Clause 153 - Notices requiring provision of information

333.     Individuals involved with a scheme are required to disclose information relevant to that scheme upon notice in writing from the Board. The notice must specify the description of the information that is required and the manner in which the information must be produced, including the time limit for production of the information.

334.     The Board must only specify information under this clause that is relevant to the exercise of the Board's functions.

Clause 154 - Entry of premises

335.     This clause provides that an appointed person may enter scheme premises at any reasonable time when the Board is involved with the scheme in order to:

•      investigate whether any required document or information or any other document exists or has existed on the premises;

•      require persons to produce or secure the production of any required document or any other document for inspection;

•      make copies of any such document;

•      take possession of any document or to take other steps to prevent interference with it;

•      require information stored in electronic form to be accessible;

•      interview persons whom he has reasonable cause to believe to be able to give relevant information.

336.     Subsection (2) states that scheme premises for these purposes are those being used for the business of, or for the storage of information relevant to, the employer, the employer's insolvency practitioner, and the administration of the scheme; unless the premises are a private dwelling not used for the purposes of trade or business.

337.     Subsection (3) requires an appointed person to produce his certificate of appointment when asked for it.

338.     Subsection (4) allows the appointed person to be accompanied by such persons as he considers appropriate.

339.     Subsections (5) and (6) set out that documents which are seized under this clause may be retained for the retention period of 12 months. The Board may extend that period by a further 12 months where appropriate.

340.     Subsection (10) defines "appointed person" as a person authorised by the Board for the scheme.

Clause 155 - Penalties relating to sections 153 and 154

341.     A person who without reasonable excuse fails to provide information when issued with a notice is guilty of an offence. Similarly a person who intentionally delays or obstructs an appointed person, or refuses to produce information or answer questions under clause 154 is guilty of an offence. Such offences are liable on conviction to a fine not exceeding a set limit, and a person may be convicted of a second offence for continued failure to comply.

342.     A person who intentionally suppresses, alters or destroys any document which he is liable to produce under clause 153 or clause 154 is also guilty of an offence and may be liable to a fine or to imprisonment or both.

Clause 156 - Warrants

343.     Subsections (1)-(2) provide that while the Board is involved with a scheme, a justice of the peace may issue a warrant if he is satisfied on the information given by or on behalf of the Board that there are reasonable grounds for believing that:

a)     documents which were required to be produced by a notice under clause 153 or by an authorised person under clause 154 are on or accessible from premises, and that requirement has not been complied with;

b)     documents which are relevant to the Board's functions in relation to the scheme are on or accessible from premises, and if the production of these documents were required, the document would not be produced but would be removed, made inaccessible, hidden or destroyed;

c)     a person will do any act which constitutes a misuse or misappropriation of the assets of the scheme, and that documents relating to the act are on or accessible from the premises.

344.     Subsection (3) states that a warrant under this section authorises an authorised person to:

a)     enter premises;

b)     search premises, take possession of or make copies of certain documents;

c)     require any person named in the warrant to provide an explanation of documents or where they may be found;

d)     require information stored in an electronic form to be made accessible so that it can be taken away.

345.     Subsection (4) provides that an inspector may be accompanied by such persons as he considers appropriate. Subsection (5) sets out that a warrant under this section shall be valid for one month after the day on which is it issued, or until the Board ceases to be involved with the scheme, whichever is longer.

346.     Subsection (6) sets out that documents which are seized under subsection (3)(d) may be retained for the retention period, or if proceedings are commenced within that period until the end of those proceedings. Subsection (7) defines "the retention period" as 12 months beginning with the day on which possession was taken of the documents under this clause. Subsection (8) allows the Board to extend the retention period for a further period of not more than 12 months even where proceedings have not been commenced.

347.     Subsection (9) sets out that the reference to the justice of the peace should be read when applying this section in Scotland as a justice within the meaning of the Criminal Procedure (Scotland) Act 1995. Similarly, the references to information in subsections (2) and (3)(a) are to be read as references to evidence.

