Pension Schemes (Northern Ireland) Act 1993

Part IN.I. Preliminary

1 Categories of pension schemes.N.I.

In this Act—

• “occupational pension scheme” means any scheme or arrangement which is comprised in one or more instruments or agreements and which has, or is capable of having, effect in relation to one or more descriptions or categories of employments so as to provide benefits, in the form of pensions or otherwise, payable on termination of service, or on death or retirement, to or in respect of earners with qualifying service in an employment of any such description or category;

• “personal pension scheme” means any scheme or arrangement which is comprised in one or more instruments or agreements and which has, or is capable of having, effect so as to provide benefits, in the form of pensions or otherwise, payable on death or retirement to or in respect of [F1earners (whether employed or self-employed)] who have made arrangements with the trustees or managers of the scheme for them to become members of it;

• “public service pension scheme” means an occupational pension scheme established by or under an enactment or the Royal prerogative or a Royal charter, being a scheme—

  (a)

  all the particulars of which are set out in, or in a legislative instrument made under, an enactment, Royal warrant or charter, or

  (b)

  which cannot come into force, or be amended, without the scheme or amendment being approved by a Minister of the Crown or government department,

  and includes any occupational pension scheme established, with the concurrence of the Department of Finance and Personnel, by or with the approval of another government department and any occupational pension scheme prescribed by regulations made by the Department and the Department of Finance and Personnel jointly as being a scheme which ought in their opinion to be treated as a public service pension scheme for the purposes of this Act.

Part IIN.I. Administration

Registration of schemesN.I.

2 Registration of occupational and personal pension schemes.N.I.

(1)Regulations may make provision with respect to the staff and other facilities that are to be available to the Registrar.

(2)Regulations may require—

(a)any person who is or has been—

(i)a trustee or manager of an occupational or personal pension scheme or an administrator of a public service pension scheme, or

(ii)the employer in relation to employment of any description or category to which an occupational pension scheme relates, and

(b)such other persons as may be prescribed,

to provide the Registrar with such information for the purposes of the register in such form and within such time as may be prescribed.

[F2(2A)The regulations may make provision for information obtained by or furnished to the Registrar under or for the purposes of this Act to be disclosed to the Regulatory Authority or the Pensions Compensation Board.]

(3)The Department may direct the Registrar to submit to it, in such form and at such intervals as may be specified in the direction, such statistical and other reports as the Department may require; and the Department may determine at its discretion whether or not to publish a report submitted to it under this subsection.

(4)In this section—

• “the register” means the register of occupational and personal pension schemes compiled and maintained under section 6 of the M1Pension Schemes Act 1993;

• “the Registrar” means the Registrar of Occupational and Personal Pension Schemes appointed under that section.

Part IIIN.I. Certification of Pension Schemes and Effects on Members’ State Scheme Rights and Duties

Chapter IN.I. Certification

PreliminaryN.I.

3 Issue of contracting-out and appropriate scheme certificates.N.I.

(1)Regulations shall provide for the [F3Inland Revenue] to issue certificates stating—

(a)that the employment of an earner in employed earner’s employment is contracted-out employment by reference to an occupational pension scheme; or

(b)that a personal pension scheme is an appropriate scheme;

and in this Act a certificate under paragraph (a) is referred to as “a contracting-out certificate” and a certificate under paragraph (b) as “an appropriate scheme certificate”.

(2)The regulations shall provide for contracting-out certificates to be issued to employers and to specify—

(a)the employments which are to be treated, either generally or in relation to any specified description of earners, as contracted-out employments; and

(b)the occupational pension schemes by reference to which those employments are to be so treated.

[F4(2A)The regulations may provide, in the case of contracting-out certificates issued before the principal appointed day, for their cancellation by virtue of the regulations—

(a)at the end of a prescribed period beginning with (and including) that day, or

(b)if prescribed conditions are not satisfied at any time in that period.

but for them to continue to have effect until so cancelled; and the regulations may provide that a certificate having effect on and after that day by virtue of this subsection is to have effect, in relation to any earner’s service on or after that day, as if issued on or after that day.

(2B)In this Act “the principal appointed day” means the day designated by an order under Article 1 of the Pensions (Northern Ireland) Order 1995 as the principal appointed day for the purposes of Part IV of that Order.]

(3)An occupational pension scheme is a contracted-out scheme in relation to an earner’s employment if it is for the time being specified in a contracting-out certificate in relation to that employment; and references in this Act to the contracting-out of a scheme are references to its inclusion in such a certificate.

(4)A personal pension scheme is an appropriate scheme if there is in force an appropriate scheme certificate issued F5. . . in accordance with this Chapter that it is such a scheme.

(5)An appropriate scheme certificate for the time being in force in relation to a scheme shall be conclusive that the scheme is an appropriate scheme.

(6)Regulations shall provide that any question whether a personal pension scheme is or at any time was an appropriate scheme shall be determined by the [F3Inland Revenue].

(7)Except in prescribed circumstances, no contracting-out certificate or appropriate scheme certificate shall have effect from a date earlier than that on which the certificate is issued.

4 Meaning of “contracted-out employment”, “guaranteed minimum pension” and “minimum payment”.N.I.

(1)The employment of an earner in employed earner’s employment is “contracted-out employment” in relation to him during any period in which he is under pensionable age and—

(a)either—

[F6(i)his service in the employment is for the time being service which qualifies him for a pension provided by an occupational pension scheme contracted out by virtue of satisfying section 5(2) (in this Act referred to as “a salary related contracted-out scheme”),]

(ii)his employer makes minimum payments in respect of his employment to an occupational pension scheme which is contracted-out by virtue of satisfying section 5(3) (in this Act referred to as “a money purchase contracted-out scheme”); and

(b)there is in force a contracting-out certificate issued by the [F7Inland Revenue] in accordance with this Chapter stating that the employment is contracted-out employment by reference to the scheme.

(2)In this Act—

• “guaranteed minimum pension” means any pension which is provided by an occupational pension scheme in accordance with the requirements of sections 9 and 13 to the extent to which its weekly rate is equal to the earner’s or, as the case may be, the earner’s widow’s or widower’s guaranteed minimum as determined for the purposes of those sections respectively; and

• “minimum payment”, in relation to an earner’s employment in any tax week, means the rebate percentage of so much of the earnings paid to or for the benefit of the earner in that week as exceeds the current lower earnings limit but not the current upper earnings limit (or the prescribed equivalents if he is paid otherwise than weekly);

[F8and for the purposes of this subsection “rebate percentage” means the appropriate flatrate percentage for the purposes of [F9section 38A]].

(3)Regulations may make provision—

(a)for the manner in which, and time at which or period within which, minimum payments are to be made;

(b)for the recovery by employers of amounts in respect of the whole or part of minimum payments by deduction from earnings;

(c)for calculating the amounts payable according to a scale prepared from time to time by the Department or otherwise adjusting them so as to avoid fractional amounts or otherwise facilitate computation;

(d)for requiring that the liability in respect of a payment made in a tax week, in so far as the liability depends on any conditions as to a person’s age on retirement, shall be determined as at the beginning of the week or as at the end of it;

(e)for securing that liability is not avoided or reduced by the payment of earnings being made in accordance with any practice which is abnormal for the employment in respect of which the earnings are paid;

(f)without prejudice to paragraph (e), for enabling the [F7Inland Revenue], where [F10they are] satisfied as to the existence of any practice in respect of the payment of earnings whereby the incidence of minimum payments is avoided or reduced by means of irregular or unequal payments of earnings, to give directions for securing that minimum payments are payable as if that practice were not followed;

(g)for the intervals at which, for the purposes of minimum payments, payments of earnings are to be treated as made; and

(h)for this section to have effect, in prescribed cases, as if for any reference to a tax week there were substituted a reference to a prescribed period.

(4)Any contracting-out certificate for the time being in force in respect of an employed earner’s employment shall be conclusive that the employment is contracted-out employment.

[F11(5)Regulations shall provide for the determination by the [F12Department] of any question whether an employment is to be treated as contracted-out employment or as to the persons in relation to whom, or the period for which, an employment is to be so treated.]

General requirements for certificationN.I.

5 Requirements for certification of schemes: general.N.I.

(1)Subject to subsection (4), an occupational pension scheme can be contracted-out in relation to an earner’s employment only if it satisfies subsection (2) or (3).

[F13(2)An occupational pension scheme satisfies this subsection only if—

(a)in relation to any earner’s service before the principal appointed day, it satisfies the conditions of subsection (2A); and

(b)in relation to any earner’s service on or after that day, it satisfies the conditions of subsection (2B).

(2A)The conditions of this subsection are that—

(a)the scheme complies in all respects with sections 9 to 19 or, in such cases or classes of case as may be prescribed, with those sections as modified by regulations; and

(b)the rules of the scheme applying to guaranteed minimum pensions are framed so as to comply with the relevant requirements.

(2B)The conditions of this subsection are that the [F14Inland Revenue][F15are satisfied] that—

(a)the scheme complies with section 8A;

(b)restrictions imposed under Article 40 of the Pensions (Northern Ireland) Order 1995 (restriction on employer-related investments) apply to the scheme and the scheme complies with those restrictions;

(c)the scheme satisfies such other requirements as may be prescribed (which—

(i)must include requirements as to the amount of the resources of the scheme, and

(ii)may include a requirement that, if the only members of the scheme were those falling within any prescribed class or description, the scheme would comply with section 8A), and

(d)the scheme does not fall within a prescribed class or description;

and [F15are satisfied] that the rules of the scheme are framed so as to comply with the relevant requirements.

(2C)Regulations may modify subsection (2B)(a) and (b) in their application to occupational pension schemes falling within a prescribed class or description.]

(3)An occupational pension scheme satisfies this subsection only if—

(a)the requirements imposed by or by virtue of sections F16. . . 22 to 28 and such other requirements as may be prescribed are satisfied in its case;

[F17(aa)the [F18Inland Revenue are] satisfied that the scheme does not fall within a prescribed class or description;] and

(b)the rules of the scheme applying to protected rights are framed so as to comply with the relevant requirements.

(4)Where there are two or more occupational pension schemes in force in relation to an earner’s employment, none of which can by itself be a contracted-out scheme, the [F19Inland Revenue may, if they think] fit, treat them for contracting-out purposes as a single scheme.

(5)A personal pension scheme can be an appropriate scheme only if—

(a)the requirements imposed by or by virtue of sections 22 to 28 and such other requirements as may be prescribed are satisfied in its case; and

(b)the rules of the scheme applying to protected rights are framed so as to comply with the relevant requirements.

(6)In this section “relevant requirements” means—

(a)the requirements of any regulations prescribing the form and content of rules of contracted-out or, as the case may be, appropriate schemes; and

(b)such other requirements as to form and content (not inconsistent with regulations) as may be imposed by the [F20Department] as a condition of contracting-out or, as the case may be, of being an appropriate scheme, either generally or in relation to a particular scheme.

6 Protected rights and money purchase benefits.N.I.

(1)Subject to [F21the following provisions of this section], the protected rights of a member of a pension scheme are his rights to money purchase benefits under the scheme.

(2)If the rules of an occupational pension scheme so provide, a member’s protected rights are—

(a)his rights under the scheme which derive from the payment of minimum payments [F22and payments under section 38A(3)] together with any payments by the [F23Inland Revenue] to the scheme under Article 9 of the M2Social Security (Northern Ireland) Order 1986 in respect of the member;

(b)any rights of the member to money purchase benefits which derive from protected rights under another occupational pension scheme or under a personal pension scheme which have been the subject of a transfer payment; and

(c)such other rights as may be prescribed.

