The Pensions Act 2011 (Transitional, Consequential and Supplementary Provisions) Regulations 2014

• Citation: S.I. 2014/1711
• Sections: 79

Section 1 Citation, commencement, extent and interpretation

(1) These Regulations may be cited as the Pensions Act 2011 (Transitional, Consequential and Supplementary Provisions) Regulations 2014 and come into force immediately after section 29 of the Pensions Act 2011 (definition of money purchase benefits) comes into force.

(2) Part 15 of these Regulations (Financial Assistance Scheme) extends to Northern Ireland.

(3) In these Regulations—

“ the Act ” means the Pensions Act 2011;

“the 1993 Act ” means the Pension Schemes Act 1993;

“the 1995 Act ” means the Pensions Act 1995;

“the 1999 Act ” means the Welfare Reform and Pensions Act 1999;

“the 2004 Act ” means the Pensions Act 2004;

“the applicable rules” has the meaning given by section 94(2) of the 1993 Act (right to cash equivalent) ;

“the appointed day” is the day appointed for the coming into force of section 29 of the Act (definition of money purchase benefits);

“assessment period” is to be construed in accordance with section 132(2) to (6) of the 2004 Act;

“ the Board ” means the Board of the Pension Protection Fund established under section 107 of the 2004 Act;

“cash balance underpin benefits” are cash balance benefits to which, under an occupational pension scheme, a member only has rights if the amount of the cash balance underpin benefits exceeds a defined benefit minimum promised to the member;

“cash equivalent” means a cash equivalent or guaranteed cash equivalent mentioned in section 93A(1) (salary related schemes: right to statement of entitlement) or 94(1) of the 1993 Act;

“defined benefit minimum” except in Part 2 and regulation 9 (money purchase underpin benefits and top-up benefits) means—

in relation to money purchase underpin benefits or cash balance underpin benefits, benefits which are not money purchase benefits, but which accrue or may accrue under an occupational pension scheme in respect of the same period of a member’s pensionable service as the member’s rights to money purchase underpin benefits or cash balance underpin benefits; or

in relation to top-up benefits, a specified minimum value or amount, where, under an occupational pension scheme, a member is promised that the member’s rights to money purchase benefits or cash balance benefits will be at least equal to that specified minimum value or amount;

“eligible scheme” has the meaning given by section 126 of the 2004 Act (eligible schemes);

“further assessment period” means the assessment period mentioned in section 159(3) of the 2004 Act (closed schemes: further assessment periods);

“money purchase underpin benefits” are money purchase benefits to which, under an occupational pension scheme, a member only has rights if the amount of the money purchase benefits exceeds a defined benefit minimum promised to the member;

“multi-employer scheme”, except in Part 7 (deficiencies in the assets) has the meaning given by section 307(4) of the 2004 Act (modification of this Act in relation to certain categories of schemes) ;

“the Regulator” means the Pensions Regulator established under section 1 of the 2004 Act;

“top-up benefit”, except in Part 2 and regulation 9, is a benefit—

the value or amount of which is greater than nil; and

to which, under an occupational pension scheme, a member only has rights where the amount of the member’s rights to money purchase benefits falls short of a defined benefit minimum promised to the member; and

“value or amount” includes in particular a rate of pension, whether specified under the scheme or determined by reference to external criteria, such as a statutory minimum requirement.

Section 2 Meaning of “cash balance benefit”

(1) For the purposes of these Regulations, a benefit is a “cash balance benefit” if conditions 1 and 2 are met.

(2) Condition 1 is that a sum of money (“the available sum”) is available under the scheme for the provision of the benefit to or in respect of the member.

(3) Condition 2 is that under the scheme—

(a) there is a promise about the amount of the available sum; but

(b) there is no promise about the rate or amount of any pension to be provided from the available sum.

(4) The promise mentioned in paragraph (3)(a) includes in particular a promise about the change in the value of, or the return from, payments made under the scheme by the member or by any other person in respect of the member.

(5) The promise mentioned in paragraph (3)(b) includes a promise that—

(a) the amount of the available sum will be sufficient to provide a pension of a particular rate or amount; and

(b) the rate or amount of a pension will represent a particular proportion of the available sum.

(6) But a benefit is not prevented from being a cash balance benefit merely because under the scheme there is a promise that—

(a) the rate or amount of the benefit payable in respect of a deceased member will be a particular proportion of the rate or amount of the benefit which was (or would have been) payable to the member; or

(b) the amount of a lump sum payable to a member, or in respect of a deceased member, will represent a particular proportion of the available sum.

Section 3 Interpretation and application of this Part

(1) This Part—

(a) applies in relation to any period after 1st January 1997; and

(b) is subject to the contrary provision for transitional purposes made by these Regulations.

(2) In this Part—

(a) “defined benefit minimum” means—

(i) in relation to money purchase underpin benefits, benefits which are not money purchase benefits, but which accrue or may accrue under an occupational pension scheme in respect of the same period of a member’s pensionable service as the member’s rights to money purchase underpin benefits; or

(ii) in relation to top-up benefits, a specified minimum value or amount, where, under the scheme, a member is promised that the member’s rights to money purchase benefits will be at least equal to that specified minimum value or amount; and

(b) a “top-up benefit” is a benefit—

(i) the value or amount of which is greater than nil; and

(ii) to which, under an occupational pension scheme, a member only has rights where the amount of the member’s rights to money purchase benefits falls short of a defined benefit minimum promised to the member.

Section 4 Money purchase underpin benefits

(1) If, at the relevant date, a member of an occupational pension scheme has rights under the scheme to money purchase underpin benefits, the existence of a contingent promise under the scheme to provide a defined benefit minimum to the member does not prevent the money purchase underpin benefits from being money purchase benefits for as long as the defined benefit minimum is of equal or lower value than the amount of the member’s rights to money purchase underpin benefits.

(2) In this regulation “the relevant date” means the date as at which the amount of the money purchase underpin benefits and the value of a defined benefit minimum promised under the scheme is being compared (for any purpose) in order to determine which is greater.

Section 5 Top-up benefits

(1) If, at the relevant date, a member of an occupational pension scheme has rights to—

(a) money purchase benefits, the amount of which is less than a defined benefit minimum promised to the member under the scheme; and

(b) a top-up benefit,

the amount of the member’s rights to money purchase benefits by reference to which the top-up benefit is calculated and the value of the top-up benefit must be aggregated to form a single benefit, which is not a money purchase benefit.

(2) In this regulation “the relevant date” means the date as at which the amount of the member’s rights to money purchase benefits and the amount of the top-up benefit is being calculated (for any purpose).

Section 6

No provision of Part 4 of the Act (money purchase benefits) or of these Regulations applies to or in relation to the Imperial Home Decor Scheme.

Section 7 Schemes which provided protected rights as cash balance benefits etc

(1) This regulation applies to an occupational pension scheme—

(a) which was contracted-out in relation to an earner’s employment under section 9(3) of the 1993 Act (requirements for certification of schemes: general) in relation to a period before the appointed day; and

(b) which provided protected rights in the form of—

(i) cash balance benefits;

(ii) a defined benefit minimum (in relation to money purchase underpin benefits or cash balance underpin benefits); or

(iii) top-up benefits,

in relation to the earner’s pensionable service under the scheme.

(2) Where this regulation applies, Part 3 of the 1993 Act (certification of pension schemes and effects on members’ state scheme rights and duties) has effect (in relation to periods before, including or after 6th April 2012) as if—

(a) references in Part 3 of that Act and regulations made under that Part to—

(i) “money purchase benefits” included cash balance benefits, a defined benefit minimum or top-up benefits (as the case may be);

(ii) “money purchase scheme” included a scheme which included cash balance benefits, top-up benefits or defined benefit minima (as the case may be); and

(iii) “money purchase contracted-out scheme” included a scheme which was contracted-out on a money purchase basis (whether or not the scheme included only money purchase benefits); and

(b) in section 31 of the 1993 Act (investment and resources of schemes) the reference in subsection (2) to “income or capital gain” was a reference to “notional income or capital gain”.

(3) In this regulation “protected rights” has the meaning given by section 10(1) of the 1993 Act (protected rights and money purchase benefits) as that section stood immediately before 6th April 2012 , subject to the modifications specified in paragraph (2).

Section 8 The subsisting rights provisions

(1) This regulation applies where—

(a) on or after 6th April 2006 but before the appointed day, a power under an occupational pension scheme to which section 67 of the 1995 Act (the subsisting rights provisions) applies has been exercised so as to modify the scheme by replacing or converting a right or entitlement to any of the benefits specified in paragraph (2) with or to a right or entitlement to money purchase benefits (“the scheme modification”);

(b) if section 29 of the Act had been in force at the time that the scheme modification took effect (and if this regulation did not apply), the modification would have been a protected modification; and

(c) the consent requirements (see section 67B(3) of the 1995 Act ) were not satisfied before the scheme modification took effect.

(2) The benefits specified in this paragraph are—

(a) cash balance benefits;

(b) a defined benefit minimum (in relation to money purchase underpin benefits or cash balance underpin benefits); and

(c) top-up benefits.

