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Clause 14 - Improvement Notices
46. This clause provides that if the Regulator is of the opinion that someone has not complied with pensions legislation, it may issue an Improvement Notice directing the person to act to remedy or prevent a recurrence of the contravention. An Improvement Notice must state that in the Regulator's opinion, a contravention of pensions legislation has taken place, and must specify the nature of the contravention and the evidence on which the Regulator has based its opinion. For each improvement measure specified in the notice the period within which it must be complied with (the time period for compliance must not be less than 21 days from the date of the notice) must be stated.
47. Subsection (3) provides that an Improvement Notice may refer to a Code of Practice issued by the Regulator under clause 64 and may allow the person to whom the notice is made a choice of ways to remedy or prevent the recurrence of the contravention. Subsection (4) states that directions in an Improvement Notice can be dependent on compliance by a third party with a direction or directions contained in a notice under clause 15 (which concerns Third Party Notices - see below). The Improvement Notice can direct the person who was issued the Improvement Notice to inform the Regulator, within the period specified in the notice, of the measures taken following issue of the notice. Subsection (7) provides that section 10 of the Pensions Act 1995 (civil penalties) applies to a person who, without reasonable excuse, fails to comply with any Improvement Notice issued to them.
Clause 15 - Third Party Notices
48. Where the Regulator is of the opinion that someone has contravened pensions legislation and that the contravention is or was wholly, or in part, due to a failure of another person (third party) to take action, and where the action or failure of the third party does not in itself constitute a contravention of the pensions legislation, the Regulator may issue a 'Third Party Notice'. The notice will direct the third party to take specified measures to remedy, or prevent recurrence of, their failure.
49. The notice must state that, in the Regulator's opinion, a contravention of pensions legislation has taken place, specify the nature of the contravention, together with the alleged failure by the third party, and include the evidence on which the Regulator has based its opinion. Each specified measure will state the deadline for compliance with the notice (this will be at least 21 days from the date of the notice). Directions in a Third Party Notice may be framed so as to allow the third party a choice of ways to remedy or prevent the recurrence of the contravention. Subsection (4) outlines that a notice may direct the third party to inform the Regulator of actions taken to comply with the notice.
50. Subsection (6) provides that section 10 of the Pensions Act 1995 (civil penalties) applies to a person who, without reasonable excuse, fails to comply with a Third Party Notice issued to him. Subsection (7) clarifies this further.
51. Improvement Notices and Third Party Notices are instruments not available to Opra, which has proved limiting to its ability to avoid or rectify breaches of legislation rather than providing sanctions after the fact.
Clause 16 - Injunctions and interdicts
52. This clause provides that the Regulator can apply to the Court for an injunction or, in Scotland, an interdict, which the Court may grant where it is satisfied that:
Clause 17 - Restitution
53. If the Regulator applies to the High Court or Court of Session and the Court in question is satisfied that there has been a misuse or misappropriation of any of the assets of an occupational or personal pension scheme, then the Court can direct the employer (in the case of an occupational pension scheme) and any person whom it appears to the Court to have been knowingly concerned in the misuse or misappropriation of the assets, to take specified steps to restore the parties to their original position.
Clause 18 - Power of Regulator to recover unpaid contributions
54. This clause enables the Regulator, on behalf of the trustees or managers of the scheme, to use any power that the trustees or managers would have had to recover assets due to a scheme (i.e. recover employer or employees' contributions that are being held by the employer and transfer them to the scheme). This is to address situations where an employer has not paid over contributions due. Any such contribution is to be treated as a debt owed by the employer to the trustees and managers of the scheme. This clause permits the Regulator to enforce that debt action on behalf of the trustees and managers.
Powers in relation to winding-up of occupational pension schemes
Clause 19 - Powers to wind up occupational pension schemes
55. This clause amends section 11 of the Pensions Act 1995 by allowing the Regulator to wind a scheme up during the assessment period in order to minimise the value of claims on the PPF.
Clause 20 - Freezing order
56. This applies to occupational pensions schemes which are not money purchase schemes. It gives the Regulator the power to make a 'freezing order' where the Regulator is satisfied that it is necessary to protect the interests of the generality of members of the scheme and there is an immediate risk to the interests of the members or assets of the scheme.
57. The order will direct that, during the period it has effect, no benefits are to accrue to, or in respect of, members and that no winding up of the scheme may begin other than by an order of the Regulator.
58. An order may also contain other directions that have effect during the period of the order e.g. no new members, or specified class of member are to be admitted to the scheme; no further contributions or payments or specified contributions or payments are to be paid into the scheme by, or on behalf of, members or specified members.
