House of Commons Public Bill Committee Proceedings

Session 2014 - 15
Internet Publications
Other Bills before Parliament

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(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—

(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—

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320

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(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.

      (2)
For subsection (1) substitute—

“(1)
The trustees or managers of a qualifying scheme must, on the

application of an eligible member, provide the member with a written

statement of the amount of the cash equivalent of the member’s

pension credit rights in relation to categories of benefits other than

money purchase benefits.

(1A)
In the case of a member with pension credit rights in relation to two

categories of benefits other than money purchase benefits, the

application may relate to pension credit rights in relation to either or

both of those categories.”

      (3)
In the heading for “Salary related schemes” substitute “Benefits other than

money purchase”.

15  (1)
Section 101J (time for compliance with transfer notice) is amended as follows.

      (2)
In subsection (1), for paragraphs (a) and (b) substitute—

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

money purchase benefits, within 6 months beginning with the

valuation date, and

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

benefits, within 6 months of the date on which the notice is

given.”

      (3)
For subsection (7) substitute—

“(7)
In subsection (1)(a), “valuation date” means the date by reference to

which the amount shown in the relevant statement under section 101H

is determined.”

16
After section 101N insert—

“101NA
Prohibition on excluding transfers of some rights without others 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.”

17  (1)
Section 101P (interpretation) is amended as follows.

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      (2)
In subsection (1), at the appropriate places insert—

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

101F(6B);”

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

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

      (3)
Omit subsection (2).

      (4)
In subsection (3), for “given to the trustees or managers of a salary related

occupational pension scheme” substitute “in relation to benefits other than

money purchase benefits”.”

18
Omit section 101Q.

19
In section 129 (overriding requirements) for “Chapters II, III, IV and V of Part

IV” substitute “Chapters 2 and 3 of Part 4, Chapters 1 and 2 of Part 4ZA”.

20
In section 130 (extra-statutory benefits), in paragraph (b), for “Chapter II, IV

or V of Part IV” substitute “Chapter 2 of Part 4 or Chapter 1 or 2 Part 4ZA”.

21
In section 153 (power to modify certain provisions), in subsection (1), for

“Chapters II, III and IV of Part IV” substitute “Chapters 2 and 3 of Part 4 and

Chapter 1 of Part 4ZA”.

22
In section 179 (linked qualifying service), in subsection (1)(a)—

(a)
in the opening words, for “Chapter 4 or 5 of Part 4” substitute “Chapter

1 or 2 of Part 4ZA”;

(b)
in sub-paragraph (iii)—

(i)
for “Chapter 4 of Part 4” substitute “Chapter 1 of Part 4ZA”;

(ii)
for “Chapter 5” substitute “Chapter 2”.

23
In section 181 (interpretation), in subsection (1), in paragraph (b) of the

definition of “transfer credits”, for “Chapter 5 of Part 4” substitute “Chapter 2

of Part 4ZA”.

Pensions Act 1995 (c. 26)

24
The Pensions Act 1995 is amended as follows.

25
In section 67A (the subsisting rights provisions: interpretation), in subsection

(9)(a), for sub-paragraph (ii) substitute—

“(ii)
Chapter 2 or 3 of Part 4 of the Pension Schemes Act

1993 (certain protection for early leavers) or

regulations made under either of those Chapters;

(iia)
Chapter 1 or 2 of Part 4ZA of that Act (transfers and

contribution refunds) or regulations made under

either of those Chapters;”.

26
In section 73 (preferential liabilities on winding up), in subsection (9), for

“Chapter 5 of Part 4” substitute “Chapter 2 of Part 4ZA”.

27
In section 73B (sections 73 and 73A: supplementary), in subsection (7), for

“Chapter 4 of Part 4” substitute “Chapter 1 of Part 4ZA”.

Learning and Skills Act 2000 (c. 21)

28
In section 135 (pensions: interpretation), in subsection (4), for “section

93(1A)” substitute “section 100D”.

Pensions Act 2004 (c. 35)

29
The Pensions Act 2004 is amended as follows.

30  (1)
Section 18 (pension liberation: interpretation) is amended as follows.

      (2)
In subsection (2)(a)—

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(a)
after “accrued rights” insert “or an entitlement”;

(b)
in sub-paragraph (ii), for “the applicable rules” substitute “the scheme

rules”.

      (3)
In subsection (3)—

(a)
for paragraph (a) substitute—

“(a)
section 94 of the Pension Schemes Act 1993 (right to

cash equivalent under Chapter 1 of Part 4ZA of that

Act)”;

(b)
in paragraph (b), for “Chapter 5 of Part 4” substitute “Chapter 2 of Part

4ZA”.

      (4)
In subsection (4)(d), for “the applicable rules” substitute “the scheme rules”.

