(5) In section 29 (transitional periods for money purchase and personal pension
schemes), in subsections (1) and (3) omit “for money purchase and personal
pension schemes”.

(6) Section 30 (transitional period for defined benefits and hybrid schemes) is
5amended as follows.

(7) In subsection (3), at the end of the substituted subsection (2) insert—

“A reference in this subsection to a scheme does not include a scheme to which
section 30(11)(a) or (b) applies.”

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

(a) 10in paragraph (a), after “defined benefits scheme” insert “other than a
scheme to which section 30(11)(a) applies”;

(b) in paragraph (aa) (inserted by section 40 of this Act), after “a hybrid
scheme” insert “other than a scheme to which section 30(11)(b) applies”;

(c)
after paragraph (c) (inserted by section 40 of this Act), insert—

“(d) 15becomes an active member, with effect from the
automatic enrolment date, of an automatic enrolment
scheme which is a defined benefits scheme to which
section 30(11)(a) applies, or

(e) becomes a defined benefits member , with effect from
20the automatic enrolment date, of an automatic
enrolment scheme which is a hybrid scheme to which
section 30(11)(b) applies.”

(9) After subsection (10) (inserted by section 40 of this Act) insert—

“(11) In subsection (2) references to a scheme do not include—

(a) 25a defined benefits scheme that satisfies the quality requirement
in relation to the jobholder by reason only of section 23A(1)(a),
or

(b) a hybrid scheme if—

(i) the appropriate paragraph of section 24(1) for any
30provisions of the scheme is paragraph (b) (those
provisions are referred to below as “the defined benefits
section”),

(ii) the defined benefits section satisfies section 23A(1)(a) as
applied by section 24(1)(b), and

(iii) 35the defined benefits section does not satisfy any of the
other requirements mentioned in section 24(1)(b).”

40 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) 40In 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) a defined benefits member, with effect from the end of
that period, of an automatic enrolment scheme which is
a hybrid scheme.”

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

(a) in paragraph (a), for “or a hybrid scheme, or” substitute—

“(aa) becomes a defined benefits member, with effect from the
closure date, of an automatic enrolment scheme which is
a hybrid scheme,”;

(b) 10after paragraph (b) insert—

“(c) becomes a money purchase member, with effect from
the automatic enrolment date, of an automatic
enrolment scheme which is a hybrid scheme,”.

(5) After subsection (9) insert—

“(10) 15For the purposes of this section—

(a) a person is a “money purchase member” of a hybrid scheme if—

(i) the person is an active member of the scheme, and

(ii) all the benefits accruing in respect of his or her
membership are money purchase benefits, and

(b) 20a person is a “defined benefits member” of a hybrid scheme if
the person is an active member of the scheme other than a
money purchase member.”

(6) Subsection (7) applies if—

(a) an employer whose first enrolment date is before the date on which the
25amendments made by this section come into force (“the
commencement date”) has given a jobholder notice under section 30(3)
of the 2008 Act,

(b) the conditions in section 30(2) of that Act have continued to be satisfied
during the period beginning with the employer’s first enrolment date
30and ending with the day before the commencement date, and

(c) had the amendments made by this section come into force on
19 December 2012, the condition in section 30(2)(c) of that Act would
not have been satisfied at a time during that period.

(7) Section 30(5) to (7) of the 2008 Act (as amended by this section) applies in
35relation to the jobholder with the following modifications—

(a) references in section 30(5) and (6) of that Act to the closure date are to
be read as references to the commencement date, and

(b) references in section 30(5) and (6) of that Act to the automatic
enrolment date are to be read as references to—

(i) 4019 December 2012, or

(ii) if later, the employer’s first enrolment date;

and section 30(3) and (4) of that Act does not apply.

(8) Expressions used in this section and in section 30 of the 2008 Act have the same
meaning in this section as in that section.

41 Penalty notices under sections 40 and 41 of the Pensions Act 2008 etc

(1) In sections 40(1)(d) and 41(1)(d) of the Pensions Act 2008 (fixed and escalating
penalty notices), at the end insert “, so far as relevant to the exercise of any of
its functions under or by virtue of this Part”.

(2) 5In section 72 of the Pensions Act 2004 (powers to require information), in
subsection (1A), for “Chapter 2 of Part 1 of the Pensions Act 2008 or section 51
of that Act” substitute “or by virtue of Part 1 of the Pensions Act 2008”.

