S.I. No. 217/1993:

OCCUPATIONAL PENSION SCHEMES (PRESERVATION OF BENEFITS) (SPECIAL CALCULATIONS) REGULATIONS, 1993.

OCCUPATIONAL PENSION SCHEMES (PRESERVATION OF BENEFITS) (SPECIAL CALCULATIONS) REGULATIONS, 1993.

The Minister for Social Welfare, in exercise of the powers conferred on him by sections 5 and 37 of the Pensions Act, 1990 (No. 25 of 1990), hereby makes the following Regulations:

1. (1) These Regulations may be cited as the Occupational Pension Schemes (Preservation of Benefits) (Special Calculations) Regulations, 1993.

(2) The Principal Regulations and these Regulations shall be construed together as one and may be cited together as the Occupational Pension Schemes (Preservation of Benefits) Regulations, 1992 and 1993.

2. In these Regulations--

"the Act" means the Pensions Act, 1990 ;

"the Principal Regulations" means the Occupational Pension Schemes (Preservation of Benefits) Regulations, 1992 ( S.I. No. 445 of 1992 );

"appropriate contributions" shall be construed in accordance with articles 7 and 8 of these Regulations;

"defined benefit scheme" means, subject to subarticle (5) of article 4, a scheme which is not a defined contribution scheme;

"defined contribution scheme" means, subject to subarticle (5) of article 4, a scheme which, under its rules, provides long service benefit, the rate or amount of which is in total directly determined by the amount of the contributions paid by or in respect of the member and includes a scheme the contributions under which are used, directly or indirectly, to provide--

( a ) benefits, other than long service benefit, and

( b ) long service benefit the rate or amount of which is in total directly determined by the part of the contributions aforesaid that is used for the provision of the long service benefit;

"enhanced long service benefit" has the meaning assigned to it by article 5 of these Regulations;

"enhanced amount" has the meaning assigned to it by article 5 of these Regulations;

"enhancement percentage" has the meaning assigned to it by article 5 of these Regulations;

"enhancement period" has the meaning assigned to it by article 5 of these Regulations;

"preserved benefit" has the meaning assigned to it by section 28 (2) of the Act.

3. These Regulations shall come into operation on the 1st day of August, 1993.

4. (1) Where on termination of relevant employment a member has periods of reckonable service after the commencement of Part III of the Act in more than one scheme relating to the same employment the preserved benefit in respect of such member shall be calculated in accordance with these Regulations.

(2) Where the period or periods of reckonable service relate to a defined benefit scheme, subject to subarticle (3) of this article, the preserved benefit in respect of each such period shall be calculated in accordance with articles 5 and 6 of these Regulations. Where the period or periods of reckonable service relate to a defined contribution scheme the preserved benefit in respect of each such period shall be calculated in accordance with article 7. Where additional long service benefit has been granted under a scheme to a member in respect of a transfer of accrued rights from another scheme where such accrued rights result from the termination of the employment to which that scheme applies the preserved benefit in respect thereof shall be calculated in accordance with Article 9. A member's total preserved benefit shall be determined by aggregating the amounts of preserved benefit calculated in accordance with each such article or articles, as the case may be, that are relevant to that member.

(3) Where a period of reckonable service under a defined benefit scheme is followed by a period of reckonable service under a defined contribution scheme relating to the same employment and where the trustees apply in respect of the member concerned part of the resources of the defined benefit scheme in the making up of a payment to the defined contribution scheme, instead of calculating the preserved benefit in respect of the period of reckonable service under the defined benefit scheme in accordance with articles 5 and 6 the trustees may calculate such preserved benefit in accordance with article 8.

(4) A preserved benefit, or part thereof, determined in accordance with these Regulations shall be payable out of the resources of the scheme or schemes to which the period or periods of reckonable service relate except that, where the trustees apply in respect of the member concerned part of the resources of the scheme in the making of a payment to another scheme relating to the same employment, such part of the preserved benefit in respect of the period of reckonable service to which the payment relates shall be determined in accordance with these Regulations but shall be payable from the resources of such other scheme.

(5) Where the rate or amount of part of the long service benefit payable under a defined benefit scheme is directly determined by an amount of contribution paid by or in respect of the member, then, for the purposes of these Regulations, the scheme in so far as it relates to such part of the long service benefit shall be treated as a defined contribution scheme and, in so far as it relates to other benefits (including the remaining part of the long service benefit) shall be treated as a defined benefit scheme.

(6) Unless specified to the contrary in these Regulations the provisions of Part III and Part B of the Second Schedule of the Act shall apply to a preserved benefit calculated in accordance with these Regulations.

