Pensions Bill (HC Bill 222)

Part 1 State pension

1 Equalisation of and increase in pensionable age for men and women

(1) In Schedule 4 to the Pensions Act 1995 (equalisation of and increase in
5pensionable age for men and women) paragraph 1 is amended as follows.

(2) In sub-paragraph (1) for “6th April 1959” substitute “6th December 1953”.

(3) Omit sub-paragraph (4).

(4) In table 1 for the entries (in both columns) relating to each of the periods from
“6th April 1953 to 5th May 1953” to “6th March 1955 to 5th April 1955”
10substitute—

(5) For table 2 substitute—

(6) In sub-paragraph (6) for “1960” substitute “1954”.

(7) Schedule 1 (equalisation of and increase in pensionable age for men and
20women: consequential amendments) has effect.

2 Abolition of certain additions to the state pension

(1) In section 150 of the Social Security Administration Act 1992 (annual up-rating
of benefits)—

(a) in subsection (1)(e)(i) for “person who is also entitled to a Category A
25or Category B retirement pension” substitute “relevant person”;

(b) after subsection (1) insert—

“(1A) In subsection (1)(e)(i) “relevant person” means a person—

(a) who became entitled to a Category A or Category B
retirement pension before the day on which section 2(1)
30of the Pensions Act 2011 comes into force, and

(b) to whom sums became payable by virtue of section 15(1)
of the Pension Schemes Act 1993 (including sums
payable by virtue of section 17(2)) before that day.

(1B) In subsection (1A)—

(a) 35a reference to becoming entitled to a pension before a
day includes a reference to becoming entitled on or after

that day to the payment of a pension in respect of a
period before that day;

(b) a reference to sums becoming payable before a day
includes a reference to sums becoming payable on or
5after that day in respect of a period before that day.”

(2) In that section after subsection (10A) insert—

“(10B) Subsection (10A) does not have effect unless—

(a) the member became entitled to a Category A or Category B
retirement pension before the day on which section 2(2) of the
10Pensions Act 2011 comes into force, and

(b) the member’s postponed pension under the scheme became
payable before that day.

(10C) In subsection (10B)—

(a) a reference to becoming entitled to a pension before a day
15includes a reference to becoming entitled on or after that day to
the payment of a pension in respect of a period before that day;

(b) a reference to a pension becoming payable before a day includes
a reference to a pension becoming payable on or after that day
in respect of a period before that day.”

(3) 20In section 151 of that Act (up-rating - supplementary) omit subsection (5).

(4) The repeal made by subsection (3) does not affect the application of
section 151(5) of that Act in relation to a person who became entitled to a
Category A or Category B retirement pension before the day on which
subsection (3) comes into force.

(5) 25In Schedule 5 to the Social Security Contributions and Benefits Act 1992
(pension increase or lump sum where entitlement to retirement pension is
deferred) omit paragraphs 5, 5A, 6, 6A and 7.

(6) Schedule 2 (repeals and amendments consequential on subsection (5)) has
effect.

(7) 30The repeals made by subsection (5) do not affect the application of paragraphs
5 to 6A of Schedule 5 to the Social Security Contributions and Benefits Act 1992
in a case where—

(a) W became entitled to a Category A or Category B retirement pension
before the day on which subsection (5) comes into force, and

(b) 35S died before that day;

(and section 150(1)(d) of the Social Security Administration Act 1992 continues
to apply accordingly).

(8) The enactments amended by Schedule 2 have effect in relation to such a case as
if the repeals and amendments made by that Schedule (apart from the
40amendments made by paragraph 3(7) and (8)) had not been made.

(9) In subsection (7) “W” and “S” have the same meaning as in paragraph 5 of
Schedule 5 to the Social Security Contributions and Benefits Act 1992.

(10) In this section a reference to becoming entitled to a pension before a day
includes a reference to becoming entitled on or after that day to the payment of
45a pension in respect of a period before that day.

3 Consolidation of additional pension

Schedule 3 (consolidation of additional pension) has effect.

