The British Coal Staff Superannuation Scheme (Modification) Regulations 1994

• Citation: S.I. 1994/2576
• Sections: 197

Section 1 Citation and Commencement

These Regulations may be cited as the British Coal Staff Superannuation Scheme (Modification) Regulations 1994 and shall come into force on 31st October 1994.

Section 2 Interpretation

In these Regulations

“the 1946 Act” means the Coal Industry Nationalisation Act 1946 ;

“the 1994 Act” means the Coal Industry Act 1994;

“the Scheme” means the British Coal Staff Superannuation Scheme which was established under the Coal Industry Nationalisation (Superannuation) Regulations 1946 made under section 37 of the 1946 Act on 1 January 1947 by a resolution of 31 December 1946 of the National Coal Board and which was amended and continued to have effect by a resolution of 18 July 1947 of that Board and was further amended by subsequent resolutions of that Board the name of which was changed to the British Coal Corporation by section 1(1) of the Coal Industry Act 1987 .

Section 3 Continuance in Force of the Scheme

The Scheme, being an existing scheme within the meaning of Schedule 5 to the 1994 Act, shall continue in force notwithstanding the repeal by the 1994 Act of section 37 of the 1946 Act and of the enactments modifying that section.

Section 4 Modification of the Scheme

The Scheme shall be modified so as to have effect as set out in the Schedule hereto by the omission of the provisions thereof which are crossed out in that Schedule and the insertion of the provisions which appear therein in italics.

Section 1 Establishment of Scheme

The Scheme shall be deemed to have been established on 1 January 1947 by the National Coal Board by the resolution numbered 1 in Appendix IV to the Rules scheduled hereto and shall be deemed to have been governed by the terms of the Scheme and Rules scheduled to the resolution numbered 2 in Appendix IV (“the Original Scheme”) as amended from time to time by the resolutions and other instruments listed in Appendix IV. The provisions of the Scheme (other than Clause 48 and the Rules) as set out in these presents shall constitute the Scheme with effect from the 1994 Amendment Date. The provisions of the Rules (and Clause 48) as set out in these presents shall apply in respect of all Contributors as at the 1994 Amendment Date and the entitlement of persons ceasing to be Contributors prior to the 1994 Amendment Date shall be determined by those provisions of the rules comprised in the Original Scheme as amended by those of the instruments listed in Appendix IV as were in force on or subsequently made and put into force so as to be effective on the date each such person ceased to be a Contributor.

Section 1 Eligibility

(1) Until the Transfer Date an employee employed by the Principal Employer, C.I.S.W.O. or a Subsidiary shall be eligible for membership of the Scheme who:—

(i) is employed in Full-Time Service or as a Permanent Part-Time Employee or pursuant to a fixed term contract of employment in a managerial, technical, administrative, clerical or supervisory industrial grade or as a rescue worker; or

(ii) is employed in Full-Time Service or as a Permanent Part-Time Employee in such other grades as the Principal Employer may from time to time determine either generally or in relation to one or more employees; and

(iii) has attained age 16 but has not attained age 55; and

(iv) has been granted a General Certificate of Health; and

(v) if the appointment is designated “temporary” has completed two years in Eligible Employment.

(2) A Contributor who, on ceasing before the Transfer Date to be employed by the Principal Employer, C.I.S.W.O. or a Subsidiary or an employer certified by the Principal Employer ( on or after the Guarantee Date with the consent of the Guarantor ) for the purposes of this paragraph, takes up employment before the Transfer Date with an employer so certified, may, with the consent of the Principal Employer (which may be given subject to such conditions as the Principal Employer impose) and of the Employer by whom the Contributor becomes employed, continue to be a Contributor while so employed in a grade eligible for membership of the Scheme by virtue of paragraph (1) of this Rule for so long as such employer continues to be certified as aforesaid. For the purposes of this paragraph a member or whole-time director of a corporate body shall be deemed to be employed by that body in such a grade as is mentioned above Provided that the Principal Employer shall not certify an Employer for the purposes of this paragraph without the approval of the Commissioners of Inland Revenue.

(3) Any whole-time Corporation Member who immediately before his appointment as such before the Closure Date was a Member of the Scheme shall be eligible to be a Contributor to the Scheme after his appointment as a Corporation Member.

(4) At the discretion of the Committee and with the approval of the Employer the conditions for eligibility specified in paragraph (1) of this Rule may be waived and in any dispute as to the eligibility for membership of any employee the decision of the Committee shall be final.

(5)

(a) Notwithstanding the foregoing provisions of this Rule and subject to paragraph (7) of this Rule, if any Contributors shall before the Guarantee Date cease to be eligible for membership in accordance with the provisions of paragraph (1) of this Rule by reason of their Employer ceasing to be a Subsidiary, all such Contributors employed by such Employer may, if such Employer so requests and the Principal Employer consents (which consent may be given subject to such conditions as the Principal Employer imposes), continue to be Contributors (and such Employer may continue to participate as an Employer) for such limited period as may be approved by the Pension Schemes Office of the Inland Revenue.

(b) Notwithstanding the foregoing provisions of this Rule arrangements made before the Guarantee Date under sub-paragraph (a) above for the continued participation of Contributors (and the employers of those Contributors) otherwise ceasing to be in Eligible Employment shall subject to the consent of the Committee and the Guarantor continue after the Guarantee Date for such period as will have been approved by the Pension Schemes Office of the Inland Revenue ending on a date not later than the First Transfer Date.

(c) Notwithstanding the foregoing provisions of this Rule if any Contributor shall on or after the Guarantee Date cease to be eligible for membership in accordance with the provisions of paragraph (1) of this Rule by reason of his employer ceasing to be a Subsidiary all such Contributors employed by that employer may if the employer so requests and the Committee with the consent of the Guarantor, agrees (which agreement may be given subject to such conditions as the Committee may impose), continue to be Contributors (and their employer may continue to participate as an Employer) for such limited period as may be approved by the Pension Schemes Office of the Inland Revenue ending on a date not later than the First Transfer Date.

(6) Upon the making by the Principal Employer of arrangements to meet such cost as is mentioned in paragraph (c) of Rule 50 the Committee shall admit to membership of the Scheme such persons for the provision of such benefits as are mentioned in that paragraph.

(7) With effect from the Guarantee Date until the Closure Date the provisions of this Rule shall continue to have effect but no person shall become eligible to be a Contributor to the Scheme after the Guarantee Date without the consent of the Guarantor.

(8) No person shall become eligible to be a Contributor to the Scheme after the Closure Date.

Section 1

Resolution

Section 1

Resolution establishing special scheme

Section 1

The aggregate of the Transferable Sums in relation to those members who elect under Rule 47A(2) to transfer to IWS-SSS their accrued pension rights as at the Transfer Date, will be calculated using the projected accrued benefit method with allowance for future increases in (a) earnings until the assumed date of retirement, death or withdrawal from membership and (b) pensions. The allowance for pension increases to be made in the calculation of the Transferable Sums will be by reference to the Retail Prices Index.

Section 1A Trusteeship, Scheme Fund and Management and Administration

With effect from the Appointment Date:—

(1) The moneys, investments and other property of the Scheme shall constitute the Scheme Fund, and British Coal Staff Superannuation Scheme Trustees Limited, hereinafter called “the Trustee”, shall be sole trustee of the Scheme and the Scheme Fund;

(2) Save insofar as the Scheme Fund or any part of it is for the time being vested in any nominee or custodian trustee appointed under Clause 9(3) or in any trustee appointed under Clause 11(1), the Scheme Fund shall be vested in the Trustee;

(3) Save in respect of the collection of contributions (the administration whereof is vested in the Principal Employer) the management and administration of the Scheme, in accordance with the provisions thereof, shall be vested in the Trustee;

(4)

(a) All powers expressed by the Scheme, in whatever terms, to be vested in, conferred on or exercisable or to be exercised by the Committee shall be vested in the Trustee;

(b) Such powers and all other powers vested in, conferred on or exercisable or to be exercised by the Trustee under or by virtue of the Scheme shall be exercised by it and on its behalf by and through the Committee in their capacity as Committee of Management of the Trustee within the meaning of the Articles of Association of the Trustee (hereinafter called “the Articles”) or any other person or body of persons required, authorised or empowered to exercise such powers or any of them by or under any provision of the Scheme and by or under the Articles; and

(c) Save in relation to Clause 46 and the meanings assigned to “the Committee” and “the Former Committee” by Clause 48(i), any reference in the Scheme, in whatever terms, to the Committee shall be construed as a reference to the Trustee acting by and through the Committee in the capacity specified in sub-paragraph (b) of this paragraph or any other person or body of persons required, authorised or empowered to act for it or on its behalf for that purpose by or under any provision of the Scheme and by or under the Articles

Provided that except insofar as is otherwise expressly provided therein, neither the Articles, any amendment to the Scheme taking effect from the Appointment Date, any such Deed as is referred to in the meanings assigned to “the Appointment Date” by Clause 48(i) nor any act or thing done in consequence or pursuance of or in connection with the Articles or any such amendment or deed shall affect the validity, operation or effect of anything done or omitted to be done before the Appointment Date by, for or on behalf of the Former Committee, any sub-committee of the Former Committee, or the Secretary (within the meaning of the Scheme as it had effect from time to time before that date).

