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Pension Schemes Act 2015

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Prospective

PART 1 E+W+SCategories of pension scheme

1IntroductionE+W+S

(1)This Part defines some key expressions used in pensions legislation—

(a)defined benefits scheme - see section 2;

(b)shared risk scheme (sometimes known as “defined ambition”) - see section 3;

(c)defined contributions scheme - see section 4.

(2)The definitions—

(a)do not apply in any public service pensions legislation;

(b)apply in other legislation only where legislation expressly provides for the definitions to apply.

2Defined benefits schemeE+W+S

A pension scheme is a “defined benefits scheme” if—

(a)the scheme provides for all members to be paid retirement income beginning at normal pension age and continuing for life,

(b)there is a full pensions promise in relation to the retirement income and any other retirement benefits that may be provided to members,

(c)the normal pension age in relation to the retirement income and any other retirement benefits that may be provided to members is fixed, and

(d)such other requirements as may be specified in regulations are met.

3Shared risk scheme (sometimes known as “defined ambition”)E+W+S

A pension scheme is a “shared risk scheme” if—

(a)there is a pensions promise in relation to at least some of the retirement benefits that may be provided to each member, but

(b)the scheme is not a defined benefits scheme.

4Defined contributions schemeE+W+S

A pension scheme is a “defined contributions scheme” if there is no pensions promise in relation to any of the retirement benefits that may be provided to the members.

5Meaning of “pensions promise” etcE+W+S

(1)For the purposes of section 2 there is a “full pensions promise” in relation to a retirement benefit if—

(a)the scheme provides for there to be a promise, at all times before the benefit comes into payment, about the level of the benefit, and

(b)the level of the benefit is to be determined wholly by reference to that promise in all circumstances.

(2)For the purposes of sections 3 and 4 there is a “pensions promise” in relation to a retirement benefit if the scheme provides for there to be a promise, at a time before the benefit comes into payment, about the level of the benefit.

(3)A reference in this section to a promise about the level of a retirement benefit—

(a)includes a promise about factors, other than longevity, that will be used to calculate the level of the benefit,

(b)does not include a promise if, or to the extent that, it consists merely of a promise that the level of the benefit will be calculated by reference to an amount available for its provision, and

(c)in the case of a benefit the level of which depends on the amount available for the provision of benefits to or in respect of the member and one or more other members collectively, does not include a promise about the factors used to determine what proportion of that amount is available for the provision of the particular benefit.

(4)A scheme provides for there to be a promise if the scheme—

(a)sets out the promise, or

(b)requires the promise to be obtained from a third party.

(5)A scheme also provides for there to be a promise for the purposes of subsection (2) if the scheme provides for the member to be given—

(a)the option of a promise from the scheme, or

(b)the option of requiring a promise to be obtained from a third party,

(whether or not the option is subject to conditions).

(6)A benefit does not fail the test in subsection (1)(b) just because the scheme confers a discretion to vary the benefit so long as the discretion—

(a)is capable of being used only for reasons related to a member's individual circumstances and meets any other requirements that may be specified in regulations, or

(b)is of a description specified in regulations.

(7)A promise about the level of retirement income is not to be treated as a pensions promise if—

(a)the promise is conditional on the retirement income coming into payment by a particular date,

(b)the scheme provides for the member to be first given the promise during such period ending on that date as may be specified in regulations, and

(c)the promise is not of a description specified in regulations.

(8)When working out for the purposes of sections 2 to 4 what benefits “may be provided” to a member, take into account—

(a)benefits that may be provided only if the member has been a member for a certain length of time, and

(b)any other benefits that, at a future time, are benefits that may be provided to the member.

6Treatment of a scheme as two or more separate schemesE+W+S

(1)Regulations must provide for a pension scheme that does not fit within any of the categories to be treated, for the purposes of this Part and any other specified legislation, as if it were two or more separate schemes each of which then fits within one of the categories.

(2)Regulations may provide for other circumstances in which a scheme is to be treated, for the purposes of this Part and any other specified legislation, as two or more separate schemes each of which fits within one of the categories.

(3)In this section “category” means a category of scheme defined by section 2, 3 or 4.

7Interpretation of Part 1E+W+S

In this Part—

  • “fixed”, in respect of normal pension age in relation to a benefit, means incapable of changing except by an amendment to the scheme rules;

  • full pensions promise” has the meaning given by section 5;

  • legislation” means—

    (a)

    an Act, or

    (b)

    subordinate legislation as defined by section 21(1) of the Interpretation Act 1978;

  • level”, in relation to a retirement benefit, means—

    (a)

    in the case of retirement income, the rate of that income, and

    (b)

    in the case of a retirement lump sum, the amount of that lump sum;

  • normal pension age”, in relation to a benefit for a member of a pension scheme, means—

    (a)

    the earliest age at which, or earliest occasion on which, the member is entitled to receive the benefit without adjustment for taking it early or late (disregarding any special provision as to early payment on the grounds of ill health or otherwise), or

    (b)

    if there is no such age or occasion, normal minimum pension age as defined by section 279(1) of the Finance Act 2004;

  • pensions promise” has the meaning given by section 5;

  • pension scheme” has the meaning given by section 1(5) of the Pension Schemes Act 1993;

  • public service pensions legislation” means—

    (a)

    the Public Service Pensions Act 2013,

    (b)

    the Superannuation Act 1972, and

    (c)

    any other provision by or under which a public service pension scheme is established;

  • public service pension scheme” has the meaning given by section 1(1) of the Pension Schemes Act 1993;

  • regulations” means regulations made by the Secretary of State;

  • retirement benefit”, in relation to a member of a pension scheme, means—

    (a)

    retirement income, or

    (b)

    a retirement lump sum;

  • retirement income”, in relation to a member of a pension scheme, means a pension or annuity payable to the member on reaching normal pension age;

  • retirement lump sum”, in relation to a member of a pension scheme, means a lump sum payable to the member on reaching normal pension age or available for the provision of other retirement benefits for the member on or after reaching normal pension age.

Prospective

PART 2 E+W+SCollective benefits

Introduction and nature of collective benefitsE+W+S

8Introduction and definitionE+W+S

(1)This Part is about pension schemes under which at least some of the benefits that may be provided are collective benefits.

(2)A benefit is a “collective benefit” if in all circumstances the rate or amount of the benefit depends entirely on—

(a)the amount available for the provision of benefits to or in respect of the member and one or more other members collectively, and

(b)factors used to determine what proportion of that amount is available for the provision of the particular benefit.

(3)But a benefit is not a collective benefit if—

(a)it is a money purchase benefit, or

(b)it is of a description specified in regulations.

9Duty to set targets for collective benefitsE+W+S

(1)Regulations may require the trustees or managers of a pension scheme to set targets in relation to any collective benefits that may be provided by the scheme.

(2)The regulations may, in particular—

(a)impose requirements about the way that targets are expressed;

(b)impose requirements about the recording or publication of targets;

(c)require the trustees or managers to set initial targets at a level which ensures that the probability of meeting the targets falls within a range specified in the regulations;

(d)require the trustees or managers to obtain a certificate from an actuary certifying that, in the opinion of the actuary, the initial targets have been set at a level that complies with regulations under paragraph (c).

(3)Regulations made in reliance on subsection (2)(d) may, in particular—

(a)require the trustees or managers to obtain the certificate from an actuary who has specified qualifications or meets other specified requirements;

(b)make provision about the content of the certificate;

(c)set out matters to which the actuary must have regard;

(d)require the trustees or managers to provide a copy of the actuary's certificate to a specified person.

(4)In this section “target” means a target, relating to the rate or amount of a benefit, that is unenforceable.

10Policy about factors used to determine each benefitE+W+S

(1)Regulations may require the trustees or managers of a pension scheme—

(a)to have a policy as to the factors to be used to determine what proportion of the amount available for the provision of any collective benefits by the scheme is to be available for the provision of a particular collective benefit, and

(b)to follow that policy in calculating any collective benefit.

(2)The regulations may, in particular—

(a)require the trustees or managers to consult about the policy;

(b)make provision about the content of the policy;

(c)set out matters that the trustees or managers must take into account, or principles they must follow, in formulating the policy;

(d)make provision about reviewing and revising the policy.

11Power to impose requirements about factors used to determine each benefitE+W+S

Regulations may make provision as to the factors to be used to determine what proportion of the amount available for the provision of any collective benefits by a pension scheme is to be available for the provision of a particular collective benefit.

ContributionsE+W+S

12Payment scheduleE+W+S

(1)Regulations may require the trustees or managers of a pension scheme to prepare a payment schedule showing—

(a)the contributions payable to the scheme in respect of any collective benefits under the scheme, and

(b)the dates on which the contributions are due.

(2)The regulations may require the payment schedule to include other amounts payable to the scheme and the dates on which they are due.

(3)The regulations may, in particular—

(a)make further provision about the content of the payment schedule;

(b)make provision about revising the payment schedule.

(4)The regulations may, in particular, make provision corresponding or similar to any provision made by section 87 of the Pensions Act 1995 (payment schedules for certain kinds of scheme).

13Overdue contributions and other paymentsE+W+S

(1)Regulations—

(a)may require the trustees or managers of a pension scheme to notify a specified person of any relevant payments that are overdue;

(b)may make provision for the recovery of those payments.

(2)In subsection (1) “relevant payment” means a payment shown in a payment schedule required by regulations under section 12.

(3)Regulations under subsection (1) may, in particular, make provision corresponding or similar to any provision made by section 88 of the Pensions Act 1995 (failure to comply with payment schedule for certain kinds of scheme).

InvestmentE+W+S

14Statement of investment strategyE+W+S

(1)Regulations may require the trustees or managers of a pension scheme to prepare a statement of their investment strategy in connection with any collective benefit investments.

(2)The regulations may, in particular, make provision about—

(a)the content of the statement;

(b)reviewing and revising the statement.

(3)The regulations may, in particular—

(a)make provision corresponding or similar to any provision made by section 35 of the Pensions Act 1995 (investment principles for occupational trust-based schemes);

(b)disapply that section in relation to any investments to which the regulations apply.

15Investment performance reportsE+W+S

(1)Regulations may require the trustees or managers of a pension scheme to obtain reports about the performance of any collective benefit investments.

(2)The regulations may, in particular, make provision about—

(a)the content of reports;

(b)how often reports must be obtained;

(c)the person from whom reports must be obtained.

16Investment powersE+W+S

(1)Regulations may make provision about—

(a)the investment powers of the trustees or managers of a pension scheme in connection with collective benefit investments;

(b)their powers to delegate decisions in connection with collective benefit investments (including provision as to liability for delegated decisions);

(c)the investment powers of any person to whom they have delegated decisions in connection with collective benefit investments.

(2)The regulations may, in particular—

(a)make provision corresponding or similar to any provision made by section 34 or 36 of the Pensions Act 1995 (powers of investment and delegation and choice of investments for occupational trust-based schemes);

(b)disapply those sections in relation to collective benefit investments.

17Restriction on borrowing by trustees or managersE+W+S

(1)Regulations may prohibit a person to whom this section applies from borrowing money or acting as a guarantor except in specified cases.

(2)This section applies to—

(a)the trustees or managers of a pension scheme under which any of the benefits that may be provided are collective benefits, and

(b)any person to whom they have delegated decisions in connection with collective benefit investments.

18Investment powers: duty of careE+W+S

(1)Regulations may make provision to prevent any instrument or agreement from excluding or restricting any liability of the trustees or managers of a pension scheme, or any person to whom they have delegated decisions, in respect of the performance of investment functions involving collective benefit investments.

(2)The regulations may, in particular—

(a)make provision corresponding or similar to any provision made by section 33 of the Pensions Act 1995 (duty of care in respect of investment powers for occupational trust-based schemes);

(b)disapply that section in relation to collective benefit investments.

ValuationE+W+S

19Valuation reportsE+W+S

(1)Regulations may require the trustees or managers of a pension scheme to obtain a report prepared by an actuary—

(a)valuing the assets held by the scheme for the purposes of providing collective benefits, and

(b)assessing the probability of the scheme meeting the targets in relation to those benefits.

(2)A report required by regulations under this section is referred to in this Part as a “valuation report”.

