Pensions Bill (HL Bill 91)

54 In Schedule 1 (supplementary provisions relating to national insurance
contributions), in paragraph 1, omit sub-paragraphs (2), (3), (6) and (9)
to (11).

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

55 5The Administration Act is amended as follows.

56 In section 150 (annual up-rating of benefits), in subsection (10A), for “the
abolition date, as defined by section 181(1) of the Pensions Act,” substitute
“6 April 2012 (the date appointed for the commencement of section 15(1) of
the Pensions Act 2007)”.

57 10In section 191 (interpretation - general)—

(a) in the definition of “money purchase contracted-out scheme”, for
“section 181A” substitute “section 7B”;

(b) in the definition of “personal pension scheme” etc, for “section
181A(6)” substitute “section 7B(6)”.

15Pensions Act 1995 (c. 26)Pensions Act 1995 (c. 26)

58 The Pensions Act 1995 is amended as follows.

59 (1) Section 51 (annual increase in rate of pension) is amended as follows.

(2) For “the appointed day” (in each place) substitute “6 April 1997”.

(3) For subsection (8) substitute—

“(8) 20An occupational pension scheme is a “relevant occupational pension
scheme” if—

(a) it has not, at any time on or after 6 April 1997, been a salary
related contracted-out scheme (see section 7B of the Pension
Schemes Act 1993), or

(b) 25it has, at any time on or after 6 April 1997, been a salary
related contracted-out scheme but no person is entitled to
receive, or has accrued rights to, benefits under the scheme
attributable to a period on or after that day when it was such
a scheme.”

60 30In section 54 (sections 51 to 53: supplementary), in subsection (3), omit the
definition of “the appointed day”.

61 For section 69 substitute—

“69 Grounds for applying for modifications: winding up registered
schemes

(1) 35The Authority may, on an application made to them by the trustees
of a registered pension scheme which is being wound up, make an
order—

(a) modifying the scheme for the purpose of enabling assets
remaining after the liabilities of the scheme have been fully
40discharged to be distributed to the employer, or

(b) authorising the trustees to modify the scheme for that
purpose.

(2) But the Authority may act under subsection (1) only if prescribed
requirements in relation to the distribution are satisfied.

(3) Regulations may make provision requiring applications under
subsection (1) to meet prescribed requirements.

(4) 5Regulations may provide that in prescribed circumstances this
section does not apply to schemes falling within a prescribed class or
description or applies to them with prescribed modifications.

(5) In this section “registered pension scheme” means an occupational
pension scheme registered under section 153 of the Finance Act 2004
10(other than a public service pension scheme).”

62 In section 70 (section 69: supplementary), omit subsection (3).

63 In section 71 (effect of orders under section 69), in subsection (1)—

(a) for “paragraph (a)” substitute “paragraph (b)”;

(b) for “paragraph (b)” substitute “paragraph (a)”;

(64) 15In section 72 (modification of public service pension schemes), in subsection (1), for “section 69(1)(b)” substitute “section 69(1)(a)”.

65 Sections 136(1), (3) and (5), 137(3) and (4) and 148 (amendments to do with
contracting-out) are repealed.

Employment Rights Act 1996 (c. 18)Employment Rights Act 1996 (c. 18)

66 The Employment Rights Act 1996 is amended as follows.

67 20In section 3 (note to be included in statement of initial employment
particulars), omit subsection (5).

68 In section 11 (references to employment tribunals), in subsection (3), omit
paragraph (a) (including the “and” at the end of it).

Child Support, Pensions and Social Security Act 2000 (c. 19)Child Support, Pensions and Social Security Act 2000 (c. 19)

69 25The Child Support, Pensions and Social Security Act 2000 is amended as
follows.

70 (1) Section 42 (disclosure of state pension information) is amended as follows.

(2) In subsection (3)(d), omit “which is not contracted-out employment”.

(3) In subsection (11), omit the definition of “contracted-out employment”.

71 30Part 2 of Schedule 5 (alternative to anti-franking rules) is repealed.

Employment Act 2002 (c. 22)Employment Act 2002 (c. 22)

72 In section 15 of the Employment Act 2002 (use of information by HMRC), in
subsection (2)(c), for “(certification of pension schemes etc)” substitute
“(schemes that were contracted-out etc)”.

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

73 In section 258 of the Pensions Act 2004 (pension protection on transfer of
employment), in subsection (2)(c), for sub-paragraphs (i) and (ii) substitute
“complies with prescribed requirements”.

5Companies Act 2006 (c. 46)Companies Act 2006 (c. 46)

74 The Companies Act 2006 is amended as follows.

75 In section 140 (interests to be disregarded: employer’s rights of recovery
under pension scheme or employee’s share scheme), in subsection (2), omit
“section 61 of the Pension Schemes Act 1993 or”.

76 10In section 673 (interests to be disregarded in determining whether company
has beneficial interest: employer’s charges and other rights of recovery), in
subsection (1)(b), omit sub-paragraph (i).

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

77 The Pensions Act 2007 is amended as follows.

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

(2) In 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
202012”.

