Regulation 24 Schemes funded by level annual premiums
England, Wales and Scotland
This regulation applies in the case of a member of a scheme that satisfies all the requirements of paragraph (3) below whose pensionable service under that scheme began before 6th April 1975.
In this regulation—
“policy” means a policy of insurance or an annuity contract; and
“premium” means any payment made in consideration for the assurance of the benefit under a policy.
The requirements of this paragraph are that—
the scheme was in existence on 6th April 1974 and has not, in the Occupational Pensions Board’s opinion, been materially altered since that date;
the benefit for each member under the scheme is related to the member’s earnings at a specified time, or over a specified period not exceeding 5 years;
the benefit for each member is secured by one or more policies;
each policy provides separate assurance in respect of each member and the proceeds of the policy are to go to that member, al least to the extent that they are not greater than the benefits to which the member is entitled at normal pension age; and
a premium is payable under each policy at least once a year and the yearly rate of the premium does not change during the member’s pensionable service, except as a result of the declaration of a bonus or a change in the premium rate of the insurer.
For the purposes of paragraph (3)(a), any alteration of the scheme which arises solely from the abolition of contracting-out for salary related schemes under the Pensions Act 2014 does not constitute a material alteration.
Where this regulation applies, if the member becomes entitled to short service benefit under the scheme, the short service benefit must be the greater of the amounts described below, namely—
the total benefit payable to, or in respect of, the member, under the policy, on the basis that no further premiums are to fall due after the date on which the member’s pensionable service is terminated; and
the appropriate proportion of the benefits (excluding any bonuses) that would have been payable under the policy to, or in respect of, the member if the member had continued in pensionable service until normal pension age, plus any bonuses declared in respect of the policy before the date on which the member’s pensionable service actually terminated.
For the purposes of paragraph (4)(b) of this regulation, the “appropriate proportion” means the proportion that the number of premiums that have fallen due in respect of each policy bears to the number of premiums that would have been payable if the member had continued in pensionable service under the scheme until normal pension age.