
PART 1
1 

(1) These Regulations may be cited as the Pension Protection Fund (General and Miscellaneous Amendments) Regulations (Northern Ireland) 2006 and shall come into operation—
(a) in the case of this regulation and regulations 19, 20 and 23, on 1st April 2006, and
(b) in all other cases, on 6th April 2006.
(2) In these Regulations—
 “the 2004 Act” means the Finance Act 2004;
 “the Order” means the Pensions (Northern Ireland) Order 2005;
 “appropriate personal pension scheme” means a personal pension scheme that is an appropriate scheme for the purposes of section 3(4) of the Pension Schemes Act (issue of contracting-out and appropriate scheme certificates);
 “base rate” means the rate for the time being quoted by the reference banks as applicable to sterling deposits or, where there is for the time being more than one such base rate, the rate which, when the base rate quoted at each bank is ranked in a descending sequence of four, is the first in the sequence;
 “beneficiary” means a person entitled to PPF compensation;
 “dependant” means—
(a) a child of the family who is financially dependent on the person, and who is aged less than 18, or
(b) a child of the family who is financially dependent on the person, who is aged less than 23 and who is either—
(i) attending a qualifying course, or
(ii) incapable of engaging in full time paid employment due to a condition that falls within the definition of a disability under the Disability Discrimination Act 1995;
 “family” means a person’s spouse, civil partner or relevant partner and any dependants;
 “the FSMA” means the Financial Services and Markets Act 2000;
 “lump sum compensation” means—
(a) any lump sum compensation payments made in relation to a person, payable under the pension compensation provisions specified in Article 146(2) of the Order (the pension compensation provisions), or
(b) any lump sum payments made in relation to a person, payable under Article 150 of the Order (duty to pay scheme benefits unpaid at assessment date etc.);
 “normal minimum pension age” has the meaning given in section 279 of the 2004 Act (other definitions);
 “normal pension age” has the meaning given in section 175 of the Pension Schemes Act (normal pension age);
 “pension annuity” means an annuity that can—
(a) only be purchased at, or after, normal minimum pension age;
(b) be purchased before normal pension age where the scheme rules so provide in accordance with paragraph 22(4) of Schedule 36 of the 2004 Act (pension schemes etc: transitional provisions and savings), or
(c) be purchased after normal pension age where the scheme rules so provide;
 “periodic compensation” means—
(a) any periodic compensation payments made in relation to a person, payable under the pension compensation provisions specified in Article 146(2) of the Order, or
(b) any periodic payments made in relation to a person, payable under Article 150 of the Order (duty to pay scheme benefits unpaid at assessment date etc.);
 “PPF compensation” means any payments made under the pension compensation provisions as specified in Article 146(2) of the Order;
 “qualifying course” means a full time educational or vocational course at a recognised educational establishment where in pursuit of that course, the time spent receiving instruction or tuition, undertaking supervised study, examination or practical work or taking part in any exercise, experiment or project for which provision is made in the curriculum of the course, exceeds 12 hours per week in normal term time, and shall include any gaps between the ending of one course and the commencement of another, where the person is enrolled on and commences the latter course;
 “reference banks” means the four largest persons for the time being (by reference to gross assets) who—
(a) have permission under Part 4 of the FSMA (permission to carry on regulated activities) to accept deposits, and
(b) are incorporated in the United Kingdom and carrying on there a regulated activity of accepting deposits, and quote a base rate applicable to sterling deposits;
 “registered pension scheme” has the meaning given in section 150(2) of the 2004 Act (meaning of pension scheme);
 “relevant partner” means a person of either sex who was not married to, or in a civil partnership with, the member—
(a) who was living with the member as if that person and the member were husband and wife, or
(b) in the case of two adults of the same sex, as if they were civil partners,and, for the purposes of these Regulations, two adults of the same sex are to be regarded as living together as civil partners if they would have been regarded as living together as husband and wife were they instead two adults of opposite sex;
 “stakeholder pension scheme” has the meaning given in Article 3 of the 1999 Order (meaning of “stakeholder pension scheme”);
 “trivial commutation lump sum” has the meaning given in paragraph 7 of Schedule 29 to the 2004 Act (trivial commutation lump sum).
(3) In paragraph (2), in the definition of “reference banks”, paragraph (b) must be read with—
(a) section 22 of the FSMA (the classes of activity and categories of investment);
(b) any relevant order under that section, and
(c) Schedule 2 to the FSMA (regulated activities).
PART 2
2 

