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Pensions Bill


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

65

 

105     

Admission of new members, payment of contributions etc

(1)   

This section applies where there is an assessment period in relation to an

eligible scheme.

(2)   

No new members may be admitted to the scheme during the assessment

period.

5

(3)   

No further contributions (other than those due to be paid before the beginning

of the assessment period) may be paid towards the scheme during the

assessment period.

(4)   

Any obligation to pay contributions towards the scheme during the assessment

period (including any obligation under section 49(8) of the Pensions Act 1995

10

(c. 26) to pay amounts deducted corresponding to such contributions) is to be

read subject to subsection (3) and section 118 (obligation to pay contributions

when assessment period ends).

(5)   

During the assessment period, except in prescribed circumstances and subject

to prescribed conditions, no transfers of, or transfer payments in respect of, any

15

member’s rights under the scheme are to be made from the scheme.

(6)   

No benefits may accrue under the scheme to, or in respect of, members of the

scheme during the assessment period.

(7)   

Subsection (6) does not prevent any increase, in a benefit, which would

otherwise accrue in accordance with the scheme or any enactment.

20

   

This subsection is subject to section 110 (which limits the scheme benefits

payable during an assessment period).

(8)   

Subsection (6) does not prevent the accrual of money purchase benefits to the

extent that they are derived from income or capital gains arising from the

investment of payments which—

25

(a)   

are made by, or in respect of, a member of the scheme, and

(b)   

relate to periods of pensionable service (within the meaning of section

124(1) and (3) of the Pensions Act 1995) prior to the assessment period.

(9)   

Any action taken in contravention of this section is void.

(10)   

Disregarding subsection (9), section 10 of the Pensions Act 1995 (civil penalties)

30

applies to any trustee or manager of a scheme who fails to take all reasonable

steps to secure compliance with this section.

106     

Directions

(1)   

This section applies where there is an assessment period in relation to an

eligible scheme.

35

(2)   

With a view to ensuring that the scheme’s protected liabilities do not exceed its

assets or, if they do exceed its assets, that the excess is kept to a minimum, the

Board may give a relevant person in relation to the scheme directions

regarding the exercise during that period of their powers in respect of—

(a)   

the investment of the scheme’s assets,

40

(b)   

the incurring of expenditure,

(c)   

the instigation or conduct of legal proceedings, and

(d)   

such other matters as may be prescribed.

(3)   

In subsection (2)—

 

 

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

66

 

(a)   

“relevant person” in relation to a scheme means—

(i)   

the trustees or managers of the scheme,

(ii)   

the employer in relation to the scheme, or

(iii)   

such other persons as may be prescribed, and

(b)   

the reference to the assets of the scheme is a reference to those assets

5

excluding any assets representing the value of any rights in respect of

money purchase benefits under the scheme.

(4)   

The Board may revoke or vary any direction under this section.

(5)   

Where a direction under this section given to the trustees or managers of a

scheme is not complied with section 10 of the Pensions Act 1995 (c. 26) (civil

10

penalties) applies to any such trustee or manager who has failed to take all

reasonable steps to secure compliance with the direction.

(6)   

That section also applies to any other person who, without reasonable excuse,

fails to comply with a direction given to him under this section.

107     

Restrictions on winding up of schemes

15

(1)   

This section applies where there is an assessment period in relation to an

eligible scheme.

(2)   

Subject to subsection (3), the winding up of the scheme must not begin during

the assessment period.

(3)   

Subsection (2) does not apply to the winding up of the scheme in accordance

20

with an order by the Regulator under section 11(3A) of the Pensions Act 1995

(Regulator’s powers to wind up occupational pension schemes to protect

Pension Protection Fund) directing the scheme to be wound up (and section

177 makes provision for the backdating of the winding up).

(4)   

Where the winding up of the scheme begins by virtue of subsection (3), or

25

otherwise began before the assessment period, no steps may be taken during

that period to discharge any liability to or in respect of a member of the scheme

in respect of pensions or other benefits.

