Personal and Occupational Pension Schemes (Protected Rights) Regulations 1987

JurisdictionUK Non-devolved
CitationSI 1987/1117

1987 No. 1117

PENSIONS

The Personal and Occupational Pension Schemes (Protected Rights) Regulations 1987

Made 25th June 1987

Laid before Parliament 6th July 1987

The Secretary of State for Social Services, in exercise of the powers conferred upon him by sections 14 and 84(1) of, and paragraphs 6, 7(2), (4) and (5), 9 (1)(a), (2) to (4) and (7) to (9) and 11 of Schedule 1 to the Social Security Act 19861(including those paragraphs of that Schedule as modified by section 32(2B) of the Social Security Pensions Act 19752), 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 Personal and Occupational Pension Schemes (Protected Rights) Regulations 1987 and shall come into force on 27th July 1987 for the purposes of personal pension schemes and on 6th April 1988 for the purposes of occupational pension schemes.

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

“the Act”means the Social Security Act 1986;

“the Board”means the Occupational Pensions Board;

“child benefit”has the same meaning as in the Child Benefit Act 19753;

“member”means member of an occupational pension scheme or a personal pension scheme;

“money purchase contracted-out scheme”has the same meaning as in the Social Security Pensions Act 1975;

“pensionable age”means, in the case of a man, 65, and in the case of a woman, 60;

“scheme”means occupational pension scheme or personal pension scheme;

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

(3) In these Regulations, except in so far as the context otherwise requires, any reference—

(a)

(a) to Schedule 1 to the Act includes a reference to that Schedule as modified by section 32(2B) of the Social Security Pensions Act 1975;

(b)

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

(c)

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

S-2 Manner of calculation and verification of protected rights mentioned in paragraph 7(2) of Schedule 1 to the Act

Manner of calculation and verification of protected rights mentioned in paragraph 7(2) of Schedule 1 to the Act

2.—(1) Except in a case to which paragraph (2) applies, the value of a member’s protected rights (under a scheme which is, or was formerly, an appropriate scheme or a money purchase contracted-out scheme) such as are mentioned in paragraph 7(2) of Schedule 1 to the Act shall be calculated and verified—

(a)

(a) in such manner as may be approved in particular cases by the trustees or managers of the scheme, and

(b)

(b) by adopting methods consistent with the requirements of Schedule 1 to the Act.

(2) In a case where a member’s rights (as described in paragraph (1)) fall, either wholly or in part, to be valued in a manner which involves making estimates of the value of benefits, the value of those rights shall be calculated and verified—

(a)

(a) in such manner as may be approved in particular cases by—

(i) a Fellow of the Institute of Actuaries, or

(ii) a Fellow of the Faculty of Actuaries, or

(iii) a person with other actuarial qualifications who is approved by the Secretary of State, at the request of the trustees or managers of the scheme in question, as being a proper person to act for the purposes of these regulations in connection with that scheme,

and in this regulation“actuary”means any person such as is referred to in head (i), (ii) or (iii) of this sub-paragraph; and

(b)

(b) by adopting methods and making assumptions which—

(i) if not determined by the trustees or managers of the scheme in question, are notified to them by an actuary, and

(ii) are certified by an actuary to the trustees or managers of the scheme as being consistent with the requirements of Schedule 1 to the Act, and as being consistent with“Retirement Benefit Schemes—Transfer Values (GN11)”published by the Institute of Actuaries and the Faculty of Actuaries and current at the date of the calculation.

S-3 Rights which the rules of a scheme may designate as protected rights

Rights which the rules of a scheme may designate as protected rights

3. For the purposes of paragraph 7(2) of Schedule 1 to the Act (scheme rules may provide that a member’s protected rights are rights specified in paragraph 7(2) and such other rights as may be prescribed), the prescribed rights are rights to money purchase benefits which derive from—

(a) guaranteed minimum pensions under an occupational pension scheme, or guaranteed minimum pensions appropriately secured within the meaning of section 52C of the Social Security Pensions Act 1975, which have been the subject of a transfer payment to the trustees or managers of the scheme;

(b) in the case of a personal pension scheme, a payment made to the trustees or managers of the scheme in accordance with section 7 of the Act and regulation 3(10) of the Personal and Occupational Pension Schemes (Incentive Payments) Regulations 19874; and

(c) in the case of an occupational pension scheme, a payment of minimum contributions made to the trustees or managers of the scheme in accordance with regulation 14(8) of the Personal Pension Schemes (Appropriate Schemes) Regulations 19875.

