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Pensions Bill


Pensions Bill
Schedule 5 — The Board of the Pension Protection Fund
Part 5 — Status and liability etc

190

 

(b)   

pay, or make provision for paying, persons from whom the Board

may decide to seek advice, as being persons considered by the Board

to be specially qualified to advise it on particular matters, such fees

as the Board may determine.

Part 5

5

Status and liability etc

Status

22    (1)  

The Board is not to be regarded—

(a)   

as the servant or agent of the Crown, or

(b)   

as enjoying any status, privilege or immunity of the Crown.

10

      (2)  

Accordingly, the Board’s property is not to be regarded as property of, or

held on behalf of, the Crown.

Validity

23         

The validity of any proceedings of the Board (including any proceedings of

any of its committees or sub-committees) is not to be affected by—

15

(a)   

any vacancy among the members of the Board or of any of its

committees or sub-committees,

(b)   

any defect in the appointment of any member of the Board or of any

of its committees or sub-committees, or

(c)   

any defect in the appointment of the Chief Executive.

20

Disqualification

24         

In Schedule 1 to the House of Commons Disqualification Act 1975 (c. 24), in

Part 2 (bodies whose members are disqualified), at the appropriate place

insert— 

   

“The Board of the Pension Protection Fund.”

25

25         

In Schedule 1 to the Northern Ireland Assembly Disqualification Act 1975

(c. 25), in Part 2 (bodies whose members are disqualified), at the appropriate

place insert— 

   

“The Board of the Pension Protection Fund.”

The Superannuation Act 1972

30

26    (1)  

The persons to whom section 1 of the Superannuation Act 1972 (c. 11)

(persons to or in respect of whom benefits may be provided by schemes

under that section) applies are to include—

the chairman of the Board

the employees of the Board.

35

      (2)  

The Board must pay to the Minister for the Civil Service, at such times as he

may direct, such sums as he may determine in respect of the increase

attributable to sub-paragraph (1) in the sums payable out of money

provided by Parliament under that Act.

 

 

Pensions Bill
Schedule 6 — Transfer of property, rights and liabilities to the Board

191

 

Exemption from liability in damages

27    (1)  

Neither the Board nor any person who is a member of the Board, a member

of any of its committees or sub-committees, or a member of its staff is to be

liable in damages for anything done or omitted in the exercise or purported

exercise of the functions of the Board conferred by, or by virtue of, this or any

5

other enactment.

      (2)  

Any person who is the Chief Executive of the Board is not to be liable in

damages for anything done or omitted in the exercise or purported exercise

of any function conferred on the Chief Executive by, or by virtue of, this Act

or any provisions in force in Northern Ireland corresponding to this Act.

10

      (3)  

Any person who is a member of the Non-Executive Committee or of any of

its sub-committees is not to be liable in damages for anything done or

omitted in the discharge or purported discharge of the duty to prepare a

report under section 86(6) on the discharge of the non-executive functions.

      (4)  

Sub-paragraphs (1) to (3) do not apply—

15

(a)   

if it is shown that the action or omission was in bad faith, or

(b)   

so as to prevent an award of damages made in respect of an act or

omission on the ground that the act or omission was unlawful as a

result of section 6(1) of the Human Rights Act 1998 (c. 42).

      (5)  

This paragraph does not prevent the Board being required to pay

20

compensation on a direction of the PPF Ombudsman by virtue of

regulations under section 173(1) or 174.

Schedule 6

Section 123

 

Transfer of property, rights and liabilities to the Board

1          

This Schedule applies where the property, rights and liabilities of an

25

occupational pension scheme are transferred to the Board in accordance

with section 123.

2     (1)  

Subject to sub-paragraph (2), the property, rights and liabilities so

transferred include—

(a)   

property, rights and liabilities that would not otherwise be capable

30

of being transferred or assigned,

(b)   

property situated anywhere in the United Kingdom or elsewhere,

and

(c)   

rights and liabilities under the law of any part of the United

Kingdom or of any country or territory outside the United Kingdom.

35

      (2)  

Where, but for this sub-paragraph, any rights or liabilities under a contract

of employment would be transferred to the Board under section 123, this

sub-paragraph operates to terminate the contract of employment on the day

preceding the day on which the transfer notice is received by the trustees or

managers of the scheme.