(5)   

Any action taken in contravention of this section is void, except to the extent

that the Board validates the action (see section 108).

30

(6)   

Disregarding subsection (5), where there is a contravention of this section,

section 10 of the Pensions Act 1995 (civil penalties) applies to any trustee or

manager who has failed to take all reasonable steps to secure compliance with

this section.

(7)   

The Regulator may not make a freezing order (see section 20) in relation to the

35

scheme during the assessment period.

(8)   

Nothing in this section operates to prevent the winding up of a scheme, and the

discharge of any liability to or in respect of a member of the scheme, in

accordance with section 119 (requirement to wind up schemes with sufficient

assets to meet protected liabilities).

40

108     

Power to validate contraventions of section 107

(1)   

The Board may validate an action for the purposes of section 107(5) only if it is

satisfied that to do so is consistent with the objective of ensuring that the

 

 

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

67

 

scheme’s protected liabilities do not exceed its assets or, if those liabilities do

exceed its assets, that the excess is kept to a minimum.

(2)   

Where the Board determines to validate, or not to validate, any action of the

trustees or managers for those purposes, it must give a notice to that effect to—

(a)   

the Regulator,

5

(b)   

the trustees or managers of the scheme,

(c)   

any insolvency practitioner in relation to the employer or, if there is no

such insolvency practitioner, the employer, and

(d)   

any other person who appears to the Board to be directly affected by the

determination.

10

(3)   

A notice under subsection (2) must contain a statement of the Board’s reasons

for the determination.

(4)   

A determination to validate an action does not take effect—

(a)   

until the period within which the determination may be reviewed by

virtue of Chapter 6 has expired, and

15

(b)   

if the determination is so reviewed, until—

(i)   

the review and any reconsideration,

(ii)   

any reference to the PPF Ombudsman in respect of the

determination, and

(iii)   

any appeal against his determination or directions,

20

   

has been finally disposed of.

109     

Board to act as creditor of the employer

(1)   

Subsection (2) applies where there is an assessment period in relation to an

eligible scheme.

(2)   

During the assessment period, the rights and powers of the trustees or

25

managers of the scheme in relation to any debt (including any contingent debt)

owed to them by the employer, whether by virtue of section 75 of the Pensions

Act 1995 (c. 26) (deficiencies in the scheme assets) or otherwise, are exercisable

by the Board to the exclusion of the trustees or managers.

(3)   

Where, by virtue of subsection (2), any amount is paid to the Board in respect

30

of such a debt, the Board must pay that amount to the trustees or managers of

the scheme.

(4)   

Where an insolvency arrangement is made in respect of the employer, the

Board is not bound by the terms of that arrangement if, and to the extent that,

the arrangement relates to a debt which, at the time the arrangement was

35

made, was a contingent debt of the employer in respect of the scheme under

section 75 of the Pensions Act 1995.

(5)   

Subsection (4) does not apply where, before the arrangement was made, the

Board consented to be so bound.

(6)   

In subsection (4) “insolvency arrangement” means—

40

(a)   

a voluntary arrangement under Part 1 or 8 of the Insolvency Act 1986

(c. 45);

(b)   

an arrangement which has effect under section 425 of the Companies

Act 1985 (c. 6);

 

 

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

68

 

(c)   

a deed of arrangement registered in accordance with the Deeds of

Arrangement Act 1914 (c. 47);

(d)   

a trust deed executed for the employer’s creditors or a composition

contract entered into by the employer.

110     

Payment of scheme benefits

5

(1)   

Subsection (2) applies where there is an assessment period in relation to an

eligible scheme.

(2)   

The benefits payable to or in respect of any member under the scheme during

the assessment period must be reduced to the extent necessary to ensure that

they do not exceed the compensation which would be payable to or in respect

10

of the members for that period in accordance with this Chapter if—

(a)   

the Board assumed responsibility for the scheme under this Chapter,

and

(b)   

the assessment date referred to in Schedule 7 were the date on which

the assessment period began.

