Pensions Bill (HL Bill 91)

(2) In subsection (1), for the words from “45AA” to “as they apply” substitute
“45AA and Schedules 4A and 4B below as they apply”.

(3) In subsection (3), for the words from “45AA” to “by virtue of subsection (1)
above” substitute “45AA and Schedules 4A and 4B below by virtue of
5subsection (1) above”.

(4) In subsection (4), for the words from “45AA” to “below” substitute “45AA
and Schedules 4A and 4B below”.

94 (1) Schedule 5 (pension increase or lump sum where entitlement to retirement
pension is deferred) is amended as follows.

(2) 10In the following provisions omit “(as those provisions have effect by virtue
of section 2(7) of the Pensions Act 2011)”—

• paragraph 4(1A)(a), (b) and (c);

• paragraph 7B(5)(b)(i).

(3) After paragraph 7 insert—

“7ZA (1) 15This paragraph modifies paragraphs 5A to 6A in cases where—

(a) W became entitled to a Category A or Category B
retirement pension before 6 April 2012, and

(b) S died before 6 April 2012.

(“W” and “S” have the same meaning as in paragraph 5.)

(2) 20Paragraph 5A applies as if—

(a) in sub-paragraph (2), after paragraph (a), there were
inserted—

“(b) the appropriate amount; and”;

(b) in sub-paragraph (3), after “following—”, there were
25inserted—

“(a) one half of the appropriate amount; and”.

(3) Paragraph 6 applies as if—

(a) in sub-paragraph (2), after paragraph (a), there were
inserted—

“(b) 30the appropriate amount; and”;

(b) in sub-paragraph (3), after paragraph (b), there were
inserted—

“(c) the appropriate amount reduced by the amount of
any increases under section 109 of the Pensions
35Act; and”;

(c) in sub-paragraph (4), after paragraph (a), there were
inserted—

“(b) one half of the appropriate amount; and”.

(4) Paragraph 6A applies as if in sub-paragraph (2), after
40paragraph (a), there were inserted—

“(b) one half of the appropriate amount; and”;

(5) In paragraphs 5A to 6A as modified by this paragraph, the
“appropriate amount” means the greater of—

(a) the amount by which the deceased person’s Category A or
45Category B retirement pension had been increased under
section 150(1)(e) of the Administration Act; or

(b) the amount by which his or her Category A or Category B
retirement pension would have been so increased had he
or she died immediately before the surviving spouse or
civil partner became entitled to a Category A or Category
5B retirement pension.

(6) In sub-paragraph (1)(a) the reference to becoming entitled to a
pension before 6 April 2012 includes a reference to becoming
entitled on or after that day to the payment of a pension in respect
of a period before that day.”

10Pension Schemes Act 1993 (c. 48)1993 (c. 48)

95 Section 46A of the Pension Schemes Act 1993 (retirement in tax year after 5
April 2020) is repealed.

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

96 In the Pensions Act 2008, the following are repealed—

(a) 15sections 102 and 103 (consolidation of additional pension);

(b) Schedule 3 (consolidation of additional pension);

(c) in Schedule 4 (minor and consequential amendments)—

• paragraph 4(2)(b) and (3)(b);

• paragraph 6(3);

• 20paragraph 7(a);

• paragraph 8(a);

• paragraph 9(2)(c);

• paragraph 10;

• paragraphs 13 to 22.

25Pensions Act 2011 (c. 19)2011 (c. 19)

97 In the Pensions Act 2011, the following are repealed—

(a) section 2(5) to (9) and Schedule 2 (abolition of certain additions to the
state pension);

(b) section 3 and Schedule 3 (consolidation of additional pension).

Section 24

30SCHEDULE 13 Abolition of contracting-out for salary related schemes

Part 1 Pension Schemes Act 1993: amendments

1 The Pension Schemes Act 1993 is amended as follows.

2 35For “the abolition date” (in each place) substitute “the first abolition date”.

3 In the heading for Part 3 of the Act—

(a) for “Certification of pension schemes” substitute “Schemes that were
contracted-out etc”;

(b) omit “and duties”.

4 For the heading to Chapter 1 of Part 3 substitute “Schemes that were
contracted-out: guaranteed minimum pensions and alteration of scheme
rules etc”.

