Part 2

Automatic enrolment

Test scheme standard for schemes that produce sum of money for provision of benefits
11
1
In section 22 of the 2008 Act (test scheme standard) after subsection (7) insert—
8
In the case of a scheme under which a sum of money is made available for the provision of benefits to a relevant member, references in this section to pensions are to be read as references to such sums.
2
For section 23 of the 2008 Act substitute—

Test scheme
23
1
A test scheme is an occupational pension scheme which satisfies—
a
the requirement in subsection (2),
b
the requirement in subsection (4) or requirements prescribed under subsection (6) (as appropriate), and
c
any further requirements that are prescribed.
2
The scheme must either—
a
provide for a member to be entitled to a pension commencing at the appropriate age and continuing for life, or
b
provide for a sum of money to be made available for the provision of benefits to a member commencing at the appropriate age and continuing for life.
3
The appropriate age is 65 or any higher age prescribed.
4
In the case of a scheme that provides entitlement to a pension as mentioned in subsection (2)(a), the annual rate of the pension at the appropriate age must be—
a
1/120th of average qualifying earnings in the last three tax years preceding the end of pensionable service,
multiplied by
b
the number of years of pensionable service, up to a maximum of 40.
5
Section 13(1) (qualifying earnings) applies for the purposes of subsection (4) as if the reference to a pay reference period were a reference to a tax year.
6
In the case of a scheme that provides for a sum of money to be made available as mentioned in subsection (2)(b), regulations must prescribe requirements relating to that sum.