59. A freezing order may not contain any direction which reduces the benefits payable to, or in respect of, a member during the period of the order to below the level to which the trustees or scheme managers would have the power to reduce them if winding up of the scheme had begun at the time the order took effect.
60. An order may require the trustees or managers to obtain an actuarial valuation.
61. Orders must contain certain specified information.
Clause 21 - Consequences of freezing order
62. This clause deals with the consequences of a freezing order. Any action taken in contravention of the freezing order is void unless it is validated by an order under clause 23 (subsection (1)).
63. A freezing order does not prevent an increase in benefits to accrue which would accrue apart from the order unless the order specifically so provides (subsection (2)).
64. A freezing order does not prevent the scheme from being wound up by virtue of an order of the Regulator under section 11 of the Pensions Act 1995 (subsection (3)).
65. If a freezing order states that no further contributions (or specified contributions) are to be made then contributions which would have been due do not have to be paid and any obligation to pay contributions is treated as if it does not arise (subsection (4)).
66. Pension sharing orders and pension earmarking orders are not prevented from being complied with even if a freezing order is in place preventing transfers.
67. Regulations may modify any provisions of Chapter 4 of Part 4 of the Pension Schemes Act 1993 (c.48) (protections for early leavers: transfer values) in their application to an occupational pension scheme in relation to which a freezing order is made containing a direction under section 21(4)(f) (no transfers of member's rights etc from the scheme).
68. If a freezing order is not complied with then section 10 of the Pensions Act 1995 (civil penalties) will apply to a trustee or manager who fails to take all such steps as are reasonable to comply with the order. If an employer is directed to repay certain contributions, and fails to do so without a reasonable excuse, a section 10 penalty will apply to the employer.
Clause 22 - Period of effect etc of freezing order
69. This clause specifies that a freezing order has to state its duration, which cannot be longer than three months. However, the Regulator has the power to extend the order, but the total duration of the order cannot be more than six months. Under clause 75 an order can be amended or revoked by another order (which must state the date the amendment or revocation will take effect. It cannot have retrospective effect).
Clause 23 - Validation of action in contravention of freezing order
70. This clause gives the Regulator power to validate by order an action which has been taken in contravention of a freezing order. It gives the trustees, managers of a scheme, or any other person affected by a freezing order a statutory right to apply to the Regulator for a validation order.
Clause 24 - Effect of winding-up of scheme on freezing order
71. A freezing order ceases to have an effect when an order made under section 11 of the Pensions Act 1995 commences (power to wind-up occupational pension schemes). The winding-up is taken to begin at the time the freezing order came into effect. The Regulator may order a specified person to take specified steps within a specified period. Trustees or managers who fail to take all such steps as are reasonable to achieve compliance with an order may be subject to section 10 of the Pensions Act 1995 (civil penalties).
Clause 25 - Effect of assessment period under Part 2 on freezing order
72. A freezing order ceases to have an effect if an assessment period begins in relation to the scheme (see clause 104) (Assessment periods).
Clause 26 - Power to give a direction where freezing order ceases to have effect
73. This clause gives the Regulator power to make directions when a freezing order ends and no wind up order (under section 11 of the Pensions Act 1995) has been made. The Regulator may order that benefits stated in the order are to accrue to, or in respect of, stated members of the scheme for the period when the freezing order was in effect or for part of that period. The Regulator may provide that stated conditions are met before benefits can accrue. These conditions can include: a requirement that specified benefits do not accrue unless an election is made by or on behalf of the member; or specified benefits do not accrue to or in respect of specified members unless a contribution is made by or on behalf of the member; or that a specified amount be paid by or on behalf of the employer.
74. Under subsection (3), if the freezing order stated that no further contributions should be made, the Regulator can make an order that contributions that cover the period of the order should be accepted.
75. If an order made under this clause is not followed then section 10 of the Pensions Act 1995 (civil penalties) will apply. If an employer fails to make a contribution which has been ordered, then section 10 of the Pensions Act 1995 (civil penalties) will apply to the employer and the trustees or managers should also inform the Regulator of any non-payment by the employer.
Clause 27 - Notification of trustees, managers, employers and members
76. If a freezing order is in place and an order is made under clause 26 (power to give direction where freezing order ceases to have effect) the Regulator must notify the trustees, managers and sponsoring employer of the scheme of the effects of the order as soon as reasonably practicable. The Regulator may order the trustees or managers of the scheme to inform all the scheme members, or members stated in the order, that a freezing order is in effect, and of the effects of the order. The period which this notification must take place will be specified in the order.
