Pension Schemes Bill (HL Bill 63)

44 In section 69 (form of short service benefit and its alternatives), in subsection
(3), for “Chapter IV of this Part” substitute “Chapter 1 of Part 4ZA”.

45 For sections 89 to 90 substitute—

“89 Scope of Chapter 1

(1) 5This Chapter applies to a member of a pension scheme if all of the
following conditions are met.

(2) Condition 1 is that the member has accrued rights to any category of
benefits under the scheme rules.

(3) Condition 2 is that no crystallisation event has occurred in relation to
10the member’s accrued rights to benefits in that category (see
subsection (7)).

(4) Condition 3 is that—

(a) the member is no longer accruing rights to benefits in that
category (see subsection (8)), and

(b) 15in the case of benefits that are not flexible benefits, the
member stopped accruing those rights at least one year
before normal pension age.

(5) But this Chapter does not apply to—

(a) a member of a salary related occupational pension scheme
20whose pensionable service terminated before 1 January 1986
and in respect of whom prescribed requirements are
satisfied;

(b) a member of a personal pension scheme which is comprised
in an annuity contract made before 4 January 1988.

(6) 25In 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) benefits that are not flexible benefits.

(7) 30For the purposes of Condition 2 a crystallisation event occurs in
relation to a member’s accrued rights to benefits in a category
when—

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

(b) 35in 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
Finance Act 2004), or

(c) 40in 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.

(8) For the purposes of Condition 3 a member stops accruing rights to a
category of benefits when there are no longer arrangements in place
45for the accrual of rights to benefits in that category for or in respect
of the member.

(9) In this section a reference to accrued rights does not include pension
credit rights.

(10) Regulations may—

(a) provide for this Chapter not to apply in relation to a person
5of a prescribed description;

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

(11) In the following provisions of this Chapter—

(a) 10a reference to a “member” of a pension scheme is a reference
to a member to whom this Chapter applies, and

(b) a reference to a member’s “transferrable rights” are to any
rights in relation to a category of benefits by virtue of which
this Chapter applies to the member.

89A 15Right to statement of entitlement: benefits other than money purchase

(1) The trustees or managers of a pension scheme must, on the
application of any member, provide the member with a statement of
entitlement in respect of the member’s transferrable rights in relation
to categories of benefits other than money purchase benefits.

(2) 20In the case of a member with transferrable rights in relation to two
categories of benefits other than money purchase benefits, the
application may relate to transferrable rights in relation to either or
both of those categories.

(3) For the purposes of this Chapter a member’s “statement of
25entitlement” is a written statement of the amount of the cash
equivalent at the guarantee date of the transferrable rights to which
the application under subsection (1) relates.

(4) In this Chapter “the guarantee date” means the date by reference to
which the value of the cash equivalent is calculated, and must be—

(a) 30within the prescribed period beginning with the date of the
application, and

(b) within the prescribed period ending with the date on which
the statement of entitlement is provided to the member.

(5) Regulations may make provision in relation to applications under
35this section and may, in particular, restrict the making of successive
applications.

(6) If the trustees or managers of a pension scheme fail to comply with
subsection (1), Article 10 of the Pensions (Northern Ireland) Order
1995 (civil penalties) applies to any trustee or manager who has
40failed to take all reasonable steps to secure compliance.

90 Right to cash equivalent

(1) A member of a pension scheme who has received a statement of
entitlement under section 89A acquires a right to take the cash
equivalent shown in that statement in accordance with this Chapter.

(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.”

46 (1) Section 91 (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 90(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).

47 (1) Section 92 (further provisions concerning exercise of option under section
91) is amended as follows.

(2) For subsection (1) substitute—

“(1) A member who has acquired a right to take a cash equivalent under
25section 90(1) or (2) may exercise the option conferred by section 91(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 91(1) in
relation to any category of benefits, and

(b) 35is also entitled to give a transfer notice under section 97F(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 97G(2)),

the member may not, if the scheme so provides, make an application
40under section 91(1) in relation to that category of benefits without
also giving a transfer notice under section 97F(1) in relation to that
category of benefits.”

48 (1) Section 93 (calculation of cash equivalents) is amended as follows.