5 5Section 7 (issue of contracting-out certificates) is repealed (and accordingly,
any certificates in force under that section immediately before this
paragraph comes into force cease to have effect).

6 After section 7 insert—

“7A Meaning of “the first abolition date” and “the second abolition date”

10In this Act—

• “the first abolition date” means 6 April 2012 (the date appointed
  for the commencement of section 15(1) of the Pensions Act
  2007 (abolition of contracting-out for defined contribution
  pension schemes));

• 15“the second abolition date” means 6 April 2016 (the date on
  which section 56(4) of the Pensions Act 2014 provides for the
  commencement of section 24(1) of that Act (abolition of
  contracting-out for salary related schemes)).

7B Meaning of “contracted-out scheme” and “appropriate scheme” etc.

(1) 20This section applies for the interpretation of this Act.

(2) An occupational pension scheme was “contracted-out” at a time if, at
that time, there was in force a certificate under section 7 (as it then
had effect) stating that the employment of an earner in employed
earner’s employment was contracted-out employment by reference
25to the scheme.

(3) “Contracting-out certificate” means a certificate of the kind
mentioned in subsection (2).

(4) An occupational pension scheme was a “salary related contracted-
out scheme” at a time if, at that time, the scheme was contracted-out
30by virtue of satisfying section 9(2) (as it then had effect).

(5) An occupational pension scheme was a “money purchase
contracted-out scheme” at a time if, at that time, the scheme was
contracted-out by virtue of satisfying section 9(3) (as it then had
effect).

(6) 35A personal pension scheme was an “appropriate scheme” at a time if,
at that time, there was in force a certificate issued under
section 7(1)(b) (as it then had effect) stating that the scheme was an
appropriate scheme.

(7) “Appropriate scheme certificate” means a certificate of the kind
40mentioned in subsection (6).

(8) An appropriate scheme certificate that was in force in relation to a
scheme is to be taken as conclusive that the scheme was, at that time,
an appropriate scheme.”

7 (1) Section 8 (meaning of “contracted-out employment”, “guaranteed minimum
45pension” and “minimum payment”) is amended as follows.

(2) For subsection (1) substitute—

“(1) In relation to any period before the second abolition date, the
employment of an earner in employed earner’s employment was
“contracted-out employment” in relation to the earner during that
5period if—

(a) the earner was under pensionable age;

(b) the earner’s service in the employment was service which
qualified the earner for a pension provided by a salary
related contracted-out scheme; and

(c) 10there was in force a contracting-out certificate issued in
accordance with this Chapter (as it then had effect) stating
that the employment was contracted-out employment by
reference to the scheme.”

(3) After subsection (1A) insert—

“(1B) 15In the following provisions of this Act “earner”, in relation to a
scheme, means a person who was an earner in contracted-out
employment by reference to the scheme.”

(4) In subsection (2), in the definition of “guaranteed minimum pension”, for
“by an occupational pension scheme” substitute “, by a scheme that was a
20salary related contracted-out scheme,”.

(5) For subsection (4) substitute—

“(4) A contracting-out certificate that was in force in respect of an
employed earner’s employment is to be taken as conclusive that the
employment was, at that time, contracted-out employment.”

8 25The italic heading above section 9 is repealed.

9 Sections 9 and 11 (requirements for certification of schemes: general) are
repealed.

10 The italic heading above section 12A is repealed.

11 Sections 12A to 12D (requirements for certification applying to employment
30from 6 April 1997) are repealed.

12 For the italic heading above section 13 substitute “Guaranteed minimum
pensions”.

13 (1) Before section 13 insert—

“12E Former salary related contracted-out schemes to comply with GMP
35requirements

(1) A scheme that was a salary related contracted-out scheme is to be
treated as including whatever provision it needs to contain to
comply with the GMP requirements.

(2) A scheme complies with the GMP requirements if, in relation to any
40earner’s service before the principal appointed day, it complies in all
respects with sections 13 to 24E.

(3) Where—

(a) a scheme is permitted by any of those sections to include
provision subject to certain requirements, and

(b) the scheme includes the provision but not the requirements,

the scheme is to be treated by subsection (1) as including the
requirements.

(4) This section overrides any provision of a scheme to the extent that
5the provision of the scheme conflicts with it.”