348.     Subsection (10) defines the term "pensions legislation" for subsection (6)(b).

Provision of false or misleading information

Clause 157 - Offence of providing false or misleading information to the Board

349.     A person who knowingly or recklessly provides false information is guilty of an offence if the information was provided in response to a notice under clause 153 or to an authorised person under clause 154 or to an inspector under clause 156, or if the person providing information was aware that the Board would use the information for the purposes of discharging its functions under this Bill. That person may be liable to a fine or imprisonment or both.

Use of information

Clause 158 - Use of information

350.     Information held by the Board for any particular function may be used for any of the functions of the Board in relation to the scheme.

Disclosure of information

Clause 159 - Restricted information

351.     Restricted information must not be disclosed by the Board or its agents except with the consent of the person to whom it relates and of the person who provided the information if different, or except as allowed by clauses 160 to 165. "Restricted information" is all information gathered by use of a notice under clause 153, by an authorised person under clause 154 or by the use of a warrant under clause 156. However, it does not include information which has already been made public or if the form of the information would prevent information relating to a person to be ascertained from it. Any person who discloses information in contravention of this clause is guilty of an offence.

Clauses 160 and 161 - Disclosure for facilitating exercise of functions by the Board; Disclosure for facilitating exercise of functions of Regulator

352.     Restricted information may be disclosed for the purpose of enabling the Board to exercise its functions. The Board may disclose information to a person qualified to provide advice relating to law, accountancy, valuation or other professional skill where such a disclosure is necessary in order to take advice. In any case, restricted information may be disclosed to the Regulator for the purpose of enabling it to discharge its functions.

Clause 162 - Disclosure for facilitating exercise of functions by other supervisory authorities

353.     Schedule 8 sets out the list of bodies to whom the Board may disclose restricted information where the Board considers the information is relevant to the discharge of the functions of that body specified in the schedule. The Secretary of State may amend the schedule after consultation with the Board.

Clause 163 - Other permitted disclosures

354.     Restricted information may be disclosed to the Secretary of State, the Commissioners of the Inland Revenue and the Department for Social Development in Northern Ireland if the disclosure appears to the Board to be in the interests of members of occupational pension schemes or in the public interest. Disclosure of restricted information is further allowed if the information relates to certain proceedings, if it is to certain prosecution bodies, or to a Regulator- appointed trustee.

Clause 164 - Disclosure of information by the Inland Revenue

355.     This clause relates to disclosure of information by the Inland Revenue. It provides that the Inland Revenue will not be bound by the restrictions imposed by section 182 of the Finance Act 1989 so long as the information is used by the PPF to discharge its functions. When the Inland Revenue discloses information to the PPF, the Board should treat is as "restricted information". This means that the Board must not disclose this information unless the Commissioners of the Inland Revenue or Customs and Excise have given permission or in the case of criminal proceedings being brought under this Bill, the Pensions Act 1995 or the Pension Schemes Act 1993.

Provision of information to scheme members etc

Clause 165 - Provision of information to members of schemes etc

356.     As described in subsection (1), the Board and trustees or managers of occupational pension schemes (during the period that the Board is involved with a scheme) may be required by regulations to provide information of prescribed descriptions to prescribed persons.

357.     Subsection (2) allows the Board to disclose restricted information to individuals or their representative, where the disclosure relates to the entitlement of that person to compensation.

358.     Subsection (3) sets out that the Board is permitted to disclose restricted data to all "affected persons" where the information relates to the Board's involvement with a scheme and where the Board is satisfied that the disclosure is reasonable.

359.     The term "affected person" is defined under subsection (4).

360.     Subsection (5) sets out the persons to whom the Board may disclose information if the information is relevant to the exercise of that person's functions in relation to the scheme, and the Board considers that the disclosure is reasonable. The persons are the scheme trustees, managers, employer, insolvency practitioner, or other professional adviser.

