C1C4C7C8Part III Certification of Pension Schemes and Effects on Members’ State Scheme Rights and Duties

Annotations:
Modifications etc. (not altering text)
C4

Pt. III: power to modify conferred (1.6.1996 for specified purposes, 6.4.1997 in so far as not already in force) by Pensions Act 1995 (c. 26), ss. 149(1), 180(1); S.I. 1996/778, art. 2(6); S.I. 1997/664, art. 2(3), Sch. Pt. 2

Chapter III Termination of contracted-out or appropriate scheme status: state scheme premiums

Approval of arrangements for schemes ceasing to be certified

I150 Powers of F50Inland Revenue to approve arrangements for scheme ceasing to be certified.

1

In the case of an occupational pension scheme or a personal pension scheme which is or has been certified as a contracted-out or, as the case may be, an appropriate scheme, the F50Inland Revenue may, for the event of, or in connection with, its ceasing to be such a scheme, approve any arrangements made or to be made in relation to the scheme, or for its purposes, for the preservation or transfer—

a

in the case of an occupational pension scheme other than a money purchase contracted-out scheme—

i

of earners’ accrued rights to guaranteed minimum pensions under the scheme F6or accrued rights to pensions under the scheme attributable to their service on or after the principal appointed day;

C5ii

of the liability for the payment of F7such pensions in respect of persons who have then become entitled to receive them;

F67iii

of safeguarded rights under the scheme;

b

in the case of a money purchase contracted-out scheme or a personal pension scheme, of protected F68, or safeguarded, rights under the scheme.

F31A

The power of the F50Inland Revenue to approve arrangements under this section—

a

includes power to approve arrangements subject to conditions, and

b

may be exercised either generally or in relation to a particular scheme.

C61B

Arrangements may not be approved under this section unless any prescribed conditions are met

2

If the scheme ceases to be a contracted-out scheme or an appropriate scheme (whether by being wound up or otherwise) and the F50Inland Revenue either—

a

F51have withdrawn F51their approval of previously approved arrangements relating to it; or

b

F51have declined to approve arrangements relating to it,

the F50Inland Revenue may issue a certificate to that effect.

3

A certificate issued under subsection (2)(a) or (b) shall be cancelled by the F50Inland Revenue if F52they subsequently approve the arrangements.

4

Regulations may provide that where the F50Inland RevenueF53have approved arrangements under subsection (1) in respect of an occupational pension scheme (other than a money purchase scheme) any provision of this Part (other than sections 18, 19, 26 to 33 and 43 to 45) or Chapter III of Part IV or Chapter II of Part V shall have effect subject to such modifications as may be specified in the regulations.

5

Any such regulations shall have effect in relation to arrangements whenever approved, unless they provide that they are only to have effect in relation to arrangements approved after they come into force.

6

It is hereby declared that an approval of arrangements relating to an occupational pension scheme which is not a money purchase contracted-out scheme may be withdrawn at any time, notwithstanding that the scheme has been wound up.

F87

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I151 Calculation of guaranteed minimum pensions preserved under approved arrangements.

C2C31

This section applies where—

a

an earner’s guaranteed minimum pension rights or accrued rights to guaranteed minimum pensions under a scheme F4satisfy prescribed conditions, and

b

one or more of the five tax years ending with the tax year in which the scheme ceases to be contracted-out is a relevant year in relation to the earner.

C2C32

Where this section applies then, except in such circumstances as may be prescribed, section 16(1) shall have effect, subject to the following provisions, that is to say—

a

any earnings factor shall be taken to be that factor as increased by the last order under section 21 of the M1Social Security Pensions Act 1975 or section 148 of the M2Social Security Administration Act 1992 to come into force before those five tax years; and

b

any relevant earnings factors derived from contributions or earnings in respect of any year (“the relevant contributions year”) shall be treated as increased by 12 per cent. compound for each of those five tax years, other than any of those years which—

i

constitutes or begins before the relevant contributions year, or

ii

begins after the final relevant year in relation to the earner.

