1 Citation, commencement and interpretation

(1)    These Regulations may be cited as the Pension Protection Fund (Closed Schemes) Regulations 2007 and shall come into force on 6th April 2007.

(2)    In these Regulations—

“the 1995 Act” means the Pensions Act 1995;

“the Act” means the Pensions Act 2004 (unless the context otherwise requires, any reference to a numbered section being to a section so numbered in that Act);

“the appropriate person” means the actuary as defined in section 156(6) (valuations of closed schemes);

“the effective date” for the purposes of a section 156 valuation, means the date by reference to which the assets were valued and the full scheme liabilities and the protected liabilities were calculated;

“closed scheme” and “closed section” shall be construed in accordance with section 155 (treatment of closed schemes);

“section 156 valuation” means an actuarial valuation under that section; and

“segregated scheme” means a multi-employer scheme which is divided into two or more sections where—

(a)    any contributions payable to the scheme by an employer in relation to the scheme or by a member are allocated to that employer's or that member's section; and

(b)    a specified proportion of the assets of the scheme is attributable to each section of the scheme and cannot be used for the purposes of any other section.

(3)    In these Regulations, in the case of a scheme which is a segregated scheme, where these Regulations apply to a section of a scheme which is for the purposes of Part 2 of the Act a closed section, for “closed scheme” and “scheme” substitute “closed section” and “section”.

NOTES
Initial Commencement
Specified date

Specified date: 6 April 2007: see para (1) above.

2 Applications and determination notices under section 153

2Applications and determination notices under section 153

(1)    An application to the Board for the purposes of section 153(2) (closed schemes) shall be in writing and shall contain the following information—

(a)    a description of the type or purpose of the application;

(b)    the date on which the application is made;

(c)    where the application is made in respect of a scheme, the name, address and pension scheme registration number of that scheme;

(d)    where the application is made in respect of a section of a segregated scheme—

(i)    the name, address and pension scheme registration number of that scheme; and

(ii)    the name of the section;

(e)    a description by the trustees or managers of the scheme of the steps they have taken to obtain a full buy-out quotation in respect of that scheme; and—

(i)    the names and addresses of any persons they have approached for that purpose; and

(ii)    the date on which any such approach was made; and

(f)    where the Board does not already have the information, the name and address of each of the trustees or managers of that scheme.

(2)    An application to the Board for the purposes of section 153 shall be accompanied by evidence in the following form—

(a)    a copy of any request made by the trustees or managers of the scheme in respect of which the application is made for a full buy-out quotation in respect of that scheme; and

(b)    a copy of any refusal given to those trustees or managers in response to such a request.

(3)    A determination notice issued by the Board under section 153(6) shall be in writing and shall contain the following information—

(a)    the name or type of notice issued;

(b)    the date on which the notice is issued;

(c)    where the notice is issued in respect of a scheme, the name, address and pension scheme registration number of that scheme;

(d)    where the notice is issued in respect of a section of a segregated scheme—

(i)    the name, address and pension scheme registration number of that scheme; and

(ii)    the name of the section;

(e)    the Board's determination to authorise or not to authorise the scheme to continue as a closed scheme; and

(f)    where the Board has authorised the scheme to continue as a closed scheme, an explanation of the provisions of—

(i)    section 155 in so far as they will operate while the scheme is a closed scheme;

(ii)    section 156 in so far as they will operate while that scheme is a closed scheme; and

(iii)    section 157 (applications and notifications where closed schemes have insufficient assets) in so far as they will operate if at any time the trustees or managers of that scheme while it is a closed scheme become aware that the value of the assets of the scheme is less than the amount of the protected liabilities in relation to the scheme.

NOTES
Initial Commencement
Specified date

Specified date: 6 April 2007: see reg 1(1).

