5. MECHANICS—CLAUSES
15, 16, 19-21, 26
5.1 Charges
Generally, we would make the point that pension
sharing needs to be as simple as possible so as to minimise charges.
We would foresee substantial start-up costs, which schemes may
feel unable to pass on to members.
It seems that the member's share of any charges
can only be deducted from money purchase rights in the scheme
or a transfer payment or benefit payment made out of the scheme.
It seems that any final salary rights of a member cannot be adjusted
to take account of the charge. We welcome the ability to add interest,
if the scheme has to wait until benefits become payable to the
member.
The spouse's share of the charge can however
be deducted from the pension credit.
We note also that the charge can cover the administrative
expenses of the initial transfer of value, plus any likely record-keeping
or disclosure expenses in relation to the spouse.
We also note the ability to deduct charges from
payments to the spouse, once any internal membership benefits
become payable. Presumably notice need only be given once, rather
than each time a payment is made.
5.2 Alienation
In Clause 19(1), we note that the relevant provisions
do not apply in relation to the court order, whereas in s.166
of the PA 1995 the same provisions are expressed not to apply
to "a court exercising its powers"—it does not
seem that anything turns on this but we wondered why the distinction
was made. We welcome the wording in Clause 19(2), and wonder whether
the same wording should be added to s.166 of the 1995 Act.
5.3 Interpretation
In Clause 21(2), it needs to be clear that the
person responsible for an insured occupational pension scheme
means the trustees if there are any, and not the insurance company.
This is achieved if "trustees or managers" has the meaning
given by s.124 of the PA 1995. We are not clear whether that definition
is imported into this Bill.
For consistency, the definition of "pensionable
service" should reflect the definition contained in the PSA
and include the wording in Clause 70(3) which is also contained
in s.124(3) PA 1995.
A general point, but where definitions are contained
in particular sections, such as "valuation date" in
Clause 4(6), could these terms be swept up in an interpretation
clause at the end, perhaps Clause 21, so that the reader is directed
to the place where the definition occurs? If a term is used in
two different sections with different meanings, there could still
be a cross reference to both those sections as appropriate. If
there could be one interpretation clause at the end of the Bill
rather than two separate ones, that would also be helpful.
5.4 Making regulations
We note the very broad provisions of Clause
26(4), which enable regulations to include such incidental, supplementary,
consequential or transitional provisions as are "expedient".
Does this enable regulations to extend to areas where they are
not specifically provided for, such as the application of pension
debits under Clause 6?
5.5 Bankruptcy
There is some uncertainty over the status of
rights under occupational pension schemes and other types of pension
arrangement where the member is declared bankrupt. Presumably
the member's bankruptcy would not affect the pension credits of
the former spouse, provided that the pension sharing order had
actually been implemented. We would welcome any clarification
of this point that you might be able to include in the legislation.
