The National Health Service Pension Scheme, Injury Benefits and Additional Voluntary Contributions (Amendment) Regulations 2015

(11) (1) A participator may apply some or all of the proceeds of an investment made under regulation 7(1), 8(2) or 9(4) to arrange with an insurer for— (a) payment of a lifetime annuity; (b) payment of a lifetime annuity and a pension commencement lump sum; (c) a lump sum commutation payment that— (i) reflects the value of the benefits referred to in paragraph (1)(a) or (b), and (ii) meets the requirements of regulations 11 and 12 of the 2009 Regulations; (d) as from 6th April 2015, any payment to the participator or a dependant of the participator, that complies with the requirements of the 2014 Act. This is subject to paragraphs (10) to (13) and regulation 15(10) and (11). (2) An authorised provider selected by the Secretary of State, must provide a participator with an option to receive benefits under paragraphs 1(a) to (c). This is subject to paragraphs (3) and (4). (3) Any annuity payable in accordance with paragraph (1)(a) or (b) must— (a) be incapable, in whole or in part, of surrender, assignment or commutation, (b) commence not earlier than the participator’s date of retirement for the purposes of, as the case may be, the 1995, 2008 or 2015 Regulations; (c) be payable to the participator for life. (4) Any dependant’s pension which is payable in respect of a participator is payable only on the death of the participator after the participator’s retirement and is payable to the dependant for life: this is subject to paragraph (6). (5) A lump sum commutation payment referred to in paragraph (1)(c) may be paid in respect of benefits payable under paragraph (1)(a), (b) or (d). (6) In the case of a person who is a child to whom— (a) Part H of the 1995 Regulations (child allowance) applies; (b) regulation 2.E.9 or 3.E.9 of the 2008 Regulations applies (meaning of dependant child), or (c) regulation 122 of the 2015 Regulations (eligible child) applies, a pension referred to in paragraph (4) ceases to be payable when that person ceases to be a dependant child within the meaning of whichever of those Regulations applies. (7) An authorised provider selected by the Secretary of State, in addition to providing a participator with the benefits options required under paragraph (2), may from 6th April 2015 provide a participator or a participator’s dependant with alternative benefit options under paragraph (1)(d). (8) A participator must, not earlier than 3 months before the date from which the participator wishes those benefits under these Regulations to be provided, make a benefits election to the Secretary of State specifying— (a) whether and which benefits are to be provided under paragraph (2) or, alternatively, paragraph (7), (b) the authorised provider who is to provide each benefit, (c) for whom, if anyone, a dependant’s benefit is to be provided, (d) if more than one benefit is to be provided, either— (i) the proportion of the amount secured by the total investments made under regulation 7(1), 8(2) or 9(4) that is to be applied to the purchase or arrangement of each of them; or (ii) the dependants’ benefits to be provided expressed as a percentage of the participator’s benefits, (e) in respect of every annuity to be provided— (i) the annual rate of the annuity; (ii) whether it is to be payable for life or for any other period; (iii) whether its rate is to be fixed or vary in accordance with the Index or increase yearly by a specified percentage or (if lower) increase by the increase in the Index for the year in question; (iv) as from 6th April 2015, whether the rate may reduce, (f) in the case of a participator who chooses a life-time annuity referred to in paragraph (1)(a) or (b) and who dies within the period of 5 years beginning with the date on which the annuity commences, whether, if the annuity had continued at the rate in force at the time of the participator’s death, a lump sum is to be paid in accordance with regulation 15(3): the lump sum referred to in this sub-paragraph is a lump sum equal to the balance that would have been payable during the remainder of that period. (9) More than one benefits election may be made under paragraph (8) and each such election must— (a) be in writing, and (b) contain such information as the Secretary of State requests. (10) Upon receipt of a notice of election under paragraph (8), the Secretary of State must, as soon as reasonably practicable, realise the investments made under regulations 7(1), 8(2) or 9(4) and apply the proceeds in the manner specified in it. (11) Where a participator dies before retirement or after retirement but before the benefits under this regulation are paid, the investments made under regulation 7(1), 8(2) or 9(4) must be realised and are, subject to any limit imposed by regulation 13, payable as a lump sum in accordance with regulation 15(3). (12) The Secretary of State may realise the investments made under regulation 7(1), 8(2) or 9(4) and apply the proceeds to the purchase of benefits under these Regulations from an insurer in such form as appear to the Secretary of State to be suitable where the conditions in paragraph (13) are satisfied. (13) Those conditions are— (a) the participator’s retirement date falls on or after 1st December 1999; and (b) the participator has attained the age of 75 and has not given a notice of election under paragraph (8) before doing so. (14) Paragraph (12) applies notwithstanding that benefits are payable to the participator under— (a) Part E or regulation L1 of the 1995 Regulations (benefits for members and preserved pensions); (b) regulation 2.D.1, 2.D.4, 2.D.5, 2.D.8, 2.D.10, 2.D.11, 3.D.1, 3.D.4, 3.D.5, 3.D.7, or 3.D.9 of the 2008 Regulations (normal retirement pensions, actuarially reduced pensions, ill health pensions and early retirement pensions), or (c) regulation 73, 79, 81, 82, 84, 90 or 94 of the 2015 Regulations (age retirement, early retirement, premature retirement, partial retirement and ill-health pensions).

