The Pension Protection Fund (Reviewable Ill Health Pensions) Regulations 2005

Explanatory Note

(This note is not part of the Regulations)

These Regulations provide for the review of reviewable ill health pensions by the Board of the Pension Protection Fund (“the Board”), the procedure to be followed in relation to a review and the determination of compensation payable in respect of an ill health pension where the conditions set out in section 141(3) of the Pensions Act 2004 (c. 35) (“the Act”) are satisfied.

The Board is established by section 107 of the Act to provide for compensation for members of certain occupational pension schemes in the event of the insolvency of the scheme's sponsoring employer and where the pension scheme is underfunded at a certain level.

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

Regulation 2 provides that an ill health pension may be reviewed by the Board where the award was made before the end of six months beginning with the assessment date.

Regulation 3 provides that where the Board decides to review an ill health pension it must notify the member entitled to that pension. Paragraph (2) provides that a notice may require the member to produce any document or provide such further information by such time as the Board may specify in the notice.

Regulation 4 provides that the member may be required by the Board to attend a medical examination in certain circumstances.

Regulation 5 provides that where a member fails to produce a document, provide information or attend a medical examination the Board may review the ill health pension based on the information available to it.

Regulation 6 sets out the matters that the Board must take into account in deciding whether the conditions specified in section 141(3)(b) of the Act are satisfied.

Regulation 7 provides that the Board must send a copy of the decision to the member and the trustees or managers of the scheme.

Regulation 8 sets out the matters to be included in the copy of the decision sent to the member and the copy sent to the trustees or managers of the scheme.

Regulation 9 provides that the decision is not binding until the period during which it may be reviewed has expired or any review, reference or appeal has been finally resolved.

Regulation 10 provides that the Board may in certain circumstances reimburse costs reasonably incurred by a member in producing any document, providing any information or attending a medical examination.

Regulation 11 provides that where—

(a)

the conditions set out in section 141(3) of the Act (effect of the review) are satisfied; and

(b)

the Board determines that compensation payable in respect of the pension is to be determined in accordance with these Regulations,

the appropriate percentage for purpose of calculating the annual rate of periodic compensation under paragraph 3 of Schedule 7 shall be nil percent.

Regulation 12 provides that where regulation 11 applies the pensioner is to be treated as being a deferred member of the scheme immediately before the assessment date.

Regulation 13(1) provides that where a person who is treated as being a deferred member of a scheme has received a lump sum under the scheme rules (other than by commutation) he shall not be entitled to lump sum compensation on attaining normal pension age.

Regulation 14 provides that where a person who is treated as being a deferred member of a scheme has already opted to commute part of his pension for a lump sum—

(a)

he shall not be entitled to commute a portion of his periodic compensation; and

(b)

his entitlement to periodic compensation shall be adjusted by reference to amount of the pension commuted under the scheme rules.

Regulation 15 provides that references to “ill health” in Schedule 7 are to be construed as including any reference in the admissible rules of the scheme to illness or physical or mental deterioration resulting in incapacity for employment or a particular form of employment.

As these Regulations are made before the expiry of the period of six months beginning with the coming into force of the provisions of the Act by virtue of which they are made, the requirement for the Secretary of State to consult such persons as he considers appropriate does not apply.

A full regulatory impact assessment has not been produced for this instrument as it has no impact on the costs of business.