IndependentParliamentaryStandardsAuthority. Parliamentary Contributory Pension Fund MPs PensionScheme

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1 IndependentParliamentaryStandardsAuthority Parliamentary Contributory Pension Fund MPs PensionScheme PresentedtotheHouseofCommonspursuanttoParagraph15ofSchedule6tothe ConstitutionalReformandGovernanceAct2010 OrderedbytheHouseofCommonstobeprintedon8December2014 HC852

2 The Independent Parliamentary Standards Authority (IPSA) copyright 2014 The text of this document (this excludes, where present, the Royal Arms and all departmental or agency logos) may be reproduced free of charge in any format or medium provided that it is reproduced accurately and not in a misleading context. The material must be acknowledged as The Independent Parliamentary Standards Authority (IPSA) copyright and the document title specified. Where third party material has been identified, permission from the respective copyright holder must be sought. Any enquiries regarding this publication should be sent to us at info@parliamentarystandards.org.uk This publication is available at Print ISBN Web ISBN ID /14 Printed on paper containing 75% recycled fibre content minimum Printed in the UK by the Williams Lea Group on behalf of the Controller of Her Majesty s Stationery Office

3 Contents StatementofReasons...3 ResponseoftheTrusteesoftheParliamentaryContributoryPensionFund...4 TheMPs PensionScheme

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5 StatementofReasons 1. ThisnewMPs PensionSchemeismadetoday8December2014followingapublic consultationfrom11julyto20october InourconsultationweproposedtoamendtheMPs PensionSchemetoputitonapar withthoseavailableinotherpartsofthepublicsector.thisnewmps PensionScheme putsthosechangesinplace.ithaseffectfrom8may Theanalysisoftheresponsestotheconsultation,andourfinalreport,areavailableon ourwebsitewww.parliamentarystandards.org.uk. 4. AsrequiredbyParagraph15ofSchedule6totheConstitutionalReformandGovernance Act2010,theresponseoftheTrusteesoftheParliamentaryContributoryPensionFund isattached. 3

6 ResponseoftheTrusteesoftheParliamentaryContributory PensionFund INTRODUCTION ThisdocumentrelatestotheParliamentaryContributoryPensionFund(the"PCPF")andis theresponsefromthetrusteesofthepcpf(the"trustees")toipsa'sconsultationofjuly 2013 MPs PayandPensions ANewPackage. As with our responses to previous IPSA consultations on this topic, we are aware that as statutoryconsultees(undertheprovisionsoftheconstitutionalreformandgovernanceact 2010, CRaG 2010 ), our response to the consultation will be laid before the House of Commons. We note that there are a number of matters which are not fully detailed in the current consultationdocumentandinrelationtowhichweexpectipsatoengagewithus(andour officials)priortofinaldecisionsbeingtakenontheproposals.inparticular: Transitionalprotections theresponsebelowidentifiessomeparticularpointsthat occurtousinthisregard, IllͲhealthpensionbenefitstobeprovidedunderthenewscheme, Operationofthecostceiling, InteractionofexistingPCPF limits withtheproposednewscheme, Operationoftheproposedfacilityformemberstobuy addedpension, Treatmentofmemberswithexisting addedyears contracts(includinginteraction withtransitionalprotection),and ContinuationoftheexistingAVCfacility. WeassumethatIPSAissatisfiedthatthedevelopmentofitsthinkingontheseissueswill notrequireittocarryoutfurtherconsultationwithus(orotherstakeholders). 4

7 RELEVANCEOFPREVIOUSCONSULTATIONRESPONSES ThisconsultationfollowsfromIPSA'searlierconsultationofOctober2012'ReviewingMPs Pay and Pensions A Consultation' and some of our comments in response to that consultation are also relevant here. We do not reͳstate all such comments in full in this document,buthaverathercrossͳreferredwhereappropriatetoourearlierresponsetothe October2012consultation. AsnotedinourresponsetotheOctober2012consultation,wewelcomeIPSA'sintentionto reviewmps'payandpensionsasonepackage.similarly,wedonotrestrictourresponseto thepensionschaptersoftheconsultation.whilstwedonotconsideritnecessaryforusto answereveryquestionintheconsultation,wemakerepresentationswhereaquestionhasa bearingonthepensionsoutcome. As with the October 2012 consultation, we are pleased to read IPSA's (implicit) acknowledgement that any reform of MPs' pension provision can be implemented within thepcpf.assetoutmorefullyinourresponsetothatconsultation,wewouldbeconcerned ifawhollynewfundweretobecreatedforfuturepensionprovisionfrom2015.itwouldbe helpfultousfromaforwardplanningperspectiveifipsacouldconfirmthis. SCOPEOFCONSULTATION SupplementaryScheme WenoteIPSA scomment(onpage69oftheoctober2012consultation)that thechanges we discuss in this consultation document would apply equally to MPs membership of the MPs PensionSchemeandtheSupplementaryScheme [but]forbrevitywereferonlytothe MPs Pension Scheme. We assume then that the same principle applies to the current consultation.theeffect,therefore,isthatthebenefitstructureproposedformpswillapply inexactlythesamewayforperiodsofaccrualasmembersofthesupplementaryscheme forthoserolesthatfallwithinipsa sremit(pursuanttotheprovisionsofcrag2010). Sincetheproposedfuturebenefitstructurehasbeendesignedtobeappropriateaspartof awiderremunerationpackagefortheroleofanmp(asopposedtoanyadditionalroleasan officeholder),wedonotfollowthelogicofautomaticallyapplyinganidenticalstructureto 5

8 the relevant part of the Supplementary Scheme (i.e. to that part of the Supplementary Scheme where future benefit provision is determined by IPSA as opposed to that power beingvestedintheministerforthecivilservice).perhapsipsacouldexplainthistous. Inourview,IPSAoughtbetakedecisionsinrespectofthefuturebenefitstructureforthese SupplementarySchememembersinthecontextofthat schemeandtherolesto whichit applies.giventheindicationsinthisconsultationdocumentthatipsahasnotyetconcluded its views on a long term pay settlement for officeholders within its remit (for example, IPSA s proposal at paragraph 148 of the consultation to carry out a full review of pay arrangementsforselectcommitteechairsandmembersofthepanelofchairsinthefirst year of the next Parliament, with a 1% increase applying from 1 April 2015 in the meantime), it is perhaps premature at this stage to seek to determine future pension provisioninrespectoftheseroles. AVCscheme WenotethatIPSAhasnotmadeanyproposalsrelatingtothePCPF AVCscheme 1,which essentiallyprovidesafacilityformembersofthepcpftomakeavcsonamoneypurchase basis.wethereforeassumethatipsaisnotproposingtoamendthiselementofthepcpf. WenotethatitwillbenecessarytoensurethattheschemegivingeffecttoIPSA sproposals doesnotgiverisetoanyunintendedconsequencesintheavcscheme. REPRESENTATIONSINRELATIONTOIPSA'SQUESTIONS Our response in this section follows the format of restating the relevant consultation question,followedbyourrepresentations. Question 3: Do you agree with the proposed pension arrangements for MPs in our preferredoption?ifso,pleasegiveyourreasons.ifnot,whatdoyouthinktheyshouldbe; andwhy? We broadly welcome IPSA's proposed pension arrangements for MPs. In particular, we welcomethechoiceofcareasthebasisoffuturebenefitaccrual(seefurtherourresponse 1 Thatis,thepartofthePCPFwhichwas,immediatelypriortotheimplementationofCRaG2010,governedby theparliamentarypensions(additionalvoluntarycontributionsscheme)regulations1993,asamended 6

