Citation, commencement and interpretation

1.-(1) These Regulations may be cited as the Occupational Pension Schemes (Indexation) Regulations 1996 and shall come into force on 6th April 1997.

(2) In these Regulations-

"the Act" means the Pensions Act 1995;

"appointed day" means the day appointed for the coming into force of section 51 of the Act for purposes other than authorising the making of these Regulations;

"indexation requirement" means the requirement under section 51(2) and (3) of the Act for certain occupational pension schemes to provide annual increases in the rate of pensions;

"pension scheme" means an occupational pension scheme, a personal pension scheme or a retirement benefits scheme approved under section 591 of the Income and Corporation Taxes Act 1988(3); and

"transfer credits" has the meaning given in section 124(1) of the Act.

Indexation of occupational pensions derived from the acceptance of transfer payments from pension schemes

2.-(1) Subject to paragraph (2) of this regulation, where a person's accrued rights to a pension payable under an occupational pension scheme to which section 51 of the Act applies, or any part of them, derive from the allowance by the scheme of a transfer credit in respect of rights which were subject to the indexation requirement, or to the requirements of section 162 of the Act, in any pension scheme of which that person has previously been a member, subsections (2) and (3) of section 51 of the Act shall apply to such part of that pension as is attributable to those rights as if they were attributable to pensionable service or to payments in respect of employment on or after the appointed day.

(2) Paragraph (1) of this regulation shall not apply in any case where a person's accrued rights to a pension payable by an occupational pension scheme referred to in that paragraph, or any part of them, derive from rights which have, at any time prior to the allowance by such a scheme of a transfer credit in respect of them, been held in a personal pension scheme and which were not subject to the requirements of section 162 of the Act in that scheme.

Indexation of occupational pensions derived from the acceptance of payments from insurance policies or annuity contracts

3. Where a person's accrued rights to a pension payable under an occupational pension scheme to which section 51 of the Act applies, or any part of them, derive from the acceptance by the scheme of a payment from a policy of insurance or annuity contract in respect of rights which were subject to the indexation requirement, or to the requirements of section 162 of the Act, in any pension scheme of which that person has previously been a member, subsections (2) and (3) of section 51 of the Act shall apply to such part of that pension as is attributable to those rights as if they were attributable to pensionable service or to payments in respect of employment on or after the appointed day.

Explanatory Note

(This note is not part of the Regulations)

These Regulations are made before the expiry of the period of six months beginning with the coming into force of the provisions of Part I of the Pensions Act 1995 (c. 26) ("the Act") by virtue of which they are made. They are accordingly exempt by section 120(2)(c) of the Act from the requirement for the Secretary of State to consult such persons as he considers appropriate.

Regulation 1 provides for citation, commencement and interpretation.

Regulation 2(1) provides for subsections (2) and (3) of section 51 of the Act to apply, on or after the day appointed for the coming into force of section 51 of the Act for purposes other than authorising the making of these Regulations ("the appointed day"), to such part of a pension payable by an occupational pension scheme to which that section applies as is derived from a transfer credit allowed by the scheme in respect of rights which have previously been subject to indexation under the requirements of section 51 or section 162 of the Act as if those rights were attributable to pensionable service or to payments in respect of employment on or after the appointed day.

Regulation 2(2) provides an exception from the provisions of regulation 2(1) in any case where a transfer credit has been allowed by an occupational pension scheme to which section 51 of the Act applies in respect of rights which have previously been held in a personal pension scheme and which were not subject to the requirements of section 162 of the Act in that scheme.

Regulation 3 provides for subsections (2) and (3) of section 51 of the Act to apply, on or after the appointed day, to such part of a pension payable by an occupational pension scheme to which that section applies as is derived from a transfer payment accepted by the scheme from a policy of insurance or annuity contract in respect of rights which have previously been subject to indexation under the requirements of section 51 or section 162 of the Act as if those rights were attributable to pensionable service or to payments in respect of employment on or after the appointed day.

An assessment of the compliance cost to business of the measures arising from the Act, including these Regulations, has been placed in the libraries of both Houses of Parliament. Copies can be obtained by post from the Department of Social Security, 11th Floor, Adelphi, 1-11 John Adam Street, London WC2N 6HT.