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Pensions BillPage 30

Requirement to obtain protected benefits quotation

14 In section 151(4)(a) of the Pensions Act 2004 (application for Board to assume
responsibility for scheme) after “form,” insert “or evidence in the prescribed
form which shows that the trustees or managers of the scheme have taken
5all reasonable steps to obtain a protected benefits quotation but were unable
to do so,”.

15 (1) Section 152 of the Pensions Act 2004 (Board’s duty to assume responsibility
for scheme) is amended as follows.

(2) After subsection (1) insert—

(1A) 10Subsection (2) applies where the application is accompanied by a
protected benefits quotation.

(3) After subsection (2) insert—

(2A) Subsection (2B) applies where—

(a) the application is accompanied by evidence in the
15prescribed form which shows that the trustees or
managers of the scheme have taken all reasonable steps to
obtain a protected benefits quotation but were unable to do
so, and

(b) the Board is satisfied that that is the case.

(2B) 20The Board must assume responsibility for the scheme in
accordance with this Chapter if it is satisfied that the value of the
assets of the scheme at the reconsideration time is less than the
amount of the protected liabilities at that time.

(4) In subsection (3)—

(a) 25after “subsection (2)” insert “or (2B)”, and

(b) for “a determination notice” substitute “a notice to that effect (a
“determination notice”)”.

(5) Omit subsection (4).

(6) In subsection (5)—

(a) 30after “in subsection (2)” insert “or (2B)”, and

(b) for “under subsection (2)” substitute “under that subsection”.

(7) Omit subsection (8).

(8) In subsection (10) for “Regulations” substitute “Where subsection (2)
applies, regulations”.

(9) 35After subsection (10) insert—

(10A) The Board may, for the purposes of subsection (2B), obtain its own
valuation of the assets of the scheme and the protected liabilities of
the scheme as at the reconsideration time (within the meaning of
section 151).

(10B) 40A valuation under subsection (10A) must be prepared in accordance
with such requirements as may be prescribed.

(10C) Section 143(3) to (6) applies in relation to a determination under
subsection (2B) and a valuation under subsection (10A) as it applies

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in relation to a determination under section 143(2)(a) and an
actuarial valuation obtained under section 143(2)(b).

(10D) In the application of section 143 by virtue of subsection (10C)

(a) references to the relevant time are to be read as references to
5the reconsideration time (within the meaning of section 151),
and

(b) references to the pre-approval period are to be read as
references to the period which begins immediately after the
reconsideration time, and ends immediately before the Board
10first issues a determination notice under this section.

16 In the following provisions of the Pensions Act 2004 after “152(2)” insert “or
(2B)”—

(a) section 154(2)(c) (requirement to wind up certain schemes), and

(b) section 172(4) and (5)(c) (fraud compensation regime).

15Removal of restriction on transfer notices

17 (1) The Pensions Act 2004 is amended as follows.

(2) In section 160(7) (transfer notice)—

(a) for “172(1) and (2)” substitute “172(2)”, and

(b) omit “within first 12 months of assessment period or”.

(3) 20Omit section 172(1) (no transfer notice within first 12 months of assessment
period).

Parliamentary control of subordinate legislation

18 (1) Section 316(2) of the Pensions Act 2004 (subordinate legislation subject to
affirmative procedure) is amended as follows.

(2) 25Omit paragraph (a) (the administration levy).

(3) In paragraph (f) (the levy ceiling) after “ceiling)” insert “which is made by
virtue of section 178(8)”.

(4) In paragraph (s) (the compensation cap) after “Fund)” insert “except an
order which is made by virtue of paragraph 27 of that Schedule”.

30Pension credit members

19 (1) Schedule 7 to the Pensions Act 2004 (pension compensation provisions) is
amended as follows.

(2) For paragraph 21 (pension credit members under normal benefit age at
assessment date) substitute—

21 (1) 35This paragraph applies to a person who—

(a) is a pension credit member of the scheme immediately
before the assessment date, but

(b) has not attained normal benefit age before that date.

(2) But it applies only to the extent that the member’s pension credit
40rights do not involve the member being credited by the scheme
with notional pensionable service.

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(3) Paragraphs 15, 18 and 19 apply to the pension credit member as
they apply to a deferred member who has not attained normal
pension age before the assessment date, subject to the following
modifications.