5. (1) Where the basis of calculating long service benefit does not alter between the commencement of Part III of the Act or, if later, the date of commencement of the period of reckonable service to which the calculation relates and the date of termination of the same period of reckonable service the amount of preserved benefit shall be calculated in accordance with the formula--

where--

A1 is the amount of enhanced long service benefit calculated at the date of termination of the member's relevant employment less, where the long service benefit under the scheme includes rights to long service benefit granted under the scheme in substitution for accrued rights in respect of a previous period of reckonable service under any other scheme relating to the same employment,

( a ) the amount of preserved benefit calculated in accordance with these Regulations in respect of such previous period of reckonable service, and

( b ) the amount of long service benefit which represents a transfer of accrued rights from any such scheme;

whichever is the greater.

B1 is the period of reckonable service to which the calculation relates completed after the commencement of Part III of the Act, and

C1 is the period of reckonable service that would have been completed if the member had remained in relevant employment and in membership of the scheme until normal pensionable age and such service had continued to qualify for long service benefit.

(2) Where the basis of calculating long service benefit is altered between the commencement of Part III of the Act or, if later, the date of commencement of the period of reckonable service to which the calculation relates and the date of termination of the same period of reckonable service the amount of preserved benefit shall be the sum of:

( a ) the amount calculated in accordance with the formula set out in subarticle (1) where A1 is calculated on the basis of the rules of the scheme in force at the commencement of Part III of the Act or, if later, the date of commencement of the period of reckonable service to which the calculation relates, and

( b ) an amount calculated in accordance with the formula--

where--

D1 is the amount of the difference in enhanced long service benefit calculated at the date of termination of relevant employment,

E1 is the period of reckonable service to which the calculation relates completed after the date on which the basis of calculation was altered, and

F1 is the period of reckonable service that would have been completed from the date of such alteration if the member had remained in relevant employment and in membership of the scheme until normal pensionable age and such service had continued to qualify for long service benefit:

Provided that where there is more than one such alteration each alteration shall be separately calculated in accordance with this formula and they shall be aggregated for the purposes of the calculation of the amount.

(3) Any preserved benefit calculated under this article shall be subject to a minimum of such amount as will ensure that the actuarial value of such benefit is equal to the amount of any contributions (excluding additional voluntary contributions) paid by the member to the scheme in respect of the period of reckonable service to which the calculation relates completed after the commencement of Part III of the Act together with compound interest thereon at the rate, if any, applicable under the rules of the scheme to refunds of members' contributions on leaving service.

(4) The amount of enhanced long service benefit to be used in the calculation of a preserved benefit under this article shall be determined in accordance with subarticles (5) to (7) of this article and a separate amount shall be determined in respect of each such period of reckonable service.

(5) ( a ) Where either there is a period of less than twelve months between

(i) 1st January 1996 or the date of termination of the period of reckonable service to which the calculation relates, whichever is the later, and

(ii) the date of termination of the member's relevant employment,

or, where the scheme provides long service benefit the rate or amount of which is calculated by reference solely to the member's length of service or which is of a fixed amount, the amount of enhanced long service benefit shall be the amount of long service benefit calculated in accordance with paragraph (a) of subarticle (7) of this article.

(b) In all other circumstances the amount of enhanced long service benefit shall be determined by adding the enhancement amounts calculated in accordance with paragraph (b) of subarticle 7 of this article to the amount of long service benefit calculated in accordance with paragraph ( a ) of subarticle (7) of this article.

(6) In respect of each twelve month period or such shorter period as the trustees shall decide (herein referred to as "the enhancement period") between

( a ) 1st January 1996 or the date of termination of the period of reckonable service to which the calculation relates, whichever is the later, and

( b ) the date of termination of the member's relevant employment

during which there has been an increase in the general level of consumer prices the trustees shall determine a percentage (herein referred to as "the enhancement percentage")

such percentage being

(i) the percentage that equals the increase in the general level of consumer prices during the preceding 12 months, or

(ii) 4 per cent,

whichever is the lesser provided that where the enhancement period is less than 12 months the enhancement percentage shall be proportionately reduced.

(7) ( a ) Where the amount of long service benefit is to be calculated in accordance with this paragraph it shall be the amount of long service benefit at the date of termination of the period of reckonable service to which the calculation relates excluding

(i) any such benefit which is being secured by way of additional voluntary contributions, and

(ii) any such benefit which represents a transfer of accrued rights from another scheme where such accrued rights result from the termination of the employment to which that scheme applies:

Provided that where a scheme provides for benefits to be calculated in relation to a member's pensionable earnings at, or in a specified period, prior to his attaining normal pensionable age or in some other way relative to such earnings, the long service benefit shall be calculated, in a corresponding manner, by reference to his earnings at, or in the same period before, the date of termination of the period of reckonable service to which the calculation relates.

