Pension Schemes Bill (HL Bill 63)

(2) A member of a pension scheme who has transferrable rights in
relation to money purchase benefits acquires a right to take their cash
equivalent in accordance with this Chapter.”

6 (1) Section 95 (ways of taking right to cash equivalent) is amended as follows.

(2) 5For subsection (1) substitute—

“(1) A member of a pension scheme who has acquired a right to take a
cash equivalent in accordance with this Chapter may only take it by
making an application in writing to the trustees or managers of the
scheme requiring them to use the cash equivalent in one of the ways
10specified below.

(1A) In the case of a right acquired under section 94(1), the application
must be made—

(a) within the period of 3 months beginning with the guarantee
date shown in the relevant statement of entitlement, and

(b) 15if the cash equivalent relates to benefits that are not flexible
benefits, by no later than the date that falls one year before
the member attains normal pension age.”

(3) In subsections (2)(a)(i) and (b)(i) and (3)(a)(i) and (b)(i), for “accrued rights”
substitute “transferrable rights”.

(4) 20Omit subsections (7) and (8).

7 (1) Section 96 (further provisions concerning exercise of option under section
95) is amended as follows.

(2) For subsection (1) substitute—

“(1) A member who has acquired a right to take a cash equivalent under
25section 94(1) or (2) may exercise the option conferred by section 95(1)
in relation to different portions of that cash equivalent in different
ways, but a member who exercises that option must do so—

(a) in relation to the whole of that cash equivalent, or

(b) if subsection (2) applies, in relation to the whole of the
30balance mentioned in subsection (3).”

(3) For subsection (4) substitute—

“(4) Where a member of a pension scheme—

(a) is entitled to make an application under section 95(1) in
relation to any category of benefits, and

(b) 35is also entitled to give a transfer notice under section 101F(1)
to the trustees or managers of the scheme in relation to
benefits in the same category (or would be entitled to do so
but for section 101G(2)),

the member may not, if the scheme so provides, make an application
40under section 95(1) in relation to that category of benefits without
also giving a transfer notice under section 101F(1) in relation to that
category of benefits.”

8 (1) Section 97 (calculation of cash equivalents) is amended as follows.

(2) After subsection (1) insert—

“(1A) Where a member applies under section 95 to take a cash equivalent
that relates to money purchase benefits, the cash equivalent is to be
calculated by reference to the date of the application.”

(3) 5In subsection (2)—

(a) in the opening words, for “except guaranteed cash equivalents”
substitute “that relate to money purchase benefits”;

(b) in paragraph (aa), for “, including a guaranteed cash equivalent,”
substitute “that relates to any category of benefits”.

(4) 10In subsection (3), omit paragraph (a).

(5) For subsection (3A) substitute—

“(3A) For the purposes of subsection (3), the “appropriate date”—

(a) in relation to a cash equivalent that relates to benefits other
than money purchase benefits, means the guarantee date for
15the purposes of the relevant statement of entitlement under
section 93A, and

(b) in relation to a cash equivalent that relates to money purchase
benefits, means the date on which the trustees or managers
receive an application from the member under section 95.”

9 20For section 98 substitute—

“98 Loss of right to cash equivalent

(1) A member of a pension scheme who acquires the right to take a cash
equivalent under section 94(1) loses that right if no application to
take the cash equivalent is made within the period specified in
25section 95(1A) (but this does not prevent the member later acquiring
a new right to take a cash equivalent under section 94(1) in relation
to the same benefits).

(2) A member of a pension scheme loses the right to take a cash
equivalent in accordance with this Chapter if the scheme is wound
30up.”

10 (1) Section 99 (trustees’ duties after exercise of option) is amended as follows.

(2) For subsection (2) substitute—

“(2) Subject to the following provisions of this section, if the trustees or
managers of a scheme receive an application under section 95 they
35must do what is needed to carry out what the member requires—

(a) in the case of an application that relates to benefits other than
money purchase benefits, within 6 months beginning with
the guarantee date shown in the relevant statement of
entitlement, and

(b) 40in the case of an application that relates to money purchase
benefits, within 6 months beginning with the date of the
application.”

(3) In subsection (3)(a) omit “at any time before the expiry of the 12 months
beginning with the termination date”.