(3)The regulations may, in particular—

(a)require the trustees or managers to obtain the report from an actuary who has specified qualifications or meets other specified requirements;

(b)require the actuary to certify whether, in the opinion of the actuary, the probability of the scheme meeting the targets falls within the required range or is above or below it;

(c)make further provision about the content of valuation reports;

(d)make provision about how often valuation reports must be obtained.

20Valuation processE+W+S

(1)Regulations may make provision about the methods or assumptions to be used by an actuary valuing assets, or assessing the probability of a scheme meeting a target in relation to a collective benefit, for the purposes of a valuation report.

(2)Regulations under subsection (1) may, in particular—

(a)require the trustees or managers of the scheme to determine the methods or assumptions to be used by the actuary;

(b)set out matters that the trustees or managers must take into account, or principles they must follow, in determining methods or assumptions.

(3)Regulations may—

(a)make provision about the assets to be taken into account for the purposes of a valuation report;

(b)require the value attributed to the assets to be reduced by the amount of any liabilities in respect of administrative expenses or other specified matters.

(4)Regulations may require an actuary preparing a valuation report to certify that, in the opinion of the actuary, any specified requirements imposed by regulations under this section have been followed.

(5)Regulations—

(a)may require an actuary to have regard to guidance issued from time to time by a specified person when preparing a valuation report;

(b)may impose other requirements on an actuary when preparing a valuation report.

Dealing with deficits and surplusesE+W+S

21Policy for dealing with a deficit or surplusE+W+S

(1)Regulations may require the trustees or managers of a pension scheme—

(a)to have a policy for dealing with a deficit or surplus in respect of any collective benefits that may be provided by the scheme, and

(b)to follow that policy if a valuation report shows a deficit or surplus.

(2)For the purposes of this Part—

(a)there is a “deficit” in respect of a collective benefit if the probability of the scheme meeting a target in relation to the benefit is below the required range, and

(b)there is a “surplus” in respect of a collective benefit if the probability of the scheme meeting a target in relation to the benefit is above the required range.

(3)Regulations under subsection (1)(a) may, in particular—

(a)require the trustees or managers to consult about the policy;

(b)make provision about the content of the policy;

(c)set out matters that the trustees or managers must take into account, or principles they must follow, in formulating the policy;

(d)make provision about reviewing and revising the policy.

(4)The regulations may, in particular, require the policy—

(a)to be formulated with a view to achieving results described in the regulations within a period or periods described in the regulations;

(b)to contain provision for a deficit or surplus to be dealt with in one or more of a range of ways described in the regulations;

(c)to contain an explanation of the possible effect of the policy, or any requirements imposed by regulations under section 22, on members in different circumstances.

22Power to impose requirements about dealing with a deficit or surplusE+W+S

(1)Regulations may specify circumstances in which a deficit or surplus in respect of any collective benefits that may be provided by a pension scheme must be dealt with in a particular way.

(2)The regulations may, in particular, specify steps that must be taken by the trustees or managers and the period or periods within which any steps must be taken.

23Deficits attributable to an offence or the imposition of a levyE+W+S

(1)Regulations may provide for an amount to be treated as a debt due from an employer to the trustees or managers of a pension scheme that provides collective benefits in cases where there is a deficit that is attributable to a specified offence or the imposition of a specified levy.

(2)The regulations may, in particular, make provision corresponding or similar to any provision made by section 75 of the Pensions Act 1995 (amounts deemed to be debts due from an employer).

(3)For the purposes of this section—

  • employer” has the meaning given by section 318 of the Pensions Act 2004;

  • deficit” has the meaning given by the regulations (and the meaning need not be the same as in section 21).

24Payment of amounts out of collective benefit fundsE+W+S

(1)Regulations must prohibit the making of payments out of funds held for the purposes of providing collective benefits except for—

(a)payments made for the purpose of providing those benefits, or

(b)other specified payments.

(2)The regulations may, in particular, make provision corresponding or similar to any provision made by section 37 of the Pensions Act 1995 (payment of surplus to employer in the case of an occupational trust-based scheme).

Cash equivalentsE+W+S

25Policy for calculating cash equivalent of benefitsE+W+S

(1)Regulations may require the trustees or managers of a pension scheme—

(a)to have a policy about the calculation and verification of the cash equivalent of any collective benefit that may be provided by the scheme;

(b)to follow that policy in calculating or verifying any cash equivalent.

(2)In this section “cash equivalent” means the cash equivalent mentioned in the following—

(a)section 93A(3) of the Pension Schemes Act 1993;

(b)section 101H(1) of that Act;

(c)section 29(2) and (3) of the Welfare Reform and Pensions Act 1999;

(d)any other provision specified in regulations.

(3)Regulations under subsection (1) may, in particular—

(a)require the trustees or managers to consult about the policy;

(b)require the trustees or managers to ensure that the policy is consistent with any requirements imposed by regulations under section 97 or 101I of the Pension Schemes Act 1993 or section 30 of the Welfare Reform and Pensions Act 1999 or any other specified requirements;

(c)make other provision about the content of the policy;

(d)set out matters that the trustees or managers must take into account, or principles they must follow, in formulating the policy;

(e)make provision about reviewing and revising the policy.

Winding upE+W+S

26Winding upE+W+S

(1)Regulations may make provision about the winding up of a pension scheme under which collective benefits may be provided or part of such a scheme.

(2)The regulations may, in particular, make provision about—

(a)the distribution of assets (including any order of priority);

(b)the operation of the scheme during winding up;

(c)the discharge of liabilities;

(d)excess assets on winding up.

(3)The regulations may, in particular—

(a)disapply or amend or otherwise modify the application of any of sections 38, 73, 73A, 73B, 74 and 76 of the Pensions Act 1995 (winding up);

(b)make provision corresponding or similar to any provision made by those sections.

27Requirement to wind up scheme in specified circumstancesE+W+S

(1)Regulations may require the trustees or managers of a pension scheme under which collective benefits may be provided to wind up the whole or part of the scheme in specified circumstances.

(2)The regulations may, in particular—

(a)provide for the winding up of the scheme or part to be as effective in law as if it had been made under powers conferred by or under the scheme;

(b)require the scheme or part to be wound up in spite of any legislative provision, rule of law or provision of a scheme, which would otherwise operate to prevent the winding up;

(c)require the scheme or part to be wound up without regard to any legislative provision, rule of law or provision of a scheme that would otherwise require, or might otherwise be taken to require, the implementation of any procedure or the obtaining of any consent with a view to the winding up.

28Policies about winding upE+W+S

(1)Regulations may require the trustees or managers of a pension scheme under which collective benefits may be provided—

(a)to have a policy about the winding up of the scheme or part of it;

(b)to follow that policy.

(2)The regulations may, in particular—

(a)require the trustees or managers to consult about the policy;

(b)make provision about the content of the policy;

(c)set out matters that the trustees or managers must take into account, or principles they must follow, in formulating the policy;

(d)make provision about reviewing and revising the policy.

(3)The regulations may, in particular, require the policy—

(a)to contain an explanation of the circumstances in which the trustees or managers are permitted or required to wind up the scheme or part and any requirements about the distribution of assets (including any order of priority);

(b)to contain an explanation of how the trustees or managers intend to use any powers to wind up the scheme or part and how they intend to use any powers in relation to the distribution of assets (including any order of priority);

(c)to contain an explanation of how the costs of winding up are required to be met or how the trustees or managers will use any powers to decide how those costs are to be met.

Identifying assetsE+W+S

29Working out which assets are available for the provision of which benefitsE+W+S

Regulations may make provision, in relation to a pension scheme under which any of the benefits that may be provided are collective benefits, about how to work out—

(a)which assets held by the scheme are held for the purposes of providing collective benefits;

(b)which assets held by the scheme are held for the purposes of providing which collective benefits;

(c)which assets held by the scheme are held for the purposes of providing any benefits other than collective benefits.

Regulations under Part 2: generalE+W+S

30Requirement to obtain actuarial adviceE+W+S

(1)Regulations may require the trustees or managers of a pension scheme to obtain advice from an actuary before making a specified decision or taking other specified steps.

(2)The regulations may, in particular, require the trustees or managers to obtain the advice from an actuary who has specified qualifications or meets other specified requirements.

(3)The regulations—

(a)may require an actuary to have regard to guidance issued from time to time by a specified person when advising on matters in accordance with the regulations;

(b)may impose other requirements on an actuary when advising on matters in accordance with the regulations.

31Sub-delegationE+W+S

Regulations under this Part may confer a discretion on a person.

32Publication of documents etcE+W+S

Regulations under this Part requiring the trustees or managers of a pension scheme to prepare or obtain any document or have a policy may impose requirements about—

(a)the publication of the document or policy;

(b)the sending of copies to persons specified in the regulations.

33EnforcementE+W+S

Regulations under this Part may provide for section 10 of the Pensions Act 1995 (civil penalties) to apply to a person who fails to comply with the regulations.

34Overriding requirementsE+W+S

Regulations under this Part may include provision for them to override the provisions of a pension scheme to the extent that there is a conflict.

Interpretation of Part 2E+W+S

35Interpretation of Part 2E+W+S

(1)In this Part—

  • collective benefit” has the meaning given by section 8;

  • collective benefit investments”, in relation to a scheme, means investments held for the purposes of the provision of any collective benefits under the scheme;

  • “deficit”, in respect of a collective benefit, has the meaning given by section 21 (but this definition does not apply in section 23, which contains its own definition);

  • money purchase benefit” has the meaning given by section 181 of the Pension Schemes Act 1993;

  • pension scheme” has the meaning given by section 1(5) of the Pension Schemes Act 1993;

  • regulations” means regulations made by the Secretary of State;

  • required range”, in relation to a level of probability, means the range specified in regulations under section 9(2)(c);

  • “surplus”, in respect of a collective benefit, has the meaning given by section 21;

  • target” means a target required by regulations under section 9;

  • trustees or managers” means—

    (a)

    in relation to a scheme established under a trust, the trustees, and

    (b)

    in relation to any other scheme, the managers;

  • valuation report” has the meaning given by section 19.

(2)A power conferred by this Part to make provision corresponding or similar to any provision made by a section of another Act includes a power to make provision corresponding or similar to any provision that may be made by regulations under that section.

PART 3 E+W+SGeneral changes to legislation about pension schemes

Administration and governanceE+W+S

Prospective

36Pensions promise obtained from third partyE+W+S

(1)The Secretary of State may by regulations provide that the trustees or managers of a defined benefits scheme or a shared risk scheme must not obtain a pensions promise from a third party unless conditions specified in the regulations are met.

(2)Regulations under this section—

(a)may provide for a specified provision of the regulations to override a provision of a scheme to the extent that there is a conflict;

(b)may provide for section 10 of the Pensions Act 1995 (civil penalties) to apply to a person who fails to comply with the regulations.

(3)In this section—

  • defined benefits scheme” has the meaning given by section 2;

  • pensions promise” has the meaning given by section 5;

  • shared risk scheme” has the meaning given by section 3;

  • trustees or managers” means—

    (a)

    in relation to a scheme established under a trust, the trustees, and

    (b)

    in relation to any other scheme, the managers.

(4)In section 34(7) of the Pensions Act 1995 (power of investment and delegation overrides other legislation etc), for the words from “other than” to the end of the subsection substitute “other than an enactment contained in, or made under—

(a)this Part,

(b)the Pension Schemes Act 1993, or

(c)section 36 of the Pension Schemes Act 2015.”

Prospective

37Duty to act in the best interests of membersE+W+S

(1)The Secretary of State may by regulations impose a duty on the managers of a relevant non-trust based scheme to act in the best interests of members when taking decisions of a specified description.

(2)In this section “relevant non-trust based scheme” means a non-trust based scheme that is—

(a)a shared risk scheme, or

(b)a defined contributions scheme under which any of the benefits that may be provided are collective benefits.

(3)Regulations under this section—

(a)may provide for the duty to act in the best interests of members to override obligations that are inconsistent with that duty (including obligations imposed by any legislative provision, rule of law or provision of a scheme or other instrument), but

(b)do not otherwise affect any duty that might arise apart from this section.

(4)Regulations under this section may provide for the consequences of a manager breaching (or threatening to breach) the duty to act in the best interests of members to be the same as the consequences of breaching (or threatening to breach) a fiduciary duty owed by the manager to the members and, accordingly, for the duty to be enforceable in the same way as a fiduciary duty.

