The Occupational Pension Schemes (Collective Money Purchase Schemes) (Extension to Unconnected Multiple Employer Schemes and Miscellaneous Provisions) Regulations 2025

34 Viability certificate

(1) A viability certificate must contain the information specified in Part 3 of Schedule 2. (2) The scheme actuary must have regard to the following matters when providing a viability certificate and considering whether the design of the scheme is sound— (a) whether, in the opinion of the scheme actuary, the trustees have, in the scheme’s member booklet, the scheme’s statement of scheme design and the wording used in the scheme’s most recent statements of benefits— (i) accurately described the methods by which the scheme determines the rate or amount of benefits provided under the scheme; (ii) accurately described estimates of the rate or amount of any future pension benefits payable under the design of the scheme; (iii) accurately explained that the future pension benefits payable under the scheme are subject to annual adjustment in accordance with the scheme rules; (b) in a case where the certificate is being provided in respect of a scheme, the trustees of which are applying for authorisation under section 8 of the Act (application for authorisation), whether the scheme actuary is satisfied that— (i) the first gateway test is met, and (ii) the second gateway test is met; (c) in a case where the certificate is being provided in respect of a scheme which has begun operating and has at least one active member, whether the scheme actuary is satisfied that the live running test is met. (3) In a case where a final version of the scheme’s member booklet, the scheme’s statement of scheme design or the wording to be used in the scheme’s statements of benefits has not been prepared, the reference to that document or wording, as the case may be, in paragraph (2)(a) is to the latest draft of that document or wording, as the case may be. (4) The first gateway test is met if the estimate of the projected average annual increase in the first ten years’ benefits, calculated on a central estimate basis— (a) by reference to the contributions to be made into the scheme over the first ten years by or on behalf of or in respect of the expected active members into the scheme, (b) by reference to the returns expected to be achieved on the available assets of the scheme during the remaining lives of the first ten years’ beneficiaries, calculated on a central estimate basis, and (c) based on the premise that such projected annual increase is to be applied over the remaining lives of the first ten years’ beneficiaries, is no less than the estimate of the projected average annual increase in the prices for goods and services as measured by the consumer prices index, calculated on a central estimate basis. (5) For the purposes of the first gateway test— (a) the “first ten years” means the period of ten years beginning with the date on which the scheme is expected to begin operating; (b) the “first ten years’ beneficiaries” means— (i) the expected active members of the scheme during the first ten years, and (ii) the expected survivors in relation to the expected active members of the scheme during the first ten years; (c) the “first ten years’ benefits” means the estimated rate or amount of future pension benefits payable under the scheme which relate to the rights to benefits to be accrued under the scheme over a period of ten years beginning with the date on which the scheme is expected to begin operating. (6) The second gateway test is met if the expected value of the rights to benefits of each active member which are expected to accrue under the scheme during the relevant period is at least equal in value to the amount of the contributions expected to be made by or on behalf of the member into the scheme in that period (not including contributions made by or on behalf of the employers other than any contributions made as a result of a salary sacrifice arrangement). (7) The live running test is met if the expected value of the rights to benefits of each active member which are expected to accrue under the scheme during the relevant period is at least equal in value to the amount of the contributions expected to be made by or on behalf of the member into the scheme in that period (not including contributions made by or on behalf of the employers other than any contributions made as a result of a salary sacrifice arrangement). (8) For the purposes of paragraphs (6) and (7)— (a) the expected value of the rights to benefits which are expected to accrue is to be calculated using the methods and assumptions that would be expected to be used for an actuarial valuation of the scheme; (b) the “relevant period” is— (i) in paragraph (6), a period of five years beginning with the date on which the scheme is expected to begin operating; (ii) in paragraph (7), a period of five years beginning with the date which has been agreed in accordance with paragraph (9) in respect of the viability certificate that is being provided. (9) A viability certificate must be prepared— (a) in respect of the scheme’s first viability certificate, by reference to information as at a date to be agreed between the trustees and the scheme actuary, but not earlier than ten months before the date when the trustees apply to the Pensions Regulator for authorisation; (b) in respect of any subsequent viability certificate, by reference to information as at a date to be agreed between the trustees and the scheme actuary, but not earlier than ten months before the date when the certificate is provided to the trustees. (10) In this regulation— “member booklet”, in relation to a scheme, means a document containing any basic information about the scheme that regulations made under section 113 of the Pension Schemes Act 1993 (disclosure of information about schemes to members etc.) require the trustees of the scheme to provide to members and, if it is practicable to do so, prospective members (each as defined for the purposes of those regulations); “salary sacrifice arrangement” has the meaning given to “relevant salary sacrifice arrangements” in section 228ZA(6) of the Finance Act 2004; “statement of benefits”, in relation to a scheme, means a document containing, in relation to a member of the scheme, any of the following information that regulations made under section 113 of the Pension Schemes Act 1993 require the trustees of the scheme to provide to the members (as defined for the purposes of those regulations) of the scheme specified by those regulations— an illustration of the amount of pension that may be payable to that member on their retirement date; other information related to that illustration; “statement of scheme design”, in relation to a scheme, means information explaining the design of the scheme that regulations made under section 46(1) of the Act (publication of information) require the trustees to publish. (11) For the purposes of this regulation a scheme begins operating where, in relation to the scheme, a person first accepts money as described in section 7(5)(a) or (b) of the Act.