Part 2 Automatic enrolment

4 5Automatic re-enrolment where employer interrupts scheme membership

(1) In section 2 (continuity of scheme membership) of the Pensions Act 2008 (“the
2008 Act”) for subsection (3) substitute—

“(3) Subsection (1) is not contravened if by virtue of section 5 the jobholder
becomes an active member of an automatic enrolment scheme with
10effect from—

“the day after the cessation referred to in paragraph (a) or (b) of
subsection (1), or

(b) a day within the prescribed period (if a period is prescribed).””

(2) In section 5 of the 2008 Act (automatic re-enrolment) after subsection (1)
15insert—

“(1A) This section also applies to a jobholder who—

(a) is aged at least 22,

(b) has not reached pensionable age, and

(c) is not an active member of a qualifying scheme because there
20has been a period beginning at any time after the jobholder’s
automatic enrolment date during which the requirements of
section 1(1)(a) or (c) were not met (so that the person was not a
jobholder for that period).

(1B) This section also applies to a jobholder who has ceased to be an active
25member of a qualifying scheme because of something other than an
action or omission by the jobholder.”

(3) For subsection (4) of that section substitute—

“(4) Regulations may provide for subsection (2) not to apply in relation to a
jobholder who in prescribed circumstances—

(a) 30has ceased to be an active member of a qualifying scheme
because of any action or omission by the jobholder, or by the
employer at the jobholder’s request, or

(b) is treated as not being an active member of a qualifying scheme
because the jobholder has given notice under section 8.”

(4) 35In subsection (8) of that section omit “, after the automatic enrolment date,”.

(5) In section 6 of the 2008 Act (timing of automatic re-enrolment) in subsection
(4)—

(a) in paragraph (a) omit “at any time after the jobholder’s automatic
enrolment date,”;

(b) 40in that paragraph omit “or a qualifying scheme of which the jobholder
is an active member ceases to be such a scheme”;

(c) in paragraph (b) omit “or the employer”;

(d) in paragraph (c) for “time” substitute “event”.

(6) In section 54 of the 2008 Act (inducements)—

(a) in subsection (1)(a) for “within the period prescribed under section
2(3)” substitute “with effect from—

(i) the day after the membership is given up, or

(ii) 5a day within the prescribed period (if a period is
prescribed)”;

(b) in subsection (1)(b) for “within the period prescribed under section
2(3)” substitute “with effect from—

(i) the day on which the jobholder became an active
10member of the scheme to which the notice
relates, or

(ii) a day within the prescribed period (if a period is
prescribed)”.

5 Earnings trigger for automatic enrolment and re-enrolment

(1) 15In section 3 of the 2008 Act (automatic enrolment) for subsection (1)
substitute—

“(1) This section applies to a jobholder—

(a) who is aged at least 22,

(b) who has not reached pensionable age, and

(c) 20to whom earnings of more than £7,475 are payable by the
employer in the relevant pay reference period (see section 15).”

(2) After subsection (6) of that section insert—

“(6A) In this section “earnings” has the meaning given in section 13(3).

(6B) In the case of a pay reference period of less or more than 12 months,
25subsection (1) applies as if the amount in paragraph (c) were
proportionately less or more.”

(3) In section 5 of the 2008 Act (automatic re-enrolment) for subsection (1)
substitute—

“(1) This section applies to a jobholder—

(a) 30who is aged at least 22,

(b) who has not reached pensionable age, and

(c) to whom earnings of more than £7,475 are payable by the
employer in the relevant pay reference period (see section 15).”

(4) After subsection (7) of that section insert—

“(7A) 35In this section “earnings” has the meaning given in section 13(3).

(7B) In the case of a pay reference period of less or more than 12 months,
subsection (1) applies as if the amount in paragraph (a) were
proportionately less or more.”

6 Postponement or disapplication of automatic enrolment

(1) 40In section 3 of the 2008 Act (automatic enrolment) at the end of subsection (7)
insert—

“This is subject to section 4.”

