Policy paper

Occupational Pension Schemes (Transfer Values) (Amendment) Regulations 2015

Updated 2 March 2015

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

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[DRAFT] Statutory Instruments [2015] No. Pensions

Made ā€“ [***]

Laid before Parliament ā€“ [***]

Coming into force ā€“ 6 April 2015

The Secretary of State for Work and Pensions makes the following Regulations in exercise of the powers conferred by sections [93(5), 93(10), 93A(5), 95(6A), 97(2), (3B) and (4), 99(4A) and (4B), 101F(6A), 113(1) and 181] of the Pension Schemes Act 1993[footnote 1] and [clause 48(7) of the Pension Schemes Bill 2015[footnote 2]b.

These Regulations were not subject to consultation because in this case the Secretary of State considered consultation to be inexpedient by reason of urgency.

Citation, commencement and interpretation

1.ā€”(1) These Regulations may be cited as the Occupational Pension Schemes (Transfer Values) (Amendment) Regulations 2015 and come into force on 6th April 2015. (2) In these Regulations, ā€˜the principal Regulationsā€™ means the Occupational Pension Schemes (Transfer Values) Regulations 1996[footnote 3].

Amendment of Part 1 of the principal Regulations

2.ā€”(1) In Regulation 1(2) of the principal Regulationsā€”

(a) In the definition of ā€œcash balance benefitā€, for ā€œby regulation 2 of the Pensions Act 2011 (Transitional, Consequential and Supplementary Provisions) Regulations 2014ā€ substitute ā€œto that expression in [clause 75 of the Pensions Schemes Bill 2014];ā€;

(b) In the definition of ā€œcash equivalentā€, for ā€œor guaranteed cash equivalent mentioned in section 93A(1) or 94(1)ā€ substitute ā€œmentioned in section 94(1) or (2)ā€;

(c) In the definition of ā€œguarantee dateā€, for ā€œsection 93A(2)ā€ substitute ā€œsection 93A(4)ā€;

(d) Omit the definition of ā€œrelevant dateā€;

(e) In the definition of ā€œstatement of entitlementā€, for ā€œsection 93A(1) of the 1993 Act (salary related schemes: right to statement of entitlement)ā€ substitute ā€œsection 93A(3) of the 1993 Act (Right to statement of entitlement: benefits other than money purchase)ā€.

Amendment of Part 2 of the principal Regulations

3.ā€”(1) In regulation 2, for ā€œChapter IV of Part IVā€ substitute ā€œChapter 1 of Part 4ZAā€[footnote 4].

(2) Omit regulations 3, 4 and 5.

Amendment of Part 3 of the principal Regulations

4.ā€”(1) In the heading to Part 3 (guaranteed statements of entitlement and calculation of transfer values), omit the word ā€œguaranteedā€.

(2) In regulation 6ā€”

(a) In the heading, omit the word ā€œGuaranteedā€;

(b) In paragraph (1)(a)[footnote 5], omit the words ā€œunder section 93A of the 1993 Act (salary related schemes: right to statement of entitlement)ā€;

(c) After paragraph 1B ¾±²Ō²õ±š°ł³Łā€”

ā€œ(1C) Where a member has transferrable rights in relation to two categories of benefit other than money purchase benefits, the trustees or managers must provide the member with a statement of entitlement setting out a separate cash equivalent value in relation to each category of benefit, unless the memberā€™s application relates to one category of benefit only.ā€;

(d) In paragraph (3), omit the words ā€œunder section 93A(1) of the 1993 Actā€;

(e) Omit paragraph (4);

(f) At the end of regulation 6 ¾±²Ō²õ±š°ł³Łā€”

ā€œ(5) In this regulation, ā€œapplicationā€ means an application for a statement of entitlement made under section 93A(1) of the 1993Act.ā€.

(3) In regulation 7C(3)(b)(ii)[footnote 6], for ā€œChapter IV of Part IVā€ substitute ā€œChapter 1 of Part 4ZAā€.