Interpretation

Clause 166 - Sections 152 to 165: interpretation

361.     This clause provides interpretation of terms such as "document" and "functions" with respect to clauses 152-165.

Chapter 6 - Reviews, Appeals and Maladministration

Review etc by the Board

Clause 167 - Meaning of "reviewable matters"

362.     This clause sets out the decisions of the Pension Protection Fund Board that may be subjected to challenge. The provision includes a power to prescribe further decisions that may be subject to challenge.

Clause 168 - Review and reconsideration by Board of reviewable matters

363.     This is a mandatory power under which regulations must provide for the review and reconsideration of reviewable matters on written application by an interested person. On completing a review or reconsideration the Board will have power to vary, revoke or substitute a different decision or pay such compensation as it may determine (subsection (4)).

Clause 169 - Investigation by Board of complaints of maladministration

364.     This clause provides that regulations may make provision for complaints of maladministration. Subsection (4) provides that the Board may pay compensation where a person has sustained injustice as a result of maladministration.

The PPF Ombudsman

Clause 170 - The Ombudsman for the Board of the Pension Protection Fund

365.     This clause provides for the creation of the Ombudsman for the Board of the Pension Protection Fund. Subsection (2) requires the Secretary of State to appoint the Ombudsman on such terms and conditions as he determines. Subsection (4) provides that the Secretary of State may also appoint one or more deputies. Subsection (6) provides that the Secretary of State may (by subordinate legislation) make provision for payment, remuneration, allowances, expenses, staffing, resources and the obtaining and use of information and documentation by the Ombudsman. Subsection (8) provides that the Secretary of State must pay the Ombudsman out of voted funds.

Clause 171 - Disqualification of PPF Ombudsman from certain offices

366.     This clause provides that the Ombudsman is, by virtue of his office, disqualified from being a Member of Parliament or a member of the Northern Ireland Assembly.

Clause 172 - Annual reports to Secretary of State

367.     This clause requires the PPF Ombudsman to prepare an annual report on the discharge of his functions. The report is to be sent to the Secretary of State as soon as practicable after the end of the relevant financial year. The Secretary of State must then arrange for the report to be published.

References to the PPF Ombudsman

Clause 173 - Reference of reviewable matter to the PPF Ombudsman

368.     This clause provides that regulations must make provision for reviewable matters to be referred to the Ombudsman and for the Ombudsman to investigate, determine and remit the matter to the Board with directions for the purpose of giving effect to his determination. Subsection (2) provides that the regulations must identify the persons who may refer a reviewable matter, the manner of making a reference and the persons to be notified of determinations and directions. Subsection (3) provides that the regulations must require the Ombudsman to conduct an oral hearing or dispose of the matter by written representations. The Ombudsman must consider any evidence not previously available in this respect.

369.     Subsection (4) provides that regulations may make provision for the procedure to be adopted, including the right of prescribed persons to make representations or be heard at any hearing. Subsection (4)(d) provides that provision may be made for costs. Subsection (4)(e) provides for a stay of legal proceedings in prescribed circumstances.

Clause 174 - Investigation by PPF Ombudsman of complaints of maladministration

370.     This clause provides that regulations may make provision for the investigation and determination by the Ombudsman of complaints of maladministration. Subsection (2) provides that regulations may make provision for the procedures in this respect.

Clause 175 - Determinations of the PPF Ombudsman

371.     This clause provides that a determination or direction of the Ombudsman is binding subject to a right of appeal, on a point of law, to the High Court or, in Scotland, to the Court of Session. Subsection (2) provides that a determination or direction is enforceable as if it were a judgement or order of court. Similar provision is made for enforcement in Scotland.

Clause 176 - Obstruction etc of the PPF Ombudsman

372.     If the PPF Ombudsman is obstructed in the performance of his functions, this clause provides that the PPF Ombudsman may certify the offence to a court. The court may then inquire into the matter and deal with the person as if the offence in question had been made in relation to the court. Subsection (4) makes similar provision in Scotland.