(1) Where Article 145(1) of the Order (effect of the Board assuming responsibility for a scheme) applies, and the Board considers that a contract relating to the property, rights or liabilities of the scheme contains terms or conditions that the Board considers to be onerous (whether triggered by the insolvency event in relation to the eligible scheme or otherwise) the Board may—
(a) disapply any such term or condition, or
(b) substitute for the term or condition, a term or condition that the Board considers to be reasonable.
(2) Where—
(a) any rights or liabilities under a relevant contract of insurance are transferred to the Board by virtue of Article 145(2)(a) of the Order, and
(b) as a result of that transfer, the Board is required, by reason of a term of that contract, to pay a specified amount, or specified amounts to a specified person who, immediately before the time mentioned in Article 145(2)(a) of the Order, was a member of the scheme or a person entitled to benefits in respect of such a member,
the Board may modify that term of that contract so that benefit under that contract shall be payable to the Board.
3 
Where—
(a) a member of an eligible scheme died before the commencement of the assessment period in relation to the scheme;
(b) during the period mentioned in Article 147(2)(a) of the Order (adjustments to be made where the Board assumes responsibility for a scheme), a person became entitled under the scheme rules to a death in service lump sum benefit in respect of that member, and
(c) that death in service lump sum benefit is calculated and paid by the trustees or managers of the eligible scheme on or after the assessment date but before the date the trustees or managers receive the transfer notice in respect of that scheme,for the purposes of Article 147(2) of the Order, that death in service lump sum benefit shall be treated as having become payable before the assessment date.
4 
Where—
(a) a member of an eligible scheme died before the commencement of the assessment period in relation to the scheme, and
(b) during the period beginning with the assessment date and ending with the receipt by the trustees or managers of the transfer notice, a person became entitled under the scheme rules to a death in service lump sum benefit in respect of that member,that person’s entitlement to that benefit shall, for the purposes of Article 150(2) of the Order (duty to pay scheme benefits unpaid at assessment date etc.), be treated as having arisen before the assessment date.
5 
The prescribed rate for interest for the purposes of—
(a) Article 147(4)(a) of the Order, or
(b) Article 147(4)(b) of the Order,shall be the base rate.
6 

(1) Where the Board determines that an amount referred to in Article 147(4)(a) of the Order has been paid to a member, or to a person in respect of a member, it shall notify that member or person in writing that—
(a) it has so determined;
(b) it has a duty to recover that amount, and
(c) if the person in receipt of that amount believes that recovery of that amount would cause hardship to that member or person with a right to scheme benefits, or his family he should—
(i) notify the Board in writing that he believes that hardship would be so caused (“the hardship notification”) within one month of the date the Board notifies him that such an amount has been paid to him, and
(ii) provide any supporting evidence to the Board that hardship would be so caused within one month of the date of the hardship notification.
(2) Where the Board receives a hardship notification in accordance with paragraph (1)(c)(i), it shall determine, having regard to any evidence provided under paragraph (1)(c)(ii), whether recovery of the overpayment would cause hardship to—
(a) the member or the member’s family, or
(b) in the case of a person who was in receipt of scheme benefits in respect of a member, to that person with a right to scheme benefits, or that person’s family.
(3) Where recovery would cause such hardship, the Board shall not recover that amount.
(4) The Board is not required to recover such an amount where recovery would not be conducive to the prudent management of its financial affairs.
7 

