Pensions Bill

House of Commons

Session 2003 - 04
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Other Bills before Parliament

Pensions Bill

Pensions Bill
Part 5 — Occupational and personal pension schemes: miscellaneous provisions
125

198
Member-nominated trustees and directors: supplementary
(1)
Regulations may modify sections 196 and 197 in their application to prescribed
cases.
(2)
In sections 196 and 197—

“company” means a company within the meaning given by section 735(1)
5
of the Companies Act 1985 (c. 6) or a company which may be wound up
under Part 5 of the Insolvency Act 1986 (c. 45) (unregistered
companies);

“occupational trust scheme” means an occupational pension scheme
established under a trust.
10
Obligations of trustees of occupational pension schemes
199
Investment principles
For section 35 of the Pensions Act 1995 (c. 26) (investment principles)
substitute—
“35
Investment principles
15
(1)
The trustees of a trust scheme must secure—
(a)
that a statement of investment principles is prepared and
maintained for the scheme, and
(b)
that the statement is reviewed at such intervals, and on such
occasions, as may be prescribed and, if necessary, revised.
20
(2)
In this section “statement of investment principles”, in relation to a trust
scheme, means a written statement of the investment principles
governing decisions about investments for the purposes of the scheme.
(3)
Before preparing or revising a statement of investment principles, the
trustees of a trust scheme must comply with any prescribed
25
requirements.
(4)
A statement of investment principles must be in the prescribed form
and cover, amongst other things, the prescribed matters.
(5)
Neither a trust scheme nor a statement of investment principles may
impose restrictions (however expressed) on any power to make
30
investments by reference to the consent of the employer.
(6)
If in the case of a trust scheme—
(a)
a statement of investment principles has not been prepared, is
not being maintained or has not been reviewed or revised, as
required by this section, or
35
(b)
the trustees have not complied with the obligation imposed on
them by subsection (3),

section 10 applies to any trustee who has failed to take all reasonable
steps to secure compliance.
(7)
Regulations may provide that this section is not to apply to any scheme
40
which is of a prescribed description.”

Pensions Bill
Part 5 — Occupational and personal pension schemes: miscellaneous provisions
126

200
Requirement for knowledge and understanding: individual trustees
(1)
This section applies to every individual who is a trustee of an occupational
pension scheme.
(2)
In this section, “relevant scheme”, in relation to an individual, means any
occupational pension scheme of which he is a trustee.
5
(3)
An individual to whom this section applies must, in relation to each relevant
scheme, be conversant with—
(a)
the trust deed and scheme rules,
(b)
any statement of investment principles for the time being maintained
under section 35 of the Pensions Act 1995 (c. 26),
10
(c)
in the case of a relevant scheme to which Part 3 (scheme funding)
applies, the statement of funding principles most recently prepared or
revised under section 180, and
(d)
any other document recording policy for the time being adopted by the
trustees relating to the administration of the scheme generally.
15
(4)
An individual to whom this section applies must have knowledge and
understanding of—
(a)
the law relating to pensions and trusts,
(b)
the principles relating to—
(i)
the funding of occupational pension schemes, and
20
(ii)
investment of the assets of such schemes, and
(c)
such other matters as may be prescribed.
(5)
The degree of knowledge and understanding required by subsection (4) is that
appropriate for the purposes of enabling the individual properly to exercise his
functions as trustee of any relevant scheme.
25
201
Requirement for knowledge and understanding: corporate trustees
(1)
This section applies to any company which is a trustee of an occupational
pension scheme.
(2)
In this section, “relevant scheme”, in relation to a company, means any
occupational pension scheme of which it is a trustee.
30
(3)
A company to which this section applies must, in relation to each relevant
scheme, secure that each individual who exercises any function which the
company has as trustee of the scheme is conversant with each of the documents
mentioned in subsection (4) so far as it is relevant to the exercise of the function.
(4)
Those documents are—
35
(a)
the trust deed and scheme rules,
(b)
any statement of investment principles for the time being maintained
under section 35 of the Pensions Act 1995,
(c)
in the case of a relevant scheme to which Part 3 (scheme funding)
applies, the statement of funding principles most recently prepared or
40
revised under section 180, and
(d)
any other document recording policy for the time being adopted by the
trustees relating to the administration of the scheme generally.