15

(3)   

Section 10 of the Pensions Act 1995 (c. 26) (civil penalties) applies to a trustee

or manager of a scheme who fails to take all reasonable steps to secure

compliance with subsection (2).

(4)   

Regulations may provide that, where there is an assessment period in relation

to an eligible scheme, the commencement of a member’s pension or other

20

benefits is, in such circumstances and on such terms and conditions as may be

prescribed, to be postponed for the whole or any part of the assessment period

for which he continues in employment after attaining normal pension age.

(5)   

Nothing in subsection (2) applies to money purchase benefits.

111     

Loans to pay scheme benefits

25

(1)   

This section applies where section 110(2) applies in relation to an eligible

scheme.

(2)   

Where the Board is satisfied that the trustees or managers of the scheme are not

able to pay benefits under the scheme (reduced in accordance with section

110(2)) as they fall due, it may, on an application by the trustees or managers,

30

lend to them such amounts as the Board considers appropriate for the purpose

of enabling them to pay those benefits.

(3)   

Where an amount lent to the trustees or managers of a scheme under

subsection (2) is outstanding at—

(a)   

the time the Board ceases to be involved with the scheme, or

35

(b)   

if earlier—

(i)   

the time during the assessment period when an order is made

under section 11(3A) of the Pensions Act 1995 directing the

winding up of the scheme, or

(ii)   

where no such order is made during that period, the time when

40

section 119 (requirement to wind up schemes with sufficient

assets to meet protected liabilities) first applies in relation to the

scheme,

   

that amount, together with the appropriate interest on it, falls to be repaid by

the trustees or managers of the scheme to the Board at that time.

45

 

 

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

69

 

(4)   

No loan may be made under subsection (2) after the time mentioned in

subsection (3)(b).

(5)   

In subsection (2) the reference to “benefits” does not include money purchase

benefits.

(6)   

In subsection (3) “the appropriate interest” on an amount lent under subsection

5

(2) means interest at the prescribed rate from the time the amount was so lent

until repayment.

(7)   

Subject to this section, the Board may make a loan under subsection (2) on such

terms as it thinks fit.

Valuation of assets and liabilities

10

112     

Board’s obligation to obtain valuation of assets and protected liabilities

(1)   

This section applies in a case within subsection (1) of section 99 or 100.

(2)   

For the purposes of determining whether the condition in subsection (2)(a) of

the section in question is satisfied, the Board must, as soon as reasonably

practicable, obtain an actuarial valuation of the scheme as at the relevant time.

15

(3)   

For this purpose—

   

“actuarial valuation”, in relation to the scheme, means a written valuation,

prepared and signed by a person with prescribed qualifications, of the

assets and protected liabilities of the scheme; and

   

“relevant time”—

20

(a)   

in a case within subsection (1) of section 99 has the meaning

given in subsection (3)(c) of that section, and

(b)   

in a case within subsection (1) of section 100 has the meaning

given in subsection (3)(b) of that section.

(4)   

For the purposes of this Chapter, regulations may prescribe how—

25

(a)   

the assets and the protected liabilities of eligible schemes, and

(b)   

their amount or value,

   

are to be determined, calculated and verified.

(5)   

Subject to any provision made under subsection (4), those matters are to be

determined, calculated and verified in accordance with guidance issued by the

30

Board.

(6)   

In calculating the amount of any liabilities for those purposes, a provision of

the scheme which limits the amount of its liabilities by reference to the value of

its assets is to be disregarded.

(7)   

The duty imposed by subsection (2) ceases to apply if and when the Board

35

ceases to be involved with the scheme.

(8)   

In this section references to “assets” do not include assets representing the

value of any rights in respect of money purchase benefits under the scheme.

113     

Approval of valuation

(1)   

This section applies where the Board obtains a valuation in respect of a scheme

40

under section 112.

 

 

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

70

 

(2)   

Where the Board is satisfied that the valuation has been prepared in

accordance with that section, it must—

(a)   

approve the valuation, and

(b)   

give a copy of the valuation to—

(i)   

the Regulator,

5

(ii)   

the trustees or managers of the scheme, and

(iii)   

any insolvency practitioner in relation to the employer or, if

there is no such insolvency practitioner, the employer.