(3) Where this regulation applies and the requirements specified by—

(a) section 67(2)(b) and (c) of the 1995 Act (trustee approval and reporting requirements); and

(b) in the case of each affected member, the actuarial equivalence requirements (within the meaning of section 67C of that Act (the actuarial equivalence requirements) ,

are satisfied, section 67A(3)(a) of that Act (the subsisting rights provisions: interpretation) applies as if the right or entitlement to a benefit specified in paragraph (2) which was replaced by or converted to a right or entitlement to money purchase benefits were a right or entitlement to money purchase benefits.

Section 9 Money purchase underpin benefits and top-up benefits

(1) This regulation applies in relation to any time on or after the appointed day when a member of an occupational pension scheme or a survivor of a member has under the scheme a right or entitlement to—

(a) money purchase underpin benefits; or

(b) money purchase benefits, where, under the scheme, the member has a contingent right to a top-up benefit if the amount of the member’s rights to money purchase benefits falls short of a defined benefit minimum promised to the member.

(2) Where this regulation applies, section 67A of the 1995 Act applies as if—

(a) in subsection (6)—

(i) in paragraph (a)(i) the second “or” were omitted; and

(ii) after paragraph (a)(i), there were inserted—

(ia) any contingent right under the scheme rules to a defined benefit minimum (in relation to money purchase underpin benefits) or to a top-up benefit (to which, under the scheme, a member only has rights where the amount of the member’s rights to money purchase benefits falls short of a defined benefit minimum promised to the member); or

(b) after subsection (6), there were inserted—

(6A) In subsection (6)—

(a) “defined benefit minimum” and “top-up benefit” have the meaning given by regulation 3(2) of the Pensions Act 2011 (Transitional, Consequential and Supplementary Provisions) Regulations 2014; and

(b) “money purchase underpin benefits” has the meaning given by regulation 1(4) of those Regulations.

(c) in subsection (7), after “At any time when the pensionable service of a member of an occupational pension scheme is continuing,”, there were inserted “subject to subsection (7A)”; and

(d) after subsection (7), there were inserted—

(7A) Where a contingent right specified in subsection (6)(a)(ia) would be extinguished if a member had opted to terminate pensionable service under the scheme, the member’s subsisting right to that contingent benefit is to be determined as if the member had not opted to terminate that pensionable service.

(3) In this regulation “defined benefit minimum” and “top-up benefit” have the meaning given by regulation 3(2) (interpretation and application of Part 2).

Section 10 Application of this Part in relation to multi-employer schemes

Where, by virtue of regulation 12 of the Occupational Pension Schemes (Winding Up) Regulations 1996 (winding up of sectionalised schemes etc) , section 73 of the 1995 Act (preferential liabilities on winding up) applied or applies to a scheme as if a section or part of the scheme were separate schemes (or would do or have done so, but for these Regulations), this Part also so applies.

Section 11 Schemes treated as money purchase schemes: winding up commencing before 6th April 2005

(1) This regulation applies where—

(a) an occupational pension scheme began to wind up before 6th April 2005 (whether or not the scheme has completed winding up before the appointed day); and

(b) if it were not for this regulation, the trustees or managers of the scheme would have been required to wind up the scheme in accordance with section 73 of the 1995 Act.

(2) Where the conditions specified in paragraph (3) are met in relation to the scheme, section 73 of that Act (as it stood on the date that the scheme began to wind up) has effect in relation to the scheme as if after subsection (1) there were inserted—

(1A) In subsection (1) “salary related occupational pension scheme” does not include a scheme which provides—

(a) cash balance benefits;

(b) money purchase benefits; or

(c) pensions derived from money purchase or cash balance benefits,

and no benefits other than those specified in paragraphs (a) to (c) or death benefits.

(1B) In subsection (1A) “cash balance benefit” has the meaning given by regulation 2 of the Pensions Act 2011 (Transitional, Consequential and Supplementary Provisions) Regulations 2014.

(3) The conditions specified in this paragraph are that, immediately before the scheme began winding up—

(a) the scheme included cash balance benefits or pensions derived from money purchase or cash balance benefits;

(b) the scheme included no benefits other than those specified in sub-paragraph (a), money purchase benefits or death benefits; and

(c) the trustees or managers of the scheme treated the scheme as a money purchase scheme.

Section 12 Non-money purchase schemes providing benefits treated as money purchase benefits: winding up commencing before 6th April 2005

(1) This regulation applies where an occupational pension scheme not treated by the trustees or managers of the scheme as a money purchase scheme began to wind up before 6th April 2005 (whether or not winding up has been completed by the appointed day).

(2) Where the conditions specified in paragraph (3) are met in relation to the scheme, regulation 13 of the Occupational Pension Schemes (Winding Up) Regulations 1996 (hybrid schemes) has effect in relation to the scheme as if—

(a) in paragraph (1)(b), after “relevant money purchase benefits” there were inserted “or relevant cash balance benefits”;

(b) in paragraph (2), for ““relevant money purchase benefits” means money purchase benefits” there were substituted ““relevant money purchase benefits” and “relevant cash balance benefits” means (as the case may be) money purchase benefits or cash balance benefits”;

(c) for paragraph (3) there were substituted—

(3) In this regulation—

(a) “cash balance benefit” has the meaning given by regulation 2 of the Pensions Act 2011 (Transitional, Consequential and Supplementary Provisions) Regulations 2014; and

(b) “underpin benefits” means money purchase or cash balance benefits (as the case may be) which will only be provided in respect of a member if their value exceeds the value of other benefits in respect of the member under the scheme which are not money purchase or cash balance benefits.

(3) The conditions specified in this paragraph are that immediately before the scheme began winding up—

(a) the scheme included cash balance benefits; and

(b) the trustees or managers of the scheme treated those benefits as if they were money purchase benefits.

Section 13 Schemes treated as money purchase schemes: winding up commencing on or after 6th April 2005 but before the appointed day

(1) This regulation applies where an occupational pension scheme which was treated as a money purchase scheme began to wind up on or after 6th April 2005 but before the appointed day (whether or not winding up has been completed by the appointed day).

(2) Where the conditions specified in regulation 11(3) (schemes treated as money purchase schemes: winding up commencing before 6th April 2005) are met in relation to the scheme, section 73 of the 1995 Act (preferential liabilities on winding up) has effect in relation to the scheme as if for subsection (2) there were substituted—

(2) This section applies to an occupational pension scheme other than a scheme which is—

(a) a money purchase scheme;

(b) a cash balance scheme;

(c) a scheme which provides money purchase benefits and cash balance benefits and no other benefits except death benefits; or

(d) a prescribed scheme or a scheme of a prescribed description.

(2A) In this section—

“cash balance benefit” has the meaning given by regulation 2 of the Pensions Act 2011 (Transitional, Consequential and Supplementary Provisions) Regulations 2014;

“cash balance scheme” means a scheme which provides—

cash balance benefits or pensions derived from cash balance benefits; and

no benefits other than—

those specified in paragraph (a);

money purchase benefits or pensions derived from money purchase benefits; or

death benefits; and

“money purchase scheme” means a scheme which provides or may provide no benefits other than—

money purchase benefits or pensions derived from money purchase benefits; or

death benefits.

Section 14 Non-money purchase schemes including benefits treated as money purchase benefits: winding up commencing on or after 6th April 2005 but before the appointed day

(1) This regulation applies where an occupational pension scheme not treated by the trustees or managers of the scheme as a money purchase scheme began to wind up on or after 6th April 2005, but before the appointed day (whether or not winding up has been completed by the appointed day).

(2) Where the condition specified in paragraph (3) is met immediately before the scheme began winding up, section 73 of the 1995 Act applies in relation to the winding up of the scheme as if the benefits specified in paragraph (4) which the trustees or managers of the scheme treated as money purchase benefits were money purchase benefits.

(3) The condition specified in this paragraph is that the scheme included benefits specified in paragraph (4) which the trustees or managers of the scheme treated as money purchase benefits.

(4) The benefits specified in this paragraph are—

(a) cash balance benefits;

(b) a defined benefit minimum (in relation to money purchase underpin benefits or cash balance underpin benefits);

(c) top-up benefits;

(d) pensions derived from money purchase benefits; and

(e) pensions derived from any of the benefits specified in sub-paragraphs (a) to (c).

Section 15 Schemes winding up after an assessment period

(1) This regulation applies where an assessment period in relation to an occupational pension scheme began before the appointed day and either—

(a) that assessment period comes to an end (whether before, on or after the appointed day) and the trustees or managers of the scheme are required to wind up or continue to wind up the scheme in accordance with section 154(1) of the 2004 Act (requirement to wind up schemes with sufficient assets to meet protected liabilities) ; or

(b) the Board ceases to be involved with the scheme in accordance with section 149(1) of that Act (circumstances in which Board ceases to be involved with an eligible scheme) and the scheme is winding up.

(2) Subject to paragraph (4), where the condition specified in paragraph (3) is met, the trustees or managers of the scheme may determine that the benefits specified in regulation 14(4) (non-money purchase schemes including benefits treated as money purchase benefits: winding up commencing on or after 6th April 2005 but before the appointed day), which the trustees or managers treated as money purchase benefits, are to be treated as money purchase benefits for the purposes of winding up the scheme in accordance with section 73 of the 1995 Act.

