Pensions Bill

House of Commons

Session 2003 - 04
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Other Bills before Parliament

Pensions Bill

Pensions Bill
Part 2 — The Board of the Pension Protection Fund
Chapter 3 — Pension protection
72

Cessation of involvement with a scheme
117
Circumstances in which Board ceases to be involved with an eligible scheme
(1)
Where an assessment period begins in relation to an eligible scheme, the Board
ceases to be involved with the scheme, for the purposes of this Part, on the
occurrence of the first withdrawal event after the beginning of that period.
5
(2)
For this purpose the following are withdrawal events in relation to a scheme—
(a)
the issuing, by an insolvency practitioner in relation to the employer, of
a notice under section 96(2) which confirms that a scheme rescue has
occurred;
(b)
the issuing, by the Board, of a withdrawal notice under section 102(3)
10
(Board’s confirmation that a scheme rescue has occurred);
(c)
in a case where a person who is or was such an insolvency practitioner
issues a notice under section 96(4)—
(i)
the issuing, by the Board, of a withdrawal notice under
subsection (5) below, or
15
(ii)
where no such withdrawal notice is issued before the end of the
period of six months beginning with the date on which the
notice was issued under section 96(4), the expiry of that period;
(d)
the issuing, by the Board, of a withdrawal notice under section 115 or
116 (refusal to assume responsibility for a scheme).
20
(3)
Subsection (4) applies where the Board—
(a)
receives a copy of a notice under section 96(4) in relation to an eligible
scheme, and
(b)
it has not, since the last insolvency event occurred in relation to the
employer, ceased to be involved with the scheme.
25
(4)
The Board must, on receiving the notice, determine whether any insolvency
event—
(a)
has occurred in relation to the employer since the date that notice was
issued, or
(b)
is likely to so occur.
30
(5)
If the Board determines under subsection (4) that no insolvency event has
occurred or is likely to occur as mentioned in that subsection, it must—
(a)
issue a withdrawal notice, and
(b)
give a copy of that notice to—
(i)
the Regulator,
35
(ii)
the trustees or managers of the scheme, and
(iii)
the employer.
(6)
Where the Board ceases to be involved with a scheme by virtue of an event
within subsection (2)(a) or (c)(ii), it must—
(a)
issue a withdrawal notice, and
40
(b)
give a copy of that notice to—
(i)
the trustees or managers of the scheme,
(ii)
the Regulator, and
(iii)
the employer.
(7)
In subsections (5) and (6) “withdrawal notice” means a notice in the prescribed
45
form which—

Pensions Bill
Part 2 — The Board of the Pension Protection Fund
Chapter 3 — Pension protection
73

(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.
118
Consequences of the Board ceasing to be involved with a scheme
(1)
Where—
5
(a)
an assessment period comes to an end by virtue of the Board ceasing to
be involved with an eligible scheme, and
(b)
during the assessment period any amount of any benefit payable to a
member, or to a person in respect of a member, under the scheme was
not paid by reason of section 110 (requirement to pay benefits in
10
accordance with the pension compensation provisions),

that amount falls due to the member, or as the case may be, person at the end
of that period.
(2)
Regulations may provide that, in cases within paragraph (a) of subsection (1),
benefits are to accrue under the scheme, in such circumstances as may be
15
prescribed, to or in respect of members of the scheme in respect of any specified
period of service being service in employment which, but for section 105(6),
would have qualified the member in question for those benefits under the
scheme.
(3)
Regulations under subsection (2) may in particular make provision—
20
(a)
for benefits not to accrue to, or in respect of, a member unless an
election is made by or on behalf of the member that they accrue;
(b)
for benefits not to accrue to, or in respect of, a member unless
contributions are paid by or on behalf of the member towards the
scheme within a prescribed period;
25
(c)
for contributions towards the scheme which, but for section 105, would
have been payable by or on behalf of the employer (otherwise than on
behalf of an employee) during the assessment period, to fall due;
(d)
requiring that such contributions as are mentioned in paragraph (a) or
(b) are accepted for the assessment period or any part of that period.
30
(4)
In this section “contributions” means, in relation to an eligible scheme,
contributions payable towards the scheme by or on behalf of the employer or
the active members of the scheme in accordance with the schedule of
contributions maintained under section 184 in respect of the scheme; and
Reconsideration and winding up
35
119
Requirement to wind up schemes with sufficient assets to meet protected
liabilities
(1)
This section applies where during an assessment period subsection (2) or (3)
applies in relation to an eligible scheme.
(2)
This subsection applies where—
40
(a)
a notice has been issued under section 96(2) confirming that a scheme
rescue is not possible in relation to the scheme and the trustees or
managers have received a copy of that notice under section 96(6) (or,
where that provision does not apply, under section 97(4)),

