Pension Schemes (Conversion of Guaranteed Minimum Pensions) Bill

Explanatory Notes

Commentary on provisions of Bill

Clause 1: Conversion of Guaranteed Minimum Pension

19 Subsections (1) to (9) of this clause amend the provisions of the Pension Schemes Act 1993 which allow pension schemes to convert GMP benefits into other scheme benefits.

20 Subsection (2) amends the definition of "GMP conversion" to clarify that it applies to the conversion of GMP benefits due to either (i) the earner who was alive immediately before the conversion date or (ii) a person who, immediately before the conversion date, was the widow, widower or surviving civil partner of the earner. The amendments in subsection 3(b) and (d) are consequential on this amendment.

21 Subsection (3)(a) ensures that any money purchase benefits accrued as a part of the pension benefits are not included in the actuarial calculation to convert GMP benefits into other benefits.

22 Subsections 3(c) and (4) remove the detailed requirements in section 24D of the Pension Schemes Act 1993 regarding survivors’ benefits that must be provided by a converted scheme and instead provide a power to prescribe in regulations the conditions which must be met in relation to survivors’ benefits that must be provided by a converted scheme.

23 Subsection (5) amends section 24E of the Pension Schemes Act 1993. Section 24E requires that the consent of the employer in relation to a scheme must be obtained before the scheme can undertake the GMP conversion process. The amendment replaces this requirement with a power to prescribe in regulations conditions that must be met by a person, if any, who must consent before conversion can take place. Subsection (5) also removes the requirement in section 24E for HMRC to be notified of a conversion.

24 The amendments in subsections (6) to (9) and (11) and (12) are consequential on the amendments referred to above.

25 Subsection (10) amends section 14 of the Pensions Act 2007 (conversion of GMPs) in consequence of the amendments referred to above.

Clause 2: Conversion of Guaranteed Minimum Pensions: Northern Ireland

26 Clause 2 makes mirroring provision to clause 1 in respect of the Pension Schemes (Northern Ireland) Act 1993 and the Pensions Act (Northern Ireland) 2008.

27 Subsections (1) to (9) of this clause amend the provisions of the Pension Schemes (Northern Ireland) Act 1993 which allow pension schemes to convert GMP benefits into other scheme benefits.

28 Section (2) amends the definition of "GMP conversion" to clarify that it applies to the conversion of GMP benefits due to either (i) the earner who was alive immediately before the conversion date or (ii) a person who, immediately before the conversion date, was the widow, widower or surviving civil partner of the earner. The amendments in subsection (3)(b) and (d) are consequential on this amendment.

29 Subsection (3)(a) ensures that any money purchase benefits accrued as a part of the pension benefits are not included in the actuarial calculation to convert GMP benefits into other benefits.

30 Subsections 3(c) and (4) remove the detailed requirements in section 20B of the Pension Schemes (Northern Ireland) Act 1993 regarding survivors’ benefits that must be provided by a converted scheme and instead provide a power to prescribe in regulations the conditions which must be met in relation to the survivors’ benefits that must be provided by a converted scheme.

31 Subsection (5) amends section 20E of the Pension Schemes (Northern Ireland) Act 1993. Section 20E requires that the consent of the employer in relation to a scheme must be obtained before the scheme can undertake the GMP conversion process. The amendment replaces this requirement with a power to prescribe in regulations conditions that must be met by a person, if any, who must consent before conversion can take place. Subsection (5) also removes the requirement in section 20E for HMRC to be notified of a conversion.

32 The amendments in subsections (6) to (9) are consequential on the amendments referred to above.

33 Subsection (10) amends section 12 of the Pensions Act (Northern Ireland) 2008 (conversion of GMPs) in consequence of the amendments referred to above.

Clause 3: Extent, commencement and short title

34 Clause 3 sets out the extent of the Bill, and makes provision for the coming into force of the Bill.

35 Subsection (1) provides that clause 1 of the Bill extends to England, Wales and Scotland only.

36 Subsection (2) provides that clause 2 of the Bill extends to Northern Ireland only.

37 Subsection provides that clause 3 of the Bill comes into force on Royal Assent, together with the provisions in clauses 1 and 2 in as far as they make provision for the purposes of making regulations under the Pension Schemes Act 1993 and the Pension Schemes (Northern Ireland) Act 1993.

38 Subsection (5) provides a power for the Secretary of State to appoint in regulations the commencement date or dates of clause 1 for all other purposes.

39 Subsection (6) provides a power for the Department for Communities in Northern Ireland to appoint by order the commencement date or dates of clause 2 for all other purposes.

40 Subsection (7) provides a power for the Secretary of State to prescribe in regulations any savings or transitional provisions in connection with the coming into force of clause 1, for example to provide for schemes which are in the process of carrying out a GMP conversion exercise when clause 1 comes into effect.

41 Subsection (8) provides a power for the Department for Communities in Northern Ireland to appoint by order any savings or transitional provisions in connection with the coming into force of clause 2, for example to provide for schemes which are in the process of carrying out a GMP conversion exercise when clause 2 comes into effect.

42 Subsection (11) states that the Bill may be cited as the Pension Schemes (Conversion of Guaranteed Minimum Pensions) Act 2022.

 

10 March 2022