(a) the standard amount, plus

(b) for each additional year, an amount found by multiplying
the standard amount by 3%.

(5) A person has an “additional year” for each whole year of
5pensionable service that exceeds 20 years of pensionable service.

(6) If the total amount calculated under sub-paragraph (4)(b) would
exceed the standard amount, it is to be treated as being equal to the
standard amount.

(7) In sub-paragraphs (3) and (4) “the standard amount”—

(a) 10for a person who is 65 years old at the relevant time, means
the amount specified by the Secretary of State by order,
and

(b) for a person of any other age at the relevant time, means
the amount specified under paragraph (a) as adjusted in
15accordance with actuarial adjustment factors published by
the Board.

(8) A person credited with a length of notional pensionable service
because of pension credit rights is to be treated for the purposes of
this paragraph as having pensionable service of that length (in
20addition to any pensionable service that the person is treated as
having under sub-paragraph (9)).

(9) In any case where the Board is satisfied that, under the admissible
rules, a person is entitled to benefits that are not attributable to a
particular period of pensionable service, the Board may for the
25purposes of this paragraph treat the person as having a length of
pensionable service to reflect those benefits (which is in addition
to any other pensionable service that the person has).

(10) In any case where the Board is satisfied that it is not possible to
identify the length of some or all of a person’s pensionable service
30under the admissible rules, the Board may, having regard to those
rules, determine its length for the purposes of this paragraph.

(11) Where a person becomes entitled to relevant compensation in
respect of benefits under two or more connected occupational
pension schemes at the same time, this paragraph applies in
35relation to the relevant compensation in respect of each benefit as
if—

(a) a reference to the length of the person’s pensionable
service were a reference to the total length of the person’s
pensionable service under all of the schemes (ignoring any
40period of overlap), and

(b) sub-paragraphs (9) and (10) apply for the purposes of
working out the length of the person’s pensionable service
in respect of each scheme as if a reference to the admissible
rules were to the admissible rules of that scheme.

(12) 45When applying this paragraph in relation to relevant
compensation in respect of a benefit, ignore any pensionable
service that relates to a benefit that is not from the same source.

(13) For the purposes of sub-paragraph (12)—

(a) benefits attributable to a person’s pensionable service
under a scheme are from the same source as benefits
attributable to the person’s pensionable service under that
or a connected occupational pension scheme,

(b) 5benefits under a scheme which are attributable to a
pension credit from a transferor are from the same source
as benefits under that or a connected occupational pension
scheme which are attributable to a pension credit from the
same transferor, and

(c) 10benefits are not otherwise from the same source.

(14) Expressions used in this paragraph have the same meaning as in
paragraph 26.”

Part 2 Consequential amendments

4 15The Pensions Act 2004 is amended as follows.

5 In section 316(2)(s), for “paragraph 26(7)” substitute “paragraph 26A(7)”.

6 (1) Schedule 7 is amended as follows.

(2) In paragraph 24(2), at the end insert “of the periodic compensation at that
time”.

(3) 20In paragraph 26(9), after “this paragraph” insert “and paragraph 26A”.

(4) In paragraph 27(2), for “sub-paragraph (7) of paragraph 26” substitute “sub-
paragraph (7) of paragraph 26A”.

7 In paragraph 18(2) of Schedule 5 to the Pensions Act 2008, for “the
compensation cap” to the end substitute “a modified version of the
25compensation cap in paragraph 26A of Schedule 7 to the Pensions Act 2004”.

Part 3 Effect of change in transitional cases

Recalculation of periodic compensation going forwards

8 (1) This paragraph applies in relation to a person if—

(a) 30the person is entitled to periodic compensation under paragraph 3,
11 or 15 of Schedule 7 to the Pensions Act 2004,

(b) the compensation is restricted in accordance with paragraph 26 of
that Schedule (compensation cap), and

(c) the person first became entitled to the compensation before the
35commencement date.

(2) The protected pension rate for the person is to be recalculated as if the
amendments made by Part 1 of this Schedule had always been in force and
the recalculated protected pension rate has effect for the person as from the
commencement date.

