Occupational Pension Schemes (Winding Up) Regulations 1996
| Year | 1996 |
1996 No. 3126
PENSIONS
The Occupational Pension Schemes (Winding Up) Regulations 1996
Made 11th December 1996
Laid before Parliament 18th December 1996
Coming into force 6th April 1997
The Secretary of State for Social Security, in exercise of the powers conferred on him by sections 97(1) and (2), 113(1)(d), 168, 181(1) and 182(2) and (3) of the Pension Schemes Act 19931and sections 38(3)(b), 49(2)(b), (3) and (4), 68(2)(e), 73(3) and (7) to (9), 74(2), (3)(a) to (d) and (5)(b), 118(1)(a) and (b), 119, 124(1), 125(2) and (3) and 174(2) to (4) of the Pensions Act 19952and of all other powers enabling him in that behalf, the Occupational Pensions Board having agreed that the proposals to make these regulations, to the extent that they are made under the Pensions Schemes Act 1993, need not be referred to them3and the Secretary of State having consulted with such persons as he considered appropriate4, by this instrument hereby makes the following regulations:—
Preliminary
Citation, commencement and interpretation
1.—(1) These Regulations may be cited as the Occupational Pension Schemes (Winding Up) Regulations 1996 and shall come into force on 6th April 1997.
(2) These Regulations do not apply to any scheme which has begun to be wound up before that date.
(3) 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 is a reference to a section of that Act.
(4) In these Regulations “the MFR Regulations” means the Occupational Pension Schemes (Minimum Funding Requirement and Actuarial Valuations) Regulations 19965.
(5) References in these Regulations to the guidance given 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, as they apply as respects schemes of the description in question with such revisions as have been so approved as at the date as at which the valuation in question is made.
Commencement of winding up
2.—(1) For the purposes of these Regulations, the time when a scheme begins to be wound up shall be determined in accordance with this regulation.
(2) Subject to paragraphs (3) and (5), where the rules of the scheme require or permit the scheme to be wound up and the scheme is wound up under those rules, the scheme begins to be wound up—
(a)
(a) either—
(i) at such time as the rules provide that it does so, or
(ii) if the rules make no provision as to that time, at such time as the trustees determine that the scheme shall begin to be wound up; or
(b)
(b) as soon as there are no members who are in pensionable service under the scheme,
whichever is the later.
(3) Where the rules of the scheme require or permit the scheme to be wound up, but the trustees determine in pursuance of section 38 or otherwise that the scheme is not for the time being to be wound up, then for the purposes of paragraph (2), in so far as any provision made by the rules of the scheme as to the time when it begins to be wound up is inconsistent with the trustees' determination, that provision shall be disregarded.
(4) Where under the rules of the scheme any person other than the trustees may determine that the scheme is to be wound up, or is not to be wound up for the time being, then the references in paragraphs (2)(a)(ii) and (3) to the trustees' determination shall be taken, in a case where the winding up begins or is deferred by virtue of that other person’s determination, as a reference to his determination; and this paragraph applies where such a power is vested in the trustees jointly with another person, or in some but not all of the trustees, as it applies where such a power is vested only in a person other than the trustees.
(5) Where—
(a)
(a) a scheme is wound up in pursuance—
(i) of an order of the Authority under section 11, or
(ii) of an order of a court; and
(b)
(b) the order makes provision as to the time at which the scheme is to begin to be wound up,
the scheme begins to be wound up at the time specified in the order or, if none is so specified, the date on which the order takes effect.
Preferential liabilities on winding up
Modifications of s. 73(3)
3.—(1) Section 73(3) applies—
(a)
(a) in all cases subject to the modifications mentioned in paragraphs (3) and (4);
(b)
(b) in the case of a scheme which begins to be wound up before the expiry of the transitional period, subject to the modifications mentioned in paragraphs (5) and (6); and
(c)
(c) in the case of a scheme which begins to be wound up after the expiry of that period, subject to the modification mentioned in paragraph (7).