40

3     (1)  

Without prejudice to the generality of section 123 and subject to sub-

paragraph (2), any legal proceedings or applications to any authority

pending immediately before the transfer by or against any of the trustees or

managers of the scheme in their capacity as trustees or managers shall be

continued by or against the Board.

45

 

 

Pensions Bill
Schedule 7 — Pension compensation provisions

192

 

      (2)  

The liabilities transferred by section 123 do not include any liabilities in

respect of an existing or future cause of action against the trustees or

managers of the scheme if, disregarding the transfer, the trustees or

managers would have been personally liable to meet the claim and would

not have been indemnified from the assets of the scheme.

5

4          

The transfer is binding on all persons, even if, apart from this paragraph, it

would have required the consent or concurrence of any person.

5          

No person shall have any power, in consequence of the transfer, to terminate

or modify any interest or right which was vested in the trustees or managers

of the scheme.

10

6          

Any reference in any agreement, document or instrument of any description

to the trustees or managers of the scheme shall have effect so far as necessary

for the purposes of giving effect to the transfer as a reference to the Board.

7     (1)  

The Board must take all such steps as may be required to secure that the

vesting in the Board, by virtue of section 123, of any foreign property, right

15

or liability is effective under the relevant foreign law.

      (2)  

Until the vesting of any foreign property, right or liability in the Board is

effective under the relevant foreign law, the persons who were the trustees

or managers of the scheme immediately before the transfer effected by

section 123 must hold that property or right for the benefit of, or discharge

20

that liability on behalf of, the Board.

      (3)  

Nothing in this paragraph prejudices the effect under the law of England

and Wales or of Scotland of the vesting in the Board, in accordance with

section 123, of any foreign property, right or liability.

      (4)  

In this paragraph references to any foreign property, right or liability are

25

references to any property, right or liability as respects which any issue

arising in any proceedings would have to be determined (in accordance with

the rules of private international law) by reference to the law of a country or

territory outside the United Kingdom.

Schedule 7

30

Section 124

 

Pension compensation provisions

Introductory

1          

This Schedule applies for the purposes of determining the compensation

payable where the Board assumes responsibility for an eligible scheme (“the

scheme”) in accordance with this Chapter.

35

2          

In this Schedule references to “the assessment date” are to the date on which

the assessment period in relation to the scheme, or (where there has been

more than one such assessment period) the last one, began.

Pensions in payment at assessment date

3     (1)  

Compensation is payable in accordance with this paragraph where,

40

immediately before the assessment date, a person is entitled to present

payment of a pension under the admissible rules of the scheme.

 

 

Pensions Bill
Schedule 7 — Pension compensation provisions

193

 

      (2)  

That person (“the pensioner”) is entitled to periodic compensation in respect

of that pension (“the pension”) commencing at the assessment date and

continuing for life or, in a case to which sub-paragraph (8) applies, until such

time as entitlement to the pension would have ceased under the admissible

rules.

5

      (3)  

The annual rate of the periodic compensation is the appropriate percentage

of the aggregate of—

(a)   

the protected pension rate, and

(b)   

any increases under paragraph 28 (annual increases in periodic

compensation).

10

      (4)  

In sub-paragraph (3) “the appropriate percentage” means—

(a)   

in a case to which sub-paragraph (7) applies, 90%, and

(b)   

in any other case, 100%.

      (5)  

In sub-paragraph (3) “the protected pension rate” means the annual rate of

the pension, under the admissible rules, immediately before the assessment

15

date.

      (6)  

In determining for the purposes of sub-paragraph (5) the annual rate of the

pension immediately before the assessment date, any recent discretionary

increase is to be disregarded if the combined effect of all recent rule changes

and recent discretionary increases in respect of the scheme is that the

20

protected liabilities of the scheme immediately before the assessment date

are greater than they would have been in the absence of those changes and

increases.

      (7)  

This sub-paragraph applies where the pensioner has not attained normal

pension age in respect of the pension before the assessment date and his

25

entitlement to the pension—

(a)   

is attributable to his pensionable service under the scheme or another

scheme, and

(b)   

did not arise by virtue of any provision of the admissible rules of the

scheme making special provision as to early payment of pension on

30

grounds of ill health.

