Pensions Bill

House of Commons

Session 2003 - 04
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Pensions Bill

Pensions Bill
Part 2 — The Board of the Pension Protection Fund
Chapter 2 — Information relating to employer’s insolvency etc
59

(7)
The Secretary of State may by order amend subsection (4)(e) to make provision
consequential upon any order under section 420 of the Insolvency Act 1986
(c. 45) (insolvent partnerships) applying the provisions of Part 2 of that Act
(administration) as amended by the Enterprise Act 2002 (c. 40).
(8)
“Insolvency date”, in relation to an insolvency event, means the date on which
5
the event occurs.
(9)
“Insolvency practitioner”, in relation to a person, means—
(a)
a person acting as an insolvency practitioner, in relation to that person,
in accordance with section 388 of the Insolvency Act 1986,
(b)
in such circumstances as may be prescribed, a person of a prescribed
10
description.
(10)
In this section—

“company” means a company within the meaning given by section 735(1)
of the Companies Act 1985 (c. 6) or a company which may be wound up
under Part 5 of the Insolvency Act 1986 (unregistered companies);
15

“person acting as an insolvency practitioner”, in relation to a person,
includes the official receiver acting as receiver or manager of any
property of that person.
(11)
In applying section 388 of the Insolvency Act 1986 under subsection (9)
above—
20
(a)
the reference in section 388(2)(a) to a permanent or interim trustee in
sequestration must be taken to include a reference to a trustee in
sequestration, and
(b)
section 388(5) (which includes provision that nothing in the section
applies to anything done by the official receiver or the Accountant in
25
Bankruptcy) must be ignored.
Status of scheme
96
Insolvency practitioner’s duty to issue notices confirming status of scheme
(1)
This section applies where an insolvency event has occurred in relation to the
employer in relation to an occupational pension scheme
30
(2)
If an insolvency practitioner in relation to the employer is able to confirm—
(a)
that a scheme rescue is not possible, or
(b)
that a scheme rescue has occurred,

he must issue a notice to that effect.
(3)
Subsection (4) applies where—
35
(a)
in prescribed circumstances, insolvency proceedings in relation to the
employer are stayed or come to an end, or
(b)
a prescribed event occurs.
(4)
If a person who was acting as an insolvency practitioner in relation to the
employer immediately before this subsection applies has not been able to
40
confirm in relation to the scheme—
(a)
that a scheme rescue is not possible, or
(b)
that a scheme rescue has occurred,

he must issue a notice to that effect.

Pensions Bill
Part 2 — The Board of the Pension Protection Fund
Chapter 2 — Information relating to employer’s insolvency etc
60

(5)
For the purposes of this section—
(a)
a person is able to confirm that a scheme rescue has occurred in relation
to an occupational pension scheme if, and only if, he is able to confirm
such matters as are prescribed for the purposes of this paragraph, and
(b)
a person is able to confirm that a scheme rescue is not possible, in
5
relation to such a scheme if, and only if, he is able to confirm such
matters as are prescribed for the purposes of this paragraph.
(6)
Where an insolvency practitioner or former insolvency practitioner in relation
to the employer issues a notice under this section, he must give a copy of that
notice to—
10
(a)
the Board,
(b)
the Regulator, and
(c)
the trustees or managers of the scheme.
(7)
A person must comply with an obligation imposed on him by subsection (2),
(4) or (6) as soon as reasonably practicable.
15
Board’s duties
97
Board’s duty where there is a failure to comply with section 96
(1)
This section applies where, in relation to an occupational pension scheme, the
Board is satisfied that an insolvency practitioner, or former insolvency
practitioner, in relation to the employer has failed to issue a notice which he
20
was required to issue under section 96.
(2)
The Board must issue a notice in the form in which it ought to have been issued.
(3)
Subject to subsections (4) and (5), a notice issued under subsection (2) has effect
as if it were a notice issued under section 96 by an insolvency practitioner or,
as the case may, former insolvency practitioner in relation to the employer.
25
(4)
Where a notice is issued under subsection (2), section 96(6) does not apply and
the Board must, as soon as reasonably practicable, give a copy of the notice to—
(a)
the Regulator,
(b)
the trustees or managers of the scheme, and
(c)
any insolvency practitioner in relation to the employer, or if there is no
30
such insolvency practitioner, the employer.
(5)
The issuing of a notice under subsection (2) does not have effect to prevent an
insolvency event in relation to the employer being a qualifying insolvency
event within the meaning of any provision of this Part or of section 75 of the
Pensions Act 1995 (c. 26) if—
35
(a)
the event occurs after the failure mentioned in subsection (1), and
(b)
had the insolvency practitioner issued the required notice under
section 96, the event would have been a qualifying insolvency event for
those purposes.

