The Occupational and Stakeholder Pension Schemes (Miscellaneous Amendments) Regulations (Northern Ireland) 2013

EXPLANATORY NOTE

(This note is not part of the Regulations)

These Regulations amend the Occupational Pension Schemes (Preservation of Benefit) Regulations (Northern Ireland) 1991 (“the Preservation of Benefit Regulations”), the Occupational Pension Schemes (Contracting-out) Regulations (Northern Ireland) 1996 (“the Contracting-out Regulations”), the Contracting-out (Transfer and Transfer Payment) Regulations (Northern Ireland) 1996 (“the Transfer Regulations”), the Occupational Pension Schemes (Transfer Values) Regulations (Northern Ireland) 1996 (“the Transfer Values Regulations”), the Occupational Pension Schemes (Winding Up) Regulations (Northern Ireland) 1996 (“the Winding Up Regulations”), the Pension Sharing (Pension Credit Benefit) Regulations (Northern Ireland) 2000 (“the Pension Credit Benefit Regulations”), the Stakeholder Pension Schemes Regulations (Northern Ireland) 2000 (“the Stakeholder Regulations”) and the Occupational Pension Schemes (Modification of Schemes) Regulations (Northern Ireland) 2006 (“the Modification of Schemes Regulations”).

Regulation 2 amends the Preservation of Benefit Regulations—

• to insert regulation 11B to provide for a further alternative to the provision of a short service benefit under section 69(2) of the Pension Schemes (Northern Ireland) Act 1993 (“the 1993 Act”), that is, the transfer of a member’s accrued rights to a European pensions institution, without the member’s consent, in accordance with the conditions set out in regulation 12 of those Regulations;

• so that the conditions in regulation 12(2) that apply to transfers of a member’s rights without their consent, allow for a transferring scheme and a receiving scheme to relate both to persons who are currently employed, or who have been employed in the past, by the same employer or related employers.

Regulation 3 amends regulation 42 of the Contracting-out Regulations—

• to set out additional requirements that apply to the amendment of scheme rules in relation to accrued contracted-out rights (section 5(2B) rights);

• so that the conditions in regulation 42 apply only to the alteration of rules in relation to contracted-out rights that are to accrue in the future under the contracted-out scheme;

• to insert paragraphs (2ZA) and (2ZB) which set out restrictions on the amendment of rules in relation to accrued contracted-out rights. Alterations to such rights are not allowed unless the benefits provided to members and survivors are at least as good as those provided by a reference scheme, unless Article 67 of the Pensions (Northern Ireland) Order 1995 (“the 1995 Order”) does not apply or, if Article 67 does apply, the alterations are neither detrimental nor protected modifications. If an alteration is a detrimental modification, the actuarial equivalence test must be applied. In both the cases where the alteration is within the scope of Article 67, regulation 42(2ZB) requires that the level of survivors’ benefits cannot be reduced.

Regulation 4 amends the Transfer Regulations to allow connected employer transfers to take place where the transferring scheme and receiving scheme relate both to persons who are currently employed, or who have been employed in the past, by the same employer or related employers, and where either scheme is a contracted-out or a former contracted-out scheme.

Regulation 5 amends regulation 2 of the Transfer Values Regulations to change the reference to the Retail Prices Index (“RPI”) to a rise in the general level of prices. Chapter IV of the 1993 Act gives most members of occupational pension schemes rights to transfer preserved benefits – or a cash equivalent thereof – to another scheme, if that scheme is willing to accept the transfer. Exceptions to this right are found in regulation 2 of the Transfer Values Regulations. One such exception applies to members who left schemes before 1st January 1986 if the scheme fully revalues the preserved rights.

Regulations 6 and 9 make consequential amendments to the Winding Up Regulations and the Modification of Schemes Regulations to insert references to regulation 11B of the Preservation of Benefit Regulations (as inserted by regulation 2 of these Regulations) alongside references to regulation 12 of those Regulations where appropriate.

Regulation 7 substitutes regulation 32 of the Pension Credit Benefit Regulations to permit schemes which have paid RPI-based increases to continue to do so without tracking the Consumer Prices Index (“CPI”) levels as well. The definition of “appropriate percentage” will make it clear which of the two figures in the revaluation order should be used in which circumstances. The higher percentage is appropriate where the pension was shared prior to 6th April 2005 and the lower percentage for pensions shared on or after that date. The definition of “relevant percentage” replaces a reference to the RPI with a reference to the CPI, reflecting how the requirement is prescribed for main scheme benefits in Article 51 of the 1995 Order.

Regulation 8 amends the Stakeholder Regulations consequential on—

• changes made by tax legislation, and

• amendments to Article 5 of the Welfare Reform and Pensions (Northern Ireland) Order 1999 (“the 1999 Order”) made by section 69 of the Pensions (No. 2) Act (Northern Ireland) 2008, and the supplementary provision made by the Pensions (2008 No. 2 Act) (Commencement No. 10 and Supplementary Provisions) Order (Northern Ireland) 2012 (“the Commencement Order”) (S.R. 2012 No. 372 (C. 35)), which removed the requirement for employers to designate a stakeholder pension scheme, deduct contributions from employees’ remuneration and pay them to the scheme, except where an employee had, before 1st October 2012, requested deductions to be made and has not withdrawn that request. New paragraphs (5A) and (5B) of regulation 24 of the Stakeholder Regulations remove the duty to deduct contributions where the employer’s designated scheme commences winding up or the employer withdraws designation of a scheme for reasons beyond the employer’s control.

The Commencement Order provides for the coming into operation of section 69 of the Pensions (No. 2) Act (Northern Ireland) 2008, which amends Article 5(1) and (5) of the 1999 Order, some of the enabling provisions under which these Regulations are made, on 1st October 2012.

Regulation 10 makes revocations.

As these Regulations, in so far as they are made under Part II of the 1995 Order and Part V of the 1999 Order, make 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, the requirement for consultation does not apply by virtue of Article 117(2)(e) of the 1995 Order and Article 73(9) of the 1999 Order.