Pensions Bill (HL Bill 76)

Pensions Act 2007 (c. 22)Pensions Act 2007 (c. 22)

77 The Pensions Act 2007 is amended as follows.

78 (1) Section 15 (abolition of contracting-out for defined contribution pension
schemes) is amended as follows.

(2) 5In subsection (1), for “the abolition date” substitute “6 April 2012”.

(3) In subsection (2), omit the definition of “the abolition date”.

(4) In subsection (4), for “the abolition date” (in each place) substitute “6 April
2012”.

79 In section 27 (consequential provision, repeals and revocations), in
10subsection (6), for “the abolition date (within the meaning of section 15)”
substitute “6 April 2012”.

80 (1) Schedule 4 (abolition of contracting-out for defined contribution pension
schemes) is amended as follows.

(2) In paragraphs 61, 62(1), (2)(a) and (b)(i) and (3), 65 and 66(2) for “the
15abolition date” (in each place) substitute “6 April 2012”.

(3) In paragraph 67(1) omit the definition of “the abolition date”.

Pensions Act 2008 (c. 30)2008 (c. 30)

81 The Pensions Act 2008 is amended as follows.

82 For section 21 substitute—

“21 20Quality requirement: UK defined benefits schemes

A defined benefits scheme that has its main administration in the
United Kingdom satisfies the quality requirement in relation to a
jobholder if it satisfies the test scheme standard in relation to that
jobholder.”

83 25In section 22 (test scheme standard), for subsection (2) substitute—

“(2) Subject to subsection (3), the relevant members are J and all active
members who are jobholders of the same employer as J.”

Section 24

SCHEDULE 14 Power to amend schemes to reflect abolition of contracting-out

30Introduction

1 This Schedule is about the power under section 24(2) to amend an
occupational pension scheme in relation to some or all of its members.

What can the power be used to do?

2 (1) The power may be used—

(a) 35to increase the employee contributions of the relevant members;

(b) to alter the future accrual of benefits for or in respect of them.

(2) But the power may not be used in a way that would—

(a) increase the amount of the total annual employee contributions of
the relevant members by more than the annual increase in the
5employer’s national insurance contributions in respect of them,

(b) reduce the amount of the scheme’s liabilities in respect of the benefits
that accrue annually for or in respect of the relevant members by
more than the annual increase in the employer’s national insurance
contributions in respect of them, or

(c) 10result in the sum of the amount of any increase in the total annual
employee contributions of the relevant members and the amount of
any reduction in the scheme’s liabilities in respect of the benefits that
accrue annually for or in respect of the relevant members being more
than the annual increase in the employer’s national insurance
15contributions in respect of the relevant members.

(3) Regulations are to define what is meant by—

(a) the total annual employee contributions of the relevant members;

(b) the annual increase in an employer’s national insurance
contributions in respect of the relevant members;

(c) 20a scheme’s liabilities in respect of the benefits that accrue annually
for or in respect of the relevant members.

(4) The regulations may make provision about the calculation of those amounts,
including provision requiring them to be calculated in accordance with
specified methods or assumptions.

(5) 25Where the effect of using the power to increase employee contributions of
the relevant members would be to increase the contributions that the
employer is required to pay, the power may be used to make other
amendments needed to ensure that only the employee contributions are
increased because of the use of the power.

(6) 30Where the effect of using the power to alter the future accrual of benefits for
or in respect of the relevant members would be to decrease the contributions
that any members are required to pay, the power may be used to make other
amendments needed to ensure that the contributions of those members are
not decreased because of the use of the power.

3 (1) 35The power may not be used in a way that would or might adversely affect
the subsisting rights of—

(a) a member of the scheme, or

(b) a survivor of a member of the scheme.

(2) “Subsisting right” and “survivor” have the meanings given by section 67A of
40the Pensions Act 1995.

4 Regulations may impose further restrictions on the use of the power.

Creation of exceptions

5 The power may not be used to amend a scheme in relation to a member of a
description specified in regulations under this paragraph.