(4) 45Omit subsection (3A).

11 After section 100 insert—

“100A Prohibition on excluding future accruals etc

Except as mentioned in sections 96(4) and 101G(4), a pension scheme
may not contain rules that would have the effect of—

(a) 5preventing a member from exercising a right under this
Chapter in relation to a category of benefits without also
exercising a right under this Chapter or otherwise to require
a transfer payment to be made in respect of another category
of benefits, or

(b) 10preventing a member who exercises a right under this
Chapter in relation to a category of benefits from accruing
rights to benefits in another category.

100B Meaning of “scheme rules”: occupational pension schemes

(1) In this Chapter references to the scheme rules, in relation to an
15occupational pension scheme, are references to—

(a) the rules of the scheme, except so far as overridden by a
relevant legislative provision,

(b) the relevant legislative provisions, to the extent that they
have effect in relation to the scheme and are not reflected in
20the rules of the scheme, and

(c) any provision which the rules of the scheme do not contain
but which the scheme must contain if it is to conform with the
requirements of Chapter 1 of Part 4 of this Act.

(2)
For the purposes of subsection (1)—

(a) 25“relevant legislative provision” means any provision
contained in any of the following provisions—

(i) Schedule 5 to the Social Security Act 1989;

(ii) this Part or Chapters 2 or 3 of Part 4 or regulations
made under this Part or either of those Chapters;

(iii) 30Part 4A of this Act or regulations made under that
Part;

(iv) section 110(1) of this Act;

(v) Part 1 of the Pensions Act 1995 or subordinate
legislation made or having effect as if made under
35that Part;

(vi) section 31 of the Welfare Reform and Pensions Act
1999;

(vii) any provision mentioned in section 306(2) of the
Pensions Act 2004;

(viii) 40regulations made under Schedule 17 to the Pensions
Act 2014;

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

(x) regulations made under Part 2 of the Pension
45Schemes Act 2014;

(b) a relevant legislative provision is to be taken to override any
of the provisions of the scheme if, and only if, it does so by
virtue of any of the following provisions—

(i) paragraph 3 of Schedule 5 to the Social Security Act
1989;

(ii) section 129(1) of this Act;

(iii) section 117(1) of the Pensions Act 1995;

(iv) 5section 31(4) of the Welfare Reform and Pensions Act
1999;

(v) section 306(1) of the Pensions Act 2004;

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

(vii) 10regulations made under paragraph 6 of Schedule 18
to the Pensions Act 2014;

(viii) regulations made under section 34 of the Pension
Schemes Act 2014.

100C Meaning of “normal pension age” in this Chapter

(1) 15In this Chapter “normal pension age”, in relation to a category of
benefits under a pension scheme, means—

(a) in a case where the scheme is an occupational pension
scheme and those benefits consist only of a guaranteed
minimum pension, the earliest age at which the member is
20entitled to receive the guaranteed minimum pension on
retirement from any employment to which the scheme
applies,

(b) in a case where the scheme is an occupational pension
scheme and the scheme provides for the member to become
25entitled to receive any of those benefits at a particular age on
retirement from any employment to which the scheme
applies, the earliest age at which the member becomes
entitled to receive any of the benefits, and

(c) in any other case, normal minimum pension age as defined
30by section 279(1) of the Finance Act 2004.

(2) For the purposes of subsection (1) any scheme rule making special
provision as to early retirement on grounds of ill-health or otherwise
is to be disregarded.

100D Interpretation of Chapter

35In this Chapter—

• “accrued rights”, in relation to a member of a pension scheme,
  means rights that have accrued to or in respect of the member
  to benefits under the scheme;

• “category”, in relation to benefits, has the meaning given by
  40section 93(6);

• “flexible benefit” has the meaning given by section 72 of the
  Pension Schemes Act 2014;

• “guarantee date”, in relation to a member who has received a
  statement of entitlement, has the meaning given by section
  4593A;

• “member” is to be read in accordance with section 93(11);

• “normal pension age” has the meaning given by section 100C;

Pension Schemes BillPage 84

• “pension credit rights”, in relation to a member of a pension
  scheme, means rights to benefits under the scheme which are
  attributable (directly or indirectly) to a pension credit;

• “salary related occupational pension scheme”: an occupational
  5pension scheme is “salary related” if—

  (a)

  the scheme is not a scheme under which all the
  benefits that may be provided are money purchase
  benefits, and

  (b)

  the scheme does not fall within a prescribed class;

• 10“scheme rules”, in relation to an occupational pension scheme,
  has the meaning given by section 100B;

• “statement of entitlement” has the meaning given by section
  93A;

• “transferrable rights” is to be read in accordance with section
  1593(11).”