(2) For section 4 of the 2008 Act substitute—

“4 Postponement or disapplication of automatic enrolment

(1) Where—

(a) an employer (E) gives to a person employed by E on E’s staging
5date (“the worker”) notice that E intends to defer automatic
enrolment for the worker until a date specified in the notice
(“the deferral date”), and

(b) any prescribed requirements in relation to the notice are met,

the worker’s automatic enrolment date is the deferral date if on that
10date section 3 applies to the worker as a jobholder of E; if not,
subsection (4) applies.

(2) Where—

(a) a person (“the worker”) begins to be employed by an employer
(E) after E’s staging date,

(b) 15E gives the worker notice that E intends to defer automatic
enrolment until a date specified in the notice (“the deferral
date”), and

(c) any prescribed requirements in relation to the notice are met,

the worker’s automatic enrolment date is the deferral date if on that
20date section 3 applies to the worker as a jobholder of E; if not,
subsection (4) applies.

(3) Where—

(a) a person (“the worker”) employed by an employer (E) becomes,
after E’s staging date, a jobholder to whom section 3 applies,

(b) 25E gives the worker notice that E intends to defer automatic
enrolment until a date specified in the notice (“the deferral
date”), and

(c) any prescribed requirements in relation to the notice are met,

the worker’s automatic enrolment date is the deferral date if on that
30date section 3 applies to the worker as a jobholder of E; if not,
subsection (4) applies.

(4) Where this subsection applies, section 3(2) does not apply in relation to
any employment of the worker by E in the period beginning with the
starting day and ending with the deferral date.

(5) 35A notice under this section may be given on or before the starting day
or within a prescribed period after that day.

(6) The deferral date may be any date in the period of three months after
the starting day.

(7) An employer who gives a worker a notice under subsection (1) or (2)
40may not give the worker a notice under subsection (3) in relation to any
occasion on or before the deferral date specified in the notice on which
the worker becomes a jobholder to whom section 3 applies.

(8) In this section—

• “staging date”, in relation to an employer of a particular
  45description, means the date prescribed under section 12 in
  relation to employers of that description;

• “starting day” means—

  Pensions BillPage 7

  (a)

  E’s staging date, in the case of a notice under subsection
  (1);

  (b)

  the day on which the worker begins to be employed by
  E, in the case of a notice under subsection (2);

  (c)

  5the day on which the worker becomes a jobholder to
  whom section 3 applies, in the case of a notice under
  subsection (3).”

(3) In section 5 of the 2008 Act (automatic re-enrolment) omit subsection (5).

(4) In section 6 of the 2008 Act (timing of automatic re-enrolment)—

(a) 10omit subsections (3) and (6);

(b) in subsection (4) for “second case” substitute “first case”;

(c) in subsection (5) for “third case” substitute “second case”.

(5) In section 7 of the 2008 Act (jobholder’s right to opt in) omit paragraph (b) of
subsection (2) and the “or” before it.

(6) 15In section 30 of the 2008 Act (transitional period for defined benefits and hybrid
schemes) in subsection (7)—

(a) for “applies, section” substitute “applies—

(a) section”;

(b) for “day on which” substitute “day with effect from which”;

(c) 20at the end insert—

“(b) section 4 applies as if—

(i) the reference in subsection (1) to the employer’s
staging date were a reference to the employer’s
first enrolment date;

(ii) 25in that subsection, for “the workers’s automatic
enrolment date is the deferral date” there were
substituted “the day with effect from which
arrangements fall to be made by virtue of section
30 in respect of the jobholder is changed to the
30deferral date”;

(iii) in subsections (4) to (6), references to the starting
day were references to the day with effect from
which arrangements would by virtue of this
section fall to be made in respect of the
35jobholder.”

7 Timing of automatic re-enrolment

In section 6 of the 2008 Act (timing of automatic re-enrolment) in subsection
(1)(b) for “three years” substitute “2 years and 9 months”.

8 Review of earnings trigger and qualifying earnings band

(1) 40For section 14 of the 2008 Act (review of qualifying earnings band) substitute—

“14 Review of earnings trigger and qualifying earnings band

(1) The Secretary of State must in each tax year consider whether any of the
amounts in sections 3(1)(c), 5(1)(c) and 13(1)(a) and (b) should be
increased or decreased.