(3) The condition specified in this paragraph is that, immediately before the assessment period referred to in paragraph (1) began, the scheme included any of the benefits specified in regulation 14(4), which the trustees or managers of the scheme treated as money purchase benefits.

(4) Where the Board has previously made a determination under regulation 54(1) (discharge as money purchase benefits: periods after the appointed day) that benefits specified in regulation 44(3) (validity of valuations etc, determinations, transfer notices and discharge of benefits before the appointed day) should, or should not, be discharged as money purchase benefits, the trustees or managers of the scheme must wind up or continue to wind up the scheme in accordance with that determination.

(5) Where the trustees or managers of the scheme—

(a) determine in accordance with paragraph (2) that benefits specified in regulation 14(4) which the trustees or managers of the scheme treated as money purchase benefits should be treated as money purchase benefits for the purposes of winding up the scheme; or

(b) are required to wind up or continue to wind up the scheme in accordance with paragraph (4),

section 73 of the 1995 Act applies in relation to the benefits treated as money purchase benefits as if those benefits were money purchase benefits.

Section 16 Closed schemes: further assessment periods

(1) This regulation applies where—

(a) an assessment period in relation to an occupational pension scheme began before the appointed day;

(b) the scheme is authorised (whether before, on or after that day) to continue as a closed scheme under section 153(5) of the 2004 Act (closed schemes);

(c) there is a further assessment period in relation to the scheme; and

(d) that further assessment period ends because the conditions specified in section 154(5) of that Act are met.

(2) Where the conditions specified in paragraph (3) are met, the trustees or managers of the scheme must wind up or continue the winding up of the scheme as if the benefits specified in regulation 14(4) which the trustees or managers of the scheme treated as money purchase benefits were money purchase benefits.

(3) The conditions specified in this paragraph are that—

(a) the scheme included any of the benefits specified in regulation 14(4); and

(b) the trustees or managers of the scheme have either —

(i) in accordance with regulation 52(2) (schemes continuing as closed schemes after an assessment period), determined that benefits specified in regulation 52(4) treated as money purchase benefits should continue to be treated as money purchase benefits; or

(ii) in accordance with regulation 52(5)(b), treated benefits specified in regulation 14(4) as money purchase benefits in accordance with a determination or a direction made by the Board.

(4) Where the trustees or managers of the scheme are required to wind up or continue to wind up the scheme in accordance with paragraph (2), section 73 of the 1995 Act applies in relation to the benefits treated as money purchase benefits as if those benefits were money purchase benefits.

Section 17 Discharge of pensions in payment derived from additional voluntary contributions treated as money purchase benefits: scheme commencing winding up on or after the appointed day

(1) Subject to paragraph (3), where the conditions specified in paragraph (2) are met in relation to a member’s pension or part of a pension in payment, the trustees or managers of an occupational pension scheme may determine that the pension or part of a pension should be discharged as if it were money purchase benefits.

(2) The conditions are that—

(a) the scheme commences winding up on or after the appointed day;

(b) the pension or part of a pension—

(i) is derived from additional voluntary contributions;

(ii) is, or is derived from (as the case may be), any of the benefits specified in regulation 14(4) which were before the appointed day treated by the trustees or managers of the scheme as money purchase benefits; and

(iii) comes into payment on or before 1st April 2015; and

(c) the trustees or managers of the scheme are satisfied that it is reasonable in the circumstances to treat the pension or part of a pension as money purchase benefits.

(3) Where an assessment period or further assessment period in relation to an eligible scheme has begun, the power of the trustees or managers of the scheme under paragraph (1) is subject to a direction by the Board under regulation 57(1) (discharge of pensions in payment derived from additional voluntary contributions treated as money purchase benefits: periods after the appointed day) that the pension or part of the pension should, or should not, be discharged as money purchase benefits.

Section 18 Interpretation

In this Part—

“approved withdrawal arrangement”, “flexible apportionment arrangement”, “multi-employer scheme”, “regulated apportionment arrangement”, “scheme apportionment arrangement” and “withdrawal arrangement” have the same meaning as in regulation 2(1) of the Employer Debt Regulations (interpretation) ;

“the effective date” is the date by reference to which the assets of a scheme are valued and the amount of the scheme liabilities is calculated;

“employer” has the same meaning as in section 75 of the 1995 Act (deficiencies in the assets) and regulations 6 (multi-employer schemes: general) and 9 (frozen schemes and former employers) of the Employer Debt Regulations;

“the Employer Debt Regulations” means the Occupational Pension Schemes (Employer Debt) Regulations 2005 ; and

“share of the difference”, in relation to an employer participating in a multi-employer scheme, has the meaning given by regulation 2(1) of the Employer Debt Regulations (interpretation) and includes in particular an employer’s share under—

a scheme apportionment arrangement;

a withdrawal arrangement;

a flexible apportionment arrangement;

an approved withdrawal arrangement; and

a regulated apportionment arrangement.

Section 19 Application to multi-employer schemes

Where, by virtue of regulation 8 (single employer sections, multi-employer sections etc) , 14 (schemes covering United Kingdom and foreign employment) or 15 (schemes with partial government guarantee) of the Employer Debt Regulations, section 75 of the 1995 Act applied before the appointed day to a scheme in relation to which there is more than one employer as if a section or part of the scheme were a separate scheme (or would have so applied but for these Regulations)—

(a) this Part also so applies; and

(b) “employer” and “member” must be read accordingly.

Section 20 Application of section 75 of the 1995 Act to schemes treated as money purchase schemes: periods before the appointed day

(1) Where, on the appointed day, the conditions specified in paragraph (2) are met in relation to an occupational pension scheme, section 75 of the 1995 Act does not apply to the scheme in relation to any time before the appointed day.

(2) The conditions specified in this paragraph are that, if this regulation did not apply—

(a) a debt would be due to the trustees or managers of the scheme from an employer in relation to the scheme in accordance with section 75 of the 1995 Act in relation to a time before the appointed day;

(b) at that time—

(i) benefits under the scheme included cash balance benefits or pensions derived from money purchase or cash balance benefits;

(ii) the scheme did not include any benefits other than those specified in paragraph (i), death benefits or money purchase benefits;

(iii) the trustees or managers of the scheme treated the scheme as a money purchase scheme; and

(iv) for that reason, the trustees or managers treated the scheme as if section 75 of that Act did not apply to it.

Section 21 Application of section 75 of the 1995 Act to non-money purchase schemes including benefits treated as money purchase benefits: periods before the appointed day

(1) This regulation applies where before the appointed day—

(a) an occupational pension scheme included benefits other than money purchase benefits;

(b) in accordance with section 75 of the 1995 Act, a debt became due to the trustees or managers of the scheme from an employer in relation to the scheme; and

(c) at the time that the debt became due, the scheme included any of the benefits specified in paragraph (2) and met the condition specified in paragraph (3).

(2) The benefits specified in this paragraph are—

(a) cash balance benefits;

(b) a defined benefit minimum (in relation to money purchase underpin benefits or cash balance underpin benefits);

(c) top-up benefits;

(d) pensions derived from money purchase benefits; and

(e) pensions derived from any of the benefits specified in sub-paragraphs (a) to (c).

(3) The condition specified in this paragraph is that assets and liabilities in respect of benefits specified in paragraph (2) were treated as if they related to money purchase benefits for the purposes of calculating the debt referred to in paragraph (1)(b).

(4) Where this regulation applies, section 75 of the 1995 Act applies in relation to the time that the debt referred to in paragraph (1)(b) became due (or would have become due if this regulation did not apply) as if the assets and liabilities relating to the benefits specified in paragraph (2) which were treated as money purchase benefits for the purposes of calculating the debt referred to in paragraph (1)(b) related to money purchase benefits.

Section 22 Non-money purchase schemes which are multi-employer schemes: arrangements before the appointed day

(1) This regulation applies where at any time before the appointed day an occupational pension scheme which was a multi-employer scheme—

(a) included any of the benefits specified in regulation 21(2) (application of section 75 of the 1995 Act to non-money purchase schemes including benefits treated as money purchase benefits: periods before the appointed day); and

(b) met the condition specified in paragraph (2).

(2) The condition specified in this paragraph is that an employer’s share of the difference (if any) between the value of the assets and the amount of the liabilities of the scheme for the purposes of section 75 of the 1995 Act was determined as if benefits specified in regulation 21(2) were money purchase benefits.

(3) Where this regulation applies, section 75 of that Act applies at the time that that debt became due (or would have become due if this regulation did not apply), as if the assets and liabilities relating to the benefits specified in regulation 21(2) which were treated as money purchase benefits for the purposes of calculating an employer’s share of the difference, related to money purchase benefits.

Section 23 Schemes or benefits treated as money purchase falling outside regulations 20 to 22

(1) Subject to paragraph (11), this regulation applies where—

(a) at any time before the appointed day, an occupational pension scheme included benefits which were not money purchase benefits;

(b) if this regulation did not apply, a debt would be due to the trustees or managers of the scheme from an employer in relation to the scheme in accordance with section 75 of the 1995 Act, in relation to a time before the appointed day;

(c) regulations 20 to 22 do not apply in relation to the scheme; and

(d) one or more of the conditions specified in paragraphs (2) to (4) is met in relation to the scheme.