(5)In this section—

  • collective benefit” has the meaning given by section 8;

  • defined contributions scheme” has the meaning given by section 4;

  • non-trust based scheme” means a scheme that is not established under a trust;

  • shared risk scheme” has the meaning given by section 3.

38Disclosure of information about schemesE+W+S

(1)Section 113 of the Pension Schemes Act 1993 (disclosure of information about schemes to members etc) is amended as follows.

(2)In subsection (1)—

(a)in the opening words, for “the persons mentioned in subsection (2)” substitute “ persons of prescribed descriptions ”;

(b)in paragraph (ca), omit “to the member” and “by him”.

(3)Omit subsection (2).

(4)Before subsection (3) insert—

(2A)In complying with requirements specified in the regulations, a person must have regard to any guidance prepared from time to time by the Secretary of State.

(5)For subsection (4) substitute—

(4)Where the regulations specify requirements to be complied with in the case of an occupational pension scheme with respect to keeping recognised trade unions informed, the regulations must make provision for referring to an employment tribunal any question whether an organisation is a recognised trade union.

(4A)For the purposes of subsection (4) a trade union is a recognised trade union in relation to an occupational pension scheme if it is an independent trade union recognised to any extent for the purposes of collective bargaining in relation to members and to prospective members of the scheme.

(6)In subsection (5), for “some or all of the persons mentioned in subsection (2)” substitute “ persons of a prescribed description ”.

(7)Omit paragraph 17 of Schedule 12 to the Pensions Act 2004, which is no longer needed given subsection (3).

Commencement Information

I1S. 38(1)(4) in force at 18.9.2017 by S.I. 2017/916, reg. 3

Prospective

Early leaversE+W+S

39Extension of preservation of benefit under occupational pension schemesE+W+S

(1)Part 4 of the Pension Schemes Act 1993 (protection for early leavers) is amended as follows.

(2)In section 71 (basic principle as to short service benefit)—

(a)in subsection (1), for paragraph (aa) (but not the “or” at the end) substitute—

(aa)he has at least 30 days' qualifying service and, if he were entitled to benefit because of this paragraph, all of it would necessarily be benefit falling within subsection (1A),;

(b)after subsection (1) insert—

(1A)The following fall within this subsection—

(a)collective benefits;

(b)benefits calculated otherwise than by reference to the member's salary.

(3)In section 70 (interpretation of Chapter 1: preservation requirements), in subsection (1)—

(a)after the definition of “relevant employment” insert—

benefits”, in relation to a member of a scheme, means—

(a)retirement benefit for the member at normal pension age, or

(b)benefit for the member's wife, husband, civil partner, widow, widower, surviving civil partner or dependants or others on the member's attaining normal pension age or the member's later death, or

(c)both such descriptions of benefit;;

(b)in the definition of “long service benefit” omit the words from “and in this definition “benefits” means” to the end of the definition.

(4)In section 71, for subsections (7) to (11) substitute—

(7)In subsection (1), “2 years' qualifying service” or (as the case may be) “30 days' qualifying service” means a period of service of the relevant duration in which the member was at all times employed either—

(a)in pensionable service under the scheme, or

(b)in service in employment which was contracted-out by reference to the scheme, or

(c)in linked qualifying service under another scheme.

(8)For the purposes of subsection (7)—

(a)a period of service may consist of a single period or two or more periods, continuous or discontinuous;

(b)no regard is to be had to whether or not the service was of the same description throughout the period of service.

(9)A period of service previously terminated is not to count towards the 2 years' or (as the case may be) 30 days' qualifying service unless it counts towards qualification for long service benefit, and need then count only to the same extent and in the same way.

(10)Subsection (1)(aa) does not apply in relation to a person's membership of a scheme if—

(a)in a case where the benefit would necessarily all be money purchase benefit, any period of relevant service began before the day on which section 36 of the Pensions Act 2014 came into force (whether or not it also ended before that date);

(b)in any other case, any period of relevant service began before the day on which section 39 of the Pension Schemes Act 2015 came into force (whether or not it also ended before that date).

Relevant service” means service that counts towards the 30 days' qualifying service for the purposes of subsection (1)(aa).

(5)In section 74 (computation of short service benefit), in subsections (3) and (4), after “so much of any benefit” insert “ , other than collective benefit, ”.

(6)In section 36 of the Pensions Act 2014, omit subsections (2) and (3) which are no longer needed given the earlier provisions of this section.

40Revaluation of accrued benefitsE+W+S

Schedule 1 contains amendments about the revaluation of benefits.

Prospective

IndexationE+W+S

41Collective benefits exempt from indexationE+W+S

(1)In section 51 of the Pensions Act 1995 (annual increase in rate of pension)—

(a)in subsection (1), for “Subject to subsections (6) and (7)” substitute “ Subject to subsections (6) to (7A) ”;

(b)after subsection (7) insert—

(7A)This section does not apply to any pension, or part of a pension, that is a collective benefit.

(2)Omit section 21(2) of the Pensions Act 2011, which is no longer needed given subsection (1).

42Regulatory own fund schemes exempt from indexationE+W+S

(1)Section 51 of the Pensions Act 1995 (annual increase in rate of pension) is amended as follows.

(2)In subsection (1)(a)(ii) (scheme based exemption) after “public service pension scheme” insert “ or a regulatory own fund scheme (see subsection (9)) ”.

(3)After subsection (8) insert—

(9)In subsection (1)(a)(ii) “regulatory own fund scheme” means a scheme in respect of which Article 17 of Council Directive 2003/41/EC of 3 June 2003 on the activities and supervision of institutions for occupational retirement provision applies.

(10)Regulations may amend subsection (9) to replace the reference to the Article mentioned there with a reference to any provision of an EU instrument that replaces it (with or without changes).

43Power to create other exemptions from indexationE+W+S

(1)In section 51 of the Pensions Act 1995 (annual increase in rate of pension), after subsection (5) insert—

(5A)Regulations may provide that this section does not apply to a pension, or part of a pension, of a specified description.

(5B)But regulations under subsection (5A) may not be made in respect of—

(a)a pension, or any part of a pension, under a defined benefits scheme,

(b)a pension, or any part of a pension, which came into payment before the day on which the regulations come into force, or

(c)a pension, or any part of a pension, which is attributable to pensionable service before the day on which the regulations come into force.

(5C)Regulations under subsection (5A) may amend this Part.

(2)In section 175(2) of that Act (statutory instruments subject to affirmative procedure), before paragraph (a) insert—

(za)section 51(5A),.

Prospective

Independent trusteesE+W+S

44Removal of requirement to maintain register of independent trusteesE+W+S

(1)Section 23 of the Pensions Act 1995 (power to appoint an independent trustee of an occupational pension scheme on the insolvency of the person who is the employer in relation to the scheme etc) is amended as follows.

(2)In subsection (1), omit paragraph (b) (requirement for the trustee to be registered in a register maintained by the Pensions Regulator) and the “and” before it.

(3)Omit subsections (4) to (6) (regulations to provide for there to be a register of independent trustees).

Prospective

Rules about modification of schemesE+W+S

45Rules about modification of schemesE+W+S

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

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

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

(b)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 (3) (meaning of “protected modification”), after paragraph (a) insert—

(aa)on taking effect would or might result in any subsisting right of a member of the scheme which is a right to benefits in respect of which there is a pensions promise becoming, or being replaced with, a right to benefits under the scheme rules in respect of which there is no pensions promise,

(ab)on taking effect would or might result in any subsisting right of a member of the scheme which is a right to retirement income in respect of which there is a pensions promise becoming, or being replaced with, a right to benefits other than retirement income,

(ac)on taking effect would or might result in any subsisting right of—

(i)a member of the scheme, or

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

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

(4)In subsection (3)(b) of that section, after “rules” insert “ , other than a pension that is a collective benefit ”.

(5)In subsection (5)(a) of that section, after “paragraph (a)” insert “ , (aa), (ab), (ac) ”.

(6)In subsection (9) of that section—

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

(viii)regulations made under Schedule 17 to the Pensions Act 2014;

(ix)regulations made under Schedule 18 to the Pensions Act 2014;

(x)regulations made under Part 2 of the Pension Schemes Act 2015;;

(b)in paragraph (b), after sub-paragraph (v) insert—

(vi)regulations made under paragraph 17 of Schedule 17 to the Pensions Act 2014;

(vii)regulations made under paragraph 6 of Schedule 18 to the Pensions Act 2014;

(viii)regulations made under section 34 of the Pension Schemes Act 2015;.

(7)In section 124 (interpretation), in subsection (1), at the appropriate places insert—

pensions promise” has the meaning given by section 5 of the Pension Schemes Act 2015;;

retirement income” has the meaning given by section 7 of the Pension Schemes Act 2015;.

Other amendmentsE+W+S

46Other amendments to do with Parts 1 and 2E+W+S

Schedule 2—

(a)contains amendments to do with Parts 1 and 2, and

(b)replaces references to “money purchase scheme” so as to limit the number of different ways of categorising pension schemes.

Commencement Information

I2S. 46 partly in force; s. 46 in force for specified purposes at 6.4.2015, see s. 89(3)(a)

PART 4 U.K.Pensions flexibilities

CHAPTER 1E+W+SPensions guidance

47Pensions guidanceE+W+S

Schedule 3 contains amendments of the Financial Services and Markets Act 2000, and of other legislation, that are about the giving of pensions guidance to pension scheme members, and survivors of pension scheme members, with a right or entitlement to flexible benefits.

CHAPTER 2U.K.Independent advice

Great BritainE+W+S

48Independent advice in respect of conversions and transfers: Great BritainE+W+S

(1)Where a member of a pension scheme has subsisting rights in respect of any safeguarded benefits, or a survivor of a member has subsisting rights in respect of any safeguarded benefits, the trustees or managers must check that the member or survivor has received appropriate independent advice before—

(a)converting any of the benefits into different benefits that are flexible benefits under the scheme;

(b)making a transfer payment in respect of any of the benefits with a view to acquiring a right or entitlement to flexible benefits for the member or survivor under another pension scheme;

(c)paying a lump sum that would be an uncrystallised funds pension lump sum in respect of any of the benefits.

(2)The Secretary of State may by regulations make provision about—

(a)what the trustees or managers must do to check that a member or survivor has received appropriate independent advice for the purposes of subsection (1), and

(b)when the check must be carried out for the purposes of that subsection.

(3)The Secretary of State may by regulations—

(a)create an exception to subsection (1) in the case of a member or survivor whose subsisting rights in respect of safeguarded benefits under the scheme, or safeguarded benefits under the scheme and any other schemes, are worth less than a specified amount;

(b)create other exceptions to subsection (1).

(4)Regulations under subsection (3)(a) may, in particular, make provision about—

(a)the valuation of the subsisting rights;

(b)the process for determining whether the exception applies.

(5)In subsection (1)(b) the reference to another pension scheme includes a scheme established in a country or territory outside Great Britain.

(6)Where the trustees or managers fail to carry out a check required by this section, section 10 of the Pensions Act 1995 (civil penalties) applies to any trustee or manager who failed to take reasonable steps to ensure that the check was carried out.

(7)Failure to carry out a check required by this section does not affect the validity of any transaction.

(8)In this section—

  • appropriate independent advice” means advice that—

    (a)

    is given by an authorised independent adviser, and

    (b)

    meets any other requirements specified in regulations made by the Secretary of State;

  • authorised independent adviser” means a person who—

    (a)

    has permission under Part 4A of the Financial Services and Markets Act 2000, or resulting from any other provision of that Act, to carry on a regulated activity specified in regulations made by the Secretary of State, [F1or is acting as an appointed representative (within the meaning given by section 39(2) of that Act) in relation to a regulated activity so specified,] and

    (b)

    meets such other requirements as may be specified in regulations made by the Secretary of State for the purpose of ensuring that the person is independent;

  • safeguarded benefits” means benefits other than—

    (a)

    money purchase benefits, and

    (b)

    cash balance benefits.

