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35 Investment principles
(1) The trustees of a trust scheme must secure—
(a) that a statement of investment principles is prepared and maintained for the scheme, and
(b) that the statement is reviewed at such intervals, and on such occasions, as may be prescribed and, if necessary, revised.
(2) In this section "statement of investment principles", in relation to a trust scheme, means a written statement of the investment principles governing decisions about investments for the purposes of the scheme.
(3) Before preparing or revising a statement of investment principles, the trustees of a trust scheme must comply with any prescribed requirements.
(4) A statement of investment principles must be in the prescribed form and cover, amongst other things, the prescribed matters.
(5) Neither a trust scheme nor a statement of investment principles may impose restrictions (however expressed) on any power to make investments by reference to the consent of the employer.
(6) If in the case of a trust scheme—
(a) a statement of investment principles has not been prepared, is not being maintained or has not been reviewed or revised, as required by this section, or
(b) the trustees have not complied with the obligation imposed on them by subsection (3), section 10 applies to any trustee who has failed to take all reasonable steps to secure compliance.
(7) Regulations may provide that this section is not to apply to any scheme
which falls within a prescribed class or description.
Safeguarding pension rights
Clause 206 - Inalienability of occupational pension
• Amendment of the Pensions Act 1995: Section 91
91 Inalienability of occupational pension.
(1) Subject to subsection (5), where a person is entitled to a pension under an occupational pension scheme or has a right to a future pension under such a scheme -
(a) the entitlement or right cannot be assigned, commuted or surrendered,
(b) the entitlement or right cannot be charged or a lien exercised in respect of it, and
(c) no set-off can be exercised in respect of it, and an agreement to effect any of those things is unenforceable.
(2) Where by virtue of this section a person's entitlement to a pension under an occupational pension scheme, or right to a future pension under such a scheme, cannot, apart from subsection (5), be assigned, no order can be made by any court the effect of which would be that he would be restrained from receiving that pension.
(4) Subsection (2) does not prevent the making of -
(a)an attachment of earnings order under the Attachment of Earnings Act 1971, or
(b)an income payments order under the Insolvency Act 1986.
(4A) Subject to section 73(3)(d) of the Debtors (Scotland) Act 1987, nothing in this section prevents any diligence mentioned in section 46 of that Act being done against a pension under an occupational pension scheme.
(5) In the case of a person ("the person in question") who is entitled to a pension under an occupational pension scheme, or has a right to a future pension under such a scheme , subsection (1) does not apply to any of the following, or any agreement to effect any of the following -
(a) an assignment in favour of the person in question's widow, widower or dependant,
(b) a surrender, at the option of the person in question, for the purpose of -
(i) providing benefits for that person's widow, widower or dependant, or
(ii) acquiring for the person in question entitlement to further benefits under the scheme,
(i) of the person in question's benefit on or after retirement or in exceptional circumstances of serious ill health,
(ii) in prescribed circumstances, of any benefit for that person's widow, widower or dependant, or
(iii) in other prescribed circumstances,
(d) subject to subsection (6), a charge or lien on, or set-off against, the person in question's entitlement, or right, (except to the extent that it includes transfer credits other than prescribed transfer credits) for the purpose of enabling the employer to obtain the discharge by him of some monetary obligation due to the employer and arising out of a criminal, negligent or fraudulent act or omission by him,
(e) subject to subsection (6), except in prescribed circumstances a charge or lien on, or set-off against, the person in question's entitlement, or right , for the purpose of discharging some monetary obligation due from the person in question to the scheme and -
(i) arising out of a criminal, negligent or fraudulent act or omission by him, or
(ii) in the case of a trust scheme of which the person in question is a trustee, arising out of a breach of trust by him.
(f) subject to subsection (6), a charge or lien on, or set-off against, the person in question's entitlement, or right, for the purpose of discharging some monetary obligation due from the person in question to the scheme arising out of a payment made in error in respect of the pension.