Section 1B Trusteeship, Scheme Fund and Management and Administration

(1) In the event of British Coal Staff Superannuation Scheme Trustees Limited ceasing for any reason to be the Trustee of the Scheme before the Guarantee Date, the Principal Employer shall forthwith procure that a new trustee or trustees of the Scheme are appointed comprising either:—

(i) a new corporate trustee whose Articles of Association would be in a form corresponding as closely as may be possible to those of British Coal Staff Superannuation Scheme Trustees Limited and would provide for the appointment of a committee of management consisting of eight persons, of whom four would be appointed by and would be subject to removal by the Principal Employer, and four would be appointed by and would be subject to removal in accordance with rules to be agreed between the Principal Employer and such organisations as at that time represent substantial proportions of the classes of the Principal Employer’s employees who are Members of the Scheme Provided that

(i) the four persons appointed by such organisations shall be persons who are or immediately before retirement were Contributors; and

(ii) in the event that it is not possible to agree such rules or there is a dispute as to which organisations represent substantial proportions of the classes of the Principal Employer’s employees who are Members of the Scheme the matter shall be referred to a single Arbitrator to be named by the President for the time being of the Law Society. The Arbitrator so named shall have all the powers conferred on Arbitrators by the Arbitration Acts 1950 and 1979; or

(ii) eight individual trustees subject to appointment and removal as aforesaid.

(2) The Principal Employer ( before the Guarantee Date ) shall appoint the Chairman and Deputy Chairman of any such committee of management or of the trustees and the chairman of any meeting of the committee of management or of the trustees shall have, in the case of an equality of votes, a second or casting vote.

(3) The Principal Employer ( before the Guarantee Date ) shall, in connection with the aforesaid appointments, make such amendments to the Scheme and Rules as may be necessary to give effect to the provisions of paragraphs (1) and (2) of this Clause.

Section 1C Trusteeship, Scheme Fund and Management and Administration

(1) With effect from the Guarantee Date the Guarantor shall subject to paragraphs (2) and (3) of this Clause have power exercisable by notice in writing (sent to the person to be appointed) signed on behalf of the Guarantor and having effect from the date specified in such notice to appoint a new trustee of the Scheme and the Scheme Fund in place of any trustee who ceases to be a trustee and the Guarantor shall also have power exercisable in like manner to remove a trustee of the Scheme and the Scheme Fund from office.

(2) With effect from the Guarantee Date the Guarantor will appoint Coal Staff Superannuation Scheme Trustees Limited or such other person as shall be appointed by the Guarantor under the power mentioned in paragraph (1) of this Clause as sole trustee of the Scheme and the Scheme Fund.

(3) In the event of Coal Staff Superannuation Scheme Trustees Limited or any other trustee appointed in accordance with paragraph (1) of this Clause ceasing after the Guarantee Date for any reason to be the trustee of the Scheme and the Scheme Fund, the Guarantor shall forthwith appoint a new trustee or trustees of the Scheme and the Scheme Fund comprising either :—

(i) a new corporate trustee whose Articles of Association would be in a form corresponding as closely as possible to those of Coal Staff Superannuation Scheme Trustees Limited at the time it ceases to be a trustee and would provide for the appointment of a committee of management consisting of eight persons, of whom four would be appointed by and would be subject to removal by the Guarantor, and four would be appointed by and would be subject to removal in accordance with rules to be agreed between the Guarantor and such organisations as represented substantial proportions of the classes of the employees and former employees of the Principal Employer who are Members of the Scheme Provided that

(a) the four persons appointed by such organisations shall be persons who are or immediately before retirement were Contributors;

(b) in the event that it is not possible to agree such rules or there is a dispute as to which organisations represent substantial proportions of the classes of the Principal Employer’s employees who were Members of the Scheme the matter shall be referred to a single Arbitrator to be named by the President for the time being of the Law Society. The Arbitrator so named shall have all the powers conferred on Arbitrators by the Arbitration Acts 1950 and 1979;

(c) with effect from 1st October 1995 two of the persons appointed by organisations referred to above shall (subject to the appointment of replacements) cease to be members of the committee of management and shall be replaced by two persons elected to represent the members of the Scheme in accordance with procedures identical to those set out in the Appendix to the Articles of Association of Coal Staff Superannuation Scheme Trustees Limited; and

(d) with effect from 1st April 1996 the remaining two persons appointed by the organisations referred to above shall (subject to the appointment of replacements) cease to be members of the committee of management and shall be replaced by two persons elected to represent the members of the scheme in accordance with the procedures identical to those set out in the Appendix to the Articles of Association of Coal Staff Superannuation Scheme Trustees Limited; or

(ii) eight individual trustees subject to the selection , appointment and removal as aforesaid of whom would be carried out in a manner corresponding to that referred to in (i) above in respect of the committee of management of a new corporate trustee.

(4) With effect from the Guarantee Date the Guarantor shall appoint the Chairman of the Committee and the Chairman so appointed shall have, in the case of an equality of votes, a second or casting vote. Provided that any person appointed as Chairman other than the first such appointee may not be a Crown Servant or a Member and will only be appointed by the Guarantor after consultation with the Committee.

Section 2 Nature of Scheme

Before the Closure Date the Scheme shall be a contributory Scheme providing for or in respect of each of the Contributors after qualifying periods of Contributing Service—

(i) as Normal Benefits (on payment by the Contributor of Normal Contributions) a pension for life on retirement at or after the Normal Retiring Age or earlier through ill-health or a lump sum payment on death before retirement or benefits on withdrawal; and

(ii) as Family Benefits (on payment by the Contributor of Family Contributions) pensions for the Contributor’s spouse and Children; and

(iii) as Added Benefits (on payment by the Contributor of Added Contributions at his option) further benefits of the nature mentioned in sub-paragraphs (i) and (ii).

Section 2 Ceasing Normal and Family Contributions and late admission to membership

(1) This Rule shall override any other provisions of the Scheme and Rules which are inconsistent with it.

(2) A Member who, whilst remaining in Eligible Employment, wishes to cease to pay Normal and Family Contributions in accordance with the provisions of Rule 11, shall give written notice to the Secretary. On the expiry of such notice his service in Eligible Employment and Contributing Service shall be deemed for the purposes of the Rules as having terminated in accordance with the provisions of Rule 23.

(3) A person who has not become a Member on first satisfying the requirements of Rule 1 may be admitted as a Member of the Scheme before the Guarantee Date in the discretion of the Committee and with the approval of the Employer on such terms and subject to such conditions as the Committee may think fit, including the provision of evidence as to health and the imposition of restrictions on benefits which might become payable on death or early retirement.

Section 2

Resolution

Section 2

Schedule

Section 2

The actuarial basis and assumptions that will be used to calculate the Transferable Sums are set out in Sections A, B, C and D of Part II of this Appendix. Section A describes the financial assumptions which will be adopted and the adjustments which will be made between the Transfer Date of the members concerned and the date or dates of payment of the Transferable Sum or Sums to IWS-SSS. Sections B and C contain the demographic assumptions to be used for male members of the Scheme and Section D contains the demographic assumptions to be used for female members of the Scheme. Normal Retiring Age is 60 for both men and women and all surviving employees are assumed to retire at that age.

Section 3 Actual Date of Entry

(1) Subject as hereinafter provided, the Actual Date of Entry of a Member shall be the date on which he is admitted as a Member of the Scheme.

(2) The Actual Date of Entry of a Contributor whose earlier service falls to be reckoned as Contributing Service pursuant to Rule 49 shall, subject to Rule 49(f)(ii)(b), be the Actual Date of Entry in respect of his first admission to the Scheme.

(3) The Actual Date of Entry of a Contributor who is a Contributor by virtue of paragraph (2) of Rule 1 shall be the date which would have been the Actual Date of Entry if he had not left the Principal Employer’s service or the employment of C.I.S.W.O. or a Subsidiary.

Section 3

Resolution (with schedule)

Section 3

Resolution establishing special scheme

Section 4

Resolution (with schedule)

Section 4

Resolution (with schedule)

Section 5 Contributions by Principal Employer and Other Employers

(1) Subject to the provisions of this Clause and Clause 6, before the Closure Date each Employer shall pay as standard contributions to the Scheme Fund a sum equal to 14.86 per cent. of the Salaries paid by each Employer to Members employed by it in respect of any period during which a Member is in Contributing Service.

(2) Subject to the provisions of Clause 6(1) as regards the cost of benefits payable in respect of Members leaving service after 5th April 1993, the Principal Employer shall make additional contributions to the Scheme as shall from time to time be determined under Rule 50(a).

(4) Before the Closure Date every Employer shall pay as deficiency contributions after the coming into operation of any determination of deficiency contributions made by the Actuary under Clause 6, such payments as may become payable by it thereunder or as may be necessary on the advice of the Actuary.

(5) The total amount of the contributions which would otherwise be payable by the Principal Employer under the preceding provisions of this Clause shall be reduced by such sum as may from time to time be agreed by the Principal Employer and the Committee as being fair and reasonable, having regard to the costs of managing and administering the Scheme (other than such costs and expenses as are incurred by virtue of the exercise of the powers conferred by Clause 11) and the cost to the Principal Employer of services rendered by the Principal Employer either directly or indirectly in connection with or for the purposes of the Scheme or, in default of any agreement, as shall be determined to be fair and reasonable having regard to such costs or cost by a chartered accountant who shall be agreed by the Principal Employer and the Committee or, in default of agreement, nominated by the President for the time being of the Institute of Chartered Accountants in England and Wales.

(6) The total amount of the contributions which would otherwise be payable by an Employer shall be reduced by an amount equal to the difference between the total amount of any Contributions Equivalent Premiums paid by that Employer during any period insofar as they relate to periods of service in respect of which a pension would or might otherwise have become payable under Rule 20AC and the total of the amounts recovered by that Employer during that period under Section 47 of the 1975 Act.

(7) With effect from the Closure Date all obligations under this Clause 5 regarding the payment of standard contributions and deficiency contributions shall cease. The obligations under paragraph (2) of this Clause in respect of the additional cost of benefits payable in respect of Members who ceased to be Contributors on grounds of redundancy before 6th April 1993 shall continue notwithstanding the arrival of the Closure Date.

