The Occupational and Personal Pension Schemes (Modification of Schemes - Miscellaneous Amendments) Regulations 2016

Statutory Instruments

2016 No. 231

Pensions

The Occupational and Personal Pension Schemes (Modification of Schemes - Miscellaneous Amendments) Regulations 2016

Made

24th February 2016

Laid before Parliament

1st March 2016

Coming into force

6th April 2016

The Secretary of State for Work and Pensions, in exercise of the powers conferred by sections 37(1) and 181(1) of the Pension Schemes Act 1993(1), sections 68(2)(e) and 124(1) of the Pensions Act 1995(2), and sections 259(1) and 318(1) of the Pensions Act 2004(3) makes the following Regulations.

These Regulations are consequential upon section 24(1) of, and Schedule 13 to, the Pensions Act 2014(4) and are made before the end of the period of six months beginning with the date those provisions come into force.

Citation and Commencement

1.—(1) These Regulations may be cited as the Occupational and Personal Pension Schemes (Modification of Schemes - Miscellaneous Amendments) Regulations 2016.

(2) These Regulations come into force on 6th April 2016.

Amendment of the Occupational Pension Schemes (Modification of Schemes) Regulations 2006

2.  After regulation 7B (amendment of schemes for adjustment measure) of the Occupational Pension Schemes (Modification of Schemes) Regulations 2006(5) insert—

“Modification of schemes: revaluation of guaranteed minimum pensions

7C.— (1) The trustees of a trust scheme may by resolution passed before 6th April 2017 modify the scheme for the purposes of —

(a) revaluing earnings factors for the purposes of section 14 (earner’s guaranteed minimum pension) of the 1993 Act in accordance with section 16(2) (revaluation of earnings factors for the purposes of section 14: early leavers etc.) of that Act as substituted by paragraph 16 of Schedule 13 to the Pensions Act 2014; and

(b) where the scheme contains a rule or provision that would require or permit the increases referred to in section 16(3) of the 1993 Act to be applied to an earner whose service in contracted-out employment ceased on the second abolition date with effect from a relevant year before the last service tax year, disapplying that rule or provision to the extent that it does not require or permit such increases.

(2) Modifications made by resolution under paragraph (1)—

(a) must only have effect from 6th April 2016 or such later date as may be specified; and

(b) may have effect from a date before the resolution is passed.

(3) In this regulation—

“contracted-out employment” has the meaning given in section 8 (meaning of “contracted-out employment” etc.) of the 1993 Act(6);

“earnings factors” has the meaning given in section 181(1) (general interpretation) of the 1993 Act;

“last service tax year” has the meaning given in section 16(2) of the 1993 Act as substituted by paragraph 16 of Schedule 13 to the Pensions Act 2014;

“relevant year” has the meaning given in section 16(5) of the 1993 Act(7);

“the second abolition date” has the meaning given in section 181(1) of the 1993 Act(8).”.

Amendment of the Occupational and Personal Pension Schemes (Consultation by Employers and Miscellaneous Amendment) Regulations 2006

3.  In regulation 10(1) of the Occupational and Personal Pension Schemes (Consultation by Employers and Miscellaneous Amendment) Regulations 2006 (listed changes: exclusions) after sub-paragraph (aa)(9) insert—

“(ab) is made for either or both of the purposes referred to in regulation 7C(1) (modification of schemes: revaluation of guaranteed minimum pensions)(10) of the Occupational Pension Schemes (Modification of Schemes) Regulations 2006,”.

Amendment of the Occupational Pension Schemes (Schemes that were Contracted-out) (No.2) Regulations 2015

4.  In regulation 20 (alteration of scheme rules) of the Occupational Pension Schemes (Schemes that were Contracted-out) (No.2) Regulations 2015(11)—

(a) in the opening words, omit “would not”; and

(b) for paragraphs (a) and (b) substitute—

“(a) would not—

(i) affect any of the matters dealt with in Part III of the 1993 Act (schemes that were contracted-out etc. and effects on members’ state scheme rights), or any regulations made under that Part, that relate to guaranteed minimum pensions, in a manner that would or might adversely affect any entitlement or accrued rights of any member of the scheme acquired before the alteration takes effect;

(ii) affect any of the matters dealt with in sections 87 to 92 of the 1993 Act(12) (protection of increases in guaranteed minimum pensions) or sections 109 and 110 of that Act(13) (annual increases of guaranteed minimum pensions) or any matters dealt with in regulations made under any of those provisions; or

(b) is made for either or both of the purposes referred to in regulation 7C(1) (modification of schemes: revaluation of guaranteed minimum pensions) of the Occupational Pension Schemes (Modification of Schemes) Regulations 2006.”.

