Pensions Bill

House of Commons

Session 2003 - 04
Internet Publications
Other Bills before Parliament

Pensions Bill

Pensions Bill
Part 2 — The Board of the Pension Protection Fund
Chapter 1 — The Board
52

Part 2
The Board of the Pension Protection Fund
Chapter 1
The Board
Establishment
5
81
The Board of the Pension Protection Fund
There shall be a body corporate called the Board of the Pension Protection
Fund (in this Act referred to as “the Board”).
82
Membership of the Board
(1)
The Board is to consist of the following members—
10
(a)
a chairman,
(b)
the Chief Executive of the Board, and
(c)
at least five other persons (“ordinary members”).
(2)
The chairman must not be appointed from the staff of the Board or be the
chairman of the Regulator.
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(3)
The number of ordinary members must not exceed any maximum number
which may be prescribed.
(4)
At least two ordinary members must be appointed from the staff of the Board.
(5)
No member of the Determinations Panel established by the Regulator under
section 10, or member of the staff of the Regulator, is eligible for appointment
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as a member of the Board.
(6)
Any power to appoint ordinary members must be exercised so as to secure that
a majority of the members of the Board are non-executive members.
(7)
In this Part—
(a)
references to executive members of the Board are to—
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(i)
the Chief Executive, and
(ii)
the ordinary members appointed from the staff of the Board,
and
(b)
references to non-executive members of the Board are to members who
are not executive members.
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83
Further provision about the Board
Schedule 5 makes further provision about the Board, including provision as
to—
the appointment of members,
the terms of appointment, tenure and remuneration of members,
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the appointment of the Chief Executive and other staff,
the proceedings of the Board,
its accounts, and

Pensions Bill
Part 2 — The Board of the Pension Protection Fund
Chapter 1 — The Board
53

the status and liability of the Board, its members and staff.
General provision about functions
84
Board’s functions
(1)
The Board must hold, manage and apply, in accordance with this Part—
(a)
a fund to be known as the Pension Protection Fund, and
5
(b)
a fund to be known as the Fraud Compensation Fund.
(2)
Sections 137 and 151 make provision for contributions to those funds to be
levied by the Board.
(3)
The Board also has such other functions as are conferred on it by, or by virtue
of, this or any other enactment.
10
85
Supplementary powers
The Board may do anything which—
(a)
is calculated to facilitate the exercise of its functions, or
(b)
is incidental or conducive to their exercise.
The Non-Executive Committee
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86
The Non-Executive Committee
(1)
The Board must establish and maintain a committee consisting of—
(a)
the chairman of the Board, and
(b)
the other non-executive members of the Board,

(in this Part referred to as “the Non-Executive Committee”).
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(2)
The chairman of the Board is to be the chairman of the Non-Executive
Committee.
(3)
The functions listed in subsection (5) (in this Part referred to as “the non-
executive functions”) are functions of the Board.
(4)
The non-executive functions must be discharged on behalf of the Board by the
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Non-Executive Committee (and are not otherwise dischargeable by or on
behalf of the Board).
(5)
The non-executive functions are—
(a)
the duty to contribute to and keep under review the strategic direction
of the Board;
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(b)
the duty to scrutinise the performance of the Chief Executive in
securing that the functions of the Board are discharged efficiently and
effectively;
(c)
the duty to monitor the extent to which the Board is meeting its
objectives and targets;
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(d)
the duty to monitor the Board’s reporting of its activities to the
Secretary of State under section 93;
(e)
the duty to keep under review the question whether the Board’s
internal financial controls secure the proper conduct of its financial
affairs;
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Pensions Bill
Part 2 — The Board of the Pension Protection Fund
Chapter 1 — The Board
54

(f)
the duty to determine under sub-paragraph (5)(a) of paragraph 12 of
Schedule 5, subject to the approval of the Secretary of State, the terms
and conditions as to remuneration of any Chief Executive appointed
under sub-paragraph (4) of that paragraph;
(g)
the duty to determine under paragraph 13(3)(a) of that Schedule,
5
subject to the approval of the Secretary of State, the terms and
conditions as to remuneration of any member of the staff who is also to
be an executive member of the Board;
(h)
the duty to determine under paragraph 13(3)(b) of that Schedule, the
terms and conditions as to remuneration of any member of the staff of
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a description prescribed for the purposes of that provision.
(6)
The Non-Executive Committee must prepare a report on the discharge of the
non-executive functions for inclusion in the Board’s annual report to the
Secretary of State under section 93.
(7)
The Non-Executive Committee’s report must relate to the same period as that
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covered by the Board’s report.
(8)
The Non-Executive Committee may authorise any of its sub-committees to
discharge on its behalf—
(a)
any of the non-executive functions;
(b)
the duty to prepare a report under subsection (6).
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Financial matters
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Investment of funds
(1)
The Board may invest for the purposes of the prudent management of its
financial affairs.
(2)
For the purposes of subsection (1) there must be two fund managers.
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(3)
For this purpose “fund manager” means an individual who or firm which is
appointed by the Board to manage the fund maintained under section 135 (the
Pension Protection Fund) and the fund maintained under any corresponding
provision in force in Northern Ireland.
(4)
The Board must not appoint an individual or firm as a fund manager unless it
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is satisfied—
(a)
in the case of an individual, that the individual has the appropriate
knowledge and experience for managing the investments of the
Pension Protection Fund, or
(b)
in the case of a firm, that arrangements are in place to secure that any
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individual who will exercise functions which the firm has as fund
manager will, at the time he exercises those functions, have the
appropriate knowledge and experience for managing the investments
of that Fund.
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Investment principles
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(1)
The Board must secure—
(a)
that a statement of investment principles is prepared and maintained,
and

