Social Security Pensions Act 1975

Part II E+W+S Transfer Values

11 (1) This Part of this Schedule applies to any member of an occupational pension scheme whose pensionable service terminates after the commencement of this Part of this Schedule if—

(a) it terminates at least one year before normal pension age; and

(b) on the date when it terminates—

(i) he has accrued rights to benefit under the scheme; . . . F1

(ii) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F1

(2) For the purposes of this Part of this Schedule . . . F2 , “pensionable service” and “normal pension age” are to be construed in accordance with Schedule 16 to the Social Security Act 1973.

(3) Any reference to a member in the following provisions of this Part of this Schedule is a reference to a member of an occupational pension scheme to whom this Part of this Schedule applies.

Textual Amendments

F1 Sch. 1A para. 11(1)(b)(ii) and word “or” preceding it, repealed (with effect from 28.2.1991) by Social Security Act 1990 (c. 27), Sch. 4, para. 5(4)(c)(i) and Sch. 7

F2 Words repealed (with effect from 28.2.1991) by Social Security Act 1990 (c. 27), Sch. 4, para. 5(4)(c)(ii) and Sch. 7

Modifications etc. (not altering text)

C1 Under reg. 3(10) of S.I. 1987/1116, para. 11 above has effect (27.7.1987) in relation to personal pension schemes as modified by para. 7 of Sch. 4 to that S.I.

12 (1) Subject to the following provisions of this Schedule, a member acquires a right, when his pensionable service terminates, to the cash equivalent at the relevant date of any benefits—

(a) which have accrued to or in respect of him under the applicable rules; . . . F3

(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F3

(2) In this paragraph “the applicable rules” means—

(a) the rules of the scheme, except so far as—

(i) section 41A or 41B above; or

(ii) Part I of this Schedule,

overrides them; and

(b) any provision which the rules of the scheme do not contain but which a scheme must contain if it is to conform with the preservation requirements; and

(c) any provision—

(i) of section 41A or 41B above; or

(ii) of Part I of this Schedule,

which overrides any of the rules of the scheme;

• “the relevant date” means [F4 , subject to regulations under sub-paragraph (2C) below,] the date when the member’s pensionable service terminates or the date of the relevant application, whichever is the later; and

• “the relevant application” means any application which the member has made under paragraph 16 below and which he has not withdrawn.

[F5 (2A) Where a member continues in employment to which a scheme applies after his pensionable service in that employment terminates—

(a) if regulations so provide, he only acquires a right to the cash equivalent of such part of the benefits specified in sub-paragraph (1) above as may be prescribed; and

(b) if regulations so provide, he acquires no right to a cash equivalent.

(2B) Regulations may provide for the purposes of sub-paragraph (2A) above that in prescribed circumstances a number of employments (whether or not consecutive) shall be treated as a single employment.]

[F6 (2C) Regulations—

(a) may provide that a right at the relevant date to the cash equivalent of any part of the benefits specified in sub-paragraph (1) above which but for regulations under the foregoing provisions of this paragraph a member would have on the termination of his pensionable service in an employment to which a scheme applies shall, if his employment terminates at least one year before normal pension age, accrue to him on the date when it terminates and be valued accordingly; and

(b) may substitute, in relation to any case to which the regulations apply—

(i) a new definition of the “relevant date” for the definition in sub-paragraph (2) above, and

(ii) a new definition of “the last option date” for the definition in paragraph 15(2) below.]

(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F7 in sub-paragraph (2) above “the preservation requirements” means the requirements set out in Part I of Schedule 16 to the Social Security Act 1973 as the requirements of Part II of that Act relating to preservation of benefit under occupational pension schemes.

