# The Personal Pension Schemes (Appropriate Schemes) Regulations 1987, Note: Explanatory note


(This note is not part of the Regulations)
These Regulations are all made under the Social Security Act 1986, and are made before the end of a period of 12 months from the commencement of the relevant sections of that Act. Consequently, by virtue of section 61(5) of that Act, the provisions of section 61(2) and (3) of the Social Security Pensions Act 1975 (as amended by section 86(1) of, and paragraph 94 of Schedule 10 to, the Social Security Act 1986), which require reference to the Occupational Pensions Board of, and a report by the Board on, proposals to make regulations for certain purposes of both Acts, do not apply to them.
If a personal pension scheme is to be an appropriate scheme for the purposes of the Social Security Act 1986, it must, in view of regulation 2, take the form of only one of the following, namely—
(a) an arrangement for the issue of insurance policies or annuity contracts;
(b) a unit trust scheme which has been authorised under or by virtue of the Financial Services Act 1986; or
(c) an arrangement for the investment of contributions in an interest-bearing account.
Regulation 3 provides that a Friendly Society can establish an appropriate scheme only if it is authorised by virtue of Chapter III of Part I of the Financial Services Act 1986 and has disclosed in its audited accounts a contributions income of not less than £300,000 in the year 1986 and £400,000 in the year 1987; and that an appropriate scheme can take the form of an interest-bearing account only if it is established by—
(a) a building society as defined in the Building Societies Act 1986;
(b) a bank recognised under the Banking Act 1979; or
(c) a deposit taker licensed under the Banking Act 1979.
Regulations 4 to 11 set out the procedures for applying to the Occupational Pensions Board for the issue by the Board of an “appropriate scheme certificate”(a certificate that a personal pension scheme is an appropriate scheme for the purposes of the Social Security Act 1986) and for applying to the Board to surrender such a certificate or to have one varied. They make provision for the Board to determine questions whether and for what period a scheme is or was an appropriate scheme, and questions arising on an application concerning the issue, variation or surrender of an appropriate scheme certificate, and they also provide for the cancellation of certificates.
Regulations 12 and 13 set out the procedures for giving notices under section 1(9) and (10) of the Social Security Act 1986 (under which a particular personal pension scheme may become, or cease to be, a particular earner’s “chosen scheme”).
Regulations 14 to 18 deal with the minimum contributions which the Secretary of State is to pay under section 1(1) of the Social Security Act 1986. Regulation 14 sets out the circumstances in which minimum contributions, otherwise payable to the trustees or managers of a personal pension scheme, are not to be paid, or are to be paid to another scheme or to other persons. Regulation 15 deals with the manner of payment of minimum contributions, and regulation 16 with claims for the purpose of section 3(1)(b) of the Social Security Act 1986, which provides for minimum contributions to be increased for tax weeks ending before 6th April 1993. Regulation 17 sets out the method of calculating or estimating the earnings on which minimum contributions are based, and regulation 18 provides for the rounding of minimum contributions to avoid fractional amounts.
Regulation 19 provides that a personal pension scheme which comprises an arrangement for the investment of contributions in an interest-bearing account or accounts can be an appropriate scheme only if (without prejudice to any right of a member of it which arises otherwise than by virtue of these regulations), the scheme rules include provision—
(a) first, that within 7 days of a member’s joining the scheme, he shall be served with a notice which contains the information mentioned in the Schedule to these Regulations; and
(b) secondly, that within 14 days of the service of that notice, the member may cancel his membership of the scheme and receive a refund of any contributions which he has paid to it.
Regulation 20 provides transitionally for the issue (only until 5th April 1989) of an appropriate scheme certificate, even though the Occupational Pensions Board have not satisfied themselves that the scheme satisfies the conditions for the issue of one, on the basis of information given by the administrators of the scheme and undertakings given by any person having power to alter the scheme’s rules and by the person who or body which has established the scheme.

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Source: https://www.legislation.gov.uk/uksi/1987/1109/note (the official version)
Page: https://openlegislation.uk/personal-pension-schemes-appropriate-schemes-regulations-1987/note
Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.