Pensions Bill

House of Commons

Session 2003 - 04
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Other Bills before Parliament

Pensions Bill

Pensions Bill
Part 1 — The Pensions Regulator
14

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Consequences of freezing order
(1)
If a freezing order is made in relation to a scheme any action taken in
contravention of the order is void except to the extent that the action is
validated by an order under section 23.
(2)
A freezing order in relation to a scheme does not prevent any increase in a
5
benefit which is an increase which would otherwise accrue in accordance with
the scheme or any enactment during the period for which the order has effect,
unless the order contains a direction to the contrary.
(3)
A freezing order in relation to a scheme does not prevent the scheme being
wound up in pursuance of an order under section 11 of the Pensions Act 1995
10
(c. 26) (power to wind up occupational pension schemes).
(4)
If a freezing order contains a direction under section 20(4)(b) that no further
contributions, or no further specified contributions, are to be paid towards a
scheme during the period for which the order has effect—
(a)
any contributions which are the subject of the direction and which
15
would otherwise be due to be paid towards the scheme during that
period are to be treated as if they do not fall due, and
(b)
any obligation to pay those contributions (including any obligation
under section 49(8) of the Pensions Act 1995 to pay amounts deducted
corresponding to such contributions) is to be treated as if it does not
20
arise.
(5)
If a freezing order contains a direction under section 20(4)(f) (no transfers of
member’s rights etc from the scheme) it does not prevent giving effect to—
(a)
a pension sharing order or provision, or
(b)
a pension earmarking order.
25
(6)
For the purposes of subsection (5)—

“pension sharing order or provision” means an order or provision falling
within section 28(1) of the Welfare Reform and Pensions Act 1999 (c. 30)
(activation of pension sharing);

“pension earmarking order” means—
30
(a)
an order under section 23 of the Matrimonial Causes Act 1973
(c. 18) (financial provision orders in connection with divorce
etc) so far as it includes provision made by virtue of section 25B
or 25C of that Act (powers to include provision about pensions),
(b)
an order under section 12A(2) or (3) of the Family Law
35
(Scotland) Act 1985 (c. 37) (powers in relation to pension lump
sums when making a capital sum order), or
(c)
an order under Article 25 of the Matrimonial Causes (Northern
Ireland) Order 1978 (S.I. 1978/1045 (N.I.15)) so far as it includes
provision made by virtue of Article 27B or 27C of that Order
40
(Northern Ireland powers corresponding to those mentioned in
paragraph (a)).
(7)
Regulations may modify any provisions of Chapter 4 of Part 4 of the Pension
Schemes Act 1993 (c. 48) (protection for early leavers: transfer values) in their
application to an occupational pension scheme in relation to which a freezing
45
order is made containing a direction under section 20(4)(f) (no transfers of
member’s rights etc from the scheme).

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Part 1 — The Pensions Regulator
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(8)
Disregarding subsection (1), if a freezing order made in relation to a scheme is
not complied with, section 10 of the Pensions Act 1995 (c. 26) (civil penalties)
applies to any trustee or manager of the scheme who has failed to take all
reasonable steps to secure compliance.
(9)
Subsection (8) does not apply in the case of non-compliance with a direction
5
under section 20(4)(c) (direction that certain deducted contributions are to be
repaid by the employer).
(10)
In such a case, section 10 of the Pensions Act 1995 (civil penalties) applies to an
employer who, without reasonable excuse, fails to repay an amount as
required by the direction.
10
22
Period of effect etc of freezing order
(1)
A freezing order must specify the period for which it has effect.
(2)
The period specified must not exceed three months.
(3)
The Regulator may on one or more occasions by order extend the period for
which the order has effect.
15
(4)
But the total period for which the order has effect must not exceed six months.
(5)
This section is subject to sections 24, 25 and 26 (effect of winding up and
assessment period on freezing orders).
23
Validation of action in contravention of freezing order
(1)
If a freezing order is made in relation to a scheme, the Regulator may by order
20
validate action taken in contravention of the order.
(2)
Any of the following persons may apply to the Regulator for an order under
this section validating particular action—
(a)
the trustees or managers of the scheme;
(b)
any person directly affected by the action.
25
24
Effect of determination to wind up scheme on freezing order
(1)
This section applies where—
(a)
the Regulator determines to make an order under section 11 of the
Pensions Act 1995 (power to wind up occupational pension schemes) in
relation to a scheme (“a winding up order”),
30
(b)
that determination is made during the period for which a freezing
order has effect in relation to the scheme,
(c)
the case is not one to which the special procedure in section 87 applies
(immediate exercise of powers where immediate risk to assets etc), and
(d)
the winding up order accordingly cannot be made until the expiry of
35
the period specified in section 85(4) (no exercise during period of
referral to the Tribunal etc).
(2)
In such a case the freezing order is to continue to have effect until—
(a)
where the winding up order is made, it ceases to have effect under
section 25 from the time when that order is made, or
40
(b)
the determination to make the winding up order is revoked.

