Pensions Bill (HL Bill 76)

(4) In this paragraph “pension account”, in relation to a member of a scheme,
means an account relating to the member’s accrued rights to benefits in
respect of a particular period of employment; and a pension account—

(a) is “dormant” if relevant contributions in relation to the period of
5employment to which the account relates have ceased; and

(b) is “current” if such contributions have not ceased.

(5) In this paragraph—

(a) references to “accrued rights to benefits”, in relation to a member of
a scheme, are to accrued rights to benefits under the applicable rules
10(within the meaning given by paragraph 1(6));

(b) “employment” has the prescribed meaning;

(c) “relevant contributions”, in relation to a member of a scheme, means
contributions to the scheme by, or on behalf or in respect of, the
member.

15Part 3 Interpretation etc

Interpretation etc

15 (1) In this Schedule—

• “active member”—

  (a)

  20in relation to an occupational pension scheme, has the
  meaning given by section 124(1) of the Pensions Act 1995,
  and

  (b)

  in relation to a personal pension scheme, means a member of
  the scheme in respect of whom contributions are being paid
  25into the scheme;

• “automatic transfer scheme” has the meaning given by paragraph 1(2);

• “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;

• 30“money purchase benefits” has the meaning given by section 181(1) of
  the Pension Schemes Act 1993;

• “money purchase scheme” has the meaning given by section 181(1) of
  the Pension Schemes Act 1993;

• “occupational pension scheme” has the meaning given by section 1 of
  35the Pension Schemes Act 1993;

• “pension scheme” means—

  (a)

  an occupational pension scheme, or

  (b)

  a personal pension scheme;

• “personal pension scheme” has the meaning given by section 1 of the
  40Pension Schemes Act 1993;

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

• “qualifying member” has the meaning given by paragraph 1(3);

• “the Regulator” means the Pensions Regulator;

• 45“transferable benefits”, and references to a person having transferable
  benefits, are to be read in accordance with paragraph 1(4);

Pensions BillPage 101

• “transferable benefits scheme” has the meaning given by paragraph
  1(5);

• “transfer notice” means a notice given under regulations made because
  of paragraph 3;

• 5“work-based pension scheme” means—

  (a)

  an occupational pension scheme,

  (b)

  a personal pension scheme where direct payment
  arrangements (within the meaning of section 111A of the
  Pension Schemes Act 1993) exist in respect of one or more
  10members of the scheme who are workers, or

  (c)

  a personal pension scheme which is or has been registered
  under section 2 of the Welfare Reform and Pensions Act 1999
  (stakeholder pension schemes);

• “worker” means a person—

  (a)

  15who is a worker for the purposes of Part 1 of the Pensions Act
  2008, or

  (b)

  to whom a provision of Part 1 of that Act applies as if the
  person were a worker because of a provision of Chapter 8 of
  that Part;

  20but for the purposes of paragraph (b), ignore section 92 of that Act.

(2) The Secretary of State may by regulations make provision about when
contributions to a pension scheme are to be regarded as having ceased for
the purposes of paragraph 1(4)(c) or 14(4).

Crown application

16 (1) 25This Schedule applies to a pension scheme managed by or on behalf of the
Crown as it applies to other pension schemes.

(2) Accordingly, references in this Schedule to a person in the person’s capacity
as a trustee or manager of a pension scheme include the Crown, or a person
acting on behalf of the Crown, in that capacity.

(3) 30This Schedule applies to persons employed by or under the Crown as it
applies to persons employed by a private person.

Overriding provision

17 (1) Regulations under this Schedule may provide that specified provisions
override any provision of an automatic transfer scheme or transferable
35benefits scheme to the extent that it conflicts with them.

(2) A “specified provision” is a provision of regulations under this Schedule
specified in the regulations for the purposes of this paragraph.

Other provision relating to regulations under this Schedule

18 (1) Regulations under this Schedule may amend or otherwise modify any
40enactment (whenever passed or made).

(2) Regulations made because of sub-paragraph (1) may in particular amend
section 175(1) of the Pension Schemes Act 1993 (levies towards certain
expenditure) so as to include expenditure of the Secretary of State or the

Commissioners for Her Majesty’s Revenue and Customs under the
regulations.