C2C33

Subsection (2) shall not apply in any case where its application would result in the amount of the guaranteed minimum being greater than it would have been apart from that subsection.

4

Regulations may provide that subsections (1) to (3) shall have effect with prescribed modifications in relation to a scheme which, immediately before it ceased to be contracted-out, contained provisions authorised by section 16(2).

5

In this section “relevant year” and “final relevant year” have the same meanings as in section 16.

Supervision of formerly certified schemes

I152 Supervision of schemes which have ceased to be certified.

1

Section 53 shall apply for the purpose of making provision for securing the continued supervision of occupational pension schemes as respects which subsection (2) applies and section 54 shall apply for the purpose of making corresponding provision in relation to personal pension schemes as respects which subsection (3) applies.

2

This subsection applies as respects any occupational pension scheme, other than a public service pension scheme, where—

F9a

the scheme has ceased to be a contracted-out scheme, and

b

any persons remain who fall within any of the following categories.

F102A

Those categories are—

a

any persons entitled to receive, or having accrued rights to—

i

guaranteed minimum pensions, or

ii

pensions under the scheme attributable to service on or after the principal appointed day but before the scheme ceased to be contracted-out,

b

any persons who have protected rights under the scheme or are entitled to any benefit giving effect to protected rights under it

F69c

any persons who have safeguarded rights under the scheme or are entitled to any benefit giving effect to safeguarded rights under it.

3

This subsection applies as respects any personal pension scheme where—

F11a

the scheme has ceased to be an appropriate scheme, and

b

any persons remain who have protected F70, or safeguarded, rights under the scheme or are entitled to any benefit giving effect to protected F70, or safeguarded, rights under it

F124

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F125

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F126

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I153 Supervision: former contracted-out schemes.

F131

The F54Inland Revenue may direct the trustees or managers of the scheme, or the employer, to take or refrain from taking such steps as the F54Inland Revenue may specify in writing; and such a direction shall be final and binding on the person directed and any person claiming under him.

1A

An appeal on a point of law shall lie to the High Court or, in Scotland, the Court of Session from a direction under subsection (1) at the instance of the trustees or managers or the employer, or any person claiming under them.

1B

A direction under subsection (1) shall be enforceable—

a

in England and Wales, in a county court as if it were an order of that court, and

b

in Scotland, by the sheriff, as if it were an order of the sheriff and whether or not the sheriff could himself have given such an order

F142

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F53

If a certificate has been issued under subsection (2) of section 50 and has not been cancelled under subsection (3) of that section, any liabilities in respect of such entitlement or rights as are referred to in section 52(2A)(a) or (b) must, except in prescribed circumstances, be discharged (subject to any directions under subsection (1)) in a prescribed manner and within a prescribed period or such longer period as the F54Inland Revenue may allow.

F154

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F155

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I154 Supervision: former appropriate personal pension schemes.

F11

The F55Inland Revenue may direct the trustees or managers of the scheme to take or refrain from taking such steps as the F55Inland Revenue may specify in writing; and such a direction shall be final and binding on the person directed and any person claiming under him.

1A

An appeal on a point of law shall lie to the High Court or, in Scotland, the Court of Session from a direction under subsection (1) at the instance of the trustees or managers or the employer, or any person claiming under them.

1B

A direction under subsection (1) shall be enforceable—

a

in England and Wales, in a county court as if it were an order of that court, and

b

in Scotland, by the sheriff, as if it were an order of the sheriff and whether or not the sheriff could himself have given such an order.

F12

If a certificate has been issued under subsection (2) of section 50 and has not been cancelled under subsection (3) of that section, any liabilities in respect of such entitlement or rights as are referred to in section 52(3)(b) must, except in prescribed circumstances, be discharged (subject to any directions under subsection (1)) in a prescribed manner and within a prescribed period or such longer period as the F55Inland Revenue may allow.

F163

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State scheme premiums

I155 Payment of state scheme premiums on termination of certified status.

