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 3 — Pension protection
88

142
Pension protection levies during the transitional period
(1)
Regulations may provide that in respect of any financial year during the
transitional period—
(a)
sections 137 and 139(3) and (4) are to apply with such modifications as
may be prescribed;
5
(b)
section 139(2) is to apply as if the reference to the levy ceiling for the
financial year were a reference to such lower amount as is specified in
the regulations.
(2)
Regulations which contain provision made by virtue of subsection (1)(b) may
only be made with the approval of the Treasury.
10
(3)
For the purposes of this section “the transitional period” means the prescribed
period beginning immediately after the initial period (within the meaning of
section 136).
143
Calculation, collection and recovery of levies
(1)
This section applies in relation to—
15
(a)
the initial levy imposed under section 136 in respect of a scheme, and
(b)
any pension protection levy imposed under section 137 in respect of a
scheme.
(2)
The levy is payable to the Board by or on behalf of—
(a)
the trustees or managers of the scheme, or
20
(b)
any other prescribed person.
(3)
The Board must in respect of the levy—
(a)
determine the schemes in respect of which it is imposed,
(b)
calculate the amount of the levy in respect of each of those schemes,
(c)
notify any person liable to pay the levy in respect of the scheme of the
25
amount of the levy in respect of the scheme and the date or dates on
which it becomes payable.
(4)
The Board may require the Regulator to discharge the Board’s functions under
subsection (3) in respect of the levy.
(5)
Where a scheme is an eligible scheme for only part of a financial year, the
30
amount of the levy payable in respect of the scheme for that year is such
proportion of the full amount as that part bears to the year.
(6)
An amount payable by a person on account of the levy is a debt due from him
to the Board.
(7)
An amount so payable may be recovered—
35
(a)
by the Board, or
(b)
if the Board so determines, by the Regulator on its behalf.
(8)
Regulations may make provision relating to—
(a)
the collection and recovery of amounts payable by way of any levy in
relation to which this section applies;
40
(b)
the circumstances in which any such amount may be waived.

Pensions Bill
Part 2 — The Board of the Pension Protection Fund
Chapter 4 — Fraud compensation
89

Chapter 4
Fraud compensation
Entitlement to fraud compensation
144
Cases where fraud compensation payments can be made
(1)
The Board shall, in accordance with this section, make one or more payments
5
(in this Part referred to as “fraud compensation payments”) in respect of an
occupational pension scheme if—
(a)
the scheme is not of a prescribed description,
(b)
the value of the assets of the scheme has been reduced since the relevant
date and the Board considers that there are reasonable grounds for
10
believing that the reduction was attributable to an act or omission
constituting a prescribed offence,
(c)
subsection (2), (3) or (4) applies,
(d)
an application is made which meets the requirements of subsection (5),
and
15
(e)
the application is made within the authorised period.
(2)
This subsection applies where—
(a)
a qualifying insolvency event has occurred in relation to the employer
in relation to the scheme,
(b)
after that event, an insolvency practitioner in relation to the employer
20
has issued a notice under section 96(2) confirming that a scheme rescue
is not possible in relation to the scheme, and
(c)
in the period which began with the occurrence of the insolvency event
and ended immediately before that notice was issued, no cessation
event occurred.
25
(3)
This subsection applies where—
(a)
in relation to the scheme, an application has been made under
subsection (1), or a notification has been given under subsection (5)(a),
of section 101, and
(b)
in response to that application, or the notice given by the Regulator
30
under subsection (4) of that section, the Board has issued a notice under
section 102(2) confirming that a scheme rescue is not possible in
relation to the scheme.
(4)
This subsection applies where—
(a)
the scheme is not an eligible scheme,
35
(b)
the employer in relation to the scheme is unlikely to continue as a going
concern,
(c)
the prescribed requirements are met in relation to the employer,
(d)
the application under this section states that the case is one in relation
to which paragraphs (b) and (c) apply, and
40
(e)
in response to that application the Board has issued a notice under
section 145(2) confirming that a scheme rescue is not possible in
relation to the scheme.
(5)
An application meets the requirements of this subsection if—
(a)
it is made by a prescribed person,
45

Pensions Bill
Part 2 — The Board of the Pension Protection Fund
Chapter 4 — Fraud compensation
90

(b)
it is made in the prescribed manner and contains the prescribed
information.
(6)
Subject to subsection (7), an application is made within the authorised period
if it is made within the period of 12 months beginning with the later of—
(a)
the time of the relevant event, or
5
(b)
the time when the auditor or actuary of the scheme, or the trustees or
managers, knew or ought reasonably to have known that a reduction of
value falling within subsection (1)(b) had occurred,

or within such longer period as the Board may determine in any case.
(7)
No application for fraud compensation may be made under this section in
10
respect of a scheme once a transfer notice is given in relation to the scheme
under section 122.
(8)
For the purposes of this section—
(a)
a cessation event occurs in relation to a scheme when—
(i)
an insolvency practitioner in relation to the employer issues a
15
notice under section 96(2), or the Board issues a notice under
section 102(3) or 145(2), confirming that a scheme rescue has
occurred in relation to the scheme,
(ii)
the Board ceases to be involved with the scheme by virtue of an
event within section 117(2)(c)(i) or (ii), or
20
(iii)
a person who is or was an insolvency practitioner in relation to
the employer issues a notice under section 96(4), in a case where
section 117(4) does not apply, and
(b)
an insolvency event (“the current event”) in relation to the employer is
a qualifying insolvency event if—
25
(i)
it is the first insolvency event in relation to the employer, or
(ii)
a cessation event has occurred after the last such insolvency
event to occur before the current event.
(9)
In this section—

