Welfare Reform and Pensions Bill

Welfare Reform and Pensions Bill - continued	House of Commons
PART IV, PENSION SHARING - continued

back to previous text

Pension debits

Reduction of benefit.

23. - (1) Subject to subsection (2), where a person's shareable rights under a pension arrangement are subject to a pension debit, each benefit or future benefit-

(a) to which he is entitled under the arrangement by virtue of those rights, and

(b) which is a qualifying benefit,

is reduced by the appropriate percentage.

(2) Where a pension debit relates to the shareable rights under an occupational pension scheme of a person who is in pensionable service under the scheme on the transfer day, each benefit or future benefit-

(a) to which the person is entitled under the scheme by virtue of those rights, and

(b) which corresponds to a qualifying benefit,

is reduced by an amount equal to the appropriate percentage of the corresponding qualifying benefit.

(3) A benefit is a qualifying benefit for the purposes of subsections (1) and (2) if the cash equivalent by reference to which the amount of the pension debit is determined includes an amount in respect of it.

(4) The provisions of this section override any provision of a pension arrangement to which they apply to the extent that the provision conflicts with them.

(5) In this section-

"appropriate percentage", in relation to a pension debit, means-

(a) if the relevant order or provision specifies the percentage value to be transferred, that percentage;

(b) if the relevant order or provision specifies an amount to be transferred, the percentage which the appropriate amount for the purposes of subsection (1) of section 21 represents of the amount mentioned in subsection (3)(b) of that section;

"relevant order or provision", in relation to a pension debit, means the pension sharing order or provision on which the debit depends;

"transfer day", in relation to a pension debit, means the day on which the relevant order or provision takes effect.

Effect on contracted-out rights.

24. - (1) The Pension Schemes Act 1993 shall be amended as follows.

(2) In section 10 (protected rights), in subsection (1), for "subsections (2) and (3)" there shall be substituted "the following provisions of this section", and at the end there shall be added-

	"(4) Where, in the case of a scheme which makes such provision as is mentioned in subsection (2) or (3), a member's rights under the scheme become subject to a pension debit, his protected rights shall exclude the appropriate percentage of the rights which were his protected rights immediately before the day on which the pension debit arose.
	(5) For the purposes of subsection (4), the appropriate percentage is-
	(a) if the order or provision on which the pension debit depends specifies the percentage value to be transferred, that percentage;
	(b) if the order or provision on which the pension debit depends specifies an amount to be transferred, the percentage which the appropriate amount for the purposes of subsection (1) of section 21 of the Welfare Reform and Pensions Act 1999 (lesser of specified amount and cash equivalent of transferor's benefits) represents of the amount mentioned in subsection (3)(b) of that section (cash equivalent of transferor's benefits)."

(3) After section 15 there shall be inserted-

"Reduction of guaranteed minimum in consequence of pension debit.	15A. - (1) Where-
	(a) an earner has a guaranteed minimum in relation to the pension provided by a scheme, and
	(b) his rights under the scheme become subject to a pension debit,
	his guaranteed minimum in relation to the scheme shall be reduced by the appropriate percentage.
	(2) For the purposes of subsection (1), the appropriate percentage is-
	(a) if the order or provision on which the pension debit depends specifies the percentage value to be transferred, that percentage;
	(b) if the order or provision on which the pension debit depends specifies an amount to be transferred, the percentage which the appropriate amount for the purposes of subsection (1) of section 21 of the Welfare Reform and Pensions Act 1999 (lesser of specified amount and cash equivalent of transferor's benefits) represents of the amount mentioned in subsection (3)(b) of that section (cash equivalent of transferor's benefits)."

(4) In section 47 (entitlement to guaranteed minimum pensions for the purposes of the relationship with social security benefits), at the end there shall be added-

"(6) For the purposes of section 46, a person shall be treated as entitled to any guaranteed minimum pension to which he would have been entitled but for any reduction under section 15A."

(5) In section 181(1), there shall be inserted at the appropriate place-

""pension debit" means a debit under section 21(1)(a) of the Welfare Reform and Pensions Act 1999;".

Pension credits

Time for discharge of liability.

25. - (1) A person subject to liability in respect of a pension credit shall discharge his liability before the end of the implementation period for the credit.

(2) Where the trustees or managers of an occupational pension scheme have not done what is required to discharge their liability in respect of a pension credit before the end of the implementation period for the credit-

(a) they shall, except in such cases as the Secretary of State may prescribe by regulations, notify the Regulatory Authority of that fact within such period as the Secretary of State may so prescribe, and

(b) section 10 of the Pensions Act 1995 (power of the Regulatory Authority to impose civil penalties) shall apply to any trustee or manager who has failed to take all such steps as are reasonable to ensure that liability in respect of the credit was discharged before the end of the implementation period for it.

(3) If trustees or managers to whom subsection (2)(a) applies fail to perform the obligation imposed by that provision, section 10 of the Pensions Act 1995 shall apply to any trustee or manager who has failed to take all reasonable steps to ensure that the obligation was performed.

(4) On the application of the trustees or managers of an occupational pension scheme who are subject to liability in respect of a pension credit, the Regulatory Authority may extend the implementation period for the credit for the purposes of this section if it is satisfied that the application is made in such circumstances as the Secretary of State may prescribe by regulations.

(5) In this section "the Regulatory Authority" means the Occupational Pensions Regulatory Authority.

"Implementation period".

26. - (1) For the purposes of this Chapter, the implementation period for a pension credit is the period of 4 months beginning with the later of-

(a) the day on which the relevant order or provision takes effect, and

(b) the first day on which the person responsible for the pension arrangement to which the relevant order or provision relates is in receipt of-

(i) the relevant matrimonial documents, and

(ii) such information relating to the transferor and transferee as the Secretary of State may prescribe by regulations.

(2) The reference in subsection (1)(b)(i) to the relevant matrimonial documents is to copies of-

(a) the relevant order or provision, and

(b) the order, decree or declarator responsible for the divorce or annulment to which it relates,

and, if the pension credit depends on provision falling within subsection (1)(f) of section 20, to documentary evidence that the agreement containing the provision is one to which subsection (3)(a) of that section applies.

(3) Subsection (1) is subject to any provision made by regulations under section 33(2)(a).

(4) The Secretary of State may by regulations-

(a) make provision requiring a person subject to liability in respect of a pension credit to notify the transferor and transferee of the day on which the implementation period for the credit begins;

(b) provide for this section to have effect with modifications where the pension arrangement to which the relevant order or provision relates is being wound up;

(c) provide for this section to have effect with modifications where the pension credit depends on a pension sharing order and the order is the subject of an application for leave to appeal out of time.

(5) In this section-

"relevant order or provision", in relation to a pension credit, means the pension sharing order or provision on which the pension credit depends;

"transferor" means the person to whose rights the relevant order or provision relates;

"transferee" means the person for whose benefit the relevant order or provision is made.

Mode of discharge of liability.

27. - (1) Schedule 5 (which makes provision about how liability in respect of a pension credit may be discharged) shall have effect.

(2) Where the person entitled to a pension credit dies before liability in respect of the credit has been discharged-

(a) Schedule 5 shall cease to have effect in relation to the discharge of liability in respect of the credit, and

(b) liability in respect of the credit shall be discharged in accordance with regulations made by the Secretary of State.

Prepared 10 February 1999