(4) 5In paragraph 15—

(a) in sub-paragraphs (1) and (2) the references to normal
pension age are to be read as references to normal benefit
age,

(b) in sub-paragraph (4) for the words from “the aggregate of”
10to the end substitute “the accrued amount”, and

(c) for sub-paragraph (5) substitute—

(5) In sub-paragraph (4) “the accrued amount” means an
amount equal to the initial annual rate of the pension to
which the deferred member would have been entitled in
15accordance with the admissible rules had the member
attained normal benefit age on the transfer day.

(5) In paragraph 18—

(a) for sub-paragraph (1)(b) substitute—

(b) the pension was attributable (directly or indirectly)
20to a pension credit to which the deferred member
became entitled under section 29(1)(b) of the
Welfare Reform and Pensions Act 1999., and

(b) in sub-paragraph (3) the references to normal pension age
are to be read as references to normal benefit age.

(6) 25In paragraph 19—

(a) in sub-paragraphs (1) and (2) the references to normal
pension age are to be read as references to normal benefit
age,

(b) in sub-paragraph (4) for the words from “the aggregate of”
30to the end substitute “the accrued amount”,

(c) for sub-paragraph (5) substitute—

(5) In sub-paragraph (4) “the accrued amount” means an
amount equal to the amount of the scheme lump sum to
which the deferred member would have been entitled in
35accordance with the admissible rules had the member
attained normal benefit age on the transfer day., and

(d) omit sub-paragraph (6).

(7) In this paragraph “transfer day” has the meaning given by section
29 of the Welfare Reform and Pensions Act 1999 (creation of
40pension debits and credits).

21A (1) This paragraph applies to a person who—

(a) is a pension credit member of the scheme immediately
before the assessment date, but

(b) has not attained normal benefit age before that date.

(2) 45But it applies only to the extent that the member’s pension credit
rights involve the member being credited by the scheme with
notional pensionable service.

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(3) Paragraphs 15 to 19 apply to the pension credit member as they
apply to a deferred member who has not attained normal pension
age before the assessment date, subject to the following
modifications.

(4) 5In paragraph 15—

(a) in sub-paragraphs (1) and (2) the references to normal
pension age are to be read as references to normal benefit
age, and

(b) for sub-paragraph (5) substitute—

(5) 10In sub-paragraph (4) “the accrued amount” means an
amount equal to the initial annual rate of the pension to
which the deferred member would have been entitled in
accordance with the admissible rules had the member
attained normal benefit age on the transfer day.

(5) 15In paragraph 16(2)(a) for the words from “day after” to “ended”
substitute “transfer day”.

(6) In paragraph 17(2)(b) the reference to normal pension age is to be
read as a reference to normal benefit age.

(7) In paragraph 18—

(a) 20for sub-paragraph (1)(b) substitute—

(b) the pension was attributable (directly or indirectly)
to a pension credit to which the deferred member
became entitled under section 29(1)(b) of the
Welfare Reform and Pensions Act 1999., and

(b) 25in sub-paragraph (3) the references to normal pension age
are to be read as references to normal benefit age.

(8) In paragraph 19—

(a) in sub-paragraphs (1) and (2) the references to normal
pension age are to be read as references to normal benefit
30age, and

(b) for sub-paragraph (5) substitute—

(5) In sub-paragraph (4) “the accrued amount” means an
amount equal to the amount of the scheme lump sum to
which the deferred member would have been entitled in
35accordance with the admissible rules had the member
attained normal benefit age on the transfer day.

(9) In this paragraph “transfer day” has the meaning given by section
29 of the Welfare Reform and Pensions Act 1999 (creation of
pension debits and credits).

(3) 40In each of the following after “21” insert “or 21A”—

(a) paragraph 25(1) (early payment of compensation),

(b) paragraph 25(3) (as amended by paragraph 12 of Schedule 8 to the
Pensions Act 2008),

(c) in paragraph 25B(4) (terminal illness lump sum) paragraph (b) of the
45definition of “relevant age”, and

(d) paragraph 28(8)(c) (annual increase in periodic compensation).

