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 4 — Fraud compensation
112

(a)
it occurs on or after the day appointed under section 113(2),
(b)
either—
(i)
it is the first insolvency event to occur in relation to the
employer on or after that day, or
(ii)
since the date of the last insolvency event which occurred before
5
the current event (but not before that day) a cessation event has
occurred in relation to the scheme, and
(c)
it does not occur in such circumstances as may be prescribed.
(10)
In this section—

“auditor” and “actuary”, in relation to an occupational pension scheme,
10
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
15
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
20
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
25
order for the purposes of this section.
(11)
This section is subject to section 167(2) (no fraud compensation payments to be
made until settlement date determined).
166
Board’s duties in respect of certain applications under section 165
(1)
This section applies where, in a case to which paragraphs (a) to (c) of
30
subsection (4) of section 165 apply (employer not likely to continue as going
concern etc), the Board receives an application within paragraph (d) of that
subsection.
(2)
If the Board is able to confirm—
(a)
that a scheme rescue is not possible, or
35
(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
practicable, give a copy of the notice to—
(a)
the Regulator,
40
(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
(d)
any insolvency practitioner in relation to the employer or, if there is no
such insolvency practitioner, the employer.
45

Pensions Bill
Part 2 — The Board of the Pension Protection Fund
Chapter 4 — Fraud compensation
113

(4)
Section 117(5) (circumstances in which scheme rescue can or cannot be
confirmed) applies for the purposes of this section.
167
Recovery of value
(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
5
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
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
10
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
(otherwise than from the Board) by the trustees or managers of the scheme in
respect of any act or omission—
15
(a)
which there are reasonable grounds for believing constituted an offence
prescribed for the purposes of paragraph (b) of section 165(1), and
(b)
to which any reduction in value falling within that paragraph was
attributable.
(4)
It is for the Board to determine whether anything received by the trustees or
20
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.
168
Fraud compensation payments
(1)
Where the Board determines to make one or more fraud compensation
25
payments, it must make the payment or payments to the trustees or managers
of the scheme in accordance with this section.
(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.
30
(3)
The amount of the payment (or, if there is more than one, the aggregate) must
not exceed the difference between—
(a)
the amount of the reduction (or, if more than one, the aggregate amount
of the reductions) within section 165(1)(b), and
(b)
the amount of any recoveries of value obtained before the settlement
35
date (within the meaning of section 167(2)).
(4)
Subject to subsection (3), the Board—
(a)
must determine the amount of any fraud compensation payment in
accordance with regulations made for the purposes of this subsection,
and
40
(b)
must take account of any interim payment already made under section
169.
(5)
The Board must give written notice of its determination under subsection (4)
to—
(a)
the Regulator,
45

Pensions Bill
Part 2 — The Board of the Pension Protection Fund
Chapter 4 — Fraud compensation
114

(b)
the trustees or managers of the scheme,
(c)
if the trustees or managers did not make the application under section
165 (fraud compensation payments), the person who made that
application, and
(d)
any insolvency practitioner in relation to the employer or, if there is no
5
such insolvency practitioner, the employer.
169
Interim payments
(1)
The Board may, on an application under section 165, make a payment or
payments to the trustees or managers of an occupational pension scheme if—
(a)
it is of the opinion that—
10
(i)
the case is one to which subsection (1) of that section applies or
may apply, and
(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 167.
15
(2)
Amounts payable under this section must not exceed the amounts determined
in accordance with regulations.
(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—
20
(a)
that the case is not one to which section 165(1) applies, or
(b)
that the amount of the payment was excessive.
(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.
25
170
Board’s powers to make fraud compensation transfer payments
(1)
This section applies where—
(a)
the Board assumes responsibility for a scheme in accordance with
Chapter 3,
(b)
the value of the assets of the scheme was reduced after the relevant date
30
but before the transfer notice (within the meaning of section 143) was
received by the trustees or managers of the scheme and there are
reasonable grounds for believing that the reduction was attributable to
an act or omission constituting an offence prescribed for the purposes
of section 165(1)(b), and
35
(c)
no application was made under section 165 in respect of that reduction
(or any such application was withdrawn before it was determined).
(2)
The Board may transfer an amount from the Fraud Compensation Fund to the
Pension Protection Fund (“fraud compensation transfer payment”) in respect
of the reduction in value, subject to the provisions of this section.
40
(3)
The Board must obtain any recoveries of value, to the extent that it may do so
without disproportionate cost and within a reasonable time.
(4)
No fraud compensation transfer payment may be made until the date
determined by the Board as the date after which further recoveries of value are