9 to question 4 below). We nevertheless make various comments in relation to specific issues.someofthoseissuesarecoveredbymorespecificquestionsintheconsultation(e.g. question5whichdealswithflexibilityinthelevelofancillarybenefits)sothosecomments aredealtwithinourresponsestotherelevantquestionsbelow.ourothercommentsareas follows: Accrualrate We consider that an accrual rate of 1/50ths would be preferable to 1/51sts from an administrativeandpracticalperspective.inthiscontext,andkeepinginmindipsa sstated principleoftreatingmpsasordinarycitizens,wenotethatunderthenewbenefitstructure intheprincipalcivilservicepensionscheme,amemberearningthesameamountasipsa s proposedsalaryformpswouldbepayinglowercontributions(7.35%)foranaccrualrateof 1/43rds(andwiththesameCPIrevaluationasisproposedforMPs),soamemberofthat schemewouldbepayinglowercontributionsforhigherbenefitaccrual. WeunderstandfromtheGovernmentActuary sdepartmentthattheexpectedcostofsuch anadjustmentwouldbeapproximately0.5%ofpay. Shareofcost We note that IPSA refers to a split of 40% employee, 60% employer as typical in the reformedpublicserviceschemes.weunderstandthatipsahavederivedthisasanaverage ofthesplitofcontributionsinthoseotherschemes.onthatbasis,andconsistentwithour supportforipsa sstatedprincipleoftreatingmpsasordinarycitizens,wesupportthatsplit. Wenotethattheabolitionofcontractingout,whichisexpectedtotakeeffectin2016,will increasethenationalinsurancecontributionspayablebymembersofthepcpf(andother publicserviceschemes)shortlyafterthenewschemecomesintoeffectin

10 Finalsalaryprotection WearepleasedtoseethatIPSAdonotproposetomakeanyelementoffuturepaynonͲ pensionable.asnotedinourresponsetothatconsultation,weworkedveryhardtoensure thatappropriateprotectionofaccruedrightswasincludedincrag2010. Costceiling We welcome the proposal to impose cost capping arrangementsakin to those which will applyinthewiderreformedpublicsector,andtoensurethatthearrangementsaresuitably tailored to the needs of the MPs' pension scheme (in particular, its position as a funded schemeandrecognisingtheinterrelatedpositionoftheministers'scheme).wenotetwo issuesinparticularatthisstage: Aswiththeunfundedschemeselsewhereinthepublicsector,thecostceilingand floor should reflect the expected cost of future accrual. Actual investment performance should therefore not affect these arrangements, so that MPs do not benefit from, nor are they penalised for, their position as members of a funded scheme. WenotethatitwouldbesensibletotaketheentirePCPFtogetherforthepurposes of cost capping assessments, because treating the Ministers' scheme separately couldgiverisetosomeextremeandunintendedconsequences,particularlyinthe shortterm.wewouldencourageipsatoengagewiththecabinetofficeonthese issues. WenotethatIPSAhascommittedtodiscussingthedetailofthiswiththeTrusteesandHM Governmentoverthecomingmonthsandlookforwardtothatprocess. 8

11 2015review InourresponsetotheOctober2012consultation,weexpressedconcernatthesuggestion that the package might be reͳexamined shortly before the election expected in Whilst we recognise that the expected costs may vary from those set out in the current proposal(ashighlightedbyipsainparagraphs105and108oftheconsultationdocument), we assume that any further review during the current Parliament would flow through to impactontheactualamountofcontributionspayable,butwouldnotresultinanyrevision tothepackageofbenefitsthensettledonbyipsa. We therefore anticipate that IPSA will make a scheme as soon as practicable once the proposals have been finalised (later this year) which will set out the intended benefit structureandthemechanismforcalculatingcontributionrates.wewouldnotexpectipsa subsequentlytoseektomakeanychanges,priortoimplementationin2015,towhatwe (and members) would then understand to be the new scheme s benefit structure. This is very important not least in terms of member expectations (and therefore planning), but additionally so as to ensure that the new scheme is capable of implementation from an administrative perspective (e.g. reprogramming IT systems, member communications and processes). Flexibility In our response to the October 2012 consultation we made representations in favour of maintaining flexibility, including a choice of accrual rates on a costͳneutral basis. The currentfacilityformemberstobuy addedyears isanotherexample.weremaininfavour ofsuchflexibilitiesforthesamereasons.wedonotrepeatthosepointsinfullhere,but would highlight in particular that we view diversity in the financial circumstances and backgrounds of MPs as something to be welcomed, and the flexibility in the PCPF as currently structured is a helpful tool in catering for the differing needs of such a diverse membership. We are pleased to note that IPSA recognises these points at paragraph 117 of the consultation document. IPSA's main reasons for proposing to remove these flexibilities 9

12 appeartobeongroundsofadministrativecomplexityandcost(atparagraph118ͳ119ofthe consultationdocument). However, as explained more fully in our response to the October 2012 consultation, the administrationsystemstodealwithdifferingaccrualandcontributionratesarealreadyin place and the continuation of such flexibility would not give rise to new complexities or administration costs with our third party administrators.moreover, systems to manage differentaccrualandcontributionrateswill,inanyevent,needtobe(orremain)inplacein anycasetocaterforthetransitionalprotections.theadministrationsystemstocaterfor added years are also in place.taking away the current flexibilities therefore does not result in any simplification of administrative process nor the cost savings that might be assumed. Wethereforeremainoftheviewthatitwouldbepreferabletoretainflexibilityofaccrual rateonacostͳneutralbasisand/orthefacilitytobuy addedyears. WenoteIPSA sproposalatparagraph119oftheconsultationtointroduce addedpension as opposed to added years.we understand that added pension will broadly reflect similar arrangements in other public sector schemes but we would welcome further engagementwithipsaonthedetailofhowthisisintendedtooperateinpractice. Onarelatedpoint,wewouldalsowelcomeengagementwithIPSAonitsproposalsforthe treatmentofexisting addedyears contracts,bothformemberswhowillbecoveredby transitionalprotectionandforthosewhowillnot. "Schemelimits" The existing PCPF benefit structure contains a number of schemeͳspecific limits. We understandthatthesewillcontinuetoapplytomembersduringanyperiodoftransitional protection,butaccrualunderthenewarrangementswillnotbesubjecttothoselimits. 10