S-4 Conditions applying to pensions and annuities which give effect to protected rights

Conditions applying to pensions and annuities which give effect to protected rights

4.—(1) For the purposes of sub-paragraphs (1) (a) (effect may be given to protected rights by the provision by the scheme of a pension which among other things satisfies such conditions as may be prescribed) and (2)(ii) (effect may be given in certain circumstances to protected rights by the purchase by the scheme of an annuity which among other things satisfies such conditions as may be prescribed) of paragraph 9 of Schedule 1 to the Act, the prescribed conditions are that the pension or annuity gives effect to all the protected rights of the member, that in the case of an annuity it is one which is purchased on or after the date on which it commences, and that the terms on which the pension is provided, or the terms of the purchase of the annuity—

(a)

(a) satisfy the requirements of paragraphs (2) to (5) of this regulation; and

(b)

(b) make no provision other than such as—

(i) is necessary to establish what the initial rate and the method of payment of the pension or annuity are to be, and that it shall continue to be paid at that rate (subject only to paragraphs (3) and (6)) throughout the lifetime of the member,

(ii) is necessary to satisfy the requirements of paragraphs (2) to (5) and regulation 5, and

(iii) is permitted by paragraphs (6) to (9).

(2) The rate of the pension or annuity shall be determined without regard to the sex or marital status of the member.

(3) The rate of the pension or annuity shall—

(a)

(a) on a date (“the first date”) not later than the first anniversary of the date on which it becomes payable, and

(b)

(b) on each anniversary of the first date,

be increased by the same percentage as that by which parts of guaranteed minimum pensions are increased, by the order (if any) made by the Secretary of State under section 37A of the Social Security Pensions Act 19756 and coming into operation on the first day of the tax year in which the date of the increase falls.

(4) Except with the written consent of the person to whom the pension or annuity is payable, the pension or annuity, if paid in arrear, shall be paid no less frequently than by monthly instalments.

(5) The pension or annuity shall be paid no less frequently than by annual instalments.

(6) The pension or annuity may be increased, not more frequently than on the first date mentioned in paragraph (3) and on each of its anniversaries, but by larger percentages than paragraph (3) requires, so however that no increase is by more than 3 per cent.

(7) When the member has died, the pension or annuity may continue to be paid, at a rate which satisfies the requirements of paragraph (8), to or for the benefit of other persons if the requirements of paragraph (9) are satisfied.

(8) The requirements first referred to in paragraph (7) are that the rate shall not exceed—

(a)

(a) at any given time during the period which is within 5 years of the date on which the pension or annuity commenced, the rate at which it would have been payable if the member had been living at that time; and

(b)

(b) at any given time during any other period, one-half of the rate at which it would have been payable if the member had been living at that time.

(9) The requirements secondly referred to in paragraph (7) are that the pension or annuity shall be paid only—

(a)

(a) to the member’s widow or widower, in a case where immediately after the member’s death the pension or annuity is required by virtue of regulation 5 to be paid to her or him;

(b)

(b) to any one person, in a case to which sub-paragraph (a) does not apply;

(c)

(c) for the benefit of any child or children, if—

(i) sub-paragraph (a) does not apply,

(ii) the pension or annuity has not been paid in accordance with sub-paragraph (b), and

(iii) immediately before the member’s death the member was entitled to child benefit in respect of that child or those children, or would have been so entitled if that child or one, some or all of those children had not been absent from Great Britain;

but only for so long as that child or at least one of those children is under the age of 18; and

(d)

(d) to any one person, during any period—

(i) which is within 5 years of the date on which the pension or annuity commenced, and

(ii) which immediately follows the death of a person who died while the pension or annuity was being paid to him in...

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