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Regulation 2 Amendment of the 1987 Regulations

Original text. Later amendments are not shown.

(1)

The 1987 Regulations shall be amended in accordance with the following paragraphs of this regulation.

(2)

In regulation 1(2) (interpretation)—

(a)

after the definition of “beneficiary” there shall be inserted the following definition—

  • “‘contracted-out employment’ shall be construed in accordance with section 8 of the Actf1;”;

(b)

after the definition of “excluded person” there shall be inserted the following definition—

  • “‘illustration date’ means, in relation to any information provided, or to be provided, under paragraph 2A(1) of Schedule 2, the date specified by the trustees as the date by reference to which amounts are calculated for the purpose of providing the information;”;

(c)

after the definition of “member” there shall be inserted the following definitions—

  • “‘non-contributing member’ means a member in respect of whom no further contributions to the scheme are due or expected after the illustration date;

  • ‘pension credit’ means a credit under section 29(1)(b) of the Welfare Reform and Pensions Act 1999f2;”; and

(d)

after the definition of “pensionable age” there shall be inserted the following definitions—

  • “‘the relevant guidance’ means the document entitled “Technical Memorandum TM1: Statutory Money Purchase Illustrations” which—

    1. (a)

      is published, and from time to time revised, by the Faculty of Actuaries and the Institute of Actuariesf3; and

    2. (b)

      is for the time being approved by the Secretary of State;

  • ‘retirement date’ means, in relation to a member—

    1. (a)

      the date which he has specified to the trustees, and which is acceptable under the rules of the scheme, for the purpose of paragraph 2A(1) of Schedule 2; or

    2. (b)

      where no acceptable date has been specified for that purpose, the date specified by the trustees as being the appropriate date for the purpose of paragraph 2A(1);”.

(3)

In regulation 5 (information to be made available to individuals)—

(a)

in paragraph (2)f4 after the words “Schedule 2” there shall be inserted the words “and, subject to paragraph (2A) below, the information mentioned in paragraph 2A of that Schedule”;

(b)

after paragraph (2) there shall be inserted the following paragraphs—

“(2A)

The requirement under paragraph (2) above to furnish the information mentioned in paragraph 2A of Schedule 2 shall not apply—

(a)

in respect of a person who is in receipt of pension benefits under the scheme; or

(b)

where the specified date referred to in paragraph 2(a) of Schedule 2 is not more than 2 years before the date which is the member’s retirement date for the purpose of paragraph 2A of Schedule 2; or

(c)

where, in relation to the member—

(i)

the value, determined by reference to the relevant guidance, of his accrued rights to money purchase benefits under the scheme was less than £5,000 on the illustration date in respect of which such information was last furnished to him;

(ii)

no contributions, including transfers of pension rights or pension credits, have been made to the scheme by him or on his behalf in respect of money purchase benefits since that date; and

(iii)

the trustees previously gave notice to the member that no further such information would be furnished to him unless further contributions to the scheme in respect of money purchase benefits had first been made by him or on his behalf; or

(d)

where, in relation to the member—

(i)

the value, determined by reference to the relevant guidance, of his accrued rights to money purchase benefits under the scheme is less than £5,000 on the first illustration date falling after 5th April 2003;

(ii)

no contributions, including transfers of pension rights or pension credits, have been made to the scheme by him or on his behalf after 5th April 2003; and

(iii)

no further contributions are, in the opinion of the trustees, likely to be made to the scheme by him or on his behalf after that illustration date; or

(e)

where the specified date referred to in paragraph 2(a) of Schedule 2 is before 6th April 2003.

(2B)

Where paragraph (2A) applies but the trustees of the scheme nevertheless choose to furnish the information described in paragraph 2A(1) of Schedule 2 and the amount comprising that information is calculated in accordance with sub-paragraphs (2) to (5) of that paragraph, then that information shall be accompanied by the additional information specified in sub-paragraph (6)(a) and (c) to (k) of that paragraph as if the information had been provided under sub-paragraph (1) of that paragraph.”.

(4)

In Schedule 2 (information to be made available to individuals), after paragraph 2 there shall be inserted the following paragraph—

“2A
(1)

The information to be provided under this sub-paragraph is an illustration of the amount, calculated in accordance with sub-paragraphs (2) to (5), of the pension an entitlement to which would be likely to accrue to the member, or be capable of being secured by him, at his retirement date in respect of rights that may arise under the scheme.

(2)

The amount referred to in sub-paragraph (1) above shall be determined by reference to—

(a)

the relevant guidance; and

(b)

the assumptions about contributions specified in sub-paragraph (3) and about annuities specified in sub-paragraphs (4) and (5), and such other assumptions as may be specified for the purpose in the relevant guidance,

having regard to the value of the member’s accrued rights to money purchase benefits under the scheme on the illustration date.