13 WewouldwelcomeIPSA'sconfirmationthatthisistheintention,inadditiontoitsproposals on the detail of how the existing limits will apply to benefits accrued prior to 2015 for memberswhoaccrueunderthenewschemeafter2015. Transitionalprotections InourresponsetotheOctober2012consultation,wemaderepresentationsthatthecosts oftransitionalprotectionsshouldnotflowthroughtotheoverallcostbalanceofthenew scheme(inkeepingwiththeapproachtakeninthewiderpublicsector).althoughitisnot stated expressly in the current consultation, we believe that this approach has been followed and we welcome that. If that is not the case, perhaps IPSA could clarify its proposal. WewouldwelcomefurtherengagementwithIPSAonthedetailofthesearrangements.For example: Weassumethatamemberwhoisbetween10and13.5yearsfromNRDandwho electstoremainintheexistingschemewillautomaticallybecomeamemberofthe newschemewhentheapplicableperiodoftransitionalprotectionexpires. Conversely, we assume that a member within 10 years of NRD will remain in the existingschemeuntiltheyceasetobeanactivemember(evenifthatisaftertheir NRD). There maybe particular complexities surrounding any members whobenefit from transitionalprotectionwholeavetheschemeandsubsequentlyreͳjoinit. The impact on existing added years contracts for members who are initially covered by transitional protection but subsequently transition to the new scheme willneedtobeconsidered. 11

14 Question 4: Do you think there are merits in considering the introduction of a defined contributionschemeformps?ifso,whatareyourreasons? No,wedonot.OurreasonsforthishavebeenmadecleartoIPSAinpreviousengagement, inparticularwemadethepointintheresponsetoipsa soctober2012consultationthat Wedonotbelievethattherecentandcontinuingriseintheuseofadefinedcontribution model in the private sector is of itself consistent with the guiding principles driving IPSA's review. Wethereforecontinuetosupporttheprovisionofadefinedbenefitpensionschemeand, more specifically, in the context of the overall remuneration package which IPSA have proposed,wesupportthecaremodelwhichipsahaveproposed. Question 5: Should MPs be able to maintain the current level of ancillary benefits by makinghigherpensioncontributions,evenifitrequiresallofthemtodoso? WestronglypressIPSAtoincludeafacilityforMPs,attheirowncost,toretainthecurrent levelofancillarybenefitsͳinparticular,thecurrentlevelofsurvivor spensions.whilstwe understandipsa spositioninproposingareductionofthecurrentlevelofancillarybenefits, wedonotunderstandwhyipsahavesuggestedthatthiscouldonlybeofferedifitwere takenupbyallmps. We recognise that IPSA may find it a difficult decision to require all MPs to pay higher contributionstomaintainthecurrentlevelofancillarybenefits.butthispredicamentonly arisesbecauseipsaisunnecessarilyadoptingan allornothing approach.sofarasweare aware,thereisnoreasonwhythisshouldbethecase. Instead,IPSAcouldsimplyincludewithinthenewschemeanoptionforMPs,iftheysowish, to pay additional contributions to provide an uplift from the proposed level of survivor s pensions, up to the current levels. This would be costͳneutral for the taxpayer and so consistentwithipsa spositionthatitseesnoreasonwhythetaxpayershouldcontinueto fundthecurrentlevels.butbyenablingthosempswhowishtopayforthisbenefittodoso, IPSAwouldbeestablishingaschemewhichrecognisesthatthereis(andshouldcontinueto be)diversityinthefinancialcircumstances,backgroundsandneedsofmps. 12

15 HavingdiscussedsuchafacilitywiththeHouseofCommonsPensionsUnitandthePCPF's third party administrators (rpmi), we understand that offering it on an individual basis wouldnotgiverisetoanyparticularadministrativedifficulties.underipsa'sproposalsas they stand, there would be different levels of contributions and ancillary benefits for differentmembersanyway(arisingfromthetransitionalprotections). Question12:DoyouagreethattheGreatOfficersofStateshouldbeabletoparticipatein themp spensionschemeinthesamewayasothermps? Yeswedo.WenotethatlegislativeamendmentstotheRulesofthePCPFwillneedtobe madebothbyipsaandthecabinetofficeinrelationtothemps SchemeandtheMinisters Scheme respectively. We urge IPSA to liaise with the Cabinet Office and the Trustees to ensurethattheseamendments,tobemadeinduecourse,interactasintended. GENERALPOINTS We note that IPSA proposals for the new scheme, summarised at paragraph 126 of the consultation,includearetirementagewhichisthehigherofstatepensionageandage65. We would like to see IPSA mirror HM Government s commitment to keep this link under review 2. Weareconcernedto ensurethatthe implementationof the newschemeruns smoothly. There will be a significant amount of work for our secretariat team and third party administrators to do, such as reprogramming IT systems, developing and testing benefit calculationroutinesandthepreparationanddistributionofmembercommunications.this is a particular concern given that implementation will coincide with a General Election, whichwillinevitablyresultinaspikeinthelevelofadministrativeworkduetotheturnover inthemembershipofthepcpf.weanticipatethattheimplementationworkshouldbegin inlate2013andwouldthereforeurgeipsatofinalisethenewschemeinsufficienttimeto facilitatethis. 2 Seeparagraph2ofAnnexAtotheMCS sconsultationdocumentoffebruary2013ontheproposedfuture schemedesignfortheministerialpensionschemewhichreads TheGovernmentwillkeepunderreviewthe linkbetweennormalpensionageinthepublicserviceschemes(includingtheministerialpensionscheme)and StatePensionAgetodeterminewhetherthelinkbetweenthetwocontinuestobeappropriate. 13

16 Arelatedpointis that theproposedchangestothe benefit structure, combinedwiththe proposed increase in salary, could give rise to tax issues for individual members (in particular, given the Annual Allowance restrictions on tax relief). It would therefore be helpfulifthechangescouldbeconfirmedinsufficienttimetoallowmemberstomanage theseissuesappropriately. NEXTSTEPS WenotethatIPSArequiresresponsestothisconsultationby20October2013andwillthen announceitsfinaldecisionbytheendof2013.therearesomeissuesonwhichipsahas committedtofurtherdiscussionswiththetrustees,someofwhicharereferencedabove. We look forward to engaging with IPSA on these as soon as possible, with a view to resolvingoutstandingissuesbeforethefinaldecisionisannounced. 25October

