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Pension Schemes (Northern Ireland) Act 1993 (c. 49)

(The document as of February, 2008)

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Pension Schemes (Northern Ireland) Act 1993 (c. 49)

1993 CHAPTER 49

ARRANGEMENT OF SECTIONS

Content
  1. Part I

    Preliminary

    1. 1. Categories of pension schemes.

  2. Part II

    Administration

    1. Registration of schemes

      1. 2. Registration of occupational and personal pension schemes.

  3. Part III

    Certification of Pension Schemes and Effects on Members' State Scheme Rights and Duties

    1. I

      Certification

      1. Preliminary

        1. 3. Issue of contracting-out and appropriate scheme certificates.

        2. 4. Meaning of "contracted-out employment", "guaranteed minimum pension" and "minimum payment".

      2. General requirements for certification

        1. 5. Requirements for certification of schemes: general.

        2. 6. Protected rights and money purchase benefits.

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

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

      3. Requirements for certification of occupational pension schemes providing guaranteed minimum pensions

        1. 9. Minimum pensions for earners.

        2. 10. Earner's guaranteed minimum.

        3. 11. Increase of guaranteed minimum where commencement of guaranteed minimum pension postponed.

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

        5. 13. Minimum pensions for widows and widowers.

        6. 14. Treatment of insignificant amounts.

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

        8. 16. Transfer of accrued rights.

        9. 17. Commutation, surrender and forfeiture.

        10. 18. Financing of benefits.

        11. 19. Securing of benefits.

        12. 20. Sufficiency of resources.

      4. Discretionary requirements

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

      5. Requirements for certification of occupational and personal money purchase schemes

        1. 22. Persons who may establish scheme.

        2. 23. Identification and valuation of protected rights.

        3. 24. Ways of giving effect to protected rights.

        4. 25. The pension and annuity requirements.

        5. 26. Securing of liability for protected rights.

        6. 27. Investment and resources of schemes.

        7. 28. Suspension or forfeiture.

        8. 29. Tax requirements to prevail over certification III

          1. 35. General power to make regulations.

      6. II

        Reduction in State Scheme Contributions and Social Security Benefits for Members of Certified Schemes

        1. Preliminary

          1. 36. Scope of Chapter II.

        2. Reduced rates of state scheme Class 1 contributions

          1. 37. Reduced rates of Class 1 contributions for earners in contracted-out employment.

          2. 38. Alteration of rates of contributions under s. 37.

        3. Minimum contributions: members of appropriate personal pension schemes

          1. 39. Payment of minimum contributions to personal pension schemes.

          2. 40. Earner's chosen scheme.

          3. 41. Amount of minimum contributions.

        4. Effect of entitlement to guaranteed minimum pensions on payment of social security benefits

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

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

          3. 44. Reduced benefits where minimum payments or minimum contributions paid.

        5. Married women and widows

          1. 45. Married women and widows.

      7. III

        Termination of Contracted-out or Appropriate Scheme Status: State Scheme Premiums

        1. Approval of arrangements for schemes ceasing to be certified

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

          2. 47. Calculation of guaranteed minimum pensions preserved under approved arrangements.

        2. Supervision of formerly certified schemes

          1. 48. Supervision of schemes which have ceased to be certified.

          2. 49. Supervision: former contracted-out schemes.

          3. 50. Supervision: former appropriate personal pension schemes.

        3. State scheme premiums

          1. 51. Payment of state scheme premiums on termination of certified status.

          2. 52. Provisions supplementary to s. 51.

          3. 53. Elections to pay contributions equivalent premiums.

          4. 54. Amount of premiums payable under s. 51.

          5. 55. Alternative basis for revaluation of earnings factors for calculation of certain premiums.

          6. 56. Effect of payment of premiums on rights.

          7. 57. Deduction of contributions equivalent premium from refund of scheme contributions.

          8. 58. No recovery of state scheme premiums from earners, etc.

          9. 59. Further provisions concerning calculations relating to premiums.

          10. 60. Actuarial tables for purposes of calculations relating to premiums.

          11. 61. Inclusion of former and future earners for some purposes of this Chapter.

          12. 62. Power to apply certain provisions to widowers.

          13. 63. Non-payment of state scheme premiums.

          14. 64. Unpaid premiums: supplementary.

    2. Part IV

      Protection for Early Leavers

      1. I

        Preservation of Benefit Under Occupational Schemes

        1. 65. Scope of Chapter I: the preservation requirements.