(3)If the rules of a personal pension scheme so provide, a member’s protected rights are—

(a)his rights under the scheme which derive from any payment of minimum contributions to the scheme; and

(b)any rights of his to money purchase benefits which derive from protected rights under another personal pension scheme or protected rights under an occupational pension scheme which have been the subject of a transfer payment; and

(c)such other rights as may be prescribed.

[F24(4)Where, in the case of a scheme which makes such provision as is mentioned in subsection (2) or (3), a member’s rights under the scheme become subject to a pension debit, his protected rights shall exclude the appropriate percentage of the rights which were his protected rights immediately before the day on which the pension debit arose.

(5)For the purposes of subsection (4), the appropriate percentage is—

(a)if the order or provision on which the pension debit depends specifies the percentage value to be transferred, that percentage;

(b)if the order or provision on which the pension debit depends specifies an amount to be transferred, the percentage which the appropriate amount for the purposes of paragraph (1) of Article 26 of the Welfare Reform and Pensions (Northern Ireland) Order 1999 (lesser of specified amount and cash equivalent of transferor’s benefits) represents of the amount mentioned in paragraph (3)(b) of that Article (cash equivalent of transferor’s benefits).]

7 Elections as to employments covered by contracting-out certificates.N.I.

(1)Subject to the provisions of this Part, an employment otherwise satisfying the conditions for inclusion in a contracting-out certificate shall be so included if and so long as the employer so elects and not otherwise.

(2)Subject to subsections (3) and (4), an election may be so made, and an employment so included, either generally or in relation only to a particular description of earners.

(3)Except in such cases as may be prescribed, an employer shall not, in making or abstaining from making any election under this section, discriminate between different earners on any grounds other than the nature of their employment.

(4)If the [F25Inland Revenue consider] that an employer is contravening subsection (3) in relation to any scheme, [F26they may]—

(a)refuse to give effect to any election made by him in relation to that scheme; or

(b)cancel any contracting-out certificate held by him in respect of it.

(5)Regulations may make provision—

(a)for regulating the manner in which an employer is to make an election with a view to the issue, variation or surrender of a contracting-out certificate;

(b)for requiring an employer to give a notice of his intentions in respect of making or abstaining from making any such election in relation to any existing or proposed scheme—

(i)to employees in any employment to which the scheme applies or to which it is proposed that it should apply;

(ii)to any independent trade union recognised to any extent for the purpose of collective bargaining in relation to those employees;

(iii)to the trustees and managers of the scheme; and

(iv)to such other persons as may be prescribed;

(c)for requiring an employer, in connection with any such notice, to furnish such information as may be prescribed and to undertake such consultations as may be prescribed with any such trade union as is mentioned in paragraph (b)(ii);

(d)for empowering the [F27Inland Revenue] to refuse to give effect to an election made by an employer unless [F28they are] satisfied that he has complied with the requirements of the regulations;

(e)for referring to an industrial tribunal any question—

(i)whether an organisation is such a trade union as is mentioned in paragraph (b)(ii), or

(ii)whether the requirements of the regulations as to consultation have been complied with.

8 Determination of basis on which scheme is contracted-out.N.I.

(1)A contracting-out certificate shall state whether the scheme is contracted-out by virtue of subsection (2) or (3) of section 5.

(2)Where a scheme satisfies both of those subsections the employers, in their application for a certificate, shall specify one of those subsections as the subsection by virtue of which they wish the scheme to be contracted-out.

(3)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.

[F29 Requirements for certification of occupational pension schemes applying from the principal appointed day]N.I.

[F308A The statutory standard.N.I.

(1)Subject to the provisions of this Part, the scheme must, in relation to the provision of pensions for earners in employed earner’s employment, and for their widows or widowers, satisfy the statutory standard.

(2)Subject to regulations made by virtue of section 5(2B)(c)(ii), in applying this section regard must only be had to—

(a)earners in employed earner’s employment, or

(b)their widows or widowers,

collectively, and the pensions to be provided for persons falling within paragraph (a) or (b) must be considered as a whole.

(3)For the purposes of this section, a scheme satisfies the statutory standard if the pensions to be provided for such persons are broadly equivalent to, or better than, the pensions which would be provided for such persons under a reference scheme.

(4)Regulations may provided for the manner of, and criteria for, determining whether the pensions to be provided for such persons under a scheme are broadly equivalent to, or better than, the pensions which would be provided for such persons under a reference scheme.

(5)Regulations made by virtue of subsection (4) may provide for the determination to be made in accordance with guidance prepared by a prescribed body and approved by the Department.

(6)The pensions to be provided for such persons under a scheme are to be treated as broadly equivalent to or better than the pensions which would be provided for such persons under a reference scheme if and only if an actuary (who, except in prescribed circumstances, must be the actuary appointed for the scheme in pursuance of Article 47 of the Pensions (Northern Ireland) Order 1995) so certifies.]

[F318B Reference scheme.N.I.

(1)This section applies for the purposes of section 8A.

(2)A reference scheme is an occupational pension scheme which—

(a)complies with each of subsections (3) and (4), and

(b)complies with any prescribed requirements.

(3)In relation to earners employed in employed earner’s employment, a reference scheme is one which provides—

(a)for them to be entitled to a pension under the scheme commencing at a normal pension age of 65 and continuing for life, and

(b)for the annual rate of the pension at that age to be—

(i)1/80th of average qualifying earning in the last three tax years preceding the end of service,

multiplied by

(ii)the number of years service, not exceeding such number as would produce an annual rate equal to half the earnings on which it is calculated.

(4)In relation to widows or widowers, a reference scheme is one which provides—

(a)for the widows or widowers of earners employed in employed earner’s employment (whether the earners die before or after attaining the age of 65) to be entitled, except in prescribed circumstances, to pensions under the scheme; and

[F32(b)for entitlements to those pensions to commence on the day following the death of the earners, and

(c)except in prescribed circumstances, for the annual rate of those pensions to be—

(i)if the earners die on or after their normal pension age, 50 per cent. of the annual rate which a reference scheme was required to provide to the deceased earners immediately before their death, or

(ii)if the earners die before their normal pension age, 50 per cent. of the annual rate of pension which a reference scheme would have been required to provide to the deceased earners if the date of their death had been their normal pension age, and

(d)if those pensions are payable in respect of earners who die—

(i)otherwise than in pensionable service under the scheme, and

(ii)before their own entitlements to pensions under the scheme have commenced,

for those pensions to be revalued in accordance with section 80 as though they were such benefits as are mentioned in section 79(1)(a).]

(5)For the purposes of this section, an earner’s qualifying earnings in any tax year are 90 per cent. of the amount by which the earner’s earnings—

(a)exceed the qualifying earnings factor for that year; and

(b)do not exceed the upper earnings limit for that year multiplied by fifty-three.

(6)Regulations may modify subsections (2) to (5).

(7)In this section—

• “normal pension age”, in relation to a scheme, means the age specified in the scheme as the earliest age at which pension becomes payable under the scheme (apart from any special provision as to early retirement on grounds of ill-health or otherwise),

• “qualifying earnings factor”, in relation to a tax year, has the meaning given by section 121(1) of the Social Security Contributions and Benefits (Northern Ireland) Act 1992, and

• “upper earnings limit”, in relation to a tax year, means the amount specified for that year by regulations made by virtue of section 5(3) of that Act as the upper earnings limit for Class 1 contributions.]

[F338C Transfer, commutation, etc.N.I.

(1)Regulations may prohibit or restrict—

(a)the transfer of any liability—

(i)for the payment of pensions under a relevant scheme, or

(ii)in respect of accrued rights to such pensions,

(b)the discharge of any liability to provide pensions under a relevant scheme, or

(c)the payment of a lump sum instead of a pension payable under a relevant scheme,

except in prescribed circumstances or on prescribed conditions.

(2)In this section, “relevant scheme” means a scheme contracted out by virtue of section 5(2B) and references to pensions and accrued rights under the scheme are to such pensions and rights so far as attributable to an earner’s service on or after the principal appointed day.

(3)Regulations under subsection (1) may provide that any provision of this Part shall have effect subject to such modifications as may be specified in the regulations.]

[F348D Entitlement to benefit.N.I.

In the case of a scheme contracted out by virtue of section 5(2B), regulations may make provision as to the ages by reference to which benefits under the scheme are to be paid.]

Requirements for certification of occupational pension schemes providing guaranteed minimum pensionsN.I.

9 Minimum pensions for earners.N.I.

(1)Subject to the provisions of this Part, the scheme must—

(a)provide for the earner to be entitled to a pension under the scheme if he attains pensionable age; and

(b)contain a rule to the effect that the weekly rate of the pension will be not less than his guaranteed minimum (if any) under sections 10 to 12.

(2)In the case of an earner who is a married woman or widow who is liable to pay primary Class 1 contributions at a reduced rate by virtue of section 19(4) of the M3Social Security Contributions and Benefits (Northern Ireland) Act 1992, subject to the provisions of this Part, the scheme must—

(a)provide for her to be entitled to a pension under the scheme if she attains pensionable age F35. . .

(b)satisfy such other conditions as may be prescribed.

(3)Subject to subsection (4), the scheme must provide for the pension to commence on the date on which the earner attains pensionable age and to continue for his life.

(4)Subject to subsection (5), the scheme may provide for the commencement of the earner’s guaranteed minimum pension to be postponed for any period for which he continues in employment after attaining pensionable age.

(5)The scheme must provide for the earner’s consent to be required—

(a)for any such postponement by virtue of employment to which the scheme does not relate; and

(b)for any such postponement after the expiration of five years from the date on which he attains pensionable age.

(6)Equivalent pension benefits for the purposes of the former legislation are not to be regarded as constituting any part of the earner’s guaranteed minimum pension.

(7)The benefits referred to in subsection (6) are any to which the earner may be immediately or prospectively entitled in respect of a period of employment which—

(a)was for him non-participating employment under that legislation; and

(b)was not on its termination the subject of any payment in lieu of contributions;

but subsection (6) excludes only so much of those benefits as had to be provided in order that the employment should for that period be treated as non-participating.

(8)In this section “the former legislation” means Part III of the M4National Insurance Act (Northern Ireland) 1966 and the previous corresponding enactments.

10 Earner’s guaranteed minimum.N.I.

(1)An earner has a guaranteed minimum in relation to the pension provided by a scheme if in any tax week in a relevant year, earnings in excess of the current lower earnings limit (or the prescribed equivalent if he is paid otherwise than weekly) have been paid to or for his benefit in respect of employment which is contracted-out by reference to the scheme.

(2)Subject to section 11(1), the guaranteed minimum shall be the weekly equivalent of an amount equal to the appropriate percentage of the total of the earner’s earnings factors for the relevant years, so far as derived from earnings such as are mentioned in subsection (1) upon which primary Class 1 contributions have been paid or treated as paid.

F36(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4)Where the amount of a person’s earnings for any period is relevant for any purpose of subsection (1) or (2) and the [F37Inland Revenue are] satisfied that records of those earnings have not been maintained or retained or are otherwise unobtainable, [F38they] may for that purpose—

(a)compute, in such manner as [F38they][F39think] fit, an amount which shall be regarded as the amount of those earnings; or

(b)take their amount to be such sum as [F38they] may specify in the particular case.