(4) In regulation 9ā€”

(a) in the heading, for ā€œguaranteed cash equivalentsā€ substitute ā€œcash equivalents shown in the statement of entitlementā€;

(b) for paragraph (1), ²õ³Ü²ś²õ³Ł¾±³Ł³Ü³Ł±šā€”

ā€œ(1) This regulation applies to a cash equivalent in respect of transferrable rights in relation to categories of benefits other than money purchase benefits where a statement of entitlement has been sent to a member of a salary related scheme by the trustees of the scheme.ā€;

(c) in paragraph (2)ā€”

(i) in the first place where it appears, for ā€œguaranteed cash equivalentā€ substitute ā€œcash equivalent shown in the statement of entitlementā€; and

(ii) in the second place where it appears, for ā€œguaranteed cash equivalentā€ substitute ā€œcash equivalent shown in the statement of entitlementā€;

(d) in paragraphs (3)[footnote 7], (5) and (6), in each place where it appears, for ā€œguaranteed cash equivalentā€ substitute ā€œcash equivalent shown in the statement of entitlementā€;

(e) in paragraph (5), for ā€œChapter IV of Part IVā€ substitute ā€œChapter 1 of Part 4ZAā€.

(5) In regulation 11ā€”

(a) For paragraph (1)[footnote 8] ²õ³Ü²ś²õ³Ł¾±³Ł³Ü³Ł±šā€”

ā€œ(1) Subject to paragraphs (1A) and (1B), a member to whom paragraph (1C) applies is entitled to receive from the trustees, on request, the information mentioned in Schedule 1 in writing.ā€;

(b) After paragraph (1B)[footnote 9] ¾±²Ō²õ±š°ł³Łā€”

ā€œ(1C) This paragraph appliesā€”

(a) to a member who is currently accruing rights to benefits in a category (as defined in section 93(6) of the 1993 Act); and

(b) to a member who is no longer accruing rights to money purchase benefits unless, in respect of those benefits, a crystallisation event under section 93(7) has occurred.ā€;

(c) omit paragraph (3)[footnote 10];

(d) in paragraph (4)[footnote 11]ā€”

(i) For ā€œto a guaranteed cash equivalentā€ substitute ā€œprovided under section 93A of the 1993 Actā€;

(ii) Before paragraph (ii) of sub-paragraph (b), ¾±²Ō²õ±š°ł³Łā€”

ā€œ(i) indicating the amount of the cash equivalent which is attributable to each category of benefit included in the statement of entitlement;ā€;

(iii) In subparagraph (ii) after the first appearance of the words ā€œcash equivalentā€ insert ā€œin relation to each category of benefitā€;

(e) In paragraphs (4)(b)(iv), (v), (vi)(aa) and (5), in each place where it appears, for ā€œguaranteed cash equivalentā€ substitute ā€œcash equivalent shown in the statement of entitlementā€.

Amendment of Part 5 of the principal Regulations

5. In regulation 13(a)(vi)[footnote 12], for ā€œguaranteed cash equivalentā€ substitute ā€œcash equivalent shown in the statement of entitlementā€.

Amendment of Part 6 of the principal Regulations

6.ā€”(1) In regulation 14ā€”

(a) In the heading, for ā€œguaranteed cash equivalentā€ substitute ā€œcash equivalent shown in the statement of entitlementā€;

(b) For paragraph (1) ²õ³Ü²ś²õ³Ł¾±³Ł³Ü³Ł±šā€”

ā€œ(1) Paragraph (2) will apply in the following situationsā€”

(a) Where a memberā€™s cash equivalent shown in the statement of entitlement has been reduced or increased under regulation 9;

(b) Where, within three months of the trustees or managers informing a member in writing that the cash equivalent has been reduced or increased in accordance with regulation 9, the member disputes the basis or amount of the increase or reduction; and

(c) Where, within three months beginning with the guarantee date, a member disputes the amount of the cash equivalent shown in the statement of entitlement.ā€

(c) For paragraph (2) ²õ³Ü²ś²õ³Ł¾±³Ł³Ü³Ł±šā€”

ā€œ(2) Where any of the situations mentioned in paragraph (1) occursā€”

(a) if the member has made an application to take the cash equivalent under section 95(1) of the 1993 Act, that application lapses unless the trustees or managers have done what is needed to carry out what the member requires or the application has been withdrawn;

(b) the time for making a fresh application to take the cash equivalent under section 95(1) is three months beginning with the date on which the trustees or managers inform the member in writing of the reduced or increased cash equivalent, or the finally determined cash equivalent; and

(c) the period specified in section 99(2) (trusteesā€™ duties after exercise of option) is six months beginning with the date on which the trustees or managers inform the member in writing of the reduced or increased cash equivalent, or the finally determined cash equivalent.ā€

(2) In regulation 15ā€”

(a) For ā€œ93(1)(a)(i)ā€ substitute ā€œ93(4)(b)ā€;

(b) For ā€œChapter IVā€ substitute ā€œChapter 1 of Part 4ZAā€;

(c) For ā€œsections 95(8)(a), 98(7)(a)(variation and loss of rights under section 94) and 99(2)(a) and (b)ā€ substitute ā€œsection 95(1A)(b)ā€.

