Pensions Bill (HL Bill 55)

20 Overseas residents

(1) Regulations may provide that an overseas resident who is entitled to a state
pension under this Part is not entitled to up-rating increases.

(2) In this section “overseas resident” means a person who is not ordinarily
5resident in Great Britain or any other territory specified in the regulations.

(3) Regulations under this section do not affect the rate of an overseas resident’s
state pension for any period during which he or she is in Great Britain or a
territory specified in the regulations (but once the overseas resident ceases to
be in Great Britain or a specified territory the rate reverts to what it would have
10been had he or she not been in Great Britain or a specified territory).

(4) Regulations under this section do not affect the rate of a person’s state pension
once the person stops being an overseas resident.

Definitions

21 “Old state pension”

(1) 15In this Part “old state pension” means a Category A retirement pension or a
Category B retirement pension.

(2) A reference in this Part to the rate of an old state pension (however expressed)
does not include—

(a) graduated retirement benefit under the National Insurance Act 1965, or

(b) 20any increase in the rate because of Schedule 5 to the Contributions and
Benefits Act (deferral increases).

22 General definitions etc

(1) In this Part—

• “the Administration Act” means the Social Security Administration Act
  251992;

• “Category A retirement pension” means a Category A retirement pension
  under Part 2 of the Contributions and Benefits Act;

• “Category B retirement pension” means a Category B retirement pension
  under Part 2 of the Contributions and Benefits Act;

• 30“the Contributions and Benefits Act” means the Social Security
  Contributions and Benefits Act 1992;

• “enactment” includes an enactment contained in subordinate legislation
  within the meaning of the Interpretation Act 1978;

• “full rate” means the rate mentioned in section 3(1);

• 35“old state pension” has the meaning given by section 21 (and references to
  the rate of an old state pension are to be read in accordance with that
  section);

• “pensionable age” has the meaning given by section 122(1) of the
  Contributions and Benefits Act; and a person is “over” pensionable age
  40if the person has reached that age (and is otherwise “under” that age);

• “post-commencement qualifying year” has the meaning given by
  section 4(4);

• “pre-commencement qualifying year” is to be read in accordance with
  section 4(4) and (5);

Pensions BillPage 11

• “qualifying earnings factor” has the meaning given by section 122(1) of
  the Contributions and Benefits Act;

• “qualifying year” has the meaning given by section 2(4);

• “reduced rate” means the rate mentioned in section 3(2);

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

• “state scheme pension credit”, and related expressions, have the meaning
  given by section 13;

• “state scheme pension debit”, and related expressions, have the meaning
  given by section 14;

• 10“tax year” has the meaning given by section 122(1) of the Contributions
  and Benefits Act;

• “transitional rate” means the rate mentioned in section 5;

• “up-rating increase”, in relation to a state pension under this Part,
  means—

  (a)

  15an increase in the rate of the state pension because of an increase
  in the amount specified in regulations under section 3(1), or

  (b)

  an increase in the rate of the state pension because of
  section 9(3), 12(3) or 17(6) or Schedule 2, 4 or 9;

• “working life” has the meaning given by section 122(1) of the
  20Contributions and Benefits Act.

(2) For the purposes of any other provision of this Part two people are to be treated
as if they are not married to each other in relation to times when either of them
is married to a third person.

Consequential and other amendments

23 25Amendments

In Schedule 12—

• Part 1 contains amendments to do with state pensions under this Part;

• Part 2 contains key amendments to do with the old state pension system;

• Part 3 contains amendments to do with state pension credit;

• 30Part 4 contains other amendments to do with this Part.

24 Abolition of contracting-out for salary related schemes etc

(1) Schedule 13 contains amendments to abolish contracting-out for salary related
schemes.

(2) An employer may amend an occupational pension scheme in relation to some
35or all of its members to take account of increases in the employer’s national
insurance contributions in respect of some or all of the members to whom the
amendments apply because of the repeal of section 41 of the Pension Schemes
Act 1993 (by Schedule 13 to this Act).

(3) The power may be used to make amendments that will apply in relation to
40future members and correspond to the amendments being made in relation to
current members.

(4) The power may not be used to amend—

(a) a public service pension scheme, or

(b) a scheme of a description specified in regulations under this paragraph.

(5) Schedule 14 contains more detail about the power.

(6) In this section and Schedule 14—

• “current member”, in relation to a scheme, means a person who is a
  member of the scheme at the time that the power is used (and “future
  5member” is to be read accordingly);

• “employer”, in relation to a scheme, means the employer of persons in the
  description of employment to which the scheme relates;

• “member” has the meaning given by section 124(1) of the Pensions Act
  1995;

• 10“national insurance contributions”, in relation to an employer, means
  secondary Class 1 national insurance contributions payable by the
  employer;

• “occupational pension scheme” has the meaning given by section 1 of the
  Pension Schemes Act 1993;

• 15“public service pension scheme” has the meaning given by that section.