        2. 66. Interpretation (Part IV).

        3. 67. Basic principle as to short service benefit.

        4. 68. No discrimination between short service and long service beneficiaries.

        5. 69. Form of short service benefit and its alternatives.

        6. 70. Computation of short service benefit.

        7. 71. Credits.

        8. 72. Pension increases.

        9. 73. Assignment, surrender and commutation of benefit.

        10. 74. Forfeiture, etc.

        11. 75. Charges, liens and set-offs.

        12. 76. Power to modify ss. 73 to 75 as respects alternative benefits.

        13. 77. Discharge of liability where short service or alternative benefits secured by insurance policies or annuity contracts.

        14. 78. Supplementary regulations.

      2. II

        Revaluation of Accrued Benefits (Excluding Guaranteed Minimum Pensions)

        1. 79. Scope of Chapter II.

        2. 80. Basis of revaluation.

        3. 81. Revaluation not to apply to substituted benefit.

        4. 82. Supplementary provisions.

      3. III

        Protection of Increases in Guaranteed Minimum Pensions ("Anti-franking")

        1. 83. General protection principle.

        2. 84. The relevant sum.

        3. 85. The appropriate addition.

        4. 86. The later earnings addition.

        5. 87. Special provision where employment continues after it ceases to be contracted-out by reference to scheme.

        6. 88. Supplementary provisions.

      4. IV

        Transfer Values

        1. 89. Scope of Chapter IV.

        2. 90. Right to cash equivalent.

        3. 91. Ways of taking right to cash equivalent.

        4. 92. Further provisions concerning exercise of option under s. 91.

        5. 93. Calculation of cash equivalents.

        6. 94. Variation and loss of rights under s. 90.

        7. 95. Trustees' duties after exercise of option.

        8. 96. Withdrawal of applications.

        9. 97. Supplementary provisions.

    3. Part V

      Annual Increases of Pensions in Payment

      1. I

        Pensions under Final Salary Schemes, etc.

        1. 98. Scope of Chapter I: annual increase of certain occupational pensions.

        2. 99. Annual increase of later service component.

        3. 100. Annual increase of earlier service component where scheme is in surplus.

        4. 101. Proportional increase where first period is less than 12 months.

        5. 102. Restriction on increase where member is under 55.

        6. 103. Application of Chapter I to pensions not attributable to pensionable service.

        7. 104. No payments to employers from non-complying schemes.

      2. II

        Guaranteed Minimum Pensions

        1. 105. Annual increase of guaranteed minimum pensions.

        2. 106. Requirement as to resources for annual increase of guaranteed minimum pensions.

    4. Part VI

      Further Requirements for Protection of Scheme Members

      1. 107. Voluntary contributions.

      2. 108. Restrictions on investment of scheme's resources in employer-related assets.

      3. 109. Disclosure of information about schemes to members, etc.

      4. 110. Additional documents for members, etc. and Registrar.

      5. 111. Powers as respects failure to comply with information requirements.

      6. 112. Regulations as to auditors.

      7. 113. Regulations as to form and content of advertisements.

      8. 114. Equal access requirements.

    5. Part VII

      Insolvency of Employers

      1. I

        Independent Trustees

        1. 115. Requirement for independent trustee where employer becomes insolvent, etc.

        2. 116. Members' powers to apply to court to enforce duty under s. 115.

        3. 117. Further provisions as to appointment and powers of independent trustees.

        4. 118. Duty of insolvency practitioner or official receiver to give information to scheme trustees.

      2. II

        Payment by the Department of Unpaid Scheme Contributions

        1. 119. Interpretation of Chapter II.

        2. 120. Duty of Department to pay unpaid contributions to schemes.

        3. 121. Certification of amounts payable under s. 120 by insolvency officers.

        4. 122. Complaint to industrial tribunal.

        5. 123. Transfer to Department of rights and remedies.

      3. III

        Priority in Bankruptcy

        1. 124. Priority in bankruptcy, etc.

    6. Part VIII

      Relationship Between Requirements and Scheme Rules

      1. 125. Overriding requirements.

      2. 126. Extra-statutory benefits.

      3. 127. Relationship of preservation requirements and scheme rules.

      4. 128. Duty to bring schemes into conformity with indirectly-applying requirements.

      5. 129. Advice of the Board as to conformity of schemes with requirements.

