Pensions Act 2014

Transfer of pension benefits

33 Automatic transfer of pension benefits etc

Schedule 17—

(a) requires the Secretary of State to make regulations under which, in certain circumstances, the cash equivalent of a person’s accrued rights to benefits under a pension scheme must be transferred to another scheme of which the person is an active member;

(b) permits the Secretary of State to make regulations requiring accounts relating to a person’s accrued rights to benefits under a pension scheme to be merged in certain circumstances.

34 Power to prohibit offer of incentives to transfer pension rights

(1) The Secretary of State may by regulations make provision prohibiting a person from offering an incentive to another person with the intention of inducing a member of a salary related occupational pension scheme to—

(a) exercise a right to require a pensions transfer, or

(b) agree to a pensions transfer.

(2) “Pensions transfer” means a transfer of sums or assets representing any of the member’s pension rights to be used for one or more of the following—

(a) acquiring rights (whether to present or future benefit) for the member under the rules of another occupational pension scheme or a personal pension scheme;

(b) purchasing one or more annuities for the member;

(c) subscribing to other pension arrangements for the member.

(3) “Pension right” means, at any time—

(a) any right which at that time has accrued to or in respect of the member to future benefits under the scheme rules, or

(b) any entitlement to the present payment of a pension or other benefit which the member has at that time, under the scheme rules;

and for this purpose “right” includes a pension credit right.

(4) Regulations under this section may in particular—

(a) provide for the prohibition to apply whether the incentive offered is to be provided by the person making the offer or another person;

(b) create exceptions to the prohibition;

(c) provide for section 10 of the Pensions Act 1995 (civil penalties) to apply to a person who contravenes the regulations.

(5) Regulations made by virtue of subsection (4)(c) may in particular provide that for the purposes of section 10 of the Pensions Act 1995 the offer of an incentive is to be regarded as a separate act in relation to each member of a scheme to whom the incentive relates.

(6) Nothing in any regulations made under this section affects the validity of a pensions transfer (or of the exercise of a right to require a transfer or of an agreement to a transfer).

(7) In this section—

• “incentive” means a financial or other advantage;

• “member” has the meaning given by section 124(1) of the Pensions Act 1995;

• “occupational pension scheme” and “personal pension scheme” have the meanings given by section 1 of the Pension Schemes Act 1993;

• “pension credit right” has the meaning given by section 124(1) of the Pensions Act 1995;

• “salary related occupational pension scheme” has the meaning given by section 93(1A) of the Pension Schemes Act 1993;

• “scheme rules” has the meaning given by section 67A(8) of the Pensions Act 1995.

(8) This section binds the Crown.

35 Expiry of power in section 34

If no regulations have been made under section 34 by the end of the period of 7 years beginning with the day on which it comes into force, that section is repealed at the end of that period.

36 Short service benefit for scheme member with money purchase benefits

(1) Section 71 of the Pension Schemes Act 1993 (basic principle as to short service benefit) is amended as follows.

(2) In subsection (1)(a), after “service,” insert—

“(aa) he has at least 30 days’ qualifying service and, if he were entitled to benefit because of this paragraph, all of it would necessarily be money purchase benefit,”.

(3) After subsection (9) insert—

“(10) Subsections (7) to (9) apply, with the substitution for references to 2 years of references to 30 days, for determining whether a person has at least 30 days’ qualifying service for the purposes of subsection (1).

(11) Subsection (1)(aa) does not apply in relation to a person’s membership of a scheme if any period of relevant service began before the day on which section 36 of the Pensions Act 2014 came into force (whether or not it also ended before that date).

“Relevant service” means service that counts towards the 30 days’ qualifying service for the purposes of subsection (1).”

(4) In section 101AA of the 1993 Act (early leavers: cash transfer sums and contribution refunds), in subsection (4)(b), after “(a)” insert “, (aa)”.