(6) Where a charge, lien or set-off is exercisable by virtue of subsection (5)(d) or (e), (e) or (f) -
(a) its amount must not exceed the amount of the monetary obligation in question, or (if less) the value (determined in the prescribed manner) of the person in question's entitlement or accrued right, and
(b) the person in question must be given a certificate showing the amount of the charge, lien or set-off and its effect on his benefits under the scheme,
and where there is a dispute as to its amount, the charge, lien or set-off must not be exercised unless the obligation in question has become enforceable under an order of a competent court or in consequence of an award of an arbitrator or, in Scotland, an arbiter to be appointed (failing agreement between the parties) by the sheriff.
(7) This section is subject to section 159 of the Pension Schemes Act 1993 (inalienability of guaranteed minimum pension and protected rights payments).
Payments by employers
Clause 207 - Payments made by employers to personal pension schemes
• Amendment of the Pension Schemes Act 1993: Section 111A
111A Monitoring of employers' payments to personal pension schemes
(1) This section applies where-
(a) an employee is a member of a personal pension scheme; and
(b) direct payment arrangements exist between the employee and his employer.
(2) In this section "direct payment arrangements" means arrangements under which contributions fall to be paid by or on behalf of the employer towards the scheme-
(a) on the employer's own account (but in respect of the employee); or
(b) on behalf of the employee out of deductions from the employee's earnings.
(3) The employer must secure that there is prepared, maintained and from time to time revised a record of the direct payment arrangements which complies with subsection (4).
(a) show the rates and due dates of contributions payable under the direct payment arrangements, and
(b) satisfy prescribed requirements.
(5) The employers must, within the prescribed period after the preparation or any revision of the record, send a copy of the record or (as the case may be) of the revised record to the trustees or managers of the scheme.
(6) Except in prescribed circumstances, the trustees or managers of the scheme must, where any contribution shown by the record to be payable under the direct payment arrangements has not been paid on or before its due date, give notice of that fact, within the prescribed period, to the Regulatory Authority and the employee.
(7) The trustees or managers of the scheme must before the end of prescribed intervals send the employee a statement setting out the amounts and dates of the payments made under the direct payment arrangements during a prescribed period.
(3) The trustees or managers of the scheme must monitor the payment of contributions by or on behalf of the employer under the direct payment arrangements.
(4) The trustees or managers may request the employer to provide them, (or arrange for them to be provided) with the payment information specified in the request.
(5) For the purposes of subsection (4) "payment information" is information required by the trustees or managers to enable them to discharge the duty imposed by subsection (3)
(6) The employer must comply with a request under subsection (4) within a reasonable period.
(7) Where, as a result of the employer's failure to so comply, the trustees or managers are unable to discharge the duty imposed by subsection (3), they must give notice to that effect to the Regulatory Authority within a reasonable period.
(7A) Where—
(a) a contribution payable under the direct payment arrangements has not been paid on or before its due date, and
(b) the trustees or managers have reasonable cause to believe that the failure to pay the contribution is likely to be of material significance in the exercise by the Regulatory Authority of any of their functions, they must give notice to that effect to the Regulatory Authority and the employee within a reasonable period after the due date.
(a) the employer fails to take all such steps as are reasonable to secure compliance with subsection (3) or (5), subsection (6) and as a result the trustees or managers of the scheme are unable to discharge the duty imposed by subsection (3), or
(b) a contribution payable under the direct payment arrangements is not paid to the trustees or managers of the scheme on or before its due date, section 10 of the Pensions Act 1995 (power of the Regulatory Authority to impose civil penalties) applies to the employer.
(9) If subsection (6) or (7) subsection (7) or (7A) is not complied with, section 10 of the Pensions Act 1995 applies to any trustee or manager of the scheme who has failed to take all such steps as are reasonable to secure compliance.
(a) subsection (6) or (7) is not complied with, and
(i) is established under a trust, and
(ii) is or has been registered under section 2 of the Welfare Reform and Pensions Act 1999 (stakeholder schemes),
section 3 of the Pensions Act 1995 (power of the Regulatory Authority to remove trustees) applies to any trustee of the scheme who has failed to take all such steps as are reasonable to secure compliance.
