Pension Schemes Bill (HL Bill 63)

Great Britain

66 Restriction on transfers out of public service defined benefits schemes: Great
Britain

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

(2) 5In section 95 (ways of taking right to cash equivalent), in subsection (2), after
“occupational pension scheme” insert “that is not an unfunded public service
defined benefits scheme”.

(3) In section 95, after subsection (2) insert—

“(2A) In the case of a member of an occupational pension scheme that is an
10unfunded public service defined benefits scheme, the ways referred to
in subsection (1) are—

(a) for acquiring transfer credits allowed under the rules of another
occupational pension scheme if—

(i) the benefits that may be provided under the other
15scheme by virtue of the transfer credits are not flexible
benefits,

(ii) the trustees or managers of the other scheme are able
and willing to accept payment in respect of the
member’s transferrable rights, and

(iii) 20the other scheme satisfies requirements prescribed in
regulations made by the Secretary of State or the
Treasury;

(b) for acquiring rights allowed under the rules of a personal
pension scheme if—

(i) 25the benefits that may be provided under the personal
pension scheme by virtue of the acquired rights are not
flexible benefits,

(ii) the trustees or managers of the personal pension scheme
are able and willing to accept payment in respect of the
30member’s transferrable rights, and

(iii) the personal pension scheme satisfies requirements
prescribed in regulations made by the Secretary of State
or the Treasury;

(c) for purchasing from one or more insurers such as are
35mentioned in section 19(4)(a), chosen by the member and
willing to accept payment on account of the member from the
trustees or managers, one or more annuities which satisfy
requirements prescribed in regulations made by the Secretary
of State or the Treasury;

(d) 40for subscribing to other pension arrangements which satisfy
requirements prescribed in regulations made by the Secretary
of State or the Treasury.

(2B) The Treasury may by regulations provide for sub-paragraph (i) of
subsection (2A)(a) or (b) not to apply in prescribed circumstances or in
45relation to prescribed schemes or schemes of a prescribed description.

(2C) In subsection (2A) “unfunded public service defined benefits scheme”
means a public service pension scheme that—

(a) is a defined benefits scheme within the meaning given by
section 37 of the Public Service Pensions Act 2013, and

(b) meets some or all of its liabilities otherwise than out of a fund
accumulated for the purpose during the life of the scheme.”

(4) 5In section 95(5)(a), for “subsection (2) is” substitute “subsections (2) and (2A)
are”.

(5) In section 95(6)—

(a) after “subsections (2)” insert “, (2A)”;

(b) after “subsection (2)” insert “or (2A)”.

(6) 10In section 96 (further provisions concerning exercise of option under section
95), in subsection (2)(b), after “subsection (2)” insert “, subsection (2A)”.

(7) In section 100 (withdrawal of applications), in subsection (2), after “subsection
(2)” insert “, subsection (2A)”.

(8) The amendments made by this section have no effect in relation to an
15application made under section 95(1) of the Pension Schemes Act 1993 before
6 April 2015.

(9) Until the coming into force of the first regulations made under a provision of
section 95(2A) of the Pension Schemes Act 1993 specified in the first column of
the table, regulations made under the provision of section 95(2) of that Act
20specified in the corresponding entry in the second column apply (with any
necessary modifications) for the purposes of the provision specified in the first
column—

67 Reduction of cash equivalents: funded public service defined benefits
schemes: Great Britain

(1) 30The Pension Schemes Act 1993 is amended as follows.

(2) In section 97 (calculation of cash equivalents), in subsection (1)—

(a) after “verified” insert “—

(a)”;

(b) at the end insert “, and

(b) 35where a designation has been made under section 97A
or 97B, in accordance with regulations under section
97C.”

(3) After section 97 insert—

“97A Designation of funded public service defined benefits schemes

(1) This section applies to funded public service defined benefits schemes
other than schemes to which section 97B applies (equivalent provision
5for certain Scottish schemes).

A scheme to which this section applies is referred to below as an
“eligible scheme”.

A scheme to which this section applies is referred to below as an
“eligible scheme”.

(2) 10The relevant person may designate an eligible scheme as a scheme to
which regulations under section 97C are to apply for a specified period
of no more than 2 years.