Pensions Bill
Part 2 — The Board of the Pension Protection Fund
Chapter 3 — Pension protection
61

Chapter 3
Pension protection
Eligible schemes
98
Eligible schemes
(1)
In this Part references to an “eligible scheme” are to an occupational pension
5
scheme which—
(a)
is not a money purchase scheme, and
(b)
is not a prescribed scheme or a scheme of a prescribed description.
(2)
A scheme is not an eligible scheme if it is being wound up immediately before
the day appointed by the Secretary of State by order for the purposes of this
10
subsection.
Circumstances in which Board assumes responsibility for eligible schemes
99
Duty to assume responsibility for schemes following insolvency event
(1)
This section applies where a qualifying insolvency event has occurred in
relation to the employer in relation to an eligible scheme.
15
(2)
The Board must assume responsibility for the scheme in accordance with this
Chapter if—
(a)
the value of the assets of the scheme at the relevant time was less than
the amount of the protected liabilities at that time (see sections 103 and
112),
20
(b)
after the relevant time an insolvency practitioner in relation to the
employer issues a notice under section 96 confirming that a scheme
rescue is not possible in relation to the scheme, and
(c)
the Board has not ceased to be involved with the scheme (see section
117) in the period beginning with the relevant time and ending with the
25
issuing of that notice.
(3)
For the purposes of this section—
(a)
in relation to an eligible scheme, an insolvency event in relation to the
employer is a qualifying insolvency event if the event does not fall
within an assessment period (see section 104) in respect of the scheme
30
which began before the event occurred,
(b)
the reference in subsection (2)(a) to the assets of the scheme is a
reference to those assets excluding any assets representing the value of
any rights in respect of money purchase benefits under the scheme, and
(c)
“the relevant time” means the time immediately before the qualifying
35
insolvency event occurs.
(4)
This section is subject to sections 115 and 116 (cases where Board must refuse
to assume responsibility for a scheme).

Pensions Bill
Part 2 — The Board of the Pension Protection Fund
Chapter 3 — Pension protection
62

100
Duty to assume responsibility for schemes following application or
notification
(1)
This section applies where, in relation to an eligible scheme, the trustees or
managers of the scheme—
(a)
make an application under subsection (1) of section 101 (a “section 101
5
application”), or
(b)
receive a notice from the Board under subsection (5)(a) of that section
(a “section 101 notification”).
(2)
The Board must assume responsibility for the scheme in accordance with this
Chapter if—
10
(a)
the value of the assets of the scheme at the relevant time was less than
the amount of the protected liabilities at that time (see sections 103 and
112),
(b)
after the relevant time the Board issues a notice under section 102
confirming that a scheme rescue is not possible in relation to the
15
scheme, and
(c)
the Board has not ceased to be involved with the scheme (see section
117) in the period beginning with the relevant time and ending with the
issuing of that notice.
(3)
In subsection (2)—
20
(a)
the reference in paragraph (a) to the assets of the scheme is a reference
to those assets excluding any assets representing the value of any rights
in respect of money purchase benefits under the scheme, and
(b)
“the relevant time” means the time immediately before the section 101
application was made or, as the case may be, the section 101 notification
25
was received.
(4)
An application under section 101(1) or notification under section 101(5)(a) is to
be disregarded for the purposes of subsection (1) if it is made or given during
an assessment period (see section 104) in respect of the scheme which began
before the application was made or notification was given.
30
(5)
This section is subject to sections 115 and 116 (cases where Board must refuse
to assume responsibility for a scheme).
101
Applications and notifications for the purposes of section 100
(1)
The trustees or managers of an eligible scheme must make an application to the
Board for it to assume responsibility for the scheme under section 100 if it
35
appears to them that—
(a)
the employer in relation to the scheme is unlikely to continue as a going
concern, and
(b)
the prescribed requirements are met in relation to the employer.
(2)
Where the Board receives an application under subsection (1), it must give a
40
copy of the application to—
(a)
the Regulator, and
(b)
the employer.
(3)
An application under subsection (1) must—
(a)
be in the prescribed form and contain the prescribed information, and
45
(b)
be made within the prescribed period.