Pensions Bill
Part 5 — Occupational and personal pension schemes: miscellaneous provisions
127

(5)
A company to which this section applies must secure that any individual who
exercises any function which the company has as trustee of any relevant
scheme has knowledge and understanding of—
(a)
the law relating to pensions and trusts,
(b)
the principles relating to—
5
(i)
the funding of occupational pension schemes, and
(ii)
investment of the assets of such schemes, and
(c)
such other matters as may be prescribed.
(6)
The degree of knowledge and understanding required by subsection (5) is that
appropriate for the purposes of enabling the individual properly to exercise the
10
function in question.
(7)
References in this section to the exercise by an individual of any function of a
company are to anything done by the individual on behalf of the company
which constitutes the exercise of the function by the company.
202
Requirement for knowledge and understanding: supplementary
15
(1)
For the purposes of sections 200 and 201, a person’s functions as trustee of a
relevant scheme are any functions which he has by virtue of being such a
trustee and include, in particular—
(a)
any functions which he has as one of the trustees authorised under
section 34(5)(a) of the Pensions Act 1995 (c. 26) (delegation of
20
investment discretions) in the case of the scheme, and
(b)
any functions which he otherwise has as a member of a committee of
the trustees of the scheme.
(2)
Regulations may provide for any provision in section 200 or 201—
(a)
not to apply, or
25
(b)
to apply with modifications,

to a trustee in prescribed circumstances.
(3)
Nothing in either of those sections affects any rule of law requiring a trustee to
have knowledge of, or expertise in, any matter.
Pension protection on transfer of employment
30
203
Conditions for pension protection
(1)
This section applies in relation to a person (“the employee”) where—
(a)
there is a transfer of an undertaking, or part of an undertaking, to which
the TUPE Regulations apply,
(b)
by virtue of the transfer the employee ceases to be employed by the
35
transferor and becomes employed by the transferee, and
(c)
at the time immediately before the employee becomes employed by the
transferee—
(i)
there is an occupational pension scheme (“the scheme”) in
relation to which the transferor is the employer, and
40
(ii)
one of subsections (2), (3) and (4) applies.
(2)
This subsection applies where—
(a)
the employee is an active member of the scheme, and

Pensions Bill
Part 5 — Occupational and personal pension schemes: miscellaneous provisions
128

(b)
if any of the benefits that may be provided under the scheme are money
purchase benefits—
(i)
the transferor is required to make contributions to the scheme in
respect of the employee, or
(ii)
the transferor is not so required but has made one or more such
5
contributions.
(3)
This subsection applies where—
(a)
the employee is not an active member of the scheme but is eligible to be
such a member, and
(b)
if any of the benefits that may be provided under the scheme are money
10
purchase benefits, the transferor would have been required to make
contributions to the scheme in respect of the employee if the employee
had been an active member of it.
(4)
This subsection applies where—
(a)
the employee is not an active member of the scheme, nor eligible to be
15
such a member, but would have been an active member of the scheme
or eligible to be such a member if he had been employed by the
transferor for a longer period, and
(b)
if any of the benefits that may be provided under the scheme are money
purchase benefits, the transferor would have been required to make
20
contributions to the scheme in respect of the employee if the employee
had been an active member of it.
(5)
For the purposes of this section, the condition in subsection (1)(c) is to be
regarded as satisfied in any case where it would have been satisfied but for any
action taken by the transferor by reason of the transfer.
25
(6)
In subsection (1)(a), the reference to an undertaking, or part of an undertaking,
has the same meaning as in the TUPE Regulations.
(7)
In the case of a scheme which is contracted-out by virtue of section 9 of the
Pension Schemes Act 1993 (c. 48), the references in subsections (2)(b), (3)(b) and
(4)(b) to contributions mean contributions other than minimum payments
30
(within the meaning of that Act).
(8)
In this section—