Section 5

Resolution (with schedule)

Section 5

Determination of special scheme

Section 6 Valuation of Scheme

(1) Following actuarial reviews of the Scheme as at 5 April 1986, 5 April 1989 and 5 April 1992 it was determined by the Principal Employer after consultation with the Committee and in accordance with the provisions of the Scheme at the relevant time that

(i) the Principal Employer and their wholly owned Subsidiaries be relieved of the obligation to pay standard contributions until 5 April 2002;

(ii) the total amount of the standard contributions, on becoming payable by the Principal Employer and their wholly owned Subsidiaries, be reduced by 4.4 per cent in respect of the Salaries after 5 April 2002 of Members who were Contributors on 5 April 1992 or who become Contributors to the Scheme between that date and 5 April 1995;

(iii) every Employer other than the Principal Employer and their wholly owned Subsidiaries be relieved of the obligation to pay standard contributions until 30 June 1995; and

(iv) the Principal Employer shall not pay additional contributions pursuant to Clause 5(2) in respect of the additional cost of terms granted pursuant to Rule 50(a) to Members leaving service on or after 6 April 1993 but before 5 April 1998 (or such later date as may be agreed between the Principal Employer and the Committee) until the aggregate additional cost of such terms as assessed by the Actuary shall have exceeded £150 million (or such other sum as the Principal Employer and the Committee may from time to time agree).

(2) The Actuary shall make periodic reviews of the financial condition of the Scheme. Each period in respect of which such a periodic review is made—

(a) shall commence on the day immediately following the end of the period in respect of which the last preceding review was made under this Clause;

(b) shall not in any event exceed three and a half years; and

(c) shall be three years unless prior to the Guarantee Date the Committee or on and after the Guarantee Date the Committee with the consent of the Guarantor determine otherwise in any particular case.

(4) On each such periodic review on or before the Guarantee Date —

(i) The Actuary shall make recommendations as to the total of the rates of Members' Normal Contributions and Family Contributions and Employers' standard contributions to the Scheme.

(ii) The Actuary shall determine whether or not, at the review date, there is a surplus or deficiency in the Scheme Fund if contributions after the review date are paid at the rate or rates recommended in sub-paragraph (i) of this paragraph. For the purposes of such determination, additional contributions paid or yet to be paid to meet the cost of benefits payable in respect of Members made redundant up to the review date shall be regarded as an asset of the Scheme Fund.

(iii) The Actuary shall make a report to the Committee on the financial condition of the Scheme specifying the determination made by him under this paragraph. A copy of each review and report so made shall be delivered by the Committee to the Principal Employer, together with any recommendation they may wish to make thereon.

(5) On a periodic review on or before the Guarantee Date —

(a) If there is a deficiency, after allowing for the additional contributions paid or yet to be paid specified in sub-paragraph (ii) of paragraph (4), the Actuary shall determine the total periodic sum, either fixed in money terms or linked to average earnings or prices, (in this paragraph called “the deficiency sum”) which, in his opinion, is required to be paid by way of deficiency contributions to the Scheme over a period not exceeding forty years commencing on such date not earlier than the review date and at such periodic intervals all as shall be determined by the Principal Employer.

(b) If contributions are not to be paid at the rate or rates recommended in sub-paragraph (i) of paragraph (4) but are to remain at the rates specified in Clause 5 and Rule 11, the Actuary shall make a fresh determination as to whether there is a surplus or deficiency in the Scheme Fund and such determination shall not take account of the admission of any new Members to the Scheme.

(c) If there is a deficiency on such determination, the Actuary shall determine the deficiency sum in accordance with the provisions of sub-paragraph (a) of this paragraph.

(d) Having regard to any determination pursuant to paragraph (4) or (5) of this Clause, the Actuary shall review any previous determination of deficiency contributions then operative made by him and shall substitute for such previous determination a fresh determination of deficiency contributions.

(e) If there is a surplus and such surplus will not be eliminated by the Principal Employer continuing to be relieved wholly or partially from the obligation to pay any contributions in accordance with proposals approved on a previous actuarial review, the Trustee shall make recommendations to the Principal Employer for dealing with any remaining surplus. The Principal Employer shall consider such recommendations and shall make such amendments to the Scheme and take such other actions as they consider appropriate to deal with any such remaining surplus in accordance with the principles set out in this sub-paragraph. Any such remaining surplus shall be applied in accordance with the following order of priorities:—

(i) first to provide annual cost of living increases to pensions and frozen pensions in respect of the period of the five preceding calendar years and the period of the calendar year in which such recommendations are put forward insofar as during that period any increase in excess of 5 per cent may not have been made pursuant to Rule 33A having regard to the proviso to sub-paragraph (2)(a) of Rule 33A;

(ii) second to suspend the Principal Employer’s obligation to pay standard contributions for such period as may be related to the aggregate of (i) the total amount of any deficiency contributions paid by the Principal Employer during the period of six years ended on the preceding 5 April and (ii) the value of any loss suffered by the Principal Employer during such period as a result of the withdrawal or reduction on any actuarial review of any benefit by way of relief from or reduction in the obligation to pay standard contributions granted to the Principal Employer on an earlier actuarial review;

(iii) third to provide cost of living increases in respect of every pension (including a frozen pension) payable in relation to the calendar year next following the calendar year in which such recommendations are put forward;

(iv) fourth to calculate the amount of the remaining balance after (a) deducting the cost of the changes made pursuant to sub-paragraphs (i), (ii) and (iii) of this paragraph (b) deducting such sum (if any) as may be determined by the Actuary in accordance with paragraph (6) below being the preserved share as therein defined (but so that such sum shall not exceed in any event such amount as would result in the remaining balance being a negative figure) and which shall be applicable for the benefit of the Principal Employer and after (c) retaining in the Scheme such sum (if any) as may be agreed as prudent by the Trustee and the Principal Employer after consultation with the Actuary and to apply, insofar as is practicable, an amount equal to one half of the amount of such remaining balance for the benefit of Members (either by making improvements to benefits or by reducing the rate of contributions, if any, under Rule 11 or eliminating them altogether, for a period) and to apply the other half of such amount for the benefit of the Principal Employer.

(f) For the purposes of sub-paragraph (e) of this paragraph, “pension” and “frozen pension” shall have the same meanings as in Rule 33A(6).

(6)

(a) This paragraph shall apply for the purposes of the Actuary’s determination of the preserved share under item (b) of paragraph (5)(e)(iv) above.

(b) The Actuary shall calculate the unapplied portion, the indexation application and the excess application as hereinafter defined:

(i) “the unapplied portion” in relation to an actuarial review means the total identified as applicable for the benefit of the Principal Employer as at the 5 April 1992 actuarial review less the amount applied (but not including the amount treated as applied under sub-paragraph (d) below) since 5 April 1992 up to the review date of the later actuarial review for the benefit of the Principal Employer in accordance with sub-paragraph (5)(e)(iv) above;

(ii) “the indexation application” in relation to an actuarial review means the amount (if any) applied under sub-paragraphs (5)(e)(i) and (iii) above following and as a result of that review;

(iii) “the excess application” at a given time means the total cost of providing increases since 5 April 1992 up to that time to pensions under Rule 33A in excess of the maximum declared by the Actuary under Rule 33A(2)(b).

In applying this paragraph on any actuarial review the unapplied portion and the indexation application shall be re-calculated in accordance with sub-paragraph (c) below.

(c) On each actuarial review following that as at 5 April 1992, the unapplied portion and the indexation application in relation to each earlier review shall each be re-calculated by the Actuary to the extent to which he considers it appropriate to take into account the following factors:

(i) any divergence between the assumptions made when the sum was first calculated on the one hand, and the actual experience of the Scheme and the assumptions made by the Actuary on the later review on the other hand

(ii) such adjustment as the Actuary considers appropriate to make allowance for timing difference and investment returns.

(d) “the preserved share” in relation to the actuarial review next following the review as at 5 April 1992 means the unapplied portion in relation to that review and “the preserved share” in relation to any subsequent actuarial review means the preserved share in relation to the immediately preceding actuarial review less the amount (if any) by which the unapplied portion in relation to that subsequent actuarial review falls short of the unapplied portion in relation to the immediately preceding actuarial review but so that there shall be treated for this purpose as having been applied since that preceding review for the benefit of the Principal Employer pursuant to sub-paragraph (5)(e)(iv) above the amount (if any) by which the preserved share on that preceding review exceeded the sum of the surplus disclosed on that preceding review (taking that surplus as nil if there was a deficiency) and all indexation applications prior to that preceding review other than in relation to the actuarial review as at 5 April 1992 together with the excess application at the time of that preceding review.

(7)

(a) As soon as practicable after the Guarantee Date the Actuary shall make and advise the Committee of the initial determination of the Investment Reserve which shall be calculated as at the Guarantee Date and shall be the Present Value of the total surplus (expressed in terms of market values) as at the 5th April 1992 actuarial review prior to any provision made for the continuation beyond the date of that review of the Principal Employer’s contribution reduction LESS the aggregate of :—

(i) the Present Value of the capital value (expressed in terms of market values) as at the 5th April 1992 actuarial review of the amount applied for the benefit of Members which for the avoidance of doubt does not include any sum attributable to enhanced early retirement benefits on redundancy granted pursuant to Rule 50(a);

(ii) the Present Value of the aggregate amounts which would have been contributed to the Scheme by the Principal Employer since 5th April 1992 up to the Guarantee Date as standard contributions but for the suspension of that liability by operation of paragraph (1)(i) of this Clause; and

(iii) the Present Value of the amount certified by the Actuary as equal to the additional liabilities created by the grant pursuant to Rule 50(a) of enhanced early retirement benefits on redundancy to Members ceasing to be Contributors on or after 5th April 1993 and before the Guarantee Date.

The Committee on receipt of the advice of the Actuary relating to his initial determination of the Investment Reserve, shall forthwith create such accounts, and make such entries or transfers as are necessary to give proper effect to the establishment of the Investment Reserve as so determined.

