Occupational Pension Schemes (Deficiency on Winding Up etc.) Regulations 1996
| Year | 1996 |
1996 No. 3128
PENSIONS
The Occupational Pension Schemes (Deficiency on Winding Up etc.) Regulations 1996
Made 11th December 1996
Laid before Parliament 18th December 1996
Coming into force in accordance with regulation 1(2) to (6)
The Secretary of State for Social Security, in exercise of the powers conferred on him by sections 68(2)(e), 75(5), (9) and (10), 89(2), 118(1)(a) and (b), 119, 124(1), 125(2), (3) and (4)(a) and 174(2) and (3) of the Pensions Act 19951and of all other powers enabling him in that behalf, by this instrument, after consultation with such persons as he considered appropriate2, hereby makes the following regulations: —
Preliminary
Citation and commencement
1.—(1) These Regulations may be cited as the Occupational Pension Schemes (Deficiency on Winding Up etc.) Regulations 1996.
(2) This regulation shall come into force on 19th December 1996.
(3) Subject to paragraphs (2) and (4) to (6) and regulation 6(1) (in so far as it relates to the period there mentioned), these Regulations shall come into force on 6th April 1997.
(4) Regulations 3 to 6 shall not apply where the applicable time falls before that date.
(5) Regulations 3 to 6 shall not apply to any scheme which began to be wound up earlier than 19th December 1996.
(6) Regulations 7 to 9 shall only apply where the act or omission to which the reduction in value is attributable occurred after 5th April 1997.
Interpretation
2.—(1) For the purposes of these Regulations the time when a scheme begins to be wound up shall be determined in accordance with regulation 2 of the Occupational Pension Schemes (Winding Up) Regulations 19963.
(2) In these Regulations, unless the context otherwise requires —
“the applicable time” has the same meaning as in section 75 (but see the modifications in regulations 4(3), 6(3) and 7(2));
“employer” has the same meaning as in section 75 (but see paragraph (4) and regulations 5, 6 and 9);
“the MFR Regulations” means the Occupational Pension Schemes (Minimum Funding Requirement and Actuarial Valuations) Regulations 19964;
“money purchase scheme” has the same meaning as in section 75 (but see paragraph 4 of Schedule 2);
“the Taxes Act” means the Income and Corporation Taxes Act 19885.
(3) References in these Regulations to a relevant insolvency event occurring in relation to an employer have the same meaning as in section 75.
(4) In these Regulations “scheme” must be construed in appropriate cases in accordance with subsections (1B) and (1C) of section 75 (as inserted by regulation 4(2) or, as the case may be, regulation 8) and Schedule 2 (and “employer” and “member” must be construed accordingly).
(5) References in these Regulations to the guidance in GN 19 are to the guidelines on winding up and scheme asset deficiency (GN 19), prepared and published by the Institute of Actuaries and the Faculty of Actuaries6and approved for the purposes of these Regulations by the Secretary of State, with such revisions as have been so approved at the applicable time.
(6) References in these Regulations to the guidance in GN 27 are to the guidelines on minimum funding requirement (GN 27), prepared and published by the Institute of Actuaries and the Faculty of Actuaries6and approved for the purposes of the MFR Regulations by the Secretary of State, with such revisions as have been so approved at the applicable time.
(7) Subject to the previous provisions of this regulation and unless the context otherwise requires —
(a)
(a) expressions used in these Regulations have the same meaning as if they were used in Part I of the Pensions Act 1995; and
(b)
(b) in these Regulations any reference to a section shall be construed as a reference to a section of that Act.
Schemes which are not money purchase schemes
Calculation of the value of scheme liabilities and assets
3.—(1) The liabilities and assets of a scheme which are to be taken into account for the purposes of section 75(1) and their amount or value shall be determined, calculated and verified by the actuary —
(a)
(a) on the general assumptions specified in paragraphs (2) and (3) of regulation 3 of the MFR Regulations;
(b)
(b) subject to paragraphs (3) and (4), in accordance with regulations 4 to 8 of the MFR Regulations;
(c)
(c) subject to sub-paragraph (d), in so far as the guidance given in GN 27 applies as respects regulations 3(2) and (3) and 4 to 8 of the MFR Regulations, in accordance with that guidance; and
(d)
(d) in accordance with the guidance given in GN 19 so far as that guidance applies for the purposes of these Regulations;
and where in these Regulations (or in the MFR Regulations as applied by this paragraph) there is a reference to the value of any asset or the amount of any liability being calculated or verified in accordance with the opinion of the actuary or as he thinks appropriate, he shall comply with any relevant provision in the guidance given in GN 27 or, as the case may be, GN 19 in making that calculation or verification.