(3) The power under subsection (2) may be exercised only if the relevant
person considers that—

(a) 15there is an increased likelihood of payments out of public funds,
or increased payments out of public funds, having to be made
into the scheme so that it can meet its liabilities, and

(b) the increased likelihood is connected with the exercise or
expected future exercise of rights to take a cash equivalent
20acquired under section 94.

(4) The power under subsection (2) may be exercised in relation to the
whole or any part of a scheme.

(5) In the application of subsection (3) to part of a scheme, paragraph (a) is
to be read as if it referred to the scheme’s liabilities relating to that part.

(6) 25A designation under subsection (2)—

(a) may be extended (on more than one occasion) for a period of no
more than 2 years;

(b) may be revoked.

(7) The relevant person must give notice in writing of a designation or its
30extension or revocation to the trustees or managers of the scheme
(except in a case where the relevant person is the trustees or managers).

(8) If the trustees or managers of an eligible scheme, or part of such a
scheme, which is not designated under this section consider that the
conditions in paragraphs (a) and (b) of subsection (3) are met in relation
35to the scheme or part they must notify—

(a) the Treasury, and

(b) (where relevant) each Minister of the Crown by whom, or with
whose approval, the scheme was established.

(9) If the trustees or managers of a scheme, or part of a scheme, which is
40designated under this section consider that the conditions in
paragraphs (a) and (b) of subsection (3) are no longer met in relation to
the scheme or part they must notify—

(a) the Treasury, and

(b) (where relevant) each Minister of the Crown by whom, or with
45whose approval, the scheme was established.

(10) In this section—

• “eligible scheme” has the meaning given by subsection (1);

Pension Schemes BillPage 33

• “funded public service defined benefits scheme” means a public
  service pension scheme that—

  (a)

  is a defined benefits scheme within the meaning given
  by section 37 of the Public Service Pensions Act 2013,
  5and

  (b)

  meets its liabilities out of a fund accumulated for the
  purpose during the life of the scheme;

• “local authority” means—

  (a)

  a county or district council in England,

  (b)

  10a county or county borough council in Wales,

  (c)

  a London borough council,

  (d)

  the Greater London Authority,

  (e)

  the Common Council of the City of London in its
  capacity as a local authority, or

  (f)

  15the Council of the Isles of Scilly;

• “payment out of public funds” means a payment provided
  directly or indirectly—

  (a)

  out of—

  (i)

  the Consolidated Fund or any other account or
  20source of money which cannot be drawn or
  spent other than by, or with the authority of, the
  Treasury, or

  (ii)

  the Welsh Consolidated Fund, or

  (b)

  by a local authority;

• 25“the relevant person” means—

  (a)

  in relation to a scheme established by virtue of
  paragraph 12 of Schedule 6 to the Constitutional Reform
  and Governance Act 2010 (or treated as so established),
  the Independent Parliamentary Standards Authority
  30and the trustees of the Parliamentary Contributory
  Pension Fund;

  (b)

  in relation to a scheme established by virtue of
  paragraph 16 of Schedule 6 to the Constitutional Reform
  and Governance Act 2010 (or treated as so established),
  35the trustees of the Parliamentary Contributory Pension
  Fund;

  (c)

  in any other case, either of the following—

  (i)

  the Treasury, or

  (ii)

  any Minister of the Crown by whom, or with
  40whose approval, the scheme was established.

(11) The Treasury may by regulations modify the definitions of “local
authority” and “the relevant person” in subsection (10).

97B Designation of funded public service defined benefits schemes:
Scotland

(1) 45This section applies to a funded public service defined benefits scheme
that is—

(a) a scheme established by, or with the approval of, the Scottish
Ministers;

(b) a scheme established by virtue of sections 73 and 74 of the
Transport Act 1962 the liabilities in respect of which were
transferred to the Scottish Transport Group by paragraph (c) of
section 28(2) of the Transport Act 1968 in so far as that
5paragraph related to liabilities regarding the securities of David
MacBrayne Limited or the Caledonian Steam Packet Company
Limited;

(c) a scheme established by virtue of paragraph 3 of Schedule 3 to
the Scottish Development Agency Act 1975;

(d) 10a scheme established by virtue of paragraph 15(2) of Schedule 1
to the Enterprise and New Towns (Scotland) Act 1990 (read
with paragraph 7 of Schedule 3 to that Act);

(e) a scheme established by virtue of section 81(4)(b) of, or
paragraph 3(4)(b) of Schedule 2 to, the Scotland Act 1998.