(b) On each periodic actuarial review following the Guarantee Date the Actuary shall review the determination of the Investment Reserve and where appropriate shall recommend to the Committee that it makes such adjustments to the Investment Reserve as he may consider appropriate in order to :—

(i) provide for transfers from the Investment Reserve to the Guaranteed Fund pursuant to paragraphs (4)(b)(I), (4)(b)(II) or (5)(iv) of Clause 6A;

(ii) provide for transfers to the Investment Reserve from a surplus in the Guaranteed Fund pursuant to paragraph (4)(a) of Clause 6A;

(iii) provide for an adjustment to the payments to the Guarantor under (c) below so as to achieve (subject to the need to retain monies to cover future liabilities in respect of enhanced early retirement benefits on redundancy) the reduction of the Investment Reserve to a nil amount over a period of 25 years from the Guarantee Date or such longer period as the Guarantor may from time to time determine;

(iv) provide for the continued application since the later of the Guarantee Date and the last review date by way of transfers to the Guaranteed Fund from the Investment Reserve of amounts for the benefit of the Principal Employer by way of contribution reductions pursuant to paragraph (1)(i) of this Clause;

(v) provide for the transfer to the Guaranteed Fund out of the sum of £150M referred to in paragraph (1)(iv) of this Clause of the amount certified by the Actuary as equal to the additional liabilities created since the Guarantee Date or the last review date (as the case may be) by the grant pursuant to Rule 50(a) of enhanced early retirement benefits on redundancy of Members ceasing to be Contributors after the Guarantee Date;

(vi) make allowance in any of the calculations (i) (ii) (iii) (iv) or (v) above or generally in the review of the determination of the Investment Reserve for timing differences, investment returns and future investment returns and for these purposes shall make such actuarial assumptions regarding future investment returns as are consistent with those employed in the periodic review being carried out or where such assumptions are required for the initial determination of the Investment Reserve, the Actuary may make such assumptions as to future investment returns as he shall consider appropriate.

The Committee on receipt of the recommendations of the Actuary relating to his review of the determination of the Investment Reserve, shall forthwith make such adjustments or transfers by reference to items (i) to (vi) above as are indicated in such recommendations.

(c) Subject to the provisions of Clause 6A which apply in the event of a periodic valuation of the Guaranteed Fund disclosing a deficiency in the Guaranteed Fund, the Committee shall each year following a periodic actuarial review of the Scheme Fund after the Guarantee Date pay to or apply for the benefit of the Guarantor such part of the Investment Reserve as the Actuary shall at that periodic actuarial review determine to be appropriate in respect of the period until the next review.

(d) For the purposes of this Clause and Clause 6A: —

(i) “investment returns” (including capital gains or losses realised or unrealised and net of expenses) shall be attributed to the Investment Reserve, the Guarantor’s Fund or the Bonus Augmentation Fund, as the case may be, every quarter by applying the proportion that the average notional balance in the relevant fund in that quarter bears to the average assets of the Scheme Fund to the total investment return (including capital gains or losses realised or unrealised) earned by the Scheme Fund in that period;

(ii) “Present Value” of a previously determined value or amount shall mean that value or amount together with investment returns attributable to the period between the date at which the amount or value was originally determined and the date at which the present value falls to be determined.

(iii) the Investment Reserve shall be initially determined as provided in sub-paragraph (a), subsequently and periodically adjusted as provided in sub-paragraph (b) and reduced by payments to the Guarantor as provided in sub-paragraph (c). The provisions of this Clause and Clause 6A regarding the Investment Reserve shall continue to have effect after any time at which it has no assets.

Section 6

Resolution (with schedule)

Section 6

Resolution establishing special scheme

Section 6A Valuations after the Guarantee Date

(1) On and with effect from the Guarantee Date there shall be created within that part of the Scheme Fund other than the Investment Reserve the following notional sub-funds: —

“the Guarantor’s Fund” ;

“the Bonus Augmentation Fund” ;

“the Guaranteed Fund” ; and

“the Crystallised Augmentation Fund”

which shall be comprised and be maintained on a notional basis in the manner set out in paragraph (2) below to reflect the particular credit and debit items referred to in that paragraph.

(2) Following each periodic actuarial review after the Guarantee Date the payments or adjustments referred to in sub-paragraphs (a) and (b) shall be made.

(a) There shall be credited to the Guarantor’s Fund: —

(i) a share of any surplus under paragraph (4)(a)(ii);

(ii) investment returns calculated in accordance with paragraph (7)(d)(i) of Clause 6; and

(iii) any payments received by the Scheme Fund from the Guarantor following a certification as is referred to in either paragraph (4)(b)(II)(iii) of this Clause or Clause 47(5)(d).

There shall be debited from the Guarantor’s Fund: —

(I) payments to the Guarantor under paragraph (3)(i); and

(II) transfers to the Guaranteed Fund pursuant to paragraph (4)(b)(II)(iv).

(b) There shall be credited to the Bonus Augmentation Fund: —

(i) a share of any surplus under paragraph (4)(a)(i); and

(ii) investment returns calculated in accordance with paragraph (7)(d)(i) of Clause 6.

There shall be debited from the Bonus Augmentation Fund: —

(I) such amounts as the Committee acting on the advice of the Actuary determine to be necessary to provide Bonus Augmentations; and

(II) transfers to the Guaranteed Fund pursuant to paragraph (4)(b)(II)(ii).

(c) The Guaranteed Fund shall comprise that part of the Scheme Fund other than the Guarantor’s Fund the Bonus Augmentation Fund and the Investment Reserve.

(d) The Crystallised Augmentation Fund shall comprise that part of the Guaranteed Fund out of which liability for Guaranteed Crystallised Augmentations shall be met.

(3) The following provisions apply in relation to the operation of the Guarantor’s Fund and the Bonus Augmentation Fund: —

(i) The Committee shall pay from any share transferred to the Guarantor’s Fund under paragraph (4)(a)(ii) amounts (after deduction of any tax due thereon) to the Guarantor as a series of payments over a ten year period beginning on the date of the review. The Actuary shall in respect of each series of ten annual payments determine the amount of the annual payments with the aim that the balance of the share to be paid shall be so paid uniformly over the ten year period and at the first and second periodic reviews following the commencement of the payments the Actuary shall review and if necessary adjust the amounts of the annual payments in any series of payments being made to maintain the uniform payment over the ten year period. Each annual payment shall be made as at 5th April in each year. The last annual payment in a ten year series shall be determined by the Actuary at the third periodic review following the commencement of that series of payments as the amount necessary to complete that series of payments.

(ii) Subject to Clause 47, no amounts may be paid credited lent or otherwise transferred to the Bonus Augmentation Fund other than amounts credited as investment returns within the meaning of paragraph (7)(d)(i) of Clause 6 or transfers to the Bonus Augmentation Fund as a share of surplus under paragraph (4)(a)(i).

(4) On each periodic review on or after the Guarantee Date the Actuary (using an actuarial method and assumptions selected by him after consultation with the Committee and the Guarantor) shall determine the value of the assets and liabilities of the Scheme Fund and in particular shall make recommendations as to the total of the rates of Members' Normal Contributions and Family Contributions and Employers' standard contributions to the Scheme and determine whether or not at the review date there is a surplus or deficiency in the Guaranteed Fund if contributions after the review date are paid at the rate or rates he has recommended above. For the purposes of such determination, additional contributions paid or yet to be paid to meet the cost of benefits payable in respect of Members made redundant up to 6th April 1993 shall be regarded as an asset of the Guaranteed Fund. For the purpose of valuing the Scheme Fund the Actuary shall have no regard to the assets comprising the Investment Reserve and when valuing those parts of the Scheme Fund comprising the Bonus Augmentation Fund and the Guarantor’s Fund he shall deem the liabilities of the Bonus Augmentation Fund and the Guarantor’s Fund to be equal in value to the corresponding assets of the respective funds.

(a) If such review discloses that there is a surplus in the Guaranteed Fund and if there shall have been a transfer under paragraphs (4)(b) or (5)(iv) of this Clause from the Investment Reserve to the Guaranteed Fund made in any previous review which in the opinion of the Actuary has not been fully re-credited to the Investment Reserve the Present Value of such uncredited amount (as determined by the Actuary), shall be transferred to the Investment Reserve from the surplus. The Actuary shall then review and adjust the Investment Reserve as provided in paragraph (7)(b) of Clause 6.The balance of the surplus (if any) following such transfer or the whole of the surplus if there shall have been no such transfer shall be divided by the Actuary into two equal shares on the basis that: —

(i) one share shall be transferred to the Bonus Augmentation Fund and if there shall be liabilities in the Crystallised Augmentation Fund in respect of Guaranteed Crystallised Augmentations the share shall be applied by the Committee to secure Crystallised Augmentations for Members in receipt of Guaranteed Crystallised Augmentations in such form and of such amount as (to the extent as the application of funds will permit) reproduces identically the Guaranteed Crystallised Augmentations being received by such Members at that time and thereupon the liability of the Crystallised Augmentation Fund in respect of such Guaranteed Crystallised Augmentations to the extent that they are so reproduced shall be extinguished. The share or the balance of the share (if any) may then be applied by the Committee pursuant to sub-paragraph (d) in augmenting subject to Inland Revenue limits all or any of the pensions in payment or prospectively payable from the Scheme; and

(ii) the other share shall be transferred to the Guarantor’s Fund.

(b)

(I) If the review discloses that there is a deficiency in the Guaranteed Fund the Actuary shall review the Investment Reserve and adjust it as provided in items (iv) (v) and (vi) of Clause 6(7)(b) and if no Bonus Augmentations are being or have been paid from the Bonus Augmentation Fund the Actuary shall certify such deficiency to the Guarantor and the Committee and the Committee shall thereupon transfer an amount from the Investment Reserve to the Guaranteed Fund for the purpose of eliminating such deficiency. The Actuary shall then complete the review and adjustment of the Investment Reserve pursuant to Clause 6(7)(b). If the deficiency is not eliminated by such a transfer from the Investment Reserve the Actuary shall certify the outstanding deficiency to the Guarantor and the Committee.

