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The Occupational Pension Schemes (Transfer Values) Regulations 1996

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Regulation 11

SCHEDULE 1E+W+S INFORMATION TO BE MADE AVAILABLE TO MEMBERS

Modifications etc. (not altering text)

C1Sch. 1 applied (with application in accordance with art. 1(2) of the commencing S.I.) by The Divorce etc. (Pensions) Regulations 2000 (S.I. 2000/1123), art. 3(1)(b)(2)(b)reg. 1(1)

1.  Whether any cash equivalent (within the meaning of [F1Chapter 1 of Part 4ZA] of the 1993 Act) is available to the member or would be so available if [F2the conditions specified in section 93(2) to (4) of the 1993 Act were met] and if so—E+W+S

[F3(a)an estimate of its amount, calculated and verified in accordance with regulations 7 to 7E on the basis that [F4the conditions specified in section 93(2) to (4) of the 1993 Act are met or were to be met on a particular date];]

(b)the accrued rights to which it relates;

(c)whether any part of the estimated amount of the cash equivalent is attributable to additional benefits—

(i)which have been awarded at the discretion of the trustees, or

(ii)which will be awarded at their discretion if their established custom continues unaltered

and in either case whether that part is attributable to the whole or only to part of those benefits; [F5and]

F6(d). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(e)if the estimated amount of the cash equivalent [F7included a reduction of the initial cash equivalent under Schedule 1A]—

[F8(i)a statement of that fact, a statement of the amount by which the initial cash equivalent has been reduced and an explanation of the reason for the reduction, which must refer to the paragraph of Schedule 1A relied upon,]

(ii)an estimate of the date (if any) by which it will be possible to make available a cash equivalent which is not so reduced, and

(iii)a statement of the member’s rights to obtain further estimates.

Textual Amendments

2.  Whether any transfer value (not being a cash equivalent within the meaning of [F9Chapter 1 of Part 4ZA] of the 1993 Act) is available to the member or would be so available if the member’s pensionable service were to terminate and if so—E+W+S

(a)an estimate of its amount, calculated on the basis that the member’s pensionable service terminated or will terminate on a particular date;

(b)the accrued rights to which it relates;

(c)whether any part of the estimated amount of the transfer value is attributable to additional benefits—

(i)which have been awarded at the discretion of the trustees, or

(ii)which will be awarded at their discretion if their established custom continues unaltered

and in either case whether that part is attributable to the whole or only to part of those benefits; and

(d)if the estimated amount of the transfer value [F10in relation to the member’s rights to benefits other than money purchase benefits] has been reduced to an amount which is less than it otherwise would be because of an actuary’s opinion that the scheme’s assets are insufficient to meet its liabilities in full—

(i)a statement of that fact and an explanation,

(ii)an estimate of the date (if any) by which it will be possible to make available a transfer value the amount of which is not so reduced, and

(iii)a statement of the member’s rights to obtain further estimates.

Textual Amendments

[F113.  Where information is made available under paragraph 1 or 2 to a member of a salary related scheme, the information to be made available to such a member also includes—E+W+S

(a)a statement that [F12the Financial Conduct Authority], the Regulatory Authority and the [F13Money and Pensions Service] provide information about transfers that may assist the member in deciding whether to transfer;

(b)if the scheme is an eligible scheme as defined in section 126 of the 2004 Act (eligible schemes), confirmation that the scheme is so eligible and that the Board of the Pension Protection Fund exists;

(c)[F14except where section 48 of the Pension Schemes Act 2015 applies,] a recommendation that the member should take financial advice before making decisions about transfers.]

Textual Amendments

[F154.  Where information is made available under this Schedule to a member of a collective money purchase scheme, the information to be made available to such a member also includes—E+W+S

(a)a statement that the Money and Pensions Service provides information about transfers that may assist the member in deciding whether to transfer;

(b)an explanation of any potential adverse consequences for the member of transferring before normal pension age;

(c)an explanation of the trustees’ duties under section 99A of the 1993 Act (trustees’ further duties: collective money purchase benefits);

(d)an explanation that the member will not be able to transfer in the event of the scheme pursuing continuity option 1 within the meaning of sections 34 and 36 of the Pension Schemes Act 2021.]