(5)In subsection (2) the “appropriate percentage” means—

(a)in respect of the earner’s earnings factors for any tax year not later than the tax year 1987-88—

(i)if the earner was not more than 20 years under pensionable age on 6th April 1978, 1.25 per cent.;

(ii)in any other case 25/N per cent.;

(b)in respect of the earner’s earnings factors for the tax year 1988-89 and for subsequent tax years—

(i)if the earner was not more than 20 years under pensionable age on 6th April 1978, 1 per cent.;

(ii)in any other case 20/N per cent.;

where N is the number of years in the earner’s working life (assuming he will attain pensionable age) which fall after 5th April 1978.

(6)Regulations may prescribe rules as to the circumstances in which earnings factors are derived from earnings for the purposes of subsection (2).

(7)For the purposes of subsection (2) the weekly equivalent of the amount there mentioned shall be calculated by dividing that amount by 52.

(8)In this section “relevant year” means any tax year in the earner’s working life (not being earlier than the tax year 1978-79 [F40or later than tax year ending immediately before the principal appointed day]).

11 Increase of guaranteed minimum where commencement of guaranteed minimum pension postponed.N.I.

(1)Where in accordance with section 9(4) the commencement of an earner’s guaranteed minimum pension is postponed for any period and there are at least seven complete weeks in that period, his guaranteed minimum in relation to the scheme shall, for each complete week in that period, be increased by one-seventh per cent.—

(a)of the amount of that minimum apart from this subsection; or

(b)if for that week (or a period which includes that week) a pension is paid to him under the scheme at a weekly rate less than that minimum, of the difference between that pension and that minimum.

(2)In subsection (1) “week” means any period of seven consecutive days.

(3)Where an earner’s guaranteed minimum pension is increased under subsection (1), the increase of that part of it which is attributable to earnings factors for the tax year 1987-88 and earlier tax years shall be calculated separately from the increase of the rest.

(4)Where one or more orders have come into operation under section 105 during the period for which the commencement of a guaranteed minimum pension is postponed, the amount of the guaranteed minimum pension for any week in that period shall be determined as if the order or orders had come into operation before the beginning of the period.

[F4111A Reduction of guaranteed minimum in consequence of pension debit.N.I.

(1)Where—

(a)an earner has a guaranteed minimum in relation to the pension provided by a scheme, and

(b)his right to the pension becomes subject to a pension debit,

his guaranteed minimum in relation to the scheme is, subject to subsection (2), reduced by the appropriate percentage.

(2)Where the earner is in pensionable service under the scheme on the day on which the order or provision on which the pension debit depends takes effect, his guaranteed minimum in relation to the scheme is reduced by an amount equal to the appropriate percentage of the corresponding qualifying benefit.

(3)For the purposes of subsection (2), the corresponding qualifying benefit is the guaranteed minimum taken for the purpose of calculating the cash equivalent by reference to which the amount of the pension debit is determined.

(4)For the purposes of this section, the appropriate percentage is—

(a)if the order or provision on which the pension debit depends specifies the percentage value to be transferred, that percentage;

(b)if the order or provision on which the pension debit depends specifies an amount to be transferred, the percentage which the appropriate amount for the purposes of paragraph (1) of Article 26 of the Welfare Reform and Pensions (Northern Ireland) Order 1999 (lesser of specified amount and cash equivalent of transferor’s benefits) represents of the amount mentioned in paragraph (3)(b) of that Article (cash equivalent of transferor’s benefits).]

12 Revaluation of earnings factors for purposes of s. 10: early leavers, etc.N.I.

(1)Subject to subsection (2), for the purpose of section 10(2) the earner’s earnings factor for any relevant year (so far as derived as mentioned in that section) shall be taken to be that factor as increased by the same percentage as that prescribed for the increase of that factor by the last order under Article 23 of the M5Social Security Pensions (Northern Ireland) Order 1975 or section 130 of the M6Social Security Administration (Northern Ireland) Act 1992 to come into operation before the end of the final relevant year.

(2)The scheme may provide that the earnings factors of an earner whose service in contracted-out employment by reference to the scheme is terminated before the final relevant year shall be determined for the purposes of section 10(2) by reference to the last such order to come into operation before the end of the tax year in which that service ends (“the last service tax year”).

(3)Where a scheme provides as mentioned in subsection (2) the scheme shall provide for the weekly equivalent mentioned in section 10(2) to be increased by at least [F42the prescribed percentage for each relevant year after the last service tax year; and the provisions included by virtue of this subsection may also conform with such additional requirements as may be prescribed]

(4)Except in such cases or classes of case as may be prescribed, the provision made by virtue of subsections (2) and (3) must be the same for all members of the scheme.

(5)In this section—

13 Minimum pensions for widows and widowers.N.I.

(1)Subject to the provisions of this Part, the scheme must provide that if the earner dies leaving a widow or widower (whether before or after attaining pensionable age), the widow or widower will be entitled to a guaranteed minimum pension under the scheme.

(2)The scheme must contain a rule to the effect that—

(a)if the earner is a man who has a guaranteed minimum under section 10, the weekly rate of the widow’s pension will be not less than the widow’s guaranteed minimum;

(b)if the earner is a woman who has a guaranteed minimum under that section, the weekly rate of the widower’s pension will be not less than the widower’s guaranteed minimum.

(3)The widow’s guaranteed minimum shall be half that of the earner.

(4)The widower’s guaranteed minimum shall be one-half of that part of the earner’s guaranteed minimum which is attributable to earnings factors for the tax year 1988-89 and subsequent tax years.

(5)The scheme must provide for the widow’s pension to be payable to her for any period for which a Category B retirement pension, widowed mother’s allowance or widow’s pension is payable to her by virtue of the earner’s contributions or for which a Category B retirement pension would be so payable but for section 43(1) of the M7Social Security Contributions and Benefits (Northern Ireland) Act 1992 (persons entitled to more than one retirement pension).

(6)The scheme must provide for the widower’s pension to be payable to him in the prescribed circumstances and for the prescribed period.

(7)The trustees or managers of the scheme shall supply to the [F45Inland Revenue] any such information as [F46the Inland Revenue] may require relating to the payment of pensions under the scheme to widowers [F47or widows].

14 Treatment of insignificant amounts.N.I.

(1)Where an amount is required to be calculated in accordance with the provisions of section 10(7), 11(1) or 13(2), (3) or (4) and, apart from this subsection, the amount so calculated is less than 0.5p, then, notwithstanding any other provision of this Act, that amount shall be taken to be zero, and other amounts so calculated shall be rounded to the nearest whole penny, taking 0.5p as nearest to the next whole penny above.

(2)Where a guaranteed minimum pension is attributable in part to earnings factors for the period before the tax year 1988-89 and in part to earnings factors for that tax year or for that tax year and subsequent tax years, the pension shall be calculated by—

(a)applying subsection (1) separately to the amount attributable to the period before the tax year 1988-89 and to the amount attributable to that and subsequent tax years, and

(b)aggregating the two amounts so calculated.

15 Discharge of liability where guaranteed minimum pensions secured by insurance policies or annuity contracts.N.I.

(1)A transaction to which this section applies discharges the trustees or managers of an occupational pension scheme from their liability to provide for or in respect of any person guaranteed minimum pensions—

(a)if it is carried out not earlier than the time when that person’s pensionable service terminates; and

(b)if and to the extent that it results in guaranteed minimum pensions for or in respect of that person being appropriately secured; and

(c)if and to the extent that the requirements set out in paragraph (a), (b) or (c) of subsection (5) are satisfied.

(2)This section applies to the following transactions—

(a)the taking out of a policy of insurance or a number of such policies;

(b)the entry into an annuity contract or a number of such contracts;

(c)the transfer of the benefit of such a policy or policies or such a contract or contracts.

(3)In this section “appropriately secured” means secured by an appropriate policy of insurance or an appropriate annuity contract, or by more than one such policy or contract.

(4)A policy of insurance or annuity contract is appropriate for the purposes of this section if—

(a)the insurance company with which it is or was taken out or entered into—

(i)is, or was at the relevant time, carrying on ordinary long-term insurance business in the United Kingdom or any other member State; and

(ii)satisfies, or at the relevant time satisfied, prescribed requirements; and

(b)it may not be assigned or surrendered except on conditions which satisfy such requirements as may be prescribed; and

(c)it contains or is endorsed with terms whose effect is that the amount secured by it may not be commuted except on conditions which satisfy such requirements as may be prescribed; and

(d)it satisfies such other requirements as may be prescribed.

(5)The requirements referred to in subsection (1) are—

(a)that the arrangement for securing the amount by means of the policy or contract was made—

(i)at the written request of the earner or, if the earner has died, of the earner’s widow or widower; or

(ii)with the consent of the earner or the widow or widower given in writing in a prescribed form;

(b)that—

(i)the case is one such as is mentioned in section 92(2); and

(ii)the policy or contract only secures guaranteed minimum pensions;

(c)that—

(i)the case is not one such as is mentioned in section 92(2); and

(ii)such conditions as may be prescribed are satisfied.

(6)In subsection (4)(a), “the relevant time” means the time when the policy of insurance was taken out or the annuity contract was entered into or, as the case may be, when the benefit of the policy or contract was transferred.

(7)In this section “ordinary long-term insurance business” has the same meaning as in the M8Insurance Companies Act 1982.

16 Transfer of accrued rights.N.I.

(1)Regulations may prescribe circumstances in which and conditions subject to which—

(a)a transfer of or a transfer payment in respect of—

(i)an earner’s accrued rights to guaranteed minimum pensions under a contracted-out scheme;

(ii)an earner’s accrued rights to pensions under an occupational pension scheme which is not contracted-out, to the extent that those rights derive from his accrued rights to guaranteed minimum pensions under a contracted-out scheme; or

(iii)the liability for the payment of guaranteed minimum pensions to or in respect of any person who has become entitled to them,

may be made by an occupational pension scheme to another such scheme or to a personal pension scheme;

(b)a transfer of or a transfer payment in respect of an earner’s accrued rights to guaranteed minimum pensions which are appropriately secured for the purposes of section 15 may be made to an occupational pension scheme or a personal pension scheme.

(2)Any such regulations may be made so as to apply to earners who are not in employment at the time of the transfer.

(3)Regulations under subsection (1) may provide that any provision of this Part (other than sections 14, 15 and 39 to 41, and sections 22 to 29 so far as they apply to personal pension schemes) or of Chapter III of Part IV or Chapter II of Part V shall have effect, where there has been a transfer to which they apply, subject to such modifications as may be specified in the regulations.

(4)Regulations under subsection (1) shall have effect in relation to transfers whenever made unless they provide that they are only to have effect in relation to transfers which take place after they come into operation.

(5)The power conferred by subsection (1) is without prejudice to the generality of section 177(2) or section 17(5) of the M9Interpretation Act (Northern Ireland) 1954.

(6)In the provisions mentioned in subsection (3) “accrued rights”, in relation to an earner, means the rights conferring prospective entitlement under the scheme in question to the pensions to be provided for the earner and the earner’s widow or widower in accordance with sections 9 and 13, and references to an earner’s accrued rights to guaranteed minimum pensions shall be construed accordingly.

17 Commutation, surrender and forfeiture.N.I.

(1)Where the annual rate of a pension required to be provided by a scheme in accordance with section 9 or 13 would not exceed the prescribed amount and the circumstances are such as may be prescribed, the scheme may provide for the payment of a lump sum instead of that pension.