42 Unpaid scheme contributions

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

(2) 10In section 123 (payment by Secretary of State of unpaid scheme contributions
on employer insolvency: interpretation)—

(a) in subsection (3), for the definition of “contract of employment” and
related expressions substitute—

• ““employer”, “employment”, “worker” and “worker’s
  15contract” and other expressions which are defined in the
  Employment Rights Act 1996 have the same meaning as
  in that Act (see further subsections (3A) and (3B));”;

(b) in subsection (3), in paragraph (b) of the definition of “holiday pay”, for
“the employee’s contract of employment” substitute “the worker’s
20contract”;

(c) after subsection (3) insert—

“(3A) Section 89 of the Pensions Act 2008 (agency workers) applies for
the purposes of this Chapter as it applies for the purposes of
Part 1 of that Act.

(3B) 25References in this Chapter to a worker include references to an
individual to whom Part 1 of the Pensions Act 2008 applies as if
the individual were a worker because of regulations made
under section 98 of that Act; and related expressions are to be
read accordingly.”

(3) 30In section 124 (Secretary of State’s duty to pay unpaid contributions)—

(a) for “an employee”, in each place, substitute “a worker”;

(b) for “the employee”, in each place, substitute “the worker”;

(c) for “the employee’s” substitute “the worker’s”;

(d) for “employees”, in each place, substitute “workers”.

(4) 35In section 161, for “contract of employment” substitute “worker’s contract”.

(5) In section 165(7)—

(a) in paragraph (a), for “contract of employment the employee” substitute
“worker’s contract the worker”;

(b) in paragraph (b), for “employee” substitute “worker”.

40Other

43 Work-based schemes: power to restrict charges or impose requirements

Schedule 18 permits the Secretary of State to make regulations—

(a) restricting the charges that may be imposed on members of certain
work-based pension schemes;

(b) imposing requirements relating to administration or governance that
must be satisfied in relation to certain work-based pension schemes.

44 5Power to require pension levies to be paid in respect of past periods

(1) The Secretary of State may by regulations provide for the Pensions Act 2004,
and regulations made under it, to have effect, so far as relating to the
requirement to pay pension levy, as if the amendments made by the 2010
regulations had always had effect.

(2) 10Regulations under this section may in particular—

(a) modify the application of the Pensions Act 2004, or regulations made
under it, in relation to amounts of pension levy required to be paid
because of regulations under this section;

(b) provide for interest to be charged at a specified rate on such amounts
15(including in respect of periods before the coming into force of
regulations under this section).

(3) In this section—

• “the 2010 regulations” means—

  (a)

  regulations 2, 3 and 8 of the Pension Protection Fund and
  20Occupational Pension Schemes (Miscellaneous Amendments)
  Regulations 2010 (S.I. 2010/196S.I. 2010/196), and

  (b)

  regulation 2 of the Occupational Pension Schemes (Levies)
  (Amendment) Regulations 2010 (S.I. 2010/1930S.I. 2010/1930);

• “pension levy” means—

  (a)

  25a levy under regulations made under section 117 of the
  Pensions Act 2004 (administration levy),

  (b)

  a levy under regulations made under section 174 of that Act
  (initial levy), or

  (c)

  a levy under section 175 of that Act (pension protection levies).

45 30Prohibition and suspension orders: directors of corporate trustees

(1) The Pensions Act 1995 is amended as follows.

(2) After section 3 insert—

“3A Prohibition orders: directors of corporate trustees etc

(1) A company or Scottish partnership is prohibited from being a trustee of
35a trust scheme at any time when an individual who is a director of the
company or a partner in the partnership is prohibited from being a
trustee of the scheme by an order under section 3.

(2) Where a company or partnership which is a trustee of a trust scheme
becomes prohibited under subsection (1) in relation to the scheme, that
40subsection has the effect of removing the company or partnership as a
trustee.

(3) The Authority may, on the application of a company or Scottish
partnership, give notice in writing to the applicant waiving the
prohibition under subsection (1)—

(a) in relation to an individual against whom an order under
section 3 has been made, and

(b) either generally or in relation to a particular scheme or
particular description of schemes.

(4) 5A notice may be given under subsection (3) only if the Authority is
satisfied that the applicant would be a fit and proper person to be a
trustee of the scheme or schemes to which the notice relates despite the
individual being, or even if the individual were to become, a director of
or partner in the applicant.

(5) 10A notice given at any time under subsection (3) cannot affect anything
done before that time.

(6) An application under subsection (3) may not be made—

(a) during the period within which the determination to exercise
the power to make the order against the individual may be
15referred to the Tribunal under section 96(3) or 99(7) of the
Pensions Act 2004 (whether by a company or partnership which
became prohibited under subsection (1) on the making of the
order or by another person), and

(b) if the determination is so referred, until the reference, and any
20appeal against the Tribunal’s determination, has been finally
disposed of.