Textual Amendments

Modifications etc. (not altering text)

Commencement Information

I3S. 48 wholly in force; s. 48 in force at Royal Assent for specified purposes; s. 48 in force in so far as not already in force at 6.4.2015 see s. 89(1)(b)(3)(b)

49Power to require employer to arrange advice for purposes of section 48E+W+S

(1)The Secretary of State may by regulations specify circumstances in which an employer must arrange or pay for a member of a pension scheme, or a survivor of a member of a pension scheme, to receive appropriate independent advice for the purpose of satisfying a requirement imposed by section 48.

(2)Regulations under subsection (1) may, in particular—

(a)impose limitations on the amount that an employer may be required to pay;

(b)prohibit an employer from seeking in any way to recover, from a member or survivor, costs incurred by the employer in complying with the regulations;

(c)provide for section 10 of the Pensions Act 1995 (civil penalties) to apply to a failure by an employer to comply with the regulations.

(3)In this section “employer” has the meaning given by regulations made by the Secretary of State.

Commencement Information

I4S. 49 wholly in force; s. 49 in force at Royal Assent for specified purposes; s. 49 in force in so far as not already in force at 6.4.2015 see s. 89(1)(b)(3)(b)

50Independent advice: consequential amendments: Great BritainE+W+S

(1)The Pension Schemes Act 1993 is amended as follows.

(2)In section 99 (trustees' duties after exercise of option), after subsection (2) insert—

(2A)Subsection (2) does not apply if—

(a)the trustees or managers have been unable to carry out the check required by section 48 of the Pension Schemes Act 2015 by reason of factors outside their control, or

(b)the trustees or managers have carried out the check required by section 48 of the Pension Schemes Act 2015 but the check did not confirm that the member had received appropriate independent advice.

(3)In section 101J (time for compliance with transfer notice in respect of pension credit benefits), after subsection (2A) (inserted by paragraph 18(3) of Schedule 4 to this Act) insert—

(2B)Subsection (1) does not apply if—

(a)the trustees or managers have been unable to carry out the check required by section 48 of the Pension Schemes Act 2015 by reason of factors outside their control, or

(b)the trustees or managers have carried out the check required by section 48 of the Pension Schemes Act 2015 but the check did not confirm that the member had received appropriate independent advice.

Northern IrelandU.K.

51Independent advice in respect of conversions and transfers: Northern IrelandN.I.

(1)Where a member of a pension scheme has subsisting rights in respect of any safeguarded benefits, or a survivor of a member has subsisting rights in respect of any safeguarded benefits, the trustees or managers must check that the member or survivor has received appropriate independent advice before—

(a)converting any of the benefits into different benefits that are flexible benefits under the scheme;

(b)making a transfer payment in respect of any of the benefits with a view to acquiring a right or entitlement to flexible benefits for the member or survivor under another pension scheme;

(c)paying a lump sum that would be an uncrystallised funds pension lump sum in respect of any of the benefits.

(2)The Department for Social Development in Northern Ireland may by regulations make provision about—

(a)what the trustees or managers must do to check that a member or survivor has received appropriate independent advice for the purposes of subsection (1), and

(b)when the check must be carried out for the purposes of that subsection.

(3)The Department for Social Development in Northern Ireland may by regulations—

(a)create an exception to subsection (1) in the case of a member or survivor whose subsisting rights in respect of safeguarded benefits under the scheme, or safeguarded benefits under the scheme and any other schemes, are worth less than a specified amount;

(b)create other exceptions to subsection (1).

(4)Regulations under subsection (3)(a) may, in particular, make provision about—

(a)the valuation of the subsisting rights;

(b)the process for determining whether the exception applies.

(5)In subsection (1)(b) the reference to another pension scheme includes a scheme established in a country or territory outside Northern Ireland.

(6)Where the trustees or managers fail to carry out a check required by this section, Article 10 of the Pensions (Northern Ireland) Order 1995 (S.I. 1995/3213 (N.I. 22)) (civil penalties) applies to any trustee or manager who failed to take reasonable steps to ensure that the check was carried out.

(7)Failure to carry out a check required by this section does not affect the validity of any transaction.

(8)In this section—

  • appropriate independent advice” means advice that—

    (a)

    is given by an authorised independent adviser, and

    (b)

    meets any other requirements specified in regulations made by the Department for Social Development in Northern Ireland;

  • authorised independent adviser” means a person who—

    (a)

    has permission under Part 4A of the Financial Services and Markets Act 2000, or resulting from any other provision of that Act, to carry on a regulated activity specified in regulations made by the Department for Social Development in Northern Ireland, [F2or is acting as an appointed representative (within the meaning given by section 39(2) of that Act) in relation to a regulated activity so specified,] and

    (b)

    meets such other requirements as may be specified in regulations made by the Department for Social Development in Northern Ireland for the purpose of ensuring that the person is independent;

  • safeguarded benefits” means benefits other than—

    (a)

    money purchase benefits, and

    (b)

    cash balance benefits.

Textual Amendments

Modifications etc. (not altering text)

Commencement Information

I5S. 51 wholly in force; s. 51 in force at Royal Assent for specified purposes; s. 51 in force in so far as not already in force at 6.4.2015 see s. 89(1)(b)(3)(b)

52Power to require employer to arrange advice for purposes of section 51N.I.

(1)The Department for Social Development in Northern Ireland may by regulations specify circumstances in which an employer must arrange or pay for a member of a pension scheme, or a survivor of a member of a pension scheme, to receive appropriate independent advice for the purpose of satisfying a requirement imposed by section 51.

(2)Regulations under subsection (1) may, in particular—

(a)impose limitations on the amount that an employer may be required to pay;

(b)prohibit an employer from seeking in any way to recover, from a member or survivor, costs incurred by the employer in complying with the regulations;

(c)provide for Article 10 of the Pensions (Northern Ireland) Order 1995 (S.I. 1995/3213 (N.I. 22)) (civil penalties) to apply to a failure by an employer to comply with the regulations.

(3)In this section “employer” has the meaning given by regulations made by the Department for Social Development in Northern Ireland.

Commencement Information

I6S. 52 wholly in force; s. 52 in force at Royal Assent for specified purposes; s. 52 in force in so far as not already in force at 6.4.2015 see s. 89(1)(b)(3)(b)

53Independent advice: consequential amendments: Northern IrelandE+W+S

(1)The Pension Schemes (Northern Ireland) Act 1993 is amended as follows.

(2)In section 95 (trustees' duties after exercise of option), after subsection (2) insert—

(2A)Subsection (2) does not apply if—

(a)the trustees or managers have been unable to carry out the check required by section 51 of the Pension Schemes Act 2015 by reason of factors outside their control, or

(b)the trustees or managers have carried out the check required by section 51 of the Pension Schemes Act 2015 but the check did not confirm that the member had received appropriate independent advice.

(3)In section 97J (time for compliance with transfer notice in respect of pension credit benefits), after subsection (2A) (inserted by paragraph 64(3) of Schedule 4 to this Act) insert—

(2B)Subsection (1) does not apply if—

(a)the trustees or managers have been unable to carry out the check required by section 51 of the Pension Schemes Act 2015 by reason of factors outside their control, or

(b)the trustees or managers have carried out the check required by section 51 of the Pension Schemes Act 2015 but the check did not confirm that the member had received appropriate independent advice.

Income tax exemptionU.K.

54Independent advice: income tax exemptionU.K.

(1)In Part 4 of the Income Tax (Earnings and Pensions) Act 2003 (employment income: exemptions), in Chapter 9 (exemptions: pension provision), after section 308A insert—

308BIndependent advice in respect of conversions and transfers of pension scheme benefits

(1)No liability to income tax arises in respect of—

(a)the provision to an employee or former employee of appropriate independent advice, or

(b)the payment or reimbursement, to or in respect of an employee or former employee, of the cost of such advice,

if conditions A to C are met.

(2)Condition A is that the provision, payment or reimbursement is required by regulations under section 49 or 52 of the Pension Schemes Act 2015 (power to require employer to arrange independent advice in respect of conversions and transfers).

(3)If condition A is met only as respects part of the payment or reimbursement because the amount of the payment or reimbursement exceeds the amount required to be paid or reimbursed, subsection (1) applies in respect of that part.

(4)Condition B is that the provision, payment or reimbursement is not pursuant to relevant salary sacrifice arrangements.

(5)Condition C is that such other requirements as may be specified in regulations made by the Treasury are satisfied in relation to the provision, payment or reimbursement.

(6)In this section—

  • “appropriate independent advice”—

    (a)

    in relation to England and Wales and Scotland, has the meaning given by regulations under section 48 of the Pension Schemes Act 2015;

    (b)

    in relation to Northern Ireland, has the meaning given by regulations under section 51 of that Act;

  • relevant salary sacrifice arrangements” means arrangements (whenever made, whether before or after the employment began) under which an employee gives up the right to receive an amount of general earnings or specific employment income in return for the provision of appropriate independent advice or the payment or reimbursement of the cost of such advice.

(2)In that Part of that Act, in section 228 (effect of exemptions on liability under provisions outside Part 2), in subsection (2), after paragraph (d) insert—

(da)section 308B (independent advice in respect of conversions and transfers of pension scheme benefits),.

(3)The amendments made by this section have effect for the tax year 2015-16 and subsequent tax years.

CHAPTER 3U.K.Drawdown, conversion of benefits and lump sums

Great BritainE+W+S

55Sums or assets that may be designated as available for drawdown: Great BritainE+W+S

(1)In the case of a member of an occupational pension scheme the only sums or assets that may be designated as available for the payment of drawdown pension for the member under the scheme are sums or assets held for the purposes of providing money purchase benefits to or in respect of the member.

(2)In the case of a survivor of a member of an occupational pension scheme the only sums or assets that may be designated as available for the payment of dependants' drawdown pension, nominees' drawdown pension or successors' drawdown pension for the survivor under the scheme are sums or assets held for the purposes of providing money purchase benefits to the survivor.

(3)This section overrides any provision of an occupational pension scheme to the extent that there is a conflict.

(4)This section does not apply in relation to sums or assets designated before 6 April 2015.

56Provision about conversion of certain benefits for drawdown: Great BritainE+W+S

(1)The Secretary of State may by regulations make provision about the conversion of benefits under an occupational pension scheme in circumstances where—

(a)a member of the scheme, or a survivor of a member of the scheme, has subsisting rights in respect of any flexible benefits other than money purchase benefits under the scheme, and

(b)the member or survivor exercises an option to convert any of the benefits into money purchase benefits for the purposes of enabling sums or assets to be designated as available for the payment of drawdown pension, dependants' drawdown pension, nominees' drawdown pension or successors' drawdown pension.

(2)Regulations under subsection (1) may, in particular, make provision about how the rate or amount of any benefits not converted are to be calculated in future.

(3)In relation to a conversion that takes place before the member or survivor reaches normal pension age, regulations under subsection (1) may in particular make provision about—

(a)the manner in which benefits are to be calculated for the purpose of converting them into money purchase benefits;

(b)the use of any power to reduce benefits.

(4)Regulations made under this section may include provision for them to override the provisions of a pension scheme to the extent that there is a conflict.

Commencement Information

I7S. 56 wholly in force; s. 56 in force at Royal Assent for specified purposes; s. 56 in force in so far as not already in force at 6.4.2015 see s. 89(1)(b)(3)(b)

57Provision about calculation of lump sums: Great BritainE+W+S

(1)The Secretary of State may by regulations make provision about the calculation of lump sums in circumstances where—

(a)a member of an occupational pension scheme, or a survivor of a member of the scheme, has subsisting rights in respect of any flexible benefits other than money purchase benefits under the scheme, and

(b)the member or survivor exercises an option to be paid a lump sum in respect of any of those benefits.

(2)Regulations under subsection (1) may, in particular, make provision about how the rate or amount of any remaining benefits are to be calculated in future.

(3)In a case where a member or survivor exercises an option to be paid a lump sum before reaching normal pension age, regulations under subsection (1) may in particular make provision about—

(a)the manner in which benefits are to be calculated for the purpose of determining the amount available for the payment of the lump sum;

(b)the use of any power to reduce the amount of the lump sum.

(4)Regulations made under this section may include provision for them to override the provisions of a pension scheme to the extent that there is a conflict.