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(4) In paragraph 36(5)(a) (meaning of “pensionable service”) after “credit” insert
“(except for the purposes of paragraphs 21 and 21A)”.

20 In the Pensions Act 2008 omit paragraphs 10 and 11 of Schedule 8 (which
amend paragraph 21 of Schedule 7 to the Pensions Act 2004).

5Postponement of compensation

21 Schedule 7 to the Pensions Act 2004 (pension compensation provisions) is
amended as follows.

22 For paragraph 25A (deferral of compensation) and the heading before it
substitute—

10Postponement of compensation

25A (1) Regulations may prescribe circumstances in which, and
conditions subject to which—

(a) a person who becomes entitled to periodic compensation
under paragraph 5, 8, 11 or 15 may elect to postpone the
15commencement of periodic compensation under that
paragraph, and

(b) a person who becomes entitled to lump sum compensation
under paragraph 7, 10, 14 or 19 may elect to postpone the
payment of lump sum compensation under that
20paragraph.

(2) Where the commencement of periodic compensation under
paragraph 5, 8, 11 or 15 ceases to be postponed, the Board must
determine—

(a) the amount mentioned in sub-paragraph (3)(a) of that
25paragraph, as at the time the periodic compensation would
have commenced if its commencement had not been
postponed, and

(b) the amount in paragraph (a), increased in accordance with
actuarial factors published by the Board.

(3) 30References in this Schedule to the amount of an actuarial increase
under this paragraph, in relation to periodic compensation, are to
the difference between the amounts in sub-paragraphs (2)(a) and
(2)(b).

(4) Where the payment of lump sum compensation under paragraph
357, 10, 14 or 19 ceases to be postponed, the Board must determine—

(a) the relevant amount, as at the time the lump sum
compensation would have been payable if its payment had
not been postponed, and

(b) the amount in paragraph (a), increased in accordance with
40actuarial factors published by the Board.

(5) References in this Schedule to the amount of an actuarial increase
under this paragraph, in relation to lump sum compensation, are
to the difference between the amounts in sub-paragraphs (4)(a)
and (4)(b).

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(6) In sub-paragraph (4) the “relevant amount” means (as
appropriate)—

(a) the amount mentioned in paragraph 7(2)(a),

(b) the aggregate of the amounts mentioned in paragraph
510(2)(a) and (b),

(c) the amount mentioned in paragraph 14(3)(a), or

(d) the amount mentioned in paragraph 19(3)(a).

23 (1) In paragraph 5(3) (periodic compensation for postponed pensioner at
assessment date)—

(a) 10omit “and” at the end of paragraph (a), and

(b) after that paragraph insert—

(aa) if the commencement of periodic compensation
under this paragraph has been postponed for any
period by virtue of paragraph 25A, the amount of
15the actuarial increase under that paragraph, and.

(2) In paragraph 7(2) (lump sum compensation for postponed pensioner at
assessment date) for the words from “the amount” to the end substitute “the
aggregate of—

(a) the amount of the scheme lump sum which would have
20been payable had the postponement ceased immediately
before the assessment date, and

(b) if the payment of compensation under this paragraph has
been postponed for any period by virtue of paragraph 25A,
the amount of the actuarial increase under that
25paragraph.

(3) In paragraph 8(3) (periodic compensation for active member over pension
age at assessment date)—

(a) omit “and” at the end of paragraph (a), and

(b) after that paragraph insert—

(aa) 30if the commencement of periodic compensation
under this paragraph has been postponed for any
period by virtue of paragraph 25A, the amount of
the actuarial increase under that paragraph, and.

(4) In paragraph 10(2) (lump sum compensation for active member over
35pension age at assessment date)—

(a) omit “and” at the end of paragraph (a), and

(b) after paragraph (b) insert , and

(c) if the payment of compensation under this
paragraph has been postponed for any period by
40virtue of paragraph 25A, the amount of the
actuarial increase under that paragraph.

(5) In paragraph 11(3) (periodic compensation for active member under
pension age at assessment date)—

(a) omit “and” at the end of paragraph (a), and

(b) 45after that paragraph insert—

(aa) if the commencement of periodic compensation
under this paragraph has been postponed for any
period by virtue of paragraph 25A, the amount of
the actuarial increase under that paragraph, and.