(7) Subsections (2) to (6) and Schedule 14 are repealed at the end of the period of 5
years beginning with 6 April 2016.

(8) The Secretary of State may by order amend subsection (7) to extend the period
for the time being mentioned there.

20Part 2 Pensionable age

25 Increase in pensionable age to 67

(1) Paragraph 1 of Schedule 4 to the Pensions Act 1995 is amended as follows.

(2) In sub-paragraph (6) for “6th April 1968” substitute “6th April 1960”.

(3) 25For sub-paragraph (7) and table 3 substitute—

“(7) A person born on any day in a period mentioned in column 1 of
table  3 attains pensionable age when the person attains the age
shown against that period in column 2.

(7A) For the purposes of table 3—

(a) 10a person born on 31st July 1960 is to be taken to attain the age
of 66 years and 4 months at the commencement of
30th November 2026;

(b) a person born on 31st December 1960 is to be taken to attain
the age of 66 years and 9 months at the commencement of
1530th September 2027;

(c) a person born on 31st January 1961 is to be taken to attain the
age of 66 years and 10 months at the commencement of
30th November 2027.”

(4) In sub-paragraph (8) for “5th April 1969” substitute “5th March 1961”.

26 20Periodic review of rules about pensionable age

(1) The Secretary of State must from time to time—

(a) review whether the rules about pensionable age are appropriate,
having regard to life expectancy and other factors that the Secretary of
State considers relevant, and

(b) 25prepare and publish a report on the outcome of the review.

(2) The first report must be published before 7 May 2017.

(3) Each subsequent report must be published before the end of the period of
6 years beginning with the day on which the previous report was published.

(4) For the purposes of each review, the Secretary of State must require the
30Government Actuary or Deputy Government Actuary to prepare a report for
the Secretary of State on—

(a) whether the rules about pensionable age mean that, on average, a
person who reaches pensionable age within a specified period can be
expected to spend a specified proportion of his or her adult life in
35retirement, and

(b) if not, ways in which the rules might be changed with a view to
achieving that result.

(5) The Secretary of State must, for the purposes of a review, appoint a person or
persons to prepare a report for the Secretary of State on other specified factors
40relevant to the review.

(6) The Secretary of State must lay before Parliament any report prepared under
this section.

(7) For the purposes of subsection (4)—

(a) a person’s adult life is the part of the person’s life after he or she reaches
5the specified age;

(b) the proportion of a person’s adult life spent in retirement is the
proportion of his or her adult life spent after reaching pensionable age.

(8) In this section—

• “pensionable age” has the meaning given by the rules in paragraph 1 of
  10Schedule 4 to the Pensions Act 1995 (and “the rules about pensionable
  age” means those rules);

• “specified” means specified by the Secretary of State.

Part 3 State pension credit

27 15State pension credit: phasing out assessed income periods

(1) In section 6 of the State Pension Credit Act 2002 (duty to specify assessed
income period), in subsection (1), after “subsection (3) or (4)” insert “where the
relevant decision takes effect before 6 April 2016”.

(2) At the end of the heading to that section insert “for pre-6 April 2016 awards”.

(3) 20Regulations under section 9(5) of the State Pension Credit Act 2002 may in
particular be made for the purpose of phasing out, on or after 6 April 2016, any
remaining assessed income period that is 5 years or shorter than 5 years.

28 Preserving indefinite status of certain existing assessed income periods

(1) If this section comes into force before 6 April 2014—

(a) 25section 105(6) of the Pensions Act 2008 (which provides that section 9(6)
of the State Pension Credit Act 2002 ceases to have effect on 6 April
2014) is repealed, and

(b) in section 9(6)(a) of the State Pension Credit Act 2002 (duration of
assessed income period for certain transitional cases to be treated as
30indefinite), after “brought to an end” insert “, on or after 6 April 2009
but before 6 April 2014,”.

(2) If this section comes into force on or after 6 April 2014—

(a) section 105(6) of the Pensions Act 2008 (which provides that section 9(6)
of the State Pension Credit Act 2002 ceases to have effect on 6 April
352014) is repealed and is to be treated as never having had effect, and

(b) in section 9(6)(a) of the State Pension Credit Act 2002 (duration of
assessed income period for certain transitional cases to be treated as
indefinite) as restored by this section, after “brought to an end” insert “,
on or after 6 April 2009 but before 6 April 2014,”.

Part 4 Bereavement support payment

29 Bereavement support payment

(1) A person is entitled to a benefit called bereavement support payment if—

(a) 5the person’s spouse or civil partner dies,

(b) the person is under pensionable age when the spouse or civil partner
dies,

(c) the person is ordinarily resident in Great Britain, or a specified
territory, when the spouse or civil partner dies, and

(d) 10the contribution condition is met (see section 30).

