of former contracted-out defined contribution schemes explaining the effect of the abolition of protected rights on the status of their accrued rights in the scheme within 4 months of the abolition date, unless they have already provided such information in the 12 months preceding the abolition date. This requirement is omitted from 6th April 2013 by Articles 27 and 29.

Article 10 amends the Personal and Occupational Pension Schemes (Abatement of Benefit) Regulations (Northern Ireland) 1987 to provide that, from the abolition date, a contracted-out deduction (from a survivor’s additional pension entitlement) of 50 per cent is to be applied to a survivor of a member of a former defined contribution contracted-out scheme in all cases.

Articles 12 and 19 amend the Occupational Pension Schemes (Contracting-out) Regulations (Northern Ireland) 1996 and the Personal Pension Schemes (Appropriate Schemes) Regulations (Northern Ireland) 1997 respectively, and provide for the payment of age-related payments, and minimum contributions to be made to another scheme, or the individual, rather than the former contracted-out scheme, where the earner is no longer a member of that scheme. These provisions are then omitted from 6th April 2015 by Articles 32 and 33, when changes to primary legislation provide that all such payments should be made to an individual.

Article 31(4) and (5) amends the Pension Schemes (Northern Ireland) Act 1993 to provide for payments of age-related payments or minimum contributions to be made to individuals in all cases, rather than the trustees or managers of the scheme, and substitutes the provisions inserted by Article 4(8) and (9) to provide for the minimum level below which such payments are not made to apply in all cases.

Articles 26 and 30 make consequential revocations.

An assessment of the cost to business of this Order is detailed in a Regulatory Impact Assessment, a copy of which has been laid in the Business Office and the Library of the Northern Ireland Assembly. Copies of that Assessment are available from the Department for Social Development, Social Security Policy and Legislation Division, Level 1, James House, 2-4 Cromac Avenue, Gasworks Business Park, Ormeau Road, Belfast BT7 2JA or from the website: http://www.dsdni.gov.uk/index/ssa/ssani-publications/ssani-pensions-publications.htm. A copy of the Assessment is also annexed to the Explanatory Memorandum which is available alongside this Statutory Rule on the website: http://www.legislation.gov.uk/nisr.