Part IU.K. Occupational pensions

Modifications etc. (not altering text)

C3Pt. I: Pensions Act 2004 (c.35), Pt. 3 construed as one with Pt. I of this Act (4.12.2005 for specified purposes, 30.12.2005 in so far as not already in force) by Pensions Act 2004 (c. 35), ss. 233, 322(1) (with s. 313); S.I. 2005/3331, art. 2(1)(a)(b), Sch. Pt. 1

Modification of schemesU.K.

[F167AThe subsisting rights provisions: interpretationU.K.

(1)In the subsisting rights provisions, each of the following expressions has the meaning given to it by the following provisions of this section—

  • [F2“prohibited modification”]

  • “regulated modification”

  • “protected modification”

  • “detrimental modification”

  • “affected member”

  • “subsisting right”

  • “scheme rules”.

[F3(1A)“Prohibited modification” means a modification of an occupational pension scheme which on taking effect would or might result in any subsisting right of—

(a)a member of the scheme, or

(b)a survivor of a member of the scheme,

which is not a right or entitlement to money purchase benefits becoming, or being replaced with, a right or entitlement to collective money purchase benefits under the scheme rules.]

(2)“Regulated modification” means a modification which is—

(a)a protected modification, or

(b)a detrimental modification,

or is both.

(3)“Protected modification” means a modification [F4, other than a prohibited modification,] of an occupational pension scheme which—

[F5(a)on taking effect would or might result in a relevant transformation of any subsisting right of a member of the scheme or a survivor of a member of the scheme (see subsection (3A)),]

(b)would or might result in a reduction in the prevailing rate of any pension in payment under the scheme rules [F6, other than a pension that is a collective money purchase benefit], or

(c)is of a prescribed description.

F7...

[F8(3A)For the purposes of subsection (3)(a), there is a relevant transformation of a subsisting right where—

(a)a subsisting right that is not a right or entitlement to money purchase benefits becomes, or is replaced with, a right or entitlement to money purchase benefits under the scheme rules,

(b)a subsisting right that is a right or entitlement to money purchase benefits other than collective money purchase benefits becomes, or is replaced with, a right or entitlement to collective money purchase benefits under the scheme rules, or

(c)a subsisting right that is a right or entitlement to collective money purchase benefits becomes, or is replaced with, a right or entitlement to money purchase benefits other than collective money purchase benefits under the scheme rules.

(3B)For the purposes of subsection (3A), the reference in the definition of “money purchase benefits” in section 181(1) of the Pension Schemes Act 1993 to the widow, widower or surviving civil partner of a member of an occupational pension scheme is to be read as including any other survivor of the member.]

(4)“Detrimental modification” means a modification [F9, other than a prohibited modification,] of an occupational pension scheme which on taking effect would or might adversely affect any subsisting right of—

(a)any member of the scheme, or

(b)any survivor of a member of the scheme.

(5)A person is an “affected member”—

(a)in relation to a protected modification within paragraph (a) or (b) of subsection (3), if, at the time the modification takes effect, he is—

(i)a member of the scheme, or

(ii)a survivor of a member of the scheme,

and, on taking effect, the modification would or might affect any of his subsisting rights as mentioned in that paragraph,

(b)in relation to a protected modification within paragraph (c) of that subsection, if he is of a prescribed description, and

(c)in relation to a detrimental modification which is not a protected modification if, at the time the modification takes effect, he is—

(i)a member of the scheme, or

(ii)a survivor of a member of the scheme,

and, on taking effect, the modification would or might adversely affect any of his subsisting rights.

(6)“Subsisting right” means—

(a)in relation to a member of an occupational pension scheme, at any time—

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

(ii)any entitlement to the present payment of a pension or other benefit which he has at that time, under the scheme rules, and

(b)in relation to the survivor of a member of an occupational pension scheme, at any time, any entitlement to benefits, or right to future benefits, which he has at that time under the scheme rules in respect of the member.

For this purpose, “right” includes a pension credit right.

(7)At any time when the pensionable service of a member of an occupational pension scheme is continuing, his subsisting rights are to be determined as if he had opted, immediately before that time, to terminate that service.

(8)“Scheme rules”, in relation to a scheme, means—

(a)the rules of the scheme, except so far as overridden by a relevant legislative provision,

(b)the relevant legislative provisions, to the extent that they have effect in relation to the scheme and are not reflected in the rules of the scheme, and

(c)any provision which the rules of the scheme do not contain but which the scheme must contain if it is to conform with the requirements of Chapter 1 of Part 4 of the Pension Schemes Act 1993 (preservation of benefit under occupational pension schemes).

(9)For the purposes of subsection (8)—

(a)“relevant legislative provision” means any provision contained in any of the following provisions—

(i)Schedule 5 to the Social Security Act 1989 (equal treatment for men and women);

[F10(ii)Chapter 2 or 3 of Part 4 of the Pension Schemes Act 1993 (certain protection for early leavers) or regulations made under either of those Chapters;

(iia)Chapter 1 or 2 of Part 4ZA of that Act (transfers and contribution refunds) or regulations made under either of those Chapters;]

(iii)Part 4A of that Act (requirements relating to pension credit benefit) or regulations made under that Part;

(iv)section 110(1) of that Act (requirement as to resources for annual increase of guaranteed minimum pensions);

(v)this Part of this Act (occupational pensions) or subordinate legislation made or having effect as if made under this Part;

(vi)section 31 of the Welfare Reform and Pensions Act 1999 (pension debits: reduction of benefit);

(vii)any provision mentioned in section 306(2) of the Pensions Act 2004;

