House of Commons Amendments

Session 2014 - 15
Internet Publications
Other Bills before Parliament

Notices of Amendments:
949

, continued

(b)
in the case of benefits that are not flexible benefits, the

member stopped accruing those rights at least one year before

normal pension age.

(5)
But this Chapter does not apply to—

(a)
a member of a salary related occupational pension scheme

whose pensionable service terminated before 1 January 1986

and in respect of whom prescribed requirements are satisfied;

(b)
a member of a personal pension scheme which is comprised

in an annuity contract made before 4 January 1988.

(6)
In this Chapter a reference to a “category” of benefits is to one of the

following three categories—

(a)
money purchase benefits;

(b)
flexible benefits other than money purchase benefits;

(c)
benefits that are not flexible benefits.

(7)
For the purposes of Condition 2 a crystallisation event occurs in

relation to a member’s accrued rights to benefits in a category when—

(a)
payment of a pension in respect of any of the benefits has

begun,

(b)
in the case of money purchase benefits, sums or assets held for

the purpose of providing any of the benefits are designated as

available for the payment of drawdown pension (as defined by

paragraph 4 of Schedule 28 to the Finance Act 2004), or

(c)
in the case of a personal pension scheme, sums or assets held

for the purpose of providing any of the benefits are applied for

purchasing an annuity or insurance policy.

(8)
For the purposes of Condition 3 a member stops accruing rights to a

category of benefits when there are no longer arrangements in place

for the accrual of rights to benefits in that category for or in respect of

the member.

(9)
In this section a reference to accrued rights does not include pension

credit rights.

(10)
Regulations may—

(a)
provide for this Chapter not to apply in relation to a person of

a prescribed description;

(b)
modify the application of this Chapter in relation to a member

who has accrued rights to benefits of a prescribed description.

(11)
In the following provisions of this Chapter—

(a)
a reference to a “member” of a pension scheme is a reference

to a member to whom this Chapter applies, and

(b)
a reference to a member’s “transferrable rights” are to any

rights in relation to a category of benefits by virtue of which

this Chapter applies to the member.

93A
Right to statement of entitlement: benefits other than money purchase

(1)
The trustees or managers of a pension scheme must, on the application

of any member, provide the member with a statement of entitlement in

respect of the member’s transferrable rights in relation to categories of

benefits other than money purchase benefits.

Notices of Amendments:
950

, continued

(2)
In the case of a member with transferrable rights in relation to two

categories of benefits other than money purchase benefits, the

application may relate to transferrable rights in relation to either or

both of those categories.

(3)
For the purposes of this Chapter a member’s “statement of

entitlement” is a written statement of the amount of the cash

equivalent at the guarantee date of the transferrable rights to which the

application under subsection (1) relates.

(4)
In this Chapter “the guarantee date” means the date by reference to

which the value of the cash equivalent is calculated, and must be—

(a)
within the prescribed period beginning with the date of the

application, and

(b)
within the prescribed period ending with the date on which the

statement of entitlement is provided to the member.

(5)
Regulations may make provision in relation to applications under this

section and may, in particular, restrict the making of successive

applications.

(6)
If the trustees or managers of a pension scheme fail to comply with

subsection (1), section 10 of the Pensions Act 1995 (civil penalties)

applies to any trustee or manager who has failed to take all reasonable

steps to secure compliance.

94
Right to cash equivalent

(1)
A member of a pension scheme who has received a statement of

entitlement under section 93A acquires a right to take the cash

equivalent shown in that statement in accordance with this Chapter.

(2)
A member of a pension scheme who has transferrable rights in relation

to money purchase benefits acquires a right to take their cash

equivalent in accordance with this Chapter.”

6    (1)
Section 95 (ways of taking right to cash equivalent) is amended as follows.

      (2)
For subsection (1) substitute—

“(1)
A member of a pension scheme who has acquired a right to take a cash

equivalent in accordance with this Chapter may only take it by making

an application in writing to the trustees or managers of the scheme

requiring them to use the cash equivalent in one of the ways specified

below.