(2) For the purposes of paragraph (1), the transitional period is—
(a)
(a) the period of 10 years beginning with 6th April 1997; or
(b)
(b) in the case of a scheme—
(i) to which regulation 16(2) of the MFR Regulations applies (extension of period covered by schedule of contributions where minimum funding valuation shows minimum funding requirement not met), and
(ii) the schedule period in relation to which has been extended under regulation 25 or 27 of those Regulations (extension by the Authority),
that extended schedule period;
and in this paragraph “the schedule period” has the same meaning as in the MFR Regulations.
(3) After paragraph (a) of section 73(3) there shall be inserted—
“(aa)
“(aa) where—
(i) the trustees or managers of the scheme are entitled to benefits under a contract of insurance which was entered into before 6th April 1997 with a view to securing the whole or part of the scheme’s liability for any pension or other benefit payable in respect of one particular person whose entitlement to payment of a pension or other benefit has arisen and for any benefit which will be payable in respect of that person on his death, and
(ii) either that contract may not be surrendered or the amount payable on surrender does not exceed the liability secured by the contract (but excluding liability for increases to pensions),
the liability so secured”.
(4) In section 73(3)(b)—
(a)
(a) at the beginning there shall be inserted the words “in a case not falling within paragraph (aa),”; and
(b)
(b) for the words “to dependants” there shall be substituted the words “in respect”.
(5) For paragraphs (c) and (d) of section 73(3) there shall be substituted—
“(c)
“(c) any liability—
(i) for equivalent pension benefits (within the meaning of section 57(1) of the National Insurance Act 1965), guaranteed minimum pensions, protected rights or section 9(2B) rights (within the meaning of regulation 1(2) of the Contracting-out (Transfer and Transfer Payments) Regulations 19967) (but excluding increases to pensions), or
(ii) in respect of members with less than two years pensionable service who are not entitled to accrued rights under the scheme, for the return of contributions,
(d)
(d) any liability for increases to pensions referred to in paragraphs (aa) and (b),
(e)
(e) any liability for increases to pensions referred to in paragraph (c),
(f)
(f) so far as not included in paragraph (c) or (e), any liability for pensions or other benefits which have accrued to or in respect of any members of the scheme (including increases to pensions).”.
(6) In the words following paragraph (f) of section 73(3) (as inserted by paragraph (5)), for the words “paragraphs (b) to (d)” there shall be substituted the words “paragraphs (aa) to (f)”.
(7) In the words following paragraph (d) of section 73(3) for the words “paragraphs (b) to (d)” there shall be substituted the words “paragraphs (aa) to (d)”.
(8) In the case of any scheme to which section 73(3) applies with the modifications mentioned in paragraphs (5) and (6), regulations 7(3)(b)(iv) and 8(4) of the Occupational Pension Schemes (Transfer Values) Regulations 19968have effect with the insertion after “(c)(i)” of “(e)” and with the substitution for “(d)” of “(f)”.
Calculation of amounts of liabilities
4.—(1) Subject to paragraphs (4) and (5), for the purposes of section 73(2) the amounts of the liabilities mentioned in section 73(3) shall be calculated and verified by the actuary of the scheme—
(a)
(a) on the assumption that the questions whether or not a person’s entitlement to payment of a pension or other benefit has arisen and whether any amount must be treated as an increase or as part of a pension are to be determined as at the crystallisation date;
(b)
(b) on the assumption that liabilities in respect of members do not include the expenses involved in meeting them;
(c)
(c) subject to paragraph (3), in the manner specified in regulations 7(2), (3) and (7) to (10) and 8(2) of the MFR Regulations (so far as they relate to the calculation and verification of liabilities); and
(d)
(d) otherwise in accordance with the guidance given in GN 19 (so far as it applies for the purposes of these Regulations).
(2) Such a calculation must be accompanied by a statement that it is in accordance with the guidance mentioned in paragraph (1)(d).
(3) For the purposes of this regulation, regulations 7 and 8 of the MFR Regulations are modified as follows—
(a)
(a) references in regulations 7(3), (7) and (8) and 8(2) to the relevant date shall be taken as references to the date as at which the calculation is made (being a date not earlier than the crystallisation date or the commencement of winding up, if later);
(b)
(b) in regulation 7(3) the words “subject to paragraphs (4) and (5)” shall be omitted; and
(c)
(c) paragraph (i) of regulation 8(2)(a) shall be omitted.
(4) If, when the assets of the scheme are applied in accordance with section 73(2) towards satisfying any...
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