Requirement for actuary’s certificate

6 (1) The power may be used only if an actuary has certified that the proposed
amendments would comply with such of the requirements imposed by or
under this Schedule as are specified in regulations under this paragraph.

(2) 5“Actuary” means—

(a) a person of a description specified in regulations, or

(b) a person approved by the Secretary of State.

When can the power be used?

7 The power may be used before or after the repeal of section 41 of the Pension
10Schemes Act 1993 comes into force (but amendments made under it must
not be framed so as to take effect before the repeal comes into force).

8 An amendment made before the repeal of section 41 of the Pension Schemes
Act 1993 comes into force does not take effect in relation to any relevant
members who have ceased to be in contracted-out employment by reference
15to the scheme before the repeal comes into force.

Can the power be used more than once?

9 (1) The power may be used to amend a scheme in relation to the same members
on more than one occasion.

(2) For the purposes of paragraph 2 as it applies in relation to the use of the
20power on the second or subsequent occasion, all of the amendments are to
be treated as if they were being made on that occasion.

(3) Regulations may make further provision modifying section 24(2) to (6) or
this Schedule (including paragraph 2) where the power is used to amend the
scheme in relation to the same members on more than one occasion.

25Modifications for multi-employer or sectionalised schemes

10 (1) Regulations may modify section 24(2) to (6) or this Schedule as it applies in
relation to—

(a) multi-employer schemes, or

(b) schemes that have different rules for different members.

(2) 30“Multi-employer scheme” means a scheme in relation to which there is more
than one employer.

The power overrides other legislation

11 An amendment under section 24 and this Schedule may be made in relation
to any member, and has effect, despite anything in any other enactment to
35the contrary.

Procedural requirements and supplementary matters

12 Regulations may impose procedural requirements about the use of the
power and the manner in which any amendments must be made.

13 Regulations under this Schedule may confer a discretion on a person.

Information

14 (1) Regulations may require the trustees or managers of an occupational
pension scheme to provide information requested by an employer in
connection with the powers given by section 24(2).

(2) 5The regulations may provide for section 10 of the Pensions Act 1995 (civil
penalties) to apply to a person who fails to comply with a requirement.

(3) In this paragraph “managers”, in relation to a pension scheme (other than a
scheme established under a trust), means the persons responsible for the
management of the scheme.

10Definitions

15 In this Schedule—

• “employee contributions” means, in relation to a member of a scheme,
  contributions made to the scheme by or on behalf of the member on
  his or her own account;

• 15“relevant member”, in relation to a scheme, means a current member in
  relation to whom the scheme has been or is to be amended under
  section 24(2).

Section 25

SCHEDULE 15 Option to boost old retirement pensions

20Part 1 Great Britain

Social Security Contributions and Benefits Act 1992

1 The Social Security Contributions and Benefits Act 1992 is amended as
follows.

2 (1) 25Section 1 (outline of contributory system) is amended as follows.

(2) In subsection (2)—

(a) omit “six”;

(b) in paragraph (d), after “making up entitlement;” insert—

“(da) Class 3A, payable by eligible people voluntarily
30under section 14A with a view to obtaining units of
additional pension;”.

(3) In subsection (4)(a), for “and 3” substitute “, 3 and 3A”.

3 After section 14 insert—

“Class 3A contributions

14A Class 3A contributions in return for units of additional pension

(1) An eligible person is entitled to pay a Class 3A contribution in return
5for a unit of additional pension.

(2) A person is eligible to pay a Class 3A contribution if the person—

(a) is entitled to a Category A, Category B or Category D
retirement pension or graduated retirement benefit, or

(b) has deferred entitlement to a Category A or Category B
10retirement pension or graduated retirement benefit.

(3) The amount of a Class 3A contribution needed to obtain a unit of
additional pension is to be determined in accordance with
regulations made by the Treasury.