(1) Subject to regulation 8, in respect of a case to which Article 154(1) of the Order (discharge of liabilities in respect of money purchase benefits) applies, the Board must secure that liabilities in respect of money purchase benefits transferred to the Board under Article 145 are discharged (or in the case of protected rights, given effect to) by way of—
(a) a transfer payment to—
(i) in the case of—(aa) protected rights, an appropriate personal pension scheme, or(bb) rights that are not protected rights, a personal pension scheme, or
(ii) an occupational pension scheme;
(b) the purchase of a pension annuity;
(c) the taking out of a policy of insurance or a number of such policies;
(d) assuring the benefits of a policy of insurance or a number of such policies, or
(e) in the circumstances described in regulation 9, a trivial commutation lump sum payment.
(2) Where a person is entitled under the scheme rules to money purchase benefits which include protected rights and rights which are not protected rights, the Board may discharge such rights together where it discharges those rights as if all those rights were protected rights.
(3) Any transfer payment made in relation to protected rights (or, if a transfer payment gives effect to both protected rights and rights which are not protected rights, that part of it which gives effect to protected rights)—
(a) shall be of an amount at least equal to the cash equivalent of the protected rights to which effect is being given, as calculated and verified in a manner consistent with regulations made under section 93 of the Pension Schemes Act (calculation of cash equivalents), and
(b) may only be made, where the appropriate personal pension scheme, personal pension scheme or occupational pension scheme is a stakeholder pension scheme, with the written consent of the member.
8 

(1) In respect of a case to which Article 154(1) of the Order applies, before the expiry of a period of three months beginning with the date that the Board assumes responsibility for the scheme in accordance with Article 145 of the Order, the Board shall give notice in writing to any person who is entitled under the scheme rules to money purchase benefits (“the money purchase beneficiary”)—
(a) of the existence of those liabilities in relation to such benefits;
(b) of the manner in which those liabilities, may be discharged by the Board in accordance with regulation 7;
(c) that the money purchase beneficiary may wish to seek independent financial advice;
(d) that the money purchase beneficiary may, before the expiry of a period of three months beginning with the date of the notice, inform the Board in writing of the manner in which he wishes those liabilities to be discharged (being a manner consistent with regulation 7), and
(e) that should the money purchase beneficiary not inform the Board in accordance with sub-paragraph (d) of the manner in which he wishes those liabilities to be discharged, the Board will discharge those liabilities as it sees fit, in accordance with these Regulations.
(2) Where the money purchase beneficiary informs the Board in accordance with paragraph (1)(d) that he wishes the liabilities relating to his money purchase benefits to be discharged in a specified manner, the Board shall request in writing any further information it may require in order for it to discharge those liabilities in the manner so specified.
(3) Subject to the requirements of regulation 9 in relation to trivial commutation, where the money purchase beneficiary has provided sufficient information for the Board to discharge the liabilities in relation to that beneficiary in respect of money purchase benefits, the Board shall, within a reasonable period, discharge those liabilities in the manner so requested.
(4) Where it is not possible to discharge money purchase liabilities in relation to a money purchase beneficiary in accordance with paragraph (3), the Board shall discharge those liabilities in accordance with regulation 7(1).
(5) Where the money purchase beneficiary dies before the Board discharges those liabilities in relation to that beneficiary, the Board shall discharge those liabilities—
(a) in the case of money purchase benefits that are protected rights—
(i) where there is a widow, widower or surviving civil partner, by purchase of an annuity, or
(ii) where there is no widow, widower or surviving civil partner, to the money purchase beneficiary’s estate;
(b) in the case of money purchase benefits that are not protected rights—
(i) where there is a widow, widower or surviving civil partner, under the rules of the scheme within the limits specified in regulation 7(1), or
(ii) where there is no widow, widower or surviving civil partner, in accordance with paragraph 15 of Schedule 29 to the 2004 Act (uncrystallised funds lump sum death benefit).
9 
The Board may discharge its liabilities in respect of money purchase benefits by way of a trivial commutation lump sum payment where this lump sum is paid in accordance with the requirements of paragraph 7 of Schedule 29 to the 2004 Act (registered pension schemes: authorised lump sums – trivial commutation lump sum).
PART 3
10 
For the purposes of Article 155(4) of the Order (equal treatment), the prescribed circumstances are where the difference in treatment as between a woman and a man in the operation of any of the payment functions is attributable to—
(a) the application of actuarial factors in respect of the difference in the life expectancy of men and women, or
(b) any difference in the amount payable by way of a pension which is permitted by regulations made under Article 64(2) of the 1995 Order (equal treatment rule: exceptions).
PART 4
11 
As soon as is reasonably practicable after the Board makes a determination of entitlement to PPF compensation in respect of a beneficiary, PPF compensation shall be paid—
(a) in the case of PPF compensation that is lump sum compensation—
(i) in accordance with the method of payment specified in regulation 12, and
(ii) in full, or
(b) in the case of PPF compensation that is periodic compensation—
(i) in accordance with the method of payment specified in regulation 12, and
(ii) by instalments paid in accordance with regulation 13.
12 

