PART 12Hybrid schemes

Modification of test scheme standard: money purchase benefit lump sum accrualsI141

1

Paragraph (2) applies where a relevant rule—

a

specifies a description of hybrid schemes, and

b

provides that the paragraph (b) quality requirements are to apply to any scheme of that description subject to the modifications made by this regulation.

2

In determining whether any such scheme satisfies the paragraph (b) quality requirements in relation to a jobholder, section 23 (test scheme) has effect as if for subsection (4) there were substituted—

4

The requirements of subsection (4A) or (4B) must be satisfied in relation to the amount available for the provision of a pension to a member at the appropriate age (“the amount”).

4A

The requirements of this subsection are that the amount must accrue at an annual rate of at least 16% of qualifying earnings.

4B

The requirements of this subsection are that the amount must—

a

accrue at an annual rate of at least 8% of qualifying earnings, and

b

until the date on which the member attains normal pension age (within the meaning of the Pension Schemes Act), be increased as a minimum by 3.5% per annum, in addition to any increase that is required by virtue of regulation 37(2)(a) of the Occupational and Personal Pension Schemes (Automatic Enrolment) Regulations (Northern Ireland) 2010.

3

Where the modification described in paragraph (2) has effect in relation to a hybrid scheme of the relevant description, regulation 39 is to be read as if, after paragraph (4) there were inserted—

4A

Where, in relation to a scheme to which the modification described in regulation 41(2) applies, an employer is determining whether the scheme satisfies the test scheme standard—

a

the employer must choose between a test scheme which satisfies the requirements of section 23(4A) or those of section 23(4B), and

b

having made that choice, that is the test scheme which the employer must apply in relation to all persons who are relevant members.