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(4) In paragraph 36(5)(a) (meaning of “pensionable service”) after “credit” insert
“(except for the purposes of paragraphs 21 and 21A)”.

20 In the Pensions Act 2008 omit paragraphs 10 and 11 of Schedule 8 (which
amend paragraph 21 of Schedule 7 to the Pensions Act 2004).

5Postponement of compensation

21 Schedule 7 to the Pensions Act 2004 (pension compensation provisions) is
amended as follows.

22 For paragraph 25A (deferral of compensation) and the heading before it
substitute—

10Postponement of compensation

25A (1) Regulations may prescribe circumstances in which, and
conditions subject to which—

(a) a person who becomes entitled to periodic compensation
under paragraph 5, 8, 11 or 15 may elect to postpone the
15commencement of periodic compensation under that
paragraph, and

(b) a person who becomes entitled to lump sum compensation
under paragraph 7, 10, 14 or 19 may elect to postpone the
payment of lump sum compensation under that
20paragraph.

(2) Where the commencement of periodic compensation under
paragraph 5, 8, 11 or 15 ceases to be postponed, the Board must
determine—

(a) the amount mentioned in sub-paragraph (3)(a) of that
25paragraph, as at the time the periodic compensation would
have commenced if its commencement had not been
postponed, and

(b) the amount in paragraph (a), increased in accordance with
actuarial factors published by the Board.

(3) 30References in this Schedule to the amount of an actuarial increase
under this paragraph, in relation to periodic compensation, are to
the difference between the amounts in sub-paragraphs (2)(a) and
(2)(b).

(4) Where the payment of lump sum compensation under paragraph
357, 10, 14 or 19 ceases to be postponed, the Board must determine—

(a) the relevant amount, as at the time the lump sum
compensation would have been payable if its payment had
not been postponed, and

(b) the amount in paragraph (a), increased in accordance with
40actuarial factors published by the Board.

(5) References in this Schedule to the amount of an actuarial increase
under this paragraph, in relation to lump sum compensation, are
to the difference between the amounts in sub-paragraphs (4)(a)
and (4)(b).

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(6) In sub-paragraph (4) the “relevant amount” means (as
appropriate)—

(a) the amount mentioned in paragraph 7(2)(a),

(b) the aggregate of the amounts mentioned in paragraph
510(2)(a) and (b),

(c) the amount mentioned in paragraph 14(3)(a), or

(d) the amount mentioned in paragraph 19(3)(a).

23 (1) In paragraph 5(3) (periodic compensation for postponed pensioner at
assessment date)—

(a) 10omit “and” at the end of paragraph (a), and

(b) after that paragraph insert—

(aa) if the commencement of periodic compensation
under this paragraph has been postponed for any
period by virtue of paragraph 25A, the amount of
15the actuarial increase under that paragraph, and.

(2) In paragraph 7(2) (lump sum compensation for postponed pensioner at
assessment date) for the words from “the amount” to the end substitute “the
aggregate of—

(a) the amount of the scheme lump sum which would have
20been payable had the postponement ceased immediately
before the assessment date, and

(b) if the payment of compensation under this paragraph has
been postponed for any period by virtue of paragraph 25A,
the amount of the actuarial increase under that
25paragraph.

(3) In paragraph 8(3) (periodic compensation for active member over pension
age at assessment date)—

(a) omit “and” at the end of paragraph (a), and

(b) after that paragraph insert—

(aa) 30if the commencement of periodic compensation
under this paragraph has been postponed for any
period by virtue of paragraph 25A, the amount of
the actuarial increase under that paragraph, and.

(4) In paragraph 10(2) (lump sum compensation for active member over
35pension age at assessment date)—

(a) omit “and” at the end of paragraph (a), and

(b) after paragraph (b) insert , and

(c) if the payment of compensation under this
paragraph has been postponed for any period by
40virtue of paragraph 25A, the amount of the
actuarial increase under that paragraph.

