The Pensions (2012 Act) (Transitional, Consequential and Supplementary Provisions) Regulations (Northern Ireland) 2014

Explanatory Note

(This note is not part of the Regulations)

These Regulations implement Part 4 of the Pensions Act (Northern Ireland) 2012 (“the Act”), section 27 of which clarifies the definition of “money purchase benefits” in section 176 of the Pension Schemes (Northern Ireland) Act 1993 (“the 1993 Act”) and in section 78 of the Pensions (No. 2) Act (Northern Ireland) 2008. Section 27 has retrospective effect and these Regulations make transitional, consequential and supplementary provision to support its commencement.

Part 1 of these Regulations provides for citation, commencement and interpretation.

Part 2 is supplementary to Part 4 of the Act. Regulation 4 makes it clear that section 27 does not change the character of money purchase underpin benefits, where the value of those benefits equals or exceeds the value of other benefits under an occupational pension scheme which are not money purchase benefits, or equals or exceeds the amount of a minimum promise under the scheme. Regulation 5 similarly clarifies that where there is a contingent promise to pay a top-up benefit if a money purchase benefit is less than a specified minimum amount or value, the existence of that promise does not prevent the benefit from being a money purchase benefit, provided the money purchase benefit is equal to or greater than the specified minimum.

Part 3 makes transitional provision for schemes which were previously contracted-out of the additional state pension system and which provided protected rights in the form of cash balance benefits, underpin benefits or top-up benefits.

Part 4 provides transitional protection for trustees or managers of a scheme where a benefit subject to a guarantee has been converted into a money purchase benefit without first obtaining the consent of each affected member, as required under Article 67 of the Pensions (Northern Ireland) Order 1995 (“the 1995 Order”). Regulation 8 also restricts the manner in which detrimental changes to a contingent promise in relation to members' money purchase benefits may be made.

Part 5 makes transitional arrangements for schemes which have begun to wind up before the day appointed for the coming into operation of section 27 of the Act (“the appointed day”) and which include benefits which may be affected by section 27 (“affected benefits”). Regulations 10 and 12 make arrangements for schemes treated as money purchase schemes and regulations 11 and 13 apply to schemes providing affected benefits as well as other defined benefits. Regulations 14 and 15 apply where a scheme has been involved with the Pension Protection Fund (“PPF”). Regulation 16 permits trustees or managers to discharge a pension which is derived from both affected benefits and voluntary contributions and which comes into payment before 1st April 2015, as if the pension were money purchase benefits.

Part 6 deals with the application of Article 75 of the 1995 Order to occupational pension schemes which may be affected by the coming into operation of section 27 of the Act. Regulation 19 disapplies Article 75 of the 1995 Order where an event which would have triggered a debt due from an employer in relation to a scheme (“a relevant event”) occurred before the appointed day, had the scheme not been treated as a money purchase scheme. Regulations 20 and 21 make similar provision for schemes with affected benefits which experienced a relevant event during that period. Regulations 22 and 23 set out transitional arrangements for schemes providing non-money purchase benefits which the trustees or managers of the scheme had treated as money purchase benefits, but which were not affected by the Supreme Court's judgment in Houldsworth and another v Bridge Trustees Ltd and another, where a relevant event occurred before the appointed day.

Part 7 makes supplementary, consequential and transitional arrangements in relation to revaluation, indexation and preservation of benefits. Regulation 24 makes transitional arrangements where affected benefits have, before the appointed day, been revalued by the application of notional interest. Regulation 25 makes transitional arrangements for schemes which before the appointed day began to provide non-indexed pensions derived from affected benefits. Regulation 26 makes consequential amendments to the Occupational Pension Schemes (Preservation of Benefit) Regulations (Northern Ireland) 1991.

Part 8 provides transitional arrangements for calculating transfer values relating to cash balance benefits which were treated as money purchase benefits. Regulation 31 also makes supplementary amendments to the Occupational Pension Schemes (Transfer Values) Regulations (Northern Ireland) 1996 to provide for calculation of transfer values in relation to cash balance benefit after the appointed day.

Part 9 makes transitional provision for members of schemes who have acquired a right to a cash transfer sum or contribution refund under Chapter 5 of Part 4 of the 1993 Act, where the member's benefits were treated as money purchase benefits before the appointed day. Regulation 34 also amends the Occupational Pension Schemes (Early Leavers: Cash Transfer Sums and Contribution Refunds) Regulations (Northern Ireland) 2006.