12 (1) In section 101F (power to give transfer notice) is amended as follows.

(2) In subsection (1), for “pension credit benefit” substitute “pension credit
rights”.

(3) After subsection (3) insert—

“(3A) 20An eligible member who has pension credit rights in relation to more
than one category of benefits under the scheme may exercise the
power to give a transfer notice in relation to the pension credit rights
in relation to any one or more of those categories.”

(4) For subsection (4) substitute—

“(4) 25The cash equivalent for the purposes of subsection (1) shall—

(a) in a case where the pension credit rights relate to a category
of benefits other than money purchase benefits, be taken to be
the amount shown in the relevant statement under section
101H, and

(b) 30in a case where the pension credit rights relate to money
purchase benefits, be determined by reference to the date the
notice under that subsection is given.”

(5) For subsection (6A) substitute—

“(6A) Regulations may—

(a) 35provide for this Chapter not to apply in prescribed
circumstances in relation to a member of a prescribed scheme
or schemes of a prescribed description;

(b) modify the application of this Chapter in relation to a
member who has accrued rights to benefits of a prescribed
40description.

(6B) In this Chapter a reference to a “category” of benefits is to one of the
following three categories—

(a) money purchase benefits;

(b) flexible benefits other than money purchase benefits;

(c) 45benefits that are not flexible benefits.”

13 For section 101G (restrictions on power to give transfer notice) substitute—

“101G Restrictions on power to give transfer notice

(1) An eligible member may not give a transfer notice in relation to a
category of benefits if a crystallisation event has occurred in relation
5to any of the member’s pension credit rights to benefits in that
category.

(2) An eligible member may give a transfer notice in relation to a
category of benefits other than money purchase benefits only if—

(a) the member has been provided with a statement under
10section 101H in relation to benefits in that category, and

(b) not more than 3 months have passed since the date by
reference to which the amount shown in the statement is
determined.

(3) An eligible member may not give a transfer notice in relation to
15benefits other than flexible benefits if there is less than one year to go
until the member reaches normal benefit age.

(4) Where an eligible member of a qualifying scheme—

(a) is entitled to give a transfer notice in relation to any category
of benefits, and

(b) 20is also entitled to make an application to the trustees or
managers of the scheme under section 95(1) in relation to
benefits in the same category (or would be entitled to do so
but for section 95(1A)(a)),

the member may not, if the scheme so provides, give a transfer notice
25in relation to that category of benefits without also making an
application under section 95(1) in relation to that category of
benefits.

(5) A transfer notice may not be given if a previous transfer notice given
by the member to the trustees or managers of the scheme is
30outstanding.

(6) For the purposes of subsection (1) a crystallisation event occurs in
relation to a member’s pension credit rights to benefits in a category
when—

(a) payment of a pension in respect of any of the benefits has
35begun,

(b) in the case of money purchase benefits, sums or assets held
for the purpose of providing any of the benefits are
designated as available for the payment of drawdown
pension (as defined by paragraph 4 of Schedule 28 to the
40Finance Act 2004), or

(c) in the case of a personal pension scheme, sums or assets held
for the purpose of providing any of the benefits are applied
for purchasing an annuity or insurance policy.”

14 (1) Section 101H (salary related schemes: statements of entitlement) is amended
45as follows.

(2) For subsection (1) substitute—

“(1) The trustees or managers of a qualifying scheme must, on the
application of an eligible member, provide the member with a
written statement of the amount of the cash equivalent of the
5member’s pension credit rights in relation to categories of benefits
other than money purchase benefits.

(1A) In the case of a member with pension credit rights in relation to two
categories of benefits other than money purchase benefits, the
application may relate to pension credit rights in relation to either or
10both of those categories.”

(3) In the heading for “Salary related schemes” substitute “Benefits other than
money purchase”.