(5) In paragraph 11(3) (periodic compensation for active member under
pension age at assessment date)—

(a) omit “and” at the end of paragraph (a), and

(b) 45after that paragraph insert—

(aa) if the commencement of periodic compensation
under this paragraph has been postponed for any
period by virtue of paragraph 25A, the amount of
the actuarial increase under that paragraph, and.

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(6) In paragraph 14(3) (lump sum compensation for active member under
pension age at assessment date) for “the protected amount” substitute “the
aggregate of—

(a) the protected amount, and

(b) 5if the payment of compensation under this paragraph has
been postponed for any period by virtue of paragraph 25A,
the amount of the actuarial increase under that
paragraph.

(7) In paragraph 15(3) (periodic compensation for deferred member under
10pension age at assessment date)—

(a) omit “and” at the end of paragraph (a), and

(b) after that paragraph insert—

(aa) if the commencement of periodic compensation
under this paragraph has been postponed for any
15period by virtue of paragraph 25A, the amount of
the actuarial increase under that paragraph, and.

(8) In paragraph 19(3) (lump sum compensation for deferred member under
pension age at assessment date) for “the protected amount” substitute “the
aggregate of—

(a) 20the protected amount, and

(b) if the payment of compensation under this paragraph has
been postponed for any period by virtue of paragraph 25A,
the amount of the actuarial increase under that
paragraph.

(9) 25In paragraph 26 (compensation cap)—

(a) in sub-paragraphs (3)(c) and (6)(e) for “14(3)” substitute “14(3)(a)”,
and

(b) in sub-paragraphs (3)(e) and (6)(g) for “19(3)” substitute “19(3)(a)”.

24 (1) In paragraph 6 (periodic compensation for widow or widower of postponed
30pensioner at assessment date)—

(a) in sub-paragraph (3) after “including” insert “any actuarial increase
under paragraph 25A and”, and

(b) after sub-paragraph (3) insert—

(3A) If, on the day the postponed pensioner (“P”) died,
35commencement of P’s periodic compensation under
paragraph 5 was postponed by virtue of paragraph 25A,
assume for the purposes of sub-paragraph (3) that the
periodic compensation commenced immediately before
the date of P’s death.

(2) 40In paragraph 9 (periodic compensation for widow or widower of active
member over pension age at assessment date)—

(a) in sub-paragraph (3) after “including” insert “any actuarial increase
under paragraph 25A and”, and

(b) after sub-paragraph (3) insert—

(3A) 45If, on the day the active member (“A”) died,
commencement of A’s periodic compensation under
paragraph 8 was postponed by virtue of paragraph 25A,
assume for the purposes of sub-paragraph (3) that the

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periodic compensation commenced immediately before
the date of A’s death.

(3) In paragraph 13 (periodic compensation for widow or widower of active
member under pension age at assessment date)—

(a) 5in sub-paragraph (3)(a) after “including” insert “any actuarial
increase under paragraph 25A and”,

(b) in sub-paragraph (3)(b) after sub-paragraph (ii) insert—

(none) (assuming commencement of the periodic
compensation was not postponed by virtue of
10paragraph 25A)., and

(c) after sub-paragraph (3) insert—

(3ZA) For the purposes of sub-paragraph (3)(a), if on the day the
active member (“A”) died commencement of A’s periodic
compensation under paragraph 11 was postponed by
15virtue of paragraph 25A, assume that the periodic
compensation commenced immediately before the date of
A’s death.

(4) In paragraph 18 (periodic compensation for widow or widower of deferred
member under pension age at assessment date)—

(a) 20in sub-paragraph (3)(a) after “including” insert “any actuarial
increase under paragraph 25A and”,

(b) in sub-paragraph (3)(b) after sub-paragraph (ii) insert—

(none) (assuming commencement of the periodic
compensation was not postponed by virtue of
25paragraph 25A)., and

(c) after sub-paragraph (3) insert—

(3ZA) For the purposes of sub-paragraph (3)(a), if on the day the
deferred member (“D”) died commencement of D’s
periodic compensation under paragraph 15 was
30postponed by virtue of paragraph 25A, assume that the
periodic compensation commenced immediately before
the date of D’s death.