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Part 2 — The Board of the Pension Protection Fund
Chapter 1 — The Board
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(b)
that the statement is reviewed at such intervals, and on such occasions,
as may be prescribed and, if necessary, revised.
(2)
In this section “statement of investment principles” means a written statement
of the investment principles governing determinations made by the Board
about investments.
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(3)
Before preparing or revising a statement of investment principles, the Board
must comply with any prescribed requirements.
(4)
A statement of investment principles must be in the prescribed form and cover,
amongst other things, the prescribed matters.
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Borrowing
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(1)
The Board may—
(a)
borrow from a deposit-taker such sums as it may from time to time
require for exercising any of its functions;
(b)
give security for any money borrowed by it.
(2)
The Board may not borrow if the effect would be—
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(a)
to take the aggregate amount outstanding in respect of the principal of
sums borrowed by it over its borrowing limit, or
(b)
to increase the amount by which the aggregate amount so outstanding
exceeds that limit.
(3)
In this section—
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“borrowing limit” means such limit as the Secretary of State may specify
by order;

“deposit-taker” means—
(a)
a person who has permission under Part 4 of the Financial
Services and Markets Act 2000 (c. 8) to accept deposits, or
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(b)
an EEA firm of the kind mentioned in paragraph 5(b) of
Schedule 3 to that Act which has permission under paragraph
15 of that Schedule (as a result of qualifying for authorisation
under paragraph 12 of that Schedule) to accept deposits.
(4)
The definition of “deposit-taker” in subsection (3) must be read with—
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(a)
section 22 of the Financial Services and Markets Act 2000,
(b)
any relevant order under that section, and
(c)
Schedule 2 to that Act.
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Grants
The Secretary of State may pay the Board out of money provided by Parliament such
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sums as he may determine towards any of its expenses, other than expenditure which
by virtue of section 135(3) or 150(3) is payable out of—
(a)
the Pension Protection Fund, or
(b)
the Fraud Compensation Fund.
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Administration levy
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(1)
Regulations may provide for the imposition of a levy (“administration levy”) in respect
of eligible schemes (see section 98) for the purpose of meeting—

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Part 2 — The Board of the Pension Protection Fund
Chapter 1 — The Board
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(a)
the expenditure of the Secretary of State relating to the establishment of the
Board;
(b)
any expenditure of the Secretary of State under section 90.
(2)
An administration levy is payable to the Secretary of State by or on behalf of—
(a)
the trustees or managers of an eligible scheme, or
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(b)
any other prescribed person.
(3)
An administration levy is payable at the prescribed rate and at prescribed times.
(4)
Before prescribing a rate under subsection (3), the Secretary of State must consult the
Board.
(5)
An amount payable by a person on account of an administration levy is a debt due from
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him to the Secretary of State.
(6)
An amount so payable is recoverable by the Secretary of State or, if he so determines,
by the Regulator on his behalf.
(7)
Without prejudice to the generality of subsections (1), (5) and (6), regulations under
this section may include provision relating to—
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(a)
the collection and recovery of amounts payable by way of levy under this
section;
(b)
the circumstances in which any such amount may be waived.
92
Fees
(1)
Regulations may authorise the Board—
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(a)
to charge prescribed fees;
(b)
to charge fees sufficient to meet prescribed costs.
(2)
Regulations under subsection (1) may prescribe, or authorise the Board to
determine, the time at which any fee is due.
(3)
Any fee which is owed to the Board by virtue of regulations under this
25
subsection may be recovered as a debt due to the Board.
Annual reports
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Annual reports to Secretary of State
(1)
The Board must prepare a report for each financial year.
(2)
Each report—
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(a)
must deal with the activities of the Board in the financial year for which
it is prepared, and
(b)
must include the report prepared by the Non-Executive Committee
under section 86(6).
(3)
The Board must send each report to the Secretary of State as soon as practicable
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after the end of the financial year for which it is prepared.
(4)
The Secretary of State must lay before each House of Parliament a copy of
every report received by him under this section.
(5)
In this section “financial year” means—