      (8)  

This sub-paragraph applies where the pension was not attributable to—

(a)   

the pensioner’s pensionable service under the scheme or another

scheme, or

(b)   

(directly or indirectly) to a pension credit to which the pensioner

35

became entitled under section 29(1)(b) of the Welfare Reform and

Pensions Act 1999 (c. 30).

      (9)  

This paragraph does not apply if compensation is payable in respect of the

pension in accordance with paragraph 5 (pension benefits postponed at

assessment date).

40

     (10)  

This paragraph is subject to—

paragraph 25 (compensation cap on periodic compensation), and

paragraph 30 (power of Secretary of State to change percentage rates

by order).

4     (1)  

This paragraph applies where—

45

(a)   

the pensioner dies on or after the assessment date, and

(b)   

the pension was attributable—

(i)   

to the pensioner’s pensionable service under the scheme, or

 

 

Pensions Bill
Schedule 7 — Pension compensation provisions

194

 

(ii)   

(directly or indirectly) to a pension credit to which the

pensioner became entitled under section 29(1)(b) of the

Welfare Reform and Pensions Act 1999 (c. 30).

      (2)  

The pensioner’s widow or widower is entitled to periodic compensation

commencing on the day following the pensioner’s death and continuing for

5

life.

      (3)  

The annual rate of the periodic compensation at any time is half of the

annual rate of the periodic compensation (including any increases under

paragraph 28) to which the pensioner would at that time have been entitled

under paragraph 3 in respect of the pension had the pensioner not died.

10

      (4)  

In this paragraph “the pension” and “the pensioner” are to be construed in

accordance with paragraph 3.

Pension benefits postponed at assessment date

5     (1)  

Compensation is payable in accordance with this paragraph where

immediately before the assessment date—

15

(a)   

a person is entitled to present payment of a pension under the

admissible rules of the scheme,

(b)   

payment of that pension is postponed, and

(c)   

he has attained normal pension age in relation to the pension.

      (2)  

That person (“the postponed pensioner”) is entitled to periodic

20

compensation in respect of that pension (“the pension”) commencing at the

assessment date and continuing for life or, in a case to which sub-paragraph

(7) applies, until such time as entitlement to the pension would have ceased

under the admissible rules.

      (3)  

The annual rate of the periodic compensation is 100% of the aggregate of—

25

(a)   

the protected pension rate, and

(b)   

any increases under paragraph 28 (annual increases in periodic

compensation).

      (4)  

In sub-paragraph (3) “the protected pension rate” means what would have

been the annual rate of the pension, under the admissible rules, if the

30

postponement of payment had ceased immediately before the assessment

date.

      (5)  

In determining for the purposes of sub-paragraph (4) the annual rate of the

pension immediately before the assessment date, any recent discretionary

increase is to be disregarded if the combined effect of all recent rule changes

35

and recent discretionary increases in respect of the scheme is likely to be an

increase in the amount of compensation payable in respect of the scheme

under this Chapter.

      (6)  

Where the pension is attributable (directly or indirectly) to a pension credit,

the reference in sub-paragraph (1)(c) to “normal pension age” is to be read

40

as a reference to “normal benefit age”.

      (7)  

This sub-paragraph applies where the pension was not attributable to—

(a)   

the pensioner’s pensionable service under the scheme or another

scheme, or

(b)   

(directly or indirectly) to a pension credit to which the pensioner

45

became entitled under section 29(1)(b) of the Welfare Reform and

Pensions Act 1999.

      (8)  

This paragraph is subject to—

 

 

Pensions Bill
Schedule 7 — Pension compensation provisions

195

 

paragraph 23 (commutation), and

paragraph 30 (power of Secretary of State to change percentage rates

by order).

6     (1)  

This paragraph applies where the postponed pensioner—

(a)   

dies on or after the assessment date,

5

(b)   

the pension was attributable—

(i)   

to the postponed pensioner’s pensionable service under the

scheme or another scheme, or

(ii)   

(directly or indirectly) to a pension credit to which the

postponed pensioner became entitled under section 29(1)(b)

10

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

      (2)  

The postponed pensioner’s widow or widower is entitled to periodic

compensation commencing on the day following the postponed pensioner’s

death and continuing for life.

