Early leavers

Preservation requirements

Occupational pension schemes are required by statute to provide certain benefits in respect of active members who end their pensionable service before normal pension age (ie to preserve benefits for them in the scheme). Members who cease to be in pensionable service before normal pension age are referred to as 'early leavers' or 'deferred members'. The benefits that schemes must preserve for an early leaver who has been in pensionable service for a certain amount of time are called a short service benefit or a deferred pension.

The preservation requirements which occupational pension schemes must comply with in respect of early leavers are contained in:

1. •

   the Pension Schemes Act 1993, Pt IV, ss 69–82 (PSA 1993), and

2. •

   the Occupational Pension Schemes (Preservation of Benefit) Regulations 1991, SI 1991/167

Insofar as the early leaver has accrued contracted-out salary-related (COSR) rights, different preservation requirements apply.

The preservation requirements are not overriding (ie they do not prevail over the provisions of a scheme's trust deed and rules). A scheme's rules are required to contain provisions that comply with the preservation requirements,...