Pensions Bill (HL Bill 76)

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 Option to boost old retirement pensions

25 Option to boost old retirement pensions

In Schedule 15—

• Part 1 contains amendments to allow certain people to pay additional
  25contributions to boost their retirement pensions;

• Part 2 contains amendments to allow corresponding legislation to be put
  in place for Northern Ireland.

Part 3 Pensionable age

26 30Increase 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) For sub-paragraph (7) and table 3 substitute—

“(7) A person born on any day in a period mentioned in column 1 of
35table  3 attains pensionable age when the person attains the age
shown against that period in column 2.

(7A) 50For the purposes of table 3—

(a) a 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
55the age of 66 years and 9 months at the commencement of
30th 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) 60In sub-paragraph (8) for “5th April 1969” substitute “5th March 1961”.

27 Periodic 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
65State considers relevant, and

(b) prepare 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
Government 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
5person who reaches pensionable age within a specified period can be
expected to spend a specified proportion of his or her adult life in
retirement, and

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

(5) 10The 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
relevant to the review.

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

(7) 15For the purposes of subsection (4)—

(a) a person’s adult life is the part of the person’s life after he or she reaches
the 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) 20In this section—

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

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

25Part 4 State pension credit

28 State 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
30relevant 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) Regulations 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.

29 35Preserving indefinite status of certain existing assessed income periods

(1) If this section comes into force before 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
2014) is repealed, and

(b) 40in 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), 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
2014) is repealed and is to be treated as never having had effect, and

(b) 5in 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 5 10Bereavement support payment

30 Bereavement support payment

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

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

(b) the person is under pensionable age when the spouse or civil partner
15dies,

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

(d) the contribution condition is met (see section 31).

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

(a) 20the rate of the benefit, and

(b) the period for which it is payable.

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

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

(a) 25specify 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
person has reached pensionable age.

(6) A person is not entitled to bereavement support payment if the death occurred
30before this section came fully into force.

(7) In this section—

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

• “specified territory” means a territory specified in regulations made by
  35the Secretary of State.

31 Bereavement support payment: contribution condition and amendments

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

(a) he or she actually paid Class 1 or Class 2 national insurance
40contributions, 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
tax year.

(2) For earnings factors, see sections 22 and 23 of the Social Security Contributions
5and Benefits Act 1992.

(3) For the purposes of section 30(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) a personal injury of the kind mentioned in section 94(1) of the Social
Security Contributions and Benefits Act 1992, or

(b)
10a 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—

• “employed earner”,

• 15“lower earnings limit”,

• “tax year”, and

• “working life”.

(5) Schedule 16 contains amendments to do with bereavement support payment.

32 Bereavement support payment: prisoners

(1) 20The 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) imprisoned or detained in legal custody, or

(b) 25unlawfully 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.

Part 6 30Private pensions

Transfer of pension benefits

33 Automatic transfer of pension benefits etc

Schedule 17—

(a) requires the Secretary of State to make regulations under which, in
35certain 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
relating to a person’s accrued rights to benefits under a pension scheme
40to be merged in certain circumstances.

34 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
member of a salary related occupational pension scheme to—

(a) 5exercise 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
10under the rules of another occupational pension scheme or a personal
pension scheme;

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

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

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

(a) 15any 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
which the member has at that time, under the scheme rules;

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

(4) 20Regulations 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) create exceptions to the prohibition;

(c) provide for section 10 of the Pensions Act 1995 (civil penalties) to apply
25to 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
is to be regarded as a separate act in relation to each member of a scheme to
whom the incentive relates.

(6) 30Nothing 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) In this section—

• “incentive” means a financial or other advantage;

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

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

• “pension credit right” has the meaning given by section 124(1) of the
  40Pensions Act 1995;

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

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

(8) 45This section binds the Crown.

35 Expiry of power in section 34

If no regulations have been made under section 34 by the end of the period of
7 years beginning with the day on which it comes into force, that section is
repealed at the end of that period.