77. Failure to comply with the order will invoke Section 10 of the Pensions Act 1995 (civil penalties).
Clause 28 - Supplementary provision relating to orders under sections 20 to 27
78. This provision enables an order under clauses 20, 22, 23, 24, 26 and 27 to be made even if legislation or a legal rule would have prevented this apart from this provision and without regard to any procedural requirements which such legislation, legal rule or scheme rule would otherwise impose.
Trustees of occupational pension schemes
Clause 29 - Prohibition orders
79. This clause amends section 3 of the Pensions Act 1995 (which deals with prohibition orders) to enable the Regulator to prevent a person from acting as a trustee, either in relation to a particular scheme or a particular description of trust schemes or trust schemes in general, wherever it considers that the person is not a "fit and proper" person to act as such. The Regulator would be expected to have regard to certain considerations when deciding whether a trustee is fit and proper to act as such, including (but not limited to):
80. The Regulator will issue guidance on how it will interpret the term "fit and proper" which will refer to the above considerations.
81. By virtue of subsection (4) of this clause, where a prohibition order is made under subsection (1) against a person in respect of one or more schemes of which he is a trustee, the order will have the effect of removing him as a trustee from all schemes to which the order relates.
82. Subsection (5) provides that an order to suspend a person from acting as a trustee because the person is facing proceedings for an offence involving dishonesty or deception should be for a maximum interim period of 12 months.
Clause 30 - Suspension orders
83. This clause amends section 4 of the Pensions Act 1995 in relation to suspension orders. The current provision is extended so that a trustee can be suspended where consideration is being given to proceedings against a trustee, rather than just when proceedings have started. Subsection (2) amends the time limit for the effect of a suspension.
Clause 31 - Appointments by Regulator
84. This clause amends Section 8 of the Pensions Act 1995 (consequences of appointment of trustees under Section 7) so that the fees and expenses of any trustee appointed by the Regulator are payable by the employer, or by the scheme, or both (at the discretion of the Regulator).
Clause 32 - Disqualification
85. By virtue of this clause, which amends section 30(1) of the Pensions Act 1995 (consequences of disqualification under section 29), disqualification will automatically remove a trustee. This is an alignment with the effect of a prohibition order.
Applications under the Insolvency Act 1986
Clause 33 - Regulator's right to apply under section 423 of Insolvency Act 1986
86. This clause allows the Regulator to apply for an order under Section 423 of the Insolvency Act 1986 (transactions defrauding creditors) if the pension scheme is owed money from the employer and either:
87. If the debtor is bankrupt, or is a corporate entity which is being wound-up, the Regulator must get leave of the court to make an application under section 423 of the Insolvency Act 1986.
88. An application made under this section is treated as being made on behalf of the victims of the transaction (trustees, members of the scheme or the Pension Protection Board).
Register of schemes
Clause 34 - Register of occupational and personal pension schemes
89. This clause compels the Regulator to set up and keep a register of pension schemes. The Regulator must record in the register the most up to date information that it has been provided with by schemes. The Regulator may record the information collected in whatever manner it considers appropriate. The register will be used by the Regulator for it's functions and it will also be used to enable members to trace their pension.
90. The Regulator will also record on the register information relating to the involvement of the PPF with a scheme if and when a transfer notice is issued by the PPF, the Regulator must record that fact and such other information as may be prescribed.
Clause 35 - Registrable information
91. The Regulator will maintain a register of relevant pension schemes. This clause defines, for the purposes of clauses 35 and 37 what will constitute "registrable information", in relation to an occupational pension and personal pension schemes. Registrable information includes:
92. Regulations may make further provision with respect to interpretation of the above information.
Clause 36 - The register: inspection, provision of information and reports etc.
93. Subsection (1) of this clause provides the power for regulations to be made in relation to the provision of information recorded in the register, extracts from the register, or copies of the register to specified persons in specified circumstances. Regulations can also provide for the inspection of the register, extracts from the register, or copies of the register by prescribed persons in prescribed circumstances.
94. Subsection (2) states that the regulations may confer functions on the Secretary of State, or other authorised person. They may also provide for disclosure of the information obtained by virtue of the regulations.
95. Under the provisions in subsection (4), (5) and (6) the Secretary of State may direct the Regulator to produce reports, in a set format and within a set time, concerning the information held in the register, including the operation of the Regulators functions in relation to the register. These reports may be published.