Commencement Information

I8S. 57 wholly in force; s. 57 in force at Royal Assent for specified purposes; s. 57 in force in so far as not already in force at 6.4.2015 see s. 89(1)(b)(3)(b)

58Restrictions on conversion of benefits during winding up etc: Great BritainE+W+S

(1)In section 73A of the Pensions Act 1995 (operation of scheme during winding up period), after subsection (6) insert—

(6A)During the winding up period no right or entitlement of any member, or of any other person in respect of a member, to a benefit that is not a money purchase benefit is to be converted into, or replaced with, a right or entitlement to a money purchase benefit under the scheme rules.

(2)In section 73B of that Act (sections 73 and 73A: supplementary), in subsections (1) and (3), after “section 73A(3)” insert “ or (6A) ”.

(3)In section 135 of the Pensions Act 2004 (restrictions on winding up, discharge of liabilities etc during assessment period), in subsection (4), before paragraph (a) insert—

(za)no right or entitlement of any member, or of any other person in respect of a member, to a benefit that is not a money purchase benefit is to be converted into, or replaced with, a right or entitlement to a money purchase benefit under the scheme rules,.

59Restriction on payment of lump sums during PPF assessment period: Great BritainE+W+S

(1)Section 138 of the Pensions Act 2004 (payment of scheme benefits during assessment period) is amended as follows.

(2)In subsection (1), after “Subsections (2)” insert “ , (2A) ”.

(3)After subsection (2) insert—

(2A)Benefits in the form of a lump sum may be paid to or in respect of a member under the scheme rules during the assessment period only in the circumstances in which, and to the extent to which, lump sum compensation would be payable to or in respect of the member in accordance with this Chapter if—

(a)the Board assumed responsibility for the scheme in accordance with this Chapter, and

(b)the assessment date referred to in Schedule 7 were the date on which the assessment period began.

(4)In subsection (3), omit “But”.

(5)In subsection (5), for “subsection (2)” substitute “ subsections (2) and (2A) ”.

(6)In subsection (6), for “subsection (3)” substitute “ subsections (2A) and (3) ”.

(7)In subsection (7), after “Subsections (2),” insert “ (2A), ”.

(8)In subsection (8), after “subsections (2)” insert “ , (2A) ”.

(9)In subsection (9), for “subsections (2) and (3)” substitute “ subsections (2) to (3) ”.

(10)After subsection (9) insert—

(9A)Regulations may make provision as to circumstances in which benefits in the form of a lump sum are to be treated for the purposes of subsection (2A) as being paid in the circumstances in which lump sum compensation would be payable in accordance with this Chapter.

(9B)Regulations may create exceptions to subsection (2A).

(11)In subsection (12), for “subsection (2)” substitute “ subsections (2) and (2A) ”.

(12)In subsection (13), after “subsection (2)” insert “ , (2A) ”.

Commencement Information

I9S. 59 wholly in force; s. 59 in force at Royal Assent for specified purposes; s. 59 in force in so far as not already in force at 6.4.2015 see s. 89(1)(b)(3)(b)

60Sections 55 to 57: consequential amendmentsE+W+S

(1)In section 101AI of the Pension Schemes Act 1993 (early leavers: cash transfer sums and contribution refunds - further provisions), in subsection (8)—

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

(x)section 55 of the Pension Schemes Act 2015;

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

(b)in paragraph (b), after sub-paragraph (vii) insert—

(viii)section 55(3) of the Pension Schemes Act 2015;

(ix)regulations made under section 56(4) or 57(4) of the Pension Schemes Act 2015.

(2)In section 67A of the Pensions Act 1995 (the subsisting rights provisions: interpretation), in subsection (9)—

(a)in paragraph (a), after sub-paragraph (x) (inserted by section 45 of this Act) insert—

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

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

(b)in paragraph (b), after sub-paragraph (viii) (inserted by section 45 of this Act) insert—

(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.

(3)In section 318 of the Pensions Act 2004 (interpretation), in subsection (3)—

(a)in paragraph (a), after sub-paragraph (x) (inserted by Schedule 2 to this Act) insert—

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

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

(b)in paragraph (b), after sub-paragraph (viii) (inserted by Schedule 2 to this Act) insert—

(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.

Northern IrelandU.K.

61Sums or assets that may be designated as available for drawdown: Northern IrelandN.I.

(1)In the case of a member of an occupational pension scheme the only sums or assets that may be designated as available for the payment of drawdown pension for the member under the scheme are sums or assets held for the purposes of providing money purchase benefits to or in respect of the member.

(2)In the case of a survivor of a member of an occupational pension scheme the only sums or assets that may be designated as available for the payment of dependants' drawdown pension, nominees' drawdown pension or successors' drawdown pension for the survivor under the scheme are sums or assets held for the purposes of providing money purchase benefits to the survivor.

(3)This section overrides any provision of an occupational pension scheme to the extent that there is a conflict.

(4)This section does not apply in relation to sums or assets designated before 6 April 2015.

62Provision about conversion of certain benefits for drawdown: Northern IrelandN.I.

(1)The Department for Social Development in Northern Ireland may by regulations make provision about the conversion of benefits under an occupational pension scheme in circumstances where—

(a)a member of the scheme, or a survivor of a member of the scheme, has subsisting rights in respect of any flexible benefits other than money purchase benefits under the scheme, and

(b)the member or survivor exercises an option to convert any of the benefits into money purchase benefits for the purposes of enabling sums or assets to be designated as available for the payment of drawdown pension, dependants' drawdown pension, nominees' drawdown pension or successors' drawdown pension.

(2)Regulations under subsection (1) may, in particular, make provision about how the rate or amount of any benefits not converted are to be calculated in future.

(3)In relation to a conversion that takes place before the member or survivor reaches normal pension age, regulations under subsection (1) may in particular make provision about—

(a)the manner in which benefits are to be calculated for the purpose of converting them into money purchase benefits;

(b)the use of any power to reduce benefits.

(4)Regulations made under this section may include provision for them to override the provisions of a pension scheme to the extent that there is a conflict.

Commencement Information

I10S. 62 wholly in force; s. 62 in force at Royal Assent for specified purposes; s. 62 in force in so far as not already in force at 6.4.2015 see s. 89(1)(b)(3)(b)

63Provision about calculation of lump sums: Northern IrelandN.I.

(1)The Department for Social Development in Northern Ireland may by regulations make provision about the calculation of lump sums in circumstances where—

(a)a member of an occupational pension scheme, or a survivor of a member of the scheme, has subsisting rights in respect of any flexible benefits other than money purchase benefits under the scheme, and

(b)the member or survivor exercises an option to be paid a lump sum in respect of any of those benefits.

(2)Regulations under subsection (1) may, in particular, make provision about how the rate or amount of any remaining benefits are to be calculated in future.

(3)In a case where a member or survivor exercises an option to be paid a lump sum before reaching normal pension age, regulations under subsection (1) may in particular make provision about—

(a)the manner in which benefits are to be calculated for the purpose of determining the amount available for the payment of the lump sum;

(b)the use of any power to reduce the amount of the lump sum.

(4)Regulations made under this section may include provision for them to override the provisions of a pension scheme to the extent that there is a conflict.

Commencement Information

I11S. 63 wholly in force; s. 63 in force at Royal Assent for specified purposes; s. 63 in force in so far as not already in force at 6.4.2015 see s. 89(1)(b)(3)(b)

64Restrictions on conversion of benefits during winding up etc: Northern IrelandE+W+S

(1)In Article 73A of the Pensions (Northern Ireland) Order 1995 (S.I. 1995/3213 (N.I. 22)) (operation of scheme during winding up period), after paragraph (6) insert—

(6A)During the winding up period no right or entitlement of any member, or of any other person in respect of a member, to a benefit that is not a money purchase benefit is to be converted into, or replaced with, a right or entitlement to a money purchase benefit under the scheme rules.

(2)In Article 73B of that Order (Articles 73 and 73A: supplementary), in paragraphs (1) and (3), after “Article 73A(3)” insert “ or (6A) ”.

(3)In Article 119 of the Pensions (Northern Ireland) Order 2005 (S.I. 2005/255 (N.I. 1)) (restrictions on winding up, discharge of liabilities etc during assessment period), in paragraph (4), before sub-paragraph (a) insert—

(za)no right or entitlement of any member, or of any other person in respect of a member, to a benefit that is not a money purchase benefit is to be converted into, or replaced with, a right or entitlement to a money purchase benefit under the scheme rules,.

65Restriction on payment of lump sums during PPF assessment period: Northern IrelandE+W+S

(1)Article 122 of the Pensions (Northern Ireland) Order 2005 (S.I. 2005/255 (N.I. 1)) (payment of scheme benefits during assessment period) is amended as follows.

(2)In paragraph (1), after “Paragraphs (2)” insert “ , (2A) ”.

(3)After paragraph (2) insert—

(2A)Benefits in the form of a lump sum may be paid to or in respect of a member under the scheme rules during the assessment period only in the circumstances in which, and to the extent to which, lump sum compensation would be payable to or in respect of the member in accordance with this Chapter if—

(a)the Board assumed responsibility for the scheme in accordance with this Chapter, and

(b)the assessment date referred to in Schedule 6 were the date on which the assessment period began.

(4)In paragraph (3), omit “But”.

(5)In paragraph (5), for “paragraph (2)” substitute “ paragraphs (2) and (2A) ”.

(6)In paragraph (6), for “paragraph (3)” substitute “ paragraphs (2A) and (3) ”.

(7)In paragraph (7), after “Paragraphs (2),” insert “ (2A), ”.

(8)In paragraph (8), after “paragraphs (2)” insert “ , (2A) ”.

(9)In paragraph (9), for “paragraphs (2) and (3)” substitute “ paragraphs (2) to (3) ”.

(10)After paragraph (9) insert—

(9A)Regulations may make provision as to circumstances in which benefits in the form of a lump sum are to be treated for the purposes of paragraph (2A) as being paid in the circumstances in which lump sum compensation would be payable in accordance with this Chapter.

(9B)Regulations may create exceptions to paragraph (2A).

(11)In paragraph (12), for “paragraph (2)” substitute “ paragraphs (2) and (2A) ”.

(12)In paragraph (13), after “paragraph (2)” insert “ , (2A) ”.

Commencement Information

I12S. 65 wholly in force; s. 65 in force at Royal Assent for specified purposes; s. 65 in force in so far as not already in force at 6.4.2015 see s. 89(1)(b)(3)(b)

66Sections 61 to 63: consequential amendmentsE+W+S

(1)In section 97AI of the Pension Schemes (Northern Ireland) Act 1993 (early leavers: cash transfer sums and contribution refunds - further provisions), in subsection (7)—

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

(viii)section 61 of the Pension Schemes Act 2015;

(ix)regulations made under section 62 or 63 of the Pension Schemes Act 2015;;

(b)in paragraph (b), after sub-paragraph (v) insert—

(vi)section 61(3) of the Pension Schemes Act 2015;

(vii)regulations made under section 62(4) or 63(4) of the Pension Schemes Act 2015.

(2)In Article 67A of the Pensions (Northern Ireland) Order 1995 (S.I. 1995/3213 (N.I. 22)) (the subsisting rights provisions: interpretation), in paragraph (9)—

(a)in sub-paragraph (a), after head (vii) insert—

(viii)section 61 of the Pension Schemes Act 2015;

(ix)regulations made under section 62 or 63 of the Pension Schemes Act 2015;;

(b)in sub-paragraph (b), after head (v) insert—

(vi)section 61(3) of the Pension Schemes Act 2015;

(vii)regulations made under section 62(4) or 63(4) of the Pension Schemes Act 2015.

(3)In Article 2 of the Pensions (Northern Ireland) Order 2005 (S.I. 2005/255 (N.I. 1)) (interpretation), in paragraph (4)—

(a)in sub-paragraph (a), after head (vii) insert—

(viii)section 61 of the Pension Schemes Act 2015;

(ix)regulations made under section 62 or 63 of the Pension Schemes Act 2015;;

(b)in sub-paragraph (b), after head (v) insert—

(vi)section 61(3) of the Pension Schemes Act 2015;

(vii)regulations made under section 62(4) or 63(4) of the Pension Schemes Act 2015.

CHAPTER 4E+W+STransfers

Rights to transfer benefitsE+W+S

67Rights to transfer benefitsE+W+S

Schedule 4 contains amendments that confer new statutory rights to transfer benefits.