25 In paragraph 24(1) (commutation of periodic compensation) for “becomes
payable” substitute “commences”.

26 (1) 35In paragraph 25B (eligibility for terminal illness lump sum)—

(a) in sub-paragraph (4) in the definition of “relevant age”—

(i) in paragraph (a) omit “or deferred” and “or (as the case may
be) 25A”, and

(ii) in paragraph (b) omit “or deferred”, and

(b) 40after sub-paragraph (4) insert—

(5) Sub-paragraph (6) applies where—

(a) the commencement of a person’s periodic
compensation under paragraph 11 or 15 is
postponed by virtue of paragraph 25A, or

(b) 45the payment of a person’s lump sum compensation
under paragraph 14 or 19 is postponed by virtue of
that paragraph.

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(6) This paragraph applies as if—

(a) the person first becomes entitled to compensation
under the paragraph in question immediately after
the period of postponement ends, and

(b) 5in sub-paragraph (1)(b), for “if the person lived to
the relevant age, the person would become entitled
on attaining that age” there were substituted “if the
period of postponement ended, the person would
become entitled”.

(2) 10In paragraph 25E (effect of successful application for terminal illness lump
sum) after sub-paragraph (6) insert—

(7) Where on the granting of the application—

(a) the commencement of a person’s periodic compensation
under paragraph 11 or 15 is postponed by virtue of
15paragraph 25A, or

(b) the payment of a person’s lump sum compensation under
paragraph 14 or 19 is postponed by virtue of that
paragraph,

this paragraph applies as if the references to the person attaining
20the relevant age were references to the period of postponement
ending.

27 (1) Paragraph 28 (annual increase in periodic compensation) is amended as
follows.

(2) In sub-paragraph (3)—

(a) 25in the definition of “underlying rate” for “any of the paragraphs
mentioned in sub-paragraph (1)” substitute “paragraph 3 or 22”, and

(b) after that definition insert—

(3) 40In sub-paragraph (5)—

(a) in paragraph (a) for the second “the” substitute “each”,

(b) omit the “and” at the end of that paragraph, and

(c) after paragraph (b) insert—

(c) for the purposes of sub-paragraph (2), the
45definition of “underlying rate” in the case of
periodic compensation under paragraph 5, 8, 11 or
15 applies as if the reference in paragraph (b) of the
definition to the amount mentioned in sub-
paragraph (3)(aa) of the paragraph in question was

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a reference to that amount reduced by the
commutation percentage, and

(d) that amount (as so reduced) is attributable to post-
1997 service and pre-1997 service in the same
5proportions as that amount would have been so
attributable had no part of the periodic
compensation been commuted.

(4) After sub-paragraph (5) insert—

(5A) The amount mentioned in sub-paragraph (3)(aa) of paragraph 5, 8,
1011 or 15 is attributable—

(a) to post-1997 service, in so far as it relates to so much of the
amount mentioned in sub-paragraph (3)(a) of the
paragraph in question as is attributable to post-1997
service, and

(b) 15to pre-1997 service, in so far as it relates to so much of that
amount as is attributable to pre-1997 service.

(5B) Where the commencement of periodic compensation under
paragraph 5, 8, 11 or 15 has been postponed by virtue of paragraph
25A, this paragraph applies as if the person first becomes entitled
20to periodic compensation under the paragraph in question on the
day on which the periodic compensation commences.