(3)

The assumptions about contributions referred to in sub-paragraph (2)(b) above are—

(a)

where the calculation relates to the rights of a non-contributing member, that no contributions will be made to the scheme by him or on his behalf after the illustration date; and

(b)

in any other case, that, until the member’s retirement date—

(i)

contributions to the scheme will be made by him or on his behalf;

(ii)

the treatment of the scheme under sections 639 to 646A of the Income and Corporation Taxes Act 1988f5 as for the time being in force will continue; and

(iii)

where a member is in contracted-out employment, sums will continue to be paid by the Commissioners of Inland Revenue in respect of him under section 43 of the Act (payment of minimum contributions to personal pension schemes)f6 in the amounts to be determined by reference to the relevant guidance.

(4)

The assumptions about annuities referred to in sub-paragraph (2)(b) above are—

(a)

that the rate of pension is to be increased annually by the relevant percentage for the time being specified in the relevant guidance; and

(b)

that, subject to sub-paragraph (5) below, irrespective of whether or not the member is married at the time when the information referred to in sub-paragraph (1) above is furnished, the annuity will include provision for the payment, to a surviving spouse of the member, of a pension of an amount equal to one half of the pension which was payable to him immediately before his death.

(5)

Sub-paragraph (4)(b) above does not apply where—

(a)

the trustees decide to use a different assumption in substitution for that specified in sub-paragraph (4)(b) on the basis that the scheme records indicate that the member is not married; or

(b)

the trustees and the member agree to use a different assumption.

(6)

The additional information which is to accompany the information provided under sub-paragraph (1) above is—

(a)

a statement to the effect that the information provided under that sub-paragraph is provided only for the purposes of illustration, that it does not represent any promise or guarantee as to the amount of benefit which may be receivable by the member or a beneficiary under the scheme, and that it should not be regarded as the only consideration by reference to which the member should make decisions as to his pension arrangements;

(b)

a statement to the effect that the provision of the information mentioned in that sub-paragraph is required by law;

(c)

a statement specifying the means by which the person to whom the information relates may obtain from the trustees further information about the information provided under sub-paragraph (1) above;

(d)

a statement to the effect that the information has been prepared by reference to the assumptions required by this paragraph or specified in the relevant guidance;

(e)

a statement to the effect that certain general assumptions have been made about the nature of the investments made for the purposes of that person’s money purchase benefits and their likely performance, which may not correspond with the investments actually made for those purposes, or their actual performance;

(f)

a statement to the effect that the amount referred to in sub-paragraph (1) above is expressed in today’s prices;

(g)

a statement to the effect that the actual amount of any pension payable to that person or beneficiary under the scheme will depend on considerations, including the actual performance of investments and the cost of buying an annuity at the time the pension becomes payable, which may be different from the assumptions made for the purpose of providing the information under sub-paragraph (1) above;

(h)

a statement specifying any assumptions made in relation to future contributions to the scheme;

(i)

a statement of the assumptions made in accordance with sub-paragraphs (3)(b)(iii) and (4) above, or as mentioned in sub-paragraph (5) above;

(j)

a statement of the member’s retirement date for the purpose of sub-paragraph (1) above; and

(k)

a statement of the illustration date used for the purpose of calculating the amount referred to in sub-paragraph (1) above.”.

Annotations

Footnotes

f1

Section 8 was amended by section 136(2) of, paragraphs 21(a) and 23 of Schedule 5 to, and Part III of Schedule 7 to, the Pensions Act 1995, by paragraph 126 of Schedule 7 to the Social Security Act 1998 (c. 14) and by paragraph 34 of Schedule 1 to the Social Security Contributions (Transfer of Functions, etc.) Act 1999 (c. 2).

f2

1999 c. 30.

f3

The Faculty of Actuaries is at Maclaurin House, 18 Dublin Street, Edinburgh EH1 3PP. The Institute of Actuaries is at Staple Inn Hall, High Holborn, London WC1V 7QJ.

f4

Regulation 5(2) was amended by regulation 20(a) of S.I. 1992/1531 and by regulation 3(1) and (2) of S.I. 1996/1435.

f5

1988 c. 1; section 646A was inserted by paragraph 8 of Schedule 7 to the Finance Act 1989 (c. 26).

f6

Section 43 was amended by paragraph 42 of Schedule 5 to the Pensions Act 1995 and by paragraph 47 of Schedule 1 to the Social Security Contributions (Transfer of Functions, etc.) Act 1999.