RPSM09101545 - Technical Pages: Member benefits: A secured pension: Scheme pension: Stopping or reducing a scheme pension: Scheme is winding-up

Reducing a scheme pension while the scheme is being wound-up

[Reg 5 The Pension Schemes (Reduction in Pension Rates) Regulations 2006 - SI 2006/138 as inserted by The Pension Schemes (Reduction in Pension Rates)(Amendment) Regulations 2009 - SI 2009/1311]

This exemption is intended to cover the situation where an occupational pension scheme reduces a scheme pension while the scheme is being wound - up if the reason for the reduction is that there are insufficient sums and assets in the pension scheme to continue to pay the pension at the existing rate.

These Regulations take retrospective effect from 6 April 2006.

If the reduction in scheme pension 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.