“PART A

Preservation of Benefits — Calculation of Preserved Benefit — Defined Benefit Scheme

1. (1) In the case of a defined benefit scheme, a preserved benefit shall consist of—

(a) basic preserved benefit calculated under paragraph 2, and

(b) preserved benefit in respect of additional long service benefit provided by additional voluntary contributions calculated under paragraph 3, and

(c) preserved benefit in respect of additional long service benefit provided by a transfer of accrued rights from another scheme, and

(d) in the case of a member of the scheme who is entitled to preserved benefit under section 28(2)(b), additional preserved benefit calculated under paragraph 4.

(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.

BASIC PRESERVED BENEFIT

2. (1) Where the basis of calculating long service benefit does not alter between 1 January 1991 or, if later, the date of commencement of the member's relevant employment and the date of termination of relevant employment the amount of basic preserved benefit shall be calculated in accordance with the formula—

A ×

B₁

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 or which represents an increase required under section 35A) calculated at the date of termination of the member's relevant employment,

B₁ is the period of reckonable service completed after 1 January 1991, 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 1 January 1991 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 basic 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 1 January 1991 or, if later, the date of commencement of the member's relevant employment, and

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

D ×

E

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 1 January 1991 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.

Preserved benefit in respect of 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—

X ×

Y

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.

Additional preserved benefit.

4. In the case of a defined benefit scheme, the amount of additional preserved benefit shall be the greater of, namely—

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

G — J

where—

G  is the 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) to which the member is entitled upon termination of relevant employment under the rules of the scheme (disregarding any provision for revaluation or increase of that benefit after the date of termination of relevant employment), and

J  is the basic preserved benefit calculated under paragraph 2;

and

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

H — J

where—

H  is a benefit of such amount as will ensure that its actuarial value is equal to the amount of any contributions (excluding additional voluntary contributions) paid by the member 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, and

J  is the basic preserved benefit calculated under paragraph 2;

and

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

A ×

B₂

where—

A  and C have the values ascribed to them in paragraph 2(1), and

B₂  is the period of reckonable service completed up to 1 January 1991.”.

“PART B

Revaluation of Preserved Benefits

5. (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 calendar year (or as at the date of termination of relevant employment in any case where a member's relevant employment has terminated since the last day of the previous calendar year), such preserved benefit to include any previous revaluation.

(2) Except as provided for in paragraphs 6 and 7 the appropriate amount shall be calculated in accordance with the formula—

P × R

where—

P is the amount of preserved benefit as at the last day of the previous calendar year (or as at the date of termination of relevant employment in any case where a member's relevant employment has terminated since the last day of the previous calendar year), and

R is the revaluation percentage:

Provided that in any case where a member's relevant employment has terminated since the last day of the previous calendar year R is X/twelfths of the revaluation percentage where X is the number of complete months from the date on which the member's relevant employment terminated to the end of the revaluation year.

6. (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 this paragraph 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 5,

whichever the trustees of the scheme consider appropriate.

7. (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 in accordance with paragraph 5, provided that where the trustees of a scheme consider that by revaluing a preserved benefit in such a manner that a member whose service in relevant employment has terminated would be treated more favourably than a member who remains in reckonable service in relation to the period of reckonable service to which the preserved benefit applies, they may revalue the preserved benefit on such other basis and such other dates as they consider just and equitable.

8. In the case of a member who is entitled to a preserved benefit under section 28(2)(a), 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 1 January 1991.”.

“PART C

Minimum Value of Contributory Retirement Benefit

9. The minimum value of contributory retirement benefit shall be the actuarial value of an amount calculated in accordance with the formula—

360 - Q

× R

where—

Q is—

(a) if relevant employment terminates before normal pensionable age, the number of complete calendar months by which the date of termination of the relevant employment precedes normal pensionable age subject to a minimum of 0 and a maximum of 60, and

(b) if relevant employment terminates on or after normal pensionable age, nil,

and

R is the amount of any contributions (excluding additional voluntary contributions) paid by the member to the scheme 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.”.