(3) In regulation 16(2), for ā€œChapter IV of Part IVā€ substitute ā€œChapter 1 of Part 4ZAā€.

(4) In regulation 17(2), for ā€œChapter IV of Part IVā€ substitute ā€œChapter 1 of Part 4ZAā€.

(5) Omit regulations 18 and 19 of the principal Regulations.

Amendment of Part 7 of the principal Regulations

7. In regulation 20, for ā€œsection 93A(4)ā€ substitute ā€œsection 93A(6)ā€.

Amendment of Part 8 of the principal Regulations

8.ā€”(1) Omit regulation 21 of the principal Regulations.

Amendment of Schedule 1 of the principal Regulations

9.ā€”(1) In paragraph 1[footnote 13]ā€”

(a) for ā€œChapter IV of Part IVā€ substitute ā€œChapter 1 of Part 4ZAā€;

(b) for ā€œthe memberā€™s pensionable service were to terminateā€ substitute ā€œthe conditions specified in section 93(2) to (4) of the 1993 Act were metā€;

(c) In sub-paragraph (a), for ā€œthe memberā€™s pensionable service terminated or will terminate on a particular date;ā€ substitute ā€œthe conditions specified in section 93(2) to (4) of the 1993 Act were met or will be met on a particular dateā€.

(2) In paragraph 2ā€”

(a) for ā€œChapter IV of Part IVā€ substitute ā€œChapter 1 of Part 4ZAā€;

(b) in sub-paragraph (d), after ā€œestimated amount of the transfer valueā€ insert ā€œin relation to the memberā€™s rights to benefits other than money purchase benefitsā€.

(3) In paragraph 3[footnote 14], at the beginning of paragraph (c) insert ā€œexcept where [clause 48 of the Bill] applies,ā€.

Amendment of Schedule 1A of the principal Regulations[footnote 15]

10.ā€”(1)In paragraph 2 of Schedule 1Aā€”

(a) In sub-paragraph (a) omit the word ā€œandā€;

(b) After sub-paragraph (b) ¾±²Ō²õ±š°ł³Łā€”

ā€œ(c) the guarantee date in relation to the statement of entitlement is at least one year before the member attains normal pension age in relation to the rights to benefits covered by the statement of entitlement.ā€.

(2) For paragraph 8 of Schedule 1A.²õ³Ü²ś²õ³Ł¾±³Ł³Ü³Ł±šā€”

ā€œ8. Where the cash equivalent shown in a memberā€™s statement of entitlementā€”

(a) relates to safeguarded benefits;

(b) is to be used for acquiring transfer credits in relation to safeguarded benefits under the rules of another scheme; and

(c) the receiving scheme has undertaken to provide benefits at least equal in value to the benefits represented by that cash equivalent on payment of a lesser sum (including nil),

the initial cash equivalent may be reduced so that the cash equivalent is that lesser sum.ā€

Amendment of the Personal Pension Schemes (Transfer Values) Regulations 1987[footnote 16]

11.ā€”(1) In regulations 1[footnote 17] and 3[footnote 18], on each occasion where it occurs, for ā€œChapter IV of Part IVā€ substitute ā€œChapter 1 of Part 4ZAā€.

(2) In regulation 4[footnote 19], for ā€œsection 94(1)(b)ā€ substitute ā€œsection 94ā€.

Amendment of the Transfer Values (Disapplication) Regulations 2010[footnote 20]

12.ā€”(1) In regulation 1, for ā€œChapter IV of Part IVā€ substitute ā€œChapter 1 of Part 4ZAā€.

(2) In regulation 2ā€”

(a) In paragraph (2)(a), for ā€œsection 94(1)ā€ substitute ā€œsection 94(2)ā€; and

(b) In paragraph (2)(b), for ā€œpension credit benefitā€ substitute ā€œpension credit rightsā€.

Transitional Provisions

13.ā€”(1) The effect Schedule 1 paragraph 3 of the principal Regulations shall be preserved in respect of a member who has made an application under section 95(1) of the 1993 Act before the commencement of these Regulations.

Explanatory note

(This note is not part of the Regulations)

Regulation 1 contains general provisions providing for the date the regulations are to come into force, how the regulations are to be cited and interpretation.