(11) A person shall not be required by virtue of subsection (8)(b) above to pay a penalty under section 10 of the Pensions Act 1995 in respect of a failure if in respect of that failure he has been-
(a) required to pay a penalty under that section by virtue of section 3(7) of the Welfare Reform and Pensions Act 1999 (failures in respect of stakeholder pensions), or
(b) convicted of an offence under subsection (12) below.
(12) A person is guilty of an offence if he is knowingly concerned in the fraudulent evasion of the direct payment arrangements so far as they are arrangements for the payment by him or any other person of any such contribution towards the scheme as is mentioned in subsection (2)(b).
(13) A person guilty of an offence under subsection (12) is liable-
(a) on summary conviction, to a fine not exceeding the statutory maximum; and
(b) on conviction on indictment, to imprisonment for a term not exceeding seven years or a fine or both.
(14) No prosecution shall be brought against the Crown for an offence under subsection (12), but that subsection applies to persons in the public service of the Crown as to other persons.
(15) In this section "due date", in relation to a contribution payable under the direct payment arrangements, means-
(a) if the contribution falls to be paid on the employer's own account, the latest day under the arrangements for paying it;
(b) if the contribution falls to be paid on behalf of the employee, the last day of a prescribed period.
(16) Regulations may provide for this section to apply with such modifications as may be prescribed in a case where-
(a) the direct payment arrangements give effect to a requirement arising under subsection (5) of section 3 of the Welfare Reform and Pensions Act 1999 (deduction and payment of employee's contributions to stakeholder scheme), and
(b) in accordance with regulations under that subsection, that requirement is for the employer to pay contributions to a person prescribed by such regulations (instead of to the trustees or managers of the scheme).
(17) Nothing in this section shall be taken as varying the provisions of the direct payment arrangements or as affecting their enforceability.
Clause 208 - Payments made by employers and members to occupational pension schemes
• Amendment of the Pensions Act 1995: Section 49
49 Other responsibilities of trustees, employers, etc.
(1) The trustees of any trust scheme must, except in any prescribed circumstances, keep any money received by them in a separate account kept by them with a deposit-taker .
(2) Regulations may require the trustees of any trust scheme to keep-
(a) records of their meetings (including meetings of any of their number), and
(b) books and records relating to any prescribed transaction.
(3) Regulations may, in the case of any trust scheme, require the employer, and any prescribed person acting in connection with the scheme, to keep books and records relating to any prescribed transaction.
(4) Regulations may require books or records kept under subsection (2) or (3) to be kept in a prescribed form and manner and for a prescribed period.
(5) Regulations must, in cases where payments of benefit to members of trust schemes are made by the employer, require the employer to make into a separate account kept by him with a deposit-taker any payments of benefit which have not been made to the members within any prescribed period.
(6) If in the case of any trust scheme any requirements imposed by or under subsection (1) or (2) are not complied with, sections 3 and 10 apply to any trustee who has failed to take all such steps as are reasonable to secure compliance.
(7) If in the case of any trust scheme any person fails to comply with any requirement imposed under subsection (3) or (5), section 10 applies to him.
(8) Where on making a payment of any earnings in respect of any employment there is deducted any amount corresponding to any contribution payable on behalf of an active member of an occupational pension scheme, the amount deducted is to be paid, within a prescribed period, to the trustees or managers of the scheme.
(8A) "Deposit taker" means-
(a) a person who has permission under Part 4 of the Financial Services and Markets Act 2000 to accept deposits;
(b) an EEA firm of the kind mentioned in paragraph 5(b) of Schedule 3 to that Act which has permission under paragraph 15 of that Schedule (as a result of qualifying for authorisation under paragraph 12 of that Schedule) to accept deposits;
(c) the Bank of England or the central bank of a member state other than the United Kingdom;
(d) the National Savings Bank; or
(e) a municipal bank, that is to say a company which was, immediately before the repeal of the Banking Act 1987 exempted from the prohibition in section 3 of that Act by virtue of section 4(1) of, and paragraph 4 of Schedule 2 to, that Act.