17 TheParliamentaryContributoryPensionFund TheMPs PensionScheme Introduction 1. Thefollowingtermshavethefollowingmeaningswithinthismemorandumandthe scheduletoit: (a) CurrentSchememeansthecurrentarrangementsforpensionsforMPsand certainofficeholders. (b) IPSAmeanstheIndependentParliamentaryStandardsAuthority; (c) Paragraph8Schememeansaschemecontainingprovisionabout(a)the administrationofthefund,(b)themanagementofthefund'sassets,(c)the indemnificationoftrustees(andformertrustees)ofthefund,(d)the proceedingsofthetrusteesofthefund,and(e)theapplicationofthefund's assetsinconnectionwiththemattersin(a) (d),whichhasbeenmadebyipsa underparagraph8ofschedule6tothe2010act. (d) Paragraph12Schememeansaschemecontainingprovisionaboutthe applicationoftheassetsofthefundinortowardstheprovisionofpensionsfor orinrespectofpersonswithserviceasamemberofthehouseofcommonsin respectofthatservice,whichhasbeenmadebyipsaunderparagraph12of schedule6tothe2010act;and (e) TrusteesmeansthetrusteesoftheFund. 2. CapitalisedtermsusedbutnotdefinedhavethemeaninggiventothemintheScheme. 3. Paragraph8ofschedule6tothe2010ActprovidesthatIPSAmaymakeanParagraph8 Scheme. 4. Paragraph12ofschedule6tothe2010ActprovidesthatIPSAmaymakeaParagraph12 Scheme. 5. WitheffectonandfromtheCARECommencementDate,IPSAintendstomakethe SchemeinordertoamendtheCurrentScheme. 15

18 6. Inaccordancewithparagraph9(1)ofschedule6tothe2010ActtheTrusteeshave consentedtoipsamakingtheadministrationscheme,generalrule2ofthescheme (Definitions)totheextentsuchdefinitionsarerequiredtointerprettheAdministration Schemeandhaveconsentedtotheirterms. 7. Inthecourseofpreparingthismemorandum,IPSAhas: a. consultedwiththetreasury,theministerforthecivilservice,personsthatipsa considerstorepresentthoselikelytobeaffectedbytheadministrationscheme,and anyotherpersonipsaconsidersappropriate;and (f) sentacopyoftheadministrationscheme,andastatementofthereasonsfor makingtheadministrationschemetothespeakerofthehouseofcommonsfor layingbeforethehouseofcommons, asrequiredbyparagraphs9(2)and9(3)ofschedule6tothe2010act. 8. Inthecourseofpreparingthismemorandum,IPSAhas: a. consultedwiththetreasury,theministerforthecivilservice,thetrustees,persons thatipsaconsiderstorepresentthoselikelytobeaffectedbythescheme,the GovernmentActuary,theReviewBodyonSeniorSalariesandanyotherpersonIPSA considersappropriate;and (g) sentacopyofanyrepresentationsmadetotibythetrusteesinresponseto consultationunderparagraph15(1)ofschedule6tothe2010act,thescheme, andastatementofthereasonsformakingtheschemetothespeakerofthe HouseofCommonsforlayingbeforetheHouseofCommons, asrequiredbyparagraphs15(1)and15(2)ofschedule6tothe2010act. 16

19 SCHEDULE1 TheMPs PensionScheme 1. Inexerciseofitspowersunderparagraphs8and12ofschedule6tothe2010Actandall otherenablingpowers,ipsaherebymakestheschemeinordertoamendtheprovisions ofthecurrentschemewitheffectonandfromthecarecommencementdate. 2. TheAdministrationSchemeshallapplytotheentireFund. 3. TotheextentthatanyprovisionsoftheFundapplicablepriortotheCARE CommencementDateareequivalentto,coverthesamepowerasorconflictwiththe provisionsintheadministrationscheme,theyshallbedisappliedandhavenoeffect afterthecarecommencementdate. 4. TheSchemeshallonlyapplyinrespectofpersonswhoaccruerightsundertheFundin respectofserviceonorafterthecarecommencementdate. 5. Fortheavoidanceofdoubt,theSchemeshallnotapplytorightsundertheFundin respectofanypersonwheresuchrightsrelateexclusivelytoservicepriortothecare CommencementDate.Suchrightsshallcontinuetobegovernedbytheprovisionsof thefundasconstitutedimmediatelypriortothecarecommencementdate,exceptto theextentsetoutinparagraphs2and3above. 17

20 Contents PARTAͲADMINISTRATIONSCHEME Paragraph8scheme AppointmentandremovalofTrustees ProceedingsofTrustees Trusteeremunerationandliability AdministrationandmanagementoftheFund PaymentstoandfromtheFund Investment Accountsandvaluations...27 PARTBͲBENEFITSSCHEMEͲGENERALRULES Paragraph12scheme Definitions Interpretation Statutoryrequirements Paymentoftax Lifetimeallowanceandothertaxarrangements Transfersout Transfersin PensionSharing Deathbenefitnominations MemberswithFSandCAREbenefits AVCScheme ContractingͲout...62 PARTCͲBENEFITSSCHEMEͲCARESECTION MembershipoftheCARESection Transitionalprovisionsandspecialcases OptingoutofCAREParticipation

21 4 OptingintoCAREParticipation ContributionsbyCAREParticipants Normalretirementpension Earlyretirementpension Illhealthretirementpension Commutationatretirement Totalcommutation Earlyleavers pensionoptions Earlyleavers transfersandrefunds DeathofaCAREParticipant DeathofaCAREDeferredPensioner DeathofaCAREPensioner Pensionsforsurvivors Pensionsforchildren AddedPension,EffectivePensionAgeandEarlyRetirementReductionWaiver Paymentofpensions...81 PARTDͲBENEFITSSCHEMEͲFSSECTION Existingbenefits MembershipforMembersoftheHouseofCommons MembershipforPrimeMinistersandSpeakers MembershipforOfficeHolders RighttooptoutforMembersoftheHouseofCommons RighttooptoutforOfficeHolders MembersoftheHouseofCommonsandOfficeHoldersreaching75before6April Members of the House of Commons and Office Holders reaching 75 after 5 April RighttooptinforMembersoftheHouseofCommons RighttooptinforOfficeHolders

22 11 ContributionsbyFSParticipatingMembers ContributionsbyparticipatingOfficeHolders EarningsCap ActualReckonableService AggregateReckonableService EntitlementofFSPensionerMembers AmountpayabletoFSPensionerMembers EntitlementofFSPensionerOfficeHolders AmountpayabletoFSPensionerOfficeHolders PermittedMaximumpensions:FSPensionerswhojoinedbefore1stJune PermittedMaximumpensions:FSPensionerswhojoinedafter1June GuaranteedMinimumPensions Durationofpensions Commutationintolumpsum EarlyretirementforMembers EarlyretirementforOfficeHolderswhohavebeenMembers CutͲoffdateandMinimumPensionAge IllͲhealthpensionsbasedonserviceasanFSParticipatingMember IllͲhealthpensionsbasedonserviceasanOfficeHolder IllͲhealthpensionsforformerMembers IllͲhealthpensionsforformerOfficeHolders AdditionalprovisionsrelatingtoillͲhealthpensions IllͲhealthdefinitions ReviewofillͲhealthpensions EqualTreatment Pensions for widows, widowers, surviving civil partners and Surviving Same Sex Spouses PensionsforSurvivingAdultDependants PensionsforChildren