Clause 37 - The register: duties of trustees or managers
96. Subsection (1) imposes a duty on trustees and managers to notify the Regulator of all the registrable information required on registrable schemes during the "initial notification period" - a period of three months from when the scheme is established, or the date from which it becomes a registrable scheme.
97. Subsection (3) provides that trustees or managers should notify the Regulator of changes to registrable information as soon as practicable. Section 10 of the Pensions Act 1995 (civil penalties) will apply to a trustee or manager who fails to comply with subsections (1) and (3).
Clause 38 - Duty of Regulator to issue scheme return notices
98. This clause requires the Regulator to issue scheme return notices (a request for information) to each registrable scheme. The first request for a scheme return must be made within three years of the scheme being a registrable scheme or, if later, the date on which the clause comes into force. The Regulator must issue subsequent scheme return notices to schemes every one to three years from the date of the schemes last return notice depending on the scheme.
99. The trustees must provide a scheme return to the Regulator by the specified return date. Failure to do so may result in a civil penalty.
100. A scheme return notice must be in writing specifying the information required, the form in which that information is to be provided, and the return date (at least 28 days after the date the notice was issued). A scheme return notice will require provision of all registrable information in relation to the scheme, and any other information in relation to the scheme which is relevant to the Regulator to enable it to exercise its functions.
Clause 39 - Duty of trustees or managers to provide scheme return
101. Subsection (1) provides that the trustees or managers of a registrable scheme must provide a completed scheme return, on or before the return date, when required to do so by the Regulator. Section 10 of the Pensions Act 1995 (civil penalties) will apply to a trustee or manager who fails to comply with subsection (1).
Clause 40 - Scheme returns: supplementary
102. This section has effect for the purposes of clauses 38 and 39 and specifies the meaning of "return date" and "scheme return". Subsection (3) states that a scheme return notice, which must be in writing, must specify details of the information required, which must include details of all registrable information, as well as any other information that may be required by the Regulator to enable it to fulfil its functions. The Regulator must also specify the return date, which must be at least 28 days from the date of issue, as well as the format of the return. A scheme return is treated as issued when it is sent to the trustees or managers of the scheme.
103. This means that the scheme return must require all registrable information in relation to the scheme, and may require other information which the Regulator reasonably requires for the purposes of the exercise of its functions.
104. For example, information may be collected to assist in:
Register of prohibited trustees
Clause 41 - Register of prohibited trustees
105. This clause provides that the Regulator must keep a register of all people who are prohibited under Section 3 of the Pensions Act 1995 from acting as a trustee. By virtue of subsection (2), the Regulator must ensure that, with the exception of the duties contained in clause 42, contents of the register are not disclosed or otherwise made available to members of the public.
Clause 42 - Accessibility of register of prohibited trustees
106. Subsection (1) provides that the Regulator must ensure that the prohibition register is open during its normal working hours for people to inspect it without notice. Subsection (2) provides that where a request is made to the Regulator as to whether a particular person appears in the prohibition register as prohibited in respect of a specific scheme; a particular description of trust scheme; or in respect of all trust schemes, then the Regulator must comply with that request promptly.
107. Subsection (3) provides that the Regulator can publish a summary of the prohibition register if the summary contains:
108. The published summary of the prohibition register must not identify any of the schemes in respect of which people who are named in the summary are prohibited and also must not disclose any other information contained in the register (subsections (3)(c) and (d) refer.) By virtue of subsection (6) the Regulator must ensure that the published summary does not identify someone as a prohibited person if the determination of such a person as being prohibited is the subject of any pending review, appeal or legal proceedings, or is a determination which might still become the subject of any such review, appeal or proceedings (as is clarified under subsection (9)) which could result in them being removed from the prohibition register.
109. The Regulator must also (by virtue of subsection (7)) ensure that, where a determination has been made, a person is prohibited, but that the determination is subject to any pending review, appeal or legal proceedings or is a determination which might still become the subject of any such review, appeal or proceedings (as is clarified under subsection (9)) which could result in him being classed as prohibited in respect of a different category (under subsection (4)(c)), then the person in question should not appear in the category (under subsection 4(c)) which is stated in the determination, but should instead be included in the category (under subsection (4)(c)) in which they would appear if the review, appeal or legal proceedings were to overturn the original determination (as is provided in subsection (8)).
110. Subsection (9) defines 'a determination which might still become the subject of a review, appeal or proceedings' as being one where:
Collecting information relevant to the Board of the Pension Protection Fund
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