The Teachers' Superannuation (Pension Sharing on Divorce) (Scotland) Regulations 2001

Explanatory Note

(This note is not part of the Regulations)

These Regulations make further amendments to the Teachers' Superannuation (Scotland) Regulations 1992 (“the 1992 Regulations”). They have retrospective effect from 1st December 2000 as authorised by section 12 of the Superannuation Act 1972. “The Secretary of State” in these Regulations means The Secretary of State for Social Security.

Regulation 3 inserts a new Part J into the 1992 Regulation to allow for pension sharing on divorce.

Part J (Regulations J1 to J20) have the following effect–

• Regulation J1 provides that the definitions of expression in respect of Part J are set out in Schedule 1A to the 1992 Regulations and are additional to the definitions of expression in Schedule 1 of those Regulations.

• Regulation J2 provides for pension sharing in respect of a member’s shareable rights under the 1992 Regulations but excludes any benefit payable to a widow or widower or other dependant of a deceased member.

• Regulation J3 provides for the member’s shareable rights to be debited and for the transferee to be entitled to a pension credit.

• Regulation J4 provides for the calculation of the specified percentage or the amount to be transferred and defines valuation day and transfer day for the purposes of this regulation.

• Regulation J5 provides for the shareable rights of the debit member to be reduced in accordance with the appropriate percentage of the pension credit.

• Regulation J6 provides for the debit member’s protected rights or guaranteed minimum pension to be reduced by the appropriate percentage.

• Regulation J7 allows the Scottish Ministers to discharge their liability in respect of the pension credit by providing the appropriate rights within the Scheme under regulation J11 which equals the amount of the credit.

• Regulation J8 makes provision for the pension credit to be reduced in circumstances where the Scottish Ministers are not aware of the pension debit and make a payment in respect of the shareable rights. If the cash equivalent of the member’s shareable rights after deduction the payment is less than the amount of the pension debit, the pension credit will be reduced to the lesser amount.

• Regulation J9 provides for the Scottish Ministers to discharge their liability in respect of a pension credit within the 4 months ‘implementation period'. The regulation also sets out the documents which Scottish Ministers must receive in order to establish the day on which the implementation period begins. It also sets out the requirement to notify the transferor and transferee of that date or any cessation or postponement of that date.

• Regulation J10 Paragraphs 1 and 2 provide that where the Scottish Ministers fail to discharge their liability within the implementation period they must notify the Regulatory Authority within the period prescribed in regulations under section 33(2)(a) of the 1999 Act and section 10 (civil penalties) of the Pensions Act 1995 will apply. The prescribed period set out in regulation 2 of the Pension Sharing (Implementation and Discharge of Liability) Regulations 2000 is 21 days from the day immediately following the implementation period. Paragraph 3 of regulation 10 provides for Scottish Ministers to request an extension of the implementation period under section 33(4) of the 1999 Act. Under regulation 3 of the Pension Sharing (Implementation and Discharge of Liability) Regulations 2000 the request must be made before the end of the implementation period. (Provision is also made under regulation 4 of those Regulations for the implementation period to be postponed or to cease where an application is made for leave to appeal out of time.)

• Regulation J11 sets out the appropriate rights in respect of the pension credit member. The credit member benefits are restricted to pension and lump sum on retirement and lump sum on death and will be treated as a preserved pension. Provision is made for benefits to be increased under the Pensions Increase Act 1971. Benefits will be payable on reaching normal retirement age for the Scheme (age 60) and may not be deferred. Provision is made for early payment of the pension credit with actuarial reduction.

• Regulation J12 prevents the active member from purchasing additional service to replace any rights debited and restricts the amount of additional service which may be purchased to the amount of service the member could have purchased if the pension sharing order had not been made. This restriction is relaxed in respect of moderate earners whose earnings at the date of divorce or annulment is not more than 25 per cent of the permitted maximum or such other amount as may be prescribed.

• Regulation J13 provides for a pension credit to be commuted on grounds of triviality. Where a pension credit member is also a member the Scheme, the pension credit may only be commuted if the aggregate of pension or pensions under the Scheme falls below the limit in regulation H7.

• Regulation J14 provides for the pension credit to be commuted for a lump sum payment before the normal benefit age on grounds of terminal ill-health where the life expectancy is less than one year.

• Regulation J15 prevents the Scheme from accepting a transfer of a pension credit from another occupational or personal pension scheme.

• Regulation J16 allows the Scottish Ministers to recover the costs accrued in respect of pension sharing as set out in the Pensions on Divorce etc (Charging) Regulations 2000 (S.I. 2000/1049).

• Regulation J17 ensures that, where a pension credit member is also an active or deferred member, the pension credit must be disregarded when assessing the length of service in relation to the Scheme service and benefits.

• Regulation J18 provides for the pension credit not to be assigned except where required by law.

• Regulation J19 provides for interest on late payment of benefits to pension credit members.

Regulation 4 inserts a new Schedule 1A giving the interpretations which apply to Part J additional to the interpretations in Schedule 1. Schedule 1A is particularly relevant to Part J.

Regulation 5 effects minor and consequential amendments to the 1992 Regulations.