(2) The Secretary of State must by regulations specify—

(a) the rate of the benefit, and

(b) the period for which it is payable.

(3) The regulations may specify different rates for different periods.

(4) 15In the case of a person who is pregnant or entitled to child benefit in specified
circumstances, the regulations may—

(a) specify a higher rate;

(b) provide for the allowance to be payable for a longer period.

(5) A person is not entitled to bereavement support payment for periods after the
20person has reached pensionable age.

(6) A person is not entitled to bereavement support payment if the death occurred
before this section came fully into force.

(7) In this section—

• “pensionable age” has the meaning given by the rules in paragraph 1 of
  25Schedule 4 to the Pensions Act 1995;

• “specified territory” means a territory specified in regulations made by
  the Secretary of State.

30 Bereavement support payment: contribution condition and amendments

(1) For the purposes of section 29(1)(d) the contribution condition is that, for at
30least one tax year during the deceased’s working life—

(a) he or she actually paid Class 1 or Class 2 national insurance
contributions, and

(b) those contributions give rise to an earnings factor (or total earnings
factors) equal to or greater than 25 times the lower earnings limit for the
35tax year.

(2) For earnings factors, see sections 22 and 23 of the Social Security Contributions
and Benefits Act 1992.

(3) For the purposes of section 29(1)(d) the contribution condition is to be treated
as met if the deceased was an employed earner and died as a result of—

(a) 40a personal injury of the kind mentioned in section 94(1) of the Social
Security Contributions and Benefits Act 1992, or

(b)

a disease or personal injury of the kind mentioned in section 108(1) of
that Act.

(4) In this section the following expressions have the meaning given by
section 122(1) of the Social Security Contributions and Benefits Act 1992—

• 5“employed earner”,

• “lower earnings limit”,

• “tax year”, and

• “working life”.

(5) Schedule 15 contains amendments to do with bereavement support payment.

31 10Bereavement support payment: prisoners

(1) The Secretary of State may by regulations provide that a person is not to be
paid bereavement support payment for any period during which the person is
a prisoner.

(2) “Prisoner” means a person (in Great Britain or elsewhere) who is—

(a) 15imprisoned or detained in legal custody, or

(b) unlawfully at large.

(3) In the case of a person remanded in custody for an offence, regulations under
subsection (1) may be made so as to apply only if a sentence of a specified
description is later imposed on the person for the offence.

20Part 5 Private pensions

Transfer of pension benefits

32 Automatic transfer of pension benefits etc

Schedule 16—

(a) 25requires the Secretary of State to make regulations under which, in
certain circumstances, the cash equivalent of a person’s accrued rights
to benefits under a pension scheme must be transferred to another
scheme of which the person is an active member;

(b) permits the Secretary of State to make regulations requiring accounts
30relating to a person’s accrued rights to benefits under a pension scheme
to be merged in certain circumstances.

33 Power to prohibit offer of incentives to transfer pension rights

(1) The Secretary of State may by regulations make provision prohibiting a person
from offering an incentive to another person with the intention of inducing a
35member of a salary related occupational pension scheme to—

(a) exercise a right to require a pensions transfer, or

(b) agree to a pensions transfer.

(2) “Pensions transfer” means a transfer of sums or assets representing any of the
member’s pension rights to be used for one or more of the following—

(a) acquiring rights (whether to present or future benefit) for the member
under the rules of another occupational pension scheme or a personal
pension scheme;

(b) purchasing one or more annuities for the member;

(c) 5subscribing to other pension arrangements for the member.

(3) “Pension right” means, at any time—

(a) any right which at that time has accrued to or in respect of the member
to future benefits under the scheme rules, or

(b) any entitlement to the present payment of a pension or other benefit
10which the member has at that time, under the scheme rules;

and for this purpose “right” includes a pension credit right.

(4) Regulations under this section may in particular—

(a) provide for the prohibition to apply whether the incentive offered is to
be provided by the person making the offer or another person;

(b) 15create exceptions to the prohibition;

(c) provide for section 10 of the Pensions Act 1995 (civil penalties) to apply
to a person who contravenes the regulations.

(5) Regulations made by virtue of subsection (4)(c) may in particular provide that
for the purposes of section 10 of the Pensions Act 1995 the offer of an incentive
20is to be regarded as a separate act in relation to each member of a scheme to
whom the incentive relates.

(6) Nothing in any regulations made under this section affects the validity of a
pensions transfer (or of the exercise of a right to require a transfer or of an
agreement to a transfer).