Pensions Bill
Part 2 — The Board of the Pension Protection Fund
Chapter 3 — Pension protection
74

(b)
the Board would have been required to assume responsibility for the
scheme under section 99 but for the fact that the condition in section
99(2)(a) was not satisfied, and
(c)
the valuation obtained by the Board under section 112 in respect of the
scheme has become binding.
5
(3)
This subsection applies where—
(a)
the Board has given the trustees or managers of the scheme notice
under section 102(2) confirming that a scheme rescue is not possible in
relation to the scheme and the trustees or managers have received a
copy of that notice under that section,
10
(b)
the Board would have been required to assume responsibility for the
scheme under section 100 but for the fact that the requirement of section
100(2)(a) was not satisfied, and
(c)
the valuation obtained by the Board under section 112 in respect of the
scheme has become binding.
15
(4)
The trustees or managers of the scheme must—
(a)
wind up the scheme, or
(b)
where the winding up of the scheme began before the assessment
period (whether by virtue of section 177 or otherwise), continue the
winding up of the scheme.
20

This is subject to subsections (5) and (6) and to any order under section 11 of
the Pensions Act 1995 (c. 26)(Regulator’s power to direct or authorise winding
up).
(5)
The duties imposed by subsection (4) are suspended—
(a)
during the period when an application for reconsideration can be made
25
under section 120, and
(b)
if such an application is made—
(i)
until the period within which the determination on the
application may be reviewed by virtue of Chapter 6 has expired,
and
30
(ii)
if the determination is so reviewed, until the review and any
reconsideration, any reference to the PPF Ombudsman in
respect of the determination, and any appeal against his
determination or directions, has been finally disposed of.
(6)
Where a scheme is wound up in accordance with subsection (4)(a), the winding
35
up is to be taken as beginning immediately before the assessment period.
(7)
Without prejudice to the power to give directions under section 106, the Board
may give the trustees or managers of the scheme directions relating to the
manner of the winding up of the scheme under this section (and may vary or
revoke any such direction given by it).
40
(8)
The winding up of a scheme under this section is as effective in law as if it had
been made under powers conferred by or under the scheme.
(9)
This section must be complied with in relation to a scheme—
(a)
in spite of any enactment or rule of law, or any rule of the scheme,
which would otherwise operate to prevent the winding up, and
45
(b)
without regard to any such enactment, rule of law or rule of the scheme
as would otherwise require or might otherwise be taken to require the

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Part 2 — The Board of the Pension Protection Fund
Chapter 3 — Pension protection
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implementation of any procedure or the obtaining of any consent with
a view to the winding up.
(10)
Where a public service pension scheme is required to be wound up under this
section, provision may be made by order modifying any enactment in which
the scheme is contained or under which it is made.
5
120
Application for reconsideration
(1)
Where a scheme is required to be wound up under section 119, the trustees or
managers may make an application (“the application”) to the Board for it to
assume responsibility for the scheme in accordance with this Chapter.
(2)
For the purposes of determining whether the scheme is required to be wound
10
up, subsection (5) of that section (suspension of requirement to wind up
pending reconsideration of scheme) is to be disregarded.
(3)
An application under this section must be in the prescribed form, contain the
prescribed information and be accompanied by—
(a)
a protected benefits quotation in the prescribed form, and
15
(b)
an auditor’s valuation of the scheme as at a date (“the reconsideration
date”) within the prescribed period ending with the day on which the
application is made.
(4)
The application must be made within the period of 3 months beginning—
(a)
in a case within subsection (2) of section 119, with the later of—
20
(i)
the day on which the trustees or managers received the copy
notice mentioned in paragraph (a) of that subsection, and
(ii)
the day on which they were notified of the binding valuation
mentioned in paragraph (c) of that subsection, and
(b)
where subsection (3) of that section applies, with the later of—
25
(i)
the day on which the trustees or managers receive the notice
mentioned in paragraph (a) of that subsection, and
(ii)
the day on which they are notified of the binding valuation
mentioned in paragraph (c) of that subsection.
(5)
For the purposes of this section—
30