“auditor” and “actuary”, in relation to an occupational pension scheme,
30
have the meaning given by section 47 of the Pensions Act 1995 (c. 26);

“the relevant event” means—
(a)
in a case where subsection (2) applies in relation to an eligible
scheme, the event within paragraph (a) of that subsection,
(b)
in any other case where subsection (2) applies, the event within
35
paragraph (b) of that subsection,
(c)
in a case where subsection (3) applies, the event within
paragraph (a) of that subsection, and
(d)
in a case where subsection (4) applies, the trustees or managers
becoming aware that paragraphs (b) and (c) of that subsection
40
apply in relation to the scheme;

“the relevant date” means—
(a)
in the case of an occupational pension scheme established
under a trust, 6th April 1997, and
(b)
in any other case, the day appointed by the Secretary of State by
45
order for the purposes of this section.
(10)
This section is subject to section 146(2) (no fraud compensation payments to be
made until settlement date determined).

Pensions Bill
Part 2 — The Board of the Pension Protection Fund
Chapter 4 — Fraud compensation
91

145
Schemes which are not eligible schemes or subject to insolvency events
(1)
This section applies where, in a case to which paragraphs (a) to (c) of
subsection (4) of section 144 apply (employer not likely to continue as going
concern etc), the Board receives an application within paragraph (d) of that
subsection.
5
(2)
If the Board is able to confirm—
(a)
that a scheme rescue is not possible, or
(b)
that a scheme rescue has occurred,

it must, as soon as practicable, issue a notice to that effect.
(3)
Where the Board issues a notice under subsection (2), it must, as soon as
10
practicable, give a copy of the notice to—
(a)
the Regulator,
(b)
the trustees or managers of the scheme,
(c)
if the trustees or managers did not make the application mentioned in
subsection (1), the person who made that application, and
15
(d)
any insolvency practitioner in relation to the employer or, if there is no
such insolvency practitioner, the employer.
(4)
Section 102(5) (circumstances in which scheme rescue can or cannot be
confirmed) applies for the purposes of this section.
146
Recovery of value
20
(1)
Where an application for a fraud compensation payment is made, the trustees
or managers must obtain any recoveries of value, to the extent that they may
do so without disproportionate cost and within a reasonable time.
(2)
No fraud compensation payment may be made until the date (“the settlement
date”) determined by the Board, after consulting the trustees or managers of
25
the scheme in question, as the date after which further recoveries of value are
unlikely to be obtained without disproportionate cost or within a reasonable
time.
(3)
In this section “recovery of value” means any increase in the value of the assets
of the scheme, being an increase attributable to any payment received
30
(otherwise than from the Board) by the trustees or managers of the scheme in
respect of any act or omission—
(a)
which there are reasonable grounds for believing constituted an offence
prescribed for the purposes of paragraph (b) of section 144(1), and
(b)
to which any reduction in value falling within that paragraph was
35
attributable.
(4)
It is for the Board to determine whether anything received by the trustees or
managers of the scheme is to be treated as a payment received in respect of any
such act or omission.

For this purpose “payment” includes any money or money’s worth.
40
147
Fraud compensation payments
(1)
Where the Board determines to make one or more fraud compensation
payments, it must make the payment or payments to the trustees or managers
of the scheme in accordance with this section.

Pensions Bill
Part 2 — The Board of the Pension Protection Fund
Chapter 4 — Fraud compensation
92

(2)
A fraud compensation payment may be made on such terms (including terms
requiring repayment in whole or in part) and on such conditions as the Board
considers appropriate.
(3)
The amount of the payment (or, if there is more than one, the aggregate) must
not exceed the difference between—
5
(a)
the amount of the reduction (or, if more than one, the aggregate amount
of the reductions) within section 144(1)(b), and
(b)
the amount of any recoveries of value obtained before the settlement
date (within the meaning of section 146(2)).
(4)
Subject to subsection (3), the Board—
10
(a)
must determine the amount of any fraud compensation payment in
accordance with regulations made for the purposes of this subsection,
and
(b)
must take account of any interim payment already made under section
148.
15
(5)
The Board must give written notice of its determination under subsection (4)
to—
(a)
the Regulator,
(b)
the trustees or managers of the scheme,
(c)
if the trustees or managers did not make the application under section
20
144 (fraud compensation payments), the person who made that
application, and
(d)
any insolvency practitioner in relation to the employer or, if there is no
such insolvency practitioner, the employer.
148
Interim payments
25
(1)
The Board may, on an application under section 144, make a payment or
payments to the trustees or managers of an occupational pension scheme if—
(a)
it is of the opinion that—
(i)
the case is one to which subsection (1) of that section applies or
may apply, and
30
(ii)
the trustees or managers would not otherwise be able to meet
liabilities of a prescribed description, but
(b)
it has not determined the settlement date under section 146.
(2)
Amounts payable under this section must not exceed the amounts determined
in accordance with regulations.
35
(3)
The Board may, except in prescribed circumstances, recover so much of any
payment made under subsection (1) as it considers appropriate if, after the
payment is made, it determines—
(a)
that the case is not one to which section 144(1) applies, or
(b)
that the amount of the payment was excessive.
40
(4)
Subject to that, a payment under subsection (1) may be made on such terms
(including terms requiring repayment in whole or in part) and on such
conditions as the Board considers appropriate.