House of Commons Public Bill Committee Proceedings

Session 2014 - 15
Internet Publications
Other Bills before Parliament

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, continued

      (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).

47  (1)
Section 92 (further provisions concerning exercise of option under section 91)

is amended as follows.

      (2)
For subsection (1) substitute—

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

section 90(1) or (2) may exercise the option conferred by section 91(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 91(1) in

relation to any category of benefits, and

(b)
is also entitled to give a transfer notice under section 97F(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 97G(2)),


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

under section 91(1) in relation to that category of benefits without also

giving a transfer notice under section 97F(1) in relation to that

category of benefits.”

48  (1)
Section 93 (calculation of cash equivalents) is amended as follows.

      (2)
After subsection (1) insert—

“(1A)
Where a member applies under section 91 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 (as

defined in section 90(1A)” 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 89A, 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 91.”

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327

, continued

49
For section 94 substitute—

“94
Loss of right to cash equivalent

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

equivalent under section 90(1) loses that right if no application to take

the cash equivalent is made within the period specified in

section 91(1A) (but this does not prevent the member later acquiring a

new right to take a cash equivalent under section 90(1) in relation to

the same benefits).

(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.”

50  (1)
Section 95 (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 91 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).

51
After section 96 insert—

“96A
Prohibition on excluding future accruals etc

Except as mentioned in sections 92(4) and 97G(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.

96B
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.

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328

, continued

(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 (Northern Ireland)

Order 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 or regulations made under that Part;

(iv)
section 106(1);

(v)
Part 2 of the Pensions (Northern Ireland) Order 1995

or orders or regulations made or having effect as if

made under that Part;

(vi)
Article 28 of the Welfare Reform and Pensions

(Northern Ireland) Order 1999;

(vii)
any provision mentioned in Article 279(2) of the

Pensions (Northern Ireland) Order 2005;

(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

(Northern Ireland) Order 1989;

(ii)
section 125(1);

(iii)
Article 114(1) of the Pensions (Northern Ireland)

Order 1995;

(iv)
Article 28(4) of the Welfare Reform and Pensions

(Northern Ireland) Order 1999;

(v)
Article 279(1) of the Pensions (Northern Ireland)

Order 2005.

96C
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.

96D
Interpretation of Chapter

In this Chapter—

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329

, 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

89(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 89A;

“member” is to be read in accordance with section 89(11);

“normal pension age” has the meaning given by section 96C;

“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—

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

be provided are money purchase benefits, and

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

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

the meaning given by section 96B;

“statement of entitlement” has the meaning given by section 89A;

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

89(11).””

52  (1)
In section 97F (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

97H, 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—

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330

, continued

(a)
money purchase benefits;

(b)
flexible benefits other than money purchase benefits;

(c)
benefits that are not flexible benefits.”

53
For section 97G (restrictions on power to give transfer notice) substitute—

“97G
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

97H 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 91(1) in relation to

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

for section 91(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 91(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.”

54  (1)
Section 97H (salary related schemes: statements of entitlement) is amended as

follows.

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331

, continued

      (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”.

55  (1)
Section 97J (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 97H

is determined.”

56
After section 97N insert—

“97NA
Prohibition on excluding transfers of some rights without others etc

Except as mentioned in sections 92(4) and 97G(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.”

57  (1)
Section 97P (interpretation) is amended as follows.

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

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

97F(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”.”

58
Omit section 97Q.

59
In section 125 (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”.

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332

, continued

60
In section 126 (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”.

61
In section 149 (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”.

62
In section 174 (linked qualifying service), in subsection (1)(a)—

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

“Chapter 1 or 2 of Part 4ZA”;

(b)
in sub-paragraph (iii)—

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

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

63
In section 176 (interpretation), in subsection (1), in paragraph (b) of the

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

2 of Part 4ZA”.

Pensions (Northern Ireland) Order 1995 (S.I. 1995/3213 (N.I. 22))

64
The Pensions (Northern Ireland) Order 1995 is amended as follows.

65
In Article 67A (the subsisting rights provisions: interpretation), in paragraph

(9)(a), for head (ii) substitute—

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

(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;”.

66
In Article 73 (preferential liabilities on winding up), in paragraph (9), for

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

67
In Article 73B (Article 73 and 73A: supplementary), in paragraph (7), for

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

Pensions (Northern Ireland) Order 2005 (S.I. 2005/255 (N.I. 1))

68
The Pensions (Northern Ireland) Order 2005 is amended as follows.

69
In Article 2 (interpretation), in paragraph (4)(a), for head (ii) substitute—

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

(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;”.

70  (1)
Article 14 (pension liberation: interpretation) is amended as follows.

      (2)
In paragraph (2)(a)—

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

(b)
in head (ii), for “the applicable rules” substitute “the scheme rules”.

      (3)
In paragraph (3)—

(a)
for sub-paragraph (a) substitute—

“(a)
section 90 of the Pension Schemes Act (right to cash

equivalent under Chapter 1 of Part 4ZA of that Act)”;

(b)
in sub-paragraph (b), for “Chapter 5 of Part IV” substitute “Chapter 2

of Part 4ZA”.

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



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