(3) In this paragraph “enactment” includes an enactment contained in
subordinate legislation within the meaning of the Interpretation Act 1978.

19 5Before making any regulations under this Schedule, the Secretary of State
must consult such persons as the Secretary of State considers appropriate.

Amendments

20 (1) The Pension Schemes Act 1993 is amended as follows.

(2) In section 94(2A) (right to cash equivalent)—

(a) 10in paragraph (a), after sub-paragraph (vii) insert—

“(viii) regulations made under Schedule 17 to the
Pensions Act 2014;”;

(b) in paragraph (b), after sub-paragraph (v) insert—

“(vi) regulations made under paragraph 17 of
15Schedule 17 to the Pensions Act 2014;”.

(3) In section 101AI(8) (rights to cash transfer sum and contribution refund:
further provisions)—

(a) in paragraph (a), after sub-paragraph (vii) insert—

“(viii) regulations made under Schedule 17 to the
20Pensions Act 2014;”;

(b) in paragraph (b), after sub-paragraph (v) insert—

“(vi) regulations made under paragraph 17 of
Schedule 17 to the Pensions Act 2014;”.

21 In section 256 of the Pensions Act 2004 (no indemnification for fines or civil
25penalties), in subsection (1)(b)—

(a) for “or section” substitute “, section”;

(b) after “2008” insert “or paragraph 10 of Schedule 17 to the Pensions
Act 2014”.

Section 43

SCHEDULE 18 30Work-based schemes: power to restrict charges or impose requirements

Power to restrict charges

1 (1) The Secretary of State may by regulations make provision—

(a) prohibiting administration charges which are of a specified class or
description, or which exceed specified limits, from being imposed on
35a member of a relevant scheme;

(b) prohibiting a relevant scheme from containing provision under
which administration charges which are of a specified class or
description, or which exceed specified limits, will or may be imposed
on a member of the scheme.

40“Specified” means specified in the regulations.

(2) The regulations—

(a) may make provision for the manner of, and criteria for, determining
whether an administration charge is of a specified class or
description or exceeds specified limits;

(b) may provide for the determination to be made in accordance with
5guidance issued from time to time by the Secretary of State.

(3) The regulations may impose duties on the trustees or managers of a relevant
scheme or others.

(4) The regulations may provide that a scheme is not a qualifying scheme in
relation to a jobholder for the purposes of Part 1 of the Pensions Act 2008 if
10a provision of the regulations—

(a) is contravened, or

(b) is contravened in a way specified in the regulations.

(5) In this paragraph—

• “administration charge”, in relation to a member of a pension scheme,
  15means any of the following to the extent that they may be used to
  meet the administrative expenses of the scheme, to pay commission
  or in any other way that does not result in the provision of pension
  benefits for or in respect of members—

  (a)

  any payments made to the scheme by, or on behalf or in
  20respect of, the member,

  (b)

  any income or capital gain arising from the investment of
  such payments, or

  (c)

  the value of the member’s rights under the scheme;

• “relevant scheme” means a work-based pension scheme of a
  25description specified in the regulations.

Power to impose requirements relating to administration or governance

2 (1) The Secretary of State may by regulations impose requirements relating to
the administration or governance of a relevant scheme that must be satisfied
in relation to the scheme.

(2) 30The regulations—

(a) may make provision for the manner of, and criteria for, determining
whether a requirement is satisfied;

(b) may provide for the determination to be made in accordance with
guidance issued from time to time by the Secretary of State.

(3) 35The regulations may impose duties on the trustees or managers of a relevant
scheme or others.

(4) The regulations may provide that a scheme is not a qualifying scheme in
relation to a jobholder for the purposes of Part 1 of the Pensions Act 2008 if
a provision of the regulations—

(a) 40is contravened, or

(b) is contravened in a way specified in the regulations.

(5) In this paragraph “relevant scheme” means a work-based pension scheme of
a description specified in the regulations.

Compliance

3 (1) The Secretary of State may by regulations make provision with a view to
ensuring compliance with a provision of regulations under paragraph 1 or 2.