(2)Neither section 9 nor section 13 shall preclude a scheme from providing for the earner’s or the earner’s widow’s or widower’s guaranteed minimum pension to be suspended or forfeited in such circumstances as may be prescribed.

F4818. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .N.I.

19 Securing of benefits.N.I.

F49(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2)Subject to subsection (3), the scheme must contain a rule by which any liabilities of the scheme in respect of—

(a)guaranteed minimum pensions and accrued rights to guaranteed minimum pensions;

(b)any such benefits as are excluded by section 9(6) from earners’ guaranteed minimum pensions;

(c)pensions and other benefits (whether or not within paragraph (a) or (b)) in respect of which entitlement to payment has already arisen; and

(d)state scheme premiums,

are accorded priority on a winding up over other liabilities under the scheme in respect of benefits attributable to any period of service after the rule has taken effect.

(3)The rule may also accord priority, on a winding up occurring after an earner has attained normal pension age, to liabilities of the scheme in respect of pensions and other benefits to which—

(a)he will be entitled on ceasing to be in employment, or

(b)the earner’s widow or widower or any dependant of the earner’s will be entitled on the earner’s death.

(4)Subsections [F50(2) and (3)] do not apply to public service pension schemes.

F49(5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6)Subsections (2) and (3) do not apply to schemes falling within any category or description prescribed as being exempt from the requirements of those subsections.

(7)If the scheme provides for the payment out of any sum representing the surrender value of a policy of insurance taken out for the purposes of the scheme, it must make provision so that there may be no payment out in relation to guaranteed minimum pensions except in such circumstances as may be prescribed.

F5120

• . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Discretionary requirementsN.I.

21 Power for Board to impose conditions as to investments and resources.N.I.

F52(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F53(2)A salary related contracted-out scheme must, in relation to any earner’s service before the principal appointed day, comply with any requirements prescribed for the purpose of securing that—

(a)the [F54Inland Revenue are] kept informed about any matters affecting the security of the minimum pensions guaranteed under the scheme, and

(b)the resources of the scheme are brought to and are maintained at a level satisfactory to the [F55Inland Revenue].]

(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Requirements for certification of occupational and personal money purchase schemesN.I.

22 Persons who may establish scheme.N.I.

The Department may prescribe descriptions of persons by whom or bodies by which the scheme may be established and, if the Department does so, the scheme may only be established by a person or body of a prescribed description.

23 Identification and valuation of protected rights.N.I.

(1)Where the rules of the scheme make such provision as is mentioned in section 6(2) or (3), they must also make provision for the identification of the protected rights.

(2)The value of such protected rights as are mentioned in section 6(2) or (3) must be calculated in a manner no less favourable than that in which the value of any other rights of the member to money purchase benefits under the scheme are calculated.

(3)Subject to subsection (2), the value of protected rights must be calculated and verified in such manner as may be prescribed.

24 Ways of giving effect to protected rights.N.I.

(1)The rules of the scheme must provide for effect to be given to the protected rights of a member—

(a)in any case where subsection (3) so requires, by the purchase of such an annuity as is mentioned in that subsection, and

[F56(aa)in any case where subsection (1A) so requires, by the making of such payments as are mentioned in that subsection,]

(b)in any other case, in such of the ways [F57provided for] by the following subsections as the rules may specify,

and they must not provide for any part of a member’s protected rights to be discharged otherwise than in accordance with those subsections.

[F58(1A)Where the scheme is a personal pension scheme which provides for the member to elect to receive payments in accordance with this subsection, and the member so elects, effect shall be given to his protected rights during the interim period by the making of payments under an interim arrangement which—

(a)complies with section 24A, and

(b)satisfies such conditions as may be prescribed;

and in such a case subsections (2) to (4) accordingly apply as regards giving effect to his protected rights as from the end of that period.]

(2)Effect may be given to protected rights—

(a)by the provision by the scheme of a pension which—

(i)complies with the pension requirements (within the meaning of section 25(1)), and

(ii)satisfies such conditions as may be prescribed; or

(b)in such circumstances and subject to such conditions as may be prescribed, by the making of a transfer payment—

(i)in the case of an occupational pension scheme, to another occupational pension scheme or to a personal pension scheme, and

(ii)in the case of a personal pension scheme, to another personal pension scheme or to an occupational pension scheme,

where the scheme to which the payment is made satisfies such requirements as may be prescribed.

(3)Subject to [F59subsection (5)], if—

(a)the rules of the scheme do not provide for a pension; or

(b)the member [F60or, where section 24A(2) applies, the member’s widow or widower] so elects,

then, except to the extent that effect is given to protected rights in accordance with subsection [F61(1A) or] (4), effect shall be given to them by the purchase by the scheme of an annuity which—

(i)complies with the annuity requirements (within the meaning of section 25(3)), and

(ii)satisfies such conditions as may be prescribed.

(4)Effect may be given to protected rights by the provision of a lump sum if—

(a)the lump sum is payable on a date which is—

(i)in the case of an occupational pension scheme, a date not earlier than that on which the member attains the age of 60 nor later than that on which he attains the age of

(b)the annual rate of a pension under subsection (2) or an annuity under subsection (3) giving effect to the protected rights and commencing on the date on which the lump sum is payable would not exceed the prescribed amount;

(c)the circumstances are such as may be prescribed; and

(d)the amount of the lump sum is calculated in [F63the prescribed manner]by reference to the amount of the pension or annuity.

(5)If the member has died without effect being given to protected rights under subsection [F64(1A),] (2), (3) or (4), effect may be given to them in such manner as may be prescribed.

(6)No transaction is to be taken to give effect to protected rights unless it falls within this section.

F65(7). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F66(8)In this section and sections 24A, 24B and 25—

• “the interim period” means the period beginning with (and including) the starting date in relation to the member in question and ending with the termination date;

• “the starting date,/q>means the date, which must not be earlier than the member’s 60th birthday, by reference to which the member elects to begin to receive payments under the interim arrangement;”

• “the termination date” means the date by reference to which the member (or, where section 24A(2) applies, the member’s widow or widower) elects to terminate the interim arrangement, and that date must be not later than—

  (a)

  the member’s 75th birthday, or

  (b)

  where section 24A(2) applies, the earlier of the member’s widow or widower’s 75th birthday and the 75th anniversary of the member’s birth.]

[F67(9)This section is subject to section 28A.]

[F6824A Requirements for interim arrangements.N.I.

(1)An interim arrangement must provide for payments to be made to the member, and, where subsection (2) applies, to the member’s widow or widower, throughout the interim period, at intervals not exceeding twelve months.

(2)This subsection applies where the member dies during the interim period and is survived by a widow or widower who at the date of the member’s death has not yet attained the age of 75 years.

(3)The aggregate amount of payments made to a person under an interim arrangement in each successive period of twelve months must not be—

(a)greater than the annual amount of the annuity which would have been purchasable by him on the relevant reference date, or

(b)less than the prescribed percentage of that amount

(4)The percentage prescribed under subsection (3)(b) may be zero.

(5)For the purposes of this section—

(a)the annual amount of the annuity which would have been purchasable by a person on any date shall be calculated in the prescribed manner by reference to—

(i)the value on that date, determined by or on behalf of the trustees or managers of the scheme, of the person’s protected rights, and

(ii)the current published tables of rates of annuities prepared by the Government Actuary for the purposes of section 28A of the Pension Schemes Act 1993, and

(b)the relevant reference date is—

(i)in relation to payments made to the member during the three years beginning with (and including) the member’s starting date, that date, and in relation to such payments made during each succeeding period of three years, the first day of the period of three years in question, or

(ii)where subsection (2) applies, in relation to payments made to the member’s widow or widower during the three years beginning with (and including) the date of the member’s death, that date, and in relation to such payments made during each succeeding period of three years, the first day of the period of three years in question.]

[F6924B Information about interim arrangements.N.I.

(1)The trustees or managers of a personal pension scheme must, if required to do so by the [F70Inland Revenue], produce any document relevant to—

(a)the level of payments made under any interim arrangement, or

(b)the value of protected rights to which such an arrangement gives effect,

or otherwise connected with the making of payments under such an arrangement.

(2)In this section, “document” includes information recorded in any form, and the reference to the production of a document, in relation to information recorded otherwise than in legible form, is a reference to producing a copy of the information in legible form.]

25 The pension and annuity requirements.N.I.

(1)For the purposes of section 24 a pension complies with the pension requirements if—

[F71(a)in the case of an occupational pension scheme it commences on a date—

(i)not earlier than the member’s 60th birthday, and

(ii)not later than his 65th birthday,

or on such later date as has been agreed by him, and continues until the date of his death, or

(aa)in the case of a personal pension scheme—

(i)where the member has elected under section 24(1A) to receive payments under an interim arrangement, it commences on the termination date, and continues until the date of the member’s death or, where section 24A(2) applies, until the death of the member’s widow or widower, or

(ii)otherwise, it commences on such a date as had been agreed by the member and is not earlier than his 60th birthday nor later than his 75th birthday, and continues until the date of his death;]

(b)in a case where the member dies while it is payable to him and is survived by a widow or widower—

(i)it is payable to the widow or widower in prescribed circumstances and for the prescribed period at an annual rate which at any given time is one-half of the rate at which it would have been payable to the member if the member had been living at that time; or

(ii)where that annual rate would not exceed a prescribed amount and the circumstances are such as may be prescribed, a lump sum calculated in [F72the prescribed manner] is provided in lieu of it.

(2)As respects the period of 5 years beginning with the commencement of the pension referred to in subsection (1), that subsection shall have effect in relation to that pension as if the words “at least” were inserted immediately before the words “one-half” in paragraph (b)(i).

(3)For the purposes of section 24 an annuity complies with the annuity requirements if—

(a)it satisfies the requirements mentioned in subsections (1) and (2) (taking the references in those subsections to pensions as references to annuities); and

(b)it is provided by an insurance company which—

(i)satisfies prescribed conditions;

(ii)complies with such conditions as may be prescribed as to the calculation of annuities provided by it and as to the description of persons by or for whom they may be purchased; and

(iii)subject to subsection (4), has been chosen by the member [F73or, where section 24A(2) applies, the member’s widow or widower.].

(4)A member [F74(or a member’s widow or widower)] is only to be taken to have chosen an insurance company if he gives notice of his choice to the trustees or managers of the scheme within the prescribed period and in such manner and form as may be prescribed, and with any such supporting evidence as may be prescribed; and, if he does not do so, the trustees or managers may themselves choose the insurance company instead.

26 Securing of liability for protected rights.N.I.

(1)The [F75Inland Revenue] must be satisfied that the scheme complies with any such requirements as may be prescribed for meeting the whole or a prescribed part of any liability in respect of protected rights under the scheme which the scheme is unable to meet from its own resources—

(a)by reason of the commission by any person of a criminal offence;

(b)in such other circumstances as may be prescribed.

(2)Subsection (1) does not apply to a public service pension scheme.

27 Investment and resources of schemes.N.I.

F76(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2)The scheme must comply with such requirements as may be prescribed as regards the part—

(a)of any payment that is made to the scheme by or on behalf of a member of the scheme;

(b)of any income or capital gain arising from the investment of such a payment; or

(c)of the value of rights under the scheme,

that may be used—

(i)to defray the administrative expenses of the scheme;

(ii)to pay commission; or

(iii)in any other way which does not result in the provision of benefits for or in respect of members.