(1) Subject to paragraphs (2) and (3), PPF compensation shall be paid by way of automated credit transfer into a bank or other account held in the name of the beneficiary.
(2) Where it is not possible for the Board to pay PPF compensation into an account specified in paragraph (1), the Board may pay PPF compensation by way of automated credit transfer into a bank or other account held in the joint names of the beneficiary and his spouse or civil partner.
(3) Where it appears to the Board that—
(a) there has been a failure in the automated credit transfer system in relation to a payment of PPF compensation, or
(b) the beneficiary does not have a bank or other account held in his own name or in the joint names of him and his spouse or civil partner into which an automated credit transfer could be made,
PPF compensation may be paid by such other method of payment as appears to the Board to be appropriate to the beneficiary.
13 
Periodic compensation shall be paid in instalments of no more than 52 in a year.
14 
Where periodic compensation paid by the Board in accordance with regulation 13 would, but for this regulation, include a fraction of a penny, that fraction shall be rounded—
(a) up to the nearest penny if the fractional amount is 0.5 or more, or
(b) down to the nearest penny if the fractional amount is less than 0.5.
15 

(1) Subject to paragraph (2), where required to do so by any—
(a) court order, or
(b) statutory provision,
the Board shall make payments of PPF compensation on behalf of a beneficiary, to a third party, in accordance with the terms of that court order or statutory provision.
(2) Payments made under paragraph (1) shall be limited to the maximum of the PPF compensation entitlement of the beneficiary to whom the order or statutory provision relates.
16 

(1) Where the Board determines that an amount referred to in Article 152(2)(e) of the Order (administration of compensation) has been paid to a person, it shall notify that person in writing that—
(a) it has so determined;
(b) it is considering whether to recover that amount, and
(c) if the person in receipt of that amount believes that recovery of the overpayment would cause hardship to him or his family then he should—
(i) notify the Board in writing within one month of the date the Board informs him that such an overpayment has been made, and
(ii) provide any supporting evidence to the Board within one month of the notification specified in head (i).
(2) Where the Board receives a hardship notification in accordance with paragraph (1)(c)(i), it shall determine, having regard to any evidence provided under paragraph (1)(c)(ii), whether recovery of that amount would cause hardship to the person to whom the overpayment has been made, or his family.
(3) Where recovery would cause such hardship, the Board shall not recover that amount.
(4) The Board is not required to recover an amount overpaid where recovery would not be conducive to the prudent management of its financial affairs.
(5) The Board may determine that such an amount paid in excess of entitlement shall be recovered—
(a) as a lump sum from a person to whom the overpayment has been made, or
(b) where the person to whom that amount is paid is a beneficiary—
(i) as a lump sum from any payment of PPF compensation to which that beneficiary is entitled, or
(ii) from that beneficiary by adjusting the amount of the instalments of future periodic compensation.
(6) Interest may be charged on an amount determined to be recoverable at the base rate for the period which begins when the amount paid in excess of entitlement was first made and ends with the recovery of the whole of the amount.
17 
Where it has been determined by the Board that a beneficiary has been paid less than his entitlement to PPF compensation, the Board shall pay an amount to that beneficiary equal to—
(a) the amount of the shortfall, and
(b) interest on that amount, calculated at the base rate from the date on which the underpayment should have been paid by the Board, to the date on which the Board pays the total amount of the shortfall.
18 

