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Regulation 7C Manner of calculation of initial cash equivalents for money purchase benefits (other than collective money purchase benefits) and cash balance benefits not calculated by reference to final salaryF1F7F8C1C2C3

England, Wales and Scotland

(1)

For F2cash balance benefits in respect of which the available sum is not calculated by reference to final salary and money purchase benefits F3other than collective money purchase benefits, the initial cash equivalent is to be calculated in accordance with this regulation.

(2)

The initial cash equivalent is the realisable value F4at the date of calculation of any benefits to which the member is entitled.

(3)

The trustees must calculate that realisable value—

(a)

in accordance with the scheme rules; and

(b)

in a manner which is—

(i)

approved by the trustees; and

(ii)

consistent with F5Chapter 1 of Part 4ZA of the 1993 Act.

(4)

F6The realisable value must include—

(a)

for money purchase benefits, any increases to the benefits resulting from a payment of interest made in accordance with the scheme rules; or

(b)

for cash balance benefits—

(i)

any interest (including notional interest) which, in accordance with the scheme rules, applies to the available sum in respect of which the benefits are calculated;

(ii)

any guarantee which, in accordance with the scheme rules, applies to the available sum in respect of the benefits or to the contributions made by the member or by another person in respect of the member;

(iii)

any options the member has which would increase the value of the member’s benefits under the scheme (adjusted to reflect the proportion of members the trustees determine are likely to exercise those options); and

(iv)

any discretionary benefits which the trustees determine should be taken into account, having regard to any established custom for awarding the benefits and any requirement for consent before they are awarded.

Annotations

Textual amendments

F1

Regs. 7-7E substituted for reg. 7 and 8 (E.W.S.) (1.10.2008) by Occupational Pension Schemes (Transfer Values) (Amendment) Regulations 2008 (S.I. 2008/1050), regs. 1(1), 4

F2

Words in reg. 7C(1) inserted (E.W.S.) (24.7.2014) by The Pensions Act 2011 (Transitional, Consequential and Supplementary Provisions) Regulations 2014 (S.I. 2014/1711) , regs. 1(1) , 32(6)(b) (with regs. 6 , 41 , 44(1) , 47(1) , 69(2) , 72(1) , 76(1) ); coming into force immediately after s. 29 of 2011 c 19 - see S.I . 2014/1683, art. 2

F3

Words in reg. 7C(1) inserted (1.8.2022) by The Occupational Pension Schemes (Collective Money Purchase Schemes) (Modifications and Consequential and Miscellaneous Amendments) Regulations 2022 (S.I. 2022/337), regs. 1(3), 3(6)

F4

Words in reg. 7C(2) inserted (E.W.S.) (13.10.2008) by Occupational and Personal Pension Schemes (Transfer Values) (Amendment) Regulations 2008 (S.I. 2008/2450) , regs. 1 , 3(3)

F5

Words in reg. 7C(3)(b)(ii) substituted (6.4.2015) by The Occupational and Personal Pension Schemes (Transfer Values) (Amendment and Revocation) Regulations 2015 (S.I. 2015/498), regs. 1(2), 4(5)

F6

Reg. 7C(4) substituted (24.7.2014) by The Pensions Act 2011 (Transitional, Consequential and Supplementary Provisions) Regulations 2014 (S.I. 2014/1711) , regs. 1(1) , 32(6)(c) (with regs. 6 , 41 , 44(1) , 47(1) , 69(2) , 72(1) , 76(1) ); coming into force immediately after s. 29 of 2011 c 19 - see S.I . 2014/1683, art. 2

F7

Words in reg. 7C heading inserted (1.8.2022) by The Occupational Pension Schemes (Collective Money Purchase Schemes) (Modifications and Consequential and Miscellaneous Amendments) Regulations 2022 (S.I. 2022/337), regs. 1(3), 3(5)

F8

Words in reg. 7C inserted (E.W.S.) (24.7.2014) by The Pensions Act 2011 (Transitional, Consequential and Supplementary Provisions) Regulations 2014 (S.I. 2014/1711) , regs. 1(1) , 32(6)(a) (with regs. 6 , 41 , 44(1) , 47(1) , 69(2) , 72(1) , 76(1) ); coming into force immediately after s. 29 of 2011 c 19 - see S.I . 2014/1683, art. 2

Modifications

C1

Regs. 7-7C modified by S.I. 2000/1048, reg. 3(3)(4)(8) (as substituted (6.4.2016) by The Pension Sharing (Miscellaneous Amendments) Regulations 2016 (S.I. 2016/289), regs. 1(2), 2(4)(b), (c))

C2

Regs. 7-7C modified by S.S.I. 2000/112, reg. 3(3)(4)(8) (as substituted (6.4.2016) by The Pension Sharing (Miscellaneous Amendments) Regulations 2016 (S.I. 2016/289), regs. 1(2), 7(3)(b), (e))

C3

Regs. 7-7C modified by S.I. 2000/1052, reg. 4 (as substituted (6.4.2016) by The Pension Sharing (Miscellaneous Amendments) Regulations 2016 (S.I. 2016/289), regs. 1(2), 4(4))

Notes on Part III

Textual amendments

F1

Word in Pt. III omitted (6.4.2015) by virtue of The Occupational and Personal Pension Schemes (Transfer Values) (Amendment and Revocation) Regulations 2015 (S.I. 2015/498), regs. 1(2), 4(2)