Pensions Bill
Part 2 — The Board of the Pension Protection Fund
Chapter 4 — Fraud compensation
115

unlikely to be obtained without disproportionate cost and within a reasonable
time.
(5)
In this section “recovery of value” means any increase in the value of the
Pension Protection Fund, being an increase attributable to any payment
received (otherwise than under this section) by the Board in respect of any act
5
or omission—
(a)
which there are reasonable grounds for believing constituted an offence
prescribed for the purposes of section 165(1)(b), and
(b)
to which any reduction in value falling within subsection (1)(b) above
was attributable.
10
(6)
It is for the Board to determine whether anything received by it 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.
(7)
The amount of any fraud compensation transfer payment (or, if there is more
than one, the aggregate) must not exceed the difference between—
15
(a)
the amount of the reduction (or, if more than one, the aggregate amount
of the reductions) within subsection (1)(b), and
(b)
the amount of any recoveries of value obtained by the Board before the
date determined by the Board under subsection (4).
(8)
Subject to subsection (7), the Board must determine the amount of any fraud
20
compensation transfer payment in accordance with regulations made for the
purposes of this subsection.
(9)
In this section “the relevant date” has the meaning given by section 165(10).
The fund
171
Fraud Compensation Fund
25
(1)
The Fraud Compensation Fund shall consist of—
(a)
any property and rights transferred under section 260 (dissolution of
the Pensions Compensation Board) which the Board designates as
assets of the Fund,
(b)
contributions levied under section 172 (fraud compensation levy),
30
(c)
money borrowed by the Board under section 104 for the purposes of
this Chapter,
(d)
amounts recovered under section 169 (recovery of interim payments),
and
(e)
any income or capital gain credited under subsection (2).
35
(2)
The Board must credit to the Fraud Compensation Fund any income or capital
gain arising from the assets in the Fund.
(3)
The following are payable out of the Fraud Compensation Fund—
(a)
sums required to meet liabilities transferred to the Board under section
260 (dissolution of the Pensions Compensation Board), which the
40
Board designates as liabilities of the Fund,
(b)
payments under section 168 (fraud compensation payments),
(c)
payments under section 169(1) (interim payments),

Pensions Bill
Part 2 — The Board of the Pension Protection Fund
Chapter 5 — Gathering information
116

(d)
amounts required to be transferred to the Pension Protection Fund
under section 170 (fraud compensation transfer payments),
(e)
money required for the repayment of, and the payment of interest on,
money within subsection (1)(c).
(4)
No other amounts are payable out of the Fraud Compensation Fund.
5
The levy
172
Fraud compensation levy
(1)
For the purposes of meeting expenditure payable out of the Fraud
Compensation Fund, regulations may provide for the imposition of a levy
(“fraud compensation levy”) in respect of occupational pension schemes.
10
(2)
Subsection (1) does not apply in relation to any scheme which is of a
description prescribed under section 165(1)(a) (schemes not eligible for fraud
compensation).
(3)
A fraud compensation levy imposed in respect of a scheme is payable to the
Board by or on behalf of—
15
(a)
the trustees or managers of the scheme, or
(b)
any other prescribed person.
(4)
A fraud compensation levy is so payable at prescribed times and at a rate, not
exceeding the prescribed rate, determined by the Board.
(5)
In determining the amount of expenditure in respect of which a fraud
20
compensation levy is to be imposed, the Board may take one year with another
(and, in doing so, must have regard to expenditure estimated to be incurred in
current or future periods and to actual expenditure incurred in previous
periods).
(6)
Notice of the rates determined by the Board under subsection (4) must be given
25
to prescribed persons in the prescribed manner.
(7)
An amount payable by a person on account of a fraud compensation levy is a
debt due from him to the Board.
(8)
An amount so payable may be recovered—
(a)
by the Board, or
30
(b)
if the Board so determines, by the Regulator on its behalf.
(9)
Without prejudice to the generality of subsection (1), (7) or (8), regulations
under this section may include provision relating to—
(a)
the collection and recovery of amounts payable by way of levy under
this section;
35
(b)
the circumstances in which any such amount may be waived.
Chapter 5
Gathering information
173
Information to be provided to the Board etc
(1)
Regulations may require such persons as may be prescribed to provide—
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Pensions Bill
Part 2 — The Board of the Pension Protection Fund
Chapter 5 — Gathering information
117

