Pension Schemes Bill (HL Bill 79)

(3) After paragraph (2) insert—

“(2A) Benefits in the form of a lump sum may be paid to or in respect of a
member under the scheme rules during the assessment period only in
the circumstances in which, and to the extent to which, lump sum
5compensation would be payable to or in respect of the member in
accordance with this Chapter if—

(a) the Board assumed responsibility for the scheme in accordance
with this Chapter, and

(b) the assessment date referred to in Schedule 6 were the date on
10which the assessment period began.”

(4) In paragraph (3), omit “But”.

(5) In paragraph (5), for “paragraph (2)” substitute “paragraphs (2) and (2A)”.

(6) In paragraph (6), for “paragraph (3)” substitute “paragraphs (2A) and (3)”.

(7) In paragraph (7), after “Paragraphs (2),” insert “(2A),”.

(8) 15In paragraph (8), after “paragraphs (2)” insert “, (2A)”.

(9) In paragraph (9), for “paragraphs (2) and (3)” substitute “paragraphs (2) to (3)”.

(10) After paragraph (9) insert—

“(9A) Regulations may make provision as to circumstances in which benefits
in the form of a lump sum are to be treated for the purposes of
20paragraph (2A) as being paid in the circumstances in which lump sum
compensation would be payable in accordance with this Chapter.

(9B) Regulations may create exceptions to paragraph (2A).”

(11) In paragraph (12), for “paragraph (2)” substitute “paragraphs (2) and (2A)”.

(12) In paragraph (13), after “paragraph (2)” insert “, (2A)”.

66 25Sections 61 to 63: consequential amendments

(1) In section 97AI of the Pension Schemes (Northern Ireland) Act 1993 (early
leavers: cash transfer sums and contribution refunds - further provisions), in
subsection (7)—

(a) in paragraph (a), after sub-paragraph (vii) insert—

“(viii) 30section 61 of the Pension Schemes Act 2015;

(ix) regulations made under section 62 or 63 of the
Pension Schemes Act 2015;”;

(b) in paragraph (b), after sub-paragraph (v) insert—

“(vi) section 61(3) of the Pension Schemes Act 2015;

(vii) 35regulations made under section 62(4) or 63(4) of
the Pension Schemes Act 2015.”

(2) In Article 67A of the Pensions (Northern Ireland) Order 1995 (S.I. 1995/3213S.I. 1995/3213
(N.I. 22)) (the subsisting rights provisions: interpretation), in paragraph (9)—

(a) in sub-paragraph (a), after head (vii) insert—

“(viii) 40section 61 of the Pension Schemes Act 2015;

(ix) regulations made under section 62 or 63 of the
Pension Schemes Act 2015;”;

(b) in sub-paragraph (b), after head (v) insert—

“(vi) section 61(3) of the Pension Schemes Act 2015;

(vii) regulations made under section 62(4) or 63(4) of
the Pension Schemes Act 2015.”

(3) 5In Article 2 of the Pensions (Northern Ireland) Order 2005 (S.I. 2005/255S.I. 2005/255
(N.I. 1)) (interpretation), in paragraph (4)—

(a) in sub-paragraph (a), after head (vii) insert—

“(viii) section 61 of the Pension Schemes Act 2015;

(ix) regulations made under section 62 or 63 of the
10Pension Schemes Act 2015;”;

(b) in sub-paragraph (b), after head (v) insert—

“(vi) section 61(3) of the Pension Schemes Act 2015;

(vii) regulations made under section 62(4) or 63(4) of
the Pension Schemes Act 2015.”

CHAPTER 4 15Transfers

Rights to transfer benefits

67 Rights to transfer benefits

Schedule 4 contains amendments that confer new statutory rights to transfer
benefits.

20Great Britain

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

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

(2) In section 95 (ways of taking right to cash equivalent), in subsection (2), after
25“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
unfunded public service defined benefits scheme, the ways referred to
30in 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
scheme by virtue of the transfer credits are not flexible
35benefits,

(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
regulations made by the Secretary of State or the
Treasury;

(b) for acquiring rights allowed under the rules of a personal
5pension scheme if—

(i) the 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
10are able and willing to accept payment in respect of the
member’s transferrable rights, and

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

(c) 15for purchasing from one or more insurers such as are
mentioned 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
20of State or the Treasury;

(d) for 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
25subsection (2A)(a) or (b) not to apply in prescribed circumstances or in
relation to prescribed schemes or schemes of a prescribed description.