(2) The regulations may in particular—

(a) 5provide for the Regulator to issue a notice (a “compliance notice”) to
a person with a view to ensuring the person’s compliance with a
provision of regulations under paragraph 1 or 2;

(b) provide for the Regulator to issue a notice (a “third party compliance
notice”) to a person with a view to ensuring another person’s
10compliance with a provision of regulations under paragraph 1 or 2;

(c) provide for the Regulator to issue a notice (a “penalty notice”)
imposing a penalty on a person where the Regulator is of the opinion
that the person has failed to comply with a compliance notice or third
party compliance notice or has contravened a provision of
15regulations under paragraph 1 or 2;

(d) provide for the making of a reference to the First-tier Tribunal or
Upper Tribunal in respect of the issue of a penalty notice or the
amount of a penalty;

(e) confer other functions on the Regulator.

(3) 20The regulations may make provision for determining the amount, or the
maximum amount, of a penalty in respect of a failure or contravention.

(4) But the amount of a penalty imposed under the regulations in respect of a
failure or contravention must not exceed—

(a) £5,000, in the case of an individual, and

(b) 25£50,000, in any other case.

Interpretation

4 (1) Expressions used in this Schedule and in Schedule 17 have the same
meaning in this Schedule as in that Schedule (see paragraph 15 of that
Schedule).

(2) 30In this Schedule “relevant scheme” is to be construed in accordance with
paragraphs 1(5) and 2(5).

Crown application

5 (1) This Schedule applies to a pension scheme managed by or on behalf of the
Crown as it applies to other pension schemes.

(2) 35Accordingly, a reference in this Schedule to a person in the person’s capacity
as a trustee or manager of a pension scheme include the Crown, or a person
acting on behalf of the Crown, in that capacity.

(3) This Schedule applies to persons employed by or under the Crown as it
applies to persons employed by a private person.

40Overriding provision

6 (1) The Secretary of State may by regulations provide that specified provisions
override any provision of a relevant scheme to the extent that it conflicts
with them.

(2) A “specified provision” is a provision of regulations under this Schedule
specified in regulations made under sub-paragraph (1).

Other provision relating to regulations under this Schedule

7 (1) The Secretary of State may by regulations amend or otherwise modify any
5enactment (whenever passed or made) in connection with any provision
made by regulations under the preceding provisions of this Schedule.

(2) In this paragraph “enactment” includes an enactment contained in
subordinate legislation within the meaning of the Interpretation Act 1978.

8 Before making any regulations under this Schedule, the Secretary of State
10must consult such persons as the Secretary of State considers appropriate.

Amendments

9 (1) The Pension Schemes Act 1993 is amended as follows.

(2) In section 94(2A) (right to cash equivalent)—

(a) in paragraph (a), after sub-paragraph (viii) (inserted by Schedule 17
15to this Act) insert—

“(ix) regulations made under Schedule 18 to the
Pensions Act 2014;”;

(b) in paragraph (b), after sub-paragraph (vi) (inserted by Schedule 17 to
this Act) insert—

“(vii) 20regulations made under paragraph 6 of
Schedule 18 to the Pensions Act 2014.”

(3) In section 101AI(8) (rights to cash transfer sum and contribution refund:
further provisions)—

(a) in paragraph (a), after sub-paragraph (viii) (inserted by Schedule 17
25to this Act) insert—

“(ix) regulations made under Schedule 18 to the
Pensions Act 2014;”;

(b) in paragraph (b), after sub-paragraph (vi) (inserted by Schedule 17 to
this Act) insert—

“(vii) 30regulations made under paragraph 6 of
Schedule 18 to the Pensions Act 2014.”

10 In section 256 of the Pensions Act 2004 (no indemnification for fines or civil
penalties), in subsection (1)(b), after “or paragraph 10 of Schedule 17 to the
Pensions Act 2014” (inserted by Schedule 17 to this Act) insert “or paragraph
353 of Schedule 18 to that Act”.

11 (1) Section 16 of the Pensions Act 2008 (automatic enrolment: qualifying
schemes) is amended as follows.

(2) In subsection (3), omit paragraphs (a), (aa) and (ab).

(3) After subsection (3) insert—

“(3A) 40See also paragraphs 1(4) and 2(4) of Schedule 18 to the Pensions Act
2014, which confer power to make regulations providing for a
scheme not to be a qualifying scheme in relation to a jobholder in
certain circumstances.”