(1A)
In the case of a right acquired under section 94(1), the application

must be made—

(a)
within the period of 3 months beginning with the guarantee

date shown in the relevant statement of entitlement, and

(b)
if the cash equivalent relates to benefits that are not flexible

benefits, by no later than the date that falls one year before the

member attains normal pension age.”

      (3)
In subsections (2)(a)(i) and (b)(i) and (3)(a)(i) and (b)(i), for “accrued rights”

substitute “transferrable rights”.

      (4)
Omit subsections (7) and (8).

7    (1)
Section 96 (further provisions concerning exercise of option under section 95)

is amended as follows.

Notices of Amendments:
951

, continued

      (2)
For subsection (1) substitute—

“(1)
A member who has acquired a right to take a cash equivalent under

section 94(1) or (2) may exercise the option conferred by section 95(1)

in relation to different portions of that cash equivalent in different

ways, but a member who exercises that option must do so—

(a)
in relation to the whole of that cash equivalent, or

(b)
if subsection (2) applies, in relation to the whole of the

balance mentioned in subsection (3).”

      (3)
For subsection (4) substitute—

“(4)
Where a member of a pension scheme—

(a)
is entitled to make an application under section 95(1) in

relation to any category of benefits, and

(b)
is also entitled to give a transfer notice under section 101F(1)

to the trustees or managers of the scheme in relation to

benefits in the same category (or would be entitled to do so but

for section 101G(2)),


the member may not, if the scheme so provides, make an application

under section 95(1) in relation to that category of benefits without also

giving a transfer notice under section 101F(1) in relation to that

category of benefits.”

8    (1)
Section 97 (calculation of cash equivalents) is amended as follows.

      (2)
After subsection (1) insert—

“(1A)
Where a member applies under section 95 to take a cash equivalent

that relates to money purchase benefits, the cash equivalent is to be

calculated by reference to the date of the application.”

      (3)
In subsection (2)—

(a)
in the opening words, for “except guaranteed cash equivalents”

substitute “that relate to money purchase benefits”;

(b)
in paragraph (aa), for “, including a guaranteed cash equivalent,”

substitute “that relates to any category of benefits”.

      (4)
In subsection (3), omit paragraph (a).

      (5)
For subsection (3A) substitute—

“(3A)
For the purposes of subsection (3), the “appropriate date”—

(a)
in relation to a cash equivalent that relates to benefits other

than money purchase benefits, means the guarantee date for

the purposes of the relevant statement of entitlement under

section 93A, and

(b)
in relation to a cash equivalent that relates to money purchase

benefits, means the date on which the trustees or managers

receive an application from the member under section 95.”

9
For section 98 substitute—

“98
Loss of right to cash equivalent

(1)
A member of a pension scheme who acquires the right to take a cash

equivalent under section 94(1) loses that right if no application to take

the cash equivalent is made within the period specified in

section 95(1A) (but this does not prevent the member later acquiring a

new right to take a cash equivalent under section 94(1) in relation to

the same benefits).

Notices of Amendments:
952

, continued

(2)
A member of a pension scheme loses the right to take a cash equivalent

in accordance with this Chapter if the scheme is wound up.”

10  (1)
Section 99 (trustees’ duties after exercise of option) is amended as follows.

      (2)
For subsection (2) substitute—

“(2)
Subject to the following provisions of this section, if the trustees or

managers of a scheme receive an application under section 95 they

must do what is needed to carry out what the member requires—

(a)
in the case of an application that relates to benefits other than

money purchase benefits, within 6 months beginning with the

guarantee date shown in the relevant statement of entitlement,

and

(b)
in the case of an application that relates to money purchase

benefits, within 6 months beginning with the date of the

application.”

      (3)
In subsection (3)(a) omit “at any time before the expiry of the 12 months

beginning with the termination date”.