Textual Amendments

Regulation 7D(1)

[F16 SCHEDULE   1A E+W+SReductions in initial cash equivalents

Textual Amendments

Modifications etc. (not altering text)

C2Sch. 1A modified by SI 2000/1054 reg. 24(2)(c) (as substituted (E.W.S.) (1.10.2008) by Occupational Pension Schemes (Transfer Values) (Amendment) Regulations 2008 (S.I. 2008/1050), reg. 1(1), Sch. 2 para. 7(c))

1.  In a case where two or more paragraphs of this Schedule apply, they must be applied in the order in which they occur in this Schedule.E+W+S

2 .  In the case of a scheme to which Part 3 of the 2004 Act (scheme funding) applies, the member’s initial cash equivalent may be reduced by the trustees if—E+W+S

(a) the insufficiency conditions are met; F17 ...

(b) the insufficiency report has an effective date which is no earlier than the effective date of the most recent actuarial valuation received by the trustees in accordance with section 224(4) of the 2004 Act (scheme funding); [F18and

(c) the guarantee date shown in the statement of entitlement is at least one year before the member attains normal pension age in relation to the rights to benefits covered by the statement of entitlement.]

Textual Amendments

Modifications etc. (not altering text)

C3 Sch. 1A para. 2 modified by SI 2000/1053 reg. 16(2)(a) (as substituted (E.W.S.) (1.10.2008) by Occupational Pension Schemes (Transfer Values) (Amendment) Regulations 2008 (S.I. 2008/1050) , reg. 1(1) , Sch. 2 para. 6(c) )

3 .  The insufficiency conditions are that the last insufficiency report shows that at the effective date of the report—E+W+S

(a)the scheme had assets that were insufficient to cover the insufficiency report liabilities in respect of all the members; and

(b)the assets were insufficient to cover in full any category of insufficiency report liabilities that is an equivalent category of liabilities for benefits in respect of which the member’s cash equivalent is being calculated.

Modifications etc. (not altering text)

C4Sch. 1A para. 3(b) modified by SI 2000/1053 reg. 16(2)(b) (as substituted (E.W.S.) (1.10.2008) by Occupational Pension Schemes (Transfer Values) (Amendment) Regulations 2008 (S.I. 2008/1050), reg. 1(1), Sch. 2 para. 6(c))

4 .  If the insufficiency conditions are met the trustees may reduce, by a percentage not exceeding the deficiency percentage, any part of the member’s initial cash equivalent that is payable in respect of such an equivalent category of liabilities as are mentioned in paragraph 3(b).E+W+S

Modifications etc. (not altering text)

C5Sch. 1A para. 4 modified by SI 2000/1053 reg. 16(2)(c) (as substituted (E.W.S.) (1.10.2008) by Occupational Pension Schemes (Transfer Values) (Amendment) Regulations 2008 (S.I. 2008/1050), reg. 1(1), Sch. 2 para. 6(c))

5 .  The deficiency percentage for any such part of a member’s initial cash equivalent is the percentage by which the insufficiency report shows that the assets were insufficient to cover that category of liabilities.E+W+S

Modifications etc. (not altering text)

C6Sch. 1A para. 5 modified by SI 2000/1053 reg. 16(2)(d) (as substituted (E.W.S.) (1.10.2008) by Occupational Pension Schemes (Transfer Values) (Amendment) Regulations 2008 (S.I. 2008/1050), reg. 1(1), Sch. 2 para. 6(c))

6.  If, by virtue of regulations made under section 232 of the 2004 Act (power to modify provisions of Part 3), Part 3 of that Act applies to a section of a scheme as if that section were a separate scheme, paragraphs 2 and 3 apply as if that section were a separate scheme and as if the reference to a scheme were accordingly a reference to that section.E+W+S

7.  In a case where a contributions equivalent premium has been paid in respect of a member in accordance with section 55 of the 1993 Act (payment of state scheme premiums on termination of certified status), the initial cash equivalent must be reduced (to nil if need be) to the extent that it represents the member’s accrued rights which have been extinguished by virtue of section 60 of the 1993 Act (effect of payment of premiums on rights) by payment of that premium.E+W+S

Modifications etc. (not altering text)

C7Sch. 1A para. 9 modified by SI 2000/1054 reg. 24(2)(f) (as substituted (E.W.S.) (1.10.2008) by Occupational Pension Schemes (Transfer Values) (Amendment) Regulations 2008 (S.I. 2008/1050), reg. 1(1), Sch. 2 para. 7(c))

[F198.  Where—E+W+S

(1) The cash equivalent shown in a member’s statement of entitlement—

(i)relates to safeguarded benefits, as defined in [clause 48(8)] of the Pension Schemes Act 2015; and

(ii)is to be used for acquiring transfer credits in relation to safeguarded benefits under the rules of another scheme; and

(2) The receiving scheme has undertaken to provide benefits at least equal in value to the benefits represented by that cash equivalent on payment of a lesser sum (including nil),

the initial cash equivalent may be reduced so that the cash equivalent is that lesser sum.]