(2) The condition specified in this paragraph is that the trustees or managers of the scheme—

(a) treated the scheme as if it were a money purchase scheme; and

(b) did not, in accordance with section 75 of the 1995 Act, treat a difference between the value of the assets and the amount of the liabilities of the scheme as a debt due from an employer in relation to the scheme.

(3) The condition specified in this paragraph is that the trustees or managers of the scheme—

(a) treated benefits which were not money purchase benefits, death benefits or benefits specified in regulation 21(2) as money purchase benefits; and

(b) excluded assets and liabilities representing the value or amount of rights to any of those benefits from a calculation of the amount of the scheme liabilities and the value of the scheme assets for the purposes of section 75 of the 1995 Act.

(4) The condition specified in this paragraph is that an employer’s share of the difference (if any) between the value of the scheme assets and the amount of the scheme liabilities, for the purposes of section 75 of that Act, was determined as if benefits which were not money purchase benefits, death benefits or benefits specified in regulation 21(2) were money purchase benefits.

(5) Subject to paragraph (6), the trustees or managers of a scheme to which this regulation applies, must, as soon as reasonably possible after the appointed day—

(a) secure a valuation of the scheme assets and scheme liabilities, calculated in accordance with regulation 5 of the Employer Debt Regulations (calculation of the amount of scheme liabilities and value of scheme assets) ;

(b) where the value of the scheme assets at the effective date of that valuation is less than the amount of the scheme liabilities, treat the difference as a debt due from an employer in relation to the scheme; and

(c) designate a time for the purposes of a debt to be imposed in accordance with section 75 of the 1995 Act.

(6) Paragraph (5) does not apply to a scheme which is not in winding up if either of the conditions specified in paragraphs (7) and (8) are met.

(7) The condition specified in this paragraph is that an actuarial valuation has been prepared in accordance with section 224 of the 2004 Act (actuarial valuations and reports) in the period of 3 years ending immediately before the appointed day and either—

(a) it appears to the trustees or managers of the scheme that the statutory funding objective was met on the effective date of that actuarial valuation; or

(b) the statutory funding objective was not met on the effective date of the valuation but on the appointed day a recovery plan is in force in relation to the scheme.

(8) The condition specified in this paragraph is that the trustees or managers of the scheme obtain an actuarial valuation in accordance with section 224 of the 2004 Act and either—

(a) it appears to the trustees or managers that the statutory funding objective is met on the effective date of that valuation; or

(b) the statutory funding objective is not met at that time but the trustees or managers ensure, within 6 months beginning with the effective date of the valuation, that a recovery plan in relation to the scheme is in force.

(9) The actuarial valuation mentioned in paragraph (8) must have an effective date within the period of 12 months beginning with the appointed day, and the trustees and managers of the scheme must ensure that they receive that valuation within 15 months beginning with the effective date.

(10) Where—

(a) the trustees or managers of the scheme comply with the requirements of paragraph (5); or

(b) either of the conditions specified in paragraph (7) or (8) is met,

no provision of section 29 of the Act or of these Regulations requires the trustees or managers of the scheme to calculate a debt which was due or would have become due from an employer in relation to the scheme in relation to a time before the appointed day.

(11) This regulation does not apply where regulation 24 (schemes or benefits treated as money purchase falling outside regulations 20 to 22: insolvent employer) applies to the scheme.

(12) Where the trustees or managers of a scheme do not comply with the requirements of paragraph (5), section 10 of the 1995 Act (civil penalties) applies to any trustee or manager who has failed to take all reasonable steps to secure compliance.

(13) In this regulation—

“recovery plan” is a recovery plan prepared in accordance with section 226 of the 2004 Act; and

“statutory funding objective” is the requirement mentioned in section 222 of that Act.

Section 24 Schemes or benefits treated as money purchase falling outside regulations 20 to 22: insolvent employer

(1) This regulation applies where—

(a) the circumstances specified in regulation 23(1) apply in relation to an occupational pension scheme; and

(b) an event which is or would be (if this regulation did not apply)—

(i) a relevant event within section 75(6A)(a) or (b) of the 1995 Act (in relation to periods on or after 6th April 2005); or

(ii) a relevant insolvency event within section 75(4) of that Act (in relation to periods before that date),

has occurred in relation to the employer in relation to the scheme, or in a case where the scheme is a multi-employer scheme, all the employers in relation to the scheme.

(2) Where this regulation applies, section 75 of the 1995 Act applies as if the assets and liabilities of the scheme relating to the non-money purchase benefits treated as money purchase benefits related to money purchase benefits, or (as the case may be), as if the scheme were a money purchase scheme.

Section 25 Revaluation of cash balance benefits etc: pensionable service before the appointed day

(1) Where—

(a) a member of an occupational pension scheme has, under the applicable rules, accrued rights to—

(i) cash balance benefits in respect of which the available sum is not calculated by reference to final salary;

(ii) a defined benefit minimum (in relation to money purchase underpin benefits or cash balance underpin benefits); or

(iii) top-up benefits;

(b) the accrued rights to benefits specified in sub-paragraph (a) are attributable to periods of pensionable service before the appointed day; and

(c) the trustees or managers of the scheme have before that day treated those benefits as if they were money purchase benefits,

if the trustees or managers of the scheme think it appropriate, those benefits or (as the case may be) the available sum in respect of which those benefits are calculated shall be revalued by the money purchase method.

(2) Where—

(a) the conditions specified in paragraph (1)(a) and (c) are satisfied; and

(b) the accrued rights to benefits specified in paragraph (1)(a) which were treated as money purchase benefits are attributable to periods of pensionable service falling partly before and partly on or after the appointed day,

if the trustees or managers of the scheme think it appropriate, so much of those benefits or of the available sum in respect of which those benefits are calculated as is attributable to periods of pensionable service before that day shall be revalued by the money purchase method.

(3) In this regulation—

(a) “final salary”, in relation to a member to or in respect of whom benefits under a pension scheme are payable, means the member’s pensionable earnings, or highest, average or representative pensionable earnings, in a specified period ending at, or defined by reference to, the time when the member’s pensionable service in relation to that scheme ends;

(b) “money purchase method” has the meaning given by Schedule 3 to the 1993 Act, except that it also includes the application of a guaranteed notional interest rate or investment yield, in accordance with the rules of the scheme, to the benefits or to the available sum in respect of which the benefits are calculated; and

(c) “pensionable earnings”, in relation to a member of a pension scheme, means earnings by reference to which benefits under the scheme are calculated.

(4) Where the trustees or managers of the scheme determine that benefits should be revalued in accordance with this regulation, section 84 of the 1993 Act applies in relation to those benefits revalued in accordance with this regulation as if they were money purchase benefits.

Section 26 Indexation of cash balance benefits etc: pensions in payment before the appointed day

(1) Section 51 of the 1995 Act (annual increase in rate of pension) does not apply to a pension or part of a pension payable under an occupational pension scheme which meets the conditions specified in paragraph (2).

(2) The conditions specified in this paragraph are that—

(a) the pension or part of a pension—

(i) is derived from any of the benefits specified in paragraph (3) which were attributable to a member’s pensionable service on or after 6th April 1997; and

(ii) first came into payment on or after 6th April 2005 but before the appointed day;

(b) the trustees or managers of the scheme before the appointed day treated those benefits as if they were money purchase benefits; and

(c) the pension or part of a pension is not, under the scheme, required to be increased each year or is to be increased at a rate below that required by section 51 of the 1995 Act.

(3) The benefits specified in this paragraph are—

(a) cash balance benefits;

(b) a defined benefit minimum (in relation to money purchase underpin benefits or cash balance underpin benefits); and

(c) top-up benefits.

Section 27 Amendment of the Occupational Pension Schemes (Preservation of Benefit) Regulations 1991

(1) The Occupational Pension Schemes (Preservation of Benefit) Regulations 1991 are amended as follows.

(2) In regulation 10(2) (money purchase benefits) for the words after “calculate” to the end substitute—

(a) the money purchase benefits, when they become payable, in accordance with the terms of an insurance policy or annuity contract in which the amount allocated to provide the benefits is invested; or

(b) a pension under the scheme derived from the money purchase benefits, on the basis of actuarial advice.

(3) Omit regulation 14 (computation of benefit – money purchase schemes) .

(4) For regulation 14A (circumstances in which uniform accrual does not apply – money purchase benefits) , substitute—

Benefits to which section 74(6) does not apply – money purchase benefits

(14A) Section 74(6) of the Act (computation of short service benefit) does not apply to money purchase benefits.

Section 28 Amendment of the Occupational Pension Schemes (Revaluation) Regulations 1991

(1) Regulation 4 of the Occupational Pension Schemes (Revaluation) Regulations 1991 (hybrid benefits) is amended as follows.

(2) For paragraph (2), substitute—

(2) In this regulation, “hybrid benefit” means a benefit the rate or amount of which is calculated by reference to the greatest, or smallest, of two or more benefits.