Signed by authority of the Secretary of State for Work and Pensions

Altmann

Minister of State,

Department for Work and Pensions

24th February 2016

EXPLANATORY NOTE

(This note is not part of the Regulations)

These Regulations make changes to regulations as a consequence of provisions contained within section 24(1) of, and Schedule 13 to, the Pensions Act 2014 (c.19) (“the 2014 Act”) which abolishes contracting-out for salary related occupational pension schemes from 6th April 2016, known as “the second abolition date”.

Regulation 2 amends the Occupational Pension Schemes (Modification of Schemes) Regulations 2006 (S.I. 2006/759) to provide a power for such schemes to modify their scheme rules to take account of changes made to section 16(2) of the Pension Schemes Act 1993 (c.48) by Schedule 13 of the 2014 Act. Schemes may use this power to make changes to have effect from the second abolition date.

Regulation 3 provides that changes made using the power provided for in regulation 2 are not ‘listed changes’ for the purposes of the Occupational and Personal Pension Schemes (Consultation by Employers and Miscellaneous Amendment) Regulations 2006 (S.I. 2006/349).

Regulation 4 amends the Occupational Pension Schemes (Schemes that were Contracted-out) (No.2) Regulations 2015 (S.I. 2015/1677) so that changes made using the power provided for in regulation 2 is a permitted change to scheme rules which govern guaranteed minimum pensions.

An analysis of the impact of the abolition of contracting-out has been made as part of the analysis of the 2014 Act. A copy is available in the libraries of both Houses of Parliament and from the Better Regulation Unit of the Department for Work and Pensions, 2D, Caxton House, Tothill Street, London SW1H 9NA.

(1)

1993 c.48. Section 37 was substituted by paragraph 39 of Schedule 5 to the Pensions Act 1995 (c.26) (“the 1995 Act”) and amended by paragraph 22 of Schedule 4 to the Marriage (Same Sex Couples) Act 2013 (c.30), S.I. 2014/3229, paragraph 24 of Schedule 13 to the Pensions Act 2014 (c.19) (“the 2014 Act”), and section 81 of the Pensions Schemes Act 2015 (c.8). Section 181(1) is cited for the meaning it gives to ‘prescribed’.

(2)

1995 c.26. Section 124(1) is cited for the meaning it gives to ‘prescribed’.

(3)

2004 c.35. Section 318(1) is cited for the meaning it gives to ‘prescribed’.

(4)

2014 c.19.

(5)

S.I. 2006/759. Regulation 7B was inserted by S.I. 2015/879.

(6)

Section 8 is amended by paragraph 7 of Schedule 13 to the 2014 Act.

(7)

The definition of “relevant year” in section 16(5) was substituted by paragraph 4 of Schedule 2 to the Welfare Reform and Pensions Act 1999 (c. 30).

(8)

The definition of “the second abolition date” was inserted by paragraph 43(2) of Schedule 13 to the 2014 Act.

(9)

S.I. 2006/349. Paragraph (aa) was inserted by S.I. 2015/879.

(10)

Regulation 7C is inserted by regulation 2 of this instrument.

(11)

S.I. 2015/1677.

(12)

Section 87 was amended by paragraph 28 of Schedule 4 to the Pensions Act 2007 and is amended by paragraph 38 of Schedule 13 to the 2014 Act. Other amendments to sections 87 to 92 are made by S.I. 2005/2050.

(13)

Section 109(3A) is amended by paragraph 40 of Schedule 13 to the 2014 Act. Subsection (3A) was inserted by section 55(b) of the Pensions Act 1995 (c. 26). Sections 109 and 110 were also amended by sections 53(4) and 55 of the 1995 Act and by S.I. 2005/2050.