Pension Schemes Bill (HL Bill 90)

(b) in sub-paragraph (1)(a), after “functions” insert “, other than its
excepted functions,”;

(c) in sub-paragraph (2)(a), after “(ca)” insert “but not its excepted
functions”;

(d) 5after sub-paragraph (2) insert—

“(2ZA) The “excepted functions” of the FCA are—

(a) its functions under sections 333E to 333Q, and

(b) its functions under section 333R so far as relating to
the collection of payments.”

17 10In section 85 of the Financial Services Act 2012 (relevant functions in relation
to scheme for investigating complaints against FCA and other regulators), in
subsection (4) (legislative functions of the FCA that are excluded)—

(a) in paragraph (c)(i), for “or 312J” substitute “, 312J or 333K”;

(b) in paragraph (e), after “139B(5)” insert “or 333P(9)”;

(c) 15after paragraph (e) insert—

“(f) setting standards under section 333H of FSMA 2000.”

18 (1) For the purpose of the exercise of a function conferred by a provision listed
in the first column of the table, a consultation requirement listed in the
corresponding entry in the second column may be satisfied by things done
20before the day on which this Act is passed.

(2) Where before the day on which this Act is passed the Financial Conduct
40Authority publishes a draft of proposed standards for the giving of pensions
guidance by designated guidance providers—

(a) the consultation requirement in section 138I of FSMA may be treated
as satisfied by virtue of sub-paragraph (1) even if the draft is not
accompanied by—

(i) a cost benefit analysis, or

(ii) 5an explanation of the Financial Conduct Authority’s reasons
for believing that setting the proposed standards would
secure an appropriate degree of protection for recipients of
pensions guidance from designated guidance providers, and

(b) if it is, any resulting standards published under section 138G(4) of
10FSMA must be accompanied by—

(i) a cost benefit analysis within the meaning of section 138I of
that Act even if the conditions in subsection (5) of section 138I
are not satisfied, and

(ii) an explanation of the Financial Conduct Authority’s reasons
15for believing that setting the standards will secure an
appropriate degree of protection for recipients of pensions
guidance from designated guidance providers.

(3) References in sub-paragraph (2) to provisions of sections 138G and 138I of
FSMA are to those provisions as applied with modifications by section
20333H(6) of that Act.

(4) Where before the day on which this Act is passed the Financial Conduct
Authority publishes a draft of proposed rules requiring information about
the availability of pensions guidance to be given by the trustees or managers
of a relevant pension scheme to members of the scheme, and survivors of
25members of the scheme, with subsisting rights in respect of any flexible
benefits, the consultation requirement in section 137FB(2) of FSMA may be
treated as satisfied by virtue of sub-paragraph (1) even if the only
consultation before publication was with the Treasury.

(5) In this paragraph—

• 30“consultation requirement” includes—

  (a)

  a requirement to publish a draft;

  (b)

  a requirement under section 333E(2)(b) or (c) of FSMA;

• “FSMA” means the Financial Services and Markets Act 2000.

19 Expenses incurred by the Financial Conduct Authority before the day on
35which this Act is passed in anticipation of the conferral of functions on it by
virtue of the amendments made by this Schedule are to be treated as if they
had been incurred on or after that day.

Section 67

SCHEDULE 4 Rights to transfer benefits

Part 1 Great Britain amendments

5Judicial Pensions Act 1981 (c. 20)Judicial Pensions Act 1981 (c. 20)

1 In Schedule 1A to the Judicial Pensions Act 1981 (transfer of accrued
benefits), in paragraph 3, for “Chapter IV of Part IV of the Pension Schemes
Act 1993” substitute “Chapter 1 of Part 4ZA of the Pension Schemes Act
1993”.

10Judicial Pensions and Retirement Act 1993 (c. 8)Judicial Pensions and Retirement Act 1993 (c. 8)

2 In Schedule 2 to the Judicial Pensions and Retirement Act 1993 (transfer of
accrued benefits), in paragraph 3, for “Chapter IV of Part IV of the Pension
Schemes Act 1993” substitute “Chapter 1 of Part 4ZA of the Pension Schemes
Act 1993”.

15Pension Schemes Act 1993 (c. 48)Pension Schemes Act 1993 (c. 48)

3 The Pension Schemes Act 1993 is amended as follows.

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

(2) Accordingly—

(a) 20before section 93 (and before the Chapter heading above it) insert—

“Part 4ZA

Transfers and contribution refunds”;

(b) for the Chapter heading above section 93 substitute—

“Chapter 1

Transfer rights: general”;

(c) for the Chapter heading above section 101AA substitute—

“Chapter 2

Early leavers: cash transfer sums and contribution refunds”.

5 In section 24F (transfers out of GMP-converted schemes), in subsection (3),
omit “guaranteed”.

6 25Until the coming into force of its repeal by Schedule 13 to the Pensions Act
2014, section 56 of the Pension Schemes Act 1993 (payment of state scheme
premiums on termination of certified status: supplementary) has effect as if,
in subsection (4)(b), for “Chapter 5 of Part 4” there were substituted
“Chapter 2 of Part 4ZA”.

7 In section 73 (form of short service benefit and its alternatives), in subsection
(3), for “Chapter IV of this Part” substitute “Chapter 1 of Part 4ZA”.

8 For sections 93 to 94 substitute—

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

(c) modify the application of this Chapter in relation to a
10member who has accrued rights to benefits of a prescribed
description.