      (4)
Omit subsection (3A).

11
After section 100 insert—

“100A
Prohibition on excluding future accruals etc

Except as mentioned in sections 96(4) and 101G(4), a pension scheme

may not contain rules that would have the effect of—

(a)
preventing a member from exercising a right under this

Chapter in relation to a category of benefits without also

exercising a right under this Chapter or otherwise to require a

transfer payment to be made in respect of another category of

benefits, or

(b)
preventing a member who exercises a right under this Chapter

in relation to a category of benefits from accruing rights to

benefits in another category.

100B
Meaning of “scheme rules”: occupational pension schemes

(1)
In this Chapter references to the scheme rules, in relation to an

occupational pension scheme, are references to—

(a)
the rules of the scheme, except so far as overridden by a

relevant legislative provision,

(b)
the relevant legislative provisions, to the extent that they have

effect in relation to the scheme and are not reflected in the

rules of the scheme, and

(c)
any provision which the rules of the scheme do not contain but

which the scheme must contain if it is to conform with the

requirements of Chapter 1 of Part 4 of this Act.

(2)
For the purposes of subsection (1)—

(a)
“relevant legislative provision” means any provision

contained in any of the following provisions—

(i)
Schedule 5 to the Social Security Act 1989;

(ii)
this Part or Chapters 2 or 3 of Part 4 or regulations

made under this Part or either of those Chapters;

(iii)
Part 4A of this Act or regulations made under that

Part;

(iv)
section 110(1) of this Act;

Notices of Amendments:
953

, continued

(v)
Part 1 of the Pensions Act 1995 or subordinate

legislation made or having effect as if made under that

Part;

(vi)
section 31 of the Welfare Reform and Pensions Act

1999;

(vii)
any provision mentioned in section 306(2) of the

Pensions Act 2004;

(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 2014;

(b)
a relevant legislative provision is to be taken to override any

of the provisions of the scheme if, and only if, it does so by

virtue of any of the following provisions—

(i)
paragraph 3 of Schedule 5 to the Social Security Act

1989;

(ii)
section 129(1) of this Act;

(iii)
section 117(1) of the Pensions Act 1995;

(iv)
section 31(4) of the Welfare Reform and Pensions

Act 1999;

(v)
section 306(1) of the Pensions Act 2004;

(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 28 of the Pension

Schemes Act 2014.

100C
Meaning of “normal pension age” in this Chapter

(1)
In this Chapter “normal pension age”, in relation to a category of

benefits under a pension scheme, means—

(a)
in a case where the scheme is an occupational pension scheme

and those benefits consist only of a guaranteed minimum

pension, the earliest age at which the member is entitled to

receive the guaranteed minimum pension on retirement from

any employment to which the scheme applies,

(b)
in a case where the scheme is an occupational pension scheme

and the scheme provides for the member to become entitled to

receive any of those benefits at a particular age on retirement

from any employment to which the scheme applies, the

earliest age at which the member becomes entitled to receive

any of the benefits, and

(c)
in any other case, normal minimum pension age as defined by

section 279(1) of the Finance Act 2004.

(2)
For the purposes of subsection (1) any scheme rule making special

provision as to early retirement on grounds of ill-health or otherwise

is to be disregarded.

100D
Interpretation of Chapter

In this Chapter—

Notices of Amendments:
954

, continued

“accrued rights”, in relation to a member of a pension scheme,

means rights that have accrued to or in respect of the member to

benefits under the scheme;

“category”, in relation to benefits, has the meaning given by section

93(6);

“flexible benefit” has the meaning given by section (Meaning of

“flexible benefit”) of the Pension Schemes Act 2014;

“guarantee date”, in relation to a member who has received a

statement of entitlement, has the meaning given by section 93A;

“member” is to be read in accordance with section 93(11);

“normal pension age” has the meaning given by section 100C;

“pension credit rights”, in relation to a member of a pension

scheme, means rights to benefits under the scheme which are

attributable (directly or indirectly) to a pension credit;

“salary related occupational pension scheme”: an occupational

pension scheme is “salary related” if—

(ab)
the scheme is not a scheme under which all the benefits that may

be provided are money purchase benefits, and

(ac)
the scheme does not fall within a prescribed class;

“scheme rules”, in relation to an occupational pension scheme, has

the meaning given by section 100B;

“statement of entitlement” has the meaning given by section 93A;

“transferrable rights” is to be read in accordance with section

93(11).””