(8B) Paragraphs (a) and (b) of subsection (8A) must be read with-
(a) section 22 of the Financial Services and Markets Act 2000;
(b) any relevant order under that section; and
(c) Schedule 2 to that Act.
(9) If in any case there is a failure to comply with subsection (8)-
(a) section 10 applies to the employer; and
(b) except in prescribed circumstances, the trustees or managers must give notice of the failure, within the prescribed period, to the Authority and the member.
(b) if the trustees or managers have reasonable cause to believe that the failure is likely to be of material significance in the exercise by the Authority of any of their functions, they must, except in prescribed circumstances, give notice of the failure to the Authority and the member within a reasonable period after the end of the prescribed period under subsection (8).
Section 88
88 Schedules of payments to money purchase schemes: supplementary.
(1) Except in prescribed circumstances, the trustees or managers of an occupational pension scheme to which section 87 applies must, where any amounts payable in accordance with the payment schedule have not been paid on or before the due date, give notice of that fact, within the prescribed period, to the Authority and to the members of the scheme.
(1) Where, in the case of an occupational pension scheme to which section 87 applies—
(a) there is a failure to pay on or before the due date any amounts payable in accordance with the payment schedule, and
(b) the trustees or managers have reasonable cause to believe that the failure is likely to be of material significance in the exercise by the Authority of any of their functions, they must, except in prescribed circumstances, give notice of the failure to the Authority and to the members of the scheme within a reasonable period after the due date.
(2) Any such amounts which for the time being remain unpaid after that date (whether payable by the employer or not) shall, if not a debt due from the employer to the trustees or managers apart from this subsection, be treated as such a debt.
(3) Where any amounts payable in accordance with the payment schedule by or on behalf of the employer on the employer's own account have not been paid on or before the due date, section 10 applies to the employer.
(4) If, in the case of an occupational pension scheme to which section 87 applies, subsection (1) is not complied with-
(a) section 3 applies to any trustee who has failed to take all such steps as are reasonable to secure compliance, and
(b)section 10 applies to any trustee or manager who has failed to take all such steps.
Deficiency in assets of certain occupational schemes
Clause 209 - Debt due from the employer when assets insufficient
• Amendment of the Pensions Act 1995: Section 75
75 Deficiencies in the assets.
(1)If, in the case of an occupational pension scheme which is not a money purchase scheme, the value at the applicable time of the assets of the scheme is less than the amount at that time of the liabilities of the scheme, an amount equal to the difference shall be treated as a debt due from the employer to the trustees or managers of the scheme.
(2)If in the case of an occupational pension scheme which is not a money purchase scheme-
(a)a relevant insolvency event occurs in relation to the employer, and
(b)a debt due from the employer under subsection (1) has not been discharged at the time that event occurs,
the debt in question shall be taken, for the purposes of the law relating to winding up, bankruptcy or sequestration as it applies in relation to the employer, to arise immediately before that time.
(3)In this section "the applicable time" means -
(a)if the scheme is being wound up before a relevant insolvency event occurs in relation to the employer, any time when it is being wound up before such an event occurs, and
(b)otherwise, immediately before the relevant insolvency event occurs.
(4)For the purposes of this section a relevant insolvency event occurs in relation to the employer-
(i)where the employer is a company, when it goes into liquidation, within the meaning of section 247(2) of the Insolvency Act 1986, or
(ii)where the employer is an individual, at the commencement of his bankruptcy, within the meaning of section 278 of that Act, or
(i)where the employer is a company, at the commencement of its winding up, within the meaning of section 129 of that Act, or
(ii)where the employer is a debtor within the meaning of the Bankruptcy (Scotland) Act 1985, on the date of sequestration as defined in section 12(4) of that Act.
