EXPLANATORY NOTE
(This note is not part of the Order)
This Order is made under section 145 of the Pensions Act 2008 (c.30), which provides for amendments to be made in consequence of section 106 of that Act. Section 106 abolishes the protected rights of members of pension schemes contracted-out on a defined contributions basis, from the contracted-out abolition date (the date for the coming into force of section 15(1) of the Pensions Act 2007 (c.22)).
This Order makes consequential amendments to subordinate legislation and provides for transitional provisions for the 3 years following abolition. The majority of amendments come into force on 6th April 2012.
References to, and provisions which relate to, protected rights are either omitted, or where appropriate, replaced with references to protected rights as they existed prior to the abolition date.
Articles 2 and 11 provide for changes to the disclosure of information requirements schemes must comply with in relation to their contracting-out status. Schemes are required to provide a one-off statement to members of former contracted-out defined contribution schemes explaining the effect of the abolition of protected rights on the status of their accrued rights in the scheme within 4 months of the abolition date, unless they have already provided such information in the 12 months preceding the abolition date. This requirement is omitted from 6th April 2013 by articles 27 and 28.
Article 4 amends the Personal and Occupational Pension Schemes (Abatement of Benefit) Regulations 1987 (S.I. 1987/1113) to provide that, from the abolition date, a contracted-out deduction (from a survivor’s additional pension entitlement) of 50% is to be applied to a survivor of a member of a former defined contribution contracted-out scheme in all cases.
Articles 8 and 17 amend the Occupational Pension Schemes (Contracting-out) Regulations 1996 and the Personal Pension Schemes (Appropriate Schemes) Regulations 1997 respectively, and provide for the payment of age-related payments, and minimum contributions to be made to another scheme, or the individual, rather than the former contracted-out scheme, where the earner is no longer a member of that scheme. These provisions are then omitted from 6th April 2015 by articles 29 and 30, when changes to primary legislation provide that all such payments should be made to an individual.
This legislation reduces the costs of administrative burdens on the private sector and civil society organisations. An assessment of the impact has been made; a copy is available in the libraries of both Houses of Parliament, and is annexed to the Explanatory Memorandum which is available alongside the instrument on www.legislation.gov.uk.