Great BritainE+W+S

68Restriction on transfers out of unfunded public service defined benefits schemes: Great BritainE+W+S

(1)The Pension Schemes Act 1993 is amended as follows.

(2)In section 95 (ways of taking right to cash equivalent), in subsection (2), after “occupational pension scheme” insert “ that is not an unfunded public service defined benefits scheme ”.

(3)In section 95, after subsection (2) insert—

(2A)In the case of a member of an occupational pension scheme that is an unfunded public service defined benefits scheme, the ways referred to in subsection (1) are—

(a)for acquiring transfer credits allowed under the rules of another occupational pension scheme if—

(i)the benefits that may be provided under the other scheme by virtue of the transfer credits are not flexible benefits,

(ii)the trustees or managers of the other scheme are able and willing to accept payment in respect of the member's transferrable rights, and

(iii)the other scheme satisfies requirements prescribed in regulations made by the Secretary of State or the Treasury;

(b)for acquiring rights allowed under the rules of a personal pension scheme if—

(i)the benefits that may be provided under the personal pension scheme by virtue of the acquired rights are not flexible benefits,

(ii)the trustees or managers of the personal pension scheme are able and willing to accept payment in respect of the member's transferrable rights, and

(iii)the personal pension scheme satisfies requirements prescribed in regulations made by the Secretary of State or the Treasury;

(c)for purchasing from one or more insurers such as are mentioned in section 19(4)(a), chosen by the member and willing to accept payment on account of the member from the trustees or managers, one or more annuities which satisfy requirements prescribed in regulations made by the Secretary of State or the Treasury;

(d)for subscribing to other pension arrangements which satisfy requirements prescribed in regulations made by the Secretary of State or the Treasury.

(2B)The Treasury may by regulations provide for sub-paragraph (i) of subsection (2A)(a) or (b) not to apply in prescribed circumstances or in relation to prescribed schemes or schemes of a prescribed description.

(2C)In subsections (2) and (2A) “unfunded public service defined benefits scheme” means a public service pension scheme that—

(a)is a defined benefits scheme within the meaning given by section 37 of the Public Service Pensions Act 2013, and

(b)meets some or all of its liabilities otherwise than out of a fund accumulated for the purpose during the life of the scheme.

(4)After section 95(5) insert—

(5A)Except in such circumstances as may be prescribed in regulations made by the Secretary of State or the Treasury, subsection (2A) is to be construed as if paragraph (d) were omitted.

(5)In section 95(6)—

(a)after “subsections (2)” insert “ , (2A) ”;

(b)after “subsection (2)” insert “ or (2A) ”.

(6)In section 96 (further provisions concerning exercise of option under section 95), in subsection (2)(b), after “subsection (2)” insert “ , subsection (2A) ”.

(7)In section 100 (withdrawal of applications), in subsection (2), after “subsection (2)” insert “ , subsection (2A) ”.

(8)The amendments made by this section have no effect in relation to an application made under section 95(1) of the Pension Schemes Act 1993 before 6 April 2015.

(9)Until the coming into force of the first regulations made under a provision of the Pension Schemes Act 1993 specified in the first column of the table, regulations made under the provision of that Act specified in the corresponding entry in the second column apply (with any necessary modifications) for the purposes of the provision specified in the first column—

New provision of ActExisting provision of Act
Section 95(2A)(a)(iii)Section 95(2)(a)(ii)
Section 95(2A)(b)(iii)Section 95(2)(b)(ii)
Section 95(2A)(c)Section 95(2)(c)
Section 95(2A)(d)Section 95(2)(d)
Section 95(5A)Section 95(5)(a).

Commencement Information

I13S. 68 wholly in force; s. 68 in force at Royal Assent for specified purposes; s. 68 in force in so far as not already in force at 6.4.2015 see s. 89(1)(b)(3)(b)

69Reduction of cash equivalents: funded public service defined benefits schemes: Great BritainE+W+S

(1)The Pension Schemes Act 1993 is amended as follows.

(2)In section 97 (calculation of cash equivalents), in subsection (1)—

(a)after “verified” insert

(a)”;

(b)at the end insert , and

(b)where a designation has been made under section 97A or 97B, in accordance with regulations under section 97C.

(3)After section 97 insert—

97ADesignation of funded public service defined benefits schemes

(1)This section applies to funded public service defined benefits schemes other than schemes to which section 97B applies (equivalent provision for certain Scottish schemes).

A scheme to which this section applies is referred to below as an “eligible scheme”.

(2)The relevant person may designate an eligible scheme as a scheme to which regulations under section 97C are to apply for a specified period of no more than 2 years.

(3)The power under subsection (2) may be exercised only if the relevant person considers that—

(a)there is an increased likelihood of payments out of public funds, or increased payments out of public funds, having to be made into the scheme so that it can meet its liabilities, and

(b)the increased likelihood is connected with the exercise or expected future exercise of rights to take a cash equivalent acquired under section 94.

(4)The power under subsection (2) may be exercised in relation to the whole or any part of a scheme.

(5)In the application of subsection (3) to part of a scheme, paragraph (a) is to be read as if it referred to the scheme's liabilities relating to that part.

(6)A designation under subsection (2)—

(a)may be extended (on more than one occasion) for a period of no more than 2 years;

(b)may be revoked.

(7)The relevant person must give notice in writing of a designation or its extension or revocation to the trustees or managers of the scheme (except in a case where the relevant person is the trustees or managers).

(8)If the trustees or managers of an eligible scheme, or part of such a scheme, which is not designated under this section consider that the conditions in paragraphs (a) and (b) of subsection (3) are met in relation to the scheme or part they must notify—

(a)the Treasury, and

(b)(where relevant) each Minister of the Crown by whom, or with whose approval, the scheme was established.

(9)If the trustees or managers of a scheme, or part of a scheme, which is designated under this section consider that the conditions in paragraphs (a) and (b) of subsection (3) are no longer met in relation to the scheme or part they must notify—

(a)the Treasury, and

(b)(where relevant) each Minister of the Crown by whom, or with whose approval, the scheme was established.

(10)In this section—

  • eligible scheme” has the meaning given by subsection (1);

  • funded public service defined benefits scheme” means a public service pension scheme that—

    (a)

    is a defined benefits scheme within the meaning given by section 37 of the Public Service Pensions Act 2013, and

    (b)

    meets its liabilities out of a fund accumulated for the purpose during the life of the scheme;

  • local authority” means—

    (a)

    a county or district council in England,

    (b)

    a county or county borough council in Wales,

    (c)

    a London borough council,

    (d)

    the Greater London Authority,

    (e)

    the Common Council of the City of London in its capacity as a local authority, or

    (f)

    the Council of the Isles of Scilly;

  • payment out of public funds” means a payment provided directly or indirectly—

    (a)

    out of—

    (i)

    the Consolidated Fund or any other account or source of money which cannot be drawn or spent other than by, or with the authority of, the Treasury, or

    (ii)

    the Welsh Consolidated Fund, or

    (b)

    by a local authority;

  • the relevant person” means—

    (a)

    in relation to a scheme established by virtue of paragraph 12 of Schedule 6 to the Constitutional Reform and Governance Act 2010 (or treated as so established), the Independent Parliamentary Standards Authority and the trustees of the Parliamentary Contributory Pension Fund;

    (b)

    in relation to a scheme established by virtue of paragraph 16 of Schedule 6 to the Constitutional Reform and Governance Act 2010 (or treated as so established), the trustees of the Parliamentary Contributory Pension Fund;

    (c)

    in any other case, either of the following—

    (i)

    the Treasury, or

    (ii)

    any Minister of the Crown by whom, or with whose approval, the scheme was established.

(11)The Treasury may by regulations modify the definitions of “local authority” and “the relevant person” in subsection (10).

97BDesignation of funded public service defined benefits schemes: Scotland

(1)This section applies to a funded public service defined benefits scheme that is—

(a)a scheme established by, or with the approval of, the Scottish Ministers;

(b)a scheme established by virtue of section 81(4)(b) of the Scotland Act 1998.

A scheme to which this section applies is referred to below as an “eligible scheme”.

(2)The relevant person may designate an eligible scheme as a scheme to which regulations under section 97C are to apply for a specified period of no more than 2 years.

(3)The power under subsection (2) may be exercised only if the relevant person considers that—

(a)there is an increased likelihood of payments out of public funds, or increased payments out of public funds, having to be made into the scheme so that it can meet its liabilities, and

(b)the increased likelihood is connected with the exercise or expected future exercise of rights to take a cash equivalent acquired under section 94.

(4)The power under subsection (2) may be exercised in relation to the whole or any part of a scheme.

(5)In the application of subsection (3) to part of a scheme, paragraph (a) is to be read as if it referred to the scheme's liabilities relating to that part.

(6)A designation under subsection (2)—

(a)may be extended (on more than one occasion) for a period of no more than 2 years;

(b)may be revoked.

(7)The relevant person must give notice in writing of a designation or its extension or revocation to the trustees or managers of the scheme (except in a case where the relevant person is the trustees or managers).

(8)If the trustees or managers of an eligible scheme, or part of such a scheme, which is not designated under this section consider that the conditions in paragraphs (a) and (b) of subsection (3) are met in relation to the scheme or part they must notify the Scottish Ministers.

(9)If the trustees or managers of a scheme, or part of a scheme, that is designated under this section consider that the conditions in paragraphs (a) and (b) of subsection (3) are no longer met in relation to the scheme or part they must notify the Scottish Ministers.

(10)In this section—

  • eligible scheme” has the meaning given by subsection (1);

  • funded public service defined benefits scheme” means a public service pension scheme that—

    (a)

    is a defined benefits scheme within the meaning given by section 37 of the Public Service Pensions Act 2013, and

    (b)

    meets its liabilities out of a fund accumulated for the purpose during the life of the scheme;

  • payment out of public funds” means a payment provided directly or indirectly—

    (a)

    out of the Scottish Consolidated Fund, or

    (b)

    by a council constituted under section 2 of the Local Government etc. (Scotland) Act 1994;

  • the relevant person” means—

    (a)

    in relation to a scheme falling within subsection (1)(a), the Scottish Ministers;

    (b)

    in relation to a scheme falling with subsection (1)(b), the trustees of the Scottish Parliamentary Contributory Pension Fund.

(11)The Scottish Ministers may by regulations modify the definition of “the relevant person” in subsection (10).

(4)After section 97B (inserted by subsection (3)) insert—

97CReduction of cash equivalents in case of designated schemes

(1)The Treasury may by regulations provide that where, under section 95(1), a member of a designated scheme requires the trustees or managers to use a cash equivalent for acquiring a right or entitlement to flexible benefits under the rules of another pension scheme the cash equivalent must be reduced by an amount determined in accordance with the regulations.

(2)Regulations under subsection (1) may not require a reduction in cases where a scheme ceases to be a designated scheme before the date on which the trustees or managers do what is needed to carry out what the member requires.

(3)Regulations under subsection (1) may produce the result (alone or in conjunction with regulations under section 97) that the amount by which a cash equivalent is to be reduced is such an amount that a member has no right to receive anything.

(4)In subsection (1), “designated scheme” means a funded public service defined benefits scheme, or part of such a scheme, that (on the date of the application under section 95(1)) is designated under section 97A or 97B.

Commencement Information

I14S. 69 wholly in force; s. 69 in force at Royal Assent for specified purposes; s. 69 in force in so far as not already in force at 6.4.2015 see s. 89(1)(b)(3)(b)

70Sections 68 and 69: consequential amendmentsE+W+S

(1)In the Pension Schemes Act 1993, in section 182 (orders and regulations: general provisions), after subsection (1) insert—

(1A)Subsection (1) does not apply to the power of the Scottish Ministers to make regulations under section 97B(11).

(2)In that Act, in section 185 (consultations about other regulations), after subsection (5) insert—

(5A)Subject to subsection (5C), before the Treasury (acting alone) make any regulations under section 95, 97A or 97C they shall consult such persons as they may consider appropriate.

(5B)Subject to subsection (5C), before the Scottish Ministers make any regulations under section 97B(11) they shall consult such persons as they may consider appropriate.

(5C)Subsections (5A) and (5B) do not apply to regulations in the case of which the Treasury or (as the case may be) the Scottish Ministers consider consultation inexpedient because of urgency or to regulations of the type described in subsection (2)(b) or (e).