(2) The value of the assets and the amount of the liabilities of a scheme which are to be taken into account for the purposes of section 75(1) must be certified by the actuary in the form set out in Schedule 1 to these Regulations, but if the scheme is being wound up on the date as at which the valuation is made, the actuary must modify the note at the end of the certificate by omitting the words from “if the scheme” onwards.
(3) For the purposes of this regulation —
(a)
(a) references in regulations 3(2), 4, 5, 7 and 8 of the MFR Regulations to the relevant date shall be taken as references to the applicable time;
(b)
(b) regulations 4(1), 7(1) and 8(2) of the MFR Regulations shall have effect with the substitution for the words “the minimum funding requirement is met” of the words “the value of the assets of the scheme is less than the amount of the liabilities of the scheme”;
(c)
(c) regulation 6(1)(b) of the MFR Regulations shall have effect with the addition at the end of the words “(and any amount treated as a debt due to the trustees or managers of the scheme under section 75(1) by virtue of the valuation in question)”.
(4) In its application for the purposes of this regulation in a case where the applicable time falls after the scheme has begun to be wound up, regulation 6(1) of the MFR Regulations has effect with the addition after sub-paragraph (c) of the words —
“and for the purposes of sub-paragraph (a), regulation 5(1)(a) of the Occupational Pension Schemes (Investment) Regulations 1996 (exclusion of employer-related investments over 5 per cent. of current market value) shall be disregarded.”.
Multi-employer schemes
4.—(1) In its application to a scheme in relation to which there is more than one employer, section 75 has effect with the following modifications.
(2) After subsection (1) insert —
“1A In the case of a scheme in relation to which there is more than one employer, the amount of the debt due from each employer shall, unless the scheme provides for the total amount of the debt due under subsection (1) to be otherwise apportioned amongst the employers, be such proportion of that total amount as, in the opinion of the actuary after consultation with the trustees or managers, the amount of the scheme’s liabilities attributable to employment with that employer bears to the total amount of the scheme’s liabilities attributable to employment with any of the employers.
1B Where a scheme in relation to which there is more than one employer is divided into two or more sections and the provisions of the scheme are such that —
(a) different sections of the scheme apply to different employers or groups of employers (whether or not more than one section applies to any particular employer or groups including any particular employer);
(b) contributions payable to the scheme by an employer, or by a member in employment under that employer, are allocated to that employer’s section (or, if more than one section applies to the employer, to the section which is appropriate in respect of the employment in question); and
(c) a specified part or proportion of the assets of the scheme is attributable to each section and cannot be used for the purposes of any other section,
each section of the scheme shall be treated as a separate scheme for the purposes of this section.
1C Where —
(a) a scheme which has been such a scheme as is mentioned in subsection (1B) is divided into two or more sections, some or all of which apply only to members who are not in pensionable service under the section; and
(b) the provisions of the scheme have not been amended so as to prevent the conditions mentioned in subsection (lB)(a) to (c) being satisfied in relation to two or more sections; but
(c) those conditions have ceased to be satisfied in relation to one or more sections (whether before or after this section came into force) by reason only of there being no members in pensionable service under the section and no contributions which are to be allocated to it,
the section in relation to which those conditions have ceased to be satisfied shall be treated as a separate scheme for the purposes of this section.”.
(3) For subsection (3) substitute —
“3 In this section “the applicable time” means —
(a) in relation to a scheme which is being wound up, any time —
(i) after the commencement of the winding up, and
(ii) before a relevant insolvency event has occurred in relation to each of the employers to whom the scheme relates; and
(b) in relation to a scheme which is not being wound up —
(i) in relation only to any employer who ceases to be a person employing persons in the description or category of employment to which the scheme relates at a time when at least one other person continues to employ such persons...
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