15A scheme to which this section applies is referred to below as an
“eligible scheme”.

(2) The relevant person may designate an eligible scheme as a scheme to
which regulations under section 97C are to apply for a specified period
of no more than 2 years.

(3) 20The power under subsection (2) may be exercised only if the relevant
person considers that—

(a) there is an increased likelihood of payments out of public funds,
or increased payments out of public funds, having to be made
into the scheme so that it can meet its liabilities, and

(b) 25the increased likelihood is connected with the exercise or
expected future exercise of rights to take a cash equivalent
acquired under section 94.

(4) The power under subsection (2) may be exercised in relation to the
whole or any part of a scheme.

(5) 30In the application of subsection (3) to part of a scheme, paragraph (a) is
to be read as if it referred to the scheme’s liabilities relating to that part.

(6) A designation under subsection (2)—

(a) may be extended (on more than one occasion) for a period of no
more than 2 years;

(b) 35may be revoked.

(7) The relevant person must give notice in writing of a designation or its
extension or revocation to the trustees or managers of the scheme
(except in a case where the relevant person is the trustees or managers).

(8) If the trustees or managers of an eligible scheme, or part of such a
40scheme, which is not designated under this section consider that the
conditions in paragraphs (a) and (b) of subsection (3) are met in relation
to the scheme or part they must notify the Scottish Ministers.

(9) If the trustees or managers of a scheme, or part of a scheme, that is
designated under this section consider that the conditions in
45paragraphs (a) and (b) of subsection (3) are no longer met in relation to
the scheme or part they must notify the Scottish Ministers.

(10) In this section—

• “eligible scheme” has the meaning given by subsection (1);

Pension Schemes BillPage 35

• “funded public service defined benefits scheme” means a public
  service pension scheme that—

  (a)

  is a defined benefits scheme within the meaning given
  by section 37 of the Public Service Pensions Act 2013,
  5and

  (b)

  meets its liabilities out of a fund accumulated for the
  purpose during the life of the scheme;

• “payment out of public funds” means a payment provided
  directly or indirectly—

  (a)

  10out of the Scottish Consolidated Fund, or

  (b)

  by a council constituted under section 2 of the Local
  Government etc. (Scotland) Act 1994;

• “the relevant person” means—

  (a)

  in relation to a scheme falling within subsection (1)(a) to
  15(d), the Scottish Ministers;

  (b)

  in relation to a scheme falling with subsection (1)(e), the
  trustees of the Scottish Parliamentary Contributory
  Pension Fund.

(11) The Scottish Ministers may by regulations modify the definition of “the
20relevant person” in subsection (10).”

(4) After section 97B (inserted by subsection (3)) insert—

“97C Reduction of cash equivalents in case of designated schemes

(1) The Treasury may by regulations provide that where, under section
95(1), a member of a designated scheme requires the trustees or
25managers to use a cash equivalent for acquiring flexible benefits under
the rules of another pension scheme the cash equivalent must be
reduced by an amount determined in accordance with the regulations.

(2) Regulations under subsection (1) may not require a reduction in cases
where a scheme ceases to be a designated scheme before the date on
30which the trustees or managers do what is needed to carry out what the
member requires.

(3) Regulations under subsection (1) may produce the result (alone or in
conjunction with regulations under section 97) that the amount by
which a cash equivalent is to be reduced is such an amount that a
35member has no right to receive anything.

(4) In subsection (1), “designated scheme” means a funded public service
defined benefits scheme, or part of such a scheme, that (on the date of
the application under section 95(1)) is designated under section 97A or
97B.”

68 40Public service defined benefits schemes: consequential amendments: Great
Britain

(1) In the Pension Schemes Act 1993, in section 182 (orders and regulations:
general provisions), after subsection (1) insert—

“(1A) Subsection (1) does not apply to the power of the Scottish Ministers to
45make regulations under section 97B(11).”