Section 29 Interpretation

In this Part “the Transfer Values Regulations ” means the Occupational Pension Schemes (Transfer Values) Regulations 1996 .

Section 30 Cash equivalent of cash balance benefits etc treated as money purchase benefits: transitional arrangements

(1) This regulation applies where—

(a) a member of an occupational pension scheme has, under the applicable rules, accrued rights to cash balance benefits, a defined benefit minimum (in relation to money purchase underpin benefits or cash balance underpin benefits) or top-up benefits; and

(b) the pensionable service of the member has terminated before the appointed day.

(2) Where the conditions specified in paragraph (3) are met—

(a) the cash equivalent of the member’s benefits specified in paragraph (1)(a) which were treated as money purchase benefits is to be calculated as if those benefits were money purchase benefits;

(b) the member acquires a right to the cash equivalent of those benefits as if section 94(1)(a) of the 1993 Act (right to cash equivalent) applied;

(c) a member who acquires a right to a cash equivalent of those benefits in accordance with sub-paragraph (b) may require the trustees or managers of the scheme to use the cash equivalent in any of the ways specified in section 95(2) of the 1993 Act (ways of taking cash equivalent) ;

(d) an application to use the cash equivalent of the benefits in accordance with sub-paragraph (c) must be made to the trustees or managers of the scheme in writing and is subject to the provisions of sections 96 to 99 (provisions concerning exercise of options) of the 1993 Act ; and

(e) a member may withdraw an application made in accordance with sub-paragraph (d) by giving the trustees or managers of the scheme notice in writing, in accordance with the provisions of section 100 of that Act (withdrawal of application) .

(3) The conditions specified in this paragraph are that before the appointed day—

(a) the trustees or managers of the scheme treated benefits specified in paragraph (1)(a) accrued by a member as if they were money purchase benefits;

(b) the member has made an application to the trustees or managers of the scheme for a written statement of entitlement of the amount of the cash equivalent of those benefits (whether or not the application also relates to other benefits) in accordance with section 93A(1) of the 1993 Act (salary related schemes: right to statement of entitlement) ; and

(c) the member has been treated as acquiring a right to the cash equivalent of those benefits, in accordance with section 94(1)(a) of that Act (including in a case where section 94(1)(a) of that Act is modified by regulation 19(2)(b) of the Transfer Values Regulations (hybrid schemes)).

(4) Where—

(a) the conditions specified in paragraph (3) are met; and

(b) the trustees or managers of the scheme have (at any time) used the cash equivalent of those benefits treated as money purchase benefits in any of the ways specified in section 95(2) of the 1993 Act,

they are discharged from the obligation to provide the benefits to which that cash equivalent value relates, as if section 99(1) of that Act (trustees’ duties after exercise of option) applied.

Section 31 Statement of entitlement in relation to cash balance benefits etc treated as money purchase benefits: periods before the appointed day

(1) Where the conditions specified in paragraph (2) are met—

(a) section 93A(1) of the 1993 Act does not, in relation to any period before the appointed day, require the trustees or managers of an occupational pension scheme to provide a statement of entitlement in respect of cash balance benefits, a defined benefit minimum (in relation to money purchase underpin benefits or cash balance underpin benefits) or top-up benefits which were treated as money purchase benefits;

(b) section 93A(4) of that Act does not apply in relation to a failure to provide a statement of entitlement occurring before the appointed day; and

(c) regulation 6(3) of the Transfer Values Regulations (guaranteed statements of entitlement) does not prevent the member making a further application under section 93A(1) of that Act for a statement of entitlement within a period of twelve months beginning on the date of an application by the member where the circumstances specified in paragraph (2)(a) of this regulation apply.

(2) The conditions specified in this paragraph are that before the appointed day—

(a) the trustees or managers of an occupational pension scheme have not, on the application of a member of the scheme made in accordance with section 93A(1) of the 1993 Act, provided the member with a statement of entitlement of the amount of the cash equivalent of cash balance benefits, a defined benefit minimum (in relation to money purchase underpin benefits or cash balance underpin benefits) or top-up benefits which have accrued to or in respect of the member under the applicable rules; and

(b) the trustees or managers of the scheme did not provide a statement of entitlement because, at the time that they received the application, those benefits were treated by the trustees or managers as money purchase benefits.

Section 32 Amendment of the Transfer Values Regulations

(1) The Transfer Values Regulations are amended as follows.

(2) In regulation 1(2) (citation, commencement and interpretation) —

(a) after the definition of “base rate”, insert—

“cash balance benefit” has the meaning given by regulation 2 of the Pensions Act 2011 (Transitional, Consequential and Supplementary Provisions) Regulations 2014;

(b) after the definition of “effective date” insert—

“final salary”, in relation to a member to or in respect of whom benefits under a pension scheme are payable, means the member’s pensionable earnings, or highest, average or representative pensionable earnings, in a specified period ending at, or defined by reference to, the time when the member’s pensionable service in relation to that scheme ends;

(c) after the definition of “member” insert—

“pensionable earnings”, in relation to a member of a pension scheme, means earnings by reference to which benefits under the scheme are calculated;

(3) In regulation 7 (manner of calculation and verification of cash equivalents – general provisions) —

(a) in paragraph (1)(a)(i), after “salary related benefits” insert “other than cash balance benefits in respect of which the available sum is not calculated by reference to final salary”;

(b) in paragraph (1)(a)(ii) after “money purchase benefits” insert “and cash balance benefits in respect of which the available sum is not calculated by reference to final salary”; and

(c) for paragraph (7) substitute—

(7) Where a portion of the cash equivalent relates to a benefit specified in paragraph (1)(a)(i) and a portion relates to a benefit specified in paragraph (1)(a)(ii), the initial cash equivalent is to be calculated—

(a) for the portion falling within paragraph (1)(a)(i), in accordance with regulations 7A and 7B; and

(b) for the portion falling within paragraph (1)(a)(ii), in accordance with regulation 7C.

(4) In regulation 7A (manner of calculation of initial cash equivalents for salary related benefits)—

(a) in the heading, at the end insert “other than cash balance benefits not calculated by reference to final salary”; and

(b) in paragraph (1) after “salary related benefits” insert “other than cash balance benefits in respect of which the available sum is not calculated by reference to final salary”.

(5) In regulation 7B (initial cash equivalents for salary related benefits: assumptions and guidance) —

(a) in the heading, after “salary related benefits” insert “other than cash balance benefits not calculated by reference to final salary”; and

(b) in paragraph (1), after “salary related benefits” insert “other than cash balance benefits in respect of which the available sum is not calculated by reference to final salary”.

(6) In regulation 7C (manner of calculation of initial cash equivalents for money purchase benefits)—

(a) in the heading, at the end insert “and cash balance benefits not calculated by reference to final salary”;

(b) in paragraph (1) after “For” insert “cash balance benefits in respect of which the available sum is not calculated by reference to final salary and”; and

(c) For paragraph (4) substitute—

(4) The realisable value must include—

(a) for money purchase benefits, any increases to the benefits resulting from a payment of interest made in accordance with the scheme rules; or

(b) for cash balance benefits—

(i) any interest (including notional interest) which, in accordance with the scheme rules, applies to the available sum in respect of which the benefits are calculated;

(ii) any guarantee which, in accordance with the scheme rules, applies to the available sum in respect of the benefits or to the contributions made by the member or by another person in respect of the member;

(iii) any options the member has which would increase the value of the member’s benefits under the scheme (adjusted to reflect the proportion of members the trustees determine are likely to exercise those options); and

(iv) any discretionary benefits which the trustees determine should be taken into account, having regard to any established custom for awarding the benefits and any requirement for consent before they are awarded.

(7) In regulation 7D (reductions to initial cash equivalents)—

(a) in paragraph (1), at the beginning insert “For salary-related benefits”;

(b) for paragraphs (2) and (3) substitute—

(2) For the purposes of paragraph (1) the trustees may—

(a) request an insufficiency report from the actuary in accordance with Schedule 1B (insufficiency reports) ; or

(b) treat the actuary’s last relevant GN11 report as an insufficiency report.

(3) For money purchase benefits, an initial cash equivalent may, or as the case may be, must be reduced in accordance with paragraphs 7 to 11, 14 and 15 of Schedule 1A (reductions in initial cash equivalents) .

Section 33

In this Part “the Early Leavers Regulations ” mean the Occupational Pension Schemes (Early Leavers: Cash Transfer Sums and Contribution Refunds) Regulations 2006 .

Section 34 Cash transfer sum: cash balance benefits etc treated as money purchase benefits

(1) Where the conditions specified in paragraph (2) are met, a cash transfer sum to which the member has acquired a right under section 101AB of the 1993 Act (right to cash transfer sum and contribution refund) is to be calculated as if it related to money purchase benefits.