(II) If the review discloses that there is a deficiency in the Guaranteed Fund and Bonus Augmentations are being or have been paid from the Bonus Augmentation Fund the Actuary shall certify the deficiency to the Guarantor and the Committee shall review the Investment Reserve and adjust it as provided in items (iv), (v) and (vi) of Clause 6(7)(b) and the Actuary shall: —

(i) determine the amounts which can be transferred from the Investment Reserve to eliminate such deficiency and the Actuary shall then complete the review and adjustment of the Investment Reserve pursuant to Clause 6(7)(b);

(ii) if the amounts referred to at (i) above which can be transferred from the Investment Reserve are not sufficient to eliminate the deficiency, determine the amounts which (when aggregated with transfers of equal value from the Guarantor’s Fund) can be transferred to the Guaranteed Fund from the Bonus Augmentation Fund to eliminate the deficiency;

(iii) if amounts fall to be transferred to the Guaranteed Fund from the Bonus Augmentation Fund, certify to the Guarantor and the Committee the balance in the Bonus Augmentation Fund prior to any such transfers and also certify the balance in the Guarantor’s Fund after account has been taken of any outstanding liabilities to the Guarantor under paragraph (3)(i) and the amount (if any) which should be added to the Guarantor’s Fund so that it equals the Bonus Augmentation Fund; and

(iv) determine the value of any transfers to the Guarantor’s Fund made following an earlier periodic review which are transferable from the Guarantor’s Fund to the Guaranteed Fund equal to and in parallel with the amounts transferred from the Bonus Augmentation Fund to the Guaranteed Fund under (ii) above.

If the review discloses a deficiency in the Guaranteed Fund giving rise to a transfer from the Investment Reserve an amount shall be transferred to the Guaranteed Fund from the Investment Reserve for the purpose of eliminating such deficiency. If it appears that such transfer will not be sufficient to eliminate the deficiency without transfers from the Bonus Augmentation Fund and the Guarantor’s Fund to the Guaranteed Fund the Actuary shall certify such deficiency to the Guarantor and the Committee and the Committee shall make transfers to the Guaranteed Fund from the Bonus Augmentation Fund and the Guarantor’s Fund in accordance with the preceding provisions of this Clause and for the purposes of this Clause the assets of the Guarantor’s Fund capable of being so transferred to the Guaranteed Fund shall include the right of the Guarantor’s Fund to receive future instalments of any amount payable by the Guarantor to that fund consisting of the balance to be added to the Guarantor’s Fund as certified under (iii) of this sub-paragraph (b)(II).

(c) On each such periodic review on or after the Guarantee Date the Actuary shall make a report to the Committee and the Guarantor on the financial condition of the Scheme Fund and the Guaranteed Fund specifying the determinations made by him under this paragraph.

(d) If the report on a periodic review on or after the Guarantee Date discloses a surplus in the Guaranteed Fund and as a consequence a transfer is made to the Bonus Augmentation Fund the Committee may as soon as reasonably practicable make recommendations to the Guarantor for the application of the surplus so transferred and any such recommendations shall be accompanied by a statement from the Actuary as to the financial implications of the recommendations. Provided the statement from the Actuary confirms that in his view the recommendations can be supported from the monies which will be available in the Bonus Augmentation Fund the Committee shall with the prior consent of the Guarantor implement the recommendations subject only to such modifications (if any) as shall be agreed between the Committee and the Actuary with the consent of the Guarantor.

(e) If there is a deficiency in the Guaranteed Fund following a transfer to it of the Investment Reserve and the transfers to the Guaranteed Fund from the Bonus Augmentation Fund and the Guarantor’s Fund under sub-paragraphs (b)(II)(ii) and (b)(II)(iv) and there remains a balance in the Guarantor’s Fund such balance (or so much as is necessary to eliminate such deficiency) shall be transferred to the Guaranteed Fund with a view to eliminating such deficiency.

(f) If the Actuary determines in the case of a deficiency in the Guaranteed Fund that following a transfer to it of the Investment Reserve under sub-paragraph (b)(II) and transfers to it from the Bonus Augmentation Fund under sub-paragraph (b)(II) and the Guarantor’s Fund under sub-paragraph (b)(II) and (if appropriate) sub-paragraph (e) the deficiency in the Guaranteed Fund will not be eliminated he shall forthwith certify the deficiency to the Guarantor and the Committee.

(5) On each periodic review on or after the Guarantee Date (other than the first such review) the Actuary shall following his review of the Guaranteed Fund carry out a review of the Bonus Augmentation Fund having taken account of the transfers (if any) between the Bonus Augmentation Fund and the Guaranteed Fund to be made in accordance with sub-paragraphs (a) or (b) of paragraph (4) and the liabilities of the Bonus Augmentation Fund created following the application of the share transferred to it under sub-paragraph (a)(i) of paragraph (4) and shall make a report to the Committee and the Guarantor on the financial condition of the Bonus Augmentation Fund. In carrying out such a review the Actuary shall determine whether or not at the review date there is a surplus or deficiency in the Bonus Augmentation Fund: —

(i) if there is a surplus in the Bonus Augmentation Fund and if there shall be liabilities in the Crystallised Augmentation Fund in respect of Guaranteed Crystallised Augmentations the surplus shall be applied by the Committee to secure Crystallised Augmentations in the Bonus Augmentation Fund for Members in receipt of Guaranteed Crystallised Augmentations in such form and of such amount (to the extent the application of funds will permit) as reproduces identically the Guaranteed Crystallised Augmentations being received by such Members at that time and thereupon the liability of the Crystallised Augmentation Fund in respect of such Guaranteed Crystallised Augmentations to the extent they are so reproduced shall be extinguished. The Committee may as soon as reasonably practicable make recommendations to the Guarantor for the application of the balance (if any) of the surplus and any such recommendations shall be accompanied by a statement from the Actuary as to the financial implications of the recommendations. Provided the statement from the Actuary confirms that in his view the recommendations can be supported from the surplus in the Bonus Augmentation Fund the Committee shall with the prior consent of the Guarantor implement the recommendations subject only to such modifications (if any) as shall be agreed between the Committee and the Actuary with the consent of the Guarantor;

(ii) if there is a deficiency in the Bonus Augmentation Fund the Actuary shall certify the deficiency to the Guarantor and the Committee and shall then recalculate the liabilities of the Bonus Augmentation Fund on the basis that all Bonus Augmentations payable therefrom on terms which provide for the amount of the Bonus Augmentations in respect of a benefit in payment to increase at any time or from time to time shall cease to apply and the liabilities in respect of Bonus Augmentations shall be recalculated on the basis of the amounts being paid at the date of the periodic review of the Bonus Augmentation Fund not being increased and being subject to the provisions of (v) below and such recalculated liabilities shall be referred to as “Crystallised Augmentations”;

(iii) if following the identification of the deficiency in the Bonus Augmentation Fund the Bonus Augmentation Fund is valued again as provided in (ii) above with the liabilities recalculated as Crystallised Augmentations and the revaluation discloses that the value of the Bonus Augmentation Fund is greater than the value of the Crystallised Augmentations the Actuary shall certify as the “Bonus Augmentation Residue” the amount which is in excess of that needed to secure the Crystallised Augmentations and the Committee may as soon as reasonably practicable make recommendations to the Guarantor for the application of the Bonus Augmentation Residue and any such recommendations shall be accompanied by a statement from the Actuary as to the financial implications of the recommendations. Provided the statement from the Actuary confirms that in his view the recommendations can be supported from the Bonus Augmentation Residue the Committee shall with the prior consent of the Guarantor implement the recommendations subject only to such modifications (if any) as shall be agreed between the Committee and the Actuary with the consent of the Guarantor. The Crystallised Augmentations shall remain a liability of the Bonus Augmentation Fund;

(iv) if the Actuary shall certify that the assets of the Bonus Augmentation Fund are insufficient to secure the payment in full of the Crystallised Augmentations which remain a liability of the Bonus Augmentation Fund, liabilities in respect of that part of the Crystallised Augmentations which is not covered by assets in the Bonus Augmentation Fund shall be transferred to the Crystallised Augmentation Fund (where those liabilities shall be referred to as “Guaranteed Crystallised Augmentations”) together with such amount from the Investment Reserve as is necessary to secure the payment of such Guaranteed Crystallised Augmentations from the Crystallised Augmentation Fund and if the amount so transferred to the Crystallised Augmentation Fund from the Investment Reserve is insufficient to secure the payment of the Guaranteed Crystallised Augmentations such additional amounts as are necessary to so secure the payment of the Guaranteed Crystallised Augmentations shall be transferred from the Guarantor’s Fund to the Crystallised Augmentation Fund. If the total amount which can be transferred from the Guarantor’s Fund is insufficient to secure the payment of the Guaranteed Crystallised Augmentations the Actuary shall certify such deficiency to the Guarantor and the Committee. Guaranteed Crystallised Augmentations shall remain a liability of the Crystallised Augmentation Fund until such time as the liability might be extinguished pursuant to paragraphs (4)(a)(i) or (5)(i) or pursuant to (v) below;

(v) no provisions in Rule 33A relating to the periodic increase to benefits shall apply to Guaranteed Crystallised Augmentations payable from the Crystallised Augmentation Fund or Crystallised Augmentations payable from the Bonus Augmentation Fund but the amounts of Guaranteed Crystallised Augmentations and Crystallised Augmentations shall be reduced in each year by amounts equal to the relevant proportion of the amount of any increase to benefits payable from the Guaranteed Fund made under Rule 33A so that eventually the payment of those Guaranteed Crystallised Augmentations and Crystallised Augmentations which represent former increases to benefits, shall cease. For the purposes of this Clause the “relevant proportion” in relation to either the Crystallised Augmentations or the Guaranteed Crystallised Augmentations of a Member shall be determined by comparing the amounts of whichever is appropriate of the Guaranteed Crystallised Augmentations or the Crystallised Augmentations of the Member with the aggregate of the amounts of the Crystallised Augmentations and the Guaranteed Crystallised Augmentations of the Member;

(vi) for the purposes of any such review of the Bonus Augmentation Fund, liabilities in respect of Bonus Augmentations shall be valued using an actuarial method and assumptions selected by the Actuary after consultation with the Guarantor and the Committee which are consistent with those used for the review of the Guaranteed Fund;

(vii) any adjustments to the relationship between the assets and liabilities of the Guaranteed Fund which arise in the course of the review of the Bonus Augmentation Fund shall be carried forward to the next periodic review.