(2) In that Act, in section 185 (consultations about other regulations), after

subsection (5) insert—

“(5A) Subject to subsection (5C), before the Treasury (acting alone) make any
regulations under section 95, 97A or 97C they shall consult such
persons as they may consider appropriate.

(5B) 5Subject to subsection (5C), before the Scottish Ministers make any
regulations under section 97B(11) they shall consult such persons as
they may consider appropriate.

(5C) Subsections (5A) and (5B) do not apply to regulations in the case of
which the Treasury or (as the case may be) the Scottish Ministers
10consider consultation inexpedient because of urgency or to regulations
of the type described in subsection (2)(b) or (e).”

(3) In that Act, in section 186 (Parliamentary control of orders and regulations)—

(a) in subsection (1) (negative procedure), after “Secretary of State” insert
“or the Treasury”;

(b) 15in subsection (3) (affirmative procedure), after paragraph (e) insert “, or

(f) regulations made under section 97A(11)”;

(c) after subsection (5) insert—

“(6) Regulations made by the Scottish Ministers under section
97B(11) are subject to the affirmative procedure (see Part 2 of the
20Interpretation and Legislative Reform (Scotland) Act 2010 (asp
10)).”

(4) In the Pensions Act 2004, in section 18 (pension liberation: interpretation), in
subsection (4)(a) (meaning of “authorised way”), omit “subsection (2) or, as the
case may be, subsection (3) of”.

(5) 25The consultation requirement in section 185(5A) of the Pension Schemes Act
1993 (inserted by subsection (2)) may be satisfied by things done before the day
on which this Act is passed.

Northern Ireland

69 Restriction on transfers out of public service defined benefits schemes:
30Northern Ireland

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

(2) In section 91(2), after “occupational pension scheme” insert “that is not an
unfunded public service defined benefits scheme”.

(3) In section 91, after subsection (2) insert—

“(2A) 35In the case of a member of an occupational pension scheme that is an
unfunded public service defined benefits scheme, the ways referred to
in subsection (1) are—

(a) for acquiring transfer credits allowed under the rules of another
occupational pension scheme if—

(i) 40the benefits that may be provided under the other
scheme by virtue of the transfer credits are not flexible
benefits,

(ii) the trustees or managers of the other scheme are able
and willing to accept payment in respect of the
member’s transferrable rights, and

(iii) the other scheme satisfies requirements prescribed in
5regulations made by the Department or the Department
of Finance and Personnel;

(b) for acquiring rights allowed under the rules of a personal
pension scheme if—

(i) the benefits that may be provided under the personal
10pension scheme by virtue of the acquired rights are not
flexible benefits,

(ii) the trustees or managers of the personal pension scheme
are able and willing to accept payment in respect of the
member’s transferrable rights, and

(iii) 15the personal pension scheme satisfies requirements
prescribed in regulations made by the Department or
the Department of Finance and Personnel;

(c) for purchasing from one or more insurers such as are
mentioned in section 15(4)(a), chosen by the member and
20willing to accept payment on account of the member from the
trustees or managers, one or more annuities which satisfy
requirements prescribed in regulations made by the
Department or the Department of Finance and Personnel;

(d) for subscribing to other pension arrangements which satisfy
25requirements prescribed in regulations made by the
Department or the Department of Finance and Personnel.

(2B) The Department of Finance and Personnel may by regulations provide
for sub-paragraph (i) of subsection (2A)(a) or (b) not to apply in
specified circumstances or in relation to specified schemes or schemes
30of a specified description.

(2C) In subsection (2A) “unfunded public service defined benefits scheme”
means a public service pension scheme that—

(a) is a defined benefits scheme within the meaning given by
section 34 of the Public Service Pensions Act (Northern Ireland)
352014, and

(b) meets some or all of its liabilities otherwise than out of a fund
accumulated for the purpose during the life of the scheme.”

(4) In section 91(5)(a), for “subsection (2) is” substitute “subsections (2) and (2A)
are”.

(5) 40In section 91(6)—

(a) after “subsections (2)” insert “, (2A)”;

(b) after “subsection (2)” insert “or (2A)”.