Chapter 7 - Miscellaneous

Backdating the winding up of eligible schemes

Clause 177 - Backdating the winding up of schemes

373.     This clause establishes backdating the winding up process of scheme where:

•      a qualifying insolvency event has occurred, and

•      the winding up of the scheme begins on or after the time of the insolvency event but not later than any of the following:

a)     an insolvency practioner in relation to the employer has issued a notice confirming that a scheme rescue is not possible, or a scheme rescue has occurred;

b)     the Board has issued a notice confirming that a scheme rescue is not possible, or that a scheme rescue has occurred;

c)     the Board has issued a withdrawal notice stating that no insolvency event has occurred or is likely to occur and a copy given to the Regulator, the trustees or managers and the insolvency practitioner in relation to the employer; or

d)     in the case where the Board ceases to be involved with the scheme on the occurrence of the first withdrawal event after the beginning of the assessment period, as in the circumstance where a scheme rescue is not possible or one has occurred.

374.     The winding up process is to be taken as beginning immediately upon the qualifying event if:

a)     the winding up is based on an order made by the Regulator; or

b)     other cases determined by the trustees or managers of the scheme.

375.     The clause is subject to clause 107 (which restricts the winding up of an eligible scheme during the assessment period).

Schedules

Schedule 5 - The Board of the Pension Protection Fund

376.     Paragraphs 1(1) and 1(2) of this Schedule state that the terms and conditions of the chairman of the Board will be set by the Secretary of State, and that the terms and conditions of Board members will be set by the chairman with the approval of the Secretary of State.

377.     Paragraph 1(3) further clarifies clause 82 to state that the Secretary of State may prescribe the procedure by which the chairman appoints Board members. Paragraph 1(4), 1(5) and Paragraphs 2 and 3 set out in further detail that although a member of the Board may be reappointed, a person will cease to be a member of the Board if:

•      in the case of the chairman of the Board, he ceases to hold this position or if he becomes a member of staff of the Board;

•      in the case of any other non-executive member, they become a member of staff of the Board;

•      in the case of an executive member appointed as one of the five other members of the Board appointed by the Secretary of State after consulting the chairman (under clause 82(1)(c));

•      in the case of the Chief Executive, he ceases to be employed as such.

378.     Paragraphs 4-6 set out provisions on remuneration which allow for the Secretary of State to determine the remuneration of the non-executive members of the Board, and allow for the Board to pay (as determined by the Secretary of State) allowances, gratuities or pensions to those who are or have been non-executive members of the Board. These paragraphs provide for the payment of compensation (where it appears to the Secretary of State that such compensation is correct in the circumstances) to a non-executive member of the Board who ceases to hold such a position other than at the end of his term of office.

379.     Paragraphs 7-11 set out that the staff of the Board is to consist of the Chief Executive as appointed under this part of the schedule; the other employees of the Board as appointed under this part of the schedule; and any additional staff made available by the Secretary of State under this part of the schedule. As provided by the Superannuation Act 1972, and comparable to other public bodies, the staff of the Board will be eligible for a government-backed pension for which the Board must pay such sums as he may direct to the Minister for the Civil Service.

380.     Paragraph 12 enables the Board to establish a committee for any purpose. Any committee established by the Board may further establish sub-committees. The members of such committees or sub-committees can include people who are not members of the Board. However, the members of sub-committees of the non-executive committee must not be executive members or staff of the Board.

381.     The Board will be responsible for setting its own procedure and quorum, and the procedure and quorum of any of its sub-committees.

382.     Paragraph 14 enables the Board to authorise any executive member of the Board; any other member of staff; or any of its committees or sub-committees to exercise functions of the Board. The non-executive functions of the Board are exempted from the general power to delegate as these functions must be discharged by the Non-Executive Committee or its sub-committees.