F171

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F22

Where—

a

an earner is serving in employment which is contracted-out employment by reference to an occupational pension scheme (other than a money purchase contracted-out scheme),

b

paragraph (a) ceases to apply, by reason of any of the following circumstances, before the earner attains the scheme’s normal pension age or (if earlier) the end of the tax year preceding that in which the earner attains pensionable age, and

c

the earner has served for less than two years in the employment,

the prescribed person F71shall, if subsection (2B) applies, pay and otherwise may elect to pay a premium under this subsection (referred to in this Act as a “contributions equivalent premium”).

2A

The circumstances referred to in subsection (2) are that—

a

the earner’s service in the employment ceases otherwise than on the earner’s death,

b

the earner ceases to be a member of the scheme otherwise than on the earner’s death,

c

the earner’s service in the employment ceases on the earner’s death and the earner dies leaving a F76widow, widower or surviving civil partner,

d

the scheme is wound up,

e

the scheme ceases to be a contracted-out occupational pension scheme;

F72...

C9F732B

Except in prescribed circumstances, this subsection applies in any case where the earner has no accrued right to any benefit under the scheme.

2C

Where a contributions equivalent premium is required to be paid in respect of an earner by virtue of subsection (2), the prescribed person must notify the Inland Revenue of that fact within the prescribed period and in the prescribed manner.

F183

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F184

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F185

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F186

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I156 Provisions supplementary to s. 55.

F191

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2

A premium under section 55 shall be paid by the prescribed person to the F56Inland Revenue within the prescribed period F20...

F213

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4

Where under the rules of the scheme transfer credits have been allowed in respect of the earner’s accrued rights under another scheme, the reference in section 55(2) to employment which is contracted-out by reference to the scheme shall include references to employment in any period of linked qualifying service which was contracted-out employment by reference to the other scheme.

F745

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F226

Subject to regulations under paragraph 1 of Schedule 2, service in any employment which ceases with the death of the employer shall be treated for the purposes of section 55(2A) as ceasing immediately before the death

I157 Elections to pay contributions equivalent premiums.

1

An election under section 55(2) must be made within the prescribed period and in the prescribed manner.

2

Except in such cases as may be prescribed, the prescribed person shall not, in making or abstaining from making elections under that section, discriminate between different earners on any grounds other than their respective lengths of relevant service.

3

In subsection (2) “relevant service” means service in contracted-out employment by reference to the scheme, together with any service in contracted-out employment which in relation to service in that employment is linked qualifying service.

4

If F57the Inland Revenue consider that the prescribed person is contravening subsection (2), F57they may cancel any contracting-out certificate held by the earner’s employer in respect of the scheme in question.

I158 Amount of premiums payable under s. 55.

F231

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F232

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F233

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F634

Subject to subsection (4A), the amount of the contributions equivalent premium shall be equal to the sum of the following amounts—

a

the amount of every reduction made under section 41 (as from time to time in force) in the amount of Class 1 contributions payable in respect of the earner’s employment in employment which was contracted-out by reference to the scheme; and

b

the total amount by which the reductions falling within paragraph (a) would have been larger if the amount of the contributions falling to be reduced had in each case been at least equal to the amount of the reduction of those contributions provided for by section 41.

4A

The amounts brought into account in accordance with subsection (4)(b) shall not include any amount which, by virtue of regulations made under section 41(1D) so as to avoid the payment of trivial or fractional amounts, is an amount that was not payable by the Inland Revenue to the secondary contributor.

F245

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F246

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7

Section 56(4) applies for the purposes of subsection (4) as it applies for the purposes of section 55(2).

F2559 Alternative basis for revaluation of earnings factors for calculation of certain premiums.

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I160 Effect of payment of premiums on rights.

F261

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F262

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F263

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4

Payment of a contributions equivalent premium in the circumstances mentioned in section F2755(2A)(a) and (b), (d) and (e) shall extinguish the earner’s accrued rights to guaranteed minimum pensions under the relevant scheme F28or (in relation to service on or after the principal appointed day) rights to pensions under the scheme so far as attributable to the amount of the premium.