(2) For the purposes of section 12E it does not matter whether the scheme ceased
to be contracted-out when the amendment made by paragraph 5 of this
Schedule came into force or before that time.

(3) But section 12E does not treat a scheme as having included any provision
10before this paragraph comes into force.

14 In section 13 (minimum pensions for earners), in subsection (2)—

(a) for “is a married woman or widow who is liable” substitute “was a
married woman or widow who was liable”;

(b) after “Act 1992” insert “at a time during a relevant year when she was
15in contracted-out employment by reference to the scheme”;

(c) at the end of that subsection insert—

““Relevant year” has the meaning given by section 14(8).”

15 (1) Section 14 (earner’s guaranteed minimum) is amended as follows.

(2) For subsection (1) substitute—

“(1) 20An earner has a guaranteed minimum in relation to the pension
provided by a scheme that was a salary related contracted-out
scheme if in any tax week in a relevant year—

(a) earnings were paid to or for the earner’s benefit in respect of
employment which was contracted-out by reference to the
25scheme; and

(b) those earnings were in excess of the lower earnings limit for
that tax week (or the prescribed equivalent if the earner was
paid otherwise than weekly).”

(3) In subsection (2), for “earnings such as are mentioned in subsection (1)”
30substitute “excess earnings mentioned in subsection (1)(b)”.

16 In section 16 (revaluation of earnings factors for the purposes of section 14:
early leavers etc), for subsection (2) substitute—

“(2) The scheme may provide that in a case where—

(a) an earner was, before the second abolition date, in
35contracted-out employment by reference to a scheme, and

(b) the earner ceases to be in pensionable service under the
scheme before the final relevant year,

the earnings factors for that person shall be determined for the
purposes of section 14(2) by reference to the last such order to come
40into force before the end of the tax year in which the earner ceases to
be in pensionable service under the scheme (“the last service tax
year”).”

17 (1) Section 17 (minimum pensions for widows, widowers and surviving civil
partners) is amended as follows.

(2) In subsection (4A), after paragraph (a) insert—

“(aa) for life, in a case where—

(i) the widow, widower or surviving civil partner
attained state pension age on or after the second
5abolition date, and

(ii) the earner died on or after the date on which the
widow, widower or surviving civil partner attained
state pension age;

(ab) for any period after the widow, widower or surviving civil
10partner has attained state pension age, in a case where—

(i) the earner died before the widow, widower or
surviving civil partner attained state pension age,

(ii) the widow, widower or surviving civil partner did
not marry or form a civil partnership after the death
15and before attaining state pension age, and

(iii) the widow, widower or surviving civil partner
attained state pension age on or after the second
abolition date;”.

(3) After subsection (9) insert—

“(9A) 20For the purposes of subsection (4A)(aa) and (ab) a person attains
state pension age when he or she attains pensionable age within the
meaning given by the rules in paragraph 1 of Schedule 4 to the
Pensions Act 1995.”

18 In section 20 (transfer of accrued rights), in subsection (1)(a)—

(a) 25in sub-paragraph (i), after “under a” insert “scheme that was a”;

(b) in sub-paragraph (ii)—

(i) omit “which is not contracted-out,”;

(ii) after “under a” insert “scheme that was a”.

19 In section 23 (securing of benefits), in subsection (2), omit paragraph (d).

20 30In section 24A—

(a) the existing text becomes subsection (1), and

(b) after that subsection insert—

“(2) The Secretary of State must give such guidance (if any) as he
or she thinks appropriate about GMP conversion.”

21 35In section 25 (power for HMRC to impose conditions as to investments and
resources), in subsection (2), after “A” insert “scheme that was a”.

22 Sections 34 to 36 (cancellation, variation, surrender and refusal of
certificates) are repealed.

23 In the italic heading above section 37, for “scheme rules after certification”
40substitute “rules by former salary related contracted-out schemes”.

24 In section 37 (alteration of rules of contracted-out schemes) for subsections
(1) to (3) substitute—

“(1) Except in prescribed cases, the rules of a scheme that was a salary
related contracted-out scheme cannot be altered unless the alteration
45is of a prescribed description.

(2) Regulations made by virtue of subsection (1) may operate so as to
validate with retrospective effect any alteration of the rules which
would otherwise be void under this section.

