Money Purchase Contracted-out Schemes Regulations 1987

JurisdictionUK Non-devolved
CitationSI 1987/1101

1987 No. 1101

PENSIONS

The Money Purchase Contracted-out Schemes Regulations 1987

Made 25th June 1987

Laid before Parliament 6th July 1987

Coming into force 6th April 1988

The Secretary of State for Social Services, in exercise of the powers conferred upon him by section 168(1) of, and Schedule 20 to, the Social Security Act 19751, sections 30(1C) and 32(2D) of the Social Security Pensions Act 19752, and sections 2 and 84(1) of the Social Security Act 19863and paragraphs 3 and 6 of Schedule 1 to that Act as modified by section 32(2B) of the Social Security Pensions Act 1975, and of all other powers enabling him in that behalf, by this instrument, which is made before the end of a period of 12 months from the commencement of the enactments under which it is made, makes the following Regulations:—

S-1 Citation, commencement and interpretation

Citation, commencement and interpretation

1.—(1) These Regulations may be cited as the Money Purchase Contracted-out Schemes Regulations 1987 and shall come into force on 6th April 1988.

(2) In these Regulations, unless the context otherwise requires—

the 1975 Act” means the Social Security Pensions Act 1975;

the 1986 Act” means the Social Security Act 1986;

“earnings period” has the same meaning as in the Social Security (Contributions) Regulations 19794;

“emoluments” means so much of a person’s remuneration or profit derived from employed earner’s employment as constitutes earnings for the purposes of the Social Security Act 19751;

“Friendly Society” means a Friendly Society registered under section 7(1)(a) of the Friendly Societies Act 19745, or, as the case may be, under section 1(1)(a) of the Friendly Societies Act (Northern Ireland) 19706;

“futures” has the meaning assigned to that word by paragraph 8 of Schedule 1 to the Financial Services Act 19867;

“government, local authority or public authority” means—

(a) the government of any member State;

(b) a local authority in any member State; or

(c) any international organisation the members of which comprise any member States;

“income tax month” means the period beginning on the 6th day of any calendar month and ending on the 5th day of the following calendar month;

“investment trust company” means a company which has been approved for the purposes of section 359 of the Income and Corporation Taxes Act 19708;

“issuer”, in relation to any securities, has the meaning assigned to that word by section 142(7) of the Financial Services Act 1986;

“options” has the meaning assigned to that word by paragraph 7 of Schedule 1 to the Financial Services Act 1986;

“recognised Stock Exchange” has the meaning assigned to that expression by paragraph 13 of Schedule 13 to the Insurance Companies Regulations 19819;

“scheme” means occupational pension scheme;

“securities”—

(a) in relation to any government, local authority or public authority, means any investment which would fall within paragraph 3 of Schedule 1 to the Financial Services Act 1986 if “government, local authority or public authority” had the same meaning in that paragraph as in these Regulations; and

(b) otherwise means any investment falling within paragraph 1, 2, 4 or 5 of that Schedule;

“trustees”, in relation to a scheme which is not set up or established under a trust, means the managers of the scheme;

and other expressions have the same meaning as in the 1975 Act.

(3) In these Regulations, unless the context otherwise requires, any reference—

(a)

(a) to a numbered regulation is to the regulation in these Regulations bearing that number;

(b)

(b) in a regulation to a numbered paragraph is to the paragraph of that regulation bearing that number;

(c)

(c) in a paragraph to a lettered sub-paragraph is to the sub-paragraph of that paragraph bearing that letter.

S-2 Permitted investments

Permitted investments

2.—(1) For the purposes of section 32(2A) of the 1975 Act10(occupational pension scheme may be contracted-out if among other things the requirements imposed by or by virtue of Schedule 1 to the 1986 Act modified under section 32(2B) of the 1975 Act are satisfied in its case) and of paragraphs 3 and 6 of Schedule 1 to the 1986 Act (schemes to comply with prescribed requirements as regards the investment of their resources, and such other requirements as may be prescribed), the prescribed requirements in relation to an occupational pension scheme are those specified in paragraphs (2) and (3).

(2) The rules of the scheme shall require that the resources of the scheme are not invested in any investments other than those specified in the Schedule to these Regulations.

(3) The rules of the scheme shall require the trustees of the scheme to take all reasonable steps to ensure that—

(a)

(a) in relation to the investments specified in paragraphs 5 to 8 of the Schedule, there is not, at any one time, invested in the securities of any one issuer—

(i) more than 5% of the value of the resouces of the scheme, or

(ii) more than 10% of that value, where the total of the investments in the securities of any one issuer of more than 5% of that value does not exceed 40% of that value;

(b)

(b) not more than 50% of the value of the resources of the scheme is invested, at any one time, in investments specified in paragraph 6 of the Schedule;

(c)

(c) not more than 35% of the value of the resources of the scheme is invested, at any one time, in investments of the kinds specified in paragraphs 7 and 8 (read together) of the Schedule;

(d)

(d) the aggregate, at any one time, of—

(i) any sum lent to a person or body associated with the scheme out of the resources of the scheme,

(ii) any part of the resources of the scheme invested in a person or body or land associated with the scheme, and

(iii) any part of the resources of the scheme invested in any one or more of the investments specified in paragraphs 8 to 10 of the Schedule,

does not exceed 10% of the value of the resources of the scheme;

(e)

(e) not more than 40% of the value of the resources of the scheme is invested, at any one time, in securities issued by any one investment trust company; and

(f)

(f) not more than 25% of the value of the resources of the scheme is invested at any one time in land.

S-3 Deduction of minimum payments from earnings

Deduction of minimum payments from earnings

3.—(1) Every employer, on making during any tax year to any earner any payment of emoluments in respect of which minimum payments are payable, may deduct minimum payments in accordance with this regulation.

(2) An employer shall not be entitled to recover any minimum payments paid or to be paid by him on behalf of any earner otherwise than by deduction in accordance with this regulation.

(3) Subject to the provisions of paragraph (4), on making any payment of emoluments to the earner the employer may deduct from those emoluments an amount which bears the same ratio to the amount of the minimum payments relating to those emoluments as A does to A plus B, where—

(a)

(a) A is the first percentage mentioned in section 30(1A)(a) of the 1975 Act11; and

(b)

(b) B is the first percentage mentioned in section 30(1A)(b) of that Act.

(4) Where 2 or more payments of emoluments fall to be aggregated under or by virtue of paragraph 1(1) of Schedule 1 to the Social Security Act 1975, the employer may deduct the amount of the minimum payments based thereon which are payable by the earner either wholly from one such payment or partly from one and partly from the other or any one or more of the others.

(5) In the circumstances specified in paragraph (6), if the employer on making any payment of emoluments to an earner does not deduct therefrom the full amount of minimum payments which by virtue of these regulations he is entitled to deduct, he may recover the amount so underdeducted by deduction from any subsequent payment of emoluments to that earner during the same tax year, so however that any amount deducted under this paragraph may be in addition to but shall not exceed any amount deducted from the same payment of emoluments under paragraph (3) or (4).

(6) Paragraph (5) applies only where—

(a)

(a) the underdeduction occurred by reason of an error made by the employer in good faith; or

(b)

(b) the emoluments in respect of which the underdeduction occurred are deemed...

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