PART 1Collective money purchase benefits

Members' rights

24Rules about modifying schemes

(1)

The Pensions Act 1995 is amended as follows.

(2)

In section 67 (the subsisting rights provisions)—

(a)

after subsection (1) insert—

“(1A)

Any exercise of such a power to make a prohibited modification is void.”;

(b)

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

(c)

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

(d)

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

(e)

after subsection (3) insert—

“(3A)

Regulations may provide for cases in which the subsisting rights provisions do not apply.”

(3)

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

““prohibited modification””.

(4)

After subsection (1) of that section insert—

“(1A)

“Prohibited modification” means a modification of an occupational pension scheme which on taking effect would or might result in any subsisting right of—

(a)

a member of the scheme, or

(b)

a survivor of a member of the scheme,

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

(5)

In subsection (3) of that section—

(a)

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

(b)

for paragraph (a) substitute—

“(a)

on taking effect would or might result in a relevant transformation of any subsisting right of a member of the scheme or a survivor of a member of the scheme (see subsection (3A)),”;

(c)

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

(d)

omit the words following paragraph (c).

(6)

After subsection (3) of that section insert—

“(3A)

For the purposes of subsection (3)(a), there is a relevant transformation of a subsisting right where—

(a)

a subsisting right that is not a right or entitlement to money purchase benefits becomes, or is replaced with, a right or entitlement to money purchase benefits under the scheme rules,

(b)

a subsisting right that is a right or entitlement to money purchase benefits other than collective money purchase benefits becomes, or is replaced with, a right or entitlement to collective money purchase benefits under the scheme rules, or

(c)

a subsisting right that is a right or entitlement to collective money purchase benefits becomes, or is replaced with, a right or entitlement to money purchase benefits other than collective money purchase benefits under the scheme rules.

(3B)

For the purposes of subsection (3A), the reference in the definition of “money purchase benefits” in section 181(1) of the Pension Schemes Act 1993 to the widow, widower or surviving civil partner of a member of an occupational pension scheme is to be read as including any other survivor of the member.”

(7)

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

(8)

In subsection (9) of that section—

(a)

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

“(xiv)

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

(xv)

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

(b)

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

“(xii)

sections 18(7)(b), 34(5), 39(6), 41(6), 42(2) and 45(5) of and paragraph 1(7) of Schedule 2 to the Pension Schemes Act 2021.”