Amendment of regulation 13

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In regulation 13 (benefit limits), after “shall” insert “be”.

Amendment of regulation 14

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In sub-paragraph (b)⁶⁸ of paragraph (1) of regulation 14 (repayment of investments in certain cases)—

• (a) at the end of paragraph (i), omit “or”;

• (b) at the end of paragraph (ii), insert—

or (iii) regulation 40 of the 2015 Regulations (eligibility for refund),

Amendment of regulation 15

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• (1) Regulation 15 (payments by the Secretary of State) is amended as follows.

• (2) For paragraph (1)⁶⁹, substitute—

(1) Where an authorised provider or a selected authorised provider fails to pay a benefit referred to in regulation 11(1) or a lump sum benefit referred to in regulation 12, the Secretary of State is liable to pay that amount.

• (3) In paragraph (3)—

• (a) for “regulation 11(1B), 11(1C), 11(4), 11(7) or 12” substitute “regulations 11(7)(f) and (10) and regulation 12”

• (b) for sub-paragraph (b) of paragraph (3), substitute—

(b) to the deceased’s personal representatives if— (i) there is no spouse, nominated partner or civil partner, or (ii) a notice has been given in accordance with any of the provisions referred to in paragraph (3A) that the spouse, nominated partner or civil partner is not to receive the payment.

• (4) After paragraph (3), insert—

(3A) The provisions referred to in paragraph (3)(b) are— (a) regulation F5 of the 1995 Regulations (payment of lump sum); (b) regulation 2.E.21 or 3.E.21 of the 2008 Regulations (payment of lump sum on death); (c) regulation 112 of the 2015 Regulations (lump sum on death); (d) paragraph 11 of Schedule 2.

• (5) For paragraph (4), substitute—

(4) Lump sums payable under regulation 11(1)(b), (c) and (d) and regulation 14(1) must be paid to the participator.

• (6) In paragraph (10), for “regulations E1” to “pensions)” substitute “the provisions referred to in paragraph (10A)”.

• (7) After paragraph (10), insert—

(10A) Those provisions are— (a) regulation E1 to E5 or L1 of the 1995 Regulations (which deal with benefits for members and preserved pensions); (b) regulation 2.D.1, 2.D.4, 2.D.5, 2.D.8, 2.D.10, 2.D.11, 3.D.1, 3.D.4, 3.D.5, 3.D.7, or 3.D.9 of the 2008 Regulations (normal retirement pensions, actuarially reduced pensions, ill health pensions and early retirement pensions); (c) regulation 73, 79, 81, 82, 84, 90 or 94 of the 2015 Regulations (age retirement, early retirement, partial retirement and ill-health pensions).

• (8) In paragraph (11) after sub-paragraph (b), insert—

(c) regulation 109 of the 2015 Regulations (option for members in serious ill-health to exchange pension for lump sum),

Amendment of regulation 19

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For paragraph (a)⁷⁰ of regulation 19 (offset for crime, negligence or fraud), substitute—

(a) the circumstances set out in any of the following provisions have occurred— (i) regulation T5 of the 1995 Regulations (offset for crime, negligence or fraud); (ii) regulation 2.J.6 or 3.J.6 of the 2008 Regulations (reduction in benefits in cases where loss caused by member’s crime, negligence or fraud); (iii) paragraph 11 of Schedule 3 to the 2015 Regulations (offset of benefits); and

Substitution of regulation 20

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For regulation 20 (loss of rights to benefits), substitute—