(4) Omit subsections (4) and (5).

12 In consequence of the amendments made by paragraph 11, section 10 of the
Pensions Act 2011 (qualifying schemes: administration charges) is repealed.

Section 45

SCHEDULE 19 5Prohibition orders: consequential amendments

Pensions Act 1995 (c. 26)1995 (c. 26)

1 The Pensions Act 1995 is amended as follows.

2 In section 6 (removal or suspension of trustees: consequences)—

(a) in subsections (1) and (3), after “section 3” insert “or 3A”;

(b) 10in subsection (4), after “section 3” insert “, 3A”.

3 In section 7 (appointment of trustees), in subsection (1), after “section 3,”
insert “by section 3A”.

4 In section 9 (removal and appointment of trustees: property), after “a
trustee” insert “or a trustee is removed under section 3A”.

15Pensions Act 2004 (c. 35)2004 (c. 35)

5 The Pensions Act 2004 is amended as follows.

6 In section 10 (functions exercisable by the Determinations Panel), in
subsection (6), after paragraph (e) insert—

“(ea) section 3A(3) of that Act (application for waiver of
20prohibition);”.

7 In section 66 (register of prohibited trustees), in subsection (1), for the words
from “of all” to the end substitute “(“the prohibition register”) of—

“(a) all persons who are prohibited under section 3 of the
Pensions Act 1995, and

(b) 25all persons appearing to the Regulator to be prohibited under
section 3A of that Act.”

8 In section 96 (Pensions Regulator’s regulatory functions: standard
procedure), in subsection (6), after paragraph (i) insert—

“(ia) the power under section 3A(3) of that Act to give a notice
30waiving a prohibition;”.

9 In section 97 (Pensions Regulator’s regulatory functions: special procedure),
in subsection (5), after paragraph (j) insert—

“(ja) the power under section 3A(3) of that Act to give a notice
waiving a prohibition;”.

10 (1) 35Schedule 2 (Pensions Regulator’s reserved regulatory functions) is amended
as follows.

(2) After paragraph 5 insert—

“5A The power under section 3A(3) to give a notice waiving a
prohibition.”

(3) In paragraph 9(a), after “orders)” insert “or by section 3A”.

Section 49

SCHEDULE 20 Pension Protection Fund: increased compensation cap for long service

Part 1 5The new compensation cap

1 Schedule 7 to the Pensions Act 2004 (pension compensation provisions) is
amended as follows.

2 In paragraph 26 (the compensation cap), for the definition of “the
compensation cap” in sub-paragraph (7) substitute—

• 10““the compensation cap” has the meaning given by
  paragraph 26A;”.

3 After paragraph 26 insert—

“26A (1) This paragraph gives the meaning of “the compensation cap” for
the purposes of paragraph 26.

(2) 15The amount of the compensation cap for a person depends on the
person’s age and length of pensionable service at the time when
the person first becomes entitled to the relevant compensation.

(3) “The compensation cap” for a person who has 20 or fewer years of
pensionable service at that time is the standard amount.

(4) 20“The compensation cap” for a person who has more than 20 years
of pensionable service at that time is—

(a) the standard amount, plus

(b) for each additional year, an amount found by multiplying
the standard amount by 3%.

(5) 25A person has an “additional year” for each whole year of
pensionable service that exceeds 20 years of pensionable service.

(6) If the total amount calculated under sub-paragraph (4)(b) would
exceed the standard amount, it is to be treated as being equal to the
standard amount.

(7) 30In sub-paragraphs (3) and (4) “the standard amount”—

(a) for a person who is 65 years old at the relevant time, means
the amount specified by the Secretary of State by order,
and

(b) for a person of any other age at the relevant time, means
35the amount specified under paragraph (a) as adjusted in
accordance with actuarial adjustment factors published by
the Board.

(8) In any case where the Board is satisfied that, under the admissible
rules, a person is entitled to benefits that are not attributable to a
40particular period of pensionable service, the Board may for the
purposes of this paragraph treat the person as having a length of

pensionable service to reflect those benefits (which is in addition
to any other pensionable service that the person has).