383.     Paragraph 17 requires the Board to keep accounts and accounting records following any accounting directions given by the Secretary of State (with approval of Treasury). The Board must prepare an annual statement of accounts, which will include an actuarial valuation of the assets and liabilities of the pension compensation fund. This actuarial valuation must be prepared by the "appointed actuary". A copy of the annual accounts must be sent to the Secretary of State and the Comptroller and Auditor General. In turn, the Comptroller and Auditor General must examine, certify and report on the accounts, and lay both the accounts and his report before both Houses of Parliament.

384.     Paragraph 18 enables the Board to pay certain expenses, including compensation for loss of earnings. This includes the power to pay fees to persons providing professional advice.

385.     By virtue of paragraph 19 the Board is to be regarded as independent from the Crown. Therefore, the property of the Board is not property of the Crown, (and the Crown will not be liable to meet any of the liabilities of the Board.)

386.     Paragraph 21 provides that Board vacancies, or any problems arising out of appointments of members of the Board, committees, sub-committees or Chief Executive will not affect the validity of any proceedings of the Board.

387.     Paragraphs 22 and 23 amend the appropriate legislation to disqualify members of the Board from membership of the House of Commons or the Northern Ireland Assembly.

388.     Paragraph 25 sets out that no member of any Board, committee or sub-committee is to be liable for damages for anything done or omitted in the discharge of the functions of the Board. This does not apply if the action or omission was in bad faith or if it was unlawful under the Human Rights Act 1998.

Schedule 6 - Transfer of assets and liabilities to the Board of the Pension Protection Fund

389.     This schedule provides for where the assets and liabilities of a scheme are transferred to the Board. The property, rights and liabilities to be transferred include:

•      property (situated anywhere in the UK or elsewhere);

•      rights and liabilities that would not otherwise be able to be transferred or assigned;

•      rights and liabilities under UK law.

390.     The liabilities transferred only include current liabilities.

Schedule 7 - Pension compensation provisions

391.     This schedule explains how Pension Protection Fund compensation is paid to members of pension schemes that are taken over by the Pension Protection Fund.

392.     Paragraphs 3 -20 define the level of Pension Protection Fund compensation that can be paid to existing members of a scheme. Those members over normal pension age and normal benefit age at assessment date will be entitled to 100% Pension Protection Fund compensation together with members of any age who are already in receipt of a pension on the grounds of ill-health and survivorship at assessment date. Those members under pension age at assessment date will be entitled to 90% of Pension Protection Fund compensation. Pension Protection Fund compensation will be subject to admissible rules.

393.     Paragraphs 4-20 also define survivors' compensation. Surviving spouses will be entitled to a pension which equates to 50% of the deceased beneficiary's Pension Protection Fund compensation entitlement, subject to admissible rules. Survivors' Pension will also be paid to Pension Protection Fund members who were pension credit members of the scheme, even if such benefits would not otherwise have been provided to the pension credit member.

394.     Paragraphs 12-20 define the periods and rate of revaluation from the assessment date of Pension Protection Fund compensation for prescribed members. Revaluation percentage will be the lesser of the percentage increase in the retail prices index during the revaluation period or the maximum rate of 5%.

395.     Paragraph 21 provides entitlement to Pension Protection Fund compensation for widows, widowers and dependent survivors, in accordance with scheme rules, where entitlement is not immediate following the death of the scheme member.

396.     Paragraph 22 provides for the Secretary of State to have regulation making powers to provide Pension Protection Fund compensation for prescribed dependents on the death of the beneficiary.

397.     Paragraph 23 provides for regulations to be made to allow for a member to commute part of their periodic Pension Protection Fund compensation to a lump sum. The maximum portion of the Pension Protection Fund compensation that a member can commute is 25%. This paragraph provides for the Secretary of State may alter, by order, the percentage of the Pension Protection Fund commutation. This paragraph also provides for Regulations to prescribe the manner in which an option to commute periodic compensation may be exercised; and the circumstances in which the maximum commutation will not apply.