Part 10 makes transitional provision for cases where a scheme was treated as a money purchase scheme and a payment of surplus funds was made to the employer before the appointed day without first complying with the conditions specified in Article 37 or 76 of the 1995 Order.

Part 11 modifies the Occupational Pension Schemes (Scheme Administration) Regulations (Northern Ireland) 1997 for transitional purposes in cases where trustees or managers of a scheme have treated the scheme as if it were a money purchase scheme.

Part 12 provides transitional, consequential and supplementary arrangements for schemes involved with the Pension Protection Fund (“the PPF”). Regulation 42 provides for a scheme treated as a money purchase scheme to be ineligible for the PPF in relation to periods before 1st April 2015. Regulation 43 validates valuations etc made before the appointed day. Regulation 46 makes transitional provision in relation to levy calculations covering periods before the appointed day. Regulations 44, 45, 47 and 48 provide transitional arrangements for schemes which have been treated as money purchase schemes, or schemes with affected benefits, in relation to periods after the appointed day. Regulations 50 to 56 validate the treatment of affected benefits as money purchase benefits in relation to periods before the appointed day, and also permit those benefits to be discharged as money purchase benefits after the appointed day where specified conditions are met.

Regulation 57 amends the Pension Protection Fund (Entry Rules) Regulations (Northern Ireland) 2005 for transitional purposes to provide for schemes previously treated as money purchase schemes which become eligible schemes. Regulations 58 and 59 make consequential and supplementary amendments to the Pension Protection Fund (Compensation) Regulations (Northern Ireland) 2005, which in turn modify Schedule 6 to the Pensions (Northern Ireland) Order 2005 (“the 2005 Order”). Regulation 60 makes consequential and supplementary amendments to the Pension Protection Fund (Review and Reconsideration of Reviewable Matters) Regulations (Northern Ireland) 2005.

Part 13 sets out transitional arrangements in relation to Part 4 of the 2005 Order. Regulation 62 deals with schemes which are not money purchase schemes but were treated as such before the appointed day. Regulation 63 makes provision for schemes providing non-money purchase benefits which were before the appointed day treated as money purchase benefits. Regulations 64 to 68 provide transitional arrangements, including modification of Part 4 of that Order and of the Occupational Pension Schemes (Scheme Funding) Regulations (Northern Ireland) 2005, for schemes treated as money purchase schemes before the appointed day.

Part 14 makes transitional modifications and consequential and supplementary amendments to the Occupational Pension Schemes (Equal Treatment) Regulations (Northern Ireland) 1995 in relation to affected benefits.

Part 15 provides transitional arrangements in relation to pension sharing activity before the appointed day.

Part 16 makes transitional provision for schemes operating across borders which have been treated as money purchase schemes before the appointed day, but will not be money purchase schemes on or after that day.

Part 17 covers disclosure of information in relation to benefits and schemes which were treated as money purchase before the appointed day. Regulation 72 disapplies specified provisions of the Occupational Pension Schemes (Disclosure of Information) Regulations (Northern Ireland) 1997 and the Occupational and Personal Pension Schemes (Disclosure of Information) Regulations (Northern Ireland) 2014 (“the Disclosure Regulations”) in relation to periods before the appointed day, so as to ensure that trustees or managers of schemes are not required to provide information in relation to a scheme or benefits treated as money purchase. Regulation 73 makes consequential and supplementary amendments to the Disclosure Regulations.

The Pensions (2005 Order) (Commencement No. 15) Order (Northern Ireland) 2014 (S.R. 2014 No. 183 (C. 12)) provides for the coming into operation of Articles 122(10)(a) and 145(3)(b) of the 2005 Order, two of the enabling provisions under which these Regulations are made, on 25th June 2014.

As these Regulations, in so far as they are made under Part 2 of the 1995 Order, Part 5 of the Welfare Reform and Pensions (Northern Ireland) Order 1999 (“the 1999 Order”) and the 2005 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, Article 73(9) of the 1999 Order and Article 289(2)(e) of the 2005 Order.

An assessment of the impact of these Regulations 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 the 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.