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3 Obtaining of actuarial valuations of closed schemes

3Obtaining of actuarial valuations of closed schemes

(1)    In this regulation—

“the determination date” means the date immediately after—

(a)    the expiry of the period within which the issue of the determination notice may be reviewed by virtue of Chapter 6 of Part 2 of the Act (reviews, appeals and maladministration); or

(b)    if the issue of the notice is so reviewed—

(i)    the review and any reconsideration;

(ii)    any reference to the PPF Ombudsman in respect of the issue of the notice; and

(iii)    any appeal against his determination or directions,

has been finally disposed of and the notice has not been revoked, varied or substituted;

“the relevant period” is the period of three years beginning immediately after the relevant time of the actuarial valuation of the scheme under section 143 (Board's obligation to obtain valuation of assets and protected liabilities);

“the relevant time” shall be construed in accordance with section 143(11)(c); and

“section 143 valuation” means an actuarial valuation under that section.

(2)    The effective date of the first section 156 valuation shall—

(a)    be within the relevant period; or

(b)    where the determination date did not fall within the relevant period, be within the period of 15 months beginning on the determination date.

(3)    Any subsequent section 156 valuation shall have an effective date which is not more than three years after the effective date of the previous section 156 valuation.

(4)    The trustees or managers of a closed scheme shall obtain any section 156 valuation of the scheme within the period of 15 months after its effective date.

NOTES
Initial Commencement
Specified date

Specified date: 6 April 2007: see reg 1(1).

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4 Valuation of the assets and liabilities of closed schemes

4Valuation of the assets and liabilities of closed schemes

For the purposes of section 156—

(a)    the assets, the full scheme liabilities and the protected liabilities in relation to a closed scheme; and

(b)    their value or amount,

shall be determined, calculated and verified in accordance with the provisions of the Schedule.

NOTES
Initial Commencement
Specified date

Specified date: 6 April 2007: see reg 1(1).

5 Prescribed qualifications for the purposes of section 156

5Prescribed qualifications for the purposes of section 156

For the purposes of the definition of “the actuary” contained in section 156(6), a person with prescribed qualifications is—

(a)    a fellow of the Faculty of Actuaries; or

(b)    a fellow of the Institute of Actuaries.

NOTES
Initial Commencement
Specified date

Specified date: 6 April 2007: see reg 1(1).

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6 Applications and notifications where closed schemes have insufficient assets

6Applications and notifications where closed schemes have insufficient assets

(1)    Where the trustees or managers of a closed scheme are required under section 157(1) to make an application to the Board for it to assume responsibility for the scheme, they must do so within six months of the time when they become aware that the value of the assets of the scheme is less than the amount of the protected liabilities in relation to the scheme.

(2)    An application to the Board for the purposes of section 157(1) shall be in writing and shall contain the following information—

(a)    a description of the type or purpose of the application;

(b)    the date on which the application is made;

(c)    where the application is made in respect of a scheme, the name, address and pension scheme registration number of that scheme;

(d)    where the application is made in respect of a section of a segregated scheme—

(i)    the name, address and pension scheme registration number of that scheme; and

(ii)    the name of the section;

(e)    a statement by the trustees or managers of the scheme in respect of which the application is made that the value of the assets of the scheme is less than the amount of the protected liabilities in relation to the scheme and the date on which they became so aware;

(f)    a statement by the trustees or managers of the scheme in respect of which the application is made whether or not they obtained advice from the appropriate person before they became aware that the value of the assets of the scheme is less than the amount of the protected liabilities in relation to the scheme;

(g)    a statement by the trustees or managers of the scheme in respect of which the application is made of—

(i)    the value of the assets of the scheme; and

(ii)    the amount of the protected liabilities in relation to the scheme; and

(h)    where the Board does not already have the information, the name and address of each of the trustees or managers of that scheme.

(3)    Where the Regulator becomes aware that the value of the assets of a closed scheme is less than the amount of the protected liabilities in relation to that scheme, the notice which the Regulator must give to the Board under section 157(3) shall be in writing and shall contain the following information—

(a)    the name or type of notice given;

(b)    the date on which the notice is given;

(c)    where the notice is given in respect of a scheme, the name, address and pension scheme registration number of that scheme;

(d)    where the notice is given in respect of a section of a segregated scheme—

(i)    the name, address and pension scheme registration number of that scheme; and

(ii)    the name of the section;

(e)    a statement by the Regulator that it has become aware that the value of the assets of the scheme is less than the amount of the protected liabilities in relation to the scheme;

(f)    the date on which the Regulator became aware that the value of the assets of the scheme is less than the amount of the protected liabilities in relation to the scheme; and

(g)    where the Board does not already have the information, the name and address of each of the trustees or managers of that scheme.