5

Payment of a contributions equivalent premium in the circumstances mentioned in section F2955(2A)(c) shall extinguish any such accrued rights in respect of the earner’s F77widow, widower or surviving civil partner.

F306

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F307

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F308

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F309

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F3010

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I161 Deduction of contributions equivalent premium from refund of scheme contributions.

1

This section applies where—

F31a

an earner’s service in contracted-out employment ceases or his employment ceases to be contracted-out employment, and

b

he (or, by virtue of a connection with him, any other person) is entitled to a refund of any payments made by or in respect of him towards the provision of benefits under the scheme by reference to which that employment was contracted-out; and

c

a contributions equivalent premium falls to be paid by any person in respect of him.

2

Where this section applies, then, subject to the following provisions of this section, the person by whom the premium falls to be paid shall be entitled on paying it to recover an amount equal to so much of the premium as is attributable to F64any actual reductions of primary Class 1 contributions (and on paying any part of it to recover a proportionate part of that amount) from the person liable for the refund.

3

The amount recoverable under this section shall not exceed the amount of the refund or so much of it as has not been made.

4

Where the period taken into account in arriving at the amount mentioned in subsection (2) does not coincide with that in respect of which the refund is to be made, the sum recoverable under this section shall be determined by reference to so much of that amount and of the refund as are referable to the same period.

5

Where the refund—

a

is made in respect of more than one period of service, and one or more of those periods is a period of previous linked qualifying service; and

b

includes any amount paid under a contracted-out scheme in relation to that service on or in connection with a transfer of accrued rights to another scheme,

the amount which may be recovered under this section shall be increased by such amount as may be prescribed.

6

Where the person liable for the premium is himself liable for the refund, he shall be entitled to retain out of the refund the amount which he could recover under this section from another person liable for the refund.

7

The amount of the refund shall be reduced by the amount recovered or retained under this section; and provision shall be made by regulations for requiring the making of refunds to be delayed for the purpose of enabling any right of recovery or retainer conferred by this section to be exercised, notwithstanding anything in any enactment relating to the making of the refund.

8

Where—

F32a

an earner’s service in contracted-out employment ceases or his employment ceases to be contracted-out employment

b

he (or, by virtue of a connection with him, any other person) is entitled to a refund of any payments made by or in respect of him under the scheme by reference to which that employment was contracted-out in relation to any previous contracted-out employment of his, being payments towards the provision of benefits under that scheme;

c

a contributions equivalent premium falls to be paid in respect of him; and

d

the period taken into account in arriving at the amount mentioned in subsection (2) includes the period of the previous contracted-out employment,

then the person liable for that premium shall have the like right of recovery from that refund (so far as the premium is not recoverable or retainable out of a refund in respect of a later employment) as a person has under this section where the refund relates to service in the employment on the F33cessation of which the premium falls to be paid (and subsection (7) shall apply accordingly).

9

This section shall apply in relation to such a refund as is referred to in subsection (1)(b) which becomes payable after the F34cessation of an earner’s service in contracted-out employment as it applies to such a refund becoming payable on the F34cessation of an earner’s service in such employment.

10

Where the earner (or, by virtue of a connection with him, any other person) becomes entitled to any payment in lieu of benefit, this section shall apply in relation to the payment as if it were such a refund as is referred to in subsection (1)(b).

11

For the purposes of subsection (10), a payment in lieu of benefit is any payment falling to be made to or for the benefit of, or in respect of, a person by virtue of his being or having been a member of an occupational pension scheme, being a payment which either—

a

is made or to be made otherwise than out of the resources of the scheme; or

b

is made or to be made out of those resources but by way of distribution on a winding up; or

c

falls within such other description of payments as may be prescribed for the purposes of that subsection.

I162 No recovery of state scheme premiums from earners etc.

1

Notwithstanding any contract to the contrary, a person shall not be entitled—

a

to recover any part of a F35contributions equivalent premium from any earner in respect of whom it is payable; or

b

except in accordance with section 61, to recover or retain any part of such a premium out of any money payable to or for the benefit of the earner or any other person.