12  (1)
In section 101F (power to give transfer notice) is amended as follows.

      (2)
In subsection (1), for “pension credit benefit” substitute “pension credit

rights”.

      (3)
After subsection (3) insert—

“(3A)
An eligible member who has pension credit rights in relation to more

than one category of benefits under the scheme may exercise the

power to give a transfer notice in relation to the pension credit rights

in relation to any one or more of those categories.”

      (4)
For subsection (4) substitute—

“(4)
The cash equivalent for the purposes of subsection (1) shall—

(a)
in a case where the pension credit rights relate to a category of

benefits other than money purchase benefits, be taken to be

the amount shown in the relevant statement under section

101H, and

(b)
in a case where the pension credit rights relate to money

purchase benefits, be determined by reference to the date the

notice under that subsection is given.”

      (5)
For subsection (6A) substitute—

“(6A)
Regulations may—

(a)
provide for this Chapter not to apply in prescribed

circumstances in relation to a member of a prescribed scheme

or schemes of a prescribed description;

(b)
modify the application of this Chapter in relation to a member

who has accrued rights to benefits of a prescribed description.

(6B)
In this Chapter a reference to a “category” of benefits is to one of the

following three categories—

Notices of Amendments:
955

, continued

(a)
money purchase benefits;

(b)
flexible benefits other than money purchase benefits;

(c)
benefits that are not flexible benefits.”

13
For section 101G (restrictions on power to give transfer notice) substitute—

“101G
Restrictions on power to give transfer notice

(1)
An eligible member may not give a transfer notice in relation to a

category of benefits if a crystallisation event has occurred in relation

to any of the member’s pension credit rights to benefits in that

category.

(2)
An eligible member may give a transfer notice in relation to a category

of benefits other than money purchase benefits only if—

(a)
the member has been provided with a statement under section

101H in relation to benefits in that category, and

(b)
not more than 3 months have passed since the date by

reference to which the amount shown in the statement is

determined.

(3)
An eligible member may not give a transfer notice in relation to

benefits other than flexible benefits if there is less than one year to go

until the member reaches normal benefit age.

(4)
Where an eligible member of a qualifying scheme—

(a)
is entitled to give a transfer notice in relation to any category

of benefits, and

(b)
is also entitled to make an application to the trustees or

managers of the scheme under section 95(1) in relation to

benefits in the same category (or would be entitled to do so but

for section 95(1A)(a)),


the member may not, if the scheme so provides, give a transfer notice

in relation to that category of benefits without also making an

application under section 95(1) in relation to that category of benefits.

(5)
A transfer notice may not be given if a previous transfer notice given

by the member to the trustees or managers of the scheme is

outstanding.

(6)
For the purposes of subsection (1) a crystallisation event occurs in

relation to a member’s pension credit rights to benefits in a category

when—

(a)
payment of a pension in respect of any of the benefits has

begun,

(b)
in the case of money purchase benefits, sums or assets held for

the purpose of providing any of the benefits are designated as

available for the payment of drawdown pension (as defined by

paragraph 4 of Schedule 28 to the Finance Act 2004), or

(c)
in the case of a personal pension scheme, sums or assets held

for the purpose of providing any of the benefits are applied for

purchasing an annuity or insurance policy.”

14  (1)
Section 101H (salary related schemes: statements of entitlement) is amended

as follows.



© Parliamentary copyright	Revised 20 November 2014