23 39 DeathinserviceofFSParticipatingMember EnhancementofinitialAdultSurvivors'pensions Meaningof"BasicorProspectivePensionorPensions" ReductionsinAdultSurvivors'pensions Restrictionontheamountofdependants'schemepensionsunderFinanceAct Gratuityondeathinservice Entitlementtofiveyearguarantee GuaranteesforAdultSurvivors GuaranteeswherechildrenbutnoAdultSurvivor Guaranteeswherenosurvivors:deathbefore Guaranteeswherenosurvivors:deathafterreaching MembersexercisingoptionunderFSRule7or PowertoremoveAdultSurvivor'spensiononchangeofstatus DeceasedFSPensionerOfficeHolders Refundtocontributor Refundafterdeath RefundofPrimeMinisters'andSpeakers'Contributions RefundofLordChancellors'Contributions DeemedContributions Pensiondebits PurchaseofAddedYearsbyFSParticipatingMembers Revocations,savingsandtransitionalprovisions Enhancedprotection OptiontoceaseContributions EffectofoptiontoceaseContributions Surrenderofexcessrightsforthepurposeofobtainingenhancedprotection Surrendertoavoidrelevantbenefitaccrual ElectionforseparatetreatmentonbecominganFSParticipantagain

24 67 Effectofelection Schedules Schedule1:CostCapValuations Schedule2:MaximumPensionsundertheFSSection Schedule3:MaximumlumpsumsundertheFSSection Schedule4:PercentageAbatementofPensionEntitlement Schedule5:PurchaseofAddedYears Schedule6:Revocations Schedule7:ReckonableService Schedule8:PensionEntitlement Schedule9:EarlyRetirementandEarlyAbatedPensions Schedule10:IllͲHealthPensions Schedule11:Widows,WidowersandChildren Schedule12:GratuitiesonDeathafterRetirement Schedule13:Refunds Schedule14:Transitionalprovisions Schedule15:Addedpension Schedule16:TheAVCScheme Schedule17:ContractingͲout

25 PARTAͲADMINISTRATIONSCHEME 1 Paragraph8scheme 1.1 PartAoftheseFundRulesconstitutesanadministrationschememadeunder paragraph8ofschedule6tothe2010act.totheextentthatthispartausesterms definedingeneralrule2,thosetermsalsoformpartofthisadministrationscheme. 1.2 AdministrationRules2to8applytotheextentthattheTrusteesexercisefunctions inrelationtothefund.totheextentthatanyprovisionsofthefundapplicable priortothecarecommencementdateareequivalentto,coverthesamepowersas orconflictwiththeprovisionsintheadministrationscheme,theyshallbedisapplied andhavenoeffectafterthecarecommencementdate.administrationrules2to8 applytotheavcschemecontainedinschedule16exceptwherecontraryprovisions appearinthatschedule. 2 AppointmentandremovalofTrustees 2.1 TheTrusteesoftheFundshallbenominatedorappointed,andmayresignorbe removed,inaccordancewithschedule6tothe2010act. 3 ProceedingsofTrustees 3.1 TheTrusteesmayactbyamajorityofthosepresentatanymeetingoftheTrustees atwhichaquorumispresent. 3.2 TheprocedureoftheTrusteesshall,subjecttotheprovisionsofthese AdministrationRules,besuchastheTrusteesmaydetermine,andthequorumfor anymeetingofthetrusteesshallbethree. 4 Trusteeremunerationandliability 4.1 NoTrusteeshallbeentitledtobepaidforactinginthatcapacityoranyother capacityauthorisedbythefund,exceptwiththepriorwrittenconsentofipsaandin accordancewithschedule6tothe2010act.whereipsaconsentstothe remunerationofatrustee,suchremunerationshallbepaidfromthefund. 23

26 4.2 Subjecttosection33ofthe1995Act,eachTrusteeandformerTrusteeshallbe indemnifiedoutofthefundagainstanyactions,claims,costs,losses,damagesand expensesarisingoutofanythingdoneoromittedtobedonebyhiminthe performanceorpurportedperformanceofhisfunctionsexceptwhenthetrusteeor formertrustee,asthecasemaybe,hasacteddishonestly,inbadfaithorrecklessly. 4.3 ThereshallnotbepurchasedoutoftheFundanyindemnityinsurancecoveringany oftheliabilitiesmentionedinadministrationrule4.2above(includingthosewhere theexceptionapplies). 4.4 TheTrusteesmayrelyingoodfaithonanyinformationrelevanttotheFund(about individualsorotherwise)suppliedtothembyoronbehalfofanyactualor prospectivebeneficiaryofthefundasconclusiveevidenceofthemattertowhichit relatesandwithoutbeingresponsibleforanyresultingloss. 5 AdministrationandmanagementoftheFund 5.1 SubjecttotheprovisionsgoverningtheFundandthe2010Act,theTrusteesshall haveallsuchpowersanddiscretionsastheymayfromtimetotimerequireforthe managementandadministrationofthefund. 5.2 Subjecttosection34ofthe1995Act,theTrusteesmaydelegatealloranyoftheir powers,dutiesanddiscretionstoanypersononsuchtermsandforsuchperiodsas theythinkfit,andanysuchdelegatemaysubdelegateanysuchfunction,sofarasis consistentwiththetermsofitsappointment. 5.3 TheTrusteesmayemploysuchofficers,servantsandagentsinconnectionwiththe functionsofadministrationofthefundandthemanagementandapplicationofthe assetsofthefundastheythinkfit,andanysuchagentmaysubdelegateanysuch function,sofarasisconsistentwiththetermsofitsappointment. 5.4 TheTrusteesmaysettleorcompromiseanyclaimordisputeinrelationtotheFund, providedthattheyobtaintheconsentofipsaortheministerforthecivilserviceas appropriateinaccordancewithschedule6tothe2010act. 24