(2) The conditions specified in this paragraph are that—

(a) before the appointed day the member has acquired a right to a cash transfer sum or to a contribution refund in accordance with section 101AB of the 1993 Act;

(b) at any time, the trustees or managers of the scheme have, in accordance with section 101AC of that Act (notification of right to cash transfer sum or contribution refund), given to the member a statement in writing specifying the amount of the cash transfer sum to which the member has acquired a right under section 101AB of that Act;

(c) the statement specifying the amount of the cash transfer sum relates to cash balance benefits, a defined benefit minimum (in relation to money purchase underpin benefits or cash balance underpin benefits) or top-up benefits which the trustees or managers of the scheme treated as money purchase benefits (whether or not the statement also relates to other benefits);

(d) the cash transfer sum relating to those benefits specified in the statement has been calculated as if the benefits were money purchase benefits; and

(e) the trustees or managers of the scheme have been notified in accordance with section 101AD of that Act (exercise of right under section 101AB) that the member wishes to take a cash transfer sum in accordance with section 101AB(1)(a).

(3) Where—

(a) the conditions specified in paragraph (2) are met;

(b) the cash transfer sum to which the member acquires a right has been calculated in the manner specified in paragraph (2)(d); and

(c) the trustees or managers of the scheme have (at any time) done what is needed to carry out the requirement specified in the member’s notice under section 101AD(2)(b) of that Act,

the trustees or managers of the scheme are discharged from any obligation in respect of any rights (including contingent rights) of, or in respect of, the member to the benefits to which the cash transfer sum relates, or to make any other payment by way of refund of contributions made by or in respect of the member (other than any pension credit or amount attributable (directly or indirectly) to a pension credit).

Section 35 Amendment of the Early Leavers Regulations

(1) The Early Leavers Regulations are amended as follows.

(2) In regulation 1(2) (interpretation) —

(a) after the definition of “actuary”, insert—

“cash balance benefit” has the meaning given by regulation 2 of the Pensions Act 2011 (Transitional, Consequential and Supplementary Provisions) Regulations 2014;

(b) after the definition of “discount rates” insert—

“final salary”, in relation to a member to or in respect of whom benefits under a pension scheme are payable, means the member’s pensionable earnings, or highest, average or representative pensionable earnings, in a specified period ending at, or defined by reference to, the time when the member’s pensionable service in relation to that scheme ends;

(c) after the definition of “insufficiency report liabilities” insert—

“pensionable earnings”, in relation to a member of a pension scheme, means earnings by reference to which benefits under the scheme are calculated;

(3) In regulation 2 (manner of calculation and verification of cash transfer sums – general provisions) —

(a) in paragraph (1)(a)(i), after “salary related benefits” insert “other than cash balance benefits in respect of which the available sum is not calculated by reference to final salary”;

(b) in paragraph (1)(a)(ii) after “money purchase benefits” insert “and cash balance benefits in respect of which the available sum is not calculated by reference to final salary”; and

(c) for paragraph (7) substitute—

(7) Where a portion of the cash transfer sum relates to a benefit specified in paragraph (1)(a)(i) and a portion relates to a benefit specified in paragraph (1)(a)(ii), the initial cash transfer sum is to be calculated—

(a) for the portion falling within paragraph (1)(a)(i), in accordance with regulations 2A and 2B; and

(b) for the portion falling within paragraph (1)(a)(ii), in accordance with regulation 2C.

(4) In regulation 2A (manner of calculation of initial cash transfer sums for salary related benefits)—

(a) in the heading, at the end insert “other than cash balance benefits not calculated by reference to final salary”; and

(b) in paragraph (1) after “salary related benefits” insert “other than cash balance benefits in respect of which the available sum is not calculated by reference to final salary”.

(5) In regulation 2B (initial cash transfer sum for salary related benefits: assumptions and guidance)—

(a) in the heading, after “salary related benefits” insert “other than cash balance benefits not calculated by reference to final salary”; and

(b) in paragraph (1), after “salary related benefits” insert “other than cash balance benefits in respect of which the available sum is not calculated by reference to final salary”.

(6) In regulation 2C (manner of calculation of initial cash transfer sums for money purchase benefits)—

(a) in the heading, at the end insert “and cash balance benefits not calculated by reference to final salary”;

(b) in paragraph (1) after “For” insert “cash balance benefits in respect of which the available sum is not calculated by reference to final salary and”; and

(c) for paragraph (4) substitute—

(4) The realisable value must include—

(a) for money purchase benefits, any increases to the benefits resulting from a payment of interest made in accordance with the scheme rules; or

(b) for cash balance benefits—

(i) any interest (including notional interest) which, in accordance with the scheme rules, applies to the available sum in respect of which the benefits are calculated;

(ii) any guarantee which, in accordance with the scheme rules, applies to the available sum in respect of the benefits or to the contributions made by the member or by another person in respect of the member;

(iii) any options the member has which would increase the value of the member’s benefits under the scheme (adjusted to reflect the proportion of members the trustees determine are likely to exercise those options); and

(iv) any discretionary benefits which the trustees determine should be taken into account, having regard to any established custom for awarding the benefits and any requirement for consent before they are awarded.

(7) In regulation 4 (reduction of cash transfer sums and contribution refunds) —

(a) in paragraph (1), for the words after “trustees or managers” substitute—

if—

(a) the insufficiency conditions are met; and

(b) the cash transfer sum relates to salary-related benefits.

(b) in paragraph (3), after “initial cash transfer sum” insert “which does not relate to money purchase benefits”; and

(c) in paragraph (7), after “the initial cash transfer sum or contribution refund” insert “, where it does not relate to money purchase benefits,”.

Section 36 Interpretation

(1) In this Part—

“employer” has the meaning given by section 124(1) of the 1995 Act; and

“the Payments to Employer Regulations ” means the Occupational Pension Schemes (Payments to Employer) Regulations 2006 .

(2) Where—

(a) a trust scheme in relation to which there is more than one employer is divided into two or more sections; and

(b) the provisions of the scheme meet the conditions specified in regulation 18(1)(b) of the Payments to Employer Regulations (schemes with more than one employer),

this Part applies as if each section of the scheme were a separate scheme.

Section 37 Failure to comply with the requirements of section 37 or 76 of the 1995 Act: periods before the appointed day

(1) Where the conditions specified in paragraph (2) are met neither—

(a) section 37 of the 1995 Act (payment of surplus to employer) ; nor

(b) section 76 of that Act (excess assets on winding up) ,

(as the case may be) apply in respect of a payment from scheme funds made to the employer in relation to the scheme.

(2) The conditions specified in this paragraph are that—

(a) the trustees of a trust scheme have exercised a power under the scheme rules to make a payment to the employer out of funds held for the purposes of the scheme and that payment was made to the employer before the appointed day;

(b) at the time that the payment was made to the employer the scheme included—

(i) cash balance benefits; or

(ii) pensions derived from money purchase or cash balance benefits;

(c) no benefits other than those specified in sub-paragraph (b), money purchase benefits and death benefits secured by insurance policies or annuity contracts; and

(d) the trustees of the scheme treated the scheme as if it were a money purchase scheme and for that reason did not comply with the requirements—

(i) for schemes not in winding up, of section 37 of the 1995 Act; or

(ii) for schemes in winding up, of section 76 of that Act,

before exercising the power to make a payment to the employer.

Section 38 Non money-purchase schemes providing cash balance benefits etc

(1) Where the circumstances specified in paragraph (2) apply—

(a) the trustees of a trust scheme may not use an actuarial valuation made on the basis specified in paragraph (2)(c) for the purposes of fulfilling the conditions specified in section 37(3)(a) of the 1995 Act or regulation 4(1) or (2) of the Payments to Employer Regulations (schemes that are subject to Part 3 of the 2004 Act – determination of assets and liabilities); and

(b) a valuation certificate prepared in relation to an actuarial valuation made on the basis specified in paragraph (2)(c) is not valid in relation to any period after the appointed day.

(2) The circumstances specified in this paragraph are that—

(a) the scheme is subject to Part 3 of the 2004 Act (scheme funding);

(b) the scheme provides any of the benefits specified in paragraph (3); and

(c) the trustees of the scheme propose to use an actuarial valuation made on the basis that benefits specified in paragraph (3) were money purchase benefits for the purpose of meeting the condition specified in section 37(3)(a) of the 1995 Act.

(3) The benefits specified in this paragraph are—

(a) cash balance benefits;

(b) a defined benefit minimum (in relation to money purchase underpin benefits or cash balance underpin benefits);

(c) top-up benefits;

(d) pensions derived from money purchase benefits; and

(e) pensions derived from any of the benefits specified in sub-paragraphs (a) to (c).

Section 39 Amendment of the Payments to Employer Regulations

For the definition of “money purchase benefits” in regulation 2 of the Payments to Employer Regulations (interpretation) substitute—

“money purchase benefits” has the meaning given by section 181(1) of the Pension Schemes Act 1993 (general interpretation) ;

Section 40 Modification of the Occupational Pension Schemes (Scheme Administration) Regulations 1996

(1) This regulation applies where during any period before the appointed day—

(a) benefits under an occupational pension scheme included benefits which are not money purchase benefits;

(b) the trustees or managers of the scheme treated the scheme as if it were a money purchase scheme; and

(c) for that reason, the trustees or managers of the scheme treated the scheme as if it were exempted by regulation 3(2)(a) of the Occupational Pension Schemes (Scheme Administration) Regulations 1996 (exemption from the professional advisers requirements for money purchase schemes) (“the Scheme Administration Regulations ”) from the requirement to appoint an actuary in relation to the scheme in accordance with section 47(1)(b) of the 1995 Act (professional advisers).