36 5Short 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
10entitled to benefit because of this paragraph, all of it would
necessarily be money purchase benefit,”.

(3) After 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
15at 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
of a scheme if any period of relevant service began before the day on
which section 36 of the Pensions Act 2014 came into force (whether or
not it also ended before that date).

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

“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
25contribution refunds), in subsection (4)(b), after “(a)” insert “, (aa)”.

Automatic enrolment

37 Automatic 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) 30Subsection (2) does not apply if the jobholder’s automatic enrolment
date is deferred under section 4 from a date before the automatic re-
enrolment 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) 35section 5(2) does not apply in relation to an automatic re-
enrolment date that falls before the day with effect from which
arrangements would by virtue of this section fall to be made in
respect of the jobholder.”

38 Automatic enrolment: powers to create general exceptions

(1) 40In section 10 of the Pensions Act 2008 (information to be given to workers)—

(a) in subsection (1)—

(i) for “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
5heading “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
employer duties; and an exception may in particular—

(a) 10turn 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
provision modifying this Part or regulations made under it in
15connection 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) modifying this Part or regulations made under it in relation to a
20person;

(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) In this section “employer duties” means any duty of an employer under
25any 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) section 5(4) of the Pensions Act 2008;

(c) 30section 18 of the Pensions Act 2011.

39 Alternative quality requirements for UK defined benefits schemes

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

(2) After section 23 insert—

“23A Alternative quality requirements for UK defined benefits schemes

(1) 35The Secretary of State may by regulations provide that a defined
benefits scheme that has its main administration in the United
Kingdom satisfies the quality requirement in relation to a jobholder if
any one or more of the following is satisfied—

(a) the scheme is of a prescribed description and satisfies the
40quality requirement under section 20 in relation to that
jobholder;

(b) the cost of providing the benefits accruing for or in respect of
the relevant members over a relevant period would require

contributions to be made of a total amount equal to at least a
prescribed percentage of the members’ total relevant earnings
over that period;

(c) in the case of each of at least 90% of the relevant members, the
5cost of providing the benefits accruing for or in respect of the
member over a relevant period would require contributions to
be made of a total amount equal to at least a prescribed
percentage of the member’s total relevant earnings over that
period.

(2) 10For this purpose—

• “contributions” means contributions to the scheme by, or on
  behalf or in respect of, a relevant member;

• “relevant earnings” means earnings of a prescribed description;

• “relevant members” means members of the scheme of a prescribed
  15description;

• “relevant period” means a period specified in or determined in
  accordance with the regulations.

(3) A percentage prescribed under subsection (1)(b) or (c) must be at least
8%.

(4) 20Regulations under subsection (1)(b) or (c) may make provision—

(a) about how to calculate whether the requirement is satisfied,
including provision requiring the calculation to be made in
accordance with prescribed methods or assumptions;

(b) requiring benefits of a prescribed description to be disregarded
25in determining whether the requirement is satisfied;

(c) that a scheme only satisfies the requirement if the scheme
actuary certifies that it does; and for this purpose “scheme
actuary” has the prescribed meaning.

(5) Section 13(3) (meaning of “earnings”) applies for the purposes of this
30section as it applies for the purposes of that section.

(6) The Secretary of State must from time to time review any regulations in
force under subsection (1).

(7) A review must be carried out—

(a) during 2017, and

(b) 35after that, no more than three years after the completion of the
previous review.”

(3) In section 24 (quality requirement: UK hybrid schemes), in subsection (1)(b),
for “23” substitute “23A”.

(4) In section 28 (certification that quality requirement or alternative requirement
40is satisfied)—

(a) after subsection (3A) insert—

“(3B) This section also applies to a defined benefits scheme that has its
main administration in the United Kingdom and is of a
description prescribed under section 23A(1)(a).”;

(b) 45in subsection (4), after paragraph (d) insert—

“(e) for a scheme within subsection (3B), means the quality
requirement under section 23A(1)(a).”