Pensions Bill
Part 2 — The Board of the Pension Protection Fund
Chapter 3 — Pension protection
63

(4)
Where the Regulator becomes aware that—
(a)
the employer in relation to an eligible scheme is unlikely to continue as
a going concern, and
(b)
the requirements mentioned in subsection (1)(b) are met in relation to
the employer,
5

it must give the Board a notice to that effect.
(5)
Where the Board receives a notice under subsection (4), it must—
(a)
give the trustees or managers of the scheme a notice to that effect, and
(b)
give the employer a copy of that notice.
(6)
Regulations may require notices under this section to be in the prescribed form
10
and contain the prescribed information.
102
Board’s duty where application or notification received under section 101
(1)
This section applies where the Board—
(a)
receives an application under subsection (1) of section 101 and is
satisfied that paragraph (a) and (b) of that subsection are satisfied in
15
relation to the application, or
(b)
is notified by the Regulator under section 101(4).
(2)
If the Board is able to confirm that a scheme rescue is not possible, it must as
soon as reasonably practicable issue a notice to that effect.
(3)
If the Board is able to confirm that a scheme rescue has occurred, it must as
20
soon as reasonably practicable issue a withdrawal notice.
(4)
The Board must, as soon as reasonably practicable, give a copy of any notice
issued under subsection (2) or (3) to—
(a)
the Regulator,
(b)
the trustees or managers of the scheme, and
25
(c)
the employer.
(5)
For the purposes of this section—
(a)
the Board is able to confirm that a scheme rescue has occurred in
relation to an occupational pension scheme if, and only if, it is able to
confirm such matters as are prescribed for the purposes of this
30
paragraph, and
(b)
the Board is able to confirm that a scheme rescue is not possible in
relation to such a scheme if, and only if, it is able to confirm such
matters as are prescribed for the purposes of this paragraph.
(6)
In this section “withdrawal notice” means a notice in the prescribed form
35
which—
(a)
states the time from which the Board ceases to be involved with the
scheme, and
(b)
contains such other information as may be prescribed.
103
Protected liabilities
40
(1)
For the purposes of this Chapter the protected liabilities, in relation to an
eligible scheme, at a particular time (“the relevant time”) are—
(a)
the cost of securing benefits for and in respect of members of the
scheme which are equivalent to the compensation which would be

Pensions Bill
Part 2 — The Board of the Pension Protection Fund
Chapter 3 — Pension protection
64

payable, in relation to the scheme, in accordance with the pension
compensation provisions (see section 124) if the Board assumed
responsibility for the scheme under this Chapter,
(b)
liabilities of the scheme which are not liabilities to, or in respect of, its
members, and
5
(c)
the estimated cost of winding up the scheme.
(2)
For the purposes of determining the cost of securing benefits within subsection
(1)(a), references in Schedule 7 ((pension compensation provisions) to the
assessment date are to be read as references to the day on which the relevant
time falls.
10
Restrictions on schemes during the assessment period
104
Assessment periods
(1)
In this Part references to an assessment period are to be construed in
accordance with this section.
(2)
Where, in relation to an eligible scheme, a qualifying insolvency event occurs
15
in relation to the employer, an assessment period—
(a)
begins with the occurrence of that event, and
(b)
ends when—
(i)
the Board ceases to be involved with the scheme (see section
117),
20
(ii)
the trustees or managers of the scheme receive a transfer notice
under section 122, or
(iii)
the winding up of the scheme is completed,

whichever first occurs.
(3)
For the purposes of subsection (2) an insolvency event in relation to the
25
employer is a qualifying insolvency event if it does not fall within an
assessment period in respect of the scheme which began before that event.
(4)
Where, in relation to an eligible scheme, an application is made under section
101(1) or a notification is received under section 101(5)(a), an assessment
period—
30
(a)
begins when the application is made or the notification is received, and
(b)
ends when—
(i)
the Board ceases to be involved with the scheme (see section
117),
(ii)
the trustees or managers of the scheme receive a transfer notice
35
under section 122, or
(iii)
the winding up of the scheme is completed,

whichever first occurs.
(5)
For the purposes of subsection (4) an application under section 101(1) or
notification under section 127(5)(a) is to be disregarded if it is made or given
40
during an assessment period in respect of the scheme which began before the
application was made or notification was given.