Superannuation Act 2010

3Limits on value of benefits provided under civil service compensation scheme

(1)The civil service compensation scheme is to have effect subject to the following limitations.

(2)The aggregate amount of compensation benefits provided to or in respect of a person under the scheme is not to exceed—

(a)in the case of a compulsory severance, an amount equal to that person’s pensionable earnings for 12 months;

(b)in the case of a voluntary severance, an amount equal to that person’s pensionable earnings for 15 months.

(3)For the purposes of this section, the amount of a compensation benefit is equal to the cost of providing it; and that cost is to be determined in accordance with guidance issued by the Minister, having regard to any advice given by the scheme actuary.

(4)If—

(a)the aggregate amount of compensation benefits provided to or in respect of a person under the scheme would (apart from this section) exceed the applicable limitation in subsection (2), and

(b)those benefits would (apart from this section) be provided otherwise than in the form of a single lump sum payment,

all the compensation benefits to be provided in that case are to be provided (subject to the limitation in subsection (2)) in the form of a single lump sum payment.

(5)The limitations in subsection (2) apply only in relation to—

(a)a compulsory severance which is the consequence of a notice of dismissal given after the time when this section comes into force;

(b)a voluntary severance which is the consequence of an agreement made after that time.

(6)For the purposes of this section—

(a)“compulsory severance” means a loss of office or employment which is the consequence of a notice of dismissal, and

(b)“voluntary severance” means any other loss of office or employment.

(7)In this section “pensionable earnings”, in relation to a person, means earnings at the rate which, immediately before the compulsory or voluntary severance in question, was the rate of earnings—

(a)on which the person was required to pay periodical pension contributions under a scheme under section 1 of the Superannuation Act 1972, or

(b)on which the person would have been required to pay such contributions if it were assumed that the person were then a member of such a scheme who was required to pay such contributions.

(8)In determining for the purposes of subsection (7) the rate of earnings on which the person was, or would have been, required to pay such contributions—

(a)any limit on that rate which applies to persons who became civil servants or members of such a scheme on or after 1 June 1989 (or to any such persons and others) is to be ignored;

(b)a person who, immediately before the compulsory or voluntary severance in question, was unpaid or was being paid at a rate less than the normal rate, is to be treated as if the person were then being paid at the normal rate;

for this purpose “the normal rate” is the rate at which the person would normally have been paid.

(9)In this section—

• “civil service compensation scheme” means so much of any scheme made under section 1 of the Superannuation Act 1972 (whether before or after the coming into force of this section) as provides by virtue of section 2(2) of that Act for benefits to be provided by way of compensation to or in respect of persons who suffer loss of office or employment;

• “compensation benefit” means so much of any pension, allowance or gratuity as is provided by way of compensation to or in respect of a person by reason only of the person’s having suffered loss of office or employment;

• “scheme actuary” means the actuary appointed by the Minister to provide a consulting service on a range of actuarial matters relating to civil service pension and compensation arrangements.

(10)In subsection (9) a reference to suffering loss of office or employment includes a reference to suffering loss or diminution of emoluments as a consequence of suffering loss of office or employment, but does not include—

(a)a loss of remuneration which a person would have received but for the person’s having been dismissed—

(i)without notice, or

(ii)with notice that is shorter than the person would normally have been given, or

(b)a loss of remuneration which a person with a fixed term appointment would have received but for the ending of that appointment before the expiry of the fixed term.

(11)The Minister may by order provide for paragraph (a) or (b) of subsection (2) to have effect as if for the number of months specified in that paragraph there were substituted a greater number of months.