Schedule 2 PART I TO BE SUBSTITUTED FOR PARTS I TO IV OF SCHEDULE 16 TO THE PRINCIPAL REGULATIONS

“PART I

1

Subject to the provisions of paragraphs 2, 3, 5 and 6, a transfer value to be made in accordance with the provisions of regulation J2, J3(1), J14 or Q2 in respect of a person shall be—

(1)

the capitalised value of his accrued rights under these Regulations at the material date, and any associated rights under the Pensions (Increase) Act 1971^f1 and the Pensions (Increase) Act 1974^f2, less a sum, if any, in respect of any state scheme premium which has been paid and not recovered in respect of a period of service included in the valuation of those rights; together with

(2)

where the transfer value is, without reasonable cause or excuse, not paid within 6 months of the material date and it is not to be paid to a statutory scheme (or any other scheme which is for the time being specified by the Secretary of State as a scheme which is to be treated as a statutory scheme for the purposes of this Schedule)—

(a)

interest, if any, calculated on a daily basis over the period from the material date to the date on which the transfer value is paid, at the rate set out in regulation 4(4)(a) of the Occupational Pension Schemes (Transfer Values) Regulations 1985^f3, or, if it is greater

(b)

the amount by which the transfer value falls short of what it would have been if the material date had been the date on which the transfer value was paid.

2

Where, prior to the last date on which the fund authority is required to pay a transfer value under these Regulations, the employing authority has directed under regulation M1 or any corresponding provision of earlier Regulations or a local Act scheme that all or any of the benefits payable under these Regulations shall be forfeited, any transfer value payable in respect of that person shall be reduced in proportion to the reduction in the total value of the benefits or shall be withheld as the case may be.

3

Where a person requests that a transfer value be paid—

(1)

(a)

to a superannuation scheme which is not contracted-out within the meaning of section 32 of the Pensions Act^f4, or

(b)

to a personal pension scheme which is not an appropriate personal pension scheme, or

(c)

to a self-employed pension arrangement;

(2)

the trustees or managers of the superannuation scheme, personal pension scheme or self-employed pension arrangement are able or willing to have transferred to it only the liability for a member’s accrued rights other than his and his surviving spouse’s rights to guaranteed minimum pensions; and

(3)

he does not require that portion of his transfer value that represents his guaranteed minimum pensions to be used in one of the ways specified in regulation J2(1),

then his transfer value shall be reduced by the amount of a state scheme premium sufficient to meet the liability in respect of that person’s and his surviving spouse’s guaranteed minimum pensions.

4

(1)

Subject to sub-paragraph (2), where a person has ceased to be a pensionable employee by virtue of a notification under regulation B4A, the person shall be entited to a transfer value under regulation J2(1)(b) only in respect of the following:—

(a)

where the person is a man, that part of his accrued rights which bears the same proportion to his total accrued rights as his reckonable service after 5th April 1988 bears to his total reckonable service;

(b)

where the person is a woman, the aggregate of—

(i)

that part of her accrued rights, other than a widower’s pension, which bears the same proportion to the total of those accrued rights as her reckonable service after 5th April 1988 bears to her total reckonable service; and

(ii)

that part of her accrued rights, relating to a widower’s pension, credited to her after 5th April 1988.

(2)

This paragraph shall not apply to a person whose reckonable service before 6th April 1988 amounts to less than 2 years.

(3)

Where—

(a)

a transfer value limited in accordance with sub-paragraph (1), has been paid in respect of a person; and

(b)

that person has subsequently ceased to be employed in local government employment before attaining the age of 65 years or, where regulation J2(7) applies, the age of 64 years;

a right to a transfer value in respect of any part of his accrued rights to which, but for the operation of sub-paragraph (1), he would have been entitled on ceasing to be a pensionable employee, shall accrue to the person on the date on which he ceases to be employed and shall be valued accordingly.

(4)

In relation to any person to whom sub-paragraph (3) above applies—

(a)

regulation J2(2)(c)(ii) shall have effect as if the words “or to be a pensionable employee” were deleted; and

(b)

the definition of “material date” in paragraph 5 shall have effect as if the words “or to be a pensionable employee” were deleted.

(5)

For the purposes of this paragraph, where a person ceases to be employed in local government employment but that person enters again into local government employment, then, if there is between those two employments—

(a)

an interval not exceeding one month; or

(b)

an interval of any length if the second of the employments results from the exercise of a right to return to work under section 45(1) of the Employment Protection (Consolidation) Act 1978^f5 (right to return to work following pregnancy or confinement),

they shall be treated as a single employment.

5

In this Schedule—

• “accrued rights” means the rights which have accrued in respect of a person under these Regulations at the material date, or which would have accrued in respect of him if the period of service necessary to satisfy the requirements of regulation E2(1)(c) had been the period which he had completed at that date;

• “capitalised value” means the capitalised value at the material date as determined by the fund authority, in such manner as may be approved by the Government Actuary or by an actuary authorised by the Government Actuary to act on his behalf for that purpose, having regard to investment conditions and the contingencies on which benefits are, or are to be, payable under these Regulations;

• “material date” means the date on which the person ceased to be employed in local government employment or to be a pensionable employee, as described in regulation J2(1) or, if it is later, the date of his application for payment of a transfer value which he has not subsequently withdrawn; and

• “state scheme premium” means a state scheme premium or a transfer premium under Part III of the Pensions Act.

6

Where one or more transfer values have been paid to a fund authority in respect of a person, any transfer value paid by that fund authority shall be at least equal to the aggregate of those transfer values and any contributions made by that person under Part C, except where it falls to be paid to a statutory scheme (or any other scheme which is for the time being specified by the Secretary of State as a scheme which is to be treated as a statutory scheme for the purposes of this Schedule).

7

A transfer value paid under this Schedule shall be at least equal in amount to the cash equivalent, if any, to which a person would otherwise be entitled under Part II of Schedule 1A to the Pensions Act.”.