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(6) In paragraph 14(3) (lump sum compensation for active member under
pension age at assessment date) for “the protected amount” substitute “the
aggregate of—

(a) the protected amount, and

(b) 5if the payment of compensation under this paragraph has
been postponed for any period by virtue of paragraph 25A,
the amount of the actuarial increase under that
paragraph.

(7) In paragraph 15(3) (periodic compensation for deferred member under
10pension age at assessment date)—

(a) omit “and” at the end of paragraph (a), and

(b) after that paragraph insert—

(aa) if the commencement of periodic compensation
under this paragraph has been postponed for any
15period by virtue of paragraph 25A, the amount of
the actuarial increase under that paragraph, and.

(8) In paragraph 19(3) (lump sum compensation for deferred member under
pension age at assessment date) for “the protected amount” substitute “the
aggregate of—

(a) 20the protected amount, and

(b) if the payment of compensation under this paragraph has
been postponed for any period by virtue of paragraph 25A,
the amount of the actuarial increase under that
paragraph.

(9) 25In paragraph 26 (compensation cap)—

(a) in sub-paragraphs (3)(c) and (6)(e) for “14(3)” substitute “14(3)(a)”,
and

(b) in sub-paragraphs (3)(e) and (6)(g) for “19(3)” substitute “19(3)(a)”.

24 (1) In paragraph 6 (periodic compensation for widow or widower of postponed
30pensioner at assessment date)—

(a) in sub-paragraph (3) after “including” insert “any actuarial increase
under paragraph 25A and”, and

(b) after sub-paragraph (3) insert—

(3A) If, on the day the postponed pensioner (“P”) died,
35commencement of P’s periodic compensation under
paragraph 5 was postponed by virtue of paragraph 25A,
assume for the purposes of sub-paragraph (3) that the
periodic compensation commenced immediately before
the date of P’s death.

(2) 40In paragraph 9 (periodic compensation for widow or widower of active
member over pension age at assessment date)—

(a) in sub-paragraph (3) after “including” insert “any actuarial increase
under paragraph 25A and”, and

(b) after sub-paragraph (3) insert—

(3A) 45If, on the day the active member (“A”) died,
commencement of A’s periodic compensation under
paragraph 8 was postponed by virtue of paragraph 25A,
assume for the purposes of sub-paragraph (3) that the

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periodic compensation commenced immediately before
the date of A’s death.

(3) In paragraph 13 (periodic compensation for widow or widower of active
member under pension age at assessment date)—

(a) 5in sub-paragraph (3)(a) after “including” insert “any actuarial
increase under paragraph 25A and”,

(b) in sub-paragraph (3)(b) after sub-paragraph (ii) insert—

(none) (assuming commencement of the periodic
compensation was not postponed by virtue of
10paragraph 25A)., and

(c) after sub-paragraph (3) insert—

(3ZA) For the purposes of sub-paragraph (3)(a), if on the day the
active member (“A”) died commencement of A’s periodic
compensation under paragraph 11 was postponed by
15virtue of paragraph 25A, assume that the periodic
compensation commenced immediately before the date of
A’s death.

(4) In paragraph 18 (periodic compensation for widow or widower of deferred
member under pension age at assessment date)—

(a) 20in sub-paragraph (3)(a) after “including” insert “any actuarial
increase under paragraph 25A and”,

(b) in sub-paragraph (3)(b) after sub-paragraph (ii) insert—

(none) (assuming commencement of the periodic
compensation was not postponed by virtue of
25paragraph 25A)., and

(c) after sub-paragraph (3) insert—

(3ZA) For the purposes of sub-paragraph (3)(a), if on the day the
deferred member (“D”) died commencement of D’s
periodic compensation under paragraph 15 was
30postponed by virtue of paragraph 25A, assume that the
periodic compensation commenced immediately before
the date of D’s death.

25 In paragraph 24(1) (commutation of periodic compensation) for “becomes
payable” substitute “commences”.

26 (1) 35In paragraph 25B (eligibility for terminal illness lump sum)—

(a) in sub-paragraph (4) in the definition of “relevant age”—

(i) in paragraph (a) omit “or deferred” and “or (as the case may
be) 25A”, and

(ii) in paragraph (b) omit “or deferred”, and

(b) 40after sub-paragraph (4) insert—

(5) Sub-paragraph (6) applies where—

(a) the commencement of a person’s periodic
compensation under paragraph 11 or 15 is
postponed by virtue of paragraph 25A, or

(b) 45the payment of a person’s lump sum compensation
under paragraph 14 or 19 is postponed by virtue of
that paragraph.

