Part 1: Collective Money Purchase Benefits Triggering events and continuity options Section 36: Continuity option 1: discharge of liabilities and winding up
This section makes provision for continuity option 1 under which trustees must discharge the liabilities of the qualifying scheme and then wind up the remaining structure of the scheme. Winding up will mean that the scheme will cease to exist.
	Subsection (1) requires trustees to establish the individual values of beneficiaries’ accrued rights to benefits under the scheme, to identify proposed arrangements for discharging these liabilities and to notify employers and beneficiaries of these proposed options, and such other matters as may be prescribed in regulations.
	Subsection (2) sets out how trustees may discharge the liabilities of the scheme. These are, transferring the value of beneficiaries’ accrued rights to benefits to another collective money purchase scheme, a Master Trust scheme, or an alternative scheme with the characteristics specified in regulations; or some other way of securing the benefits (‘an alternative payment mechanism’) as specified in regulations.
	Subsection (3) provides that a transfer proposal may deal with the entitlements of different descriptions of beneficiaries in different ways.
	Subsection (4) makes it clear that beneficiaries (scheme members and survivors) retain their right to take a cash equivalent transfer instead of the trustee’s proposed discharge mechanism.
	Subsection (5) allows for regulations which will set out the way in which the notification in subsection (1)(c) must be made, and the timing of the notification.
	Subsection (6) allows for regulations to set out how continuity option 1 is to be given effect and provides a non-exhaustive list of other matters which may be covered by regulations under this subsection.
	Subsection (7) provides a list of the matters about which the Secretary of State must make regulations under subsection (6). These include how the rights of beneficiaries are to be quantified, how pensioner beneficiaries who are receiving a periodic income are to be dealt with during the wind up period, the conditions that should be met by a pension scheme or alternative payment arrangement and provision about winding-up.
	Subsection (8) defines "beneficiary" and "pensioner beneficiary" for the purposes of this part.
	A financial penalty under section 10 of the Pensions Act 1995 applies to anyone who fails to comply with any requirement imposed by this section (subsection (9)) and regulations may also make provision for the application of Section 10 of the Pensions Act 1995 to a person failing to comply with requirements in the regulations (subsection (10)).