(6) In section 92 (further provisions concerning exercise of option under section
91), in subsection (2)(b), after “subsection (2)” insert “, subsection (2A)”.

(7) 45In section 96 (withdrawal of applications), in subsection (2), after “subsection
(2)” insert “, subsection (2A)”.

(8) The amendments made by this section have no effect in relation to an
application made under section 91 of the Pension Schemes (Northern Ireland)
Act 1993 before 6 April 2015.

(9) Until the coming into force of the first regulations made under a provision of
section 91(2A) of the Pension Schemes (Northern Ireland) Act 1993 specified in
the first column of the table, regulations made under the provision of section
91(2) of that Act specified in the corresponding entry in the second column
5apply (with any necessary modifications) for the purposes of the provision
specified in the first column—

70 Reduction of cash equivalents: funded public service defined benefits
schemes: Northern Ireland

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

(2) 15In section 93 (calculation of cash equivalents), in subsection (1)—

(a) after “verified” insert “—

(a)”;

(b) at the end insert “, and

(b) where a designation has been made under section 93A,
20in accordance with regulations under section 93B.”

(3) After section 93 insert—

“93A Designation of funded public service defined benefits schemes

(1) The relevant Department may designate a funded public service
defined benefits scheme as a scheme to which regulations under section
2593B are to apply for a specified period of no more than 2 years.

(2) The power under subsection (1) may be exercised only if the relevant
Department considers that—

(a) there is an increased likelihood of payments out of public funds,
or increased payments out of public funds, having to be made
30into the scheme so that it can meet its liabilities, and

(b) the increased likelihood is connected with the exercise or
expected future exercise of rights to take a cash equivalent
acquired under section 90.

(3) The power under subsection (1) may be exercised in relation to the
35whole or any part of a scheme.

(4) In the application of subsection (2) to part of a scheme, paragraph (a) is
to be read as if it referred to the scheme’s liabilities relating to that part.

(5) A designation under subsection (1)—

(a) may be extended (on more than one occasion) for a period of no
40more than 2 years;

(b) may be revoked.

(6) The relevant Department must give notice in writing of a designation
or its extension or revocation to the trustees or managers of the scheme
(except in a case where the relevant Department is the trustees or
5managers).

(7) If the trustees or managers of a funded public service defined benefits
scheme, or part of such a scheme, that is not designated under this
section consider that the conditions in paragraphs (a) and (b) of
subsection (2) are met in relation to the scheme or part they must
10notify—

(a) the Department of Finance and Personnel, and

(b) (where relevant) each Northern Ireland department by whom,
or with whose approval, the scheme was established.

(8) If the trustees or managers of a scheme, or part of a scheme, that is
15designated under this section consider that the conditions in
paragraphs (a) and (b) of subsection (2) are no longer met in relation to
the scheme or part they must notify—

(a) the Department of Finance and Personnel, and

(b) (where relevant) each Northern Ireland department by whom,
20or with whose approval, the scheme was established.

(9) In this section—

• “funded public service defined benefits scheme” means a public
  service pension scheme that—

  (a)

  is a defined benefits scheme within the meaning given
  25by section 34 of the Public Service Pensions Act
  (Northern Ireland) 2014, and

  (b)

  meets its liabilities out of a fund accumulated for the
  purpose during the life of the scheme;

• “local authority” means a district council constituted under
  30section 1 of the Local Government Act (Northern Ireland) 1972;

• “payment out of public funds” means a payment provided
  directly or indirectly—

  (a)

  out of the Northern Ireland Consolidated Fund;

  (b)

  by a local authority;

• 35“the relevant Department”, in relation to a funded public service
  defined benefits scheme, means either of the following—

  (a)

  the Department of Finance and Personnel, or

  (b)

  any Northern Ireland department by whom, or with
  whose approval, the scheme was established.

(10) 40The Department of Finance and Personnel may by regulations make
modifications of the definition of “the relevant Department” in
subsection (9).”

(4) After section 93A (inserted by subsection (3)) insert—

“93B Reduction of cash equivalents in case of section 93A designated
45schemes

(1) The Department of Finance and Personnel may by regulations provide
that where, under section 91(1), a member of a designated scheme