(3)Subject to subsection (4)—

(a)in the case of an occupational pension scheme, all minimum payments [F77and payments under section 38A(3)] and any payments made by the [F78Inland Revenue] under Article 9 of the M10Social Security (Northern Ireland) Order 1986, and

(b)in the case of a personal pension scheme, all minimum contributions,

which are paid to a scheme in respect of one of its members must be applied so as to provide money purchase benefits for or in respect of that member, except so far as they are used—

(i)to defray the administrative expenses of the scheme; or

(ii)to pay commission.

(4)If regulations are made under subsection (2), the payments mentioned in paragraph (a) of subsection (3) and the contributions mentioned in paragraph (b) of that subsection may be used in any way which the regulations permit, but not in any way not so permitted except to provide money purchase benefits for or in respect of the member.

[F79(5)Any minimum contributions required by reason of this section to be applied so as to provide money purchase benefits for or in respect of a member of a scheme must be so applied in the prescribed manner and within the prescribed period.]

28 Suspension or forfeiture.N.I.

Except in such circumstances as may be prescribed, the rules of the scheme must not permit the suspension or forfeiture of a member’s protected rights or of payments giving effect to them.

[F8028A Discharge of protected rights on winding up: insurance policies.N.I.

(1)Where an occupational pension scheme is being wound up and such conditions as may be prescribed are satisfied, effect may be given to the protected rights of a member of the scheme (in spite of section 24) by—

(a)taking out an appropriate policy of insurance, or a number of such policies, under which the member is the beneficiary, or

(b)assuring the benefits of a policy of insurance, or a number of such policies, to the member, where the policy assured is an appropriate policy.

(2)A policy of insurance is appropriate for the purposes of this section if—

(a)the insurance company with which it is or was taken out or entered into—

(i)is, or was at the time when the policy was taken out or (as the case may be) the benefit of it was assured, carrying on ordinary long-term insurance business (within the meaning of the Insurance Companies Act 1982) in the United Kingdom or any other member State, and

(ii)satisfies, or at that time satisfied, prescribed requirements, and

(b)it may not be assigned or surrendered except on conditions which satisfy such requirements as may be prescribed,

(c)it contains or is endorsed with terms whose effect is that the amount secured by it may not be commuted except on conditions which satisfy such requirements as may be prescribed, and

(d)it satisfies such other requirements as may be prescribed.]

29 Tax requirements to prevail over certification requirements.N.I.

Nothing in sections 22 to 28 shall be taken to prejudice any requirements with which a scheme must comply if it is to qualify for tax-exemption or tax-approval.

[F8129A Appropriate schemes: “Blowing the whistle”.N.I.

(1)If any person acting as an auditor or actuary of an appropriate scheme has reasonable cause to believe that—

(a)any requirement which, in the case of the scheme, is required by section 5(5)(a) to be satisfied is not satisfied, and

(b)the failure to satisfy the requirement is likely to be of material significance in the exercise by the [F82Inland Revenue] of any of [F83their] functions relating to appropriate schemes,

that person must immediately give a written report of the matter to the [F82Inland Revenue].

(2)No duty to which a person acting as auditor or actuary of an appropriate scheme is subject shall be regarded as contravened merely because of any information or opinion contained in a written report under this section.]

Cancellation, variation, surrender and refusal of certificatesN.I.

30 Cancellation, variation, surrender and refusal of certificates.N.I.

(1)Regulations shall provide for the cancellation, variation or surrender of any contracting-out certificate or appropriate scheme certificate, or the issue of an amended certificate—

[F84(a)in the case of a contracting-out certificate—

(i)on any change of circumstances affecting the treatment of an employment as contracted-out employment or

(ii)where the scheme is a salary related contracted-out scheme and the certificate was issued on or after the principal appointed day, if any employer of persons in the description or category of employment to which the scheme in question relates, or the actuary of the scheme, fails to provide the [F85Inland Revenue], at prescribed intervals, with such documents as may be prescribed for the purpose of verifying that the conditions of section 5(2B) are satisfied; and]

(b)in the case of an appropriate scheme certificate, on any relevant change of circumstances.

(2)Regulations may enable the [F85Inland Revenue] to cancel or vary a contracting-out certificate where—

(a)[F86they have] reason to suppose that any employment to which it relates ought not to be treated as contracted-out employment in accordance with the certificate; and

(b)the employer does not show that it ought to be so treated.

(3)Where—

(a)by or by virtue of any provision of this Part the contracting-out of a scheme in relation to an employment depends on the satisfaction of a particular condition, or

(b)by or by virtue of any provision of sections 22 to 28 a scheme’s being an appropriate scheme depends on the satisfaction of a particular condition,

the continued contracting-out of the scheme or, as the case may be, the scheme’s continuing to be an appropriate scheme shall be dependent on continued satisfaction of the condition; and if the condition ceases to be satisfied, that shall be a ground (without prejudice to any other) for the cancellation or variation of the contracting-out or appropriate scheme certificate.

(4)A contracting-out certificate in respect of any employment may be withheld or cancelled by the [F85Inland Revenue] if [F87they consider] that there are circumstances which make it inexpedient that the employment should be or, as the case may be, continue to be, contracted-out employment by reference to the scheme, notwithstanding that the relevant scheme is one that [F88they] would otherwise treat as proper to be contracted-out in relation to all earners in that employment.

(5)An appropriate scheme certificate may be withheld or cancelled by the [F85Inland Revenue] if [F87they consider] that there are circumstances which make it inexpedient that the scheme should be or continue to be an appropriate scheme, notwithstanding that [F88 they] would otherwise issue such a certificate or not cancel such a certificate.

[F89(6)Without prejudice to their powers apart from this subsection, the [F85Inland Revenue] may withhold or cancel a contracting-out certificate in respect of a scheme if they consider that the rules of the scheme are such that persons over particular ages may be prevented from participating in the scheme.]

[F90(7)Without prejudice to the preceding provisions of this section, failure of a scheme to comply with any requirements prescribed by virtue of section 21(2) shall be a ground on which the [F85Inland Revenue] may, in respect of any employment to which the scheme relates, cancel a contracting-out certificate.]

(8)Except in prescribed circumstances, no cancellation, variation or surrender of a contracting-out certificate or appropriate scheme certificate shall have effect from a date earlier than that on which the cancellation, variation or surrender is made.

31 Surrender and cancellation of contracting-out certificates: issue of further certificates.N.I.

(1)This section applies in any case where—

(a)a contracting-out certificate (“the first certificate”) has been surrendered by an employer or cancelled by the Board; and

(b)at any time before the end of the period of 12 months beginning with the date of the surrender or cancellation, that or any connected employer makes an election under section 7 in respect of any employment which was specified by virtue of section 3(2)(a) in the first certificate, with a view to the issue of a further contracting-out certificate.

(2)This section applies whether or not the scheme specified in the first certificate in relation to the employment concerned is the same as the scheme which would be specified in the further certificate if it were issued.

(3)The Board shall not give effect to the election referred to in subsection (1) by issuing a further certificate unless they consider that, in all the circumstances of the case, it would be reasonable to do so.

(4)Regulations may make such supplemental provision in relation to cases falling within this section as the Department considers necessary or expedient.

(5)For the purposes of subsection (1)—

(a)an employment (“the second employment”) in respect of which an election of the kind referred to in subsection (1)(b) has been made; and

(b)an employment (“the first employment”) which was specified by virtue of section 3(2)(a) in the first certificate,

shall be treated as one employment if, in the opinion of the Board—

(i)they are substantially the same, however described; or

(ii)the first employment falls wholly or partly within the description of the second employment or the second employment falls wholly or partly within the description of the first employment.

(6)Regulations shall prescribe the cases in which employers are to be treated as connected for the purposes of this section.

32 Surrender and cancellation of contracting-out certificates: cancellation of further certificates.N.I.

(1)This section applies in any case where—

(a)a contracting-out certificate (“the first certificate”) has been surrendered by an employer or cancelled by the Board;

(b)a further contracting-out certificate (“the further certificate”) has been issued, after the surrender or cancellation of the first certificate but before the end of the period of 12 months beginning with the date of the surrender or cancellation, in respect of any employment which was specified by virtue of section 3(2)(a) in the first certificate; and

(c)the Board have formed the opinion that had they been aware of all the circumstances of the case at the time when the further certificate was issued they would have been prevented by section 31(3) from issuing it.

(2)This section applies whether or not the scheme specified in the first certificate in relation to the employment concerned is the same as the scheme specified in the further certificate.

(3)The Board may, before the end of the period of 12 months beginning with the date on which the further certificate was issued, cancel that certificate.

(4)Where a contracting-out certificate is cancelled under subsection (3) the provisions of this Act and of any regulations and orders made under it shall have effect as if the certificate had never been issued.

(5)Regulations may make such supplemental provision in relation to cases falling within this section as the Department considers necessary or expedient.

(6)Without prejudice to subsection (5), regulations may make provision, in relation to any case in which the Board have cancelled a contracting-out certificate under subsection (3), preventing the recovery by the employer concerned (whether by deduction from emoluments or otherwise) of such arrears which he is required to pay to the Department in respect of an earner’s liability under section 6(3) of the M11Social Security Contributions and Benefits (Northern Ireland) Act 1992 as may be prescribed.

(7)For the purposes of subsection (1)—

(a)an employment (“the second employment”) in respect of which a further contracting-out certificate of the kind referred to in subsection (1)(b) has been issued; and

(b)an employment (“the first employment”) which was specified by virtue of section 3(2)(a) in the first certificate,

shall be treated as one employment if, in the opinion of the Board—

(i)they are substantially the same, however described; or

(ii)the first employment falls wholly or partly within the description of the second employment or the second employment falls wholly or partly within the description of the first employment.

Alteration of scheme rules after certificationN.I.

[F9133 Alteration of rules of contracted-out schemes.N.I.

(1)Except in prescribed circumstances, the rules of a contracted-out scheme cannot be altered unless the alteration is of a prescribed description.

(2)Regulations made by virtue of subsection (1) may operate so as to validate with retrospective effect any alteration of the rules which would otherwise be void under this section.

(3)References in this section to a contracted-out scheme include a scheme which has ceased to be contracted-out so long as any person is entitled to receive, or has accrued rights to, any benefits under the scheme attributable to a period when the scheme was contracted-out.

(4)The reference in subsection (3) to a person entitled to receive benefits under a scheme includes a person so entitled by virtue of being the widower of an earner only in such cases as may be prescribed.]

34 Alteration of rules of appropriate schemes.N.I.

(1)Where an appropriate scheme certificate has been issued, no alteration of the rules of the relevant scheme shall be made so as—

(a)to affect any of the matters dealt with in sections 22 to 29; or

(b)to cause the scheme to take a different permitted form from that previously taken,

F92. . .

(2)Subsection (1) does not apply to an alteration of a prescribed description.

(3)Subject to subsection (4), any alteration to which subsection (1) applies shall be void F93. . ..

(4)[F94Regulations made by virtue of subsection (2) may], operate so as to validate with retrospective effect any alteration of the rules which would otherwise be void under this section.

(5)This section shall continue in force in relation to a scheme after it has ceased to be an appropriate scheme so long as any person has protected rights under the scheme.