28 (1) In paragraph 29 (Board’s powers to alter rates of revaluation and
indexation) after sub-paragraph (6) insert—

(6A) A determination under sub-paragraph (2) which has effect as
25mentioned in sub-paragraph (6)(b)(ii) may provide that, where the
payment of periodic compensation to a person is postponed by
virtue of paragraph 25A, the determination applies as if the person
first becomes entitled to the periodic compensation on the day on
which the periodic compensation commences.

(2) 30In paragraph 30 (Secretary of State’s powers to vary percentage paid as
compensation) after sub-paragraph (6) insert—

(6A) An order under this paragraph which has effect as mentioned in
sub-paragraph (6)(b)(ii) may provide that, where the payment of
compensation to a person is postponed by virtue of paragraph
3525A, the order applies as if the person first becomes entitled to the
compensation immediately after the period of postponement
ends.

Pension compensation sharing: postponement of compensation

29 Schedule 5 to the Pensions Act 2008 (pension compensation payable on
40discharge of pension compensation credit) is amended as follows.

30 (1) Omit paragraph 11 (deferral of compensation).

(2) In Part 4 after the Part heading insert—

Postponement of compensation

16A (1) Regulations may prescribe circumstances in which, and
45conditions subject to which, a person who becomes entitled to

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periodic compensation under paragraph 4 or 6 may elect to
postpone the commencement of periodic compensation under
that paragraph.

(2) Where the commencement of periodic compensation under
5paragraph 4 or 6 ceases to be postponed, the Board must
determine—

(a) the relevant amount, as at the time the periodic
compensation would have commenced if its
commencement had not been postponed, and

(b) 10the amount in paragraph (a), increased in accordance with
actuarial factors published by the Board.

(3) References in this Schedule to the amount of an actuarial increase
under this paragraph are to the difference between the amounts in
sub-paragraphs (2)(a) and (2)(b).

(4) 15In sub-paragraph (2) the “relevant amount” means (as
appropriate)—

(a) the amount mentioned in paragraph 4(3)(a), or

(b) the aggregate of the amounts mentioned in paragraph
6(3)(a) and (b).

31 (1) 20In paragraph 4(3) (periodic compensation for transferee over pension
compensation age on transfer day)—

(a) omit “and” at the end of paragraph (a), and

(b) after that paragraph insert—

(aa) if the commencement of periodic compensation
25under this paragraph has been postponed for any
period by virtue of paragraph 16A, the amount of
the actuarial increase under that paragraph, and.

(2) In paragraph 4(4) (provisions to which paragraph 4 is subject) after “subject
to” insert “paragraph 16A (postponement of compensation) and”.

(3) 30In paragraph 6(3) (periodic compensation for transferee under pension
compensation age on transfer day)—

(a) omit “and” at the end of paragraph (b), and

(b) after that paragraph insert—

(ba) if the commencement of periodic compensation
35under this paragraph has been postponed for any
period by virtue of paragraph 16A, the amount of
the actuarial increase under that paragraph, and.

(4) In paragraph 6(4) (provisions to which paragraph 6 is subject)—

(a) omit the entry for paragraph 11,

(b) 40omit “and” at the end of the entry for paragraph 15, and

(c) after that entry insert—

32 (1) In paragraph 5 (periodic compensation for widow etc of transferee over
45pension compensation age on transfer day)—

(a) in sub-paragraph (3) after “(including” insert “any actuarial increase
under paragraph 16A and”, and

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(b) after sub-paragraph (3) insert—

(3A) If, on the day the transferee (“T”) died, commencement of
T’s periodic compensation under paragraph 4 was
postponed by virtue of paragraph 16A, assume for the
5purposes of sub-paragraph (3) that the periodic
compensation commenced immediately before the date of
T’s death.