(3) Subsection (1) does not apply to a scheme if no person is entitled to
5receive, or has accrued rights to, any benefits under the scheme
attributable to a period when the scheme was contracted-out.”

25 After section 37 insert—

“37A Transfer of liabilities etc: schemes contracted-out on or after 6 April
1997

(1) 10Regulations may prohibit or restrict—

(a) the transfer of any liability—

(i) for the payment of pensions under a relevant scheme,
or

(ii) in respect of accrued rights to such pensions,

(b) 15the discharge of any liability to provide pensions under a
relevant scheme, or

(c) the payment of a lump sum instead of a pension payable
under a relevant scheme,

except in prescribed circumstances or on prescribed conditions.

(2) 20In this section “relevant scheme” means a scheme that was a salary
related contracted-out scheme by virtue of section 9(2B) and
references to pensions and accrued rights under the scheme are to
such pensions and rights so far as attributable to an earner’s service
on or after the principal appointed day (including, in a case where
25there has been a transfer payment, any pensions or rights deriving
(directly or indirectly) from—

(a) an earner’s service on or after the principal appointed day in
employment that was contracted-out employment by
reference to another scheme, or

(b) 30in a case where the transfer payment was made before the
first abolition date, protected rights under another
occupational pension scheme or under a personal pension
scheme which derive from payments or contributions in
respect of employment on or after the principal appointed
35day.)

(3) Regulations under subsection (1) may provide that any provision of
this Part shall have effect subject to such modifications as may be
specified in the regulations.”

26 For the heading to Chapter 2 of Part 3 substitute “Reduction in social
40security benefits for members of schemes that were contracted-out”.

27 In section 40 (scope of Chapter 2)—

(a) omit paragraph (a);

(b) in paragraph (c) for “such schemes” substitute “schemes that were
contracted-out pension schemes”.

28 45The italic heading above section 41 is repealed.

29 Section 41 (reduced rates of Class 1 contributions) is repealed.

30 (1) Section 42 (review and alteration of reduced rates of Class 1 contributions)
is repealed.

(2) There is no duty, before the repeal of section 42 comes into force, to lay
before Parliament any reports under that section.

31 5In section 48A (additional pension and other benefits), in subsection (1), for
the words from the beginning to the end of paragraph (b) substitute “In
relation to—

“(a) any tax week falling before the first abolition date where the
amount of a Class 1 contribution attributable to
10section 8(1)(a) of the Social Security Contributions and
Benefits Act 1992 in respect of the earnings paid to or for the
benefit of an earner in that week was reduced under section
42A of this Act (as it then had effect),

(b) any tax week falling before the second abolition date where
15the amount of a Class 1 contribution attributable to
section 8(1)(a) of the Social Security Contributions and
Benefits Act 1992 in respect of the earnings paid to or for the
benefit of an earner in that week was reduced under section
41 of this Act (as it then had effect), or

(c) 20any tax week falling before the first abolition date where an
amount was paid under section 45(1) of this Act (as it then
had effect) in respect of the earnings paid to or for the benefit
of an earner,”.

32 Section 49 (women, married women and widows) is repealed.

33 25Section 50 (powers of HMRC to approve arrangements for scheme ceasing
to be certified) is repealed.

34 In section 51 (calculation of guaranteed minimum pensions under approved
arrangements), in subsection (1)(b), for “ceases” substitute “ceased”.

35 For section 52 substitute—

“52 30Supervision of former salary related contracted-out schemes

Section 53 shall apply for the purpose of making provision for
securing the continued supervision of any scheme that was a salary
related contracted-out scheme, other than a public service pension
scheme, if any person is entitled to receive or has accrued rights to—

(a) 35a guaranteed minimum pension under the scheme, or

(b) a pension under the scheme attributable to service on or after
the principal appointed day but before the scheme ceased to
be contracted-out.”

36 In section 53 (supervision: former contracted-out schemes), omit
40subsection (3).

37 Sections 55 to 68 (state scheme premiums) are repealed.

38 In section 87 (general protection principle), in subsection (1)(a), for sub-
paragraph (i) substitute—

“(i) the date (“the cessation date”) which is the earlier of—

(a) 45the date on which an earner ceases to be in
pensionable service under a scheme that was,

before the second abolition date, a salary
related contracted-out scheme; and

(b) the date on which the earner attains
pensionable age;”.