      (3)  

The annual rate of the periodic compensation at any time is half of the

15

annual rate of the periodic compensation (including any increases under

paragraph 28) to which the postponed pensioner would at that time have

been entitled under paragraph 5 in respect of the pension had the postponed

pensioner not died.

      (4)  

In this paragraph “the postponed pensioner” and “the pension” are to be

20

construed in accordance with paragraph 5.

7     (1)  

Compensation is payable in accordance with this paragraph where

immediately before the assessment date—

(a)   

a person is entitled to present payment of a lump sum under the

admissible rules of the scheme (“the scheme lump sum”),

25

(b)   

payment of that lump sum is postponed, and

(c)   

he has attained normal pension age in relation to the lump sum.

      (2)  

That person is entitled to compensation in the form of a lump sum of an

amount equal to 100% of the amount of the scheme lump sum which would

have been payable had the postponement ceased immediately before the

30

assessment date.

      (3)  

The compensation is payable at the assessment date.

      (4)  

Where the scheme lump sum is attributable (directly or indirectly) to a

pension credit, the reference in sub-paragraph (1)(c) to “normal pension

age” is to be read as a reference to “normal benefit age”.

35

      (5)  

This paragraph does not apply in relation to a lump sum to which a person

is entitled by reason of commuting any part of a pension under the scheme.

      (6)  

This paragraph is subject to paragraph 30 (power to change percentage rates

by order).

Active members over normal pension age at assessment date

40

8     (1)  

Compensation is payable in accordance with this paragraph where a person

who, under the admissible rules, is (immediately before the assessment

date) an active member of the scheme has, before that date, attained normal

pension age in respect of his rights under the admissible rules of the scheme

to a pension.

45

 

 

Pensions Bill
Schedule 7 — Pension compensation provisions

196

 

      (2)  

The active member is entitled to periodic compensation in respect of that

pension (“the pension”) commencing at the assessment date and continuing

for life.

      (3)  

The annual rate of the periodic compensation is 100% of the aggregate of—

(a)   

the protected notional pension, and

5

(b)   

any increases under paragraph 28 (annual increases in periodic

compensation).

      (4)  

In sub-paragraph (3) “the protected notional pension” means the aggregate

of—

(a)   

the accrued amount, and

10

(b)   

any increases in the pension to which the active member would have

been entitled under the admissible rules (by virtue of the fact that the

pension did not come into payment at normal pension age) if he had

ceased to be an active member of the scheme immediately before the

assessment date.

15

      (5)  

Subject to sub-paragraphs (6) and (7), the accrued amount is—equation: times[char[A],char[R],char[x],char[P],char[E],char[x],char[P],char[S]]

           

where—

AR is the active member’s annual accrual rate in respect of the pension

under the admissible rules,

PE is the active member’s annual pensionable earnings in respect of

20

the pension under the admissible rules, and

PS is the active member’s pensionable service in respect of the pension

under the admissible rules in years (including any fraction of a

year).

      (6)  

If the accrual rates or pensionable earnings differ in respect of different parts

25

of the active member’s pensionable service relating to the pension, an

amount is calculated in accordance with the formula in sub-paragraph (5) in

respect of each of those parts and the accrued amount is the aggregate of

those amounts.

           

For this purpose the references in that sub-paragraph to the active member’s

30

pensionable service, accrual rate and pensionable earnings are to be read as

references to the part of his pensionable service in question and to his accrual

rate and pensionable earnings in respect of that part.

      (7)  

In any case where the Board is satisfied that it is not possible to identify one

or more of the elements of the formula in sub-paragraph (5), the Board may,

35

having regard to the admissible scheme rules, determine how the accrued

amount is to be calculated.

      (8)  

This paragraph is subject to—

paragraph 23 (commutation), and

paragraph 30 (power of Secretary of State to change percentage rates

40

by order).

9     (1)  

This paragraph applies where the active member dies on or after the

assessment date.

 

 

 
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