(4)    Where the Board receives a notice from the Regulator to which paragraph (3) applies, the notice under section 157(4) which the Board must give to the trustees or managers of the scheme in question shall be in writing and shall contain the following information—

(a)    the name or type of notice given;

(b)    the date on which the notice is given;

(c)    where the notice is given in respect of a scheme, the name, address and pension scheme registration number of that scheme;

(d)    where the notice is given in respect of a section of a segregated scheme—

(i)    the name, address and pension scheme registration number of that scheme; and

(ii)    the name of the section;

(e)    a statement that the Board received a notice from the Regulator under section 157(3), the effect of that notice and the date on which it was given by the Regulator;

(f)    the address for communications at which the Board may be contacted in respect of the giving of the notice; and

(g)    whether the notice given by the Board contains any information which is restricted information under section 197 (restricted information), and, if so, the nature of the restrictions.

NOTES
Initial Commencement
Specified date

Specified date: 6 April 2007: see reg 1(1).

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7 Transitional provision for schemes with an assessment date before 1st April 2007

7Transitional provision for schemes with an assessment date before 1st April 2007

(1)    In this regulation, “assessment date” means the date on which the assessment period in relation to a scheme or closed scheme, or (where there has been more than one such assessment period) the last one, began.

(2)    In the case of a scheme or closed scheme with an assessment date before 1st April 2007, these Regulations shall have effect until 31st December 2007 as if there were substituted for the definition of “relevant accounts” in paragraph 1 of the Schedule the following—

““relevant accounts” means—

(a)    audited accounts for the scheme which are prepared in respect of a period ending with the effective date;

(b)    if none are so prepared, the latest such accounts which are available at the effective date; or

(c)    if the appropriate person's opinion is that it is practicable to use them, the latest such accounts which are available on the date the appropriate person signs the section 156 valuation;”.

NOTES
Initial Commencement
Specified date

Specified date: 6 April 2007: see reg 1(1).

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Signature

Signed by authority of the Secretary of State for Work and Pensions

James Purnell

Minister of State,

Department for Work and Pensions

14th March 2007

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EXPLANATORY NOTE

EXPLANATORY NOTE (This note is not part of the Regulations)

These Regulations make provision relating to various requirements under sections 153, 156 and 157 of the Pensions Act 2004 (c 35) (“the Act”) in relation to closed schemes.

Regulation 2 makes provision in respect of applications to the Board of the Pension Protection Fund (“the Board”) under section 153 of the Act for authority for a scheme to continue as a closed scheme in circumstances where the trustees or managers of the scheme are unable to obtain a full buy-out quotation. It also makes provision in respect of the form and content of determination notices issued by the Board under section 153.

Regulation 3 provides that the trustees or managers of closed schemes must obtain an initial actuarial valuation under section 156 of the Act of the scheme's assets, full scheme liabilities and protected liabilities within a prescribed period. It also provides that such trustees or managers must obtain section 156 actuarial valuations at least every three years after the initial such valuation.

Regulation 4 and the Schedule provide for how the assets, full scheme liabilities and the protected liabilities in relation to a closed scheme, and their amount or value, are to be determined, calculated and verified in accordance with section 156 of the Act.

Regulation 5 prescribes the qualifications required of a person conducting an actuarial valuation under section 156 of the Act.

Regulation 6 sets out the time limit for making applications to the Board under section 157 of the Act in circumstances where a closed scheme has insufficient assets. It also makes provision in respect of the form and content of applications and notifications to the Board under that section, and in respect of the form and content of notifications given by the Board under that section.

Regulation 7 makes transitional provision in relation to the coming into force of the definition of “relevant accounts”.

As these Regulations are made before the expiry of the period of six months beginning with the coming into force of the provisions of the Act by virtue of which they are made, the requirement for the Secretary of State to consult such persons as he considers appropriate does not apply. However, a consultation exercise has nevertheless taken place.

A Regulatory Impact Assessment has not been prepared for this instrument as it has only a negligible impact on the costs of business, charities or voluntary bodies.

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