39 5In section 96 (further provisions concerning exercise of option to take cash
equivalent in a particular way), in subsection (2), in paragraph (a)(i) omit
“which is not a contracted-out scheme”.

40 In section 109 (annual increase of guaranteed minimum pensions), in
subsection (3A)(b), omit “for the purposes of Part 3 of the Pensions Act
101995”.

41 In section 171 (questions arising in proceedings), in subsection (1), omit
paragraph (b) and the “or” before it.

42 In section 178 (trustees and managers of schemes), in paragraph (a)—

(a) after “1985” insert “or”;

(b) 15omit “or Part II of Schedule 5 to the Child Support, Pensions and
Social Security Act 2000”.

43 (1) Section 181(1) (general interpretation) is amended as follows.

(2) In the appropriate places insert—

• ““the first abolition date” has the meaning given by section 7A;”

• 20““the second abolition date” has the meaning given by section 7A;”

• ““the principal appointed day” means 6 April 1997 (which is the day
  designated as the principal appointed day for the purposes of Part 3
  of the Pensions Act 1995);”

• ““salary related contracted-out scheme” is to be construed in
  25accordance with section 7B;”.

(3) Omit the definition of “abolition date”.

(4) In the definition of “appropriate scheme” and “appropriate scheme
certificate”, for “section 181A” substitute “section 7B”.

(5) In the definition of “contracting-out certificate”, for “section 7 and section
30181A” substitute “section 7B”.

(6) In the definition of “contributions equivalent premium”, for “has the
meaning given in” substitute “means a premium that was paid under”.

(7) In the definition of “earner” and “earnings”, after “in accordance with” insert
“section 8(1B) of this Act and”.

(8) 35In the definition of “money purchase contracted-out scheme”, for “section
181A” substitute “section 7B”.

44 Section 181A (interpretation of references to money purchase contracted-out
schemes or appropriate schemes after first abolition date) is repealed.

45 In section 185 (consultation about other regulations), omit subsection (9).

46 (1) 40Schedule 2 (certification regulations) is amended as follows.

(2) Omit paragraphs 1 to 4.

(3) In paragraph 5(3A), for “a contracted-out occupational pension scheme
which is being wound up,” substitute “a scheme which was a contracted-out

occupational pension scheme and which was being wound up before the
second abolition date”.

(4) Omit paragraphs 6 to 8.

47 (1) Schedule 4 (priority in bankruptcy) is amended as follows.

(2) 5In paragraph 2—

(a) in sub-paragraph (1), after “contributions to a” insert “Northern
Ireland”;

(b) in sub-paragraph (5), at the appropriate place insert—

• ““Northern Ireland salary related contracted-out
  10scheme” means a salary related contracted-out
  scheme within the meaning of the Pension Schemes
  (Northern Ireland) Act 1993 (and references to
  employment that is contracted-out by reference to a
  scheme are to be read accordingly);”.

(3) 15In paragraph 3—

(a) in sub-paragraph (1), after “on account of a” insert “Northern
Ireland”;

(b) after sub-paragraph (5) insert—

“(6) In this paragraph “Northern Ireland contributions
20equivalent premium” means a contributions equivalent
premium within the meaning of the Pension Schemes
(Northern Ireland) Act 1993.”

(4) Omit paragraph 4(2).

Part 2 25Other Acts: amendments

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

48 The Contributions and Benefits Act is amended as follows.

49 In section 1 (outline of contributory system), in subsection (3), omit the
words after paragraph (b).

50 30In section 4C (power to make provision in consequence of provision made
by virtue of section 4B(2) etc), in subsection (5), in each of paragraphs (a)
and (b) omit the words from “, including” to the end.

51 In section 8 (calculation of primary Class 1 contributions), in subsection (3),
omit paragraph (c) and the “and” before it.

52 35In section 9 (calculation of secondary Class 1 contributions), in
subsection (3), omit paragraph (c) and the “and” before it.

53 In section 20 (descriptions of contributory benefits), in subsection (3), for
“(reduction in state scheme contributions and benefits for members of
certified schemes)” substitute “(reduction in benefits for members of
40schemes that were contracted-out)”.