(7) The Authority must prepare and publish a statement of the policies
they intend to adopt in relation to the exercise of their powers under
this section.

(8) 25The Authority may revise any statement published under subsection
(7) and must publish any revised statement.

(9) References in this section to an order under section 3 are to an order
under that section made on or after the date on which section 45(2) of
the Pensions Act 2014 comes fully into force.”

(3) 30Section 4 (Pensions Regulator’s power to suspend trustee of occupational
pension scheme) is amended as follows.

(4) In subsection (1)(f), after “paragraph” insert “(aa),”.

(5) In subsection (2)(a), after “or (aa)” insert “or, in a case where the Authority
would have power to suspend a director or partner under paragraph (aa), by
35virtue of paragraph (f)”.

(6) Schedule 19 contains consequential amendments.

46 Preparation of guidance for pensions illustrations

In section 16 of the Companies (Audit, Investigations and Community
Enterprise) Act 2004 (grants to bodies concerned with accounting standards
40etc), in subsection (2), after paragraph (o) insert—

“(oa) exercising functions under regulations made under section
113(3A) of the Pension Schemes Act 1993 or section 109(3A) of
the Pension Schemes (Northern Ireland) Act 1993 (preparing
guidance for pensions illustrations);”.

47 Pensions Regulator’s objectives

In section 5(1) of the Pensions Act 2004, after paragraph (c) insert—

“(cza) in relation to the exercise of its functions under Part 3 only, to
minimise any adverse impact on the sustainable growth of an
5employer,”.

48 Maximum period between scheme returns to be 5 years for micro schemes

(1) Section 63 of the Pensions Act 2004 is amended as follows.

(2) After subsection (3) insert—

“(3A) But subsection (3)(a) has effect as if the reference to three years were a
10reference to five years if—

(a) the trustees or managers have complied with paragraph (b) of
section 62(2),

(b) the information they provided under that paragraph included
the number of members of the scheme, and

(c) 15that number was no more than 4.”

(3) After subsection (4) insert—

“(4A) But subsection (4)(a) has effect as if the reference to three years were a
reference to five years if—

(a) on the date on which the previous scheme return notice was
20issued, the number of members of the scheme was recorded in
the register, and

(b) that number was no more than 4.”

49 Pension Protection Fund: increased compensation cap for long service

See Schedule 20 for amendments increasing the Pension Protection Fund
25compensation cap for people with long pensionable service.

50 Pension Protection Fund: compensation cap to apply separately to certain
benefits

(1) Paragraph 26 of Schedule 7 to the Pensions Act 2004 (Pension Protection Fund:
compensation cap) is amended as follows.

(2) 30In sub-paragraph (1)(b), for “sub-paragraph (2)(a) or (b)” substitute “sub-
paragraph (2)(a), (b) or (c)”.

(3) In sub-paragraph (2)(a)(ii), for “paragraph (b)(i) does not apply” substitute
“neither of paragraphs (b) and (c) applies”.

(4) In sub-paragraph (2)(b)—

(a) 35before paragraph (i) insert—

“(zi) benefit A is attributable to the person’s
pensionable service,”;

(b) in paragraph (i), after “one or more other benefits” insert “that are
attributable to his pensionable service”.

(5) 40In sub-paragraph (2), after paragraph (b) insert “, and

(c) this paragraph applies if—

(i) benefit A is attributable to a pension credit from a
transferor,

(ii) at the same time as the person becomes entitled to
relevant compensation in respect of benefit A he also
5becomes entitled to relevant compensation in respect
of one or more other benefits that are—

(iia) under the scheme or a connected occupational
pension scheme, and

(iib) attributable to a pension credit from the same
10transferor,

(“benefit or benefits B”), and

(iii) the aggregate of the annual values of benefit A and
benefit or benefits B exceeds the compensation cap.”

(6) In sub-paragraph (5), after “sub-paragraph (2)(b)” insert “or (c)”.

(7) 15The amendments made by this section are to be treated as always having had
effect.

51 Public service pension schemes: transitional arrangements

(1) Section 18 of the Public Service Pensions Act 2013 (restriction of existing
pension schemes) is amended as follows.