(3)In that Act, in section 186 (Parliamentary control of orders and regulations)—

(a)in subsection (1) (negative procedure), after “Secretary of State” insert “ or the Treasury ”;

(b)in subsection (3) (affirmative procedure), after paragraph (e) insert , or

(f)regulations made under section 97A(11);

(c)after subsection (5) insert—

(6)Regulations made by the Scottish Ministers under section 97B(11) are subject to the affirmative procedure (see Part 2 of the Interpretation and Legislative Reform (Scotland) Act 2010 (asp 10)).

(4)In the Pensions Act 2004, in section 18 (pension liberation: interpretation), in subsection (4)(a) (meaning of “authorised way”), omit “subsection (2) or, as the case may be, subsection (3) of”.

(5)The consultation requirement in section 185(5A) of the Pension Schemes Act 1993 (inserted by subsection (2)) may be satisfied by things done before the day on which this Act is passed.

Commencement Information

I15S. 70 wholly in force; s. 70 in force at Royal Assent for specified purposes; s. 70 in force in so far as not already in force at 6.4.2015 see s. 89(1)(b)(3)(b)

Northern IrelandU.K.

71Restriction on transfers out of unfunded public service defined benefits schemes: Northern IrelandU.K.

(1)The Pension Schemes (Northern Ireland) Act 1993 is amended as follows.

(2)In section 91(2), after “occupational pension scheme” insert “ that is not an unfunded public service defined benefits scheme ”.

(3)In section 91, after subsection (2) insert—

(2A)In the case of a member of an occupational pension scheme that is an unfunded public service defined benefits scheme, the ways referred to in subsection (1) are—

(a)for acquiring transfer credits allowed under the rules of another occupational pension scheme if—

(i)the benefits that may be provided under the other scheme by virtue of the transfer credits are not flexible benefits,

(ii)the trustees or managers of the other scheme are able and willing to accept payment in respect of the member's transferrable rights, and

(iii)the other scheme satisfies requirements prescribed in regulations made by the Department or the Department of Finance and Personnel;

(b)for acquiring rights allowed under the rules of a personal pension scheme if—

(i)the benefits that may be provided under the personal pension scheme by virtue of the acquired rights are not flexible benefits,

(ii)the trustees or managers of the personal pension scheme are able and willing to accept payment in respect of the member's transferrable rights, and

(iii)the personal pension scheme satisfies requirements prescribed in regulations made by the Department or the Department of Finance and Personnel;

(c)for purchasing from one or more insurers such as are mentioned in section 15(4)(a), chosen by the member and willing to accept payment on account of the member from the trustees or managers, one or more annuities which satisfy requirements prescribed in regulations made by the Department or the Department of Finance and Personnel;

(d)for subscribing to other pension arrangements which satisfy requirements prescribed in regulations made by the Department or the Department of Finance and Personnel.

(2B)The Department of Finance and Personnel may by regulations provide for sub-paragraph (i) of subsection (2A)(a) or (b) not to apply in specified circumstances or in relation to specified schemes or schemes of a specified description.

(2C)In subsections (2) and (2A) “unfunded public service defined benefits scheme” means a public service pension scheme that—

(a)is a defined benefits scheme within the meaning given by section 34 of the Public Service Pensions Act (Northern Ireland) 2014, and

(b)meets some or all of its liabilities otherwise than out of a fund accumulated for the purpose during the life of the scheme.

(4)After section 91(5) insert—

(5A)Except in such circumstances as may be prescribed in regulations made by the Department or the Department of Finance and Personnel, subsection (2A) is to be construed as if paragraph (d) were omitted.

(5)In section 91(6)—

(a)after “subsections (2)” insert “ , (2A) ”;

(b)after “subsection (2)” insert “ or (2A) ”.

(6)In section 92 (further provisions concerning exercise of option under section 91), in subsection (2)(b), after “subsection (2)” insert “ , subsection (2A) ”.

(7)In section 96 (withdrawal of applications), in subsection (2), after “subsection (2)” insert “ , subsection (2A) ”.

(8)The amendments made by this section have no effect in relation to an application made under section 91 of the Pension Schemes (Northern Ireland) Act 1993 before 6 April 2015.

(9)Until the coming into force of the first regulations made under a provision of the Pension Schemes (Northern Ireland) Act 1993 specified in the first column of the table, regulations made under the provision of that Act specified in the corresponding entry in the second column apply (with any necessary modifications) for the purposes of the provision specified in the first column—

New provision of ActExisting provision of Act
Section 91(2A)(a)(iii)Section 91(2)(a)(ii)
Section 91(2A)(b)(iii)Section 91(2)(b)(ii)
Section 91(2A)(c)Section 91(2)(c)
Section 91(2A)(d)Section 91(2)(d)
Section 91(5A)Section 91(5)(a).

Commencement Information

I16S. 71 wholly in force; s. 71(1)-(7) in force at Royal Assent for specified purposes; s. 71 in force so far as not already in force at 6.4.2015 see s. 89(1)(b)(3)(b)

72Reduction of cash equivalents: funded public service defined benefits schemes: Northern IrelandE+W+S

(1)The Pension Schemes (Northern Ireland) Act 1993 is amended as follows.

(2)In section 93 (calculation of cash equivalents), in subsection (1)—

(a)after “verified” insert

(a)”;

(b)at the end insert , and

(b)where a designation has been made under section 93A, in accordance with regulations under section 93B.

(3)After section 93 insert—

93ADesignation of funded public service defined benefits schemes

(1)The relevant Department may designate a funded public service defined benefits scheme as a scheme to which regulations under section 93B are to apply for a specified period of no more than 2 years.

(2)The power under subsection (1) may be exercised only if the relevant Department considers that—

(a)there is an increased likelihood of payments out of public funds, or increased payments out of public funds, having to be made into the scheme so that it can meet its liabilities, and

(b)the increased likelihood is connected with the exercise or expected future exercise of rights to take a cash equivalent acquired under section 90.

(3)The power under subsection (1) may be exercised in relation to the whole or any part of a scheme.

(4)In the application of subsection (2) to part of a scheme, paragraph (a) is to be read as if it referred to the scheme's liabilities relating to that part.

(5)A designation under subsection (1)—

(a)may be extended (on more than one occasion) for a period of no more than 2 years;

(b)may be revoked.

(6)The relevant Department must give notice in writing of a designation or its extension or revocation to the trustees or managers of the scheme (except in a case where the relevant Department is the trustees or managers).

(7)If the trustees or managers of a funded public service defined benefits scheme, or part of such a scheme, that is not designated under this section consider that the conditions in paragraphs (a) and (b) of subsection (2) are met in relation to the scheme or part they must notify—

(a)the Department of Finance and Personnel, and

(b)(where relevant) each Northern Ireland department by whom, or with whose approval, the scheme was established.

(8)If the trustees or managers of a scheme, or part of a scheme, that is designated under this section consider that the conditions in paragraphs (a) and (b) of subsection (2) are no longer met in relation to the scheme or part they must notify—

(a)the Department of Finance and Personnel, and

(b)(where relevant) each Northern Ireland department by whom, or with whose approval, the scheme was established.

(9)In this section—

  • funded public service defined benefits scheme” means a public service pension scheme that—

    (a)

    is a defined benefits scheme within the meaning given by section 34 of the Public Service Pensions Act (Northern Ireland) 2014, and

    (b)

    meets its liabilities out of a fund accumulated for the purpose during the life of the scheme;

  • local authority” means a district council constituted under section 1 of the Local Government Act (Northern Ireland) 1972;

  • payment out of public funds” means a payment provided directly or indirectly—

    (a)

    out of the Northern Ireland Consolidated Fund, or

    (b)

    by a local authority;

  • the relevant Department”, in relation to a funded public service defined benefits scheme, means either of the following—

    (a)

    the Department of Finance and Personnel, or

    (b)

    any Northern Ireland department by whom, or with whose approval, the scheme was established.

(10)The Department of Finance and Personnel may by regulations make modifications of the definition of “the relevant Department” in subsection (9).

(4)After section 93A (inserted by subsection (3)) insert—

93BReduction of cash equivalents in case of section 93A designated schemes

(1)The Department of Finance and Personnel may by regulations provide that where, under section 91(1), a member of a designated scheme requires the trustees or managers to use a cash equivalent for acquiring a right or entitlement to flexible benefits under the rules of another pension scheme the cash equivalent must be reduced by an amount determined in accordance with the regulations.

(2)Regulations under subsection (1) may not require a reduction in cases where a scheme ceases to be a designated scheme before the date on which the trustees or managers do what is needed to carry out what the member requires.

(3)Regulations under subsection (1) may produce the result (alone or in conjunction with regulations under section 93) that the amount by which a cash equivalent is to be reduced is such an amount that a member has no right to receive anything.

(4)In subsection (1), “designated scheme” means a funded public service defined benefits scheme, or part of such a scheme, that (on the date of the application under section 91(1)) is designated under section 93A.

Commencement Information

I17S. 72 wholly in force; s. 72 in force at Royal Assent for specified purposes; s. 72 in force in so far as not already in force at 6.4.2015 see s. 89(1)(b)(3)(b)

73Sections 71 and 72: consequential amendmentsE+W+S

(1)In the Pension Schemes (Northern Ireland) Act 1993, in section 176 (general interpretation), in subsection (1), in the definition of “regulations”, after “means” insert “ , unless the context otherwise requires, ”.

(2)In that Act, in section 181 (Assembly etc control of regulations and orders)—

(a)in subsection (2) (regulations and orders subject to confirmatory procedure), at the end insert “ and to regulations made by the Department of Finance and Personnel under section 93A(10) ”;

(b)in subsection (4) (regulations and orders subject to negative resolution), for “shall” substitute “ and regulations made by the Department of Finance and Personnel under section 91 or 93B shall ”.

(3)In the Pensions (Northern Ireland) Order 2005 (S.I. 2005/255 (N.I. 1)), in Article 14 (pension liberation: interpretation), in paragraph (4)(a) (meaning of “authorised way”), omit “subsection (2) or, as the case may be, subsection (3) of”.

CHAPTER 5U.K.Interpretation of Part 4

74Meaning of “flexible benefit”U.K.

In this Part “flexible benefit”, in relation to a member of a pension scheme or a survivor of a member, means—

(a)a money purchase benefit,

(b)a cash balance benefit, or

(c)a benefit, other than a money purchase benefit or cash balance benefit, calculated by reference to an amount available for the provision of benefits to or in respect of the member (whether the amount so available is calculated by reference to payments made by the member or any other person in respect of the member or any other factor).

75Meaning of “cash balance benefit”U.K.

(1)In this Part “cash balance benefit”, in relation to a member of a pension scheme or a survivor of a member, means a benefit calculated by reference to an amount available for the provision of benefits to or in respect of the member (“the available amount”) where there is a promise about that amount.

(2)But a benefit is not a “cash balance benefit” if, under the scheme—

(a)a pension may be provided from the available amount to or in respect of the member, and

(b)there is a promise about the rate of that pension.

(3)The promise mentioned in subsection (1) includes, in particular, a promise about the change in the value of, or the return from, payments made by the member or any other person in respect of the member.

(4)The promise mentioned in subsection (2)(b) includes a promise that—

(a)the available amount will be sufficient to provide a pension of a particular rate;

(b)the rate of a pension will represent a particular proportion of the available amount.

(5)A benefit is not excluded from the definition of “cash balance benefit” by subsection (2) merely because under the scheme there is a promise that—

(a)the rate or amount of the benefit payable in respect of a deceased member will be a particular proportion of the rate or amount of the benefit which was (or would have been) payable to the member, or

(b)the amount of a lump sum payable to a member, or in respect of a deceased member, will represent a particular proportion of the available amount.

76Interpretation of Part 4U.K.