15 (1) Section 101J (time for compliance with transfer notice) is amended as
follows.

(2) 15In subsection (1), for paragraphs (a) and (b) substitute—

“(a) in the case of an application that relates to benefits other than
money purchase benefits, within 6 months beginning with
the valuation date, and

(b) in the case of an application that relates to money purchase
20benefits, within 6 months of the date on which the notice is
given.”

(3) For subsection (7) substitute—

“(7) In subsection (1)(a), “valuation date” means the date by reference to
which the amount shown in the relevant statement under section
25101H is determined.”

16 After section 101N insert—

“101NA Prohibition on excluding transfers of some rights without others etc

Except as mentioned in sections 96(4) and 101G(4), a pension scheme
may not contain rules that would have the effect of—

(a) 30preventing a member from exercising a right under this
Chapter in relation to a category of benefits without also
exercising a right under this Chapter or otherwise to require
a transfer payment to be made in respect of another category
of benefits, or

(b) 35preventing a member who exercises a right under this
Chapter in relation to a category of benefits from accruing
rights to benefits in another category.”

17 (1) Section 101P (interpretation) is amended as follows.

(2) In subsection (1), at the appropriate places insert—

• 40““category”, in relation to benefits, has the meaning given by
  section 101F(6B);”

• ““flexible benefit” has the meaning given by section 72 of the
  Pension Schemes Act 2014;”.

(3) Omit subsection (2).

(4) In subsection (3), for “given to the trustees or managers of a salary related
occupational pension scheme” substitute “in relation to benefits other than
money purchase benefits”.”

18 Omit section 101Q.

19 5In section 129 (overriding requirements) for “Chapters II, III, IV and V of
Part IV” substitute “Chapters 2 and 3 of Part 4, Chapters 1 and 2 of Part
4ZA”.

20 In section 130 (extra-statutory benefits), in paragraph (b), for “Chapter II, IV
or V of Part IV” substitute “Chapter 2 of Part 4 or Chapter 1 or 2 of Part 4ZA”.

21 10In section 153 (power to modify certain provisions), in subsection (1), for
“Chapters II, III and IV of Part IV” substitute “Chapters 2 and 3 of Part 4 and
Chapter 1 of Part 4ZA”.

22 In section 179 (linked qualifying service), in subsection (1)(a)—

(a) in the opening words, for “Chapter 4 or 5 of Part 4” substitute
15“Chapter 1 or 2 of Part 4ZA”;

(b) in sub-paragraph (iii)—

(i) for “Chapter 4 of Part 4” substitute “Chapter 1 of Part 4ZA”;

(ii) for “Chapter 5” substitute “Chapter 2”.

23 In section 181 (interpretation), in subsection (1), in paragraph (b) of the
20definition of “transfer credits”, for “Chapter 5 of Part 4” substitute “Chapter
2 of Part 4ZA”.

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

24 The Pensions Act 1995 is amended as follows.

25 In section 67A (the subsisting rights provisions: interpretation), in
25subsection (9)(a), for sub-paragraph (ii) substitute—

“(ii) Chapter 2 or 3 of Part 4 of the Pension Schemes Act
1993 (certain protection for early leavers) or
regulations made under either of those Chapters;

(iia) Chapter 1 or 2 of Part 4ZA of that Act (transfers and
30contribution refunds) or regulations made under
either of those Chapters;”.

26 In section 73 (preferential liabilities on winding up), in subsection (9), for
“Chapter 5 of Part 4” substitute “Chapter 2 of Part 4ZA”.

27 In section 73B (sections 73 and 73A: supplementary), in subsection (7), for
35“Chapter 4 of Part 4” substitute “Chapter 1 of Part 4ZA”.

Learning and Skills Act 2000 (c. 21)Learning and Skills Act 2000 (c. 21)

28 In section 135 (pensions: interpretation), in subsection (4), for “section
93(1A)” substitute “section 100D”.

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

29 40The Pensions Act 2004 is amended as follows.

30 (1) Section 18 (pension liberation: interpretation) is amended as follows.

(2) In subsection (2)(a)—

(a) after “accrued rights” insert “or an entitlement”;

(b) in sub-paragraph (ii), for “the applicable rules” substitute “the
scheme rules”.

