PART 11Test Scheme
F1Lump sum test scheme requirements39A
1
For the purposes of section 23(6) of the Act the requirement relating to the sum of money is specified in paragraph (2) in the case of a final salary lump sum test scheme and paragraph (3) in the case of an average salary lump sum test scheme.
2
The requirement for a final salary lump sum test scheme is that the sum of money to be made available for the provision of benefits to a member amounts to 16% of final pensionable pay, multiplied by the number of years of pensionable service up to a maximum of 40 years.
3
The requirement for an average salary lump sum test scheme is that either of the requirements specified in paragraph (4) or paragraph (5) is met.
4
The requirement in this paragraph is that the sum of money to be made available for the provision of benefits to a member amounts to 16% of average annual qualifying earnings during pensionable service multiplied by the number of years of pensionable service up to a maximum of 40 years.
5
The requirement in this paragraph is that the sum of money to be made available for the provision of benefits to a member amounts to the sum of—
a
8% of average annual qualifying earnings during pensionable service multiplied by the number of years of pensionable service up to a maximum of 40 years; plus
b
during any period in which a member is deferred, an amount equal to an annual increase on accrued rights at 3.5% above any increase that is required by virtue of regulation 37(2)(a).
6
For the purposes of paragraphs (4) and (5), average annual qualifying earnings are to be calculated on the basis that each year’s qualifying earnings are revalued during pensionable service at—
a
the minimum rate specified in regulation 36(4), where paragraph (4) applies; and
b
3.5% above the minimum rate specified in regulation 36(4), where paragraph (5) applies.
7
In this regulation—
“average salary lump sum test scheme” means a test scheme falling within section 23(2)(b) of the Act under which the sum of money is determined by reference to average qualifying earnings over the period of pensionable service;
“final pensionable pay” means average annual qualifying earnings in the last three tax years preceding the end of pensionable service; and
“final salary lump sum test scheme” means a test scheme falling within section 23(2)(b) of the Act under which the sum of money is determined by reference to final pensionable pay.