(2) Where this regulation applies—

(a) regulation 3(2)(a) of the Scheme Administration Regulations applies in relation to any period before the date specified in sub-paragraph (b) during which there was no actuary appointed in relation to the scheme as if the scheme were a money purchase scheme; and

(b) subject to paragraph (3), the trustees or managers of the scheme must, on or before 6th October 2014, appoint an actuary in accordance with section 47(1)(b) of the 1995 Act.

(3) The requirement in paragraph (2)(b) to appoint an actuary in accordance with section 47(1)(b) of that Act does not apply where, in relation to any period, the scheme is exempted from that requirement by regulation 3 of the Scheme Administration Regulations.

Section 41 Scheme accounts

(1) This regulation applies where, before the appointed day—

(a) benefits under an occupational pension scheme included benefits which are not money purchase benefits; and

(b) the trustees or managers of the scheme treated those benefits as if they were money purchase benefits.

(2) Where this regulation applies, no provision of Part 4 of the Act or of these Regulations affects the validity of scheme accounts prepared in relation to any period before the appointed day.

Section 42 Interpretation

(1) In this Part—

“administration levy” is a levy imposed in accordance with section 117(1) of the 2004 Act (administration levy);

“admissible rules” has the meaning given by paragraph 35(2) of Schedule 7 to the 2004 Act (scheme rules, admissible rules etc) ;

“assessment date” has the meaning given by section 142(1) of the 2004 Act (sections 140 and 141: interpretation);

“employer” has the meaning given by section 318(1) of the 2004 Act (general interpretation), including the extensions to that meaning made by—

regulation 1(4) of the Entry Rules Regulations (citation, commencement and interpretation) ; and

in relation to a non-segregated scheme or a multi-employer section of a segregated scheme, regulation 1(5) of those Regulations ;

“the Entry Rules Regulations” means the Pension Protection Fund (Entry Rules) Regulations 2005 ;

“fraud compensation levy” has the same meaning as in section 189(1) of the 2004 Act;

“the Fraud Compensation Levy Regulations ” means the Occupational Pension Schemes (Fraud Compensation Levy) Regulations 2006;

“initial levy” has the same meaning as in section 174(1) of the 2004 Act;

“non-segregated scheme” has the meaning given by regulation 1(3) of the Entry Rules Regulations;

“the PPF Miscellaneous Regulations ” means the Pension Protection Fund (General and Miscellaneous Amendments) Regulations 2006 ;

“pension protection levy” has the meaning given by section 175(1) of the 2004 Act (pension protection levies);

“the relevant Pension Protection Fund provisions” means—

Part 2 of the 2004 Act (the Board of the Pension Protection Fund) (except section 172(6) of that Act (relationship with fraud compensation regime)) and any instrument made under that Part;

Part 3 of Schedule 5 (proceedings and delegation etc) and Schedule 7 (pension compensation provisions) to the 2004 Act and any instrument made under those provisions;

Chapter 1 of Part 3 (pension compensation on divorce etc) of and Schedule 5 (pension compensation payable on discharge of pension compensation credit) to the Pensions Act 2008 and any instrument made under those provisions; and

any provision corresponding to the provisions mentioned in sub-paragraph (a), (b) or (c) in force in Northern Ireland;

“relevant time” means the date in relation to which the value of the assets and liabilities of the eligible scheme is calculated;

“segregated scheme” has the meaning given by regulation 1(2) of the Pension Protection Fund (Multi-employer Schemes) (Modification) Regulations 2005 (citation, commencement and interpretation) ;

(2) Where, by virtue of any provision of regulations made under section 307(1) of the 2004 Act, the relevant Pension Protection Fund provisions apply or applied to a scheme as if a section or segregated part of an occupational pension scheme were a separate scheme—

(a) this Part also so applies; and

(b) “admissible rules”, “employer”, “member” and “trustees or managers of the scheme” must be read accordingly.

Section 43 Eligibility: schemes treated as money purchase schemes

(1) Subject to paragraph (3), where the Board considers that the conditions specified in paragraph (2) are met in relation to an occupational pension scheme—

(a) an occupational pension scheme which would otherwise be an eligible scheme is not an eligible scheme in relation to any period before 1st April 2015;

(b) the scheme becomes an eligible scheme on 1st April 2015; and

(c) the relevant Pension Protection Fund provisions apply in relation to the scheme with effect from that date.

(2) The conditions specified in this paragraph are that immediately before the appointed day—

(a) the scheme included benefits which are not money purchase benefits; and

(b) the trustees or managers of the scheme treated the scheme as if it were a money purchase scheme and, for that reason, was not an eligible scheme.

(3) Paragraph (1)(b) and (c) does not apply where—

(a) the scheme falls within the description of schemes which are not eligible schemes specified in regulation 2 of the Entry Rules Regulations (schemes which are not eligible schemes) ;

(b) an insolvency event has occurred in relation to the employer in relation to the scheme before 1st April 2015; or

(c) the trustees or managers of the scheme have during the period beginning with the appointed day and ending immediately before 1st April 2015, entered into a legally enforceable agreement, the effect of which is to reduce the amount of any debt due to the scheme under section 75 of the 1995 Act (deficiencies in the assets) which may be recovered by, or on behalf of, the trustees or managers of the scheme.

(4) Paragraph (3)(b) applies in relation to a multi-employer scheme that is a non-segregated scheme as if the reference to “the employer in relation to the scheme” were a reference to the employer who is the only remaining employer in relation to that scheme.

(5) Paragraph (3)(c) does not apply where the conditions specified in regulation 2(3)(a) or (b) of the Entry Rules Regulations would be met if the scheme had been an eligible scheme in the period beginning with the appointed day and ending immediately before 1st April 2015.

(6) In this regulation, “insolvency event” has the meaning given by section 121 of the 2004 Act (insolvency event, insolvency date and insolvency practitioner) .

Section 44 Validity of valuations etc, determinations, transfer notices and discharge of benefits before the appointed day

(1) Where the conditions specified in paragraph (2) are met, no provision of Part 4 of the Act or of these Regulations affects the validity, in relation to any period before the appointed day, of—

(a) a valuation obtained by the Board in accordance with section 143(2)(b) (Board’s obligation to obtain valuation of assets and protected liabilities) , section 152(9) or (10A) (duty to assume responsibility following reconsideration) or section 158(3)(b) (duty to assume responsibility for closed schemes) of the 2004 Act;

(b) a determination made by the Board under section 143(2)(a), section 152(3) or section 158(3)(a) of that Act;

(c) a protected benefits quotation accompanying an application made in accordance with section 151(1) of that Act (application for reconsideration);

(d) the Board’s approval of a valuation made with respect to a scheme in accordance with section 144(2)(a) of that Act (approval of valuation) ;

(e) a valuation provided by the trustees or managers of an occupational pension scheme to the Board in accordance with section 156 of that Act (valuations of closed schemes) or regulations made under that section;

(f) audited scheme accounts prepared or provided for any of the purposes of Part 2 of the 2004 Act or of regulations made under that Part;

(g) a direction given by the Board under section 134 of that Act (directions);

(h) a transfer notice (within the meaning of section 160(2) of that Act (transfer notice)) given (at any time) by the Board to the trustees or managers of the scheme; or

(i) the discharge of benefits specified in paragraph (3) which were treated by the trustees or managers of the scheme as if they were money purchase benefits.

(2) The conditions specified in this paragraph are that—

(a) an assessment period or further assessment period in relation to the scheme began before the appointed day; and

(b) the Board is satisfied that immediately before the beginning of that assessment period or further assessment period—

(i) the scheme included any of the benefits specified in paragraph (3); and

(ii) the trustees or managers of the scheme treated benefits specified in paragraph (3) as if they were money purchase benefits.

(3) The benefits specified in this paragraph are—

(a) cash balance benefits;

(b) a defined benefit minimum (in relation to money purchase underpin benefits or cash balance underpin benefits);

(c) top-up benefits; and

(d) pensions derived from any of the benefits specified in sub-paragraphs (a) to (c) or from money purchase benefits.

Section 45 Schemes which become eligible schemes: provision of valuations to determine scheme underfunding

(1) Where the conditions specified in regulation 43(2) (eligibility: schemes treated as money purchase schemes) are met in relation to an occupational pension scheme, the trustees or managers of the scheme must obtain and provide an actuarial valuation of the scheme (“the first valuation”) for the purposes of section 179 of the 2004 Act (valuations to determine scheme underfunding) to the Board, or to the Regulator on the Board’s behalf, on or before 31st March 2015.

(2) The relevant time of the first valuation must be within the period beginning with the appointed day and ending with 31st March 2015.

(3) For the purposes of that valuation, the assets and the protected liabilities of the scheme must be calculated as if the scheme were an eligible scheme, in accordance with regulations 5 (valuation of assets) , 6 (valuation of protected liabilities) and 7 (alternative valuation of assets and protected liabilities in specific cases) of the Pension Protection Fund (Valuation) Regulations 2005 .

