Paragraph 5

in subsection (2), the words “or it satisfies subsection (2A) below.” shall be inserted after paragraph (b) (but not as part of it);

the following subsections shall be inserted after that subsection—

“(2A)

An occupational pension scheme satisfies this subsection only if—

(a)

the requirements imposed by or by virtue of Schedule 1 to the Social Security Act 1986, modified under subsection (2B) below, are satisfied in its case;

(b)

it complies with section 40(1) below; and

(c)

the rules of the scheme applying to protected rights are framed so as to comply with the requirements of any regulations prescribing the form and content of rules of contracted-out schemes and with such other requirements as to form and content (not inconsistent with regulations) as may be imposed by the Occupational Pensions Board as a condition of contracting-out, either generally or in relation to a particular scheme.

(2B)

The modifications of Schedule 1 are—

(a)

that for the references to a personal pension scheme there shall be substituted references to an occupational pension scheme;

(b)

that for the references in paragraph 5 to minimum contributions there shall be substituted references to minimum payments and any payments by the Secretary of State under section 7 of the Social Security Act 1986;

(c)

that for paragraph 7(2) there shall be substituted—

(2)

The rules of the scheme may provide that a member’s protected rights are his rights under the scheme which derive from the payment of minimum payments (within the meaning of the Social Security Pensions Act 1975) together with any payments by the Secretary of State to the scheme under section 7 of this Act in respect of the member and any rights of the member to money purchase benefits which derive from protected rights (within the meaning of the Social Security Pensions Act 1975) under another occupational pension scheme or protected rights under a personal pension scheme which have been the subject of a transfer payment and such other rights as may be prescribed.;

(d)

that in paragraph 9—

(i)

for the reference to an occupational pension scheme there shall be substituted a reference to a personal pension scheme; and

(ii)

for the reference to a personal pension protected rights premium there shall be substituted a reference to a contracted-out protected rights premium; and

(e)

that paragraph 10 shall not apply to public service pension schemes.

(2C)

A contracting-out certificate shall state whether the scheme is contracted-out by virtue of subsection (2) or subsection (2A) above; and where a scheme satisfies both of those subsections the employers, in their application for a certificate, shall specify one of the subsections as the subsection by virtue of which they desire the scheme to be contracted-out.

(2D)

A scheme which has been contracted-out by virtue of one of those subsections may not become contracted-out by reason of the other, except in prescribed circumstances.”.