(4) Before making those regulations the Treasury must consult the
15Government Actuary or the Deputy Government Actuary.

(5) A person—

(a) may pay Class 3A contributions on more than one occasion,
but

(b) may not obtain more than the maximum number of units of
20additional pension.

(6) The maximum number of units of additional pension that a person
may obtain is to be specified by the Treasury in regulations.

(7) In this section “deferred”, in relation to graduated retirement benefit,
has the meaning given by section 36(4A) of the National Insurance
25Act 1965.

(8) For the meaning of “deferred” in relation to a Category A or
Category B retirement pension, see section 55(3) of this Act.

14B Class 3A contributions: repayment

(1) The Treasury may by regulations provide for a Class 3A contribution
30to be repaid in specified circumstances.

(2) Regulations under subsection (1) may, in particular, make provision
about applications for repayments and other procedural matters.

(3) A person is to be treated as never having had a unit of additional
pension if the Class 3A contribution paid in respect of it is repaid.

(4) 35Regulations under subsection (1) may provide for benefits paid to a
person because of the unit of additional pension to be recovered by
deducting them from the repayment.

14C Class 3A contributions: power to change eligibility or remove the
option to pay

(1) 40The Treasury may by regulations change who is eligible to pay Class
3A contributions.

(2) The Treasury may by regulations remove the option for people to
pay Class 3A contributions

(3) Regulations under this section may, in particular, amend an Act.”

4 If paragraph 3 comes into force before the day mentioned in section 55(4) of
5this Act, section 14A(2) as inserted by that paragraph has effect as if the
reference to entitlement included the prospective entitlement of a person
who—

(a) has not yet reached pensionable age, but

(b) will reach pensionable age before that day (assuming that the person
10lives until pensionable age).

5 In section 43 (persons entitled to more than one retirement pension), in
subsection (1), after “subsection (2) below” insert “and section 61ZC below
(which deals with unusual cases involving units of additional pension)”.

6 In section 44 (Category A retirement pension), in subsection (3)—

(a) 15in paragraph (b), at the end insert “or where the pensioner has one or
more units of additional pension”;

(b) after paragraph (b) insert—

“For units of additional pension, see section 14A.”

7 (1) Section 45 (rate of additional pension in a Category A retirement pension) is
20amended as follows.

(2) In subsection (1)—

(a) after “shall be” insert “the sum of the following—

(a) in relation to any surpluses in the pensioner’s
earnings factors,”;

(b) 25at the end insert “; and

(b) if the pensioner has one or more units of additional
pension, a specified amount for each of those units.”

(3) In subsection (2), at the end of paragraph (d) insert “; and

(e) if the pensioner has one or more units of additional pension,
30a specified amount for each of those units.”

(4) After subsection (2) insert—

“(2A) For the purposes of subsections (1)(b) and (2)(e) the “specified
amount” is an amount to be specified by the Secretary of State in
regulations.”

8 35In section 52 (special provision for surviving spouses), after subsection (3)
insert—

“(3A) In subsection (3) the references to additional pension in a Category A
or Category B retirement pension do not include any amount of
additional pension attributable to units of additional pension.

(3B) 40If an amount of additional pension in the Category B retirement
pension is attributable to units of additional pension, the additional
pension in the Category A retirement pension is increased by that
amount (in addition to any increase under subsection (3)).”

9 After section 61 insert—

“61ZA Shortfall in contributions: people with units of additional pension

(1) This section applies to a person who has one or more units of
additional pension if the person—

(a) 5is not entitled to a Category A retirement pension, but

(b) would be entitled to a Category A retirement pension if the
relevant contribution conditions were satisfied.

(2) The relevant contribution conditions are to be taken to be satisfied
for the purposes of the person’s entitlement to a Category A
10retirement pension.

(3) But where a person is entitled to a Category A retirement pension
because of this section, the only element of that pension to which the
person is so entitled is the additional pension attributable to the units
of additional pension.