(3) 5In subsection (3)—

(a) for paragraph (a) substitute—

“(a) section 94 of the Pension Schemes Act 1993 (right to
cash equivalent under Chapter 1 of Part 4ZA of that
Act)”;

(b) 10in paragraph (b), for “Chapter 5 of Part 4” substitute “Chapter 2 of
Part 4ZA”.

(4) In subsection (4)(d), for “the applicable rules” substitute “the scheme rules”.

(5) Omit subsection (5).

31 In section 23 (freezing orders), in subsection (4)(g), for “salary related
15schemes” substitute “benefits other than money purchase”.

32 In section 24 (consequences of freezing order), in subsection (7), for
paragraphs (a) and (b) substitute—

“(a) Chapter 1 of Part 4ZA of the Pension Schemes Act 1993
(transfer rights: general), or

(b) 20Chapter 2 of that Part (early leavers: cash transfer sums and
contribution refunds).”

33 In section 73 (inspection of premises), in subsection (2)(d)—

(a) for “Chapter 4 of Part 4” substitute “Chapter 1 of Part 4ZA”;

(b) for “Chapter 5 of Part 4” substitute “Chapter 2 of Part 4ZA”.

34 25In section 135 (restrictions on winding up, discharge of liabilities etc), in
subsection (6)(b), for “Chapter 5 of Part 4” substitute “Chapter 2 of Part
4ZA”.

35 In section 138 (payment of scheme benefits), in subsection (3)(b), for
“Chapter 5 of Part 4” substitute “Chapter 2 of Part 4ZA”.

36 30In section 318 (interpretation), in subsection (3)(a), for sub-paragraph (ii)
substitute—

“(ii) Chapter 2 or 3 of Part 4 of the Pension Schemes Act
1993 (certain protection for early leavers) or
regulations made under either of those Chapters;

(iia) 35Chapter 1 or 2 of Part 4ZA of that Act (transfers and
contribution refunds) or regulations made under
either of those Chapters;”.

37 (1) Schedule 7 (pension compensation provisions) is amended as follows.

(2) In paragraph 20(1)(c), for “Chapter 5 of Part 4” substitute “Chapter 2 of Part
404ZA”.

(3) In paragraph 32(1)(b), for “Chapter 5 of Part 4” substitute “Chapter 2 of Part
4ZA”.

Pensions Act 2014 (c. 19)2014 (c. 19)

38 The Pensions Act 2014 is amended as follows.

39 In section 34 (power to prohibit offer of incentives to transfer pension rights),
in subsection (7), in the definition of “salary related occupational pension
5scheme”, for “section 93(1A)” substitute “section 100D”.

40 In Schedule 17 (automatic transfer of pension benefits etc), in paragraph 1—

(a) in sub-paragraph (4)(d) for “applicable rules” substitute “scheme
rules”;

(b) for sub-paragraph (6) substitute—

“(6) 10In sub-paragraph (4)—

(a) the reference to “scheme rules” is, in relation to an
occupational pension scheme, to be read in
accordance with section 100B of the Pension
Schemes Act 1993;

(b) 15“benefits” means—

(i) money purchase benefits other than money
purchase benefits of a prescribed
description, or

(ii) benefits of a prescribed description.”

20Part 2 Northern Ireland amendments

Pension Schemes (Northern Ireland) Act 1993 (c. 49)Pension Schemes (Northern Ireland) Act 1993 (c. 49)

41 The Pension Schemes (Northern Ireland) Act 1993 is amended as follows.

42 (1) Chapters 4 and 5 of Part 4 of the Act become Chapters 1 and 2 of a new
25Part 4ZA.

(2) Accordingly—

(a) before section 89 (and before the Chapter heading above it) insert—

“Part 4ZA

Transfers and contribution refunds”;

(b) for the Chapter heading above section 89 substitute—

“Chapter 1

Transfer rights: general”;

(c) for the Chapter heading above section 97AA substitute—

“Chapter 2

Early leavers: cash transfer sums and contribution refunds”.

43 30In section 52 (payment of state scheme premiums on termination of certified
status: supplementary), in subsection (4)(b), for “Chapter 5 of Part IV”
substitute “Chapter 2 of Part 4ZA”.