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Pensions Bill


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

139

 

(a)   

after subsection (2) insert—

“(2A)   

The Compensation Board may also review such a

determination without an application being made.”

(b)   

for subsections (4) and (5) substitute—

“(4)   

Regulations may make provision—

5

(a)   

with respect to reviews under this section (or any

corresponding provision in force in Northern Ireland);

(b)   

with respect to applications under subsection (2) (or any

corresponding provision in force in Northern Ireland)

and the procedure to be adopted on any such

10

application.”

(3)   

In section 81 (cases where compensation provisions apply), omit subsections

(1)(d), (2A) and (7).

(4)   

In section 83 (amount of compensation) for subsections (3) and (4) substitute—

“(3)   

The amount of the payment, or (if there is more than one) the aggregate,

15

must not exceed the aggregate of—

(a)   

the amount (if any) by which the shortfall at the application date

exceeds the recoveries of value made between the application

date and the settlement date, and

(b)   

interest at the prescribed rate for the prescribed period on the

20

amount of that excess (if any).”

Annual increases in rate of pensions

212     

Annual increase in rate of certain occupational pensions

(1)   

Section 51 of the Pensions Act 1995 (c. 26) (annual increase in rate of certain

occupational pensions) is amended in accordance with subsections (2) to (5).

25

(2)   

In subsection (1) omit “and” at the end of paragraph (a) and for paragraph (b)

substitute—

“(b)   

the whole, or any part of, the pension is attributable to

pensionable service on or after the appointed day or, in the case

of money purchase benefits, to payments in respect of

30

employment carried on on or after the appointed day, and

(c)   

apart from this section—

(i)   

the annual rate of the pension, or

(ii)   

if only part of the pension is attributable as described in

paragraph (b), so much of the annual rate as is

35

attributable to that part,

   

would not be increased each year by at least the appropriate

percentage of that rate.”

(3)   

In subsection (4)(b) for “5 per cent per annum” substitute “—

(i)   

in the case of a category X pension, 5% per annum, and

40

(ii)   

in the case of a category Y pension, 2.5% per annum.”

 

 

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

140

 

(4)   

After subsection (4) insert—

“(4A)   

For the purposes of this section, a pension is a category X pension if it

is—

(a)   

a pension which became a pension in payment before the

commencement day, or

5

(b)   

a pension—

(i)   

which becomes a pension in payment on or after the

commencement day, and

(ii)   

the whole of which is attributable to pensionable service

before that day or, in the case of money purchase

10

benefits, to payments in respect of employment carried

on before that day.

(4B)   

For the purposes of this section, a pension is a category Y pension if it

is a pension—

(a)   

which becomes a pension in payment on or after the

15

commencement day, and

(b)   

the whole of which is attributable to pensionable service on or

after the commencement day or, in the case of money purchase

benefits, to payments in respect of employment carried on on or

after that day.

20

(4C)   

For the purposes of applying this section in the case of a pension—

(a)   

which becomes a pension in payment on or after the

commencement day,

(b)   

part of which is attributable to pensionable service before the

commencement day or, in the case of money purchase benefits,

25

to payments in respect of employment carried on before that

day, and

(c)   

part of which is attributable to pensionable service on or after

that day or, in the case of money purchase benefits, to payments

in respect of employment carried on on or after that day,

30

   

each of those parts of the pension is to be treated as if it were a separate

pension.”

(5)   

In subsection (5)—

(a)   

for “the provisions of subsections (2) and (3)” substitute “any of the

provisions of this section”, and

35

(b)   

in paragraph (a), after “appointed day” insert “or the commencement

day”.

(6)   

After that section insert—

“51ZA  Meaning of the “appropriate percentage”

(1)   

For the purposes of section 51(1)(c) and (2), “the appropriate

40

percentage” in relation to an increase in the whole or part of the annual

rate of a pension—

(a)   

in the case of a category X pension, means the revaluation

percentage for the latest revaluation period specified in the

order under paragraph 2 of Schedule 3 to the Pension Schemes

45

Act 1993 (revaluation of accrued pension benefits) which is in

force at the time of the increase, and

 

 

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

141

 

(b)   

in the case of a category Y pension, means whichever is the

lesser of—

(i)   

the revaluation percentage for the latest revaluation

period specified in the order under paragraph 2 of

Schedule 3 to the Pension Schemes Act 1993 which is in

5

force at the time of the increase, and

(ii)   

2.5%.

