OpenLegislation

Paragraph 14 I1C1C2C3C4C5C6C7

England, Wales and Scotland

Changes not yet applied. Later legislation changes this provision in ways not yet written into the text below:

(1)

Compensation is payable in accordance with this paragraph where immediately before the assessment date, under the admissible rules of the scheme, an active member of the scheme has not attained normal pension age in respect of his rights to a lump sum (“the scheme lump sum”).

(2)

If the active member survives to attain normal pension age in respect of the scheme lump sum, he is entitled to compensation in respect of the scheme lump sum when he attains that age.

(3)

The compensation is a lump sum equal to 90% of F1the aggregate of—

(a)

the protected amount, and

(b)

if the payment of compensation under this paragraph has been postponed for any period by virtue of paragraph 25A, the amount of the actuarial increase under that paragraph.

(4)

In sub-paragraph (3) “the protected amount” means the aggregate of—

(a)

the accrued amount, and

(b)

the revaluation amount for the revaluation period.

(5)

Subject to sub-paragraphs (6) and (7), the accrued amount is—

AR×PE×PS

where—

AR is the active member’s annual accrual rate in respect of the scheme lump sum under the admissible rules,

PE is the active member’s annual pensionable earnings in respect of the scheme lump sum under the admissible rules, and

PS is the active member’s pensionable service in respect of the scheme lump sum, under the admissible rules, in years (including any fraction of a year).

(6)

If the accrual rates or pensionable earnings differ in respect of different parts of the active member’s pensionable service relating to the scheme lump sum, an amount is calculated in accordance with the formula in sub-paragraph (5) in respect of each of those parts and the accrued amount is the aggregate of those amounts.

For this purpose the references in that sub-paragraph to the active member’s pensionable service, accrual rate and pensionable earnings are to be read as references to the part of his pensionable service in question and to his accrual rate and pensionable earnings in respect of that part.

(7)

In any case where the Board is satisfied that it is not possible to identify one or more of the elements of the formula in sub-paragraph (5), the Board may, having regard to the admissible rules, determine how the accrued amount is to be calculated.

(8)

Paragraph 12 applies for the purpose of determining the revaluation amount except that—

(a)

in that paragraph the references to the pension are to be read as references to the scheme lump sum, and

(b)

in sub-paragraph (6) of that paragraph the reference to paragraph 11 is to be read as a reference to this paragraph.

(9)

This paragraph is subject to—

  • paragraph 20 (compensation in respect of scheme right to transfer payment or contribution refund),

  • F2paragraph 22A (calculation of compensation on and after 1 January 2024),

  • F3paragraph 25E (terminal illness lump sum),

  • F4...and

  • paragraph 30 (power of Secretary of State to change percentage rates by order).

Annotations

Textual amendments

F1

Words in Sch. 7 para. 14(3) substituted (13.3.2013) by Pensions Act 2011 (c. 19), s. 38(4), Sch. 4 para. 23(6); S.I. 2013/585, art. 2(b)(ii)

F2

Words in Sch. 7 para. 14(9) inserted (coming into force in accordance with reg. 1(b) of the amending S.I.) by The Pensions Act 2004 (Amendment) (Pension Protection Fund Compensation) Regulations 2023 (S.I. 2023/1309), reg. 3(5)

F3

Words in Sch. 7 para. 14(9) inserted (1.4.2009) by Pensions Act 2008 (c. 30), s. 149(1), Sch. 8 para. 6; S.I. 2009/809, art. 2(1)(b)(i)

F4

Words in Sch. 7 para. 14(9) omitted (coming into force in accordance with reg. 1(b) of the amending S.I.) by virtue of The Pensions Act 2004 (Amendment) (Pension Protection Fund Compensation) Regulations 2023 (S.I. 2023/1309), reg. 3(3)

Modifications

C1

Sch. 7 para. 14 modified (6.4.2005) by The Pension Protection Fund (Compensation) Regulations 2005 (S.I. 2005/670), regs. 1(1), 17(2) (with reg. 23(3))

C2

Sch. 7 modified (6.4.2005) by The Pension Protection Fund (Reviewable Ill Health Pensions) Regulations 2005 (S.I. 2005/652), regs. 1(1), 15

C3

Sch. 7 applied (with modifications) (6.4.2005) by The Pension Protection Fund (Reviewable Ill Health Pensions) Regulations 2005 (S.I. 2005/652), regs. 1(1), 14(2)

C4

Sch. 7 modified (6.4.2005) by The Pension Protection Fund (Compensation) Regulations 2005 (S.I. 2005/670), regs. 1(1), 12 (with reg. 23(3))

C5

Sch. 7 applied (with modifications) (6.4.2005) by The Pension Protection Fund (Hybrid Schemes) (Modification) Regulations 2005 (S.I. 2005/449), regs. 1(1), 3(2)-(4)

C6

Sch. 7 applied (with modifications) (6.4.2005) by The Pension Protection Fund (Reviewable Ill Health Pensions) Regulations 2005 (S.I. 2005/652), regs. 1(1), 13(1)

C7

Sch. 7 para. 14 modified by S.I. 2005/670, reg. 26(4) (as inserted (6.4.2010) by The Pension Protection Fund (Miscellaneous Amendments) Regulations 2010 (S.I. 2010/560), regs. 1(2)(b), 4(4))

Commencement

I1

Sch. 7 para. 14 in force at 6.4.2005 by S.I. 2005/275, art. 2(7), Sch. Pt. 7

Notes on Schedule 7

Modifications

C1

Sch. 7 amendment to earlier affecting provision S.I. 2005/652, reg. 14(2) (1.4.2005) by The Occupational Pension Schemes and Pension Protection Fund (Amendment) Regulations 2005 (S.I. 2005/993), regs. 1(1), 7

C7

Sch. 7 modified (1.8.2006) by The Pension Protection Fund (Pension Sharing) Regulations 2006 (S.I. 2006/1690), regs. 1(1), 3

C8

Sch. 7 applied (24.7.2014) by The Pensions Act 2011 (Transitional, Consequential and Supplementary Provisions) Regulations 2014 (S.I. 2014/1711), regs. 1(1), 42(1), 53, 57 (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

C9

Sch. 7 applied (24.7.2014 immediately after 2011 c. 19, s. 29, see S.I. 2014/1683, art. 2) by The Pensions Act 2011 (Transitional, Consequential and Supplementary Provisions) Regulations 2014 (S.I. 2014/1711), regs. 1(1), 42(1), 53, 57 (with regs. 6, 41, 44(1), 47(1), 69(2), 72(1), 76(1))

C10

Sch. 7 modified by S.I. 2005/670, reg. 29 (as inserted in Pt. 12 of S.I. 2005/670 by S.I. 2018/95, reg. 2(6)) (24.2.2018) by The Pension Protection Fund (Compensation) (Amendment) Regulations 2018 (S.I. 2018/95), regs. 1, 2(6)

C11

Sch. 7 modified by S.I. 2005/670, reg. 30 (as inserted (for specified purposes and with effect in accordance with reg. 30(3)-(5) of the amending S.I.) by The Pension Protection Fund (Pensionable Service) and Occupational Pension Schemes (Investment and Disclosure) (Amendment and Modification) Regulations 2018 (S.I. 2018/988), regs. 1(2)(b), 2(3))