Explanatory note

Regulation 2 amends regulation 4 of the Occupational Pension Schemes (Scheme Administration) Regulations 1996 (S.I. 1996/1715) (“the Scheme Administration Regulations”). Regulation 4(2)(d) of the Scheme Administration Regulations provides that a person shall be prohibited from acting as a statutory auditor on the grounds of lack of independence as set out in section 1214 of the Companies Act 2006 (c. 46). The amendment provides that regulation 4(2)(d) does not apply to the accounts and auditor’s statement for a relevant scheme for a scheme year—

• in which the scheme has at least 500 participating employers at the start of that scheme year; or

• which immediately precedes a scheme year in which the scheme has at least 500 participating employers at the start of the scheme year.

A relevant scheme is a trust scheme which applies to earners in employment under different employers.

Regulation 3 amends regulation 4 of the Occupational Pension Schemes (Discharge of Liability) Regulations 1997 (S.I. 1997/784), which prescribes the conditions on which policies of insurance and annuity contracts may be commuted to provide a lump sum. The amendment ensures that commutation may take place if benefits secured by an insurance policy or annuity contract have become payable, the earner requests or consents to payment of a lump sum and the payment qualifies under the Finance Act 2004 (c. 12) as a pension commencement lump sum. However, commutation under this provision does not apply to benefits consisting of the guaranteed minimum pension (as defined in section 8(2) of the Pension Schemes Act 1993 (c. 48)) of an earner or their widow, widower or surviving civil partner.

Regulation 4 amends the Transfer of Employment (Pension Protection) Regulations 2005 (S.I. 2005/649) (“the 2005 Regulations”). Regulation 4(2) amends regulation 1 of the 2005 Regulations by inserting the definition of “remuneration period” which is relevant to both regulations 2 and 3 of those Regulations. Also inserted are provisions for the calculation of the employee’s remuneration and transferee contributions. Regulation 4(4) inserts a definition of “relevant contributions” into regulation 2 of the 2005 Regulations so that it operates without the need to cross refer to regulation 3. Regulation 4(5) substitutes a new regulation 3 in the 2005 Regulations that defines “relevant contributions” where the transferee sponsors a money purchase scheme or a stakeholder pension scheme. Contributions are “relevant contributions” if they match either those made by the employee, up to 6 per cent. of the employee’s remuneration or, in certain circumstances, the contributions the transferor had been required to make.

Regulation 5 updates a reference in regulation 10(3) of the Occupational Pension Schemes (Employer Debt) Regulations 2005 (S.I. 2005/678) to take account of the repeal of section 81(1)(c) of the Pensions Act 1995 (c. 26) and its reenactment in section 182(1)(b) of the Pensions Act 2004 (c. 35).

Two separate assessments of the impact of regulations in this instrument have been made. A copy of each of the impact assessments for regulations 2, 3 and 5, and for regulation 4 respectively, is available in the libraries of both Houses of Parliament and 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, 2D, Caxton House, Tothill Street, London SW1H 9NA.