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(6) This paragraph applies as if—

(a) the person first becomes entitled to compensation
under the paragraph in question immediately after
the period of postponement ends, and

(b) 5in sub-paragraph (1)(b), for “if the person lived to
the relevant age, the person would become entitled
on attaining that age” there were substituted “if the
period of postponement ended, the person would
become entitled”.

(2) 10In paragraph 25E (effect of successful application for terminal illness lump
sum) after sub-paragraph (6) insert—

(7) Where on the granting of the application—

(a) the commencement of a person’s periodic compensation
under paragraph 11 or 15 is postponed by virtue of
15paragraph 25A, or

(b) the payment of a person’s lump sum compensation under
paragraph 14 or 19 is postponed by virtue of that
paragraph,

this paragraph applies as if the references to the person attaining
20the relevant age were references to the period of postponement
ending.

27 (1) Paragraph 28 (annual increase in periodic compensation) is amended as
follows.

(2) In sub-paragraph (3)—

(a) 25in the definition of “underlying rate” for “any of the paragraphs
mentioned in sub-paragraph (1)” substitute “paragraph 3 or 22”, and

(b) after that definition insert—

(3) 40In sub-paragraph (5)—

(a) in paragraph (a) for the second “the” substitute “each”,

(b) omit the “and” at the end of that paragraph, and

(c) after paragraph (b) insert—

(c) for the purposes of sub-paragraph (2), the
45definition of “underlying rate” in the case of
periodic compensation under paragraph 5, 8, 11 or
15 applies as if the reference in paragraph (b) of the
definition to the amount mentioned in sub-
paragraph (3)(aa) of the paragraph in question was

Pensions BillPage 39

a reference to that amount reduced by the
commutation percentage, and

(d) that amount (as so reduced) is attributable to post-
1997 service and pre-1997 service in the same
5proportions as that amount would have been so
attributable had no part of the periodic
compensation been commuted.

(4) After sub-paragraph (5) insert—

(5A) The amount mentioned in sub-paragraph (3)(aa) of paragraph 5, 8,
1011 or 15 is attributable—

(a) to post-1997 service, in so far as it relates to so much of the
amount mentioned in sub-paragraph (3)(a) of the
paragraph in question as is attributable to post-1997
service, and

(b) 15to pre-1997 service, in so far as it relates to so much of that
amount as is attributable to pre-1997 service.

(5B) Where the commencement of periodic compensation under
paragraph 5, 8, 11 or 15 has been postponed by virtue of paragraph
25A, this paragraph applies as if the person first becomes entitled
20to periodic compensation under the paragraph in question on the
day on which the periodic compensation commences.

28 (1) In paragraph 29 (Board’s powers to alter rates of revaluation and
indexation) after sub-paragraph (6) insert—

(6A) A determination under sub-paragraph (2) which has effect as
25mentioned in sub-paragraph (6)(b)(ii) may provide that, where the
payment of periodic compensation to a person is postponed by
virtue of paragraph 25A, the determination applies as if the person
first becomes entitled to the periodic compensation on the day on
which the periodic compensation commences.

(2) 30In paragraph 30 (Secretary of State’s powers to vary percentage paid as
compensation) after sub-paragraph (6) insert—

(6A) An order under this paragraph which has effect as mentioned in
sub-paragraph (6)(b)(ii) may provide that, where the payment of
compensation to a person is postponed by virtue of paragraph
3525A, the order applies as if the person first becomes entitled to the
compensation immediately after the period of postponement
ends.

Pension compensation sharing: postponement of compensation

29 Schedule 5 to the Pensions Act 2008 (pension compensation payable on
40discharge of pension compensation credit) is amended as follows.

30 (1) Omit paragraph 11 (deferral of compensation).

(2) In Part 4 after the Part heading insert—

Postponement of compensation

16A (1) Regulations may prescribe circumstances in which, and
45conditions subject to which, a person who becomes entitled to

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