27 5.5 Whereonthedeathofanypersonthereisduetothedeceasedorhispersonal representativesfromthetrusteesasumwhich(ifanypartofitduebywayof Interestisdisregarded)doesnotexceedtheamountofthelimitforthetimebeing specifiedbyvirtueofordersmadefromtimetotimeundersection6ofthe AdministrationofEstates(SmallPayments)Act1965,probateorotherproofofthe titleofthepersonalrepresentativesofthedeceasedmaybedispensedwith,andthe Trusteesmaypaythewholeoranypartofthatsumtothoserepresentativesorto theperson,ortooramonganyoneormoreofanypersons,appearingtothe Trusteestobebeneficiallyentitledtothepersonalormovableestateofthe deceased. 5.6 AnypersontowhomapaymentismadeunderAdministrationRule5.5,andnotthe Trustees,shallthereafterbeliabletoaccountfortheamountpaidtohimunderthat AdministrationRule IftheTrusteesreceivenoticeinwritingofanyclaimagainsttheestateofthe deceasedatanytimebeforetheyhavemadeafullpaymentunderadministration Rule5.5above,then,exceptwherethesumtobepaidappearstothemtobebona vacantia,theyshallnotmakeany,or(asthecasemaybe)anyfurther,payment underthatadministrationrule5.5toanypersonotherthanthepersonal representativesofthedeceaseduntiltheclaimissatisfiedorwithdrawn. 6 PaymentstoandfromtheFund 6.1 AllpensionsandothersumspayableunderthetermsoftheFundbytheTrustees, includingcontributionsequivalentpremiumsandtransferpremiumspayablein respectofformercareparticipantsandfsparticipants,shallbepaidoutofthe Fund,andallsumsreceivedbytheTrusteesunderthetermsoftheFundshallbe paidintothefund. 6.2 Allexpensesincurredinconnectionwiththeadministrationandmanagementofthe Fund(includinganyfeepayabletotheComptrollerandAuditorGeneral)andthe remunerationandpensions,orcontributionstowardspensions,payabletoorin 25

28 respectofofficersandservantsemployedbythetrusteesshallbepaidoutofthe Fund. 6.3 TheassetsoftheFundshallformasinglenonͲsegregatedfund. 7 Investment 7.1 Withoutprejudicetothegeneralityoftheirpowersofinvestmentunderschedule6 tothe2010act,thetrusteesmayinparticularenterintoanyofthefollowing transactions: (a) thepurchasefromaninsurancecompany(asdefinedinsection275ofthe FinanceAct2004)andmaintenanceofanyannuityforthelifeofanyperson,or foranyotherperiod; (b) theestablishmentandmaintenanceofanypolicyoflifeassurance; (c) theunderwritingorsubͳunderwritingofanyfunds,securities,bonds, debentures,stocksorshares; (d) thepurchaseofanyassetwhichdoesnotproduceanincome; (e) thepurchaseofordealinginforeigncurrencies,options,tradedoptionor financialfutures; (f) themakingofsecuredorunsecuredloansofanyassetsofthefund,including cash,securities,bonds,debentures,stocksorshares; (g) thepurchaseofrealpropertyoranyinterestinrealproperty,inrelationtowhich thetrusteesmayactasiftheywereabsolutelyandbeneficiallyentitledtosuch property. 7.2 TheTrusteesmayplacealloranyoftheassetsoftheFundunderthecontrolof,orin thenameof,suchbodycorporateasnomineeforthemasmaybeappointedby themorontheirbehalf. 26

29 7.3 TheTrusteesmayraiseorborrowanymoney,uponsuchtermsastheythinkfit,for anyofthepurposesofthefundandmaysecuremoneybychargingalloranypartof thefundoranyparticularinvestmentinthefund. 7.4 TheTrusteesmayinsureanyassetoftheFundonsuchtermsastheythinkfit. 7.5 Notwithstandingregulation3(3)(c)oftheOccupationalPensionSchemes(Scheme Administration)Regulations1996,theTrusteesshallappointafundmanager. 7.6 TheTrusteesshallprepareandconsultonastatementofinvestmentprinciplesfor thefundinaccordancewithschedule6tothe2010act. 8 Accountsandvaluations 8.1 TheFundshallbevaluedbytheGovernmentActuaryinaccordancewiththe requirementsofschedule6tothe2010act. 8.2 ExchequercontributionsshallbepaidintotheFundinaccordancewithparagraphs 10and11ofschedule6tothe2010Act. 8.3 TheTrusteesshallkeepproperaccountsandshallprepareinrespectofeach financialyearofthefundstatementsofaccountinsuchformandinsuchmanneras thecomptrollerandauditorgeneralmaydirect. 8.4 TheComptrollerandAuditorGeneralshallexamineandcertifyeverystatementof accountpreparedunderadministrationrule8.3andshalllayacopyofeverysuch statement,togetherwithhisreportonit,beforethehouseofcommons. 27

30 PARTBͲBENEFITSSCHEMEͲGENERALRULES 1 Paragraph12scheme 1.1 PartsB,CandDoftheseFundRulesandSchedules1to17totheFundRules togetherconstituteaschememadeunderparagraph12ofschedule6tothe2010 Act. 1.2 TheprovisionsofthisPartBapplytobenefitspayableunderboththeCARESection andthefssection. 2 Definitions 2.1 IntheseFundRules,exceptwhereotherwisestatedorwherethecontextrequires otherwise: 1965ActmeanstheMinisterialSalariesandMembers'PensionsAct ActmeansthePensions(Increase)Act1971andassociatedlegislation;and wherethefundrulesprovidethatanyrevaluationorincreasesaretobeappliedin accordancewiththe1971act,suchrevaluationorincreasesshallbeappliedonthe basisthatthepensionauthority(asdefinedinthe1971act)appliestherevaluation orincreases(asapplicable)prescribedforthepurposesofthe1971actinfull. 1972ActmeanstheParliamentaryandotherPensionsAct ActmeanstheSocialSecurityPensionsAct ActmeansthePensionSchemesAct ActmeansthePensionsAct ActmeanstheWelfareReformandPensionsAct1999orcorresponding NorthernIrelandlegislationandreferencestolegislationunderthatActalsoreferto correspondingnorthernirelandlegislation 2000ActmeanstheFinancialServicesandMarketsAct ActmeanstheIncomeTaxAct

31 2010ActmeanstheConstitutionalReformandGovernanceAct2010 AccruedPensionRightsandanyequivalentexpressionmeansuchrightsaftertaking intoaccountanyreductionappliedinaccordancewithsection31ofthe1999act. ActualPeriodofReckonableServiceasanFSParticipatingMember,ActualPeriod ofreckonableserviceasanfsparticipatingofficeholderandactualperiodof ReckonableServiceasanFSParticipanthavethemeaningsassignedtothembyFS Rule14 Added(Combined)PensionmeansadditionalpensionpurchasedbyaCARE Participantunderparagraph3ofSchedule15 Added(Participant)PensionmeansadditionalpensionpurchasedbyaCARE Participantunderparagraph2ofSchedule15. AddedPensionmeanseitherAdded(Participant)PensionorAdded(Combined) Pension AddedPensionNoticemeansanoticegivenbyaCAREParticipantunderparagraph 7or11ofSchedule15requestingthepurchaseofAddedPension AddedYearmeansaperiodofreckonableserviceasanFSParticipatingMember purchasedunderfsrule59andschedule5includingapartofayearexpressedin daysandanyfutureaddedyear AdministrationRulereferstoaprovisionintheAdministrationSchemesetoutin PartAoftheFundRulesand/oranyrelevantprovisionintheSchedules AdministrationSchememeansthescheme,moreparticularlydescribedin AdministrationRule1.1asamendedorinforcefromtimetotime Administratormeansthepersonwhoistheschemeadministratorforthepurposes ofsection270ofthefinanceact2004 AdultSurvivormeansawidow,widower,survivingcivilpartnerorSurvivingSame SexSpouseor,inrelationtoapersonwhowasaparticipantatanytimeonorafter3 November2004,thatperson'sSurvivingAdultDependant 29

