7

This Article does not apply to any pension (or part of a pension) under a relevant occupational pension scheme which—

a

is a cash balance benefit (see Article 51ZB), and

b

first comes into payment on or after the day on which section 21 of the Pensions Act (Northern Ireland) 2012 comes into operation.

8

An occupational pension scheme is a “relevant occupational pension scheme” if—

a

it has not, on or after the appointed day, been contracted-out by virtue of satisfying section 5(2) of the Pension Schemes Act, or

b

it has, on or after the appointed day, been so contracted-out, but no person is entitled to receive, or has accrued rights to, benefits under the scheme attributable to the period on or after that day when it was so contracted-out.

Meaning of “cash balance benefit”51ZB

1

For the purposes of Article 51(7)(a), a pension provided to or in respect of a member of an occupational pension scheme is a “cash balance benefit” if conditions 1 and 2 are met.

2

Condition 1 is that the rate of the pension is calculated by reference to a sum of money (“the available sum”) which is available under the scheme for the provision of benefits to or in respect of the member.

3

Condition 2 is that under the scheme—

a

there is a promise about the amount of the available sum, but

b

there is no promise about the rate or amount of the benefits to be provided.

4

The promise mentioned in paragraph (3)(a) includes in particular a promise about the change in the value of, or the return from, payments made under the scheme by the member or by any other person in respect of the member.

5

The promise mentioned in paragraph (3)(b) includes a promise that—

a

the amount of the available sum will be sufficient to provide benefits of a particular rate or amount;

b

the rate or amount of a benefit will represent a particular proportion of the available sum.

6

But a pension is not prevented from being a cash balance benefit merely because under the scheme there is a promise that—

a

the rate or amount of a benefit payable in respect of a deceased member will be a particular proportion of the rate or amount of a benefit which was (or would have been) payable to the member;

b

the amount of a lump sum payable to a member, or in respect of a deceased member, will represent a particular proportion of the available sum.