(2)   

In this section “the revaluation percentage” and “the revaluation

period” have the same meaning as in paragraph 2 of Schedule 3 to the

Pension Schemes Act 1993.”

10

(7)   

In section 54(3) of that Act (sections 51 to 53: supplementary), at the

appropriate place insert—

   

““the commencement day” means the day appointed for the coming into

force of section 212 of the Pensions Act 2004 (amendments to section

51);”.

15

213     

Annual increase in rate of certain personal pensions

(1)   

Section 162 of the Pensions Act 1995 (c. 26) (annual increase in rate of certain

personal pensions) is amended in accordance with subsections (2) and (3).

(2)   

In subsection (1) omit “and” at the end of paragraph (a) and for paragraph (b)

substitute—

20

“(b)   

the whole, or any part of, the pension is attributable to

contributions in respect of employment carried on on or after

the appointed day, and

(c)   

apart from this section—

(i)   

the annual rate of the pension, or

25

(ii)   

if only part of the pension is attributable as described in

paragraph (b), so much of the annual rate as is

attributable to that part,

   

would not be increased each year by at least the appropriate

percentage of that rate.”

30

(3)   

After subsection (2) insert—

“(2A)   

For the purposes of this section, a pension is a category X pension if it

is—

(a)   

a pension which became a pension in payment before the

commencement day, or

35

(b)   

a pension—

(i)   

which becomes a pension in payment on or after the

commencement day, and

(ii)   

the whole of which is attributable to contributions in

respect of employment carried on before that day.

40

(2B)   

For the purposes of this section, a pension is a category Y pension if it

is a pension—

(a)   

which becomes a pension in payment on or after the

commencement day, and

(b)   

the whole of which is attributable to contributions in respect of

45

employment carried on on or after that day.

 

 

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

142

 

(2C)   

For the purposes of applying this section in the case of a pension—

(a)   

which becomes a pension in payment on or after the

commencement day,

(b)   

part of which is attributable to contributions in respect of

employment carried on before that day, and

5

(c)   

part of which is attributable to contributions in respect of

employment carried on on or after that day,

   

each of those parts of the pension is to be treated as if it were a separate

pension.”

(4)   

After that section insert—

10

“162A  Meaning of the “appropriate percentage”

(1)   

For the purposes of section 162(1)(c) and (2), “the appropriate

percentage” in relation to an increase in the whole or part of the annual

rate of a pension—

(a)   

in the case of a category X pension, means the revaluation

15

percentage for the latest revaluation period specified in the

order under paragraph 2 of Schedule 3 to the Pension Schemes

Act 1993 (revaluation of accrued pension benefits) which is in

force at the time of the increase, and

(b)   

in the case of a category Y pension, means whichever is the

20

lesser of—

(i)   

the revaluation percentage for the latest revaluation

period specified in the order under paragraph 2 of

Schedule 3 to the Pension Schemes Act 1993 which is in

force at the time of the increase, and

25

(ii)   

2.5%.

(2)   

In this section “the revaluation percentage” and “the revaluation

period” have the same meaning as in paragraph 2 of Schedule 3 to the

Pension Schemes Act 1993.”

(5)   

In section 163(3) of that Act (section 162: supplementary), at the appropriate

30

place insert—

   

““the commencement day” means the day appointed for the coming into

force of section 213 of the Pensions Act 2004 (amendments to section

162);”.

214     

Power to increase pensions giving effect to pension credits etc

35

(1)   

Section 40 of the Welfare Reform and Pensions Act 1999 (c. 30) (power of the

Secretary of State to increase pensions provided to give effect to certain rights)

is amended as follows.

(2)   

In subsection (1), for “5%” substitute “the maximum percentage”.

(3)   

After subsection (2) insert—

40

“(2A)   

For the purposes of subsection (1) the “maximum percentage” means—

(a)   

5% in a case where—

(i)   

the pension is in payment before the commencement

day, or

 

 

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

143

 

(ii)   

the pension is not in payment before the commencement

day but the entitlement to the relevant pension credit

arose before that day, and

(b)   

2.5% in a case where the entitlement to the relevant pension

credit arises on or after the commencement day.”