(2C) In subsections (2) and (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
30section 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) After section 95(5) insert—

“(5A) Except in such circumstances as may be prescribed in regulations made
35by the Secretary of State or the Treasury, subsection (2A) is to be
construed as if paragraph (d) were omitted.”

(5) In section 95(6)—

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

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

(6) 40In 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
45application 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
the Pension Schemes Act 1993 specified in the first column of the table,
regulations made under the provision of that Act specified in the
corresponding entry in the second column apply (with any necessary
5modifications) for the purposes of the provision specified in the first column—

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

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

(2) 15In section 97 (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 97A
20or 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
25other than schemes to which section 97B applies (equivalent provision
for certain Scottish schemes).

A 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
30which 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) there is an increased likelihood of payments out of public funds,
35or 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
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) 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) 5A 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
10extension 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
15to 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
20designated 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
25whose approval, the scheme was established.

(10) In this section—

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

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

  (a)

  30is a defined benefits scheme within the meaning given
  by section 37 of the Public Service Pensions Act 2013,
  and

  (b)

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

• 35“local authority” means—

  (a)

  a county or district council in England,

  (b)

  a county or county borough council in Wales,

  (c)

  a London borough council,

  (d)

  the Greater London Authority,

  (e)

  40the Common Council of the City of London in its
  capacity as a local authority, or

  (f)

  the Council of the Isles of Scilly;

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

  (a)

  45out of—

  (i)

  the Consolidated Fund or any other account or
  source of money which cannot be drawn or

  Pension Schemes BillPage 35

  spent other than by, or with the authority of, the
  Treasury, or

  (ii)

  the Welsh Consolidated Fund, or

  (b)

  by a local authority;

• 5“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
  10and 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),
  15the 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
  20whose 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) 25This 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 section 81(4)(b) of the Scotland
30Act 1998.

A 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
35of no more than 2 years.

(3) The 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
40into 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 94.

(4) The power under subsection (2) may be exercised in relation to the
45whole 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) A 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
5extension 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
10to 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
paragraphs (a) and (b) of subsection (3) are no longer met in relation to
the scheme or part they must notify the Scottish Ministers.

(10) 15In this section—

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

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

  (a)

  is a defined benefits scheme within the meaning given
  20by section 37 of the Public Service Pensions Act 2013,
  and

  (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
  25directly or indirectly—

  (a)

  out 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)

  30in relation to a scheme falling within subsection (1)(a),
  the Scottish Ministers;

  (b)

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

(11) 35The Scottish Ministers may by regulations modify the definition of “the
relevant 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
4095(1), a member of a designated scheme requires the trustees or
managers to use a cash equivalent for acquiring a right or entitlement
to 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) 45Regulations under subsection (1) may not require a reduction in cases
where a scheme ceases to be a designated scheme before the date on

which 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
5which a cash equivalent is to be reduced is such an amount that a
member 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
1097B.”

70 Sections 68 and 69: consequential amendments

(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
15make 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
20persons as they may consider appropriate.

(5B) Subject 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
25which the Treasury or (as the case may be) the Scottish Ministers
consider 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
30“or the Treasury”;

(b) in 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
3597B(11) are subject to the affirmative procedure (see Part 2 of the
Interpretation 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
40case may be, subsection (3) of”.

(5) The 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

71 Restriction on transfers out of unfunded public service defined benefits
schemes: Northern Ireland

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

(2) 5In 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) In the case of a member of an occupational pension scheme that is an
unfunded public service defined benefits scheme, the ways referred to
10in 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
scheme by virtue of the transfer credits are not flexible
15benefits,

(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
20regulations 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
25pension 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) 30the 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
35willing 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
40requirements 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
45of a specified description.

(2C) In subsections (2) and (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)
2014, and

(b) meets some or all of its liabilities otherwise than out of a fund
5accumulated for the purpose during the life of the scheme.”

(4) After section 91(5) insert—

“(5A) Except in such circumstances as may be prescribed in regulations made
by the Department or the Department of Finance and Personnel,
subsection (2A) is to be construed as if paragraph (d) were omitted.”

(5) 10In 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) 15In 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) 20Until the coming into force of the first regulations made under a provision of
the Pension Schemes (Northern Ireland) Act 1993 specified in the first column
of the table, regulations made under the provision of that Act specified in the
corresponding entry in the second column apply (with any necessary
modifications) for the purposes of the provision specified in the first column—

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

(a) 35after “verified” insert “—

(a)”;

(b) at the end insert “, and

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