The Parliamentary Pensions (Amendment) Regulations 2009

EXPLANATORY NOTE

(This note is not part of the Regulations)

These Regulations amend the Parliamentary Pensions (Consolidation and Amendment) Regulations 1993 (S.I. 1993/3253) (“the Principal Regulations”), which were made under the Parliamentary and other Pensions Act 1987 (c.45) (“the 1987 Act”) and set out a pension scheme for Members of Parliament, Ministers and holders of certain offices.

Regulation 1 provides for citation, commencement, interpretation and application. The Regulations come into force on 1st September 2009. Most of the Regulations make changes to the provisions for payment of ill-health pensions and only apply to persons who are serving as Members of the House of Commons or office holders on or after 1st September 2009. They do not apply to any member who, before 31st May 2009, was granted ill-health retirement under regulation J1(3) with effect from a future date.

Regulation 1(5) (insofar as it inserts a definition of “the Principal Regulations”) and regulation 14 take effect from 6th April 2006. Regulation 11 takes effect from 1st October 2008. Section 2(4)(b)(i) of the 1987 Act authorises the making of provisions taking effect from a date earlier than the date the Regulations are made.

Regulation 2 amends regulation F8 of the Principal Regulations, to clarify that the requirement for a pension to continue for the life of the payee is subject to new regulation J6, which provides that an ill-health pension may be terminated or reduced in certain circumstances.

Regulation 3 amends regulation J1 of the Principal Regulations, which sets out the circumstances in which an ill-health pension may be paid in respect of a Member who retires because of ill-health. It also applies where an office holder retires and has accrued a period of past service as a Member. The amendments require an applicant for an ill-health pension to certify certain matters to the Trustees in order to qualify for an ill-health pension. They also put in place a two tier system for ill-health pensions. Where an applicant satisfies the Trustees that he is incapable of any work, he will be entitled to an upper tier ill-health pension, based on service that he would have completed if he had continued working to age 65. Where an applicant satisfies the Trustees that he is unable to perform his duties as an MP because of ill-health, but does not satisfy them that he is incapable of any work, he will be entitled to a lower tier ill-health pension, based on actual, rather than enhanced, service.

Regulation 4 amends regulation J2 of the Principal Regulations to make similar changes to the circumstances in which an ill-health pension is payable in respect of service as an office holder. Service as an office holder only gives rise to entitlement to a lower tier ill-health pension, based on actual service.

Regulation 5 amends regulation J3 of the Principal Regulations in relation to ill-health pensions for former MPs. The eligibility requirements are amended, in line with amendments made to regulations J1 and J2, although there is no system of two tier ill-health pensions for former MPs.

Regulation 6 makes similar amendments to regulation J4 of the Principal Regulations in relation to ill-health pensions for former office holders.

Regulation 7 omits regulation J4A of the Principal Regulations. This was inserted to ensure compliance with the tax simplification regime for pension schemes in the Finance Act 2004 but is not needed as it is covered by other provisions.

Regulation 8 substitutes regulation J5 of the Principal Regulations to clarify what evidence is required in order for the Trustees to be satisfied that a person is eligible for ill-health early retirement.

Regulation 9 inserts two new regulations. Firstly, new regulation J5A sets out definitions of “gainful work” and “permanent” which are used throughout Section J. Secondly, new regulation J6 makes provision for the Trustees to review an ill-health pension payable to a person aged under 65 and terminate or reduce it where they consider that the pensioner no longer satisfies the conditions for payment of that pension (for example because they have recovered).

Regulation 10 makes a consequential change to regulation K4 of the Principal Regulations to reflect the changes made to Section J.

Regulation 11 amends regulation P5, to reflect changes made to the legislation on calculation of pension scheme transfer values, made by the Occupational Pension Schemes (Transfer Values) (Amendment) Regulations 2008 (S.I. 2008/1050). This amendment takes effect from 1st October 2008, which is when the changes to the transfer value regulations came into force.

Regulation 12 amends regulation P8, to change the circumstances in which an MP or office holder may pay a transfer from a personal pension scheme or a voluntary contribution scheme into the MPs’ pension scheme.

Regulation 13 makes a consequential change to regulation T3 of the Principal Regulations which arises as a result of the introduction of a two tier ill-health pension for MPs.

Regulation 14 amends the definition of “retained benefits” in Schedule 2 of the Principal Regulations, which are benefits that are taken into account when calculating the maximum pension payable to a member by the scheme. The amendment clarifies that any benefits financed by the MP’s or office holder’s salary should not count as retained benefits. This amendment takes effect from 6th April 2006, when the definition of “retained benefits” was previously amended.

Regulation 15 makes a consequential change to Schedule 6 of the Principal Regulations, also to reflect the introduction of a two tier ill-health pension for MPs.

Regulation 16 sets out the provisions that will apply in relation to the pension payable to a member who, before 31st May 2009, was granted ill-health retirement with effect from a future date under regulation J1(3).

An impact assessment has not been produced for this instrument as no impact on the private or voluntary sectors is foreseen.