(6) The Actuary shall produce and make available to the Guarantor and the Committee from time to time such certificates as to matters ascertained or determined by him for the purposes of this Clause and Clause 47 (including confirmation that any transfers required under this Clause or Clause 47 have been made) as the Guarantor or the Committee may require in connection with the implementation of any arrangements entered into by the Trustee and the Guarantor pursuant to Clause 44.

Section 6AB Admission of Other Employers and New Members

(1) Before the Guarantee Date the Principal Employer may, with the consent of the Trustee, and on and after the Guarantee Date the Guarantor with the consent of the Trustee, may extend the benefit of the Scheme to such employees of any Employer which was not participating in the Scheme as at 2 November 1990 as may be eligible for membership of the Scheme Provided that

(i) any such Employer shall enter into a deed by which it covenants with the Trustee to comply with and observe the provisions of the Scheme so far as they are applicable to it as an Employer but so that any Employer which was a Subsidiary of the Principal Employer as at 2 November 1990 shall not be required to enter into such a deed; and

(ii) the participation of any such Employer will not prejudice approval of the Scheme by the Commissioners of Inland Revenue; and

(iii) the Trustee shall not be entitled to give its consent unless any such Employer covenants to pay such contributions as the Actuary shall determine to be fair and reasonable and unless the Actuary gives an opinion to the effect that the admission to the Scheme of the existing employees (if any) of any such Employer on the terms proposed is unlikely within the following five years to prejudice significantly the rights or interests of any person already a Member at the date of such admission.

(2)

(a) New employees of Employers (subject to the exceptions mentioned in sub paragraph (b) of this paragraph) shall not be eligible for membership of the Scheme without the consent of (before the Guarantee Date) without the consent of the Trustee the Trustee or (on and after the Guarantee Date) the Trustee and the Guarantor Provided that the Trustee shall not be entitled to give its consent unless the Actuary gives an opinion to the effect that the admission of such employees to the Scheme on the terms proposed is unlikely within the following five years to prejudice significantly the rights or interests of any person already a Member at the date of such admission.

(b) The following categories of new employees shall be excluded from the provisions of sub paragraph (a) of this paragraph:

(i) new employees of the British Coal Corporation and of any Employer which at the time of the new employee accepting employment is a Subsidiary of the British Coal Corporation;

(ii) new employees of a Principal Employer other than the British Coal Corporation who accept employment in the ordinary course of that part of its business which such Principal Employer shall have acquired from the British Coal Corporation; and

(iii) new employees of any other Employer who accept employment in the ordinary course of that Employer’s business.

(3) After the Closure Date the powers of admission of Employers and new Members under this Clause 6B shall cease.

Section 7

Resolution (with schedule)

Section 7

Resolution establishing special scheme

Section 8 Receipts and Payments

(1) Subject to Rule 11A the Committee shall receive for the credit of the Scheme Fund all contributions and other payments (which for the avoidance of doubt shall expressly include income from investments) due to the Scheme. All payments received by the Principal Employer in connection with the Scheme shall be paid by the Principal Employer to the Scheme Fund.

(2) All payments required to be made under the Scheme shall subject to paragraph (3) of this Clause be made by the Committee from the Scheme Fund, and, in the event of the Fund not being sufficient to make such payments, then, to the extent of such insufficiency, they shall be made by the Principal Employer before the Guarantee Date and by the Guarantor after the Guarantee Date to the extent provided for in any arrangements entered into by the Trustee pursuant to Clause 44.

(3) With effect from the Guarantee Date all payments of Bonus Augmentations or Crystallised Augmentations other than Guaranteed Crystallised Augmentations shall be debited only from the Bonus Augmentation Fund.

Section 8

Resolution (with schedule)

Section 8

Determination of special scheme

Section 9 Investment

(1) So much of the moneys of the Scheme as shall not from time to time be required for application in the payment of pensions or other benefits or otherwise shall as soon as practicable be invested by the Committee in or upon the security of such investments whatsoever and wheresoever situate whether or not involving liability or whether or not producing income and whether or not otherwise authorised by law for the investment of trust funds as the Committee shall in their absolute discretion think fit to the intent that the Committee shall have the same unrestricted powers of making, varying, managing and transposing investments as if they were absolutely entitled to such moneys beneficially.

(2) Without prejudice to the generality of the foregoing powers the Committee shall have power:—

(a) to effect and maintain policies of insurance;

(b) to retain or place any such moneys on deposit or current account with any bank or on deposit with any company, local authority, building society or insurance company in any part of the world and for such periods as they shall think fit; and

(c) to carry out any improvements of any kind to land or buildings in which the Scheme has an interest including the erection demolition and reconstruction of any buildings and the development of land and other property.

(3) The Committee shall have the power to appoint one or more nominees or custodian trustees to hold investments on behalf of the Committee.

(4) The Committee shall have power to raise or borrow any sum or sums of money and secure the repayment thereof in such manner and upon such terms as they think fit and to charge the sums so raised or borrowed or any part thereof on all or any part of the Scheme Fund.

(5) The Committee shall have power to enter into any transaction which is not authorised by any of the other provisions of the Scheme or otherwise by law and which in their opinion is beneficial to the Scheme and, without prejudice to the generality of the foregoing, the Committee shall have power:—

(a) to lend any investments of the Scheme Fund to any person or corporation on such terms and for such purposes as the Committee may think fit;

(b) to underwrite, sub-underwrite or guarantee the subscription of any stocks, shares, debenture stocks or other investments; and

(c) to give any warranty or indemnity in connection with the exercise of their powers under this Clause.

(6) Moneys may be invested or laid out in or upon any investment or transaction of any nature hereby authorised notwithstanding that the same may be acquired or entered into by the Committee jointly or in common with any other person or corporation.

Section 9

Resolution (with schedule)

Section 9

Determination of special scheme

Section 9A Investment

(1) Notwithstanding the provisions of Clause 9 no part of the Scheme Fund shall at any time be invested in employer-related investments as defined in paragraph (2) of this Clause save that the Scheme Fund may at any time be invested in not more than 3 per cent of any class of any securities issued by an Employer or any such company as is referred to in sub-paragraph (a)(i) of paragraph (2) of this Clause which are listed or permitted to be dealt in on any recognised stock exchange.

(2) For the purposes of this Clause:—

(a) “employer-related investments” means—

(i) shares or other securities issued by an Employer or by any holding company as defined in section 736 of the Companies Act 1985 of an Employer or by any company in which an Employer or such holding company holds a majority of the voting rights;

(ii) property (other than land) which is used for the purposes of any business carried on by an Employer or any such company as is referred to in sub-paragraph (a)(i); and

(iii) loans to an Employer or any such company as is referred to in sub-paragraph (a)(i).

(b) “securities” means any asset, right or interest falling within paragraph 1, 2, 4 or 5 of Schedule 1 to the Financial Services Act 1986.

Section 10 Investment

(1) The Committee by themselves or any nominee on their behalf shall have power to do all or any of the following:—

(a) to carry on any business or other activity in partnership whether in the United Kingdom or elsewhere;

(b) to enter into any business or other partnership with others whether in the United Kingdom or elsewhere, or to acquire by subscription or otherwise an interest whether freely transferable or not in any such partnership;

(c) from time to time to finance or provide funds whether by way of loan or further investment or otherwise for any partnership or proposed partnership of which they or their nominee may for the time being be partners or propose to become partners; and

(d) from time to time to enter into any arrangement or agreement whether by way of substitution for or modification of any then subsisting arrangement or agreement or otherwise with all or any of the other partners or proposed partners in any partnership or proposed partnership of which they or their nominee may for the time being be partners or propose to become partners.

(2) The Committee or any nominee on their behalf shall have power without being liable for any loss occasioned thereby to leave the entire management of any business or activity carried on by any partnership of which they or such nominee may for the time being be partners to any other partners or partner without any obligations on their or such nominee’s part to attend thereto further than to require such other partners or partner to render an account thereof from time to time as the Committee or such nominee may think appropriate.

(3) For the avoidance of doubt the Committee shall have power:—

(i) to employ any moneys of the Scheme not required for payment of pensions or other benefits; and

(ii) to enter into transactions in connection with such partnership

as though such a partnership were an investment authorised under paragraph (1) of Clause 9.

(4) For the purposes of this Clause “business” includes any trade, profession or occupation.

Section 10

Resolution (with schedule)

Section 10

Supplemental determination

Section 10A Investment

The Committee shall with effect from the Guarantee Date exercise and perform their powers and duties under Clauses 9, 9A and 10 in accordance with and subject to any directions as the Guarantor may from time to time make. Provided that the Guarantor will only make such directions after consultation with the Committee unless in exceptional circumstances such consultation is impracticable.

Section 11 Investment

(1) Without prejudice to the provisions of or to any powers conferred by Section 23 of the Trustee Act 1925 or Clauses 9 and 10, the Committee shall have power ( such power to be exercisable after the Guarantee Date only with the consent of the Guarantor ) to employ such nominees or agents as the Committee may think fit in the transaction of any business of the Scheme (including the payment of pensions and other benefits) and any valid receipt therefor given to or by such nominee or agent shall be a good and sufficient discharge to the Committee.