(2) In paragraph 7 (periodic compensation for widow etc of transferee under
pension compensation age on transfer day)—

(a) 10in sub-paragraph (3)(a) after “(see paragraph 8)” insert “, any
actuarial increase under paragraph 16A”,

(b) in sub-paragraph (3)(b) after sub-paragraph (ii) insert—

(none) (assuming commencement of the periodic
compensation was not postponed by virtue of
15paragraph 16A)., and

(c) after sub-paragraph (3) insert—

(3A) For the purposes of sub-paragraph (3)(a), if on the day the
transferee (“T”) died commencement of T’s periodic
compensation under paragraph 6 was postponed by virtue
20of paragraph 16A, assume that the periodic compensation
commenced immediately before the date of T’s death.

33 In paragraph 9(1) (commutation of periodic compensation) for “becomes
payable” substitute “commences”.

34 (1) In paragraph 12 (eligibility for terminal illness lump sum)—

(a) 25in sub-paragraph (4) in the definition of “relevant age”—

(i) in paragraph (a) omit “or deferred” and “or (as the case may
be) 11”, and

(ii) in paragraph (b) omit “or deferred”, and

(b) after sub-paragraph (4) insert—

(5) 30Sub-paragraph (6) applies where the commencement of a
person’s periodic compensation under paragraph 6 is
postponed by virtue of paragraph 16A.

(6) This paragraph applies as if—

(a) the person first becomes entitled to compensation
35under paragraph 6 immediately after the period of
postponement ends, and

(b) in sub-paragraph (1)(b), for “if the transferee lived
to the relevant age, he or she would become
entitled on attaining that age” there were
40substituted “if the period of postponement ended,
the transferee would become entitled”.

(2) In paragraph 15 (effect of successful application for terminal illness lump
sum) after sub-paragraph (3) insert—

(4) Where on the granting of the application the commencement of a
45person’s periodic compensation under paragraph 6 is postponed
by virtue of paragraph 16A, this paragraph applies as if the

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references to the transferee attaining the relevant age were
references to the period of postponement ending.

35 (1) Paragraph 17 (annual increase in periodic compensation) is amended as
follows.

(2) 5In sub-paragraph (4) in the definition of “the underlying rate”—

(a) omit “and” at the end of paragraph (a), and

(b) after that paragraph insert—

(aa) so much of any actuarial increase under paragraph
16A as relates to the amount in paragraph (a), and.

(3) 10In sub-paragraph (7)—

(a) after “references in” insert “paragraph (a) of”, and

(b) at the end insert “(and paragraph (aa) of the definition applies
accordingly).”

(4) After sub-paragraph (7) insert—

(7A) 15Where the commencement of periodic compensation has been
postponed by virtue of paragraph 16A, this paragraph applies as
if the transferee first becomes entitled to the periodic
compensation on the day on which the periodic compensation
commences.

36 20In paragraph 20 (Board’s power to alter rates of revaluation and indexation)
after sub-paragraph (5) insert—

(5A) A determination under sub-paragraph (1)(b) which has effect as
mentioned in sub-paragraph (5)(b)(ii) may provide that, where the
payment of periodic compensation to the transferee is postponed
25by virtue of paragraph 16A, the determination applies as if the
transferee first becomes entitled to the periodic compensation on
the day on which the periodic compensation commences.

Calculation of compensation: admissible rules etc

37 (1) Schedule 7 to the Pensions Act 2004 (pension compensation provisions) is
30amended as follows.

(2) In paragraph 3(6) (pensions in payment at assessment date) for “35(3)”
substitute “35(3A)”.

(3) In paragraph 5(5) (pensions postponed at assessment date) for “35(3)”
substitute “35(3A)”.

(4) 35In paragraph 35 (admissible rules, recent discretionary increases etc)—

(a) for sub-paragraph (3) substitute—

(3) This sub-paragraph applies to a scheme if, in calculating
the protected liabilities in relation to the scheme at the
relevant time, the effect of taking into account any recent
40rule changes is that those liabilities are greater than they
otherwise would be.

(3A) This sub-paragraph applies to a scheme if, in calculating
the protected liabilities in relation to the scheme at the
relevant time, the effect of taking into account any recent

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