Regulation 2 makes consequential amendments to regulation 1 of the Occupational Pension Schemes (Transfer Values) Regulations 1996 (S.I. 1996/1847) (ā€œthe principal Regulationsā€) following the introduction of the Pension Schemes Act 2015.

Regulation 3(1) makes consequential amendments to regulation 2 of the principal Regulations. Regulation 3(2) repeals regulations 3, 4 and 5 of the principal Regulations.

Regulation 4 makes consequential amendments to Part 3 of the principal Regulations.

Regulation 4(2)(c) confirms that where a member applies for a statement of entitlement in respect of more than one category of benefit, the trustees must provide a separate cash equivalent for each category.

Regulation 5 makes consequential amendments to regulation 13 of the principal Regulations.

Regulation 6 makes consequential amendments to Part 6 of the principal Regulations. Regulation 6(1) amends regulation 14 of the principal regulations and provides for where the time for a member to make an application to take the cash equivalent will be extended. The Regulation also extends time for the trustee to do what is required in the same circumstances.

Regulation 7 makes consequential amendments to regulation 20 of the principal Regulations.

Regulation 8 repeals regulation 21 of the principal Regulations.

Regulation 9 makes consequential amendments to Schedule 1 of the principal Regulations. Regulation 9(3) ensures that where a trustee is not required by section 48 of the Pension Schemes Act 2015 to check that the member has received independent financial advice, the trustees make a recommendation that the member should take financial advice.

Regulation 10 makes consequential amendments to Schedule 1A of the principal Regulations. Regulation 10(2) makes amendments to paragraph 8 so that it applies to the transfer of safeguarded benefits.

Regulation 11 makes consequential amendments to the Personal Pension Schemes (Transfer Values) Regulations 1987 (S.I. 1987/1112).

Regulation 12 makes consequential amendments to the Transfer Values (Disapplication) Regulations 2010 (S.I. 2010/6).

Regulation 13 provides a transitional provision preserving the effect of Schedule 1 paragraph 3 of the principal Regulations in respect of a member who has made an application to take the cash equivalent under section 95(1) before the commencement of the Regulations.

  1. 1993 c. 48. Section 93 and 93A were amended by the [Pension Schemes Bill 2015]. Section 95(6A) was inserted by the [Pensions Schemes Bill 2015]. Section 97 was amended by the [Pension Schemes Bill 2015]; Section 99(4A) was inserted by the Pensions Act 1995 (c. 26). Section 99(4B) was inserted by the [Pension Schemes Bill 2015]. Section 101F(6A) was amended by the [Pension Schemes Act 2015]. Section 113(1) was amended by the Child Support, Pensions and Social Security Act 2000 (c. 19). Section 181 is cited for the meaning it gives to ā€œprescribedā€ and ā€œregulationsā€.Ā ā†©

  2. [2015 c. xx]. Section 48(7) is cited for the meaning it gives to ā€œsafeguarded benefitsā€.Ā ā†©

  3. S.I. 1996/1847.Ā ā†©

  4. Regulation 2 was amended by S.I. 2013/459.Ā ā†©

  5. Paragraph (1) of Regulation 6 was substituted by SI 2008/1050.Ā ā†©

  6. Regulation 7C was substituted by SI 2008/1050.Ā ā†©

  7. Paragraph 3 of Regulation 9 was amended by SI 2005/706.Ā ā†©

  8. Paragraph 1 of Regulation 11 was substituted by SI 2008/1050.Ā ā†©

  9. Paragraph 1B of Regulation 11 was substituted by SI 2008/1050.Ā ā†©

  10. Paragraph 3 of Regulation 11 was amended by SI 2008/1050.Ā ā†©

  11. Paragraph 4 of Regulation 11 was amended by SI 2005/72 and SI 2008/1050.Ā ā†©

  12. Regulation 13 was amended by SI 2005/686.Ā ā†©

  13. Paragraph 1 of Schedule 1 was amended by SI 2008/1050.Ā ā†©

  14. Paragraph 3 of Schedule 1 was amended by SI 2013/472.Ā ā†©

  15. Schedule 1A was inserted by SI 2008/1050.Ā ā†©

  16. S.I. 1987/1112.Ā ā†©

  17. Regulation 1 was amended by SI 1994/1062, SI 2008/1050 and SI 2011/1246.Ā ā†©

  18. Regulation 3 was substituted by SI 2008/1050 and amended by SI 2008/2450.Ā ā†©

  19. Regulation 4 was substituted by SI 2008/1050.Ā ā†©

  20. S.I. 2010/6.Ā ā†©

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