(3) 40For the purposes of that recalculation, paragraph 26A(7) of Schedule 7 to the
Pensions Act 2004 (inserted by Part 1 of this Schedule) has effect as if—

(a) the references to an order made by the Secretary of State were
references to the relevant old order, and

(b) the reference to actuarial adjustment factors were a reference to the
relevant old actuarial adjustment factors.

(4) 5In this paragraph—

• “the protected pension rate”—

  (a)

  for a person entitled to periodic compensation under
  paragraph 3 or 15 of Schedule 7 to the Pensions Act 2004,
  means the protected pension rate for the purposes of sub-
  10paragraph (3)(a) of that paragraph;

  (b)

  for a person entitled to periodic compensation under
  paragraph 11 of that Schedule, means the protected notional
  pension for the purposes of sub-paragraph (3)(a) of that
  paragraph;

• 15“the relevant old order” means the order in force under paragraph 26(7)
  of Schedule 7 to the 2004 Act (as originally enacted) at the time when
  the person first became entitled to the periodic compensation;

• “the relevant old actuarial adjustment factors” means the actuarial
  adjustment factors published by the Board under paragraph 26(7) of
  20Schedule 7 to the 2004 Act (as originally enacted) at the time when
  the person first became entitled to the periodic compensation.

(5) Nothing in this paragraph affects increases already accrued under
paragraph 28 of Schedule 7 to the Pensions Act 2004 in relation to periods
before the commencement date.

25New cap does not generally affect old payments

9 (1) Nothing in this Schedule affects—

(a) periodic compensation for a person for periods before the
commencement date, or

(b) lump sum compensation for a person who became entitled to the
30compensation before the commencement date.

(2) In this paragraph—

• “periodic compensation” means compensation within paragraph
  26(4)(a), (b) or (d) of Schedule 7 to the Pensions Act 2004;

• “lump sum compensation” means compensation within paragraph
  3526(4)(c) or (e) of that Schedule.

Survivors’ compensation

10 When working out the annual rate of a person’s periodic compensation
under paragraph 4(3), 13(3) or 18(3) of Schedule 7 to the Pensions Act 2004,
take into account any effect that paragraph 8 would have had on the dead
40person’s rate if it were not for the death.

Cases involving early payment or postponement of compensation

11 Nothing in this Schedule affects the amount of—

(a) an actuarial reduction under paragraph 25 of Schedule 7 to the
Pensions Act 2004 in a case where a person became entitled to

periodic compensation or lump sum compensation before the
commencement date, or

(b) an actuarial increase under paragraph 25A of that Schedule in a case
where the commencement of periodic compensation or the payment
5of lump sum compensation was postponed before the
commencement date (even if it continues to be postponed on or after
that date).

Recalculation of terminal illness lump sums given in the past year

12 (1) This paragraph applies in relation to a person who is alive on the
10commencement date if—

(a) the person has become entitled to a terminal illness lump sum under
paragraph 25E of Schedule 7 to the Pensions Act 2004 at any time in
the period of one year ending with the commencement date, and

(b) the amount of the terminal illness lump sum was restricted in
15accordance with paragraph 26 of that Schedule (compensation cap).

(2) The terminal illness lump sum for the person is to be recalculated under
Schedule 7 to the Pensions Act 2004 as if the amendments made by Part 1 of
this Schedule had been in force at the time that the person became entitled
to it.

(3) 20For the purposes of that recalculation, paragraph 26A(7) of Schedule 7 to the
Pensions Act 2004 (inserted by Part 1 of this Schedule) has effect as if—

(a) the references to an order made by the Secretary of State were
references to the relevant old order, and

(b) the reference to actuarial adjustment factors were a reference to the
25relevant old actuarial adjustment factors.

(4) In sub-paragraph (3)—

• “the relevant old order” means the order in force under paragraph 26(7)
  of Schedule 7 to the 2004 Act (as originally enacted) at the time when
  the person became entitled to the terminal illness lump sum;

• 30“the relevant old actuarial adjustment factors” means the actuarial
  adjustment factors published by the Board under paragraph 26(7) of
  Schedule 7 to the 2004 Act (as originally enacted) at the time when
  the person became entitled to the terminal illness lump sum.