[F11(xi)section 55 of the Pension Schemes Act 2015;

(xii)regulations made under section 56 or 57 of the Pension Schemes Act 2015;]

[F12(xiii)sections 21, 23, 26, 28, 29 and 33 of and Schedule 1 to the Pension Schemes Act 2017;]

[F13(xiv)regulations made under section 18(4) of or paragraph 1(6) of Schedule 2 to the Pension Schemes Act 2021;

(xv)sections 34, 39, 41, 42 and 45 of the Pension Schemes Act 2021;]

(b)a relevant legislative provision is to be taken to override any of the provisions of the scheme if, and only if, it does so by virtue of any of the following provisions—

(i)paragraph 3 of Schedule 5 to the Social Security Act 1989;

(ii)section 129(1) of the Pension Schemes Act 1993;

(iii)section 117(1) of this Act;

(iv)section 31(4) of the Welfare Reform and Pensions Act 1999;

(v)section 306(1) of the Pensions Act 2004;

[F14(ix)section 55(3) of the Pension Schemes Act 2015;

(x)regulations made under section 56(4) or 57(4) of the Pension Schemes Act 2015;]

[F15(xi)sections 21(7), 23(7), 26(9), 28(6), 29(2) and 33(5) of and paragraph 1(7) of Schedule 1 to the Pension Schemes Act 2017;]

[F16(xii)sections 18(7)(b), 34(5), 39(6), 41(6), 42(2) and 45(5) of and paragraph 1(7) of Schedule 2 to the Pension Schemes Act 2021.]

(10)For the purposes of this section—

(a)“survivor”, in relation to a member of an occupational pension scheme, means a person who—

(i)is the widow or widower of the member, or

(ii)has survived the member and has any entitlement to benefit, or right to future benefits, under the scheme rules in respect of the member, and

(b)a modification would or might adversely affect a person’s subsisting right if it would alter the nature or extent of the entitlement or right so that the benefits, or future benefits, to which the entitlement or right relates would or might be less generous.

(11)In the subsisting rights provisions, in relation to—

(a)the exercise of a power to modify an occupational pension scheme to which the subsisting rights provisions apply, or

(b)a modification made, or to be made, in exercise of such a power,

references to “the scheme” are to be read as references to the scheme mentioned in paragraph (a).]

Textual Amendments

F1Ss. 67-67I substituted for s. 67 (1.11.2005 for specified purposes, 6.4.2006 in so far as not already in force) by Pensions Act 2004 (c. 35), ss. 262, 322(1) (with s. 313); S.I. 2005/2447, art. 2(5)(a)(b), Sch. Pt. 2

F2Words in s. 67A(1) inserted (11.2.2021 for specified purposes, 1.8.2022 in so far as not already in force) by Pension Schemes Act 2021 (c. 1), ss. 24(3), 131(1)(3)(a); S.I. 2022/721, regs. 1(2), 3(a)

F3S. 67A(1A) inserted (11.2.2021 for specified purposes, 1.8.2022 in so far as not already in force) by Pension Schemes Act 2021 (c. 1), ss. 24(4), 131(1)(3)(a); S.I. 2022/721, regs. 1(2), 3(a)

F4Words in s. 67A(3) inserted (11.2.2021 for specified purposes, 1.8.2022 in so far as not already in force) by Pension Schemes Act 2021 (c. 1), ss. 24(5)(a), 131(1)(3)(a); S.I. 2022/721, regs. 1(2), 3(a)

F5S. 67A(3)(a) substituted (11.2.2021 for specified purposes, 1.8.2022 in so far as not already in force) by Pension Schemes Act 2021 (c. 1), ss. 24(5)(b), 131(1)(3)(a); S.I. 2022/721, regs. 1(2), 3(a)

F6Words in s. 67A(3)(b) inserted (11.2.2021 for specified purposes, 1.8.2022 in so far as not already in force) by Pension Schemes Act 2021 (c. 1), ss. 24(5)(c), 131(1)(3)(a); S.I. 2022/721, regs. 1(2), 3(a)

F7Words in s. 67A(3) omitted (11.2.2021 for specified purposes, 1.8.2022 in so far as not already in force) by virtue of Pension Schemes Act 2021 (c. 1), ss. 24(5)(d), 131(1)(3)(a); S.I. 2022/721, regs. 1(2), 3(a)

F8S. 67A(3A)(3B) inserted (11.2.2021 for specified purposes, 1.8.2022 in so far as not already in force) by Pension Schemes Act 2021 (c. 1), ss. 24(6), 131(1)(3)(a); S.I. 2022/721, regs. 1(2), 3(a)

F9Words in s. 67A(4) inserted (11.2.2021 for specified purposes, 1.8.2022 in so far as not already in force) by Pension Schemes Act 2021 (c. 1), ss. 24(7), 131(1)(3)(a); S.I. 2022/721, regs. 1(2), 3(a)

F13S. 67A(9)(a)(xiv)(xv) inserted (11.2.2021 for specified purposes, 1.8.2022 in so far as not already in force) by Pension Schemes Act 2021 (c. 1), ss. 24(8)(a), 131(1)(3)(a); S.I. 2022/721, regs. 1(2), 3(a)

F16S. 67A(9)(b)(xii) inserted (11.2.2021 for specified purposes, 1.8.2022 in so far as not already in force) by Pension Schemes Act 2021 (c. 1), ss. 24(8)(b), 131(1)(3)(a); S.I. 2022/721, regs. 1(2), 3(a)

Modifications etc. (not altering text)