(9) In any case where the Board is satisfied that it is not possible to
identify the length of some or all of a person’s pensionable service
5under the admissible rules, the Board may, having regard to those
rules, determine its length for the purposes of this paragraph.

(10) Expressions used in this paragraph have the same meaning as in
paragraph 26.”

Part 2 10Consequential amendments

4 The Pensions Act 2004 is amended as follows.

5 In section 316(2)(s), for “paragraph 26(7)” substitute “paragraph 26A(7)”.

6 (1) Schedule 7 is amended as follows.

(2) In paragraph 26(9), after “this paragraph” insert “and paragraph 26A”.

(3) 15In paragraph 27(2), for “sub-paragraph (7) of paragraph 26” substitute “sub-
paragraph (7) of paragraph 26A”.

Part 3 Effect of change in transitional cases

Recalculation of periodic compensation going forwards

7 (1) 20This paragraph applies in relation to a person if—

(a) the person is entitled to periodic compensation under paragraph 3,
11 or 15 of Schedule 7 to the Pensions Act 2004,

(b) the compensation is restricted in accordance with paragraph 26 of
that Schedule (compensation cap), and

(c) 25the person first became entitled to the compensation before the
commencement date.

(2) The protected pension rate for the person is to be recalculated as if the
amendments made by Part 1 of this Schedule had always been in force and
the recalculated protected pension rate has effect for the person as from the
30commencement date.

(3) For the purposes of that recalculation, paragraph 26A(7) of Schedule 7 to the
Pensions Act 2004 (inserted by Part 1 of this Schedule) has effect as if—

(a) the references to an order made by the Secretary of State were
references to the relevant old order, and

(b) 35the reference to actuarial adjustment factors were a reference to the
relevant old actuarial adjustment factors.

(4) In this paragraph—

• “the protected pension rate”—

  (a)

  for a person entitled to periodic compensation under
  40paragraph 3 or 15 of Schedule 7 to the Pensions Act 2004,

  Pensions BillPage 109

  means the protected pension rate for the purposes of sub-
  paragraph (3)(a) of that paragraph;

  (b)

  for a person entitled to periodic compensation under
  paragraph 11 of that Schedule, means the protected notional
  5pension for the purposes of sub-paragraph (3)(a) of that
  paragraph;

• “the relevant old order” means the order in force under paragraph 26(7)
  of Schedule 7 to the 2004 Act (as originally enacted) at the time when
  the person first became entitled to the periodic compensation;

• 10“the relevant old actuarial adjustment factors” means the actuarial
  adjustment factors published by the Board under paragraph 26(7) of
  Schedule 7 to the 2004 Act (as originally enacted) at the time when
  the person first became entitled to the periodic compensation.

(5) Nothing in this paragraph affects increases already accrued under
15paragraph 28 of Schedule 7 to the Pensions Act 2004 in relation to periods
before the commencement date.

New cap does not generally affect old payments

8 (1) Nothing in this Schedule affects—

(a) periodic compensation for a person for periods before the
20commencement date, or

(b) lump sum compensation for a person who became entitled to the
compensation before the commencement date.

(2) In this paragraph—

• “periodic compensation” means compensation within paragraph
  2526(4)(a), (b) or (d) of Schedule 7 to the Pensions Act 2004;

• “lump sum compensation” means compensation within paragraph
  26(4)(c) or (e) of that Schedule.

Survivors’ compensation

9 When working out the annual rate of a person’s periodic compensation
30under paragraph 4(3), 13(3) or 18(3) of Schedule 7 to the Pensions Act 2004,
take into account any effect that paragraph 7 would have had on the dead
person’s rate if it were not for the death.

Cases involving early payment or postponement of compensation

10 Nothing in this Schedule affects the amount of—

(a) 35an actuarial reduction under paragraph 25 of Schedule 7 to the
Pensions Act 2004 in a case where a person became entitled to
periodic compensation or lump sum compensation before the
commencement date, or

(b) an actuarial increase under paragraph 25A of that Schedule in a case
40where the commencement of periodic compensation or the payment
of lump sum compensation was postponed before the
commencement date (even if it continues to be postponed on or after
that date).