(2) After subsection (1) insert—

“(1A) Where a member applies under section 91 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 (as
defined in section 90(1A)” substitute “that relate to money purchase
benefits”;

(b) in paragraph (aa), for “, including a guaranteed cash equivalent,”
10substitute “that relates to any category of benefits”.

(4) In 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
15than money purchase benefits, means the guarantee date for
the purposes of the relevant statement of entitlement under
section 89A, and

(b) in relation to a cash equivalent that relates to money purchase
benefits, means the date on which the trustees or managers
20receive an application from the member under section 91.”

49 For section 94 substitute—

“94 Loss of right to cash equivalent

(1) A member of a pension scheme who acquires the right to take a cash
equivalent under section 90(1) loses that right if no application to
25take the cash equivalent is made within the period specified in
section 91(1A) (but this does not prevent the member later acquiring
a new right to take a cash equivalent under section 90(1) in relation
to the same benefits).

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

50 (1) Section 95 (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
35managers of a scheme receive an application under section 91 they
must 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
40entitlement, and

(b) in 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
45beginning with the termination date”.

(4) Omit subsection (3A).

51 After section 96 insert—

“96A Prohibition on excluding future accruals etc

Except as mentioned in sections 92(4) and 97G(4), a pension scheme
5may not contain rules that would have the effect of—

(a) preventing 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
10of benefits, or

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

96AB Meaning of “scheme rules”: occupational pension schemes

(1) 15In this Chapter references to the scheme rules, in relation to an
occupational 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
20have effect in relation to the scheme and are not reflected in
the 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.

(2)
25For the purposes of subsection (1)—

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

(i) Schedule 5 to the Social Security (Northern Ireland)
Order 1989;

(ii) 30this Part or Chapters 2 or 3 of Part 4 or regulations
made under this Part or either of those Chapters;

(iii) Part 4A or regulations made under that Part;

(iv) section 106(1);

(v) Part 2 of the Pensions (Northern Ireland) Order 1995
35or orders or regulations made or having effect as if
made under that Part;

(vi) Article 28 of the Welfare Reform and Pensions
(Northern Ireland) Order 1999;

(vii) any provision mentioned in Article 279(2) of the
40Pensions (Northern Ireland) Order 2005;

(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
45(Northern Ireland) Order 1989;

(ii) section 125(1);

(iii) Article 114(1) of the Pensions (Northern Ireland)
Order 1995;

(iv) Article 28(4) of the Welfare Reform and Pensions
(Northern Ireland) Order 1999;

(v) Article 279(1) of the Pensions (Northern Ireland)
Order 2005.

96AC 5Meaning of “normal pension age” in this Chapter

(1) In 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
10minimum pension, the earliest age at which the member is
entitled 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
15scheme and the scheme provides for the member to become
entitled 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) 20in any other case, normal minimum pension age as defined
by 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.

96AD 25Interpretation of Chapter

In 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;

• 30“category”, in relation to benefits, has the meaning given by
  section 89(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
  35statement of entitlement, has the meaning given by section
  89A;

• “member” is to be read in accordance with section 89(11);

• “normal pension age” has the meaning given by section 96C;

• “pension credit rights”, in relation to a member of a pension
  40scheme, means rights to benefits under the scheme which are
  attributable (directly or indirectly) to a pension credit;

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

  (a)

  the scheme is not a scheme under which all the
  45benefits that may be provided are money purchase
  benefits, and

  (b)

  the scheme does not fall within a prescribed class;

• “scheme rules”, in relation to an occupational pension scheme,
  has the meaning given by section 96B;

Pension Schemes BillPage 96

• “statement of entitlement” has the meaning given by section
  89A;

• “transferrable rights” is to be read in accordance with section
  89(11).”

52 (1) 5In section 97F (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) An eligible member who has pension credit rights in relation to more
10than 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) The cash equivalent for the purposes of subsection (1) shall—

(a) 15in 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
97H, and

(b) in a case where the pension credit rights relate to money
20purchase benefits, be determined by reference to the date the
notice under that subsection is given.”