(4) 15For units of additional pension, see section 14A.

61ZB Shortfall in contributions: people whose dead spouse had units of
additional pension

(1) This section applies to a person whose spouse or civil partner died
with one or more units of additional pension if the person—

(a) 20is not entitled to a Category B retirement pension as a result
of the death, but

(b) would be entitled to a Category B retirement pension as a
result of the death if the relevant contribution conditions
were satisfied.

(a)(a)25is not entitled to a Category B retirement pension as a result
of the death, but

(b) would be entitled to a Category B retirement pension as a
result of the death if the relevant contribution conditions
were satisfied.

(2) 30The relevant contribution conditions are to be taken to be satisfied
for the purposes of the person’s entitlement to that Category B
retirement pension.

(3) But where a person is entitled to a Category B retirement pension
because of this section, the only element of that pension to which the
35person is so entitled is the additional pension attributable to the units
of additional pension.

(4) For units of additional pension, see section 14A.

61ZC Entitlement to more than one pension: sections 61ZA and 61ZB

(1) Section 43 does not prevent a person from being entitled for the same
40period to both—

(a) a Category A retirement pension because of section 61ZA,
and

(b) one Category B retirement pension.

(2) Section 43 does not prevent a person from being entitled for the same
45period to both—

(a) a Category A retirement pension, and

(b) one Category B retirement pension because of section 61ZB
(or, if there is more than one such Category B retirement
pension, the most favourable of them).

(3) Accordingly—

(a) in section 43(2)(a) the reference to “a Category A or a
Category B retirement pension”, in a case in which subsection
(1) or (2) of this section applies, includes “a Category A and a
5Category B retirement pension”,

(b) in sections 43(3)(a) and (aa), 51A and 52 “Category A
retirement pension” does not include a pension to which a
person is entitled because of section 61ZA, and

(c) in sections 43(3)(a) and 52 “Category B retirement pension”
10does not include a pension to which a person is entitled
because of section 61ZB.”

10 In section 122 (interpretation), in subsection (1), at the appropriate place
insert—

• ““unit of additional pension” means a unit of additional pension for
  15which a person has paid a Class 3A contribution under section 14A;”.

11 In section 176 (parliamentary control), in subsection (1)(a), at the appropriate
places insert—

• “section 14A;”

• “section 45(2A);”

12 20In the heading to Schedule 1, for “and 3” substitute “, 3 and 3A”.

Social Security Administration Act 1992 (c. 5)Social Security Administration Act 1992 (c. 5)

13 (1) Section 162 of the Social Security Administration Act 1992 (destination of
contributions) is amended as follows.

(2) In subsection (5)(e), after “those contributions;” insert—

“(ea) 25in the case of Class 3A contributions, 15.5 per cent of the
amount estimated to be the total of those contributions;”.

(3) In subsection (8)(c), for “or (e)” substitute “, (e) or (ea)”.

Welfare Reform and Pensions Act 1999 (c. 30)Welfare Reform and Pensions Act 1999 (c. 30)

14 In section 47 of the Welfare Reform and Pensions Act 1999 (shareable state
30scheme rights), in subsection (2)(a), omit “earnings-related”.

Part 2 Northern Ireland

Social Security Contributions and Benefits (Northern Ireland) Act 1992 (c. 7)Social Security Contributions and Benefits (Northern Ireland) Act 1992 (c. 7)

15 The Social Security Contributions and Benefits (Northern Ireland) Act 1992
35is amended as follows.

16 (1) Section 1 (outline of contributory system) is amended as follows.

(2) In subsection (2)—

(a) omit “six”;

(b) in paragraph (d), after “making up entitlement;” insert—

“(da) Class 3A, payable by eligible people voluntarily
under section 14A with a view to obtaining units of
additional pension;”.

(3) 5In subsection (4)(a), for “and 3” substitute “, 3 and 3A”.