(2) 20After subsection (5) insert—

“(5A) Scheme regulations may also provide for exceptions to subsection (1) in
the case of—

(a) persons who were members of a public body pension scheme
specified in the regulations, or who were eligible to be members
25of such a scheme, immediately before 1 April 2012, and

(b) such other persons as the regulations may specify, being
persons who before that date had ceased to be members of a
scheme referred to in paragraph (a) or to be eligible for
membership of such a scheme.”

(3) 30In each of subsections (6) and (8), after “(5)” insert “or (5A)”.

Part 7 Final provisions

52 Power to make consequential amendments etc

(1) The Secretary of State or the Treasury may by order make consequential,
35incidental or supplementary provision in connection with any provision made
by this Act.

(2) An order under this section may amend, repeal, revoke or otherwise modify
any enactment (whenever passed or made).

(3) “Enactment” includes an enactment contained in subordinate legislation
40within the meaning of the Interpretation Act 1978.

53 Regulations and orders

(1) Regulations and orders under this Act are to be made by statutory instrument.

(2) A statutory instrument containing (whether alone or with other provisions)—

(a) regulations under section 3, 17, 18(3) or (5), 19, 20, 30, 32 or 34,

(b) 5the first regulations under section 10,

(c) an order under section 52 that amends or repeals a provision of an Act,

(d) regulations under Schedule 17,

(e) regulations under paragraph 2 of Schedule 18 or regulations under
paragraph 7 of that Schedule that amend a provision of an Act, or

(f) 10the first regulations under paragraph 1 or 3 of that Schedule,

may not be made unless a draft of the instrument has been laid before and
approved by a resolution of each House of Parliament.

(3) Any other statutory instrument containing regulations or an order under this
Act is subject to annulment in pursuance of a resolution of either House of
15Parliament.

(4) Subsection (3) does not apply to a statutory instrument containing an order
under section 55(1), (6) or (8) only.

(5) A power to make regulations or an order under this Act may be used—

(a) to make different provision for different purposes;

(b) 20in relation to all or only some of the purposes for which it may be used.

(6) Regulations or orders under this Act may include incidental, supplementary,
consequential, transitional, transitory or saving provision.

54 Extent

(1) This Act extends to England and Wales and Scotland only, subject to the
25following provisions of this section.

(2) Any amendment or repeal made by this Act has the same extent as the
enactment to which it relates.

(3) This Part extends also to Northern Ireland.

55 Commencement

(1) 30This Act comes into force on such day or days as the Secretary of State may by
order appoint, subject as follows.

(2) The following come into force on the day on which this Act is passed—

(a) section 29;

(b) section 50;

(c) 35this Part.

(3) The following come into force at the end of the period of 2 months beginning
with the day on which this Act is passed—

(a) Part 3;

(b) sections 34 and 35;

(c) 40section 41;

(d) sections 46 and 47;

(e) paragraph 30(2) of Schedule 13.

(4) Part 1 comes into force on 6 April 2016, so far as not brought into force earlier
by an order under subsection (1).

(5) The Secretary of State may by order—

(a) 5amend subsection (4) so as to replace the reference to 6 April 2016 with
a later date, and

(b) make corresponding amendments in Part 1 or any enactment amended
by it.

(6) Section 51 comes into force on such day or days as the Treasury may by order
10appoint.

(7) An order under subsection (1) or (6) may appoint different days for different
purposes.

(8) The Secretary of State may by order make transitional, transitory or saving
provision in connection with the coming into force of any provision of this Act.

56 15Short title

This Act may be cited as the Pensions Act 2014.

SCHEDULES

Section 5

SCHEDULE 1 Transitional rate of state pension: calculating the amount

Part 1 5Introduction

1 (1) This Schedule sets out how to calculate the amounts used to work out the
transitional rate of a person’s state pension.

(2) Part 2 of the Schedule sets out how to calculate the amount for a person’s
pre-commencement qualifying years.

(3) 10Part 3 of the Schedule sets out how to calculate the amount for a person’s
post-commencement qualifying years (if any).

Part 2 Amount for pre-commencement qualifying years

How to calculate the amount for pre-commencement qualifying years

2 15A person’s amount for pre-commencement qualifying years is calculated as
follows.

Step 1 - calculate the person’s pension under the old system

Calculate the weekly rate based on the old state pension and graduated
retirement benefit (see paragraph 3 for more about this).

20Step 2 - calculate a pension based on the new system

Calculate the weekly rate based on the new state pension (see paragraph 4
for more about this).

Step 3 - take whichever rate is higher (the foundation amount)

Take whichever of the rates found under Steps 1 and 2 is higher.

25Step 4 - revalue to date when the person reached pensionable age

Revalue the amount of that rate in accordance with paragraph 6.