(a)
to the Board, or
(b)
to a person—
(i)
with whom the Board has made arrangements under paragraph
18 of Schedule 5, and
(ii)
who is authorised by the Board for the purposes of the
5
regulations,

information of a prescribed description at such times, or in such circumstances,
as may be prescribed.
(2)
Regulations under subsection (1) may in particular make provision for
requiring such persons as may be prescribed to provide any information or
10
evidence needed for a determination of entitlement to compensation under
Chapter 3 of this Part.
(3)
Regulations made by virtue of paragraph (b) of that subsection must make
provision regarding the manner in which the persons required to provide
information are to be notified of the identity of the person authorised as
15
mentioned in sub-paragraph (ii) of that paragraph.
174
Notices requiring provision of information
(1)
Any person to whom subsection (3) applies may be required by a notice in
writing to produce any document, or provide any other information, which
is—
20
(a)
of a description specified in the notice, and
(b)
relevant to the exercise of the Board’s functions in relation to an
occupational pension scheme.
(2)
A notice under subsection (1) may be given by—
(a)
the Board, or
25
(b)
a person authorised by the Board for the purposes of this section in
relation to the scheme.
(3)
This subsection applies to—
(a)
a trustee or manager of the scheme,
(b)
a professional adviser in relation to the scheme,
30
(c)
the employer in relation to the scheme,
(d)
an insolvency practitioner in relation to the employer, and
(e)
any other person appearing to the Board or person giving the notice to
be a person who holds, or is likely to hold, information relevant to the
discharge of the Board’s functions in relation to the scheme.
35
(4)
Where the production of a document, or the provision of information, is
required by a notice given under subsection (1), the document must be
produced, or information must be provided, in such a manner, at such a place
and within such a period as may be specified in the notice.
175
Entry of premises
40
(1)
An appointed person may, for the purpose of enabling or facilitating the
performance of any function of the Board in relation to an occupational
pension scheme, at any reasonable time enter scheme premises and, while
there—

Pensions Bill
Part 2 — The Board of the Pension Protection Fund
Chapter 5 — Gathering information
118

(a)
may make such examination and inquiry as may be necessary for such
purpose,
(b)
may require any person on the premises to produce, or secure the
production of, any document relevant to that purpose for inspection by
the appointed person,
5
(c)
may take copies of any such document,
(d)
may take possession of any document appearing to be such a document
or take in relation to any such document any other steps which appear
necessary for preserving it or preventing interference with it,
(e)
may, in the case of any such document which consists of information
10
which is stored in electronic form and is on, or accessible from, the
premises, require the information to be produced in a form—
(i)
in which it can be taken away, and
(ii)
in which it is legible or from which it can readily be produced
in a legible form, and
15
(f)
may, as to any matter relevant to the exercise of the Board’s functions
in relation to the scheme, examine, or require to be examined, either
alone or in the presence of another person, any person on the premises
whom he has reasonable cause to believe to be able to give information
relevant to that matter.
20
(2)
Premises are scheme premises for the purposes of subsection (1) if the
appointed person has reasonable grounds to believe that—
(a)
they are being used for the business of the employer,
(b)
an insolvency practitioner in relation to the employer is acting there in
that capacity,
25
(c)
documents relevant to—
(i)
the administration of the scheme, or
(ii)
the employer,

are being kept there, or
(d)
the administration of the scheme, or work connected with the
30
administration of the scheme, is being carried out there,

unless the premises are a private dwelling-house not used by, or by permission
of, the occupier for the purposes of a trade or business.
(3)
An appointed person applying for admission to any premises for the purposes
of this section must, if so required, produce his certificate of appointment.
35
(4)
When exercising a power under this section an appointed person may be
accompanied by such persons as he considers appropriate.
(5)
Any document of which possession is taken under this section may be retained
until the end of the period comprising—
(a)
the period of 12 months beginning with the date on which possession
40
was taken of the document, and
(b)
any extension of that period under subsection (6).
(6)
The Board may before the end of the period mentioned in subsection (5)
(including any extension of it under this subsection) extend it by such period
not exceeding 12 months as the Board considers appropriate.
45
(7)
In this section “appointed person” means a person appointed by the Board for
the purposes of this section in relation to the scheme.