House of Commons Public Bill Committee Proceedings

Session 2014 - 15
Internet Publications
Other Bills before Parliament

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, continued

(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 subsection (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)
In section 91(5)(a), for “subsection (2) is” substitute “subsections (2) and (2A)

are”.

(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.

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299

, continued

(9)
Until the coming into force of the first regulations made under a provision of

section 91(2A) of the Pension Schemes (Northern Ireland) Act 1993 specified in

the first column of the table, regulations made under the provision of section

91(2) 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—

Provision of section 91(2A)
Provision of section 91(2)

Paragraph (a)(iii)
Paragraph (a)(ii)

Paragraph (b)(iii)
Paragraph (b)(ii)

Paragraph (c)
Paragraph (c)

Paragraph (d)
Paragraph (d).”

Secretary Iain Duncan Smith

Added  NC29

To move the following Clause—


“Reduction of cash equivalents: funded public service defined benefits

schemes: Northern Ireland

(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—

“93A
Designation 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

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 90.

(3)
The power under subsection (1) may be exercised in relation to the whole

or any part of a scheme.

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300

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(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—

(v)
is a defined benefits scheme within the meaning given by section

34 of the Public Service Pensions Act (Northern Ireland) 2014,

and

(w)
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—

(x)
out of the Northern Ireland Consolidated Fund;

(y)
by a local authority;

“the relevant Department”, in relation to a funded public service defined

benefits scheme, means either of the following—

(z)
the Department of Finance and Personnel, or

(aa)
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).”

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301

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

“93B
Reduction 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

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.””

Secretary Iain Duncan Smith

Added  NC30

To move the following Clause—


“Public service defined benefits schemes: consequential amendments:

Northern Ireland

(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”.”

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302

, continued

Secretary Iain Duncan Smith

Added  NC31

To move the following Clause—


“Meaning of “flexible benefit”

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

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).”

Secretary Iain Duncan Smith

Added  NC32

To move the following Clause—


“Meaning of “cash balance benefit”

(1)
In this Part “cash balance benefit”, in relation to a member of a pension scheme,

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.”

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303

, continued

Secretary Iain Duncan Smith

Added  NC33

To move the following Clause—


“Interpretation of Part 4

UK definitions

(1)
In this Part—

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

balance benefit”);

“dependants’ drawdown pension”, in relation to a member, has the meaning

given by paragraph 18 of Schedule 28 to the Finance Act 2004;

“drawdown pension”, in relation to a survivor, has the meaning given by

paragraph 4 of Schedule 28 to the Finance Act 2004;

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

benefit”);

“normal pension age”, in relation to a benefit for a member of a pension

scheme or a survivor of a member, means—

(e)
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

(f)
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”—

(g)
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,

(h)
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;

“survivor”, in relation to a member of an occupational 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—

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

(j)
in relation to any other scheme, the managers.


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;

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304

, continued

“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.”

Secretary Iain Duncan Smith

Agreed to  2

Clause  2,  page  2,  line  2,  at end insert “, and

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

Secretary Iain Duncan Smith

Agreed to  3

Clause  5,  page  3,  line  4,  at end insert—

“( )
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.”

Secretary Iain Duncan Smith

Agreed to  4

Clause  7,  page  4,  line  5,  at end insert—

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

Secretary Iain Duncan Smith

Agreed to  5

Clause  19,  page  8,  line  29,  at end insert—

“( )
set out matters that the trustees or managers must take into account, or

principles they must follow, in formulating the policy;”

Secretary Iain Duncan Smith

Agreed to  6

Clause  19,  page  8,  line  36,  after “policy” insert “, or any requirements imposed by

regulations under section (Power to impose requirements about dealing with a deficit or



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