79 In section 27 (consequential provision, repeals and revocations), in
subsection (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
25schemes) is amended as follows.

(2) In paragraphs 61, 62(1), (2)(a) and (b)(i) and (3), 65 and 66(2) for “the
abolition 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 30The Pensions Act 2008 is amended as follows.

82 For section 21 substitute—

“21 Quality 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
35jobholder if it satisfies the test scheme standard in relation to that
jobholder.”

83 In 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 5Power to amend schemes to reflect abolition of contracting-out

Introduction

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) 10The power may be used—

(a) to 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
15the relevant members by more than the annual increase in the
employer’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
20contributions in respect of them, or

(c) result 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
25than the annual increase in the employer’s national insurance
contributions 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
30contributions in respect of the relevant members;

(c) a 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
35specified methods or assumptions.

(5) Where 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
40increased because of the use of the power.

(6) Where 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) The power may not be used in a way that would or might adversely affect
5the 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
the Pensions Act 1995.

4 10Regulations 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) 15The 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) “Actuary” means—

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

(b) 20a 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
Schemes 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 25An 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
to the scheme before the repeal comes into force.

Can the power be used more than once?

9 (1) 30The 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
power on the second or subsequent occasion, all of the amendments are to
be treated as if they were being made on that occasion.

(3) 35Regulations may make further provision modifying section 24(2) to (7) 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.

Modifications for multi-employer or sectionalised schemes

10 (1) Regulations may modify section 24(2) to (7) or this Schedule as it applies in
40relation to—

(a) multi-employer schemes, or

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

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

5The 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
the contrary.

Procedural requirements and supplementary matters

12 10Regulations 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
15pension scheme to provide information requested by an employer in
connection with the powers given by section 24(2).

(2) The 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
20scheme established under a trust), means the persons responsible for the
management of the scheme.

Definitions

15 In this Schedule—

• “employee contributions” means, in relation to a member of a scheme,
  25contributions made to the scheme by or on behalf of the member on
  his or her own account;

• “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

30SCHEDULE 15 Option to boost old retirement pensions

Part 1 Great Britain

Social Security Contributions and Benefits Act 1992 (c. 4)Social Security Contributions and Benefits Act 1992 (c. 4)

1 35The Social Security Contributions and Benefits Act 1992 is amended as
follows.

2 (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) 5Class 3A, payable by eligible people voluntarily
under 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—

10“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
for a unit of additional pension.

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

(a) 15is 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
retirement pension or graduated retirement benefit.

(3) The amount of a Class 3A contribution needed to obtain a unit of
20additional pension is to be determined in accordance with
regulations made by the Treasury.

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

(5) A person—

(a) 25may pay Class 3A contributions on more than one occasion,
but

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

(6) The maximum number of units of additional pension that a person
30may 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
Act 1965.

(8) For the meaning of “deferred” in relation to a Category A or
35Category 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
to be repaid in specified circumstances.

(2) Regulations under subsection (1) may, in particular, make provision
40about 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) Regulations 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
5option to pay

(1) The 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) 10Regulations under this section may, in particular, amend an Act.”

4 If paragraph 3 comes into force before the day mentioned in section 56(4) of
this 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) 15has not yet reached pensionable age, but

(b) will reach pensionable age before that day (assuming that the person
lives 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
20(which deals with unusual cases involving units of additional pension)”.

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

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

(b) after paragraph (b) insert—

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

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

(2) In subsection (1)—

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

(a) 30in relation to any surpluses in the pensioner’s
earnings factors,”;

(b) at 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) 35In subsection (2), at the end of paragraph (d) insert “; and

(e) if the pensioner has one or more units of additional pension,
a 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
40amount” is an amount to be specified by the Secretary of State in
regulations.”

8 In 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) 5If 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 10 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) is not entitled to a Category A retirement pension, but

(b) would be entitled to a Category A retirement pension if the
15relevant 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
retirement pension.

(3) But where a person is entitled to a Category A retirement pension
20because 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) For units of additional pension, see section 14A.

61ZB Shortfall in contributions: people whose dead spouse had units of
25additional 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) is not entitled to a Category B retirement pension as a result
of the death, but

(b) 30would be entitled to a Category B retirement pension as a
result of the death if the relevant contribution conditions
were satisfied.

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

(b) 35would be entitled to a Category B retirement pension as a
result of the death 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 that Category B
40retirement 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
person is so entitled is the additional pension attributable to the units
of additional pension.

(4) 45For 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
period 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
5period 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) 10Accordingly—

(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
Category B retirement pension”,

(b) 15in 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”
does not include a pension to which a person is entitled
20because 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
  which a person has paid a Class 3A contribution under section 14A;”.

11 25In section 176 (parliamentary control), in subsection (1)(a), at the appropriate
places insert—

• “section 14A;”

• “section 45(2A);”.

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

30Social 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) in the case of Class 3A contributions, 15.5 per cent of the
35amount 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
scheme rights), in subsection (2)(a), omit “earnings-related”.