Pensions Act, 1990

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SECOND SCHEDULE

Preservation and Revaluation of Benefits

Section 29 .

PART A

Preservation of Benefits

Calculation of preserved benefit — defined benefit scheme

1. (1) In the case of a defined benefit scheme, where the basis of calculating long service benefit does not alter between the commencement of Part III or, if later, the date of commencement of the member's relevant employment and the date of termination of relevant employment the amount of preserved benefit shall be calculated in accordance with the formula—

where—

A is the amount of long service benefit (excluding any such benefit which is being secured by way of additional voluntary contributions or which represents a transfer of accrued rights from another scheme) calculated at the date of termination of the member's relevant employment,

B is the period of reckonable service completed after the commencement of Part III , and

C is the period of reckonable service that would have been completed if the member had remained in relevant employment 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 or, if later, the date of commencement of the member's relevant employment and the date of termination of the member's relevant employment the amount of preserved benefit shall be the sum of—

(a) the amount calculated in accordance with the formula set out in subparagraph (1) where A is calculated on the basis of the rules of the scheme in force at the commencement of Part III or, if later, the date of commencement of the member's relevant employment, and

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

where—

D is the amount of the difference in long service benefit calculated at the date of termination of relevant employment applicable to the alteration,

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

F 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 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 paragraph 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 in respect of the period of reckonable service completed after the commencement of Part III 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.

2. 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 on earlier death, or in some other way relative to such earnings, preserved 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 his relevant employment.

Benefit provided by additional voluntary contributions

3. (1) In the case of an additional long service benefit referred to in section 29 (6) preserved benefit in respect of such additional benefit, shall include an amount calculated in accordance with the formula—

where—

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

Y is the period of reckonable service for which the member of the scheme has contributed towards such benefit (or increase in benefit), and

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

(2) For the purposes of subparagraph (1), “increase in benefit” means a benefit secured by an increase in the rate of contribution previously contracted and each such increase in benefit shall for the purposes of this paragraph be treated separately.

PART B

Revaluation of Preserved Benefits

4. (1) Any preserved benefit payable under a defined benefit scheme shall be revalued annually at the end of each revaluation year, by adding the appropriate amount to the amount of preserved benefit as at the last day of the previous revaluation year, such preserved benefit to include any previous revaluation.

(2) Except as provided for in paragraphs 5 and 6 below the appropriate amount shall be calculated in accordance with the formula—

where—

P is the amount of preserved benefit as at the last day of the previous revaluation year, and

R is the revaluation percentage.

5. (1) This paragraph applies to a scheme which provides long service benefit the rate or amount of which is calculated by reference to—

(a) the member's average pensionable earnings over the period of service on which such benefit is based, or

(b) the member's total pensionable earnings over the period of service on which such benefit is based.

(2) Any preserved benefit provided under a scheme to which subparagraph (1) applies shall be revalued—

(a) by revaluing the pensionable earnings of the member concerned during each revaluation year in any manner in which they could have been revalued during that year if the member had remained in the same reckonable service, or

(b) in accordance with paragraph 4,

whichever the trustees of the scheme consider appropriate.

6. (1) This paragraph applies to a scheme which provides long service benefit—

(a) the rate or amount of which is calculated by reference solely to the member's length of service, or

(b) which is of a fixed amount.

(2) Any preserved benefit provided under a scheme to which subparagraph (1) applies shall be revalued—

(a) during each revaluation year in any manner in which it could have been revalued during that year if the member had remained in the same reckonable service, or

(b) in accordance with paragraph 4,

whichever the trustees of the scheme consider appropriate.

7. No part of the appropriate amount to be added to preserved benefit under this Part shall be provided by reducing the amount of any benefit payable under the rules of the scheme concerned in respect of reckonable service completed before the commencement of Part III .