(6)The reference in subsection (1)(b) to a permitted form is to one of the following forms, namely—

(a)an arrangement for the issue of insurance policies or annuity contracts;

(b)a unit trust scheme of a kind mentioned in Part I of Schedule 1 to the Personal Pension Schemes (Appropriate Schemes) Regulations (Northern Ireland) 1988 which has been authorised under section 78(1) of or by virtue of paragraph 9 of Schedule 15 to the Financial Services Act 1986;

(c)an arrangement for the investment of contributions in an interest-bearing account (including shares in or deposits with a building society (within the meaning of the M12Building Societies Act 1986)).

[F95(d)an investment company with variable capital within the meaning of the Open-Ended Investment Companies (Investment Companies with Variable Capital) Regulations (Northern Ireland) 1997.]

F96(7). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

General regulations as to administration of Part IIIN.I.

35 General power to make regulations.N.I.

Schedule 1 shall have effect for enabling regulations to be made in relation to the operation and administration of this Part, and Part I of that Schedule has effect as respects occupational pension schemes, and Part II of that Schedule as respects personal pension schemes.

Chapter IIN.I. Reduction in State Scheme Contributions and Social Security Benefits for Members of Certified Schemes

PreliminaryN.I.

36 Scope of Chapter II.N.I.

This Chapter has effect for the purpose—

(a)of reducing the rates at which certain national insurance contributions are payable by or in respect of earners whose employment is contracted-out by reference to contracted-out occupational pension schemes;

(b)of providing for contributions to be paid by the [F97Inland Revenue] in respect of earners who are members of [F98money purchase contracted-out schemes and members of]appropriate personal pension schemes; and

(c)of making provision concerning the payment of certain social security benefits payable in respect of members and former members of such schemes.

[F99 Reduced rates of contributions for members of salary related contracted-out schemes]N.I.

37[F100 Reduced rates of Class 1 contributions.]N.I.

[F101(1)Subsections (1A) to (1C) apply where—

(a)the earnings paid to or for the benefit of an earner in any tax week are in respect of an employment which is contracted-out employment at the time of the payment; and

(b)the earner’s service in the employment is service which qualifies him for a pension provided by a salary related contracted-out scheme,

and in subsections (1A) and (1B) “the relevant part”, in relation to those earnings, means so much of those earnings as exceeds the current lower earnings limit but not the current upper earnings limit for that week (or the prescribed equivalents if the earner is paid otherwise than weekly).

(1A)The amount of the primary Class 1 contribution in respect of the relevant part of those earnings (“amount A”) shall be reduced by an amount equal to 1.6 per cent. of that part.

(1B)The amount of any secondary Class 1 contribution in respect of the earnings (“amount B”) shall be reduced by an amount equal to 3 per cent. of the relevant part of those earnings (“amount C”).

(1C)Where amount C exceeds amount B, the excess shall be set off against the amount which the secondary contributor is liable to pay (under paragraph 3 of Schedule 1 to the Social Security Contributions and Benefits (Northern Ireland) Act 1992) in respect of amount A.]

(2)Where—

(a)an earner has ceased to be employed in an employment; and

(b)earnings are paid to him or for his benefit within the period of 6 weeks, or such other period as may be prescribed [F102by regulations made by the Secretary of State], from the day on which he so ceased,

that employment shall be treated for the purposes of subsection (1) as contracted-out employment at the time when the earnings are paid if it was contracted-out employment in relation to the earner when he was last employed in it.

(3)This section shall not affect the amount of any primary Class 1 contribution which is payable at a reduced rate by virtue of regulations under section 19(4) of the M13Social Security Contributions and Benefits (Northern Ireland) Act 1992 (reduced rates for married women and widows).

38 Alteration of rates of contributions under s. 37.N.I.

[F103(1)Whenever the Secretary of State makes an order under section 42 of the Pension Schemes Act 1993 (determination of reduced rates of Class 1 contributions for members of salary related contracted-out schemes), the [F104order may also make corresponding provision] for Northern Ireland.]

(2)An order under subsection (1) may contain consequential provisions altering any percentage for the time being specified in paragraph 2(3) of Schedule 3 as that percentage applies in relation to earnings paid or payable on or after the day as from which the order is to have effect.

[F105 Reduced rates of contributions, and rebates, for members of money purchase contracted-out schemes]N.I.

[F10638A Reduced rates of Class 1 contributions and rebates.N.I.

[F107(1)Subsections (2) to (3) apply where—

(a)the earnings paid to or for the benefit of an earner in any tax week are in respect of an employment which is contracted-out employment at the time of the payment; and

(b)the earner’s service in the employment is service which qualifies him for a pension provided by a money purchase contracted-out scheme,

and in subsections (2) and (2A) “the relevant part”, in relation to those earnings, means so much of those earnings as exceeds the current lower earnings limit but not the current upper earnings limit for that week (or the prescribed equivalents if the earner is paid otherwise than weekly).

(2)The amount of the primary Class 1 contribution in respect of the relevant part of those earnings (“amount A”) shall be reduced by an amount equal to the appropriate flat-rate percentage of that part.

(2A)The amount of any secondary Class 1 contribution in respect of the earnings (“amount B”) shall be reduced by an amount equal to the appropriate flat-rate percentage of the relevant part of those earnings (“amount C”).

(2B)Where amount C exceeds amount B, the excess shall be set off against the amount which the secondary contributor is liable to pay (under paragraph 3 of Schedule 1 to the Social Security Contributions and Benefits (Northern Ireland) Act 1992) in respect of amount A.]

(3)The [F108Inland Revenue] shall, except in prescribed circumstances or in respect of prescribed periods, pay in respect of that earner and that tax week to the trustees or managers of the scheme or, in prescribed circumstances, to a prescribed person, the amount by which—

(a)the appropriate age-related percentage of that part of those earnings,

exceeds

(b)the appropriate flat-rate percentage of that part of those earnings.

(4)Regulations [F109made by the Secretary of State] may make provisions—

(a)as to the manner in which and time at which or period within which payments under subsection (3) are to be made,

(b)for the adjustment of the amount which would otherwise be payable under that subsection so as to avoid the payment of trivial or fractional amounts,

(c)for earnings to be calculated or estimated in such manner and on such basis as may be prescribed for the purpose of determining whether any, and if so what, payments under subsection (3) are to be made.

(5)If the [F108Inland Revenue][F110pay] an amount under subsection (3) which [F111they][F112are] not required to pay or [F112are] not required to pay to the person to whom, or in respect of whom, the [F108Inland Revenue][F110pay] it, the [F108Inland Revenue] may recover it from any person to whom, or in respect of whom, the [F108Inland Revenue] paid it.

(6)Where—

(a)an earner has ceased to be employed in an employment, and

(b)earnings are paid to him or for his benefit within the period of six weeks, or such other period as may be prescribed, from the day on which he so ceased,. that employment shall be treated for the purposes of this section as contracted-out employment at the time when the earnings are paid if it was contracted-out employment in relation to the earner when he was last employed in it

(7)Subsection (3) of section 37 applies for the purposes of this section as it applies for the purposes of that.]

[F113(8)In subsections (3), (4) and (6) “prescribed” means prescribed by regulations made by the Secretary of State.]

[F11438B Determination and alteration of rates of contributions, and rebates, applicable under section 38A.N.I.

Whenever the Secretary of State makes an order under section 42B of the Pension Schemes Act 1993, (determination and alteration of reduced rates of primary and secondary Class 1 contributions for members of money purchase contracted-out schemes), the [F115order may also make corresponding provision] for Northern Ireland.]

Minimum contributions: members of appropriate personal pension schemesN.I.

39 Payment of minimum contributions to personal pension schemes.N.I.

(1)Subject to the following provisions of this Part, the [F116Inland Revenue] shall, except in such circumstances [F117or in respect of such periods] as may be prescribed, pay minimum contributions in respect of an employed earner for any period during which the earner—

(a)is over the age of 16 but has not attained pensionable age;

(b)is not a married woman or widow who has made an election which is still operative that her liablity in respect of primary Class 1 contributions shall be a liability to contribute at a reduced rate; and

(c)is a member of an appropriate personal pension scheme which is for the time being the earner’s chosen scheme.

(2)Subject to subsection (3), minimum contributions in respect of an earner shall be paid to the trustees or managers of the earner’s chosen scheme.

(3)In such circumstances as may be prescribed minimum contributions shall be paid to a prescribed person.

(4)Where the condition mentioned in subsection (1)(a) or (c) ceases to be satisfied in the case of an earner in respect of whom the [F116Inland Revenue][F118are] required to pay minimum contributions, the duty of the [F116Inland Revenue] to pay them shall cease as from a date determined in accordance with regulations [F119made by the Secretary of State].

(5)If the [F116Inland Revenue][F120pay] an amount by way of minimum contributions which [F121they are] not required to pay, the [F116Inland Revenue] may recover it—

(a)from the person to whom the [F116Inland Revenue] paid it, or

(b)from any person in respect of whom the [F116Inland Revenue] paid it.

(6)If the [F116Inland Revenue][F120pay] in respect of an earner an amount by way of minimum contributions which the [F116Inland Revenue][F122are] required to pay, but [F123do] not pay it to the trustees or managers of the earner’s chosen scheme, the may recover it from the person to whom the [F116Inland Revenue] paid it or from the earner.

[F124(7)In this section “prescribed” means prescribed by regulations made by the Secretary of State.]

40 Earner’s chosen scheme.N.I.

(1)Where an earner and the trustees or managers of an appropriate personal pension scheme have jointly given notice to the [F125Inland Revenue], in such manner and form and with such supporting evidence as may be prescribed—

(a)that the earner is, or intends to become, a member of the scheme and wishes minimum contributions in respect of him to be paid to the scheme under section 39;

(b)that the trustees or managers have agreed to accept him as a member of the scheme and to receive such minimum contributions in respect of him,

that scheme is the earner’s chosen scheme for the purposes of section 39 as from a date determined in accordance with regulations [F128made by the Secretary of State] and specified in the notice, unless at that date some other appropriate scheme is the earner’s chosen scheme for those purposes.

[F129(1A)The grounds referred to in subsection (1) are that the [F125Inland Revenue][F130are of] the opinion—

(a)that section 27(5) is not being complied with in respect of any members of the scheme,

(b)that, having regard to any other provisions of sections 22 to 28 and 39 to 41, it is inexpedient to allow the scheme to be the chosen scheme of any further earners.]

(2)Either an earner or the trustees or managers of the scheme may cancel a notice under subsection (1) by giving notice to that effect to the [F125Inland Revenue] at such time and in such manner and form as may be prescribed.

(3)When a notice under subsection (2) is given, the scheme ceases to be the earner’s chosen scheme as from a date determined in accordance with regulations [F128made by the Secretary of State] and specified in the notice.

[F131(4)In this section “prescribed” means prescribed by regulations made by the Secretary of State.]

41 Amount of minimum contributions.N.I.

[F132(1)In relation to any tax week falling within a period for which the [F133Inland Revenue are] required to pay minimum contributions in respect of an earner, the amount of those contributions shall be an amount equal to the appropriate age-related percentage of so much of the earnings paid in that week (other than earnings in respect of contracted-out employment) as exceeds the current lower earnings limit but not the current upper earnings limit for that week (or the prescribed equivalents if he is paid otherwise than weekly).]