      6. 130. Determination of questions whether schemes conform with requirements.

      7. 131. Persons competent to make applications under s. 130.

    7. Part IX

      Modification and Winding Up of Schemes

      1. Modification

        1. 132. Applications to the Board to modify schemes (other than public service schemes).

        2. 133. Persons competent to make applications under s. 132.

        3. 134. Further provisions concerning the Board's powers under s. 132.

        4. 135. Other functions of the Board as respects modification of schemes.

        5. 136. Effect of orders under ss. 132 and 135.

        6. 137. Modification of public service schemes.

      2. Winding up

        1. 138. Powers of the Board to wind up schemes.

        2. 139. Winding up of public service schemes.

        3. 140. Deficiencies in the assets of a scheme on winding up.

    8. Part X

      Investigations: the Pensions Ombudsman

      1. 141. The Pensions Ombudsman.

      2. 142. Functions of the Pensions Ombudsman.

      3. 143. Death, insolvency or disability of authorised complainant.

      4. 144. Staying court proceedings where a complaint is made or a dispute is referred.

      5. 145. Procedure on an investigation.

      6. 146. Investigations: further provisions.

      7. 147. Determinations of the Pensions Ombudsman.

      8. 148. Power to apply county court rules.

    9. Part XI

      General and Miscellaneous Provisions

      1. Modification powers

        1. 149. Power to modify certain provisions of this Act.

        2. 150. Application of enactments as respects personal pension schemes.

      2. Information about schemes

        1. 151. Requirement to give information to the Department or the Board for the purposes of certain provisions.

        2. 152. Information as to guaranteed minimum pensions.

        3. 153. Power of Department to obtain information in connection with applications under s. 120.

        4. 154. Disclosure of information between government departments, etc.

      3. Avoidance of certain transactions and provisions

        1. 155. Inalienability of guaranteed minimum pension and protected rights payments.

        2. 156. Terms of contracts of service or schemes restricting choice to be void.

        3. 157. Provisions excluding Chapter II of Part VII to be void.

        4. 158. Removal of restrictions on friendly societies' pension business.

        5. 159. Exemption of certain schemes from rule against perpetuities.

      4. Special classes of earner

        1. 160. Crown employment.

        2. 161. Application of certain provisions to cases with foreign element.

      5. Reciprocity with other countries

        1. 162. Reciprocity with other countries.

      6. Application of provisions relating to social security administration

        1. 163. Application of general provisions relating to administration of social security.

      7. General provisions as to offences

        1. 164. Breach of regulations.

      8. General provisions as to determinations and appeals

        1. 165. Determination of questions by Department.

        2. 166. Questions arising in proceedings.

        3. 167. Review of the Board's determinations.

        4. 168. References and appeals from the Board.

      9. Financial provisions

        1. 169. Grants by the Board to advisory bodies, etc.

        2. 170. Levies towards meeting certain costs and grants.

        3. 171. Fees for official services to schemes.

        4. 172. General financial arrangements.

    10. Part XII

      Supplementary Provisions

      1. Interpretation

        1. 173. Managers of schemes.

        2. 174. Linked qualifying service.

        3. 175. Normal pension age.

        4. 176. General interpretation.

      2. Subordinate legislation, etc.

        1. 177. Orders and regulations (general provisions).

        2. 178. Sub-delegation.

        3. 179. Consultation with Social Security Advisory Committee.

        4. 180. Consultations about other regulations.

        5. 181. Assembly, etc. control of regulations and orders.

      3. Supplemental provisions

        1. 182. Repeals.

        2. 183. Transitional provisions and savings.

        3. 184. Prospective and consequential amendments.

        4. 185. Transitory modifications.

        5. 186. Short title, commencement and extent.

      1. Schedule 1

        Certification Regulations.

        1. Part I

          Occupational Pension Schemes.

        2. Part II

          Personal Pension Schemes.

      2. Schedule 2

        Methods of Revaluing Accrued Pension Benefits.

      3. Schedule 3

        Priority in Bankruptcy, etc.

      4. Schedule 4

        Repeals.

        1. Part I

          General.

        2. Part II

          Provisions Relating to Equal Access.

        3. Part III

          Subordinate Legislation Revoked.

      5. Schedule 5

        Transitional Provisions and Savings.

        1. Part I

          General Provisions.

        2. Part II

          Specific Provisions.

      6. Schedule 6

        Re-enactment or Amendment of Certain Provisions Not in Force.