UK definitions

(1)In this Part—

  • cash balance benefit” has the meaning given by section 75;

  • “dependants' drawdown pension”, in relation to a survivor, has the meaning given by paragraph 18 of Schedule 28 to the Finance Act 2004;

  • drawdown pension”, in relation to a member, has the meaning given by paragraph 4 of Schedule 28 to the Finance Act 2004;

  • flexible benefit” has the meaning given by section 74;

  • “nominees' drawdown pension”, in relation to a survivor, has the meaning given by paragraph 27B of Schedule 28 to the Finance Act 2004;

  • normal pension age”, in relation to a benefit for a member of a pension scheme or a survivor of a member, means—

    (a)

    the earliest age at which, or earliest occasion on which, the member or survivor is entitled to receive the benefit without adjustment for taking it early or late (disregarding any special provision as to early payment on the grounds of ill health or otherwise), or

    (b)

    if there is no such age or occasion, normal minimum pension age as defined by section 279(1) of the Finance Act 2004;

  • “subsisting right”—

    (a)

    in relation to a member of a pension scheme means—

    (i)

    any right which has accrued to or in respect of the member to future benefits under the scheme, or

    (ii)

    any entitlement to benefits under the scheme,

    (b)

    in relation to a survivor of a member of a pension scheme, means any right to future benefits, or entitlement to benefits, which the survivor has under the scheme in respect of the member;

  • “successors' drawdown pension”, in relation to a survivor, has the meaning given by paragraph 27G of Schedule 28 to the Finance Act 2004;

  • survivor”, in relation to a member of a pension scheme, means a person who has survived the member and has a right to future benefits, or is entitled to benefits, under the scheme in respect of the member;

  • trustees or managers” means—

    (a)

    in relation to a scheme established under a trust, the trustees, and

    (b)

    in relation to any other scheme, the managers;

  • uncrystallised funds pension lump sum” has the meaning given by paragraph 4A of Schedule 29 to the Finance Act 2004.

Great Britain only definitions

(2)In any provision of this Part as it extends to England and Wales and Scotland—

  • money purchase benefits” has the meaning given by section 181 of the Pension Schemes Act 1993;

  • occupational pension scheme” has the meaning given by section 1 of the Pension Schemes Act 1993;

  • pension scheme” has the meaning given by section 1(5) of the Pension Schemes Act 1993.

Northern Ireland only definitions

(3)In any provision of this Part as it extends to Northern Ireland—

  • money purchase benefits” has the meaning given by section 176 of the Pension Schemes (Northern Ireland) Act 1993;

  • occupational pension scheme” has the meaning given by section 1 of the Pension Schemes (Northern Ireland) Act 1993;

  • pension scheme” has the meaning given by section 1(5) of the Pension Schemes (Northern Ireland) Act 1993.

PART 5 E+W+SMiscellaneous

RemployE+W+S

77Payments into Remploy Limited Pension and Assurance SchemeE+W+S

The Secretary of State may make payments into the Remploy Limited Pension and Assurance Scheme.

Commencement Information

I18S. 77 in force at 16.11.2015 by S.I. 2015/1851, reg. 2(a)

Judicial and public service pensionsE+W+S

78Pension scheme for fee-paid judgesE+W+S

(1)In the Judicial Pensions and Retirement Act 1993, after Part 1 insert—

PART 1A E+W+SFEE-PAID JUDGES
18APension scheme for fee-paid judges

(1)The appropriate Minister may by regulations establish a scheme for the payment of pensions and other benefits to or in respect of fee-paid judges.

(2)The scheme may make provision for payments to or in respect of a person in relation to the person's service before the scheme is established.

(3)No benefits are to be provided under a new public service pension scheme in relation to service in relation to which benefits are to be provided under a scheme under this section.

New public service pension scheme” means a scheme under—

(a)section 1 of the Public Service Pensions Act 2013, or

(b)section 1 of the Public Service Pensions Act (Northern Ireland) 2014 (c. 2).

(4)The power under section 18(5) of the Public Service Pensions Act 2013 is to include power to provide for exceptions in the case of a person who—

(a)served as a fee-paid judge before 1 April 2012, and

(b)has been notified by the appropriate Minister that he or she will potentially be eligible for benefits under a scheme under this section in relation to that service,

(and section 18(6) to (8) of the 2013 Act apply accordingly).

(5)The power under section 18(5) of the Public Service Pensions Act (Northern Ireland) 2014 is to include power to provide for exceptions in the case of a person who—

(a)served as a fee-paid judge before 1 April 2012, and

(b)has been notified by the appropriate Minister that he or she will potentially be eligible for benefits under a scheme under this section in relation to that service,

(and section 18(7) to (9) of the 2014 Act apply accordingly).

(6)Regulations under this section may, in particular, include provision corresponding or similar to—

(a)any provision made by Part 1, section 20 or Schedule 2 or 2A;

(b)any provision that may be made by regulations under Part 1, section 20 or Schedule 2 or 2A.

(7)In this section—

  • judge” means a person who holds an office specified in the regulations;

  • fee-paid judge” means a judge whose service is remunerated by the payment of fees (as opposed to the payment of a salary).

(2)Schedule 5 contains related amendments.

79Judicial pensions: pension sharing on divorce etcE+W+S

In paragraph 1(5) of Schedule 2A to the Judicial Pensions and Retirement Act 1993 (pension credits), for the words from “in respect of the office” to the end substitute “ in respect of the rights from which the pension credit is derived ”.

80Public service pension schemesE+W+S

In Schedule 5 to the Public Service Pensions Act 2013 (meaning of “existing scheme”), in paragraph 1, after “1972” insert “ other than a scheme which relates to staff of the Secret Intelligence Service or Security Service ”.

Marriage of same sex couplesS

81Extension to Scotland of certain provisions about marriage of same sex couplesS

Sections 17(11), 24D(5), 37(7) and 38A of the Pension Schemes Act 1993 (regulations about relevant gender change cases) extend to Scotland.

Commencement Information

I19S. 81 in force at 16.11.2015 by S.I. 2015/1851, reg. 2(b)

Pension sharingE+W+S

82Pension sharing and normal benefit ageE+W+S

(1)The Pension Schemes Act 1993 is amended as follows.

(2)In section 101B (interpretation), for the definition of “normal benefit age” substitute—

normal benefit age”, in relation to a pension credit benefit for a member of a scheme, is the earliest age at which the member is entitled to receive the benefit without adjustment for taking it early or late (disregarding any special provision as to early payment on the grounds of ill-health or otherwise);

normal pension age”, in relation to a benefit for a member of a scheme, means the earliest age at which the member is entitled to receive the benefit without adjustment for taking it early or late (disregarding any special provision as to early payment on the grounds of ill-health or otherwise).

(3)In section 101C (basic principle as to pension credit benefit), for subsection (1) substitute—

(1)The normal benefit age in relation to a pension credit benefit for a member of a scheme—

(a)must not be lower than 60, and

(b)must not be higher than the permitted maximum.

(1A)The “permitted maximum” is 65 or, if higher, the highest normal pension age for any benefit that is payable under the scheme to or in respect of any of the members by virtue of rights which are not attributable (directly or indirectly) to a pension credit.

PART 6 U.K.General

83Power to make consequential amendmentsU.K.

(1)The appropriate national authority may by regulations make provision that is consequential on any provision made by this Act.

(2)Regulations under this section may amend, repeal, revoke or otherwise modify any primary or subordinate legislation (whenever passed or made).

(3)In this section—

  • appropriate national authority” means—

    (a)

    in relation to provision which could be made by an Act of the Northern Ireland Assembly without the consent of the Secretary of State (see sections 6 to 8 of the Northern Ireland Act 1998), the Department for Social Development in Northern Ireland, and

    (b)

    in relation to any other provision, the Secretary of State or the Treasury;

  • primary legislation” means—

    (a)

    an Act;

    (b)

    Northern Ireland legislation;

  • subordinate legislation” means—

    (a)

    subordinate legislation as defined by section 21(1) of the Interpretation Act 1978;

    (b)

    an instrument made under Northern Ireland legislation.

84RegulationsU.K.

(1)Regulations made by the Secretary of State or the Treasury under this Act are to be made by statutory instrument.

(2)A statutory instrument containing—

(a)the first regulations under section 8(3)(b), 9, 10, 11 or 21,

(b)regulations under section 48(3)(b), or

(c)regulations under section 83 that amend, repeal or otherwise modify a provision of primary legislation,

(whether alone or with other provision) may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.

(3)Any other statutory instrument containing regulations under this Act is subject to annulment in pursuance of a resolution of either House of Parliament.

(4)Subsection (3) does not apply to a statutory instrument containing regulations under section 89(4) or (6) only.

85Regulations: Northern IrelandU.K.

(1)A power of the Department for Social Development in Northern Ireland to make regulations under this Act is exercisable by statutory rule for the purposes of the Statutory Rules (Northern Ireland) Order 1979 (S.I. 1979/1573 (N.I. 12)).

(2)Subsection (3) applies where regulations made by the Department for Social Development in Northern Ireland contain—

(a)provision made under section 51(3)(b), or

(b)provision made under section 83 that amends, repeals, revokes or otherwise modifies a provision of primary legislation,

(whether alone or with other provision).

(3)Where this subsection applies, the regulations—

(a)must be laid before the Northern Ireland Assembly after being made;

(b)take effect on such date as may be specified in the regulations but (without prejudice to the validity of anything done under them or to the making of new regulations) cease to have effect on the expiry of a period of 6 months from that date unless at some time before the expiry of that period the regulations are approved by a resolution of the Northern Ireland Assembly.

(4)Any other regulations made by the Department for Social Development in Northern Ireland under this Act are subject to negative resolution within the meaning of section 41(6) of the Interpretation Act (Northern Ireland) 1954 (c. 33 (N.I.)).

(5)Subsection (4) does not apply to regulations containing provision under section 89(6) only.

86Regulations: supplementaryU.K.

(1)A power to make regulations under this Act may be used—

(a)to make different provision for different purposes;

(b)in relation to all or only some of the purposes for which it may be used.

(2)Regulations under this Act may include incidental, supplementary, consequential, transitional, transitory or saving provision.

87Crown applicationU.K.

(1)In this section “the relevant provisions” means—

(a)Part 2,

(b)section 36,

(c)section 37,

(d)in Chapter 2 of Part 4, sections 48, 49, 51 and 52, and

(e)in Chapter 3 of Part 4, sections 55 to 57 and 61 to 63.

(2)The relevant provisions apply to a pension scheme managed by or on behalf of the Crown as they apply to other pension schemes.

(3)Accordingly, references in those provisions to a person in the person's capacity as a trustee or manager of a pension scheme include the Crown, or a person acting on behalf of the Crown, in that capacity.

(4)References in the relevant provisions to a person in the person's capacity as an employer include the Crown, or a person acting on behalf of the Crown, in that capacity.

(5)Nothing in the relevant provisions applies to Her Majesty in Her private capacity (within the meaning of the Crown Proceedings Act 1947).

88ExtentU.K.

(1)This Act extends to England and Wales and Scotland only, subject to the following provisions of this section.

(2)Any amendment or repeal made by this Act has the same extent as the enactment to which it relates.

(3)Section 81 extends to Scotland only.

(4)The following extend also to Northern Ireland—

(a)section 54(3);

(b)Chapter 5 of Part 4;

(c)this Part.

(5)The following extend to Northern Ireland only—

(a)in Chapter 2 of Part 4, sections 51 and 52;

(b)in Chapter 3 of Part 4, sections 61 to 63;

(c)section 71(8) and (9).

89CommencementU.K.

(1)The following come into force on the day on which this Act is passed—

(a)section 47 and Schedule 3;

(b)any other provision of Part 4 so far as is necessary for enabling the exercise on or after the day on which this Act is passed of any power to make provision by regulations;

(c)sections 78 and 79 and Schedule 5;

(d)section 80;

(e)this Part.

(2)Section 82 comes into force on 1 April 2015.

(3)The following come into force on 6 April 2015—

(a)paragraphs 24, 30, 33 and 36 of Schedule 2 (and section 46 so far as relating to those provisions);

(b)Part 4, so far as not already in force.

(4)The following come into force on such day or days as may be appointed by regulations made by the Secretary of State—

(a)Parts 1 to 3 other than paragraphs 24, 30, 33 and 36 of Schedule 2 (and section 46 so far as relating to those provisions);

(b)sections 77 and 81.

(5)Regulations under subsection (4) may appoint different days for different purposes.

(6)The Secretary of State or the Department for Social Development in Northern Ireland may by regulations make transitional, transitory or saving provision in connection with the coming into force of any provision of this Act.

90Short titleU.K.

This Act may be cited as the Pension Schemes Act 2015.

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