(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F8

Textual Amendments

F3 Sch. 1A para. 12(1)(b) and word “or” preceding it repealed (with effect from 28.2.1991) by Social Security Act 1990 (c. 27), Sch. 4, para. 5(4)(c)(iii) and Sch. 7

F4 Words inserted (with effect from 6.4.1988) by Social Security Act 1988 (c. 7), Sch. 2, para. 3(a)

F5 Sch. 1A paras. 12(2A) and (2B) inserted (with effect from 6.4.1988) by Social Security Act 1986 (c. 50), Sch. 10, para. 30(a)

F6 Sch. 1A para. 12(2C) inserted (with effect from 6.4.1988) by Social Security Act 1988 (c. 7), Sch. 2, para. 3(b)

F7 Words repealed restrospectively by Social Security Act 1986 (c. 50), Sch 10, para. 30(b)

F8 Sch. 1A para. 12(4) repealed restrospectively by Social Security Act 1986 (c. 50), Sch 10, para. 30(b)

Modifications etc. (not altering text)

C2 Under reg. 3(10) of S.I. 1987/1116, Sch. 1A para. 12 has effect (27.7.1987) in relation to personal pension schemes as modified by para. 8 of Sch. 4 to that S.I.

13 (1) A member who acquires a right to a cash equivalent under this Part of this Schedule may only take it by exercising the option conferred by sub-paragraph (2) below.

[X1 (2) Subject to sub-paragraphs (3) and (4) below, the option conferred by this sub-paragraph on any such member is that of requiring the trustees or managers of the scheme of which he is a member to use the cash equivalent to which he has acquired a right in whichever of the ways specified in paragraphs (a), (b) and (c) below he chooses—

(a) for acquiring transfer credits allowed under the rules of [F9 another occupational pension scheme, or for acquiring rights allowed under the rules of a personal pension scheme] whose trustees or managers [F10 , in either case,] are able and willing to accept him and which [F10 , in either case,] satisfies prescribed requirements;

(b) [F11 except in respect of the cash equivalent of his protected rights, if any, under a scheme which is, or was formerly, a money purchase contracted-out scheme] for purchasing from one or more insurance companies such as are mentioned in section 52C (4)(a) above, chosen by the member and willing to accept payment on account of the member from the trustees or managers, one or more annuities which satisfy prescribed requirements;

(c) subject to sub-paragraph (3) below, for subscribing to [F12 other pension arrangements which satisfy prescribed requirements].]

[F13 (2) Subject to sub-paragraphs (3) and (4) below, the option conferred by this sub-paragraph on any such member is that of requiring the trustees or managers of the scheme of which he is a member to use the cash equivalent to which he has acquired a right in whichever of the ways specified in paragraphs (a), (b) and (c) below he chooses—

(a) for acquiring transfer credits allowed under the rules of an occupational pension scheme, or for acquiring rights allowed under the rules of another personal pension scheme whose trustees or managers, in either case, are able and willing to accept him and which, in either case, satisfies prescribed requirements;

(c) subject to sub-paragraph (3) below, for subscribing to other pension arrangements which satisfy prescribed requirements.]

[F14 (2A) Without prejudice to the generality of sub-paragraph (2) above, the powers conferred by that sub-paragraph include power to provide that a scheme, an annuity or pension arrangements must satisfy requirements of the Inland Revenue.]

(3) Except in such circumstances as may be prescribed sub-paragraph (2) above is to be construed as if paragraph (c) were omitted.

(4) A member may exercise the option conferred by sub-paragraph (2) above in different ways in relation to different portions of his cash equivalent, but a member who exercises that option must do so in relation to the whole of his cash equivalent or, where sub-paragraph (5) below applies, in relation to the whole of the sum mentioned in sub-paragraph (6) below.

[X2 (5) Where—

[F15 (a) the trustees or managers of an occupational pension scheme which is not a contracted:-out scheme, or of a personal pension scheme which is not an appropriate scheme, [F16 or of a self-employed pension arrangement within the meaning of regulation 2D of the Occupational Pension Schemes (Transfer Values) Regulations 1985 or regulation 2A of the Personal Pension Schemes (Transfer Values) Regulations 1987] are able or willing to accept a transfer payment only in respect of a member’s rights other than his accrued rights to guaranteed minimum pensions or his protected rights; and

(b) the member has not required the trustees or managers of the scheme from which he is being transferred to use that portion of his cash equivalent that represents guaranteed minimum pensions or protected rights in any of the ways specified in sub-paragraph (2) above.]

paragraph 12 above, this paragraph and paragraph 14 below are to be construed as conferring on the member an option only in respect of the sum mentioned in sub-paragraph (6) below.