      (5)
Omit subsection (5).

31
In section 23 (freezing orders), in subsection (4)(g), for “salary related

schemes” substitute “benefits other than money purchase”.

32
In section 24 (consequences of freezing order), in subsection (7), for

paragraphs (a) and (b) substitute—

“(a)
Chapter 1 of Part 4ZA of the Pension Schemes Act 1993

(transfer rights: general), or

(b)
Chapter 2 of that Part (early leavers: cash transfer sums and

contribution refunds).”

33
In section 73 (inspection of premises), in subsection (2)(d)—

(a)
for “Chapter 4 of Part 4” substitute “Chapter 1 of Part 4ZA”;

(b)
for “Chapter 5 of Part 4” substitute “Chapter 2 of Part 4ZA”.

34
In section 135 (restrictions on winding up, discharge of liabilities etc), in

subsection (6)(b), for “Chapter 5 of Part 4” substitute “Chapter 2 of Part 4ZA”.

35
In section 138 (payment of scheme benefits), in subsection (3)(b), for “Chapter

5 of Part 4” substitute “Chapter 2 of Part 4ZA”.

36
In section 318 (interpretation), in subsection (3)(a), for sub-paragraph (ii)

substitute—

“(ii)
Chapter 2 or 3 of Part 4 of the Pension Schemes Act

1993 (certain protection for early leavers) or

regulations made under either of those Chapters;

(iia)
Chapter 1 or 2 of Part 4ZA of that Act (transfers and

contribution refunds) or regulations made under

either of those Chapters;”.

37  (1)
Schedule 7 (pension compensation provisions) is amended as follows.

      (2)
In paragraph 20(1)(c), for “Chapter 5 of Part 4” substitute “Chapter 2 of Part

4ZA”.

      (3)
In paragraph 32(1)(b), for “Chapter 5 of Part 4” substitute “Chapter 2 of Part

4ZA”.

Pensions Act 2014 (c. 19)

38
The Pensions Act 2014 is amended as follows.

39
In section 34 (power to prohibit offer of incentives to transfer pension rights),

in subsection (7), in the definition of “salary related occupational pension

scheme”, for “section 93(1A)” substitute “section 100D”.

40
In Schedule 17 (automatic transfer of pension benefits etc), in paragraph 1—

(a)
in sub-paragraph (4)(d) for “applicable rules” substitute “scheme

rules”;

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, continued

(b)
for sub-paragraph (6) substitute—

    “(6)
In sub-paragraph (4)—

(a)
the reference to “scheme rules” is, in relation to an

occupational pension scheme, to be read in

accordance with section 100B of the Pension

Schemes Act 1993;

(b)
“benefits” means—

(i)
money purchase benefits other than money

purchase benefits of a prescribed

description, or

(ii)
benefits of a prescribed description.”

Northern Ireland amendments

Pension Schemes (Northern Ireland) Act 1993 (c. 49)

41
The Pension Schemes (Northern Ireland) Act 1993 is amended as follows.

42  (1)
Chapters 4 and 5 of Part 4 of the Act become Chapters 1 and 2 of a new

Part 4ZA.

      (2)
Accordingly—

(a)
before section 89 (and before the Chapter heading above it) insert—

“Part 4ZA

Transfers and contribution refunds”;

(b)
for the Chapter heading above section 89 substitute—

“Chapter 1

Transfer rights: general”;

(c)
for the Chapter heading above section 97AA substitute—

“Chapter 2

Early leavers: cash transfer sums and contribution refunds”.

43
In section 52 (payment of state scheme premiums on termination of certified

status: supplementary), in subsection (4)(b), for “Chapter 5 of Part IV”

substitute “Chapter 2 of Part 4ZA”.

44
In section 69 (form of short service benefit and its alternatives), in subsection

(3), for “Chapter IV of this Part” substitute “Chapter 1 of Part 4ZA”.

45
For sections 89 to 90 substitute—

“89
Scope of Chapter 1

(1)
This Chapter applies to a member of a pension scheme if all of the

following conditions are met.

(2)
Condition 1 is that the member has accrued rights to any category of

benefits under the scheme rules.

(3)
Condition 2 is that no crystallisation event has occurred in relation to

the member’s accrued rights to benefits in that category (see

subsection (7)).

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(4)
Condition 3 is that—

(a)
the member is no longer accruing rights to benefits in that

category (see subsection (8)), and

(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.

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89A
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.

(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), Article 10 of the Pensions (Northern Ireland) Order

1995 (civil penalties) applies to any trustee or manager who has failed

to take all reasonable steps to secure compliance.

90
Right to cash equivalent

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

entitlement under section 89A 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.”

46  (1)
Section 91 (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 90(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.”



© Parliamentary copyright	Revised 26 November 2014