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Part 2 — The Board of the Pension Protection Fund
Chapter 2 — Information relating to employer’s insolvency etc
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(a)
the period beginning with the date on which the Board is established
and ending with the next following 31st March, and
(b)
each successive period of 12 months.
Chapter 2
Information relating to employer’s insolvency etc
5
Insolvency events
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Duty to notify insolvency events in respect of employers
(1)
This section applies where, in the case of an occupational pension scheme, an
insolvency event occurs in relation to the employer.
(2)
The insolvency practitioner in relation to the employer must give a notice to
10
that effect within the notification period to—
(a)
the Board,
(b)
the Regulator, and
(c)
the trustees or managers of the scheme.
(3)
For the purposes of subsection (2) the “notification period” is the prescribed
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period beginning with the later of—
(a)
the insolvency date, and
(b)
the date the insolvency practitioner becomes aware of the existence of
the scheme.
(4)
A notice under this section must be in such form and contain such information
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as may be prescribed.
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Insolvency event, insolvency date and insolvency practitioner
(1)
In this Part each of the following expressions has the meaning given to it by this
section—

“insolvency event”
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“insolvency date”

“insolvency practitioner”.
(2)
An insolvency event occurs in relation to an individual where—
(a)
he is adjudged bankrupt or sequestration of his estate has been
awarded;
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(b)
the nominee in relation to a proposal for a voluntary arrangement
under Part 8 of the Insolvency Act 1986 (c. 45) submits a report to the
court under section 256(1) or 256A(3) of that Act which states that in his
opinion a meeting of the individual’s creditors should be summoned to
consider the debtor’s proposal;
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(c)
a deed of arrangement made by or in respect of the affairs of the
individual is registered in accordance with the Deeds of Arrangement
Act 1914 (c. 47);
(d)
he executes a trust deed for his creditors or enters into a composition
contract;
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(e)
he has died and—

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Part 2 — The Board of the Pension Protection Fund
Chapter 2 — Information relating to employer’s insolvency etc
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(i)
an insolvency administration order is made in respect of his
estate in accordance with an order under section 421 of the
Insolvency Act 1986 (c. 45), or
(ii)
a judicial factor appointed under section 11A of the Judicial
Factors (Scotland) Act 1889 (c. 39) is required by that section to
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divide the individual’s estate among his creditors.
(3)
An insolvency event occurs in relation to a company where—
(a)
the nominee in relation to a proposal for a voluntary arrangement
under Part 1 of the Insolvency Act 1986 submits a report to the court
under section 2 of that Act (procedure where nominee is not the
10
liquidator or administrator) which states that in his opinion meetings
of the company and its creditors should be summoned to consider the
proposal;
(b)
the directors of the company file (or in Scotland lodge) with the court
documents and statements in accordance with paragraph 7(1) of
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Schedule A1 to that Act (moratorium where directors propose
voluntary arrangement);
(c)
an administrative receiver within the meaning of section 251 of that Act
is appointed in relation to the company;
(d)
the company enters administration within the meaning of paragraph
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1(2)(b) of Schedule B1 to that Act;
(e)
a resolution is passed for a voluntary winding up of the company
without a declaration of solvency under section 89 of that Act;
(f)
an order for the winding up of the company is made by the court under
Part 4 or 5 of that Act.
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(4)
An insolvency event occurs in relation to a partnership where—
(a)
an order for the winding up of the partnership is made by the court
under any provision of the Insolvency Act 1986 (as applied by an order
under section 420 of that Act (insolvent partnerships));
(b)
sequestration is awarded on the estate of the partnership under section
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12 of the Bankruptcy (Scotland) Act 1985 (c. 66) or the partnership
grants a trust deed for its creditors;
(c)
the nominee in relation to a proposal for a voluntary arrangement
under Part 1 of the Insolvency Act 1986 (as applied by an order under
section 420 of that Act) submits a report to the court under section 2 of
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that Act (procedure where nominee is not the liquidator or
administrator) which states that in his opinion meetings of the
members of the partnership and the partnership’s creditors should be
summoned to consider the proposal;
(d)
the members of the partnership file with the court documents and
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statements in accordance with paragraph 7(1) of Schedule A1 to that
Act (moratorium where directors propose voluntary arrangement) (as
applied by an order under section 420 of that Act);
(e)
an administration order under Part 2 of the Insolvency Act 1986 (as
applied by section 420 of that Act) is made in relation to the
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partnership.
(5)
An insolvency event also occurs in relation to a person where an event occurs
which is a prescribed event in relation to such a person.
(6)
Except as provided by subsections (2) to (5), for the purposes of this Part an
event is not to be regarded as an insolvency event in relation to a person.
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