(1) This section applies in relation to an occupational pension scheme other than a scheme which is—
(a) a money purchase scheme, or
(b) of a prescribed description.
(2) If—
(a) at any time which falls—
(i) when a scheme is being wound up, but
(ii) before any insolvency event in relation to the employer which occurs while the scheme is being wound up, the value of the assets of the scheme is less than the amount at that time of the liabilities of the scheme, and
(b) the trustees or managers of the scheme designate that time for the purposes of this subsection (before the occurrence of an event within paragraph (a)(ii)), an amount equal to the difference shall be treated as a debt due from the employer to the trustees or managers of the scheme.
This is subject to subsection (3).
(3) Subsection (2) applies only if before the commencement of the winding up of the scheme—
(a) no insolvency event has occurred in relation to the employer, or
(b) any such event has been followed by an event within subsection (6A)(b), (c) or (d).
(4) Where—
(a) immediately before a qualifying insolvency event occurs in relation to the employer the value of the assets of the scheme is less than the amount at that time of the liabilities of the scheme, and
(b) if the scheme was being wound up immediately before that event, subsection (2) has not applied in relation to the scheme to treat an amount as a debt due from the employer to the trustees or managers of the scheme, an amount equal to the difference shall be treated as a debt due from the employer to the trustees or managers of the scheme.
(4A) A debt under subsection (4) is to be taken, for the purposes of the law relating to insolvency as it applies to the employer, to arise immediately before the occurrence of the qualifying insolvency event.
(4B) Where the scheme was not being wound up immediately before the qualifying insolvency event, the debt due from the employer under subsection (4) is contingent upon—
(a) the occurrence, in relation to the scheme, of an event within paragraph (a) of subsection (6A) in circumstances where that event is the first event within that subsection to occur after the qualifying insolvency event, or
(b) the commencement of the winding up of the scheme before any event within subsection (6A) occurs.
(5) For the purposes of subsection (1) subsections (2) and (4), the liabilities and assets to be taken into account, and their amount or value, must be determined, calculated and verified by a prescribed person and in the prescribed manner.
(6) In calculating the value of any liabilities for those purposes, a provision of the scheme which limits the amount of its liabilities by reference to the amount of its assets is to be disregarded.
(6A) The events within this subsection are—
(a) the issuing of a notice under subsection (2) of section 96 of the Pensions Act 2004 confirming that a scheme rescue is not possible;
(b) the issuing of such a notice confirming that a scheme rescue has occurred;
(c) the Board ceasing to be involved with the scheme under subsection section 117(2)(b) of that Act (withdrawal where no insolvency event likely to occur in six month period or expiry of six month period without further insolvency event occurring), or
(d) if where an insolvency practitioner issues a notice under section 96(4) (confirmation of inability to confirm status of scheme) section 117(4) of that Act (Board's duty to consider whether to withdraw) does not apply, the issuing of that notice."
(6B) For the purposes of this section—
(a) section 95 of the Pensions Act 2004 applies for the purposes of determining if and when an insolvency event has occurred in relation to the employer,
(b) an insolvency event ("the current event") in relation to the employer is a qualifying insolvency event if—
(i) it is the first insolvency event in relation to the employer, or
(ii) an event within subsection (6A)(b), (c) or (d) has occurred in relation to the scheme since the date of the last insolvency event (if any) to occur in relation to the employer before the current event, and
(c) references to an insolvency event in relation to an employer do not include an insolvency event which occurred in relation to him before he became the employer in relation to the scheme.
(7) This section does not prejudice any other right or remedy which the trustees or managers may have in respect of a deficiency in the scheme's assets.
(8) A debt due by virtue only of this section shall not be regarded-
(a) as a preferential debt for the purposes of the Insolvency Act 1986, or
(b) as a preferred debt for the purposes of the Bankruptcy (Scotland) Act 1985.
(9) This section does not apply to an occupational pension scheme falling within a prescribed class or description.
(10) Regulations may modify this section as it applies in prescribed circumstances.
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