"Permitted reductions"

"Charges etc. - permitted reductions in members' rights

14. - (1) The value of a member's rights under the scheme may be reduced in the circumstances, and to the extent, set out in paragraphs (2) to (5) of this regulation.

(2) To the extent that a member's rights are represented by a fund allocated to him to the exclusion of other members, the value of those rights may be reduced by the making of deductions from that fund no greater than 1/365 per cent. of its value for each day on which it is held for the purposes of the scheme.

(3) To the extent that a member's rights are represented by a share of funds held for the purposes of the scheme, the amount of that share not being determined by reference to a discretion exercisable by any person, the value of those rights may be reduced by the making of deductions from that share no greater than 1/365 per cent. of its value for each day on which it is so held.

(4) To the extent that a member's rights are represented by rights in a with-profits fund, the value of those rights may be reduced by the making of deductions from the with-profits fund no greater than 1/365 per cent of the value of the member's rights in the fund for each day on which it is held for the purposes of the scheme.

(5) The value of a member's rights under the scheme may be reduced -

(a) where administrative expenses are incurred by the trustees or manager in -

(i) the purchase or provision of an annuity for the member in accordance with the scheme, or

(ii) the making of payments of income (otherwise than by way of an annuity) to a member under arrangements made in accordance with the scheme, by the amount of those expenses;

(b) by such amount, and in such manner, as is permitted by regulations under section 24 or 41 (charges in respect of pension sharing costs);

(c) where any stamp duty or other charges are incurred directly in the sale or purchase of securities or property held for the purposes of the scheme, by the amount of such of those charges as are attributable to the member's rights;

(d) where the member is the transferor for the purposes of section 29 (pension sharing: creation of pension debits and credits), by the amount of any payment made to discharge the liability of the trustees or manager in respect of a credit within the . meaning of that section;

(e) by the amount of any payment made for the purpose of returning excessive contributions made in relation to the member, in accordance with the arrangements that the scheme must have in order to be approved under Chapter IV of Part XIV of the Income and Corporation Taxes Act 1988 (pension schemes, social security benefits, life annuities etc.); and

(f) by the amount required to discharge any monetary obligation due from the member to the scheme which -

(i) arises out of a criminal, negligent or fraudulent act or omission by him; or

(ii) in the case of a trust scheme of which the person in question is a trustee, arises out of breach of trust by him, and which is either not in dispute or, if there is a dispute, where the obligation in question has become enforceable under an order of a competent court or in consequence of an award of an arbitrator or, in Scotland, an arbiter appointed (failing agreement between the parties) by the sheriff.

(6) When calculating the value of a member's rights for the purposes of paragraphs (2) to (4) above, where the trustees or manager have specified under paragraph (7) below that such rights are to be valued weekly or monthly -

(a) where the rights are to be valued weekly, they are to be valued on such day of the week ("the specified day") as has been so specified by the trustees or manager (except that, where that day is not a working day, the rights are to be valued on the next working day), and the value of the rights on each subsequent day prior to the next specified day is to be taken to be the value of the rights on the previous specified day; and

(b) where the rights are to be valued monthly, they are to be valued on such date in each month ("the specified date") as has been so specified by the trustees or manager (except that, where that date is not a working day, the rights are to be valued on the next working day), and the value of the rights on each subsequent day prior to the next specified date is to be taken to be the value of the rights on the previous specified date.

(7) For the purposes of paragraph (6) above -

(a) the frequency, which must be daily, weekly or monthly, with which rights are to be valued; and

(b) where valuation is to take place weekly or monthly, the day of the week or, as the case may be, the date in the month on which it is to take place, must be specified in writing by the trustees or manager of the scheme; and the specification may not be amended during the period of 12 months after the date on which it is made.

(8) Where the value of a.ny member's rights is reduced by reference to an amount of costs or charges referred to in paragraph (5)(c) above, then, for the purposes of calculating any reduction under paragraph (2), (3) or (4) above, the funds held by the scheme are to be calculated after the deduction of any such amount."

Source: Stakeholder regulations