(20) (1) Where paragraph (2) applies, the Secretary of State may direct that all or any part of any rights to benefit a person has under these Regulations and which arise by virtue of an employer’s contributions paid on or after the date on which these Regulations come into force, are to be forfeited. (2) This paragraph applies where on or after the date these Regulations come into force— (a) that person commits and is convicted of an offence referred to in— (i) regulation T6 of the 1995 Regulations (loss of rights to benefits); (ii) regulation 2.J.7 or 3.J.7 of the 2008 Regulations (forfeiture of rights to benefits), or (iii) paragraph 12 of Schedule 3 to the 2015 Regulations (forfeiture of rights to benefits), and (b) the circumstances are such that a direction may be made by the Secretary of State under whichever of those provisions applies.

Amendment of Schedule 2

65

• (1) Schedule 2 (pension sharing on divorce or nullity of marriage or dissolution or nullity of civil partnership)⁷¹ is amended as follows.

• (2) In paragraph 1 (discharge of liability in respect of pension credit)—

• (a) for paragraph (b) of sub-paragraph (5), substitute—

(b) any dependant’s pension which is payable under it is payable only on the death of the pension credit member after that member has reached normal benefit age and is payable to the dependant for life: this is subject to paragraph (6);

• (b) after sub-paragraph (5), add—

(6) In the case of a person who is a child to whom— (a) Part H of the 1995 Regulations (child allowance) applies; (b) regulation 2.E.9 or 3.E.9 of the 2008 Regulations applies (meaning of dependant child); or (c) regulation 122 of the 2015 Regulations (eligible child) applies, a pension referred to in paragraph (5)(b) ceases to be payable when that person ceases to be a dependant child within the meaning of whichever of those Regulations applies. (7) Sub-paragraph (5) does not apply where, in accordance with sub-paragraph (5C) of paragraph 4, a pension credit member elects to be provided with alternative benefits referred to in sub-paragraph (5B) of that paragraph.

• (3) In paragraph (4) (pension credit benefit)—

• (a) in sub-paragraph (4), for “this paragraph” substitute “sub-paragraph (1) and any alternative benefit referred to in sub-paragraph (5A)”;

• (b) after sub-paragraph (5), insert—

(5A) An authorised provider selected by the Secretary of State— (a) must provide a pension credit member with an option to receive the benefits referred to in sub-paragraph (5)(a), (aa) and (b); and (b) may, as from 6th April 2015, provide such a member with an option to receive the alternative benefits referred to in sub-paragraph (5B). (5B) Those alternative benefits are benefits that are equivalent in value to the benefits referred to in sub-paragraph (5)(a), (aa) and (b) and which comply with the requirements of the 2014 Act. (5C) A member who wishes to be provided with such alternative benefits must elect to do so by giving the Secretary of State notice in writing not earlier than 3 months before attaining normal benefit age.

• (c) in sub-paragraph (7)—

• (i) after “sub-paragraph (5)” insert “, or as the case may be, sub-paragraph (5C)”;

• (ii) after paragraph (b) insert—

(c) where sub-paragraph (5C) applies, pay the alternative benefits the pension credit member has elected to be provided with,

• (d) for sub-paragraphs (8) and (9), substitute—

(8) Where the conditions in sub-paragraph (9) are satisfied, the Secretary of State may realise the investments made under paragraph 2 and apply the proceeds to the purchase of benefits under these Regulations from an insurer that the Secretary of State considers— (a) suitable, (b) will satisfy the requirements of regulations 12 to 14 of the Pension Sharing (Pension Credit Benefit) Regulations 2000⁷², (c) will comply with the requirements of the 2014 Act, and (d) will fully discharge its liability for payment of benefits under these Regulations. (9) Those conditions are that the pension credit member has— (a) attained normal benefit age on, or after, 1st May 2001, and (b) attained the age of 75 and not given notice of an election under sub-paragraph (5) before doing so. (10) Paragraph (8) applies notwithstanding that the benefits are payable to a pension credit member by virtue of that member being a member of the NHS Pension Scheme under— (a) Part E or regulation L1 of the 1995 Regulations (benefits for members and preserved pension); (b) regulation 2.D.1, 2.D.4, 2.D.5, 2.D.8, 2.D.10, 2.D.11, 3.D.1, 3.D.4, 3.D.5, 3.D.7, or 3.D.9 of the 2008 Regulations (normal retirement pensions, actuarially reduced pensions, ill health pensions and early retirement pensions); or (c) regulation 73, 79, 81, 82, 84, 90 or 94 of the 2015 Regulations (age retirement, early retirement, partial retirement and ill-health pensions).