Textual Amendments

F20 9 .  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .E+W+S

Textual Amendments

10.  Where all or any of a member’s benefits have been appropriately secured, the initial cash equivalent in respect of those benefits must be reduced so that the cash equivalent is nil.E+W+S

11.  For the purposes of paragraph 10, “appropriately secured” means the same as in section 19 of the 1993 Act (discharge of liability where guaranteed minimum pensions secured by insurance policies or annuity contracts), except that a policy of insurance or annuity contract which is taken out or entered into with an authorised friendly society (as defined for the purposes of regulation 6 of the Occupational Pension Schemes (Preservation of Benefit) Regulations 1991 (means of assuring short service benefit)), but which otherwise satisfies the conditions for being appropriate for the purposes of section 19 of that Act, is to be treated as if it were appropriate for the purposes of that section provided the terms of such policy or contract are not capable of being amended, revoked or rescinded.E+W+S

12 .  Where a scheme has (in the case of a cash equivalent mentioned in section 93A of the 1993 Act, before the guarantee date) begun to be wound up, an initial cash equivalent may be reduced to the extent necessary for the scheme to comply with the winding up provisions (as defined in section 73B(10)(a) of the 1995 Act) and regulations made under those provisions.E+W+S

Modifications etc. (not altering text)

C8Sch. 1A para. 12 modified by SI 2000/1054 reg. 24(2)(g) (as substituted (E.W.S.) (1.10.2008) by Occupational Pension Schemes (Transfer Values) (Amendment) Regulations 2008 (S.I. 2008/1050), reg. 1(1), Sch. 2 para. 7(c))

C9Sch. 1A para. 12 modified by SI 2000/1052 reg. 4(4)(e) (as substituted (E.W.S.) (1.10.2008) by Occupational Pension Schemes (Transfer Values) (Amendment) Regulations 2008 (S.I. 2008/1050), reg. 1(1), Sch. 2 para. 5(b))

13.  If, by virtue of regulations made under section 73B(4)(b)(i) of the 1995 Act (sections 73 and 73A: supplementary) by virtue of section 73B(5) of that Act, the winding up provisions (as so defined) apply to a section of a scheme as if that section were a separate scheme, paragraph 12 applies as if that section were a separate scheme and as if the references to a scheme were accordingly references to that section.E+W+S

14.  Where all or any of the benefits to which an initial cash equivalent relates have been surrendered, commuted or forfeited before the date on which the trustees do what is needed to carry out what the member requires, the initial cash equivalent of the benefits so surrendered, commuted or forfeited must be reduced so that the cash equivalent is nil.E+W+S

15.  The trustees may reduce an initial cash equivalent to reflect any reasonable administration costs were the member to leave the scheme and must offset against these costs any reasonable administrative savings.E+W+S

Regulations 7D(2) and 7E(4)

SCHEDULE 1BE+W+SInsufficiency Reports

1.  Where the trustees have requested an insufficiency report under regulation 7D(2) or 7E(4), the actuary is responsible for the preparation of the report.E+W+S

2.  The insufficiency report must contain—E+W+S

(a)a comparison, as at the effective date of the report, between the insufficiency report liabilities of all members and the market value of the assets of the scheme; and

(b)a statement of any allowance the actuary makes under paragraph 3.

3.  The actuary may deduct from the assets of the scheme an allowance which—E+W+S

(a)is of such amount as he considers reasonable in the circumstances of the scheme; and

(b)represents the expenses associated with wind up.

4.  Where it appears to the actuary that the circumstances are such that it is appropriate, he may exclude any rights under an insurance policy from the scheme assets.E+W+S

5.  Where rights under an insurance policy are excluded under paragraph 4, the liabilities secured by the policy must be disregarded for the purposes of the insufficiency report.E+W+S

6.  The value of any rights under an insurance policy included in the scheme assets must be the value the actuary considers appropriate.E+W+S

7.  The insufficiency report liabilities are—E+W+S

(a)for active members with vested rights, calculated and verified in accordance with regulations 7 to 7E and Schedule 1A as appropriate except that—

(i)paragraphs 2 to 6 of Schedule 1A are to be disregarded;

(ii)references to “guarantee date” are to be taken to mean the effective date of the report; and

