Part 1Pension scheme membership for jobholders
Chapter 1Employers' duties
Quality requirements
26Quality requirement: UK personal pension schemes
(1)
This section applies to a personal pension scheme if the operation of the scheme—
(a)
is carried on in such a way as to be a regulated activity for the purposes of the Financial Services and Markets Act 2000 (c. 8), and
(b)
is carried on in the United Kingdom by a person who is in relation to that activity an authorised person or an exempt person under section 19 of that Act.
(2)
The scheme satisfies the quality requirement in relation to a jobholder if the following conditions are satisfied.
(3)
The first condition is that all of the benefits that may be provided to the jobholder under the scheme are money purchase benefits.
(4)
The second condition is that, in relation to the jobholder, there is an agreement between the provider of the scheme and the employer under which—
(a)
the employer must pay contributions in respect of the jobholder;
(b)
the employer's contribution, however calculated, must be equal to or more than 3% of the amount of the jobholder's qualifying earnings in the relevant pay reference period.
(5)
In subsection (6), “shortfall” means the difference (if any) between—
(a)
the employer's contribution in respect of the jobholder under the agreement referred to in subsection (4), and
(b)
8% of the amount of the jobholder's qualifying earnings in the relevant pay reference period.
(6)
The third condition is that if there is a shortfall there is an agreement between the provider of the scheme and the jobholder under which the jobholder must pay contributions which, however calculated, are equal to or more than the shortfall.
(7)
The fourth condition is that, in relation to the jobholder, there are direct payment arrangements (within the meaning of section 111A of the Pension Schemes Act 1993 (c. 48)) between the jobholder and the employer.
F1(7A)
The fifth condition is that if the scheme is a group personal pension scheme of a prescribed description it must, unless subsection (7C) applies, hold an approval under section 28B in respect of a main scale default arrangement.
(7B)
The sixth condition is that if the scheme is a group personal pension scheme of a prescribed description it must hold an approval under section 28C in respect of the asset allocation requirement. See also section 28G (suspension of asset allocation requirement: savers’ interest test) for provision about circumstances in which the asset allocation requirement is suspended.
(7C)
This subsection applies if the group personal pension scheme—
(a)
has previously been approved under section 28E (transition pathway relief) and is to be treated in accordance with regulations as if it had approval under section 28B,
(b)
qualifies under section 28E for transition pathway relief, or
(c)
qualifies under section 28F for new entrant pathway relief.
(7D)
Regulations under subsection (7A) or (7B) may exempt any description of group personal pension schemes, for example those that are designed to meet the needs of persons with a protected characteristic within the meaning of the Equality Act 2010.
(7E)
Regulations may—
(a)
permit the Regulatory Authority to determine that a group personal pension scheme is to be treated as meeting the fifth or sixth condition for a period (the “protected period”) specified by the Regulatory Authority;
(b)
specify circumstances in which a group personal pension scheme which is treated as mentioned in paragraph (a) and meets prescribed conditions is to be subject during a prescribed period (which ends with the end of the protected period) to any requirements specified in the regulations; and provision under this paragraph may include provision corresponding to any provision that may be made under section 28A(10);
(c)
make provision about the Regulatory Authority requiring the provider of a group personal pension scheme to give the Regulatory Authority a plan showing how they propose to meet or continue to meet the scale requirement under section 28B or the conditions for approval under section 28C.
(8)
F2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(9)
A scheme does not fail to satisfy the quality requirement under this section merely because the provider of the scheme may on any occasion refuse to accept a contribution below an amount prescribed for the purposes of this section on the grounds that it is below that amount.
F3(10)
In this section “main scale default arrangement” is to be interpreted in accordance with section 28B(13).