Pension Schemes Act 2021 (c. 1)

PART 1 E+W+S Collective money purchase benefits

Members' rights E+W+S

24 Rules about modifying schemes E+W+S

(1) The Pensions Act 1995 is amended as follows.

(2) In section 67 (the subsisting rights provisions)—

(a) after subsection (1) insert—

“(1A) Any exercise of such a power to make a prohibited modification is void.”;

(b) in subsection (2)(a)(i), after “if the modification is a protected modification,” insert “ or the scheme is a collective money purchase scheme within the meaning of Part 1 of the Pension Schemes Act 2021, ”;

(c) in subsection (2)(a)(ii), for “if it is not” substitute “ if sub-paragraph (i) does not apply ”;

(d) in subsection (3) omit paragraph (b) and the “or” before it;

(e) after subsection (3) insert—

“(3A) Regulations may provide for cases in which the subsisting rights provisions do not apply.”

(3) In section 67A (the subsisting rights provisions: interpretation), in subsection (1), before “ “regulated modification”” insert—

““prohibited modification””.

(4) After subsection (1) of that section insert—

“(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.”

(5) In subsection (3) of that section—

(a) after “a modification” insert “ , other than a prohibited modification, ”;

(b) for paragraph (a) substitute—

“(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)),”;

(c) in paragraph (b), after “rules” insert “ , other than a pension that is a collective money purchase benefit ”;

(d) omit the words following paragraph (c).

(6) After subsection (3) of that section insert—

“(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.”

(7) In subsection (4) of that section, after “a modification” insert “ , other than a prohibited modification, ”.

(8) In subsection (9) of that section—

(a) in paragraph (a), after sub-paragraph (xiii) insert—

“(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) in paragraph (b), after sub-paragraph (xi) insert—

“(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.”

Commencement Information

I1 S. 24 in force at Royal Assent for specified purposes, see s. 131(3)(a)

I2 S. 24 in force at 1.8.2022 in so far as not already in force by S.I. 2022/721, reg. 3(a)

25 Transfer rights E+W+S

(1) Chapter 1 of Part 4ZA of the Pension Schemes Act 1993 (transfer rights: general) is amended as follows.

(2) In section 93 (scope of Chapter 1)—

(a) in subsection (7) (crystallisation events), in paragraph (b), after “money purchase benefits” insert “ other than collective money purchase benefits ”;

(b) after subsection (10) insert—

“(10A) Where a pension scheme is divided into sections, each section that is a collective money purchase scheme for the purposes of Part 1 of the Pension Schemes Act 2021 (see section 1(2)(b) of that Act) is to be treated as a separate scheme for the purposes of this Chapter.”

(3) In section 97 (calculation of cash equivalents), after subsection (3) insert—

“(3ZA) Where, in the case of an application from a member under section 95 that relates to money purchase benefits that are collective money purchase benefits, regulations under section 99(2)(c) provide for a period longer than 6 months, subsection (3)(b) is to be read as if the reference to 6 months were a reference to that longer period.”

(4) In section 99 (trustees' duties after exercise of option), in subsection (2) (period in which to carry out what the member requires)—

(a) omit the “and” at the end of paragraph (a);

(b) in paragraph (b), after “money purchase benefits” insert “ other than collective money purchase benefits ”;

(c) at the end of paragraph (b) insert “, and

(c) in the case of an application which relates to money purchase benefits that are collective money purchase benefits, within 6 months beginning with the date of the application or such longer period beginning with that date as may be prescribed.”

(5) After section 99 insert—

“99A Trustees' further duties: collective money purchase benefits

(1) If the trustees receive an application under section 95 relating to money purchase benefits that are collective money purchase benefits—

(a) they must give the member notice in writing of the cash equivalent that relates to those benefits, and

(b) they must not without the written consent of the member enter into an agreement with a third party to use the member's cash equivalent in a way specified in section 95(2) before the end of the period mentioned in subsection (2).

(2) The period referred to in subsection (1)(b) is—

(a) the period of 3 weeks beginning with the day after the day on which the notice is given, or

(b) such other period as may be specified in regulations.

(3) Any action taken in contravention of subsection (1)(b) is void.”

(6) In section 100B (meaning of “scheme rules”: occupational pension schemes), in subsection (2)—

(a) in paragraph (a), at the end insert—

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

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

(b) in paragraph (b), at the end insert—

“(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.”

Commencement Information

I3 S. 25 in force at Royal Assent for specified purposes, see s. 131(3)(a)

I4 S. 25 in force at 1.8.2022 in so far as not already in force by S.I. 2022/721, reg. 3(a)