(4) The relevant time of any subsequent actuarial valuation for the purposes of section 179 of the 2004 Act must be no more than 3 years after the relevant time of the first valuation provided to the Board or to the Regulator on the Board’s behalf.

(5) The trustees or managers of the scheme must provide any subsequent valuation for the purposes of section 179 of that Act to the Board, or to the Regulator on the Board’s behalf, within a period of 15 months beginning immediately after the relevant time of the valuation.

(6) In this regulation “protected liabilities” means the cost of securing benefits for and in respect of members of the scheme which correspond to the compensation which would be payable, in relation to the scheme, in accordance with the pension compensation provisions (see section 162 of the 2004 Act (the pension compensation provisions)) if the scheme were an eligible scheme for which the Board were to assume responsibility.

Section 46 Provision of information: schemes and benefits treated as money purchase

(1) This regulation applies—

(a) in the case of a scheme which is an eligible scheme on the appointed day, where the trustees or managers of the scheme have, before the appointed day, excluded liabilities relating to benefits which are not money purchase benefits from a valuation under section 179 of the 2004 Act because those liabilities were treated as if they related to money purchase benefits; or

(b) where the trustees or managers of a scheme which includes liabilities relating to benefits which are not money purchase benefits have not, before the appointed day, carried out valuations under section 179 of that Act because they treated the scheme as if it were a money purchase scheme.

(2) Where this regulation applies, the trustees or managers of the scheme must, on or before 31st March 2015, inform the Regulator that the scheme includes benefits which are not money purchase benefits but have been treated as money purchase benefits.

(3) Where—

(a) paragraph (1)(a) of this regulation applies; and

(b) the scheme is an eligible scheme on the appointed day,

the Board, or the Regulator on the Board’s behalf, may direct the trustees or managers of the scheme to provide any information or documents relevant to the calculation of the levies in relation to the scheme.

(4) Information or documents relevant to the calculation of the levies includes, in particular—

(a) accounts in relation to the scheme;

(b) actuarial reports in relation to the scheme; and

(c) actuarial valuations in relation to the scheme.

(5) The Board or the Regulator on the Board’s behalf may revoke or vary any direction given under paragraph (3).

(6) Where a direction under paragraph (3) given to the trustees or managers of a scheme is not complied with, section 10 of the 1995 Act (civil penalties) applies to any trustee or manager who has failed to take all reasonable steps to secure compliance with the direction.

Section 47 Eligible schemes including benefits treated as money purchase benefits: initial levy and pension protection levies

(1) For the purposes of the initial levy and the pension protection levies, where the conditions specified in paragraph (2) are met, and subject to paragraph (4), no provision of Part 4 of the Act or of these Regulations—

(a) affects the validity of an actuarial valuation, the relevant time of which is before the appointed day, and which is provided to the Board, or the Regulator on the Board’s behalf (whether before, on or after the appointed day), in accordance with section 179 of the 2004 Act;

(b) requires the trustees or managers of an eligible scheme to obtain or provide a further or revised actuarial valuation in respect of a financial year before 1st April 2015;

(c) affects the validity of any calculation or determination by the Board in relation to the amount of a pension protection levy or initial levy imposed on a scheme in respect of a financial year before 1st April 2015;

(d) permits the Board, or the Regulator on the Board’s behalf, to increase the amount of a pension protection levy payment which has been notified to the trustees or managers of a scheme in respect of a financial year before 1st April 2015;

(e) prevents recovery by the Board, or by the Regulator on the Board’s behalf, of a debt due in respect of a pension protection levy or initial levy which—

(i) has arisen in accordance with sections 181(6) (calculation, collection and recovery of levies) or 181A(3) (pension protection levy: interest for late payment) of the 2004 Act; and

(ii) relates to an amount payable in respect of a financial year before 1st April 2015.

(2) The conditions specified in this paragraph are that the Board is satisfied that at the relevant time of the valuation provided to the Board, or to the Regulator on the Board’s behalf, in accordance with section 179 of that Act—

(a) the scheme included any of the benefits specified in paragraph (3);

(b) the trustees or managers of the scheme treated benefits specified in paragraph (3) as if they were money purchase benefits; and

(c) the amount of a pension protection levy or initial levy due in respect of the scheme has been calculated on the basis that benefits specified in paragraph (3) which were treated by the trustees or managers of the scheme as if they were money purchase benefits were money purchase benefits.

(3) The benefits specified in this paragraph are—

(a) cash balance benefits;

(b) a defined benefit minimum (in relation to money purchase underpin benefits or cash balance underpin benefits);

(c) top-up benefits; and

(d) pensions derived from any of the benefits specified in sub-paragraphs (a) to (c) or from money purchase benefits.

(4) Paragraph (1) is subject to the power of the Board, or the Regulator on the Board’s behalf, to direct the trustees or managers of an eligible scheme to obtain and provide an out-of-cycle valuation under regulation 49(1) (eligible schemes including benefits which become non-money purchase: power to direct out-of-cycle valuations).

Section 48 Schemes which become eligible schemes: administration levy and pension protection levies: periods after the appointed day

(1) The trustees or managers of an occupational pension scheme which becomes an eligible scheme on 1st April 2015 in accordance with regulation 43(1)(b) are liable to pay the administration levy and the pension protection levy in respect of the scheme with effect from that date.

(2) The trustees or managers of the scheme must pay the amount of the administration levy and the pension protection levy notified by the Board, or by the Regulator on the Board’s behalf, within the period of 28 days beginning with the date on which the Board or the Regulator gives notification of the amounts to the trustees or managers.

(3) In the case of the late payment of the pension protection levy under this regulation, interest is to be charged in accordance with regulation 19A of the PPF Miscellaneous Regulations (interest for late payment of the pension protection levy) , unless the Board has granted a waiver under those Regulations.

Section 49 Eligible schemes including benefits which become non-money purchase: power to direct out-of-cycle valuations

(1) Where the conditions specified in regulation 47(2) apply to an occupational pension scheme, the Board, or the Regulator on the Board’s behalf, may direct the trustees or managers of the scheme to obtain and provide to the Board an out-of-cycle valuation in relation to the scheme for any financial year beginning on 1st April 2015, 2016 or 2017.

(2) Where the Board, or the Regulator on the Board’s behalf, exercises the power to direct the trustees or managers of an occupational pension scheme to obtain and provide an out-of-cycle valuation, the Board may, having regard to that valuation, calculate or recalculate a pension protection levy payment in relation to that scheme in respect of any financial year beginning on any date specified in paragraph (1).

(3) The trustees or managers of the scheme must pay the amount of the pension protection levy notified by the Board, or by the Regulator on the Board’s behalf, within the period of 28 days beginning with the date on which the Board or the Regulator gives notification of the amount of the levy to the trustees or managers.

(4) In the case of the late payment of the pension protection levy notified to the trustees or managers by the Board, or by the Regulator, under paragraph (3), interest is to be charged in accordance with regulation 19A of the PPF Miscellaneous Regulations, unless the Board has granted a waiver under those Regulations.

(5) Where the amount of the pension protection levy notified by the Board or the Regulator to the trustees or managers of the scheme is less than an amount previously notified to, and paid by, the trustees or managers in respect of the same financial year, the Board must repay the difference between the two amounts to the trustees or managers.

(6) Where the Board, or the Regulator on the Board’s behalf, directs the trustees or managers of the scheme to obtain and provide an out-of-cycle valuation, the relevant time of any subsequent actuarial valuation for the purposes of section 179 of the 2004 Act must be within the period of three years beginning immediately after the relevant time of the out-of-cycle valuation.

(7) The Board, or the Regulator on the Board’s behalf, may revoke or vary any direction given under paragraph (1).

(8) Where a direction under paragraph (1) given to the trustees or managers of a scheme is not complied with, section 10 of the 1995 Act (civil penalties) applies to any trustee or manager who has failed to take all reasonable steps to secure compliance with the direction.

(9) In this regulation, an “out-of-cycle valuation” means a valuation which has a relevant time which is—

(a) after the appointed day; and

(b) within the period of three years beginning immediately after the relevant time of the last actuarial valuation for the purposes of section 179 of the 2004 Act (whether the relevant time of that valuation was before, on or after the appointed day).

Section 50 Waiver of Fraud Compensation Levy: periods before the appointed day

(1) Where the conditions specified in paragraph (2) are met, a waiver by the Board of payment of an amount due in relation to any fraud compensation levy imposed under section 189 of the 2004 Act (fraud compensation levy), in accordance with regulation 7 of the Fraud Compensation Levy Regulations (waiver) , applies as if the scheme had been a money purchase scheme at the time of the waiver.

(2) The conditions specified in this paragraph are that—

(a) the fraud compensation levy payment was due in respect of a period before the appointed day;

(b) the trustees or managers of the scheme confirmed in writing to the Board that the conditions specified in regulation 7(1) of the Fraud Compensation Levy Regulations were met during that period; and

(c) the Board is satisfied that during that period—

(i) the scheme included cash balance benefits or pensions derived from money purchase or cash balance benefits;

(ii) the scheme included no benefits other than benefits falling within paragraph (i), money purchase benefits or death benefits; and

(d) the trustees or managers of the scheme treated the scheme as if it were a money purchase scheme.