Explanatory note

These Regulations amend the Occupational Pension Schemes (Contracting-out) Regulations 1996 ( S.I. 1996/1172) (“the Contracting-out Regulations”) and the Occupational Pension Schemes (Modification of Schemes) Regulations 2006 ( S.I. 2006/759) (“the Modification of Schemes Regulations”).

Regulation 2(2) amends regulation 62 of the Contracting-out Regulations to provide for a new fixed rate percentage to be used for the revaluation of a person’s guaranteed minimum pension (if the scheme provides for revaluation by that method in accordance with section 16(2) of the Pension Schemes Act 1993 (c. 48)), if they leave contracted-out employment on or after 6th April 2012.

Regulation 2(3) corrects an error in a previous amendment to the Contracting-out Regulations (made by S.I. 2011/1294), and clarifies that it is the trustees or managers of the scheme to whom the actuary and the employer must provide the specified information under paragraph 4(a) and (b) of Schedule 3 to those Regulations.

Regulation 3 inserts a new regulation 7A into the Modification of Schemes Regulations. The new regulation provides a power for trustees to modify their scheme rules for the purposes of amending or removing rules which make special provision for the protected rights of members, where those rules are no longer required, or where the rules no longer reflect a statutory provision, as a result of the coming into force of the listed statutory provisions which implement the abolition of contracting-out on a defined contribution basis and the abolition of protected rights. The power can be used to make limited retrospective changes. The provision makes clear that the removal of rules relating to protected rights does not affect the member’s underlying entitlement to money purchase benefits under the scheme.

Regulation 2 amends an existing regulatory regime and has no new impact on the private sector and civil society organisations. Publication of an impact assessment is not necessary for such legislation.

Regulation 3 of this instrument enables more schemes to benefit from the abolition of the special provisions in relation to protected rights. An assessment of the impact of regulation 3 was included in the impact assessment published alongside the statutory instruments which implement the abolition of contracting-out on a defined contribution basis and the abolition of protected rights ( S.I. 2011/1245, 2011/1246, 2011/1724 and 2011/1730). A copy of that impact assessment is available in the libraries of both Houses of Parliament and is annexed to the Explanatory Memorandum which is available alongside this instrument on www.legislation.gov.uk. Copies may also be obtained from the Better Regulation Unit of the Department for Work and Pensions, Caxton House, Tothill Street, London SW1H 9NA, or from the DWP website: http://www.dwp.gov.uk/resourcecentre/ria.asp.