( b ) In respect of each enhancement period an amount (herein referred to as "the enhancement amount") shall be calculated in accordance with the formula

where L is determined by taking the amount of long service benefit calculated in accordance with paragraph ( a ) of this subarticle and adding thereto any enhancement amounts calculated in accordance with this paragraph in respect of any previous enhancement period, and

E is the enhancement percentage for that enhancement period.

6. (1) Where a member of a scheme is entitled to additional long service benefit under the scheme by virtue of the payment of additional voluntary contributions, a preserved benefit in respect of such benefit shall be calculated in accordance with subarticle (2) of this article:

Provided that if the member has received a refund of any such contributions paid by him during any period of reckonable service prior to the commencement of Part III of the Act then, in calculating the amount of any preserved benefit under subarticle (2) of this article, any period of reckonable service prior to the commencement of Part III of the Act shall be disregarded.

(2) The preserved benefit shall be an amount calculated in accordance with the following formula--

where--

X1 is the amount of such additional benefit (or increase or reduction in benefit),

Y1 is the period of reckonable service for which the member of the scheme has contributed towards such benefit (or increase or reduction in benefit) and where the member has contributed under more than one scheme it shall mean the aggregate of all periods of reckonable service for which the member has contributed, and

Z1 is the total period of reckonable service under all such schemes for which such member would have contributed towards such benefit (or increase or reduction in benefit) if he had remained in relevant employment until normal pensionable age.

(3) For the purposes of subarticle (2), "increase or reduction in benefit" means a benefit related to an increase or reduction in the rate of contribution previously contracted and each such increase or reduction in benefit shall for the purposes of this subarticle be treated separately.

7. (1) The amount of preserved benefit shall be such that its actuarial value at the date on which payment of it commences is equal to the accumulated value on that date of the appropriate contributions in respect of the member concerned under the scheme.

(2) Subject to subarticle (3) of this article the appropriate contributions shall be the contributions paid by or in respect of the member concerned for the purposes of long service benefit from the commencement of Part III of the Act or, if later, the date of the commencement of the period of reckonable service to which the calculation relates and the date of termination of the same period of reckonable service but excluding additional voluntary contributions and any payment representing a transfer of accrued rights from another scheme.

(3) Where a member of a scheme is entitled to additional long service benefit under the scheme by virtue of the payment of additional voluntary contributions, the appropriate contributions shall be all such contributions:

Provided that if the member has received a refund of any such contributions paid by him prior to the commencement of Part III of the Act, the appropriate contributions shall be the contributions paid by him from such commencement.

(4) Where benefits under a scheme are secured under one or more policies of assurance, the accumulated value, on the date on which payment of preserved benefit commences, of the appropriate contributions paid by or on behalf of a member shall, for the purposes of these Regulations, be the proportion of the proceeds of every such policy applicable to those contributions.

8. Where, in accordance with subarticle (3) of article 4, the trustees elect to calculate a preserved benefit in accordance with this article it shall be such that its actuarial value on the date on which payment of it commences is equal to the accumulated value on that date of the appropriate contributions where such contributions shall be such amount of the payment received by the trustees of the scheme in respect of the period of reckonable service under the defined benefit scheme as represented the actuarial value at the date of transfer of the preserved benefit (including future revaluations thereof) calculated as if the member's service in relevant employment had terminated on the date of termination of reckonable service under the defined benefit scheme but disregarding any provision requiring the completion of a minimum period of qualifying service.

9. Where additional long service benefit has been granted under a scheme to a member in respect of a transfer of accrued rights from another scheme where such accrued rights result from the termination of the employment to which that scheme applies, that benefit shall be provided in addition to the preserved benefit under articles 5 to 8:

Provided that if the member has received a refund of the contributions paid by him to the other scheme prior to the commencement of Part III of the Act which were included in the rights transferred from the other scheme then, in calculating the amount of any preserved benefit under this article, any additional long service benefit accrued under that other scheme prior to such commencement shall be disregarded.

GIVEN under the Official Seal of the Minister for Social Welfare, this 27th day of July, 1993.

MICHAEL WOODS,

Minister for Social Welfare.

EXPLANATORY NOTE.

The Pensions Act, 1990 provides in Part III for the preservation of occupational pension entitlements for people who leave an occupational pension scheme and who have a minimum of 5 years qualifying service in the Scheme, of which at least 2 years is after 1 January 1991.

Under the provisions of the Pensions Act an entitlement to preserved benefit only arises where a member's service in relevant employment terminates.

These Regulations provide that where employment has terminated and a person has periods of reckonable service in more than one scheme relating to the same employment, then the preserved benefit entitlement of the member will be calculated in accordance with these Regulations.

The Regulations will allow for the earlier periods of reckonable service to be enhanced so that the member who transfers within schemes in the same employment will not lose out when he eventually leaves employment and his preserved benefit is being calculated.