(2) If the Secretary of State considers that any of those amounts should be
increased or decreased, the Secretary of State may make an order
substituting in the provisions in question the amounts that the
Secretary of State thinks appropriate.

(3) 5For the purposes of subsection (1) the Secretary of State may take into
account any of the factors specified in subsection (4) (as well as any
others that the Secretary of State thinks relevant).

(4) The factors are—

(a) the amounts for the time being specified in Chapter 2 of Part 3
10(personal allowances) of the Income Tax Act 2007;

(b) the amounts for the time being specified in regulations under
section 5 of the Social Security Contributions and Benefits Act
1992 (earnings limits and thresholds for Class 1 national
insurance contributions);

(c) 15the amount for the time being specified in section 44(4) of that
Act (rate of basic state pension);

(d) the general level of prices in Great Britain, and the general level
of earnings there, estimated in such manner as the Secretary of
State thinks fit.”

(2) 20For the italic heading before section 13 of the 2008 Act substitute—

(3) In section 143(5) of the 2008 Act (statutory instruments subject to affirmative
resolution procedure) in paragraph (c) after “section” insert “14(2),”.

9 Rounded figures for earnings trigger and qualifying earnings band

25After section 15 of the 2008 Act insert—

“15A Power to specify rounded figures

(1) The Secretary of State may by order specify rounded figures for the
purposes of section 3(6B), 5(7B) or 13(2) in the case of pay reference
periods of any length specified in the order.

(2) 30A rounded figure so specified applies in place of the amount that
would otherwise apply (“the exact amount”).

(3) The Secretary of State must decide in relation to any particular amount
whether to specify—

(a) a figure that is a whole number of pounds, or

(b) 35a figure that is divisible by 10 pence, or

(c) a figure that includes a whole number of pennies.

(4) It is for the Secretary of State to decide whether to round any particular
amount up or down.

Accordingly, a figure specified under this section may be the figure
40within paragraph (a) or (b) or (c) of subsection (3) that is closest to the
exact amount or the one that is next closest to it (or, if two figures are
joint closest, it may be either of those).”

10 Test scheme standard for schemes that produce sum of money for provision
of benefits

(1) In section 22 of the 2008 Act (test scheme standard) after subsection (7) insert—

“(8) In the case of a scheme under which a sum of money is made available
5for the provision of benefits to a relevant member, references in this
section to pensions are to be read as references to such sums.”

(2) For section 23 of the 2008 Act substitute—

“23 Test scheme

(1) A test scheme is an occupational pension scheme which satisfies—

(a) 10the requirement in subsection (2),

(b) the requirement in subsection (4) or requirements prescribed
under subsection (6) (as appropriate), and

(c) any further requirements that are prescribed.

(2) The scheme must either—

(a) 15provide for a member to be entitled to a pension commencing at
the appropriate age and continuing for life, or

(b) provide for a sum of money to be made available for the
provision of benefits to a member commencing at the
appropriate age and continuing for life.

(3) 20The appropriate age is 65 or any higher age prescribed.

(4) In the case of a scheme that provides entitlement to a pension as
mentioned in subsection (2)(a), the annual rate of the pension at the
appropriate age must be—

(a) 1/120th of average qualifying earnings in the last three tax
25years preceding the end of pensionable service,

• multiplied by

(b) the number of years of pensionable service, up to a maximum of
40.

(5) Section 13(1) (qualifying earnings) applies for the purposes of
30subsection (4) as if the reference to a pay reference period were a
reference to a tax year.

(6) In the case of a scheme that provides for a sum of money to be made
available as mentioned in subsection (2)(b), regulations must prescribe
requirements relating to that sum.”

11 35Certification that alternative to quality requirement is satisfied

(1) Section 28 of the 2008 Act (sections 20, 24 and 26: certification that quality
requirement is satisfied) is amended as follows.

(2) For the heading substitute “Certification that quality requirement or
alternative requirement is satisfied”.

(3) 40In subsection (1) for “any jobholder of an employer” substitute “each of an
employer’s relevant jobholders”.