(3)   

Where the Board is not so satisfied, it must obtain another valuation under that

section.

10

114     

Binding valuations

(1)   

For the purposes of this Chapter a valuation obtained under section 112 is not

binding until—

(a)   

it is approved under section 113,

(b)   

the period within which the approval may be reviewed by virtue of

15

Chapter 6 has expired, and

(c)   

if the approval is so reviewed—

(i)   

the review and any reconsideration,

(ii)   

any reference to the PPF Ombudsman in respect of the

determination, and

20

(iii)   

any appeal against his determination or directions,

   

has been finally disposed of.

(2)   

For the purposes of determining whether or not the condition in section

99(2)(a) or, as the case may be, section 100(2)(a) (condition that scheme assets

are less than protected liabilities) is satisfied in relation to a scheme, a binding

25

valuation is conclusive.

   

This subsection is subject to section 134(3) and (4) (treatment of fraud

compensation payments).

(3)   

Where a valuation becomes binding under this section the Board must as soon

as practicable give a notice to that effect together with a copy of the binding

30

valuation to—

(a)   

the trustees or managers of the scheme,

(b)   

any insolvency practitioner in relation to the employer or, if there is no

such insolvency practitioner, the employer.

(4)   

A notice under subsection (3) must be in the prescribed form and contain the

35

prescribed information.

Refusal to assume responsibility

115     

Schemes which become eligible schemes

(1)   

Regulations may provide that where the Board is satisfied that an eligible

scheme was not such a scheme throughout such period as may be prescribed,

40

the Board must refuse to assume responsibility for the scheme under this

Chapter.

 

 

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

71

 

(2)   

Where, by virtue of subsection (1), the Board is required to refuse to assume

responsibility for a scheme, it—

(a)   

must issue a withdrawal notice, and

(b)   

give a copy of that notice to—

(i)   

the Regulator,

5

(ii)   

the trustees or managers of the scheme, and

(iii)   

any insolvency practitioner in relation to the employer or, if

there is no such insolvency practitioner, the employer.

(3)   

In this section “withdrawal notice” means a notice in the prescribed form

which—

10

(a)   

states the time from which the Board ceases to be involved with the

scheme (see section 117), and

(b)   

contains such other information as may be prescribed.

116     

New schemes created to replace existing schemes

(1)   

The Board must refuse to assume responsibility for a scheme (“the new

15

scheme”) under this Chapter where it is satisfied that—

(a)   

the new scheme was established during such period as may be

prescribed,

(b)   

the employer in relation to the new scheme was, at the date of

establishment of that scheme, also the employer in relation to a scheme

20

established before the new scheme (the “old scheme”),

(c)   

a transfer or transfers of, or transfer payment or transfer payments in

respect of, any rights of members under the old scheme has or have

been made to the new scheme, and

(d)   

the main purpose or one of the main purposes of establishing the new

25

scheme and making the transfer or transfers, or transfer payment or

transfer payments, was to enable those members to receive

compensation under the pension compensation provisions in respect of

their rights under the new scheme in circumstances where, in the

absence of the transfer or transfers, regulations under section 115

30

would have operated to prevent such payments in respect of their

rights under the old scheme.

(2)   

Where, under subsection (1), the Board is required to refuse to assume

responsibility for a scheme, it—

(a)   

must issue a withdrawal notice, and

35

(b)   

give a copy of that notice to—

(i)   

the Regulator,

(ii)   

the trustees or managers of the scheme, and

(iii)   

any insolvency practitioner in relation to the employer or, if

there is no such insolvency practitioner, the employer.

40

(3)   

In this section “withdrawal notice” means a notice in the prescribed form

which—

(a)   

states the time from which the Board ceases to be involved with the

scheme (see section 117), and

(b)   

contains such other information as may be prescribed.

45

 

 

 
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