PART 11Test Scheme

Test scheme: requirements to revalue accrued benefits and increase pensions in payment

37.—(1) Paragraph (2) applies for the purposes of section 23(1)(b) (test scheme) of the Act.

(2) The following must be satisfied in relation to a test scheme—

(a)the requirements of section 84(1) (basis of revaluation) of the 1993 Act; and

(b)the requirements of section 51 (annual increase in rate of pension) of the 1995 Act(1).

(3) For the purposes of paragraph (2)(a), section 84(1) of the 1993 Act shall have effect as if the words “Subject to subsections (2) and (3),” were omitted.

Staged increase in appropriate age

38.—(1) In paragraph (2), “relevant determination” means a determination under section 22 (test scheme standard) of the Act as to whether a scheme satisfies the test scheme standard in relation to a jobholder.

(2) For the purposes of making any relevant determination on or after the date specified in an entry in Column 1 of the Table, the higher “appropriate age” prescribed for the purposes of section 23(3) of the Act is the age specified in Column 2 of the same entry.

Requirements for meeting the test scheme standard

39.—(1) This regulation applies for the purposes of section 22(4) of the Act.

(2) No person other than—

(a)the scheme actuary, or

(b)the employer of the relevant members of the scheme,

may certify that a scheme satisfies the test scheme standard.

(3) An employer may certify a scheme under paragraph (2)(b) only in cases that do not require any calculation, comparison or assessment of a description usually carried out by actuaries.

(4) In determining whether a scheme satisfies the test scheme standard, a scheme actuary or employer—

(a)must have regard to the benefits to be provided under the scheme for persons who, at the date by reference to which the determination is made (which may precede the date on which it is made), are relevant members of the scheme; and

(b)must not have regard to—

(i)pension credit benefits;

(ii)death benefits;

(iii)discretionary benefits (apart from those arising from discretionary pre-retirement revaluation made in the case of schemes providing for average salary benefits);

(iv)survivors’ benefits;

(v)money purchase benefits (but this is subject to regulations 41 and 42);

(vi)benefits in respect of any person who is not a jobholder for the purposes of the Act;

(vii)benefits in respect of any jobholder whose annual rate of benefit accrual under the scheme has been reduced below the rate specified in section 23(4)(a) of the Act, where the reduction is made as a result of a request made by the jobholder in question in accordance with scheme rules; or

(viii)benefits in respect of any jobholder who has given notice under section 8 (jobholder’s right to opt out) of the Act.

(5) A scheme actuary or employer may not certify that a scheme satisfies the test scheme standard if the benefits to be provided for more than 10% of relevant members are not at least as valuable as the benefits which would be provided for them under a test scheme.

(6) In determining whether—

(a)any of paragraphs (3) to (5) apply in relation to a scheme; or

(b)a scheme otherwise satisfies the test scheme standard,

a scheme actuary or employer must follow any guidance issued by the Secretary of State under section 22(5) of the Act which is for the time being in force.

(7) “Scheme actuary” has the meaning given in section 22(7) of the Act except—

(a)where the scheme is a defined benefits or hybrid scheme within section 18(b) (occupational pension schemes) of the Act;

(b)where the scheme is a defined benefits or hybrid scheme within section 18(c) of the Act and there is an actuary appointed to the scheme who satisfies the requirements of regulations made under section 47(5) (professional advisers) of the 1995 Act(2); or

(c)in any other circumstances where, by virtue of regulations made under section 47 of the 1995 Act(3), the scheme is not required to appoint a scheme actuary.

(8) In any case falling within paragraph (7)(b), “scheme actuary” means the actuary referred to in that paragraph who is appointed to the scheme.

(9) “Relevant members” has the meaning given in section 22(2) of the Act.