Contracting-out (Transfer and Transfer Payment) Regulations 1996
| Year | 1996 |
1996 No. 1462
PENSIONS
The Contracting-out (Transfer and Transfer Payment) Regulations 1996
Made 5th June 1996
Laid before Parliament 11th June 1996
Coming into force 6th April 1997
The Secretary of State for Social Security, in exercise of the powers conferred on him by sections 12C(1)(a)1, 20(1), (2) and (3), 181(1)2and 182(2) and (3) of the Pension Schemes Act 19933and of all other powers enabling him in that behalf, after agreement with the Occupational Pensions Board that certain proposals within these Regulations need not be referred to them, by this instrument, which otherwise contains regulations made only for the purpose of consolidating regulations revoked by them and regulations made under section 12C(1)(a) of the Pension Schemes Act 1993 as inserted by section 136 of the Pensions Act 19954and which are made before the end of the period of 6 months beginning with the coming into force of that section5, hereby makes the following Regulations:
PART I
GENERAL
Citation, commencement and interpretation
1.—(1) These Regulations may be cited as the Contracting-out (Transfer and Transfer Payment) Regulations 1996 and shall come into force on 6th April 1997.
(2) In these Regulations—
“the 1993 Act” means the Pension Schemes Act 1993;
“accrued rights”, for the purposes of Parts II and IV of these Regulations, has the meaning given to that expression in section 20(6) of the 1993 Act;
“appropriate personal pension scheme” shall be construed in accordance with section 7 of the 1993 Act6;
“appropriate policy” means a policy of insurance or an annuity contract such as is described in section 19(4) of the 1993 Act;
“appropriately secured” has the meaning given to that expression in section 19(3) of the 1993 Act;
“connected employer transfer” and “connected employer transfer payment” mean respectively a transfer of guaranteed minimum pensions from a salary-related contracted-out scheme to a salary-related contracted-out scheme and a transfer payment in respect of section 9(2B) rights from a salary-related contracted-out scheme to a salary-related contracted-out scheme where either—
(a) the transferring scheme and the receiving scheme apply to employment with the same employer; or
(b) the transferring scheme and the receiving scheme apply to employment with different employers, the earner or person concerned is one of a group of persons in respect of whom transfers or transfer payments are being made from the transferring scheme to the receiving scheme and either—
(i) the transfer or transfer payment is a consequence of a financial transaction between the employers,
(ii) each of the employers is one of a group of companies consisting of a holding company and one or more subsidiaries within the meaning of section 736 of the Companies Act 19857, or
(iii) the employers are associated employers within the meaning of section 590A(3) and (4) of the Income and Corporation Taxes Act 19888;
“earner” includes an earner who is not in employment at the time of the transfer or transfer payment;
“money purchase contracted-out scheme” means an occupational pension scheme which is contracted-out by virtue of satisfying section 9(3) of the 1993 Act9;
“overseas arrangement” means a scheme or arrangement, other than an occupational pension scheme, which—
(a) has effect, or is capable of having effect, so as to provide benefits on termination of employment or on death or retirement to or in respect of earners;
(b) is not an appropriate personal pension scheme; and
(c) is administered wholly or primarily outside the United Kingdom;
“overseas scheme” means an occupational pension scheme which is administered wholly or primarily outside the United Kingdom but does not include one which is contracted-out within the meaning of section 7(3) of the 1993 Act nor one in respect of which section 53 of the 1993 Act10applies;
“the principal appointed day” has the meaning given to that expression in section 7(2B) of the 1993 Act11;
“protected rights” has the meaning given to that expression in section 10 of the 1993 Act12;
“salary-related contracted-out scheme” means an occupational pension scheme which is contracted-out by virtue of satisfying section 9(2) of the 1993 Act13;
“scheme” means an occupational pension scheme or a personal pension scheme;
“section 9(2B) rights” are—
(a) rights (other than rights attributable to voluntary contributions within the meaning of section 111 of the 1993 Act) which are attributable to an earner’s service on or after the principal appointed day in employment which is contracted-out in accordance with section 9(2B) of the 1993 Act14; and
(b) where a transfer payment has been made to a salary-related scheme in respect of rights mentioned in paragraph (a) or of post-97 protected rights (as defined in regulation 1(2) of the Protected Rights (Transfer Payment) Regulations 199615), any rights arising under that scheme as a consequence of that payment or, where only part of it was made in respect of such rights, of that part of it;
“trustees”, in relation to a scheme which is not set up or established under a trust, means the managers of the scheme.