(1) The Board may suspend payment of periodic compensation to a person—
(a) where—
(i) correspondence is returned to the Board from the last known address of that person, and
(ii) the Board is unable to contact that person following reasonable enquiries;
(b) where the Board determines that a person is obtaining, attempting to obtain, or may be attempting to obtain PPF compensation to which he is not entitled, or
(c) where an automated credit transfer payment in respect of a beneficiary’s entitlement to periodic compensation cannot be completed.
(2) The Board shall resume payments of periodic compensation to a person where in the opinion of the Board—
(a) the matter that led to the suspension has been resolved to the satisfaction of the Board, and
(b) it is reasonable for the Board to resume making those payments.
PART 5
19 
The Board may collect amounts payable by way of a pension protection levy in instalments where—
(a) the trustees or managers who are liable to pay the levy in respect of an eligible scheme make an application to the Board to pay the amount in respect of the levy by instalments, and
(b) the Board considers that it is appropriate to do so, having taken into consideration any exceptional circumstances that may exist in relation to that scheme.
20 
Where a scheme—
(a) is an eligible scheme on the first day of a financial year, and
(b) ceases to be an eligible scheme during that financial year,Article 164(5) of the Order (amount of the levy payable in respect of a scheme which is an eligible scheme for only part of the period for which the levy is imposed) does not apply to that scheme and the full amount of the levy is payable.
PART 6
21 

(1) The Pension Protection Fund (Entry Rules) Regulations (Northern Ireland) 2005 shall be amended in accordance with paragraphs (2) to (5).
(2) In regulation 1(2) (interpretation), for the definition of “tax approved scheme” there shall be substituted the following definition—“
 “tax registered scheme” means a pension scheme that is registered under Chapter 2 of Part 4 of the Finance Act 2004 (registration of pension schemes).”.
(3) In regulation 2(1) (schemes which are not eligible schemes)—
(a) in sub-paragraph (f), for “tax approved scheme” there shall be substituted “tax registered scheme”;
(b) at the end of sub-paragraph (m), “and” shall be inserted, and
(c) sub-paragraph (n) shall be omitted.
(4) In regulation 3(1) (schemes which cease to be eligible schemes), for sub-paragraph (a) there shall be substituted the following sub-paragraph—“
(a) the scheme has ceased to be a tax registered scheme, or”.
(5) In the Schedule (contents of accounts audited by the auditor of the scheme)—
(a) in paragraph 2(3)(a), “to which section 107 of the Pension Schemes Act (voluntary contributions) applies” shall be omitted, and
(b) in paragraph 5(b), for “regulation 6 of the Occupational Pension Schemes (Investment) Regulations (Northern Ireland) 1996 (investments to which restrictions on employer related investments do not apply)” there shall be substituted “regulation 13 of the Occupational Pension Schemes (Investment) Regulations (Northern Ireland) 2005 (restrictions on employer-related investments)”.
22 