(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3)Regulations [F134made by the Secretary of State] may make provision—

(a)for earnings to be calculated or estimated in such manner and on such basis as may be prescribed for the purpose of determining whether any, and if so what, minimum contributions are payable in respect of them;

(b)for the adjustment of the amount which would otherwise be payable by way of minimum contributions so as to avoid the payment of trivial or fractional amounts;

(c)for the intervals at which, for the purposes of minimum contributions, payments of earnings are to be treated as made;

F135(d). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(e)for this section to have effect in prescribed cases as if for any reference to a tax week there were substituted a reference to a F136. . .

(f)as to the manner in which and time at which or period within which minimum contributions are to be made.

[F137(4)In subsection (3) “prescribed” means prescribed by regulations made by the Secretary of State.]

[F13841A Alteration of rates of minimum contributions under section 41.N.I.

Whenever the Secretary of State makes an order under section 45A of the Pension Schemes Act 1993 (determination and alteration of rates of contributions to personal pension schemes) the [F139order may also make corresponding provision] for Northern Ireland.]

[F14041B Money purchase and personal pension schemes: verification of agesN.I.

(1)Regulations [F141made by the Secretary of State] may make provision for the manner in which an earner’s age is to be verified in determining the appropriate age-related percentages for the purposes of section 38A and 41(1).

(2)Information held by the Department [F142or the Inland Revenue] as to the age of any individual may, whether or not it was obtained in pursuance of regulations under subsection (1), be disclosed by the Department [F142or the Inland Revenue]—

(a)to the trustees or managers of a money purchase contracted-out scheme or an appropriate personal pension scheme, and

(b)to such other persons as may be prescribed,

in connection with the making of payments under section 38A(3) or the payment of minimum contributions.]

[F143(3)In this section “prescribed” means prescribed by regulations made by the Secretary of State.]

Effect of entitlement to guaranteed minimum pensions on payment of social security benefitsN.I.

42 Effect of entitlement to guaranteed minimum pensions on payment of social security benefits.N.I.

(1)Where for any period a person is entitled both—

(a)to a Category A or Category B retirement pension, a widowed mother’s allowance, [F144or a widow’s pension] under the M14Social Security Contributions and Benefits (Northern Ireland) Act 1992; and

(b)to one or more guaranteed minimum pensions,

the weekly rate of the benefit mentioned in paragraph (a) shall for that period be reduced by an amount equal—

[F145(i)to that part of its additional pension which is attributable to earnings factors for any tax years ending before the principal appointed day,]

(ii)to the weekly rate of the pension mentioned in paragraph (b) (or, if there is more than one such pension, their aggregate weekly rates),

whichever is the less.

F146(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F147(3)Where for any period—

(a)a person is entitled to one or more guaranteed minimum pensions; and

(b)he is also entitled to long-term incapacity benefit under section 30A of the Social Security Contributions and Benefits (Northern Ireland) Act 1992,

for that period an amount equal to the weekly rate or aggregate weekly rates of the guaranteed minimum pension or pensions shall be deducted from any increase payable under regulations under section 30B(7) of that Act and he shall be entitled to such an increase only if there is a balance after the deduction and, if there is such a balance, at a weekly rate equal to it.]

(4)Where for any period—

(a)a person is entitled to one or more guaranteed minimum pensions;

(b)he is also entitled to a Category A retirement pension under section 44 of the Social Security Contributions and Benefits (Northern Ireland) Act 1992; and

(c)the weekly rate of his pension includes an additional pension such as is mentioned in section 44(3)(b) of that Act,

for that period section 47 of that Act shall have effect as if the following subsection were substituted for subsection (3)—

“(3)In subsection (2) above “the relevant amount” means an amount equal to the aggregate of—

(a)the additional pension; and

(b)the weekly rate or aggregate weekly rates of the guaranteed minimum pension or pensions,

reduced by the amount of any reduction in the weekly rate of the Category A retirement pension made by virtue of section 42(1) of the Pension Schemes (Northern Ireland) Act 1993.”.

(5)Where for any period—

(a)a person is entitled to one or more guaranteed minimum pensions;

(b)he is also entitled to a Category A retirement pension under section 44 of the M15Social Security Contributions and Benefits (Northern Ireland) Act 1992; and

(c)the weekly rate of his Category A retirement pension does not include an additional pension such as is mentioned in subsection (3)(b) of that section,

for that period the relevant amount shall be deducted from the amount that would otherwise be the increase under section 47(1) of that Act and the pensioner shall be entitled to an increase under that section only if there is a balance remaining after that deduction and, if there is such a balance, of an amount equal to it.

(6)Where for any period—

(a)a person is entitled to one or more guaranteed minimum pensions;

(b)he is also entitled—

F148(i). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(ii)to a Category A retirement pension under section 44 of that Act; or

(iii)to a Category B retirement pension under [F149section 48A or 48B] of that Act; and

(c)the weekly rate of the pension includes an additional pension such as is mentioned in section 44(3)(b) of that Act,

for that period paragraph 3 of Schedule 7 to that Act shall have effect as if the following sub-paragraph were substituted for sub-paragraph (3)—

“(3)In this paragraph “the relevant amount” means an amount equal to the aggregate of—

(a)the additional pension; and

(b)the weekly rate or aggregate weekly rates of the guaranteed minimum pension or pensions,

reduced by the amount of any reduction in the weekly rate of the pension made by virtue of section 42(1) of the Pension Schemes (Northern Ireland) Act 1993.”.

(7)Where for any period—

(a)a person is entitled to one or more guaranteed minimum pensions;

(b)he is also entitled to any of the pensions under the Social Security Contributions and Benefits (Northern Ireland) Act 1992 mentioned in subsection (6)(b); and

(c)the weekly rate of the pension does not include an additional pension such as is mentioned in section 44(3)(b) of that Act,

for that period the relevant amount shall be deducted from the amount that would otherwise be the increase under paragraph 3 of Schedule 7 to that Act and the beneficiary shall be entitled to an increase only if there is a balance after that deduction and, if there is such a balance, only to an amount equal to it.

(8)In this section “the relevant amount” means an amount equal to the weekly rate or aggregate weekly rates of the guaranteed minimum pension or pensions—

F150(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b)in the case of subsection (5), reduced by the amount of any reduction in the weekly rate of the Category A retirement pension made by virtue of subsection (1);

and references in this section to the weekly rate of a guaranteed minimum pension are references to that rate without any increase under section 11(1).

F151(9). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

43 Further provisions concerning entitlement to guaranteed minimum pensions for the purposes of s. 42.N.I.

(1)The reference in section 42(1) to a person entitled to a guaranteed minimum pension shall be construed as including a reference to a person so entitled by virtue of being the widower of an earner F152. . . only if—

(a)at the time of the earner’s death she and her husband had both attained pensionable age; or

(b)he is also entitled to a Category A retirement pension by virtue of section 41(7) of the Social Security Contributions and Benefits (Northern Ireland) Act 1992.

(2)For the purposes of section 42 a person shall be treated as entitled to any guaranteed minimum pension to which he would have been entitled—

(a)if its commencement had not been postponed, as mentioned in section 9(4); or

(b)if there had not been made a transfer payment or transfer under regulations made by virtue of section 16 as a result of which—

(i)he is no longer entitled to guaranteed minimum pensions under the scheme by which the transfer payment or transfer was made, and

(ii)he has not become entitled to guaranteed minimum pensions under the scheme to which the transfer payment or transfer was made.

(3)Where—

(a)guaranteed minimum pensions provided for a member or the member’s widow or widower under a contracted-out scheme have been wholly or partly secured as mentioned in subsection (3) of section 15; and

(b)either—

(i)the transaction wholly or partly securing them was carried out before 1st January 1986 and discharged the trustees or managers of the scheme as mentioned in subsection (1) of that section; or

(ii)it was carried out on or after that date without any of the requirements specified in subsection (5)(a) to (c) of that section being satisfied in relation to it and the scheme has been wound up; and

(c)any company with which any relevant policy of insurance or annuity contract was taken out or entered into is unable to meet the liabilities under policies issued or securities given by it; and

(d)the combined proceeds of—

(i)any relevant policies and annuity contracts, and

(ii)any cash sums paid or alternative arrangements made under the M16Policyholders protection Act 1975 ,

are inadequate to provide the whole of the amount secured,

the member and the member’s widow or widower shall be treated for the purposes of section 42 as only entitled to such part (if any) of the member’s or, as the case may be, the member’s widow’s or widower’s guaranteed minimum pension as is provided by the proceeds mentioned in paragraph (d).

(4)A policy or annuity is relevant for the purposes of subsection (3) if taking it out or entering into it constituted the transaction to which section 15 applies.

(5)For the purposes of section 42 a person shall be treated as entitled to any guaranteed minimum pension to which he would have been entitled—

(a)if a lump sum had not been paid instead of that pension under provisions included in a scheme by virtue of section 17(1); or

(b)if that pension had not been forfeited under provisions included in a scheme by virtue of section 17(2).

[F153(6)For the purposes of section 42, a person shall be treated as entitled to any guaranteed minimum pension to which he would have been entitled but for any reduction under section 11A.]

[F154(7)For the purposes of section 42, a person shall be treated as entitled to any guaranteed minimum pension to which he would have been entitled but for any order under Article 315A of the Insolvency (Northern Ireland) Order 1989 (recovery of excessive pension contributions).]

[F15544 Reduced benefits where minimum payments or minimum contributions paid.N.I.

(1)Subject to subsection (3), this subsection applies where for any period—

(a)minimum payments have been made in respect of an earner to an occupational pension scheme which is a money purchase contracted-out scheme in relation to the earner’s employment, or

(b)minimum contributions have been paid in respect of an earner under section 39.

(2)Where subsection (1) applies then, for the purposes of section 42—

(a)the earner shall be treated, as from the date on which he reaches pensionable age, as entitled to a guaranteed minimum pension at a prescribed weekly rate arising from that period in that employment;

F156(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(c)in prescribed circumstances F157. . . any widow or widower of the earner shall be treated as entitled to a guaranteed minimum pension at a prescribed weekly rate arising from that period;

and where subsection (1)(b) applies, paragraphs (a) to (c) of this subsection apply also for the purposes of [F158section]47(2) of the M17Social Security Contributions and Benefits (Northern Ireland) Act 1992 and paragraph 3(2) of Schedule 7 to that Act, but with the omission from paragraph (a) of the words “in that employment”.

(3)Where the earner is a married woman or widow, subsection (1) shall not have effect by virtue of paragraph (a) of that subsection in relation to any period during which there is operative an election that her liability in respect of primary Class 1 contributions shall be a liability to contribute at a reduced rate.

(4)The power to prescribe a rate conferred by subsection (2)(a) includes power to prescribe a nil rate.]

[F159 Effect of reduced contributions and rebates on social security benefits]N.I.

[F16044A Additional pension and other benefits.N.I.

(1)In relation to any tax week there—

(a)the amount of a Class 1 contribution in respect of the earnings paid to or for the benefit of an earner in that week is reduced under section 37 or 38A, or

(b)an amount is paid under section 41(1) in respect of the earnings paid to or for the benefit of an earner,

section 44(6) of the Social Security Contributions and Benefits (Northern Ireland) Act 1992 (earnings factors for additional pension) shall have effect, except in prescribed circumstances, as if no primary Class 1 contributions had been paid or treated as paid upon those earnings for that week and section 45A of that Act did not apply (where it would, apart from this subsection, apply).

(2)Where the whole or part of a contributions equivalent premium has been paid or treated as paid in respect of the earner, the Department may make a determination reducing or eliminating the application of subsection (1).