PART II
TRANSFERS OF AND TRANSFER PAYMENTS IN RESPECT OF GUARANTEED MINIMUM PENSIONS
General
2.—(1) A transfer or transfer payment from an occupational pension scheme of or in respect of the accrued rights of an earner to guaranteed minimum pensions may be made in accordance with whichever of regulations 3 to 6 is applicable and no such transfer or transfer payment may otherwise be made from such a scheme.
(2) A transfer or transfer payment from an appropriate policy of or in respect of the accrued rights of an earner to guaranteed minimum pensions which are appropriately secured may be made in accordance with whichever of regulations 3, 5 or 6 is applicable and no such transfer or transfer payment may otherwise be made from such a policy.
(3) A transfer of liability for the payment of guaranteed miniumum pensions to or in respect of any person who has become entitled to them may be made from an occupational pension scheme in accordance with whichever of regulations 3 or 4 is applicable and no such transfer may be made otherwise.
(4) In regulations 3 to 6 “transfer” means a transfer, of accrued rights or liability, such as is described in this regulation and “transfer payment” means a payment in respect of accrued rights such as is described in this regulation.
Transfers of guaranteed minimum pensions to salary-related contracted-out schemes
3. A transfer may be made to a salary-related contracted-out scheme if—
(a) the earner or person concerned consents in writing;
(b) in the case of a transfer of the accrued rights of an earner—
(i) the earner is employed by an employer who is a contributor to the receiving scheme, or
(ii) the earner has previously been a member of the receiving scheme;
(c) in the case of a transfer of the accrued rights of an earner who is not in employment which is contracted-out by reference to the receiving scheme, the conditions specified in paragraphs 1 to 4 of Schedule 1 are satisfied, unless the transfer is from an appropriate policy in which case the condition set out in paragraph 5 of Schedule 1 must be satisfied;
(d) in the case of a transfer of the accrued rights of an earner from an appropriate policy, the receiving scheme does not make provision under section 16(2) and (3) of the 1993 Act16(revaluation of earnings factors for purposes of section 14: early leavers etc.), or any analogous provision, in relation to the rights transferred where the effect would be to increase them at a different rate from that at which they would have been increased had the transfer not taken place; and
(e) in the case of a transfer of liability for the payment of guaranteed minimum pensions to or in respect of a person who has become entitled to them, the transfer is from a scheme and the conditions set out in paragraph 6 of Schedule 1 are satisfied.
Connected employer transfers of guaranteed minimum pensions
4. A connected employer transfer may be made to a salary-related contracted-out scheme subject to the conditions set out in regulation 3(c) and (e).
Transfer payments in respect of guaranteed minimum pensions to money purchase contracted-out schemes and appropriate personal pension schemes
5. A transfer payment may be made to a money purchase contracted-out scheme or an appropriate personal pension scheme if—
(a) the earner consents in writing;
(b) if the transfer payment is to a money purchase contracted-out scheme—
(i) the earner is employed by an employer who is a contributor to the receiving scheme, or
(ii) the earner has previously been a member of the receiving scheme;
(c) the transfer payment is applied so as to provide money purchase benefits under the receiving scheme for or in respect of the earner; and
(d) the transfer payment (whether or not it forms part of a larger payment in respect of both guaranteed minimum pensions and other rights) is of an amount at least equal to the cash equivalent of the earner’s accrued rights to guaranteed minimum pensions, as calculated and verified in a manner consistent with regulations made under section 97 of the 1993 Act17(calculation of cash equivalents).
Transfer payments in respect of guaranteed minimum pensions to overseas schemes
6. A transfer payment may be made to an overseas scheme if—
(a) the earner consents in writing;
(b) the trustees of the...
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