17 After section 14 insert—

“Class 3A contributions

14A Class 3A contributions in return for units of additional pension

(1) An eligible person is entitled to pay a Class 3A contribution in return
10for a unit of additional pension.

(2) A person is eligible to pay a Class 3A contribution if the person—

(a) is entitled to a Category A, Category B or Category D
retirement pension or graduated retirement benefit, or

(b) has deferred entitlement to a Category A or Category B
15retirement pension or graduated retirement benefit.

(3) The amount of a Class 3A contribution needed to obtain a unit of
additional pension is to be determined in accordance with
regulations made by the Treasury.

(4) Before making those regulations the Treasury must consult the
20Government Actuary or the Deputy Government Actuary.

(5) A person—

(a) may pay Class 3A contributions on more than one occasion,
but

(b) may not obtain more than the maximum number of units of
25additional pension.

(6) The maximum number of units of additional pension that a person
may obtain is to be specified by the Treasury in regulations.

(7) In this section “deferred”, in relation to graduated retirement benefit,
has the meaning given by section 35(4A) of the National Insurance
30Act (Northern Ireland) 1966.

(8) For the meaning of “deferred” in relation to a Category A or
Category B retirement pension, see section 55(3) of this Act.

14B Class 3A contributions: repayment

(1) The Treasury may by regulations provide for a Class 3A contribution
35to be repaid in specified circumstances.

(2) Regulations under subsection (1) may, in particular, make provision
about applications for repayments and other procedural matters.

(3) A person is to be treated as never having had a unit of additional
pension if the Class 3A contribution paid in respect of it is repaid.

(4) 40Regulations under subsection (1) may provide for benefits paid to a
person because of the unit of additional pension to be recovered by
deducting them from the repayment.

14C Class 3A contributions: power to change eligibility or remove the
option to pay

(1) The Treasury may by regulations change who is eligible to pay Class
3A contributions.

(2) 5The Treasury may by regulations remove the option for people to
pay Class 3A contributions.

(3) Regulations under this section may, in particular, amend an Act.”

18 (1) If paragraph 17 comes into force before the new state pension
commencement date for Northern Ireland, section 14A(2) as inserted by that
10paragraph has effect as if the reference to entitlement included the
prospective entitlement of a person who—

(a) has not yet reached pensionable age, but

(b) will reach pensionable age before that day (assuming that the person
lives until pensionable age).

(2) 15In this paragraph “the new state pension commencement date for Northern
Ireland” means the date on which legislation in Northern Ireland
corresponding to section 2 of this Act comes fully into force.

19 In section 121 (interpretation), in subsection (1), at the appropriate place
insert—

• 20““unit of additional pension” means a unit of additional pension for
  which a person has paid a Class 3A contribution under section 14A;”.

20 In section 172 (procedure for regulations etc), in subsection (11A), after
“11(3)” insert “, 14A”.

21 In the heading to Schedule 1, for “and 3” substitute “, 3 and 3A”.

25Social Security Administration (Northern Ireland) Act 1992 (c. 8)Social Security Administration (Northern Ireland) Act 1992 (c. 8)

22 (1) Section 142 of the Social Security Administration (Northern Ireland) Act
1992 (destination of contributions) is amended as follows.

(2) In subsection (5)(e), after “those contributions;” insert—

“(ea) in the case of Class 3A contributions, 15.5 per cent of the
30amount estimated to be the total of those contributions;”.

(3) In subsection (8)(c), for “or (e)” substitute “, (e) or (ea)”.

Section 31

SCHEDULE 16 Bereavement support payment: amendments

Forfeiture Act 1982 (c. 34)Forfeiture Act 1982 (c. 34)

1 35In section 4 of the Forfeiture Act 1982 (Upper Tribunal to decide whether
forfeiture rule applies to social security benefits), in the definition of
“relevant enactment” in subsection (5), after the entry relating to Part 1 of
this Act (inserted by Schedule 12 to this Act) insert—

• “section 30 of that Act,”.