      7. Schedule 7

        Consequential Amendments.

      8. Schedule 8

        Transitory Modifications.

An Act to consolidate for Northern Ireland certain enactments relating to pension schemes, with corrections and minor improvements under the Consolidation of Enactments (Procedure) Act 1949.

[5th November 1993]

Be it enacted by the Queen's most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:--



Part I Preliminary

1 Categories of pension schemes

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 employed earners 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 II Administration

Registration of schemes

2 Registration of occupational and personal pension schemes

(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.

(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 [1993 c. 48.] Pension Schemes Act 1993;

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



Part III Certification of Pension Schemes and Effects on Members' State Scheme Rights and Duties

Chapter I Certification

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Preliminary

3 Issue of contracting-out and appropriate scheme certificates

(1) Regulations shall provide for the Board 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.

(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 by the Board 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 Board.

(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"

(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--

(i) his service in the employment is for the time being service which qualifies him for a guaranteed minimum pension provided by an occupational pension scheme, or

(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 Board 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);

and for the purposes of this subsection "rebate percentage" means the sum of the percentages for the time being mentioned in paragraphs (a) and (b) of section 37(1).

(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 Department, where it is 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.

(5) Regulations shall provide for the determination by the Board 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 certification

5 Requirements for certification of schemes: general

(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).

(2) An occupational pension scheme satisfies this subsection only if--

(a) it complies in all respects with sections 9 to 20 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.

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

(a) the requirements imposed by or by virtue of sections 18 and 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.

(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 Board 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 Board 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

(1) Subject to subsections (2) and (3), 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 together with any payments by the Department to the scheme under Article 9 of the [S.I. 1986/1888 (N.I. 18).] Social 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.

7 Elections as to employments covered by contracting-out certificates

(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 Board consider that an employer is contravening subsection (3) in relation to any scheme, they 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 Board to refuse to give effect to an election made by an employer unless they 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

(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.



Requirements for certification of occupational pension schemes providing guaranteed minimum pensions

9 Minimum pensions for earners

(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 [1992 c. 7.] Social 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 and does not have a guaranteed minimum under sections 10 to 12; and

(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 [1966 c. 6 (N.I.).] National Insurance Act (Northern Ireland) 1966 and the previous corresponding enactments.

10 Earner's guaranteed minimum

(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.

(3) In determining the guaranteed minimum in a case where--

(a) earnings such as are mentioned in subsection (1) have been paid to 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 [1992 c. 7.] Social Security Contributions and Benefits (Northern Ireland) Act 1992, and

(b) the tax week in which those earnings are paid falls in the tax year 1991-92 or any subsequent tax year,

the married woman or widow shall be treated for the purposes of this section as having such earnings factors derived from those earnings as she would have had if primary Class 1 contributions had been payable, and paid, upon them otherwise than at a reduced rate.

(4) Where the amount of a person's earnings for any period is relevant for any purpose of subsection (1) or (2) and the Department is satisfied that records of those earnings have not been maintained or retained or are otherwise unobtainable, it may for that purpose--

(a) compute, in such manner as it thinks fit, an amount which shall be regarded as the amount of those earnings; or

(b) take their amount to be such sum as it 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).

11 Increase of guaranteed minimum where commencement of guaranteed minimum pension postponed

(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.

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

(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 [S.I. 1975/1503 (N.I. 15).] Social Security Pensions (Northern Ireland) Order 1975 or section 130 of the [1992 c. 8.] Social 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--

(a) 5 per cent. compound for each relevant year after the last service tax year; or

(b) the amount by which an earnings factor for that year equal to that weekly equivalent would be increased by the last order under Article 23 of the [S.I. 1975/1503 (N.I. 15).] Social Security Pensions (Northern Ireland) Order 1975 or section 130 of the Social [1992 c. 8.] Security Administration (Northern Ireland) Act 1992 to come into operation before the end of the final relevant year,

whichever makes the lesser increase; and the provisions included by virtue of this subsection may also conform with such additional requirements as may be prescribed for the purposes of section 51(5).

(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--

  • "relevant year" has the meaning given in section 10(8), and

  • "final relevant year" means the last tax year which is a relevant year in relation to the earner.

13 Minimum pensions for widows and widowers

(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 [1992 c. 7.] Social 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 Department any such information as it may require relating to the payment of pensions under the scheme to widowers.

14 Treatment of insignificant amounts

(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--

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