the “TUPE regulations” means the Transfer of Undertakings (Protection
of Employment) Regulations 1981 (S.I. 1981/1794);

references to the transferor include any associate of the transferor, and
35
section 435 of the Insolvency Act 1986 (c. 45) applies for the purposes of
this section as it applies for the purposes of that Act.
204
Form of protection
(1)
In a case where section 203 applies, it is a condition of the employee’s contract
of employment with the transferee that the requirements in subsection (2) or
40
the requirement in subsection (3) are complied with.
(2)
The requirements in this subsection are that—
(a)
the transferee secures that, as from the relevant time, the employee is,
or is eligible to be, an active member of an occupational pension scheme
in relation to which the transferee is the employer, and
45
(b)
in a case where the scheme is a money purchase scheme, as from the
relevant time—

Pensions Bill
Part 5 — Occupational and personal pension schemes: miscellaneous provisions
129

(i)
the transferee makes relevant contributions to the scheme in
respect of the employee, or
(ii)
if the employee is not an active member of the scheme but is
eligible to be such a member, the transferee would be required
to make such contributions if the employee were an active
5
member, and
(c)
in a case where the scheme is not a money purchase scheme, as from the
relevant time the scheme—
(i)
satisfies the statutory standard referred to in section 12A of the
Pension Schemes Act 1993 (c. 48), or
10
(ii)
if regulations so provide, complies with such other
requirements as may be prescribed.
(3)
The requirement in this subsection is that, as from the relevant time, the
transferee makes relevant contributions to a stakeholder pension scheme of
which the employee is a member.
15
(4)
The requirement in subsection (3) is for the purposes of this section to be
regarded as complied with by the transferee during any period in relation to
which the condition in subsection (5) is satisfied.
(5)
The condition in this subsection is that the transferee has offered to make
relevant contributions to a stakeholder pension scheme of which the employee
20
is eligible to be a member (and the transferee has not withdrawn the offer).
(6)
Subsection (1) does not apply in relation to a contract if or to the extent that the
employee and the transferee so agree at any time after the time when the
employee becomes employed by the transferee.
(7)
In this section—
25

“the relevant time” means—
(a)
in a case where section 203 applies by virtue of the application
of subsection (2) or (3) of that section, the time when the
employee becomes employed by the transferee;
(b)
in a case where that section applies by virtue of the application
30
of subsection (4) of that section, the time at which the employee
would have been a member of the scheme referred to in
subsection (1)(c)(i) of that section or (if earlier) would have been
eligible to be such a member;

“relevant contributions” means such contributions in respect of such
35
period or periods as may be prescribed;

“stakeholder pension scheme” means a pension scheme which is
registered under section 2 of the Welfare Reform and Pensions Act 1999
(c. 30).
Safeguarding pension rights
40
205
Paternity leave and adoption leave
(1)
In Schedule 5 to the Social Security Act 1989 (c. 24) (employment-related
schemes for pensions or other benefits: equal treatment), after paragraph 5