(3)Subsection (1) is subject to regulations under paragraph 5(3A) to (3E) of Schedule 1.

(4)Regulations may, so far as is required for the purpose of providing entitlement to additional pension (such as is mentioned in section 44(3)(b) of the Social Security Contributions and Benefits (Northern Ireland) Act 1992) but to the extent only that amount of additional pension is attributable to provision made by regulations under section 45(5) of that Act, disapply subsection (1).

(5)In relation to earners where, by virtue of subsection (1), section 44(6) of Social Security Contributions and Benefits (Northern Ireland) Act 1992 has effect, in any tax year, as mentioned in that subsection in relation to some but not all of their earnings, regulations may modify the application of section 44(5) of that Act.]

[F161Women, married women and widows]N.I.

F16245[ Women, married women and widows.]N.I.

The Department [F163or as the case may be, the Secretary of State] may make regulations modifying, in such manner as it [F164or he]thinks proper—

(a)this Chapter in its application to women born on or after 6th April 1950, and

(b)sections 37, 38, 42(1), 43(2) and (5) and 44, in their application to women who are or have been married.

Chapter IIIN.I. Termination of Contracted-out or Appropriate Scheme Status: State Scheme Premiums

Approval of arrangements for schemes ceasing to be certifiedN.I.

46 Powers of Board to approve arrangements for scheme ceasing to be certified.N.I.

(1)In the case of an occupational pension scheme or a personal pension scheme which is or has been certified as a contracted-out or, as the case may be, an appropriate scheme, the [F165Inland Revenue] may, for the event of, or in connection with, its ceasing to be such a scheme, approve any arrangements made or to be made in relation to the scheme, or for its purposes, for the preservation or transfer—

(a)in the case of an occupational pension scheme other than a money purchase contracted-out scheme—

(i)of earners’ accrued rights to guaranteed minimum pensions under the scheme [F166or accrued rights to pensions under the scheme attributable to their service on or after the principal appointed day,] and;

(ii)of the liability for the payment of [F167such pensions] in respect of persons who have then become entitled to receive them;

(b)in the case of a money purchase contracted-out scheme or a personal pension scheme, of protected rights under the scheme.

[F168(1A)The power of the [F165Inland Revenue] to approve arrangements under this section—

(a)includes power to approve arrangements subject to conditions, and

(b)may be exercised either generally or in relation to a particular scheme.

F168(1B)Arrangements may not be approved under this section unless any prescribed conditions are met]

(2)If the scheme ceases to be a contracted-out scheme or an appropriate scheme (whether by being wound up or otherwise) and the [F165Inland Revenue] either—

(a)[F169have] withdrawn [F170their] approval of previously approved arrangements relating to it; or

(b)[F169have] declined to approve arrangements relating to it,

the [F165Inland Revenue] may issue a certificate to that effect.

(3)A certificate issued under subsection (2)(a) or (b) shall be cancelled by the [F165Inland Revenue] if [F171they subsequently approve] the arrangements.

(4)Regulations may provide that where the [F165Inland Revenue][F172 have] approved arrangements under subsection (1) in respect of an occupational pension scheme (other than a money purchase scheme) any provision of this Part (other than sections 14, 15, 22 to 29 and 39 to 41) or Chapter III of Part IV or Chapter II of Part V shall have effect subject to such modifications as may be specified in the regulations.

(5)Any such regulations shall have effect in relation to arrangements whenever approved, unless they provide that they are only to have effect in relation to arrangements approved after they come into operation.

(6)It is hereby declared that an approval of arrangements relating to an occupational pension scheme which is not a money purchase contracted-out scheme may be withdrawn at any time, notwithstanding that the scheme has been wound up.

F173(7). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

47 Calculation of guaranteed minimum pensions preserved under approved arrangements.N.I.

(1)This section applies where—

(a)an earner’s guaranteed minimum pension rights or accrued rights to guaranteed minimum pensions under a scheme [F174satisfy prescribed conditions], and

(b)one or more of the five tax years ending with the tax year in which the scheme ceases to be contracted-out is a relevant year in relation to the earner.

(2)Where this section applies then, except in such circumstances as may be prescribed, section 12(1) shall have effect, subject to the following provisions, that is to say—

(a)any earnings factor shall be taken to be that factor as increased by the last order under Article 23 of the M18Social Security Pensions (Northern Ireland) Order 1975 or section 130 of the M19Social Security Administration (Northern Ireland) Act 1992 to come into operation before those five tax years; and

(b)any relevant earnings factors derived from contributions or earnings in respect of any year (“the relevant contributions year”) shall be treated as increased by 12 per cent. compound for each of those five tax years, other than any of those years which—

(i)constitutes or begins before the relevant contributions year, or

(ii)begins after the final relevant year in relation to the earner.

(3)Subsection (2) shall not apply in any case where its application would result in the amount of the guaranteed minimum being greater than it would have been apart from that subsection.

(4)Regulations may provide that subsections (1) to (3) shall have effect with prescribed modifications in relation to a scheme which, immediately before it ceased to be contracted-out, contained provisions authorised by section 12(2).

(5)In this section “relevant year” and “final relevant year” have the same meanings as in section 12.

Supervision of formerly certified schemesN.I.

48 Supervision of schemes which have ceased to be certified.N.I.

(1)Section 49 shall apply for the purpose of making provision for securing the continued supervision of occupational pension schemes as respects which subsection (2) applies and section 50 shall apply for the purpose of making corresponding provision in relation to personal pension schemes as respects which subsection (3) applies.

(2)This subsection applies as respects any occupational pension scheme, other than a public service pension scheme, where—

[F175(a)the scheme has ceased to be a contracted-out scheme, and

(b)any persons remain who fall within any of the following categories.

(2A)Those categories are—

(a)any persons entitled to receive, or having accrued rights to—

(i)guaranteed minimum pensions, or

(ii)pensions under the scheme attributable to service on or after the principal appointed day but before the scheme ceased to be contracted-out,

(b)any persons who have protested rights under the scheme or are entitled to any benefit giving effect to protected rights under it.]

(3)This subsection applies as respects any personal pension scheme where—

[F176(a)the scheme has ceased to be an appropriate scheme, and

(b)any persons remain who have protected rights under the scheme or are entitled to any benefit giving effect to protected rights under it.]

F177(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F177(5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F177(6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

49 Supervision: former contracted-out schemes.N.I.

[F178(1)The [F179Inland Revenue] may direct the trustees or managers of the scheme, or the employer, to take or refrain from taking such steps as the [F179Inland Revenue] may specify in writing; and such a direction shall be final and binding on the person directed and any person claiming under him.

(1A)An appeal on a point of law shall lie to the High Court from a direction under subsection (1) at the instance of the trustees or managers or the employer, or any person claiming under them.

(1B)A direction under subsection (1) shall be enforceable as if it were an order of the county court.]

F180(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F181(3)If a certificate has been issued under subsection (2) of section 46 and has not been cancelled under subsection (3) of that section, any liabilities in respect of such entitlement or rights as are referred to in section 48(2A)(a) or (b) must, except in prescribed circumstances, be discharged (subject to any directions under subsection (1)) in a prescribed manner and within a prescribed period or such longer period as the [F179Inland Revenue] may allow.]

F180(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F180(5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

50 Supervision: former appropriate personal pension schemes.N.I.

[F182(1)The [F183Inland Revenue] may direct the trustees or managers of the scheme to take or refrain from taking such steps as the [F183Inland Revenue] may specify in writing; and such a direction shall be final and binding on the person directed and any person claiming under him.

(1A)An appeal on a point of law shall lie to the High Court from a direction under subsection (1) at the instance of the trustees or managers or the employer, or any person claiming under them.

(1B)A direction under subsection (1) shall be enforceable as if it were an order of the county court.

(2)If a certificate has been issued under subsection (2) of section not been cancelled under subsection (3) of that section, any liabilities in respect of such entitlement or rights as are referred to in section 48(3)(b) must, except in prescribed circumstances, be discharged (subject to any directions under subsection (1)) in a prescribed manner and within a prescribed period or such longer period as the [F183Inland Revenue] may allow.]

(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

State scheme premiumsN.I.

51 Payment of state scheme premiums on termination of certified status.N.I.

F184(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F185(2)Where—

(a)an earner is serving in employment which is contracted-out employment by reference to an occupational pension scheme (other than a money purchase contracted-out scheme),

(b)paragraph (a) ceases to apply, by reason of any of the following circumstances, before the earner attains the scheme’s normal pension age or (if earlier) the end of the tax year preceding that in which the earner attains pensionable age, and

(c)the earner has served for less than two years in the employment,

the prescribed person [F186shall, if subsection (2B) applies, pay and otherwise] may elect to pay a premium under this subsection (referred to in this Act as a “contributions equivalent premium”).

[F187(2ZA)In this section “prescribed” means prescribed by regulations made by the Secretary of State.]

(2A)The circumstances referred to in subsection (2) are that—

(a)the earner’s service in the employment ceases otherwise than on the earner’s death,

(b)the earner ceases to be a member of the scheme otherwise than on the earner’s death,

(c)the earner’s service in the employment ceases on the earner’s death and the earner dies leaving a widow or widower,

(d)the scheme is wound up,

(e)the scheme ceases to be a contracted-out occupational pension scheme;

[F188. . .]]

[F189(2B)Except in prescribed circumstances, this subsection applies in any case where the earner has no accrued right to any benefit under the scheme.

(2C)Where a contributions equivalent premium is required to be paid in respect of an earner by virtue of subsection (2), the prescribed person must notify the Inland Revenue of that fact within the prescribed period and in the prescribed manner.]

(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F184(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F184(5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F184(6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

52 Provisions supplementary to s. 51.N.I.

F190(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2)A premium under section 51 shall be paid by the prescribed person to the [F191Inland Revenue] within the prescribed period F192. . ..

F190(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4)Where under the rules of the scheme transfer credits have been allowed in respect of the earner’s accrued rights under another scheme, the reference in section 51(2) to employment which is contracted-out by reference to the scheme shall include references to employment in any period of linked qualifying service which was contracted-out employment by reference to the other scheme.

[F193(5)The reference in section 51(2A) to an accrued right to short service benefit includes an accrued right to any provision which, under the preservation requirements, is permitted as an alternative to short service benefit (other than provision for return of contributions or for benefit in the form of a lump sum).

(6)Subject to regulations under paragraph 1 of Schedule 1, service in any employment which ceases with the death of the employer shall be treated for the purposes of section 51(2A) as ceasing immediately before the death]

[F194(7)In this section “prescribed” means prescribed by regulations made by the Secretary of State.]

53 Elections to pay contributions equivalent premiums.N.I.

(1)An election under section 51(2) must be made within the prescribed period and in the prescribed manner.

(2)Except in such cases as may be prescribed, the prescribed person shall not, in making or abstaining from making elections under that section, discriminate between different earners on any grounds other than their respective lengths of relevant service.

(3)In subsection (2) “relevant service” means service in contracted-out employment by reference to the scheme, together with any service in contracted-out employment which in relation to service in that employment is linked qualifying service.

(4)If [F195the Inland Revenue consider] that the prescribed person is contravening subsection (2), [F196they] may cancel any contracting-out certificate held by the earner’s employer in respect of the scheme in question.

[F197(5)In this section “prescribed” means prescribed by regulations made by the Secretary of State.]