32 AggregatePeriodofReckonableServiceasanFSParticipatingMember,Aggregate PeriodofReckonableServiceasanFSParticipatingOfficeHolderandAggregate PeriodofReckonableServiceasanFSParticipanthavethemeaningsassignedto thembyfsrule15 AVCSchemehasthemeaninggiveninSchedule16 BasicorProspectivePensionorPensionshasthemeaningassignedtoitbyFS Rule40 CARECommencementDatemeansthedayafterthedateofthefirstgeneral electionoccurringafter1april2015 CARECredithasthemeaninggiveninCARERule6.3 CAREDeferredPensionermeansapersonwhohasbeenaCAREParticipantbut who: (a) hasceasedcareparticipation; (b) isnotinreceiptofapensionunderthecaresection;and (c) isentitledorprospectivelyentitledtoapensionunderthecaresectionwhichis notyetinpayment. CAREMembermeansapersonwhoisorhasbeenaCAREParticipantandcontinues tohaveacurrentorprospectiveentitlementtobenefitsunderthecaresection,and includeseachcareparticipant,caredeferredpensionerandcarepensioner. CAREParticipantmeansapersonwhohasbeenadmittedtoparticipateintheCARE Sectioninaccordancewithitsprovisionsandwhohasnot: (a) ceasedtobeamemberofthehouseofcommonsoranofficeholder;or (b) withdrawnfromoroptedoutofactivemembershipofthecaresection and CAREParticipation shallbereadaccordingly. 30

33 CAREPensionermeansapersonwhohasbeenaCAREParticipantorCAREDeferred PensionerwhoisreceivingapensionfromtheFund(includinganearlyretirement pensionoranillhealthpension) CARERulereferstoaprovisioninPartCoftheFundRulesand/oranyrelevant provisioninschedules1,14,15or17. CARESectionmeansthesectionoftheSchemethatprovidesbenefitsonacareer averagebasis,thetermsofwhicharesetoutinpartcofthefundrulesand/orthe relevantprovisionsinschedules1,14,15or17. CAREServicemeanstheperiodorperiodsduringwhichapersonisaCARE ParticipantinRelevantServiceinrespectofwhichhepaysContributionsunderCARE Rule5.1,butdoesnotincludeanyperiodduringwhichheisanOptedOutMember. ForthepurposesofcalculatingthebenefitspayabletoorinrespectofaCARE Member,unlesstheTrusteesandIPSAagreeotherwiseinrelationtoanyparticular circumstanceormember(orgroupofmembers): (a) CAREServiceshallincludeanyperiodofservicecreditedtohimintheCARE SectioninrespectofatransferintotheFund;and (b) ifhehascareserviceasbothamemberofthehouseofcommonsandasan OfficeHolder,hisbenefitsineachcapacityshallbecalculatedseparately. Accordingly,CAREServiceduringwhichthepersonisaMemberoftheHouseof CommonsonlyshallnotcounttowardsthecalculationofhisbenefitsasanOffice Holder,andviceversa. CAREYearmeanseachperiodof12monthscommencingon1April Category1contributormeans: (a) inrespectofanyperiodbeginningonorafter5july2001andendingbefore 15July2002: anfsparticipatingmemberwhoisamemberofthehouseof Commonson15July2002or 31

34 anfsparticipatingofficeholderwhoisanofficeholderon15july 2002, whoopts,before1january2003,tocontributetothefundonorafter5july 2001atarateof9%; (b) inrespectofanyperiodbeginningonorafter15july2002andendingbefore 1April2008: anfsparticipatingmemberor aparticipatingofficeholder, whodoesnotopt,before1january2010,tocontributetothefundatareduced rate; (c) inrespectofanyperiodbeginningonorafter1april2008andendingbefore1 April2009: anfsparticipatingmemberwho: (A) (B) doesnotopt,before1january2010,tocontributetothefund atareducedrateand,onorafterthatdate,eitherdoesnot exercisetheoptiontoselectamembershipcategoryinfs Rule11.4orexercisesthatoptionwitheffectfromadateonor after1april2009;or exercisestheoptiontoselectamembershipcategoryinfs Rule11.4andwhosequalifyingnoticespecifiesthatthe MemberwishestocontributetotheFundasaCategory1 contributorwitheffectonandfromthelaterof1april2008or thedateofthefsparticipatingmember'selectionorreͳ electiontothehouseofcommonsor anfsparticipatingofficeholderwho: (A) doesnotopt,before1january2010,tocontributetothefund atareducedrateand,onorafterthatdate,eitherdoesnot 32

35 exercisetheoptiontoselectamembershipcategoryinfs Rule12.4orexercisesthatoptionwitheffectfromadateonor after1april2009or (B) exercisestheoptiontoselectamembershipcategoryinfs Rule12.4andwhosequalifyingnoticespecifiesthattheOffice HolderwishestocontributetotheFundasaCategory1 contributorwitheffectonandfromthelaterof1april2008or thedateoftheparticipatingofficeholder'scurrent appointmentasanofficeholderand (d) inrespectofanyperiodbeginningonorafter1april2009: anfsparticipatingmemberwho: (A) (B) doesnotopt,before1january2010,tocontributetothefund atareducedrate,oronorafterthatdatedoesnotexercise theoptiontoselectamembershipcategoryinfsrule11.4or (forfsparticipatingmemberson1april2012andinrespectof theperiodbeginningon1april2012)infsrule11.15or exercisestheoptiontoselectamembershipcategoryinfs Rule11.4or(forFSParticipatingMemberson1April2012and inrespectoftheperiodbeginningon1april2012)infsrule 11.15andwhosequalifyingnoticespecifiesthattheMember wishestocontributetothefundasacategory1contributor; or anfsparticipatingofficeholderwho: (A) doesnotopt,before1january2010,tocontributetothefund atareducedrate,oronorafterthatdatedoesnotexercise theoptiontoselectamembershipcategoryinfsrule12.4or (forparticipatingofficeholderson1april2012andinrespect oftheperiodbeginningon1april2012)infsrule12.16;or 33