• (4) For paragraph (b) of sub-paragraph (2)⁷³ of paragraph 7 (commutation of the whole of pension credit at normal benefit age), substitute—

(b) the total benefits payable meet the requirements of regulation 12 of the 2009 Regulations.

• (5) For paragraph 13 substitute—

(13) (1) This paragraph applies in relation to pension credit benefit which arises by virtue of pension credit rights which are derived from an employer’s contributions paid on or after the date on which the AVC Regulations came into force in respect of the relevant participator. (2) Where paragraph (3) applies, the Secretary of State may reduce the amount of any pension credit benefit payable to or in respect of a pension credit member under this Schedule to the extent set out, and subject to the conditions specified, in whichever of the regulations referred to in that paragraph applies. (3) This paragraph applies where on or after the date these Regulations come into force— (a) in respect of a relevant pension credit member the circumstances set out in whichever of the following regulations applies have occurred— (i) regulation T5 of the 1995 Regulations (offset for crime, negligence or fraud); (ii) regulation 2.J.6 or 3.J.6 of the 2008 Regulations (reduction in benefits in cases where loss caused by member’s crime, negligence or fraud); (iii) paragraph 11 of Schedule 3 to the 2015 Regulations (offset of benefits), and (b) there has been a loss to public funds. (4) In this paragraph— - “relevant pension credit member” means a pension credit member who is also a member of the NHS Pension Scheme; - “relevant participator” means the participator in relation to whose rights under the AVC scheme the pension sharing order or provision, which gave the pension credit member in question entitlement to a pension credit, was made.

• (6) For paragraph 14 (loss of rights to benefits), substitute—

(14) (1) Where paragraph (2) applies, the Secretary of State may direct that all or any part of any rights to pension credit benefit a pension credit member has under this Schedule and which arise by virtue of an employer’s contributions paid on or after the date on which the AVC Regulations come into force in respect of a relevant participator, are to be forfeited. (2) This paragraph applies where on or after the date these Regulations come into force— (a) that pension credit member commits and is convicted of an offence referred to in— (i) regulation T6 of the 1995 Regulations (loss of rights to benefits); (ii) regulation 2.J.7 or 3.J.7 of the 2008 Regulations (forfeiture of rights to benefits), or (iii) paragraph 12 of Schedule 3 to the 2015 Regulations (forfeiture of rights to benefits), and (b) the circumstances are such that a direction may be made by the Secretary of State under whichever of those regulations applies. (3) In this paragraph “relevant participator” means the participator in relation to whose rights under the AVC scheme the pension sharing order or provision, which gave the pension credit member in question entitlement to a pension credit, was made.

PART 6 — Miscellaneous

Option to persons detrimentally affected by these Regulations

66

• (1) This regulation applies in relation to any benefit which is being paid or may become payable under the regulations amended by these Regulations to or in respect of a person who, having served in an employment or office, service in which qualified the person to participate in the benefits provided under the regulations amended by these Regulations, ceased to serve therein before these Regulations came into force.

• (2) Where, in a case to which this regulation applies, any provision of these Regulations would operate in relation to any person so as to place that person in a worse position than that person would have been if that provision had not applied, that person may elect that the provision shall not apply by giving notice in accordance with paragraph (3).

• (3) A notice given pursuant to paragraph (2) shall be in writing and shall be delivered to the Secretary of State within six months of the coming into force of these Regulations or such longer period as the Secretary of State may allow.

• (4) An election pursuant to paragraph (2) shall have effect in relation to the benefit referred to in paragraph (1) only to the extent that such benefit has accrued by virtue of periods of service rendered prior to the cessation referred to in paragraph (1) (or, if there has been more than one such cessation, the last of them before the coming into force of these Regulations) and in determining entitlement to, and the amount of, the benefit to that extent, such person shall be treated as if that person had never recommenced service at any time after that cessation (or, as the case may be, the last such cessation).

Signed

Signed by authority of the Secretary of State for Health.