(5) For subsection (6A) substitute—

“(6A) Regulations may—

(a) provide for this Chapter not to apply in prescribed
25circumstances 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
description.

(6B) 30In 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) benefits that are not flexible benefits.”

53 35For section 97G (restrictions on power to give transfer notice) substitute—

“97G 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
to any of the member’s pension credit rights to benefits in that
40category.

(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
section 97H 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
5benefits 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) 10is also entitled to make an application to the trustees or
managers of the scheme under section 91(1) in relation to
benefits in the same category (or would be entitled to do so
but for section 91(1A)(a)),

the member may not, if the scheme so provides, give a transfer notice
15in relation to that category of benefits without also making an
application under section 91(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
20outstanding.

(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
25begun,

(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
30Finance 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.”

54 (1) Section 97H (salary related schemes: statements of entitlement) is amended
35as 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
40member’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
45both of those categories.”

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

55 (1) Section 97J (time for compliance with transfer notice) is amended as follows.

(2) In 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
5the valuation date, and

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

(3) For subsection (7) substitute—

“(7) 10In subsection (1)(a), “valuation date” means the date by reference to
which the amount shown in the relevant statement under section
97H is determined.”

56 After section 97N insert—

“97NA Prohibition on excluding transfers of some rights without others etc

15Except as mentioned in sections 92(4) and 97G(4), a pension scheme
may not contain rules that would have the effect of—

(a) preventing 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
20a transfer payment to be made in respect of another category
of benefits, or

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

57 (1) 25Section 97P (interpretation) is amended as follows.

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

• ““category”, in relation to benefits, has the meaning given by
  section 97F(6B);”

• ““flexible benefit” has the meaning given by section 72 of the
  30Pension 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”.”

58 35Omit section 97Q.

59 In section 125 (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”.

60 In section 126 (extra-statutory benefits), in paragraph (b), for “Chapter II, IV
40or V of Part IV” substitute “Chapter 2 of Part 4 or Chapter 1 or 2 of Part 4ZA”.

61 In section 149 (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”.

62 In section 174 (linked qualifying service), in subsection (1)(a)—

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

(b) in sub-paragraph (iii)—

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

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

63 In section 176 (interpretation), in subsection (1), in paragraph (b) of the
definition of “transfer credits”, for “Chapter 5 of Part IV” substitute “Chapter
2 of Part 4ZA”.

Pensions (Northern Ireland) Order 1995 (S.I. 1995/3213 (N.I. 22)S.I. 1995/3213 (N.I. 22))

64 10The Pensions (Northern Ireland) Order 1995 is amended as follows.

65 In Article 67A (the subsisting rights provisions: interpretation), in paragraph
(9)(a), for head (ii) substitute—

“(ii) Chapter 2 or 3 of Part 4 of the Pension Schemes Act
(certain protection for early leavers) or regulations
15made under either of those Chapters;

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

66 In Article 73 (preferential liabilities on winding up), in paragraph (9), for
20“Chapter 5 of Part IV” substitute “Chapter 2 of Part 4ZA”.

67 In Article 73B (Article 73 and 73A: supplementary), in paragraph (7), for
“Chapter 4 of Part IV” substitute “Chapter 1 of Part 4ZA”.

Pensions (Northern Ireland) Order 2005 (S.I. 2005/255 (N.I. 1)S.I. 2005/255 (N.I. 1))

68 The Pensions (Northern Ireland) Order 2005 is amended as follows.

69 25In Article 2 (interpretation), in paragraph (4)(a), for head (ii) substitute—

“(ii) Chapter 2 or 3 of Part 4 of the Pension Schemes Act
(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;”.

70 (1) Article 14 (pension liberation: interpretation) is amended as follows.

(2) In paragraph (2)(a)—

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

(b) 35in head (ii), for “the applicable rules” substitute “the scheme rules”.

(3) In paragraph (3)—

(a) for sub-paragraph (a) substitute—

“(a) section 90 of the Pension Schemes Act (right to cash
equivalent under Chapter 1 of Part 4ZA of that Act)”;

(b) 40in sub-paragraph (b), for “Chapter 5 of Part IV” substitute “Chapter
2 of Part 4ZA”.

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