36 (B) exercisestheoptiontoselectamembershipcategoryinfs Rule12.4or(forparticipatingOfficeHolderson1April2012 andinrespectoftheperiodbeginningon1april2012)infs Rule12.16andwhosequalifyingnoticespecifiesthatthe OfficeHolderwishestocontributetotheFundasaCategory1 contributor. Category2contributormeans: (a) inrespectofanyperiodbeginningonorafter5july2001andendingbefore 15July2002: anfsparticipatingmemberor aparticipatingofficeholder, whodoesnotopt,before1january2003,tocontributetothefundonorafter5 July2001atarateof9% (b) inrespectofanyperiodbeginningonorafter15july2002andendingbefore 1April2008: anfsparticipatingmemberor aparticipatingofficeholder, whoopts,before1january2010,tocontributetothefundatareducedrate (c) inrespectofanyperiodbeginningonorafter1april2008andendingbefore1 April2009: anfsparticipatingmemberwho: (A) opts,before1january2010,tocontributetothefundata reducedrateandeitherhasnotsubsequentlyexercisedthe optiontoselectamembershipcategoryinfsrule11.4orhas subsequentlyexercisedthatoptionwitheffectfromadateon orafter1april2009or 34

37 (B) exercisestheoptiontoselectamembershipcategoryinfs Rule11.4(a)andwhosequalifyingnoticespecifiesthatthe MemberwishestocontributetotheFundasaCategory2 contributorwitheffectonandfromthelaterof1april2008or thedateofthefsparticipatingmember'selectionorreͳ electiontothehouseofcommonsor anfsparticipatingofficeholderwho: (A) (B) opts,before1january2010,tocontributetothefundata reducedrateandeitherhasnotsubsequentlyexercisedthe optiontoselectamembershipcategoryinfsrule12.4orhas subsequentlyexercisedthatoptionwitheffectfromadateon orafter1april2009;or exercisestheoptiontoselectamembershipcategoryinfs Rule12.4(a)andwhosequalifyingnoticespecifiesthatthe OfficeHolderwishestocontributetotheFundasaCategory2 contributorwitheffectonandfromthelaterof1april2008or thedateoftheparticipatingofficeholder'scurrent appointmentasanofficeholderand (d) inrespectofanyperiodbeginningonorafter1april2009: anfsparticipatingmemberwho: (A) (B) opts,before1january2010,tocontributetothefundata reducedrateandhasnotsubsequentlyexercisedtheoptionto selectamembershipcategoryinfsrule11.4or(forfs ParticipatingMemberson1April2012andinrespectofthe periodbeginningon1april2012)infsrule11.15;or exercisestheoptiontoselectamembershipcategoryinfs Rule11.4or(forFSParticipatingMemberson1April2012and inrespectoftheperiodbeginningon1april2012)infsrule 35

38 11.15andwhosequalifyingnoticespecifiesthattheMember wishestocontributetothefundasacategory2contributor; or anfsparticipatingofficeholderwho: (A) (B) opts,before1january2010,tocontributetothefundata reducedrateandhasnotsubsequentlyexercisedtheoptionto selectamembershipcategoryinfsrule12.4or(for participatingofficeholderson1april2012andinrespectof theperiodbeginningon1april2012)infsrule12.16or exercisestheoptiontoselectamembershipcategoryinfs Rule12.4or(forparticipatingOfficeHolderson1April2012 andinrespectoftheperiodbeginningon1april2012)infs Rule12.16andwhosequalifyingnoticespecifiesthatthe OfficeHolderwishestocontributetotheFundasaCategory2 contributor Category3contributormeans: (a) inrespectofanyperiodbeginningonorafter1april2008andendingbefore1 April2009: anfsparticipatingmember: (A) (B) whoexercisestheoptioninfsrule11.4(a)toselecta membershipcategoryand whosequalifyingnoticespecifiesthatthememberwishesto contributetothefundasacategory3contributorwitheffect onandfromthelaterof1april2008orthedateofthefs ParticipatingMember'selectionorreͲelectiontotheHouseof Commonsor aparticipatingofficeholder: 36

39 (A) (B) whoexercisestheoptioninfsrule12.4(a)toselecta membershipcategoryand whosequalifyingnoticespecifiesthattheofficeholderwishes tocontributetothefundasacategory3contributorwith effectonandfromthelaterof1april2008orthedateofthe participatingofficeholder'scurrentappointmentasanoffice Holderand (b) inrespectofanyperiodbeginningonorafter1april2009: anfsparticipatingmemberwhoexercisestheoptiontoselecta membershipcategoryinfsrule11.4or(forfsparticipating Memberson1April2012andinrespectoftheperiodbeginningon1 April2012)inFSRule11.15andwhosequalifyingnoticespecifiesthat thememberwishestocontributetothefundasacategory3 contributoror anfsparticipatingofficeholderwhoexercisestheoptiontoselecta membershipcategoryinfsrule12.4or(forparticipatingoffice Holderson1April2012andinrespectoftheperiodbeginningon1 April2012)inFSRule12.16andwhosequalifyingnoticespecifiesthat theofficeholderwishestocontributetothefundasacategory3 contributor ChairmanofaSelectCommitteemeanstheChairmanofaselectcommittee appointedunderthestandingordersofthehouseofcommonswhoiseligiblefor additionalsalaryinrespectofthatappointment ChairmanofaStandingCommitteemeanstheChairmanofastandingcommittee appointedunderthestandingordersofthehouseofcommonswhoiseligiblefor additionalsalaryinrespectofthatappointment Childinrelationtoanydeceasedpersondoesnotincludeanypersonwhoisnota dependantofthedeceasedpersonforthepurposesofsection167ofthefinance 37

40 Act2004(pensiondeathbenefitrules)becauseparagraph15(2)or(3)ofschedule28 tothatactappliestohim,butsubjecttothatitincludesanillegitimatechild,a stepchild,anadoptedchildoranaturalchild(whetherlegitimateorillegitimate)who hadnotbeenbornasatthedateoftherelevantperson sdeath ConsolidatedFundmeanstheConsolidatedFundoftheUnitedKingdom ConsumerPricesIndexmeans: (a) thegeneralindexofconsumerprices(forallitems)publishedbythestatistics Board;or (b) wherethatindexisnotpublishedforamonth,anyindexorfigurespublishedby theboardandwhichisdeterminedbythetrusteestobeanappropriate substitute. ContractedͲoutEmploymentshallbeconstruedinaccordancewithsection8ofthe 1993Act Contribution(exceptintheexpression"ContributionsEquivalentPremium"),means anyamountdeductedfromsalaryordeemedtohavebeenpaidundersection5of the1965act,undersection3orsection4ofthe1972actorundercarerule5orfs Rule11orFSRule12andanyreferencetothepaymentofaContributionshallbe construedaccordingly ContributionsEquivalentPremiumhasthesamemeaningasinsection55(2)ofthe 1993Act CostCapCosthasthemeaninggiveninSchedule1,paragraph10. CostCapValuationmeansavaluationofthecostofaccrualintheCARESection, carriedoutinaccordancewithschedule1. CostCapValuationDatehasthemeaninggiveninSchedule1,paragraphs3and4. EarlyRetirementReductionWaivermeansthedisapplicationofthereductiontoa CAREMember spensionthatwouldotherwiseapplyundercarerule7.2or11.6,by thepaymentofalumpsumunderparagraph20ofschedule15 38