The Pensions Regulator

Code of practice 10
Modification of subsisting rights

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Making representations

59. Members must be given a reasonable opportunity to make representations to the trustees about the proposed modification.³⁰
60. The regulator would normally expect a period of at least four weeks to be permitted for the members to make such representations, although it is accepted that this will vary with the complexity of the amendments proposed and the number and location of the members.
61. Nevertheless, affected members should not be made to feel under pressure to come to a decision without adequate time and opportunity to make their views known to the trustees and to ask questions about the proposal.
62. The trustees should give due consideration to any representations received.
63. Sufficient time should be allowed by the trustees for:
    • advice to be obtained where necessary in relation to issues raised; and
    • discussions with employers to take place where it may be appropriate to amend a proposed modification in the light of representations received.

Revising a modification which is subject to the actuarial equivalence requirement

65. Where a proposed modification is revised after the information requirement has been fulfilled but before the trustees have determined it should be made (or given their approval to its being made by someone else) the trustees must consider whether the revised modification differs from the original in any material way. Where the differences are decided not to be material to the members concerned, the information requirement is taken as having been satisfied.³¹
66. In considering whether differences are material, trustees should:
    • consider taking actuarial and legal advice as to what is material in this context
    • note that changes to an original proposal which are not material, especially following representations, would not need to be treated as a new modification in respect of the information requirement.
67. However, if there is a material difference, it will be necessary for the trustees to recommence the procedure as if the revised modification were a new modification.

The actuarial value requirement

67. Before making the decision to effect or give approval to a modification (see paragraphs 71 to 73), the trustees must have made adequate arrangements or taken adequate steps to secure that actuarial value³² will be maintained.³³ This will involve the trustees in taking the advice of an actuary.

The actuarial equivalence statement requirement

69. The trustees must obtain an actuarial equivalence statement within a reasonable period after the effective date of the modification.³⁴
70. The actuarial equivalence statement is a statement produced by an actuary, who will usually be the scheme actuary. This statement is to certify that at the time the proposed modification took effect, the actuarial value of each affected member's subsisting rights immediately after the change is no less than the actuarial value of that member's subsisting rights immediately before the change.³⁵
71. Although the exact circumstances of each scheme could cause this period to be extended, it would normally be expected that the actuarial equivalence statement would be obtained within a month of the effective date of the change.

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