398.     Paragraph 24 provides for the Secretary of State to prescribe the circumstances and conditions in which a person may become entitled to periodic compensation before he attains normal pension age or normal benefit age.

399.     Paragraph 25 defines the Pension Protection Fund periodic compensation cap and the circumstances in which the periodic compensation cap applies. The periodic compensation cap will apply to those members who, at assessment date, are under normal pension age and normal benefit age and who are not already in receipt of a pension on the grounds of ill-health or survivorship. The periodic compensation cap will be £25,000 for those who first become entitled to periodic compensation at age 65. The cap will be lower for those becoming first entitled to periodic Pension Protection Fund compensation before age 65 and higher for those becoming first entitled to periodic Pension Protection Fund compensation after that age. The person's normal pension age will not affect the operation of the cap. This schedule provides the Secretary of State with the power, by order, to specify the maximum permitted rate of periodic compensation.

400.     Paragraph 26 defines the annual increase in Pension Protection compensation cap. The Secretary of State will specify the amount of increase where the new general level of earnings in Great Britain exceeds the old level. The order made by the Secretary of State will have the effect of increasing the rate specified by the percentage by which the new level is greater than the old level. The order must provide for the increase to have effect on and after the 1^st April in the year following the end of the tax year to which the review relates.

401.     Paragraph 27 provides for regulations to limit the amount of lump sum compensation payable to a person in respect of benefits under a scheme, or two or more connected schemes if the same person is or was the employer in relation to both schemes. Regulations will also include annual uprating of the lump sum cap in line with earnings.

402.     Paragraph 28 defines the annual increase in Pension Protection periodic compensation. The amount of increase is to be the lesser of the percentage increase in the retail prices indexation for the reference period or the percentage for that period which corresponds to 2.5% per annum. Indexation will only apply to that part of the Pension Protection Fund compensation which is attributable to pensionable service on or after 6 April 1997.

403.     Paragraph 29 provides the Board with the power, subject to consultation, to alter the maximum revaluation and indexation rates.

404.     Paragraph 30 provides the Secretary of State with the power, subject to consultation, to alter the percentage paid as Pension Protection Fund compensation. This schedule also provides the Board with the power to make an order only in respect of a period for which the Board has reduced the maximum revaluation and indexation rates to nil.

405.     Paragraph 31 defines normal pension age, which for the purposes of the Pension Protection Fund compensation is the age specified in the admissible rules as the earliest age at which the scheme pension becomes payable without actuarial adjustment (excluding any admissible rule making special provision as to early payment on grounds of ill-health or otherwise). If it is not possible to identify a normal pension age from the scheme's admissible rules, this schedule also allows the Board to define how normal pension age should be determined.

406.     Paragraph 32 defines the meanings of: scheme rules; admissible rules; recent rule changes; and recent discretionary increases. Scheme rules mean rules of the scheme, subject to prescribed exemptions. Admissible rules relate to scheme rules, but disregard all recent rule changes if the combined effect of those changes and any recent discretionary increases is that the protected liabilities of the scheme immediately before the assessment date are greater than they would have been in the absence of those changes and increases. Recent rules changes and discretionary increases mean changes (excluding required increases and increases in RPI) to the scheme and increases in pensions in payment which were made or took effect in the period of three years ending with the assessment date, subject to prescribed exemptions.

407.     Paragraph 33 defines the meaning of: accrual rate; pensionable service; and pensionsable earnings, which are used in the Pension Protection Fund calculation of compensation for prescribed members of a scheme. This schedule also provides the Secretary of State with regulation making powers to include or exclude something that would, on the natural meaning of the words, fall within or be outside of the definition of accrual rate, pensionable service and pensionable earnings.

408.     Paragraph 34 of this schedule provides explanations of terms used in relation to the Pension Protection Fund and provides regulation making power to describe ill-health for the purposes of Pension Protection Fund.