5

(4)   

In subsection (3), at the appropriate places insert—

   

““commencement day” means the day appointed for the coming into

force of section 214 of the Pensions Act 2004 (amendments to section

40);”

   

““relevant pension credit” means the pension credit to which the eligible

10

pension credit rights or, as the case may be, the safeguarded rights

relate.”

Revaluation

215     

Exemption from statutory revaluation requirement  

(1)   

Section 84 of the Pension Schemes Act 1993 (c. 48) (basis of revaluation) is

15

amended as follows.

(2)   

In subsection (5), after paragraph (a) insert “or

(b)   

under any arrangement which maintains the value of the

pension or other benefit by reference to the rise in the retail

prices index during that period,”.

20

(3)   

After that subsection add—

“(6)   

In subsection (5)(b), “retail prices index” means—

(a)   

the general index of retail prices (for all items) published by the

Office for National Statistics; or

(b)   

where that index is not published for a month, any substituted

25

index or figures published by that Office.”

Contracting out

216     

Meaning of “working life” in Pension Schemes Act 1993

In section 181 of the Pension Schemes Act 1993 (general interpretation), in

subsection (1) for the definition of “working life” substitute—

30

““working life”, in relation to a person, means the period beginning with

the tax year in which the person attains the age of 16 and ending

with—

(a) 

the tax year before the one in which the person attains the age

of 65 in the case of a man or 60 in the case of a woman, or

35

(b) 

if earlier, the tax year before the one in which the person dies.”

217     

Power to prescribe conditions by reference to Inland Revenue approval

In section 9 of the Pension Schemes Act 1993 (requirements for certification of

 

 

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

144

 

schemes: general), after subsection (5) insert—

“(5A)   

Regulations about pension schemes made under this Chapter may

contain provisions framed by reference to whether or not a scheme—

(a)   

is approved under Chapter 1 (retirement benefit schemes) of

Part 14 of the Income and Corporation Taxes Act 1988, or is a

5

relevant statutory scheme within the meaning of that Chapter,

or

(b)   

is approved under Chapter 4 (personal pension schemes) of that

Part.”

218     

Restrictions on commutation and age at which benefits may be received

10

(1)   

For section 21(1) of the Pension Schemes Act 1993 (c. 48) (commutation in

guaranteed minimum pension cases) substitute—

“(1)   

A scheme may, in such circumstances and subject to such restrictions

and conditions as may be prescribed, provide for the payment of a

lump sum instead of a pension required to be provided by the scheme

15

in accordance with section 13 or 17.”

(2)   

In section 17 of that Act (minimum pensions for widows and widowers), at the

end insert—

“(8)   

Where—

(a)   

a lump sum is paid to an earner under provisions included in a

20

scheme by virtue of section 21(1), and

(b)   

those provisions are of a prescribed description,

   

the earner shall be treated for the purposes of this section as having any

guaranteed minimum under section 14 that he would have had but for

that payment.”

25

(3)   

In section 28 of that Act (ways of giving effect to protected rights), in subsection

(4) (provision of a lump sum)—

(a)   

after “provision of a lump sum” insert “, subject to such restrictions as

may be prescribed,”;

(b)   

omit paragraphs (a) and (b);

30

(c)   

at the end insert “; and

(e)   

such other conditions as may be prescribed are

satisfied.”

(4)   

Omit subsections (4A) and (4B) of that section.

(5)   

In subsections (3) and (5) of that section, for “, (4) or (4A)” substitute “or (4)”.

35

(6)   

In subsection (8) of that section, in the definition of “the starting date” omit

“, which must not be earlier than the member’s 60th birthday,”.

(7)   

In section 29(1) of that Act (how a pension may comply with “the pension

requirements” for the purposes of section 28)—

(a)   

in paragraph (a), for the words from “date” to “or on” substitute “date

40

that is not later than the member’s 65th birthday, or on”;

(b)   

in paragraph (aa)(ii) omit the words from “and is not” to “75th

birthday,”.

 

 

 
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