(6) The sum referred to in sub-paragraph (5) above is the sum equal to the balance of the cash equivalent to which the member would be entitled if sub-paragraph (5) above did not apply, after deduction of an amount sufficient for the trustees or managers of the scheme from which he is being transferred to meet their liability in respect of his and his widow’s guaranteed minimum pensions [F17 or his protected rights].]

[F18 (5) Where—

(a) the trustees or managers of an occupational pension scheme which is not a contracted-out scheme, or of a personal pension scheme which is not an appropriate scheme, [F19 or of a self-employed pension arrangement within the meaning of regulation 2D of the Occupational Pension Schemes (Transfer Values) Regulations 1985 or regulation 2A of the Personal Pension Schemes (Transfer Values) Regulations 1987] are able or Willing to accept a transfer payment only in respect of a member’s rights other than his protected fights within the meaning given by Schedule 1 to the Social Security Act 1986; and

(b) the member has not required the trustees or managers of the scheme from which he is being transferred to use that portion of his cash equivalent that represents protected rights within the meaning given by Schedule 1 to te Social Security Act 1986 in either of the ways specified in sub-paragraph (2) above,

paragraph 12 above, this paragraph and paragraph 14 below are to be construed as conferring on the member an option only in respect of the sum mentioned in sub-paragraph (6) below.

(6) The sum referred to in sub-paragraph (5) above is the sum equal to the balance of the cash equivalent to which the member would be entitled if sub-paragraph (5) above did not apply, after deduction of an amount sufficient for the trustees or managers of the scheme from which he is being transferred to meet their liability in respect of his protected rights within the meaning given by Schedule 1 to the Social Security Act 1986.]

Editorial Information

X1 Sch. 1A para. 13(2) containing sub-paras (a) and (c) substituted for para. 13(2) containing sub-paras. (a), (b) and (c) (with effect from 6.4.1988) by S.I. 1987/1116, reg. 3(10) and para. 9(a)(b)

X2 Sch. 1A para 13(5)(6) as set out second substituted (with effect from 6.4.1988) for para 13(5)(6) as set out first, by S.I. 1987/1116, Sch. 4 para. 9(c) and (d)

Textual Amendments

F9 Words substituted (with effect from 6.4.1988) by The Personal and Occupational Pension Schemes (Modification of Enactments) Regulations 1987 (S.I. 1987/1116, Sch. 6, para. 1)

F10 Words inserted (with effect from 6.4.1988) by The Personal and Occupational Pension Schemes (Modification of Enactments) Regulations 1987 (S.I. 1987/1116, Sch. 6, para. 1)

F11 Words inserted (with effect from 6.4.1988) by The Personal and Occupational Pension Schemes (Modification of Enactments) Regulations 1987 (S.I. 1987/1116, Sch. 6, para. 2)

F12 Words substituted by Social Security Act 1986 (c. 50), Sch. 10, para. 30(c)(i)

F13 Sch. 1A para. 13(2) containing sub-paras (a) and (c) substituted for para. 13(2) containing sub-paras. (a), (b) and (c) (with effect from 6.4.1988) by S.I. 1987/1116, reg. 3(10) and para. 9(a)(b)

F14 Sch. 1A para. 13(2A) inserted by Social Security Act 1986 (c.50), Sch. 10, para. 30(c)(ii)

F15 Sch. 1A para. 13(5)(a)(b) substituted (with effect from 6.4.1988) by The Personal and Occupational Pension Schemes (Modification of Enactments) Regulations 1987 (S.I. 1987/1116, Sch. 6, para.3)

F16 Words inserted (with effect from 1.7.1988) by The Personal and Occupational Pension Schemes (Transfer to Self- employed Arrangements) Regulations 1988 (S.I. 1988/1016, reg. 4(2)(b))

F17 Words added (with effect from 6.4.1988) by The Personal and Occupational Pension Schemes (Modification of Enactments) Regulations 1987 (S.I. 1987/1116, Sch. 6, para.4)