(2) Without prejudice to the generality of the foregoing and the provisions of Clauses 27 and 27A, the Committee shall have power ( such power to be exercisable with effect from the Guarantee Date only with the consent of the Guarantor ) to appoint and remove one or more investment managers to the Scheme and to authorise any such investment manager to exercise all or any of their powers set out in Clauses 9, 10 and paragraph (1) of this Clause on such terms as to remuneration and otherwise as shall from time to time be agreed between the Committee ( with effect from the Guarantee Date with the consent of the Guarantor ) and such investment manager or managers.

Section 11 Normal and Family Contributions

(a) Every Member by virtue of the foregoing provisions of the Rules who is employed in Eligible Employment in a grade eligible for membership of the Scheme or is otherwise eligible to be a Contributor shall from his Actual Date of Entry pay Normal Contributions for securing Normal Benefits at the rate of 5 per cent of Salary (or, if his Actual Date of Entry was before 1st January, 1964, 4 per cent of Salary).

(b) Every male Contributor shall also pay Family Contributions for securing Family Benefits at the rate of 1 per cent of Salary provided that during the period commenced on 6th April 1993 and terminating on 5th April 2009 every male Contributor shall be relieved of the obligation to pay Family Contributions but for the purpose of calculating Family Benefits he shall be deemed to have paid Family Contributions during such period for so long as he continues to be a Contributor.

(c) Subject to the proviso to paragraph (b) to this Rule and to the provisions of paragraph (d) of this Rule, contributions payable by a Contributor under paragraphs (a) and (b) of this Rule shall continue to be payable by him:—

(i) for a period of 40 years from the date of commencement of contributions under paragraph (a) of this Rule, reduced by the combined period of any Back Service Credit for Normal Benefits and of any Added Years for Normal Benefits and of any Extra Service Credit; or

(ii) subject to Rule 24(2), until he ceases to be employed in Eligible Employment in a grade eligible for membership of the Scheme; or

(iii) until he ceases to be a Contributor under any other provision of the Rules;

whichever is the shortest period.

(d) A Contributor who by virtue of an award of Extra Service Credit under paragraph (3) of Rule 44AD shall have paid or be deemed to have paid contributions for a period of 40 years or more shall, notwithstanding the provisions of sub-paragraph (c)(i) of this Rule, continue to pay contributions until 5th April 1993.

(e) Payment of Contributor’s contributions for the period between Actual Date of Entry and date of commencement of payment of contributions to be spread forward with compound interest from date of commencement of payments to date five years before Normal Retiring Age, but, when the contributions relate to a period not exceeding two years, the period of spread forward may terminate on the next but one 5th April, or extend for a period not exceeding two years from the date of commencement of contributions, in any of which events no compound interest will be charged.

Section 11

Resolution (with schedule)

Section 11A Additional Voluntary Contributions by Members

(1) This Rule sets out the terms upon which a Contributor may elect to make additional voluntary contributions to the AVC Scheme in order to secure additional benefits on retirement or payable upon death.

(2) In this Rule the words and expressions defined in Clause 48 shall have the same meanings and in addition

(a) “AVC Scheme” means the Scheme embodied in this Rule for the provision of certain additional benefits

(b) “the Contributor’s Fund” shall mean in relation to a Contributor to the AVC Scheme the amount payable on his retirement, death or ceasing to be in Eligible Employment in respect of his contributions to the AVC Scheme.

(3) No Contributor may elect in accordance with paragraph (4) of this Rule if he is then subject to notice to terminate his employment.

(4)

(a) Subject to paragraph (3) of this Rule a Contributor may elect to pay additional voluntary contributions at any time prior to Normal Retiring Age.

(b) In no circumstances shall any additional voluntary contributions be of such an amount that they would (when aggregated with any Normal or Family Contributions) in any year exceed 15 per cent, or such higher percentage as the Board of Inland Revenue may in a particular case prescribe, of his total remuneration from the Employer for that year.

(c) Contributions will be deducted from the earnings becoming payable to a Contributor save that a Contributor may at any time make a lump sum payment to the AVC Scheme by way of a special payment.

(d) A Contributor may on giving reasonable notice to the Secretary reduce, increase or terminate with effect on and from 6th April in each year his additional voluntary contributions Provided that subject as hereinafter mentioned a reduction in his additional voluntary contributions must not result in the payment of contributions of less than such amount as the Trustee may from time to time determine and provided further that the Trustee shall have power in its absolute discretion to allow a Contributor to terminate or reduce his additional voluntary contributions in case of financial hardship.

(5) Additional voluntary contributions shall be payable in such manner (consistent with Inland Revenue approval) as the Contributor and the Employer shall agree and shall be applied by the Trustee to provide additional benefits in respect of the Contributor in such form as the Contributor shall with the consent of the Trustee determine Provided that no part of the additional benefit shall take the form of a cash payment payable to the Member during his lifetime except to the extent as may be permitted by the Board of Inland Revenue. Such additional benefits must be reasonable having regard to (1) the amount of the additional voluntary contributions and (2) the value of the other benefits under the Scheme.

(6) On the death of a Contributor who has paid additional voluntary contributions pursuant to this Rule while in Eligible Employment the Contributor’s Fund shall be applied by the Trustee pursuant to Rule 28 or Rule 28A, whichever shall be applicable.

(7) On the retirement of a Contributor the Contributor’s Fund shall unless otherwise agreed between the Contributor and the Trustee be applied by the Trustee in accordance with the wishes of the Contributor expressed to the Trustee in writing Provided that:—

(a) if the Contributor has not expressed any wishes in writing to the Trustee it shall be entitled to apply the Contributor’s Fund in providing such benefits for the Contributor his Dependants or personal representatives as the Trustee in its absolute discretion shall think appropriate.

(b) if the wishes of the Contributor expressed pursuant to this paragraph would result in the benefit for which the Contributor has elected exceeding the Inland Revenue Limits then the surplus of the money in the Contributor’s Fund shall be applied by the Trustee at its discretion in providing such other benefits for the Contributor his Dependants or personal representatives as the Trustee in its absolute discretion shall deem appropriate and if the Trustee has provided the maximum benefits to or in respect of a Contributor which it may provide under the Inland Revenue Limits then the Contributor’s benefits under the Scheme shall be reduced so far as may be necessary.

(8) Any benefit provided pursuant to paragraph (7) of this Rule shall be secured by contracts or policies taken out with an Approved Insurer.

(9) On a Member ceasing to be a Contributor before attaining Normal Retiring Age without becoming entitled to an immediate pension under Rule 22 then—

(a) the additional voluntary contributions payable by such Member shall cease forthwith;

(b) if the Contributor to whom this paragraph applies elects to take a refund of his contributions the Contributor’s Fund shall be returned to him subject to deduction of tax pursuant to Rule 57;

(c) if a transfer is made to another retirement benefits fund, scheme or arrangement in respect of part or all of a Contributor’s benefit under the Scheme a like transfer shall be made in respect of the Contributor’s Fund; and

(d) subject to the preceding provisions the Contributor’s Fund shall be applied in providing benefits in accordance with paragraph (7) of this Rule at Normal Retiring Age or such earlier date on which any benefits under Rule 23 commence to be payable.

Section 11B Cost of Administration

(1) The Committee shall at such times and in such manner as may be agreed between the Committee and the Principal Employer pay to the Principal Employer such amounts as are certified by a duly authorised officer of the Principal Employer to have been expended by the Principal Employer in the payment of benefits under the Rules.

(2)

(a) Subject to the provisions of Clause 5 the costs of managing and administering the Scheme (other than such costs and expenses as are incurred by virtue of the exercise of the powers conferred by Clause 11) and the cost to the Principal Employer of services rendered by the Principal Employer either directly or indirectly in connection with or for the purposes of the Scheme in so far as incurred in either case on or after 6 April 1986 and before 6 April 1995 shall be borne by the Principal Employer.

(b) The costs and expenses incurred by virtue of the exercise of the powers conferred by Clause 11 in so far as incurred on or after 6 April 1986 together with the costs of managing and administering the Scheme and the cost to the Principal Employer of services rendered by the Principal Employer referred to in (a) above incurred on or after 6 April 1995 shall be payable by or with the authority of the Committee out of the Scheme Fund other than the Investment Reserve.

Section 12 Accounts to be kept

(1) The Committee shall cause to be kept full and true accounts of the Scheme Fund and of all sums of money received and expended by the Committee and by all persons employed by or under them, and shall cause to be kept full and complete records of all matters necessary or proper to be recorded. Separate accounts shall be kept in relation to additional voluntary contributions made by Contributors under Rule 11A.

(2) The Committee shall create and maintain and cause to be incorporated in the Statement of Accounts and the Auditors' Report thereon, separate accounts showing the workings of each of the Investment Reserve, the Guarantor’s Fund, the Bonus Augmentation Fund, the Crystallised Augmentation Fund and the Guaranteed Fund recording in full the accretions to and the payments from and transfers between each of those Funds. The terms of Bonus Augmentations, Crystallised Augmentations (if any) and Guaranteed Crystallised Augmentations (if any) shall be recorded and documented separately in Appendix VI. The terms on which any Guaranteed Crystallised Augmentations cease to be a liability of the Guaranteed Fund as a consequence of the application of later surpluses in the Bonus Augmentation Fund shall also be recorded in a similar manner. In respect of the benefits payable or secured out of the Bonus Augmentation Fund or otherwise records shall be kept of all Bonus Augmentations, Crystallised Augmentations and Guaranteed Crystallised Augmentations in respect of each Member entitled to the same showing the amounts paid or payable.

Section 12 Purchase of Further Years of Family Contributing Service

(1)

(a) A male Contributor shall have the option to purchase Further Years of Family Contributing Service in accordance with the succeeding provisions of this Rule.