Pensions Bill
Part 5 — Occupational and personal pension schemes: miscellaneous provisions
130

insert—
“Unfair paternity leave provisions
5A    (1)
Where an employment-related benefit scheme includes any unfair
paternity leave provisions (irrespective of any differences on the
basis of sex in the treatment accorded to members under those
5
provisions), then—
(a)
the scheme shall be regarded to that extent as not complying
with the principle of equal treatment; and
(b)
subject to sub-paragraph (3), this Schedule shall apply
accordingly.
10
      (2)
In this paragraph “unfair paternity leave provisions”, in relation to
an employment-related benefit scheme, means any provision—
(a)
which relates to continuing membership of, or the accrual of
rights under, the scheme during any period of paid paternity
leave in the case of any member who is (or who, immediately
15
before the commencement of such a period, was) an
employed earner and which treats such a member otherwise
than in accordance with the normal employment
requirement; or
(b)
which requires the amount of any benefit payable under the
20
scheme to or in respect of any such member, to the extent that
it falls to be determined by reference to earnings during a
period which included a period of paid paternity leave, to be
determined otherwise than in accordance with the normal
employment requirement.
25
      (3)
In the case of any unfair paternity leave provision—
(a)
the more favourable treatment required by paragraph 3(1) is
treatment no less favourable than would be accorded to the
member in accordance with the normal employment
requirement; and
30
(b)
paragraph 3(2) does not authorise the making of any such
election as is there mentioned;

but, in respect of any period of paid paternity leave, a member shall
only be required to pay contributions on the amount of contractual
remuneration or statutory paternity pay actually paid to or for him
35
in respect of that period.
      (4)
In this paragraph—
“period of paid paternity leave”, in the case of a member,
means a period—
(a)
throughout which the member is absent from work
40
in circumstances where sub-paragraph (5), (6) or (7)
applies, and
(b)
for which the employer (or if he is no longer in his
employment, his former employer) pays him any
contractual remuneration or statutory paternity pay;
45
and
“the normal employment requirement” is the requirement that
any period of paid paternity leave shall be treated as if it
were a period throughout which the member in question

Pensions Bill
Part 5 — Occupational and personal pension schemes: miscellaneous provisions
131

works normally and receives the remuneration likely to be
paid for doing so.
      (5)
This sub-paragraph applies if—
(a)
the member’s absence from work is due to the birth or
expected birth of a child, and
5
(b)
the member satisfies the conditions prescribed under section
171ZA(2)(a)(i) and (ii) of the Social Security Contributions
and Benefits Act 1992 in relation to that child.
      (6)
This sub-paragraph applies if—
(a)
the member’s absence from work is due to the placement or
10
expected placement of a child for adoption under the law of
any part of the United Kingdom, and
(b)
the member satisfies the conditions prescribed under section
171ZB(2)(a)(i) and (ii) of that Act in relation to that child.
      (7)
This sub-paragraph applies if—
15
(a)
the member’s absence from work is due to the adoption or
expected adoption of a child who has entered the United
Kingdom in connection with or for the purposes of adoption
which does not involve the placement of the child for
adoption under the law of any part of the United Kingdom,
20
and
(b)
the member satisfies the conditions prescribed under section
171ZB(2)(a)(i) and (ii) of that Act (as applied by virtue of
section 171ZK of that Act (adoption cases not involving
placement under the law of the United Kingdom)) in relation
25
to that child.
Unfair adoption leave provisions
5B    (1)
Where an employment-related benefit scheme includes any unfair
adoption leave provisions (irrespective of any differences on the
basis of sex in the treatment accorded to members under those
30
provisions), then—
(a)
the scheme shall be regarded to that extent as not complying
with the principle of equal treatment; and
(b)
subject to sub-paragraph (3), this Schedule shall apply
accordingly.
35
      (2)
In this paragraph “unfair adoption leave provisions”, in relation to
an employment-related benefit scheme, means any provision—
(a)
which relates to continuing membership of, or the accrual of
rights under, the scheme during any period of paid adoption
leave in the case of any member who is (or who, immediately
40
before the commencement of such a period, was) an
employed earner and which treats such a member otherwise
than in accordance with the normal employment
requirement; or
(b)
which requires the amount of any benefit payable under the
45
scheme to or in respect of any such member, to the extent that
it falls to be determined by reference to earnings during a
period which included a period of paid adoption leave, to be
determined otherwise than in accordance with the normal
employment requirement.
50