F18 Sch. 1A para 13(5)(6) as set out second substituted (with effect from 6.4.1988) for para 13(5)(6) as set out first, by S.I. 1987/1116, Sch. 4 para. 9(c) and (d)

F19 Words inserted (with effect from 1.7.1988) by The Personal and Occupational Pension Schemes (Transfer to Self-employed Arrangements) Regulations 1988 S.I. 1988/1016, reg. 4(2)(b)

Modifications etc. (not altering text)

C3 Under reg. 3(10) of S.I. 1987/1116, para. 13(1) and (2) as set out first above have effect (27.7.1987) in relation to personal pension schemes subject to the modifications, specified in para. 9(a) and (b) of Sch. 4 to that S.I., of para. 13(2) as it stood before 6.4.1988. As so modified, para.13(2) reads as set out secondly below

C4 Under reg. 3(10) of S.I. 1987/1116, para. 13 (2A)-(6) above have effect (27.7.1987) in relation to personal pension schemes subject to the modifications, specified in para. 9(c) and (d) of Sch. 4 to that S.I., of para. 13(5) and (6) as it stood before 6.4.88. As so modified para. 13(5) and (6) reads as set out secondly below

C5 Sch. 1A para. 13(6) to be construed (with effect from 21.7.1989) as if references to “widow” included references to widower (and with consequential modifications) by virtue of Social Security Act 1986 (c. 50), s.9(4)(i)

14 (1) [F20 Cash equivalents] are to be calculated and verified in the prescribed manner.

(2) The power to make regulations conferred by sub-paragraph (1) above includes power to provide that cash equivalents are to be calculated and verified in such manner as may be approved in particular cases—

(a) by prescribed persons; or

(b) by persons with prescribed professional qualifications or experience; or

(c) by persons approved by the Secretary of State

[F21 and power to provide that they shall be calculated and verified in accordance with guidance prepared by a prescribed body].

(3) Regulations may provide—

(a) that in calculating cash equivalents account shall be taken—

(i) of any surrender, commutation or forfeiture of the whole or part of a member’s pension which occurs before the trustees or managers of the scheme of which he is a member do what is needed to comply with what he requires under paragraph 16 below;

[X3 (ii) in a case where a paragraph 13(5) above applies, of the need to deduct an appropriate amount to provide guaranteed minimum pensions [F22 or give effect to protected rights]; and]

[F23 (ii) in a case where paragraph 13(5) above applies, of the need to deduct an appropriate amount to make provision for protected rights; and]

[F24 (b) that in prescribed circumstances a cash equivalent shall be increased or reduced.]

(4) Without prejudice to the generality of sub-paragraph (3) above—

(a) the circumstances that may be specified by virtue of paragraph (b) of that sub-paragraph include—

(i) the length of time which elapses between the termination of a member’s pensionable service and his exercise of the option conferred by this Part of this Schedule or regulations under it;

(ii) failure by the trustees or managers of a scheme to do what is needed to carry out what a member of the scheme requires within six months of the date on which they receive an application from him under paragraph 16 below; and

(iii) the state of the funding of a scheme; and

(b) regulations under that sub-paragraph may specify as the amount by which a cash equivalent is to be reduced such an amount that a member has no right to receive anything.

Editorial Information

X3 Sch. 1A, para. 14(3)(a)(ii) as set out second, substituted for para. 14(3)(a)(ii) as set out first, by S.I.1987/1116, Sch. 4, para. 10(a)

Textual Amendments

F20 Words substituted (with effect from 6.4.1988) by Social Security Act 1986 (c. 50), Sch. 10, para. 30(d)(i)

F21 Words added (with effect from 25.7.1986) by Social Security Act 1986 (c.50), Sch. 10, para. 30(d)(ii)

F22 Words inserted (with effect from 6.4.1988) by The Personal and Occupational Pension Schemes (Modification of Enactments) Regulations 1987 (S.I. 1987/1116, Sch. 6, para. 5)