(7) 25In this section—

• “incentive” means a financial or other advantage;

• “member” has the meaning given by section 124(1) of the Pensions Act
  1995;

• “occupational pension scheme” and “personal pension scheme” have the
  30meanings given by section 1 of the Pension Schemes Act 1993;

• “pension credit right” has the meaning given by section 124(1) of the
  Pensions Act 1995;

• “salary related occupational pension scheme” has the meaning given by
  section 93(1A) of the Pension Schemes Act 1993;

• 35“scheme rules” has the meaning given by section 67A(8) of the Pensions
  Act 1995.

(8) This section binds the Crown.

34 Expiry of power in section 33

If no regulations have been made under section 33 by the end of the period of
407 years beginning with the day on which it comes into force, that section is
repealed at the end of that period.

35 Short service benefit for scheme member with money purchase benefits

(1) Section 71 of the Pension Schemes Act 1993 (basic principle as to short service
benefit) is amended as follows.

(2) In subsection (1)(a), after “service,” insert—

“(aa) he has at least 30 days’ qualifying service and, if he were
entitled to benefit because of this paragraph, all of it would
necessarily be money purchase benefit,”.

(3) 5After subsection (9) insert—

“(10) Subsections (7) to (9) apply, with the substitution for references to
2 years of references to 30 days, for determining whether a person has
at least 30 days’ qualifying service for the purposes of subsection (1).

(11) Subsection (1)(aa) does not apply in relation to a person’s membership
10of a scheme if any period of relevant service began before the day on
which section 35 of the Pensions Act 2013 came into force (whether or
not it also ended before that date).

“Relevant service” means service that counts towards the 30 days’
qualifying service for the purposes of subsection (1).

15“Relevant service” means service that counts towards the 30 days’
qualifying service for the purposes of subsection (1).”

(4) In section 101AA of the 1993 Act (early leavers: cash transfer sums and
contribution refunds), in subsection (4)(b), after “(a)” insert “, (aa)”.

Automatic enrolment

36 20Automatic re-enrolment: exceptions where automatic enrolment deferred

(1) The Pensions Act 2008 is amended as follows.

(2) In section 5 (automatic re-enrolment), after subsection (3) insert—

“(3A) Subsection (2) does not apply if the jobholder’s automatic enrolment
date is deferred under section 4 from a date before the automatic re-
25enrolment date to a date after the automatic re-enrolment date.”

(3) In section 30(7) (transitional period for defined benefits and hybrid schemes),
at the end insert—

“(c) section 5(2) does not apply in relation to an automatic re-
enrolment date that falls before the day with effect from which
30arrangements would by virtue of this section fall to be made in
respect of the jobholder.”

37 Automatic enrolment: powers to create general exceptions

(1) In section 10 of the Pensions Act 2008 (information to be given to workers)—

(a) in subsection (1)—

(i) 35for “must” substitute “may”;

(ii) in paragraphs (a) and (b), omit “all”;

(b) in subsection (2) for “must state” substitute “may in particular make
provision about”.

(2) In Chapter 8 of Part 1 of the Pensions Act 2008, before section 88 (and the

heading “Workers” above it) insert—

“Exceptions

87A Power to create exceptions from the employer duties etc

(1) The Secretary of State may by regulations provide for exceptions to the
5employer duties; and an exception may in particular—

(a) turn an employer duty into a power;

(b) be framed by reference to a description of worker, particular
circumstances or in some other way.

(2) Regulations which make provision under subsection (1)(a) may make
10provision modifying this Part or regulations made under it in
connection with that provision.

(3) The regulations may make provision in connection with the coming to
an end of the state of affairs that caused an exception to apply,
including provision—

(a) 15modifying this Part or regulations made under it in relation to a
person;

(b) for the purpose of putting a person, wholly or partly, in the
position he or she would have been in if the exception had never
applied.

(4) 20In this section “employer duties” means any duty of an employer under
any provision of sections 2 to 11 and 54 or of regulations made under
those sections.”

(3) In consequence of subsection (2), the following are repealed—

(a) section 292A of the Pensions Act 2004;

(b) 25section 5(4) of the Pensions Act 2008;

(c) section 18 of the Pensions Act 2011.

38 Automatic enrolment: transitional period for hybrid schemes

(1) Section 30 of the Pensions Act 2008 (transitional period for defined benefits and
hybrid schemes) is amended as follows.

(2) 30In subsection (2)(b) and (c), for “a hybrid scheme” substitute “a defined benefits
member of a hybrid scheme”.

(3) In subsection (3), in the substituted subsection (2)—

(a) after “becomes” insert “(a)”;

(b) for “or a hybrid scheme” substitute “, or

(b) 35a defined benefits member, with effect from the end of
that period, of an automatic enrolment scheme which is
a hybrid scheme.”

(4) In subsection (5), in the substituted subsection (2)—

(a) in paragraph (a), for “a hybrid scheme” substitute “becomes a defined
40benefits member, with effect from that date, of an automatic enrolment
scheme which is a hybrid scheme”;