RPSM09101530 - Technical Pages: Member benefits: A secured pension: Scheme pension: Stopping or reducing a scheme pension: Scheme wide reduction

Where a scheme wide reduction is applied

This exemption is intended to cover situations where, for example, the scheme has to reduce pensions payable over the previous year’s level on the basis of actuarial advice.

In this case, the scheme pensions can be reduced provided the reduction was applied to all the scheme pensions currently being paid from the scheme. This does not include dependants’ scheme pensions.

This reduction may be applied on a pro-rata basis or a flat rate basis.

If a scheme pension is reduced in accordance with this relaxation, and the reduction is part of what the legislation calls ‘avoidance arrangements’, the member will become liable to an additional unauthorised payments charge on a defined ‘appropriate amount’.

RPSM09101600 explains what the legislation means by avoidance arrangements and the appropriate amount.