F23 Sch. 1A, para. 14(3)(a)(ii) as set out second, substituted for para. 14(3)(a)(ii) as set out first, by S.I. 1987/1116, Sch. 4, para. 10(a)

F24 Sch. 1A para. 14(3)(b) substituted (with effect from 6.4.1988) by Social Security Act 1986 (c. 50), Sch. 10, para. 30(d)(iii)

Modifications etc. (not altering text)

C6 Under reg. 3(10) of, and para. 10 of Sch. 4 to, S.I. 1987/1116, para. 14 above has effect (27.7.1987) in relation to personal pension schemes subject to the omission of sub-paragraph 14(4)(a)(i), and to the modification, specified in para. 1O(a) of Sch. 4 to that S.I., of sub-para. 14(3)(a)(ii) as it stood before 6.4.1988. As so modified, sub-para. 14(3)(a)(ii) reads as set out second

15 (1) A member may only exercise the option conferred by paragraph 13 above on or before the last option date.

(2) In this paragraph “the last option date” means the date which falls—

(a) one year before the date on which he attains normal pension age, or

(b) six months after the date when his pensionable service terminates, whichever is the later.

(3) A member loses the right to any cash equivalent under this Part of this Schedule—

(a) if his pension or benefit in lieu of a pension or any part of it becomes payable before he attains normal pension age;

(b) if he fails to exercise the option conferred by paragraph 13 above on or before the last option date; or

(c) if the scheme is wound up.

Modifications etc. (not altering text)

C7 Under reg. 3(10) of S.I. 1987/1116, the revised form of para. 15 set out in para. 11 of Sch. 4 to that S.I. has effect (27.7.1987) in relation to personal pension schemes.

C8 (Definition of “the last option date” modified, in certain cases where employment continues after pensionable service in it has terminated, by S.I. 1985/1931, reg. 2C(3))

16 (1) A member may only exercise the option conferred by paragraph 13 above by making an application in writing to the trustees or managers of the scheme.

[X4 (2) In any case where—

(a) a member has exercised that option; and

(b) the trustees or managers of the scheme have done what is needed to carry out what the member requires.

the trustees or managers shall be discharged from any obligation to provide benefits to which the cash equivalent related except, in any [F25 such cases as are] mentioned in paragraph 13(5) above, to the extent that an obligation to provide [F25 such guaranteed minimum pensions or give effect to such protected rights] continues to subsist.]

[F26 (2) In any case where—

(a) a member has exercised that option; and

(b) the trustees or managers of the scheme have done what is needed to carry out what the member requires,

the trustees or managers shall be discharged from any obligation to provide benefits to which the cash equivalent related except, in any such cases as are mentioned in paragraph 1 3(5) above, to the extent that an obligation to make provision for such protected rights continues to subsist.]

(3) If the trustees or managers of a scheme receive an application under this paragraph, it shall be their duty, subject to the following provisions of this paragraph, to do what is needed to carry out what the member requires—

(a) within twelve months of the date on which they receive the application; or

(b) by the date on which the member attains normal pension age, whichever is the earlier.

(4) If—

(a) disciplinary proceedings or proceedings before a court have been commenced against a member at any time before the expiry of the period of twelve months beginning with the date when his pensionable service terminates; and

(b) it appears to the trustees or managers of the scheme of which he is a member that the proceedings may lead to the whole or part of the pension or benefit in lieu of a pension payable to the member or his widow being forfeited,

it shall be the trustees’ or managers’ duty, subject to the following provisions of this paragraph, to do what is needed to carry out what the member requires before—

(i) the date before which they would be obliged to do it under sub-paragraph (3) above; or

(ii) the end of the period of three months after the conclusion of the disciplinary or court proceedings (including any proceedings on appeal),

whichever is the later.