Daniel Poulter — Parliamentary Under-Secretary of State, — Department of Health — 4th February 2015

We consent

David Evennett — Harriett Baldwin — Two of the Lords Commissioners of Her Majesty’s Treasury — 5th February 2015

Explanatory note

(This note is not part of the Regulations)

EXPLANATORY NOTE

These Regulations further amend the National Health Service Pension Scheme Regulations 1995 (S.I. 1995/300) (“the 1995 Regulations”), the National Health Service Pension Scheme Regulations 2008 (S.I. 2008/653) (“the 2008 Regulations”), the National Health Service (Injury Benefits) Regulations 1995 (“the IB Regulations”) and the National Health Service Pension Scheme (Additional Voluntary Contributions) Regulations 2000 (S.I. 2000/619) (“the AVC Regulations”).

The Regulations are divided into six Parts. Part 1 is introductory, Parts 2 and 3 amend the 1995 Regulations and the 2008 Regulations respectively, Part 4 makes consequential amendments to the IB Regulations, Part 5 makes consequential amendments to the AVC Regulations and Part 6 provides that certain persons detrimentally affected by these Regulations may elect for its provisions not to apply to them.

Part 1 provides for citation, commencement and effect, including that certain provisions of these Regulations take effect before the date they come into force (see section 12(1) Superannuation Act 1972 c.11 for the relevant power).

Parts 2 and 3 make similar amendments in respect of both the 1995 Regulations and the 2008 Regulations. They also introduce amendments specific to either the 1995 Regulations or the 2008 Regulations.

The changes dealing with similar issues in Parts 2 and 3—

• introduce new definitions relevant to those Regulations (regulations 3, 19, 39)

• amend the regulations specifying what constitutes pensionable pay (regulations 4, 20)

• amend the provisions relating to the rate of contributions payable for the scheme years 2015-2016 to 2018-2019 (inclusive) (regulations 5, 15, 22, 24, 41)

• insert new provisions (regulations D1A and E3AB of the 1995 Regulations and regulations 2.C.4A and 2.D.11A of the 2008 Regulations) and amend existing provisions dealing with entitlement to, and calculation of, redundancy pensions and the payment of contributions under an additional contribution option (regulations 6 to 9, 25 to 29)

• amend the provisions relating to applications for transfers (regulations 11, 31 to 33, 43 to 45)

• insert new provisions (regulation M8 of the 1995 Regulations and regulation 2.F.18 and 3.F.18 of the 2008 Regulations) dealing with a member’s right to transfer a preserved or deferred pension to 2015 Scheme (regulations 13, 34, 46)

• amend the provision relating to tax, lifetime allowances and protections (regulations 14, 18).

Amendments specific to the 1995 Regulations—

• make amendments to the provisions governing the payments of pensions to widows in the case of hardship (regulation 10)

• make minor technical amendments to regulation M7 of those Regulations which deals with the right to transfer a preserved pension from the 1995 to the 2008 Section of the Scheme (regulation 12)

• make minor technical amendments to the heading of Schedule 2B (regulation 16).

Amendments specific to the 2008 Regulations—

• make technical correcting amendments to the provisions relating to the determination of pensionable pay (regulation 23)

• amend regulation 2.E.5 to omit unnecessary words (regulation 30)

• make minor amendments to regulations 2.M.3, 2.M.4, 2.M.6 and 2.M.7 (regulations 35 to 38).

Part 4 makes amendments to the IB Regulations to reflect the coming into force of the National Health Service Pension Scheme 2015. The amendments to the IB Regulations insert appropriate cross references to the applicable provisions of the 2015 Scheme to ensure that when calculating benefits under those Regulations the provisions of the 2015 Scheme apply as necessary (regulations 48, 49, 51, 52). The definition of “average remuneration” in the IB Regulations is also amended (regulation 50).

Part 5 makes amendments to the AVC Regulations to reflect the coming into force of the National Health Service Pension Scheme 2015. The amendments to the AVC Regulations insert appropriate cross references to the applicable provisions of the 2015 Scheme in relation to, inter alia, the making and acceptance of elections, payment of additional voluntary contributions, elections, transfers, pensions provision repayment of investments, payments by the Secretary of State offsetting and forfeiture of benefits. The amendments also provide greater flexibility when members take their AVC benefits (regulations 54 to 65).

Part 6 provides that deferred members, or members in receipt of a relevant benefit, who are detrimentally affected by these Regulations may elect for the provisions not to apply to them by giving notice within six months of the coming into force of these Regulations (regulation 66).

Footnotes