“auditor’s valuation”, in relation to a scheme, means a written valuation
of the assets of the scheme (excluding any assets representing the value
of any rights in respect of money purchase benefits under the scheme),
prepared and signed by the auditor in relation to the scheme (within
the meaning given by section 47 of the Pensions Act 1995 (c. 26));
35

“protected benefits quotation” means a quotation for one or more
annuities from one or more insurers, being companies willing to accept
payment in respect of the members from the trustees or managers of the
scheme, which would provide in respect of each member of the
scheme—
40
(a)
benefits to or in respect of the member corresponding to the
compensation which would be payable to or in respect of the
member in accordance with the pension compensation
provisions if the Board assumed responsibility for the scheme
by virtue of this section, or
45
(b)
benefits in accordance with the member’s accrued rights under
the scheme (other than his rights in respect of money purchase
benefits), if the cost of securing those benefits in respect of the

Pensions Bill
Part 2 — The Board of the Pension Protection Fund
Chapter 3 — Pension protection
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member is lower than the cost of securing the benefits within
paragraph (a).
(6)
Subject to subsection (7), regulations under subsection (4) of section 112, and
guidance under subsection (5) of that section, apply to an auditor’s valuations
for the purposes of this section as they apply for the purposes of a valuation
5
under that section.
(7)
Regulations may provide for the purposes of an auditor’s valuation
accompanying an application under this section—
(a)
that the value assigned to assets of a prescribed description is to be the
value assigned to those assets in the binding valuation obtained under
10
section 112;
(b)
how the value to be assigned to such an asset is to be determined where
the asset has been acquired during the assessment period.
121
Duty to assume responsibility following reconsideration
(1)
This section applies where an application is made in respect of a scheme in
15
accordance with section 120.
(2)
The Board must assume responsibility for the scheme in accordance with this
Chapter if it is satisfied that the value of the assets of the scheme at the
reconsideration date is less than the aggregate of—
(a)
the amount quoted in the protected benefits quotation accompanying
20
the application,
(b)
the amount of the liabilities of the scheme which are not liabilities to, or
in respect of, members of the scheme, and
(c)
the estimated costs of winding up the scheme.
(3)
The Board may, for the purposes of subsection (2), obtain its own valuation of
25
the assets of the scheme as at the reconsideration date and, where it does so,
section 120(6) and (7) apply as they apply in relation to the auditor’s valuation
under that section.
(4)
The amount of the liabilities mentioned in subsection (2)(b) is to be taken to be
the amount assigned to those liabilities of the scheme which are not liabilities
30
to, or in respect of, members of the scheme in—
(a)
the binding valuation obtained under section 112, or
(b)
where a valuation of those liabilities at a more recent date (but not later
than the reconsideration date) has been obtained by the trustees or
managers of the scheme for the purposes of the audited scheme
35
accounts, that valuation.
(5)
In subsection (4) “audited scheme accounts”, in relation to a scheme, means
accounts, audited by the auditor of the scheme, which are obtained by the
trustees or managers of the scheme in accordance with a requirement under
section 41 of the Pensions Act 1995 (c. 26).
40
(6)
In this section references to the assets of the scheme do not include assets
representing the value of any rights in respect of money purchase benefits
under the scheme.
(7)
This section is subject to sections 115 and 116 (refusal to assume responsibility
for a scheme).
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