(11) In the following provisions of this Chapter—

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

(b) 15a 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.

93A Right to statement of entitlement: benefits other than money purchase

(1) The trustees or managers of a pension scheme must, on the
20application 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) In the case of a member with transferrable rights in relation to two
categories of benefits other than money purchase benefits, the
25application 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
entitlement” is a written statement of the amount of the cash
equivalent at the guarantee date of the transferrable rights to which
30the 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) within the prescribed period beginning with the date of the
application, and

(b) 35within 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
this section and may, in particular, restrict the making of successive
applications.

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

94 Right to cash equivalent

(1) 45A member of a pension scheme who has received a statement of
entitlement under section 93A 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.”

9 (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) 20After subsection (6) insert—

“(6A) Regulations may extend the period specified in subsection (1A)(a) in
prescribed circumstances.”

(5) Omit subsections (7) and (8).

10 (1) Section 96 (further provisions concerning exercise of option under section
2595) is amended as follows.

(2) For subsection (1) substitute—

“(1) A member who has acquired a right to take a cash equivalent under
section 94(1) or (2) may exercise the option conferred by section 95(1)
in relation to different portions of that cash equivalent in different
30ways, 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
balance mentioned in subsection (3).”

(3) In subsection (2), in paragraphs (a) and (b), for each “accrued rights”
35substitute “transferrable rights”.

(4) 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) 40is 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
45under 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.”

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

(2) After subsection (1) insert—

“(1A) 5Where 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) In subsection (2)—

(a) in paragraph (a), in the opening words, for “except guaranteed cash
10equivalents” 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) In subsection (3), omit paragraph (a).

(5) For subsection (3A) substitute—

“(3A) 15For 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
the purposes of the relevant statement of entitlement under
section 93A, and

(b) 20in 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.

(3B) Where regulations under subsection (2)(b) provide for the cash
equivalent shown in a statement of entitlement to be increased or
25reduced after the member has made an application under section 95,
the regulations may provide for the application under section 95 to
lapse (but this does not prevent the member making a fresh
application in respect of the increased or reduced cash equivalent).”

12 For section 98 substitute—

“98 30Loss 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 required by
section 95(1A) or (6A).

(2) 35A member of a pension scheme loses the right to take a cash
equivalent in accordance with this Chapter if, after the member
makes an application under section 95, the duty of the trustees or
managers to do what is needed to carry out what the member
requires is extinguished by section 99(2A).

(3) 40Nothing in subsection (1) or (2) prevents the member from later
acquiring a new right to take a cash equivalent in relation to the same
benefits.

(4) A member of a pension scheme loses the right to take a cash
equivalent in accordance with this Chapter if the scheme is wound
45up.”

13 (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
5must 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) 10in 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 period of 12
months beginning with the termination date”.

(4) 15Omit subsection (3A).

(5) After subsection (4A) insert—

“(4B) Regulations may extend the period for compliance under subsection
(2) or (3) in prescribed circumstances.”

14 After section 100 insert—

“100A 20 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) preventing a member from exercising a right under this
Chapter in relation to a category of benefits without also
25exercising a right under this Chapter or otherwise to require
a 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
30rights 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 a pension
scheme, are references to—

(a) the rules of the scheme, except so far as overridden by a
35relevant legislative provision,

(b) the relevant legislative provisions, to the extent that they
have 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
40but 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) “relevant legislative provision” means any provision
contained in any of the following provisions—

(i) 45Schedule 5 to the Social Security Act 1989;

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

(iii) this Part of this Act or regulations made under this
Part;

(iv) 5Part 4A of this Act or regulations made under that
Part;

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

(vi) Part 1 of the Pensions Act 1995 or subordinate
legislation made or having effect as if made under
10that Part;

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

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

(ix) 15regulations made under Schedule 17 to the Pensions
Act 2014;

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

(xi) regulations made under Part 2 of the Pension
20Schemes Act 2015;

(xii) section 55 of the Pension Schemes Act 2015;

(xiii) regulations made under section 56 or 57 of the
Pension Schemes Act 2015;

(b) a relevant legislative provision is to be taken to override any
25of 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) 30section 117(1) of the Pensions Act 1995;

(iv) section 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
35to the Pensions Act 2014;

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

(viii) regulations made under section 34 of the Pension
Schemes Act 2015;

(ix) 40section 55(3) of the Pension Schemes Act 2015;

(x) regulations made under section 56(4) or 57(4) of the
Pension Schemes Act 2015.

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

(1) In this Chapter “normal pension age”, in relation to a category of
45benefits 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
entitled to receive the guaranteed minimum pension on

retirement from any employment to which the scheme
applies,

(b) in any other case where the scheme is an occupational
pension scheme and the scheme provides for the member to
5become 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) in a case not falling within paragraph (a) or (b), normal
10minimum 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.

100D 15Interpretation 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;

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

• “flexible benefit” has the meaning given by section 74 of the
  Pension Schemes Act 2015;

• “guarantee date”, in relation to a member who has received a
  25statement of entitlement, has the meaning given by section
  93A;

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

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

• “pension credit rights”, in relation to a member of a pension
  30scheme, 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
  35benefits that may be provided are money purchase
  benefits, and

  (b)

  the scheme does not fall within a prescribed class;

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

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

• “transferrable rights” is to be read in accordance with section
  93(11).”

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

(2) 45In subsection (1), for “pension credit benefit” substitute “pension credit
rights”.