(1) The Pension Protection Fund (Compensation) Regulations (Northern Ireland) 2005 shall be amended in accordance with paragraphs (2) to (6).
(2) In regulation 1(2) (interpretation)—
(a) after the definition of “the Order” there shall be inserted the following definition—“
 “the 2004 Act” means the Finance Act 2004”;
(b) in the appropriate place in alphabetical order there shall be inserted the following definitions—“
 “commutation period” means the period beginning with the day on which a trivial commutation lump sum or PPF trivial commutation lump sum is first paid to the member and ending 12 months after that day;
 “lump sum compensation” means—
(a) any lump sum compensation payments made in relation to a person, payable under the pension compensation provisions as specified in Article 146(2) (the pension compensation provisions), or
(b) any lump sum payments made in relation to a person, payable under Article 150 (duty to pay scheme benefits unpaid at assessment date etc.);
 “periodic compensation” means—
(a) any periodic compensation payments made in relation to a person, payable under the pension compensation provisions specified in Article 146(2); or
(b) any periodic payments made in relation to a person, payable under Article 150;
 “PPF compensation” means any payments made under the pension compensation provisions specified in Article 146(2) (the pension compensation provisions);
 “PPF trivial commutation lump sum” means a payment made under paragraph 24 of Schedule 6 (commutation of periodic compensation);
 “registered pension scheme” has the meaning given in section 150(2) of the 2004 Act (meaning of pension schemes);
 “standard lifetime allowance” means—
(a) for the tax year 2006-07, the amount specified in section 218(2) of the 2004 Act (individual’s lifetime allowance and standard lifetime allowance), and
(b) for each subsequent tax year the amount specified in the relevant order for that tax year made under section 218(3) of that Act;
 “tax year” has the meaning given in section 279(1) of the 2004 Act (other definitions);
 “trivial commutation lump sum” has the meaning given in paragraph 7 of Schedule 29 to the 2004 Act (trivial commutation lump sum);”.
(c) for the definition of “relevant partner” there shall be substituted the following definition—“
 “relevant partner” means a person of either sex who was not married to, or in a civil partnership with, the member—
(a) who was living with the member as if that person and the member are husband and wife, or
(b) in the case of two adults of the same sex, as if they were civil partners,and, for the purposes of these Regulations, two adults of the same sex are to be regarded as living together as civil partners if they would have been regarded as living together as husband and wife were they instead two adults of opposite sex;”.
(3) In regulation 17 (commutation of periodic compensation)—
(a) in paragraph (1), for “specified in paragraph (2)” there shall be substituted “specified in paragraphs (2) and (3)”, and
(b) after paragraph (2) there shall be added the following paragraph—“
(3) Where a person makes an application to the Board to commute in accordance with regulation 18(1), that person must have attained the age of 60 and must not have attained the age of 75 on the date specified in regulation 18(2)(b).”.
(4) For regulation 18 (circumstances in which the portion of compensation to be commuted may exceed 25 per cent) there shall be substituted the following regulation—“
18 

(1) The prescribed circumstances for the purposes of paragraph 24(2) of Schedule 6 (commutation of periodic compensation) are that the portion to be commuted is a PPF trivial commutation lump sum in accordance with paragraph (2).
(2) A payment is a PPF trivial commutation lump sum if—
(a) either—
(i) no trivial commutation lump sum or PPF trivial commutation lump sum has previously been paid to the person—(aa) by a registered pension scheme, or(bb) the Board, or
(ii) if such a lump sum has previously been paid; it was paid before the end of the commutation period;
(b) on the nominated date, the value of the member’s entitlement to PPF compensation and pension rights do not exceed the commutation limit;
(c) it is paid when all or part of the member’s standard lifetime allowance is available, and
(d) it extinguishes the member’s entitlement to PPF compensation.
(3) The nominated date is—
(a) the day within the period of three months ending with the first day of the commutation period nominated by the person, or
(b) if no day is nominated, the first day of the commutation period.
(4) The commutation limit is 1% of the standard lifetime allowance on the nominated date.
(5) The value of the member’s pension rights on the nominated date is the aggregate of—
(a) the value of the member’s relevant crystallised pension rights on that date, and
(b) the value of the member’s uncrystallised rights on that date.
(6) For the purposes of paragraph (5)—
(a) relevant crystallised pension rights shall be calculated in accordance with paragraph 8 of Schedule 29 to the 2004 Act (trivial commutation lump sum); and
(b) a member’s uncrystallised rights shall be calculated in accordance with paragraph 9 of Schedule 29 to the 2004 Act.
(7) The value of the member’s entitlement to PPF compensation shall be calculated by adding any entitlement he may have to lump sum compensation and any entitlement he may have to periodic compensation.
(8) For the purposes of paragraph (7), the value of any entitlement to—
(a) lump sum compensation, shall be the full amount of the lump sum compensation to which that member would be entitled on the nominated date, and
(b) periodic compensation, shall be calculated by multiplying the annual periodic compensation to which that member would be entitled on the nominated date by 20.”.
(5) In regulation 19 (manner in which an option to commute may be exercised), paragraph (4) shall be omitted.
(6) In regulation 21(1)(a) (disregard of certain small payments in determining PPF compensation cap) for “Finance Act 2004” there shall be substituted “2004 Act”.
23 
In regulation 5 of the Pension Protection Fund (Valuation) Regulations (Northern Ireland) 2005 (valuation of assets) “, less the amount of the external liabilities,” shall be omitted.
Sealed with the Official Seal of the Department for Social Development on 24th March 2006.
John O'Neill
A senior officer of the
Department for Social Development