(5) The Occupational Pensions Board may grant an extension of the period within which the trustees or managers of a scheme are obliged to do what is needed to carry out what a member of the scheme requires—

(a) in any case where in the opinion of the Board—

(i) the scheme is being wound up or is about to be wound up;

(ii) the scheme is ceasing to be a contracted-out scheme;

(iii) the interests of the members of the scheme generally will be prejudiced if the trustees or managers of the scheme do what is needed to carry out what is required within that period; or

(iv) the member has not taken all such steps as the trustees or managers can reasonably expect him to take in order to satisfy them of any matter which falls to be established before they can properly carry out what he requires;

(b) in any case where the provisions of section 49 above apply; and

(c) in any case where a request for an extension has been made on a ground specified in paragraph (a) or (b) above, and the Board’s consideration of the request cannot be completed before the end of that period.

(6) A request under sub-paragraph (5) above may only be made by the trustees or managers.

(7) The Board shall have power, if they are satisfied that there has been a relevant change of circumstances since they granted an extension, or that they granted an extension in ignorance of a material fact or on the basis of a mistake as to a material fact—

(a) to direct that the extension shall end on a date earlier than that on which it would otherwise have ended; or

(b) to revoke the grant of the extension.

(8) An application to the trustees or managers of a scheme under this paragraph is to be taken to have been made if it is delivered to them personally, or sent by post in a registered letter or by the recorded delivery service.

Editorial Information

X4 Sch. 1A para. 16(2) as set out second substituted (with effect from 6.4.1988) for para. 16(2) as set out first by S.I. 1987/1116, Sch. 4, para. 12(a)

Textual Amendments

F25 Words substituted (with effect from 6.4.1988) by The Personal and Occupational Pension Schemes (Modification of Enactments) Regulations 1987 (S.I. 1987/1116, Sch. 6, para. 6)

F26 Sch. 1A para. 16(2) as set out second substituted (with effect from 6.4.1988) for para. 16(2) as set out first by S.I. 1987/1116, Sch. 4, para. 12(a)

Modifications etc. (not altering text)

C9 Under reg. 3(10) of S.I. 1987/1116, para. 16(1) and (2) as set out first have effect (27.7.1987) in relation to personal pension schemes subject to the modification, specified in para. 12(a) of Sch. 4 to that S.I., of that part of para. 16(2) which came after the words “an obligation” as it stood before 6.4.1988. As so modified, para. 16(2) reads as set out second

C10 Under reg. 3(10) of S.I 1987/1116, Sch. 1A para. 16(3)-(8) has effect (27.7.1987) in relation to personal pension schemes subject to the modifications, specified in para. 12(b)-(e) of Sch. 4 to that S.I., to paras. 3(b), (4) and (5)

17 (1) Subject to sub-paragraph (2) below, a member of a scheme may withdraw an application under paragraph 16 above by giving the trustees or managers of the scheme notice in writing that he no longer wishes them to do what is needed to carry out what he previously required.

(2) Such a notice shall be of no effect if it is given to the trustees or managers at a time when, in order to comply with what the member previously required, they have already entered into an agreement with a third party to use the whole or part of the member’s cash equivalent in a way specified in paragraph 13(2)(a), (b) or (c) above.

(3) A member who withdraws an application may make another.

(4) A notice to the trustees or managers of a scheme under this paragraph is to be taken to have been given if it is delivered to them personally, or sent by post in a registered letter or by recorded delivery service.

Modifications etc. (not altering text)

C11 Under reg. 3(10) of, and para. 13 of Sch. 4 to, S.I. 1987/1116, paras. 17 and 18 above have effect (27.7.1987) in relation to personal pension schemes, subject to the substitution, in para. 17(2) above, of “13(2)(a) or (c)” for “13(2)(a), (b) or (c)”

18 (1) Subject to sub-paragraph (2) below, this Part of this Schedule overrides any provision of a scheme to the extent that it conflicts with this Part of this Schedule.

(2) This Part of this Schedule does not override any provision of a scheme to the extent that it deals with priorities on a winding-up.

Modifications etc. (not altering text)

C12 Under reg. 3(10) of, and para. 13 of Sch. 4 to, S.I. 1987/1116, paras. 17 and 18 above have effect (27.7.1987) in relation to personal pension schemes, subject to the substitution, in para. 17(2) above, of “13(2)(a) or (c)” for “13(2)(a), (b) or (c)”