Pensions Bill

House of Commons

Session 2003 - 04
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Pensions Bill

Pensions Bill
Part 1 — The Pensions Regulator
12

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Freezing order
(1)
This section applies to an occupational pension scheme which is not a money
purchase scheme.
(2)
The Regulator may make a freezing order in relation to such a scheme if and
only if—
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(a)
the order is made pending consideration being given to the making of
an order in relation to the scheme under section 11(1)(c) of the Pensions
Act 1995 (c. 26) (power to wind up schemes where necessary to protect
the generality of members), and
(b)
the Regulator is satisfied that—
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(i)
there is, or is likely to be if the order is not made, an immediate
risk to the interests of members under the scheme or the assets
of the scheme, and
(ii)
it is necessary to make the freezing order to protect the interests
of the generality of the members of the scheme.
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But no freezing order may be made in relation to a scheme during an
assessment period (within the meaning of section 104) (see section 107(7)).
(3)
A freezing order is an order directing that during the period for which it has
effect—
(a)
no benefits are to accrue under the scheme to, or in respect of, members
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of the scheme, and
(b)
winding up of the scheme may not begin.
(4)
A freezing order may also contain one or more of the following directions
which have effect during the period for which the order has effect—
(a)
a direction that no new members, or no specified classes of new
25
member, are to be admitted to the scheme;
(b)
a direction that—
(i)
no further contributions or payments, or
(ii)
no further specified contributions or payments,

are to be paid towards the scheme by or on behalf of any members or
30
any specified members of the scheme;
(c)
a direction that, any amount or any specified amount which—
(i)
corresponds to any contribution which would be due to be paid
towards the scheme on behalf of a member but for a direction
under paragraph (b), and
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(ii)
has been deducted from a payment of any earnings in respect of
an employment,

is to be repaid to the member in question by the employer;
(d)
a direction that no benefits, or no specified benefits, are to be paid to or
in respect of any members or any specified members under the scheme;
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(e)
a direction that payments of all benefits or specified benefits under the
scheme to or in respect of all the members or specified members may
only be made from the scheme if they are reduced in a specified manner
or by a specified amount;
(f)
a direction that—
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(i)
no transfers or no specified transfers of, or no transfer payments
or no specified transfer payments in respect of, any member’s
rights under the scheme are to be made from the scheme, or

Pensions Bill
Part 1 — The Pensions Regulator
13

(ii)
transfers or specified transfers of, or transfer payments or
specified transfer payments in respect of, any member’s rights
under the scheme may only be made from the scheme if they are
determined in a specified manner and satisfy such other
conditions as may be specified;
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(g)
a direction that no statements of entitlement are to be provided to
members of the scheme under section 93A of the Pension Schemes Act
1993 (c. 48) (salary related schemes: right to statement of entitlement).
(5)
For the purposes of subsection (4)(b)—
(a)
the references to contributions do not include contributions due to be
10
paid before the order takes effect, and
(b)
the references to payments towards a scheme include payments in
respect of pension credits where the person entitled to the credit is a
member of the scheme.
(6)
A freezing order may not contain a direction under subsection (4)(d) or (e)
15
which reduces the benefits payable to or in respect of a member, for the period
during which the order has effect, below the level to which the trustees or
managers of the scheme would have power to reduce them if a winding up of
the scheme had begun at the time when the freezing order took effect.
(7)
A freezing order may also require the trustees or managers of the scheme to
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obtain an actuarial valuation within a specified period.
(8)
A freezing order containing such a requirement must specify—
(a)
the date by reference to which the assets and liabilities are to be valued,
(b)
the assets and liabilities which are to be taken into account,
(c)
the manner in which the valuation must be prepared,
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(d)
the information and statements which it must contain, and
(e)
any other requirements that the valuation must satisfy.
(9)
For the purposes of subsection (7)—

“an actuarial valuation” means a written valuation of the scheme’s assets
and liabilities prepared and signed by the actuary, and
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“the actuary” means—
(a)
the actuary appointed under section 47(1)(b) of the Pensions Act
1995 (c. 26) (professional advisers) in relation to the scheme, or
(b)
if no such actuary has been appointed—
(i)
a person with prescribed qualifications or experience, or
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(ii)
a person approved by the Secretary of State.
(10)
In this section “specified” means specified in the freezing order.
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Consequences of freezing order
(1)
If a freezing order is made in relation to a scheme any action taken in
contravention of the order is void except to the extent that the action is
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validated by an order under section 23.
(2)
A freezing order in relation to a scheme does not prevent any increase in a
benefit which is an increase which would otherwise accrue, in accordance with
the scheme or any enactment, during the period for which the order has effect
unless the order contains a direction to the contrary.
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Pensions Bill
Part 1 — The Pensions Regulator
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(3)
A freezing order in relation to a scheme does not prevent the scheme being
wound up in pursuance of an order under section 11 of the Pensions Act 1995
(c. 26) (power to wind up occupational pension schemes).
(4)
If a freezing order contains a direction under section 20(4)(b) that no further
contributions, or no further specified contributions, are to be paid towards a
5
scheme during the period for which the order has effect—
(a)
any contributions which are the subject of the direction and which
would otherwise be due to be paid towards the scheme during that
period are to be treated as if they do not fall due, and
(b)
any obligation to pay those contributions (including any obligation
10
under section 49(8) of the Pensions Act 1995 to pay amounts deducted
corresponding to such contributions) is to be treated as if it does not
arise.
(5)
If a freezing order contains a direction under section 20(4)(f) (no transfers of
member’s rights etc from the scheme) it does not prevent giving effect to—
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(a)
a pension sharing order or provision, or
(b)
a pension earmarking order.
(6)
For the purposes of subsection (5)—