(b) Subject as hereinafter provided, the option conferred by this paragraph to purchase Further Years of Family Contributing Service other than Added Years for Normal Family Benefits shall be exercisable within six months of marriage or of first becoming a Contributor or before 6th October, 1978, whichever is the latest Provided that if the Contributor has married whilst downgraded and not allowed to continue as a Contributor he may (without prejudice to the time limits available to him under this sub-paragraph) exercise that option within three months of re-entering a grade eligible for membership of the Scheme.

(c) The option conferred by this paragraph to purchase Added Years for Normal Family Benefits shall be exercisable in accordance with Rule 15(c) and (d) and, in so far as it is applicable, paragraph (2)(c) of this Rule.

(2) Subject as hereinafter provided:—

(c) A Contributor who exercises an option under paragraph (1) of this Rule shall pay for the period (if any) from his Actual Date of Entry to the date of commencement of payments under Rule 11(b) (but excluding any period between those dates which, by virtue of Rule 48(d), does not count as Contributing Service or during which the Contributor was downgraded and not allowed to continue as a Contributor or was not in Eligible Employment) the same proportion of Salary as under Rule 11(b) and such further payments under the succeeding provisions of this Rule as may be appropriate.

(ee) A Contributor who has been granted a Back Service Credit for Normal Benefits under Rule 44AA (in the form in which that Rule had effect on 2nd April, 1961), or a Back Service Credit for Normal Benefits under Rule 44, but no Back Service Credit for Normal Family Benefits under those Rules, shall have the option of paying three per cent of the annual rate of Salary paid to him at his Actual Date of Entry for the whole or any part of the period of such Back Service Credit, and he shall receive a Back Service Credit for Normal Family Benefits corresponding to the length of time by reference to which payment is so made. This option shall be exercisable within six months of transfer or first appointment to Eligible Employment or of exercising the option under paragraph (1) of this Rule for Normal Family Benefits or by 31st December, 1956, whichever is the later.

(f) A Contributor who has opted under paragraph (1) hereof for Added Years for Normal Family Benefits shall pay therefor, and in addition to any other contributions payable by him, the lump sum payment per £100 of Salary at the date of exercise of the option or the annual contribution (payable by instalments) per £100 of Salary at such date necessary to purchase one Added Year for Normal Family Benefits as are set out in Appendices I and II.

(g)

(i) Contributions under paragraphs (2)(c) and (ee) of this Rule shall (subject as therein provided) be paid as a single lump sum within 28 days of notification of the amount payable or, at the option of the Contributor, be spread forward with compound interest over the period from the date of exercise of the option under paragraph (1) of this Rule by virtue of which they become payable to a date five years before Normal Retiring Age Provided that if a Contributor lodges a request with the Secretary within 30 days of the date of his being notified of the cost of the contributions for Normal Family Benefits, the Principal Employer may in their discretion allow all or part of the spread-forward contributions payable pursuant to this paragraph to accumulate as a loan in accordance with Rule 53AA.

(ii) Contributions under paragraph (2)(f) of this Rule shall be payable as a single lump sum within 28 days of notification of the amount payable or, at the option of the Contributor, be spread with compound interest over the period from the date of the exercise of the option under paragraph (1) of this Rule by virtue of which they become payable to Normal Retiring Age.

(iii) A male Contributor who has exercised prior to 17 May 1990 an option to purchase Further Years of Family Contributing Service under paragraph (1) of this Rule may on or before Normal Retiring Age elect either to have the number of Added Years credited reduced to such period as may, in the opinion of the Actuary, be actuarially equivalent to the contributions for Added Years already paid, or to have the outstanding contributions, which would otherwise have been payable until his attainment of Normal Retiring Age deducted from any lump sum or pension payable to him.

(h) Notwithstanding the provisions of Rule 19, in calculating spread-forward contributions in respect of payments under paragraph (2)(ee) of this Rule, no interest shall be added in respect of the period before Actual Date of Entry.

(m) If a Contributor’s wife dies, or the marriage is dissolved or annulled, and all Children attain the age of 18 years or die, no further contributions shall be payable under any of the foregoing provisions of this Rule.

(n) If a Contributor satisfies the Committee that he is living separate and apart from his wife pursuant to a decree for judicial separation or a deed of separation, and that he has no Children below the age of 18 years living and he requests that the provisions of this paragraph shall apply to him, then, with effect from such date as the Committee shall determine, no further contributions shall be payable under any of the foregoing provisions of this Rule Provided that if a Contributor who has ceased to pay contributions by virtue of the preceding provisions of this paragraph resumes cohabitation with his wife he shall thereupon recommence payment of such contributions as he would pay but for the operation of this paragraph and shall also pay in such manner as the Committee may decide a sum representing the amount of the contributions which the Contributor would have paid but for the operation of this paragraph whilst living separate and apart from his wife, together with interest thereon to the date of resumption of cohabitation.

(3)

(a) Where contributions have ceased to be payable pursuant to paragraph (2)(m) of this Rule or of the previous Rule 12, or where they have ceased to be payable under paragraph (2)(n) of this Rule or of the previous Rule 12 and the wife referred to in that provision has died or the Contributor’s marriage to her has been dissolved or annulled, and all Children have attained the age of 18 years or died, and the Contributor subsequently remarries whilst still paying Normal Contributions under Rule 11(a), he may, at his option to be exercised before the Transfer Date :—

(i) if contributions so ceased before the date of commencement of contributions under Rule 11(b), pay contributions under paragraph (2)(a) or (b) of the previous Rule 12 for the period between the dates of such termination and such commencement (but excluding any period between those dates which, by virtue of Rule 48(d), does not count as Contributing Service or during which he was downgraded and not allowed to continue as a Contributor or was not in Eligible Employment); and

(ii) pay a sum representing the value at the date of termination under paragraph (2)(m) or as the case may be (2)(n) of the future spread-forward contributions which would have become payable under paragraphs (2)(c), (ee) and (f) of this Rule with interest to date of the exercise of such option; to be spread-forward with compound interest over the period from the date of recommencing payments to a date five years before Normal Retiring Age, or, if this date has passed, to be spread-forward with compound interest to Normal Retiring Age.

(b) Where a Contributor remarries in the circumstances specified in paragraph (3)(a) hereof, and that wife dies or the marriage is dissolved or annulled, and all Children attain the age of 18 years or die, no further contributions shall be payable under any of the foregoing provisions but if he subsequently remarries whilst still paying Normal Contributions under Rule 11(a) he may, at his option ( to be exercised before the Transfer Date) , pay in the manner determined by the Committee such sum in respect of Family Benefits as the Actuary considers reasonable having regard to the contributions already paid by the Contributor under this Rule.

(4)

(a) Subject as hereinafter provided a Contributor who exercises or has exercised an option under paragraph (1) of this Rule or of the previous Rule 12 shall be credited:—

(i) with Family Contributing Service for the period if any from his Actual Date of Entry to the date of commencement of payments under Rule 11(b) (but excluding any period between those dates which, by virtue of Rule 48(d), does not count as Contributing Service or during which the Contributor was downgraded and not allowed to continue as a Contributor or was not in Eligible Employment);

(ii) if he pays or has paid contributions in accordance with paragraph (2)(ee) of this Rule or the previous Rule 12, with Family Contributing Service equal in length to the Back Service Credit referred to in whichever of those provisions is applicable; and

(iv) if he exercises or has exercised the option under paragraph (1) of this Rule or of the previous Rule 12 for Added Years for Normal Family Benefits, with a period of Family Contributing Service consisting of the Added Years for which he has so opted.

(b) If after 5th April, 1978 a Contributor:—

(i) ceases to pay contributions under this Rule by virtue of paragraph (2)(m) thereof and does not for whatever reason make any subsequent payment under paragraph (3) of this Rule; or

(ii) ceases to pay contributions under this Rule by virtue of paragraph (2)(n) thereof and does not for whatever reason make any subsequent payment under that provision or under paragraph (3)(a) of this Rule; or

(iii) ceases to pay contributions under this Rule by virtue of paragraph (3)(b) thereof and does not for whatever reason make any subsequent payment under that provision; or

(iv) leaves Eligible Employment and subsequently satisfies the requirements of Rule 27(1)(a) or 27(1)(b) but does not for whatever reason make any payment under Rule 27(3)(c) or 27(4); or

(v) leaves Eligible Employment in circumstances giving rise to entitlement to a payment of benefits under Rule 23(2), 23(2A), 23(3)(a) as it had effect before 6th April, 1980 or Rule 23(4) and if applicable Rule 32 and subsequently re-enters Eligible Employment, again becomes a Contributor and has part or all of his earlier service again reckoned as Contributing Service, but does not for whatever reason make any payment under Rule 49(d) (iii) or under that provision as applied by Rule 49(f)(i)(b) or (f)(ii)(c) or under Rule 49(dd);

then without prejudice to the provisions of Rule 15(i), proviso (iii) to Rule 32 and Rule 49 the period of Family Contributing Service credited to him under sub-paragraph (a) of this paragraph shall be reduced by such period as the Actuary considers reasonable having regard to the effect (if any) of those provisions and to the amount of the contributions under this Rule or under the previous Rule 12 remaining unpaid at the date when he so ceases to pay contributions or leaves Eligible Employment as the case may be.

(c) If the period of Family Contributing Service credited to a Contributor is reduced under sub-paragraph (b) of this paragraph, the Committee may in their discretion in the case of any reduction under sub-paragraph (b)(ii) and shall in any other case cancel such reduction on payment by the Contributor or his widow of such sum as the Committee acting on the advice of the Actuary may require.

(5) Where a Contributor has exercised any option under Rule 12(1) as it had effect before 6th April, 1978:—

(a) he shall from that date pay contributions in accordance with whichever of the provisions of paragraphs (2) and (3) of this Rule as shall be applicable as if he exercised that option under paragraph (1) of the Rule; and

(b) any reference in paragraphs (3) and (4) of this Rule to “the previous Rule 12” shall take effect in relation to him as a reference to Rule 12 as it had effect before that date.