Meaning of “the pension compensation provisions” in Part 2 of the Pensions Act 2004

13 35Section 162(2) of the Pensions Act 2004 is to be treated as including a
reference to this Part of this Schedule among “the pension compensation
provisions”.

Part 4 Schemes undergoing assessment or winding up on the commencement date

40Schemes undergoing assessment on the commencement date

14 (1) This paragraph applies in relation to an eligible scheme that is undergoing
assessment on the commencement date.

Continue to use the old cap as the basis of assessment

(2) For the purposes of the following, ignore any effect that this Schedule has on
the compensation which would be payable if the Board assumed
responsibility for the scheme in accordance with Chapter 3 of Part 2 of the
Pensions Act 2004—

(a) 5any provision in which the definition of “protected liabilities” in
section 131 of that Act applies, and

(b) any provision in which the definition of “protected benefits
quotation” in section 151(8) of that Act applies.

(3) For the purposes of section 138(2) of the Pensions Act 2004 take into account
10any effect that this Schedule has on the compensation which would be
payable if the Board assumed responsibility for the scheme in accordance
with Chapter 3 of Part 2 of that Act on the assessment date.

Schemes that begin winding up before the commencement date

15 (1) This paragraph applies in relation to an eligible scheme that is being wound
15up if the winding up began (or is treated as having begun) before the
commencement date.

(2) For the purposes of sections 73 and 73A of the Pensions Act 1995, ignore any
effect that this Schedule has on the compensation which would be payable
if the Board assumed responsibility for the scheme in accordance with
20Chapter 3 of Part 2 of the Pensions Act 2004.

(3) If for any period the scheme is being wound up and is also undergoing
assessment (“the overlap period”), sub-paragraph (4) applies.

(4) For the purposes of section 73A of the Pensions Act 1995 as it applies in
relation to the overlap period, take into account any effect that this Schedule
25has on the compensation which would be payable if the Board assumed
responsibility for the scheme in accordance with Chapter 3 of Part 2 of the
Pensions Act 2004.

Meaning of “undergoing assessment”

16 For the purposes of this Part of this Schedule an eligible scheme is
30“undergoing assessment” if an assessment period has begun in relation to
the scheme but has not yet ended.

Meaning of “eligible scheme”

17 Section 126(4) of the Pensions Act 2004 (list of provisions in relation to which
regulations may provide that a scheme remains an “eligible scheme”) is to be
35treated as including a reference to this Part of this Schedule.

Part 5 Interpretation and power to make further transitional provision

Interpretation

18 In this Schedule “the commencement date” means the date on which it
5comes fully into force.

19 Other expressions used in this Schedule have the same meaning as in Part 2
of the Pensions Act 2004.

Further transitional provision

20 The inclusion of Parts 3 and 4 of this Schedule does not prevent transitional
10provision being made by order under section 56(8).

21 (1) In relation to a case involving multiple benefits, transitional provision made
by order under section 56(8) may, in particular—

(a) disapply or modify any provision of this Schedule;

(b) make provision similar to any provision of this Schedule.

(2) 15For these purposes, “a case involving multiple benefits” means a case
mentioned in paragraph 26(9) of Schedule 7 to the Pensions Act 2004.

22 (1) Transitional provision made by order under section 56(8) may, in particular,
make provision in relation to compensation payable under Chapter 1 of Part
3 of the Pensions Act 2008 (compensation sharing on divorce etc) that is
20similar to any provision of Part 3 of this Schedule.

(2) Regulations under paragraph 18 of Schedule 5 to the Pensions Act 2008
which restrict an amount payable to a person in any period by reference to
a modified version of the compensation cap in paragraph 26A of Schedule 7
to the Pensions Act 2004 (inserted by Part 1 of this Schedule) may also make
25provision similar to any provision of Part 3 of this Schedule.