“pension sharing order or provision” means an order or provision falling
within section 28(1) of the Welfare Reform and Pensions Act 1999 (c. 30)
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(activation of pension sharing), and

“pension earmarking order” means—
(a)
an order under section 23 of the Matrimonial Causes Act 1973
(c. 18) (financial provision orders in connection with divorce
etc) so far as it includes provision made by virtue of section 25B
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or 25C of that Act (powers to include provision about pensions),
(b)
an order under section 12A(2) or (3) of the Family Law
(Scotland) Act 1985 (c. 37) (powers in relation to pension lump
sums when making a capital sum order), or
(c)
an order under Article 25 of the Matrimonial Causes (Northern
30
Ireland) Order 1978 (S.I. 1978/1045 (N.I.15)) so far as it includes
provision made by virtue of Article 27B or 27C of that Order
(Northern Ireland powers corresponding to those mentioned in
paragraph (a)).
(7)
Regulations may modify any provisions of Chapter 4 of Part 4 of the Pension
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Schemes Act 1993 (c. 48) (protection for early leavers: transfer values) in their
application to an occupational pension scheme in relation to which a freezing
order is made containing a direction under section 20(4)(f) (no transfers of
member’s rights etc from the scheme).
(8)
Disregarding subsection (1), if a freezing order made in relation to a scheme is
40
not complied with, section 10 of the Pensions Act 1995 (civil penalties) applies
to any trustee or manager of the scheme who has failed to take all reasonable
steps to secure compliance.
(9)
Subsection (8) does not apply in the case of non-compliance with a direction
under section 20(4)(c) (direction that certain deducted contributions are to be
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repaid by the employer).
(10)
In such a case, section 10 of the Pensions Act 1995 (civil penalties) applies to an
employer who, without reasonable excuse, fails to repay an amount as
required by the direction.

Pensions Bill
Part 1 — The Pensions Regulator
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Period of effect etc of freezing order
(1)
A freezing order must specify the period for which it has effect.
(2)
The period specified must not exceed three months.
(3)
The Regulator may on one or more occasions by order extend the period for
which the order has effect.
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(4)
But the total period for which the order has effect must not exceed six months.
(5)
This section is subject to sections 24 and 25 (effect of winding up and
assessment period on freezing orders).
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Validation of action in contravention of freezing order
(1)
If a freezing order is made in relation to a scheme, the Regulator may by order
10
validate action taken in contravention of the order.
(2)
Any of the following persons may apply to the Regulator for an order under
this section validating particular action—
(a)
the trustees or managers of the scheme;
(b)
any person directly affected by the action.
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Effect of winding up of scheme on freezing order
(1)
This section applies where—
(a)
an order is made under section 11 of the Pensions Act 1995 (c. 26) (“the
1995 Act”) (power to wind up occupational pension schemes) in
relation to a scheme, and
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(b)
the order is made during the period for which a freezing order has
effect in relation to the scheme.
(2)
In such a case—
(a)
the winding up of the scheme in pursuance of the order under section
11 of the 1995 Act is to be taken as beginning at the time when the
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freezing order took effect, and
(b)
the freezing order ceases to have effect from the time when the order
under section 11 of the 1995 Act is made.
(3)
The Regulator may by order direct any specified person—
(a)
to take such specified steps as it considers are necessary as a result of
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the winding up of the scheme being deemed under subsection (2)(a) to
have begun at the time when the freezing order took effect, and
(b)
to take those steps within a specified period.
(4)
Section 10 of the 1995 Act (civil penalties) applies to a person who, without
reasonable excuse, fails to comply with a direction to him contained in an order
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under this section.
(5)
In this section “specified” means specified in an order under this section.
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Effect of assessment period under Part 2 on freezing order
Where an assessment period (within the meaning of section 104) begins in
relation to a scheme, any freezing order in relation to the scheme ceases to have
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effect when the assessment period begins.