Section 23 — Pensions Act 2008: Test scheme

Test scheme 23 1 A test scheme is an occupational pension scheme which satisfies—

a the requirement in subsection (2),

b the requirement in subsection (4) or requirements prescribed under subsection (6) (as appropriate),

and c any further requirements that are prescribed.

2 The scheme must either—

a provide for a member to be entitled to a pension commencing at the appropriate age and continuing for life, or b provide for a sum of money to be made available for the provision of benefits to a member commencing at the appropriate age and continuing for life.

3 The appropriate age is 65 or any higher age prescribed.

4 In the case of a scheme that provides entitlement to a pension as mentioned in subsection (2)(a), the annual rate of the pension at the appropriate age must be—

a 1/120th of average qualifying earnings in the last three tax years preceding the end of pensionable service, multiplied by b the number of years of pensionable service, up to a maximum of 40.

5 Section 13(1) (qualifying earnings) applies for the purposes of subsection (4) as if the reference to a pay reference period were a reference to a tax year.

6 In the case of a scheme that provides for a sum of money to be made available as mentioned in subsection (2)(b), regulations must prescribe requirements relating to that sum.