Social Welfare and Pensions Act 2012

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Provisions relating to funding standard and funding standard reserve.

29.— The Principal Act is amended by substituting the following section for section 44:

“44.— (1) Subject to the subsequent provisions of this Part, a relevant scheme shall be deemed to have satisfied the funding standard if, in the opinion of the actuary, the resources of the scheme at the effective date of the actuarial funding certificate would have been sufficient, if the scheme had been wound up on that date, to provide for—

(a) the liabilities of the scheme consisting of—

(i) additional benefits secured or granted by way of additional voluntary contributions or a transfer of rights from another scheme to which paragraph 2 of the Third Schedule relates to the extent that the rights to which the transfer relates were originally secured or granted by way of additional voluntary contributions,

(ii) benefits in the course of payment to which paragraph 1 of the Third Schedule relates,

(iii) benefits, other than those referred to in subparagraphs (i) and (ii), which consist of a transfer of rights from another scheme to which paragraph 2 of the Third Schedule relates,

(iv) benefits, other than those referred to in subparagraphs (i), (ii) and (iii), to which paragraphs 3 and 4 of the Third Schedule relate, and

(v) the percentage (in this Part referred to as the ‘specified percentage’) of any benefits, other than those referred to in subparagraphs (i), (ii) and (iii), to which paragraph 5 of the Third Schedule relates,

and

(b) the estimated expenses of administering the winding up of the scheme.

(2) Subject to the subsequent provisions of this Part, a relevant scheme shall be deemed to have satisfied the funding standard reserve if, in the opinion of the actuary, the additional resources of the scheme at the effective date of the funding standard reserve certificate are at least equal to the aggregate of—

(a) an amount equal to A x (B — C) where—

A is 15 per cent (or such higher percentage, being not more than 50 per cent, or lower percentage, being not less than zero per cent as may be prescribed by the Minister),

B is the amount of the funding standard liabilities of the scheme at the effective date of the funding standard reserve certificate, and

C is the amount, subject to a maximum of an amount equal to the funding standard liabilities, of the resources of the scheme invested in the following assets—

(i) securities issued under section 54 (1) of the Finance Act 1970 and known as bonds,

(ii) securities issued under the laws of a Member State (other than the State) that correspond to securities referred to in subparagraph (i),

(iii) cash deposits with one or more credit institutions,

(iv) such other assets of a type that offers a similar degree of security to those assets referred to in subparagraphs (i), (ii) or (iii) as may be prescribed by the Minister,

and

(b) the amount by which the funding standard liabilities of the scheme would increase on the effective date of the funding standard reserve certificate if the interest rate or interest rates assumed for the purposes of determining the funding standard liabilities was one half of one per cent (or such higher percentage, being not more than 5 per cent, or lower percentage, being not less than zero per cent, as may be prescribed by the Minister) less than the interest rate or interest rates (as appropriate) assumed for the purposes of determining the funding standard liabilities for the actuarial funding certificate which has the same effective date as the funding standard reserve certificate less the amount by which the resources of the scheme would increase at the same date as a result of the same change in interest rate or interest rates.

(c) For the purposes of paragraphs (a) and (b), resources shall not include resources which relate to contributions or a transfer of rights from another scheme to the extent that the benefits provided are directly determined by the accumulated value of those contributions or the amount transferred and a given investment performance is not guaranteed or specified in relation to those contributions or the amount transferred.”.