(iii)it is to be assumed that the member ceases pensionable service on the effective date;

(b)for deferred members, calculated and verified in accordance with regulations 7 to 7E and Schedule 1A as appropriate except that—

(i)paragraphs 2 to 6 of Schedule 1A are to be disregarded; and

(ii)references to “guarantee date” are to be taken to mean the effective date of the report;

(c)for pensioner members, calculated and verified in accordance with regulations 7 to 7C as appropriate except that references to “guarantee date” are to be taken to mean the effective date of the report;

(d)for members over normal pension age not in receipt of a pension, calculated and verified—

(i)in the same way as those of pensioner members; and

(ii)on the assumption that the member’s pension comes into payment on the effective date of the report;

(e)for pension credit members, calculated and verified in accordance with regulations 7 to 7E and Schedule 1A as appropriate except that—

(i)paragraphs 2 to 6 of Schedule 1A are to be disregarded; and

(ii)references to “guarantee date” are to be taken to mean the effective date of the report; and

(f)for members with unvested rights, equal to the amount of the unvested contributions and the actuary is to assume that the member ceases pensionable service on the effective date of the report.

8.  When preparing the insufficiency report—E+W+S

(a)the actuary must make estimates comparing the relevant assets with the relevant liabilities of the scheme in respect of each category of liability;

(b)for the purposes of sub-paragraph (a), the actuary may use one or more categories of liability;

(c)where the actuary uses more than one category, he must have regard to the priority order on winding up specified in section 73(3) of the 1995 Act (preferential liabilities on winding up); and

(d)in determining the extent and content of the category or categories of liabilities, the actuary may use such approximations as he considers reasonable.

9.  In this Schedule—E+W+S

“relevant assets” means, subject to paragraphs 2(b) to 6, for a particular category of liability, the market value of the scheme assets, less the total of the relevant liabilities for all categories with greater priority under the priority order and are not to exceed the maximum of the relevant liabilities for that category.

“relevant liabilities” means, for a particular category of liability, the sum of all insufficiency report liabilities falling into that category.]

Regulation 21

SCHEDULE 2E+W+S TRANSITIONAL PROVISIONS

In the case of an application such as is mentioned in regulation 21(2), the Occupational Pension Schemes (Transfer Values) Regulations 1985 are modified as follows—

(a)after regulation 4(3A) there shall be inserted—

“(3B) Paragraphs (3) and (3A) shall not apply after the expiry of the first period within which the trustees are required under section 57 of the Pensions Act 1995 to obtain an actuarial valuation (as defined in section 56(5)(c) of that Act) nor where the trustees have obtained such a valuation within that period.”;

(b)in regulation 3(2)(b)(ii) for the words “current at the date of the calculation" there shall be substituted the words “current on 5th April 1997".

Regulation 21

SCHEDULE 3E+W+S REVOCATIONS

(1)(2)(3)
Statutory Instrument NumberStatutory InstrumentProvision revoked
S.I. 1985/1931The Occupational Pension Schemes (Transfer Values) Regulations 1985The whole of the Regulations
S.I. 1986/751The Occupational Pension Schemes (Revaluation and Transfer Values) Amendment Regulations 1986The whole of the Regulations
S.I. 1986/2171The Occupational Pension Schemes (Miscellaneous Amendments) Regulations 1986Regulation 4
S.I. 1987/1107The Occupational Pension Schemes (Transfer Values) Amendment Regulations 1987The whole of the Regulations
S.I. 1987/1114The Personal and Occupational Pension Schemes (Consequential Provisions) Regulations 1987Regulation 8
S.I. 1988/474The Personal and Occupational Pension Schemes (Tax Approval and Miscellaneous Provisions) Regulations 1988Regulation 3
S.I. 1988/476The Occupational Pension Schemes (Miscellaneous Amendments) Regulations 1988Regulation 3
S.I. 1988/523The Occupational Pension Schemes (Transfer Values) Amendment Regulations 1988The whole of the Regulations
S.I. 1988/1016The Personal and Occupational Pension Schemes (Transfer to Self-employed Pension Arrangements) Regulations 1988Regulation 2
S.I. 1990/1142The Personal and Occupational Pension Schemes (Miscellaneous Amendments) (No. 2) Regulations 1990Regulation 5
S.I. 1991/167The Occupational Pension Schemes (Preservation of Benefit) Regulations 1991Schedule 1, paragraph 2
S.I. 1994/1062The Occupational and Personal Pension Schemes (Consequential Amendments) Regulations 1994Schedule 2, paragraph 7

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