F362

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

I163 Further provisions concerning calculations relating to premiums.

1

The following amounts shall be certified by the F58Inland Revenue—

F37a

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F65b

the sum of the amounts specified in section 58(4);

F38c

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

d

the amount mentioned in section 61(2).

F392

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3

If the F58Inland Revenue—

F40a

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

b

F59are satisfied that records of earnings relevant for determining the amount mentioned in F41section 58(4) have not been maintained or retained or are otherwise unobtainable,

then F59they may for that purpose—

i

compute, in such manner as F59they think fit, an amount which shall be regarded as the amount of those earnings; or

ii

take their amount to be such sum as he may specify in the particular case,

F42...

F434

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5

For the purposes of subsection (1) the F58Inland Revenue may make such adjustments as F60they think necessary for avoiding fractional amounts.

F4464 Actuarial tables for purposes of calculations relating to premiums.

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F4565 Inclusion of former and future earners for some purposes of this Chapter.

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F4666 Power to apply certain provisions to widowers.

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I167 Non-payment of F47contributions equivalent premiums.

1

If a person fails to pay any F47contributions equivalent premium which is payable by him at or within the time prescribed for the purpose, he shall be liable on summary conviction to a fine of not more than level 3 on the standard scale.

2

Where—

a

a person is convicted of the offence under subsection (1) of failing to pay a premium, and

b

the premium remains unpaid at the date of the conviction,

he shall be liable to pay to the F61Inland Revenue a sum equal to the amount which he failed to pay.

3

Subject to subsection (4), where a person is convicted of an offence mentioned in subsection (2), evidence may be given of any previous failure by him to pay F47contributions equivalent premiums within the time prescribed for the purpose; and in that subsection “the conviction” and “the offence” mean respectively the conviction referred to in this subsection and the offence of which the person is convicted.

4

Such evidence may be given only if notice of intention to give it is served with the summons or warrant or, in Scotland, the complaint on which the person appeared before the court which convicted him.

I168 Unpaid premiums: supplementary.

1

Where in England and Wales a person charged with an offence to which section 67(2) applies is convicted of that offence in his absence under section F4912(5) of the M3Magistrates’ Courts Act 1980, then if—

a

it is proved to the satisfaction of the court, on oath or in the manner prescribed by rules under section 144 of that Act, that notice under section 67(4) has been duly served specifying the other premiums in respect of which the prosecutor intends to give evidence; and

b

the F75designated officer for the court has received a statement in writing purporting to be made by the accused or by a solicitor acting on his behalf to the effect that if the accused is convicted in his absence of the offence charged he desires to admit failing to pay the other premiums so specified or any of them,

section 67(3) and (4) shall have effect as if the evidence had been given and the failure so admitted had been proved, and the court shall proceed accordingly.

2

In England and Wales where—

a

a person is convicted of an offence to which section 67(2) applies; and

b

an order is made under F66section 12 of the Powers of Criminal Courts (Sentencing) Act 2000 discharging him absolutely or conditionally,

subsection (1) and section 67(2) to (4) shall apply as if it were a conviction for all purposes.

3

In Scotland where—

a

a person is convicted on indictment of, or is charged before a court of summary jurisdiction with, any such offence; and

b

an order is made under the M4Criminal Procedure (Scotland) Act 1975 discharging the offender absolutely or placing him on probation,

section 67(2) to (4) shall apply as if—

i

the conviction on indictment were a conviction for all purposes; or

ii

(as the case may be) the making of the order by the court of summary jurisdiction were a conviction.

4

In England or Wales any sum which a person is liable to pay under subsection (1) or section 67(2) to (4) shall be recoverable from him as a penalty.

5

F48Contributions equivalent premiums recovered by the F62Inland Revenue under those provisions shall be treated for all purposes as premiums paid to the F62Inland Revenue in respect of the person in respect of whom they were originally payable.