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Part 1 — The Pensions Regulator
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(3)
Subsection (2) is subject to the Regulator’s power under section 90 to revoke
the freezing order at any time.
25
Effect of winding up order on freezing order
(1)
This section applies where—
(a)
an order is made under section 11 of the Pensions Act 1995 (c. 26) (“the
5
1995 Act”) (power to wind up occupational pension schemes) in
relation to a scheme, and
(b)
the order is made during the period for which a freezing order has
effect in relation to the scheme.
(2)
In such a case—
10
(a)
the winding up of the scheme in pursuance of the order under section
11 of the 1995 Act is to be taken as beginning at the time when the
freezing order took effect, and
(b)
the freezing order ceases to have effect from the time when the order
under section 11 of the 1995 Act is made.
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(3)
The Regulator may by order direct any specified person—
(a)
to take such specified steps as it considers are necessary as a result of
the winding up of the scheme being deemed under subsection (2)(a) to
have begun at the time when the freezing order took effect, and
(b)
to take those steps within a specified period.
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(4)
If the trustees or managers of a scheme fail to comply with a direction to them
contained in an order under this section, section 10 of the 1995 Act (civil
penalties) applies to any trustee or manager who has failed to take all
reasonable steps to secure compliance.
(5)
That section also applies to any other person who, without reasonable excuse,
25
fails to comply with a direction to him contained in an order under this section.
(6)
In this section “specified” means specified in an order under this section.
26
Effect of assessment period under Part 2 on freezing order
Where an assessment period (within the meaning of section 119) begins in
relation to a scheme, any freezing order in relation to the scheme ceases to have
30
effect when the assessment period begins.
27
Power to give a direction where freezing order ceases to have effect
(1)
This section applies where—
(a)
the Regulator revokes a freezing order in relation to a scheme or it
otherwise ceases to have effect, and
35
(b)
at the time when the freezing order ceases to have effect, the Regulator
has not made an order under section 11 of the Pensions Act 1995 (“the
1995 Act”) in relation to the scheme.
(2)
In such a case the Regulator may make an order under this section in relation
to the scheme containing a direction that, if specified conditions are met,
40
specified benefits are to accrue under the scheme to, or in respect of, specified
members of the scheme in respect of specified periods of service being service

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Part 1 — The Pensions Regulator
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in employment which but for the freezing order would have qualified the
member in question for those benefits under the scheme.
(3)
The conditions mentioned in subsection (2) may include—
(a)
a requirement that specified benefits do not accrue to, or in respect of,
a member or a specified member unless a contribution of a specified
5
amount is paid by or on behalf of the member towards the scheme
within a specified period;
(b)
a requirement that a contribution of a specified amount must be paid
by or on behalf of the employer within a specified period;
(c)
a requirement that such contributions as are specified under paragraph
10
(a) or (b) are to be accepted for the period for which the freezing order
had effect or any part of that period.
(4)
Where the freezing order contained a direction under section 20(4)(d) or (e)
and any amount of any benefit under the scheme was not paid as a result of the
direction—
15
(a)
the direction does not affect any entitlement to that benefit, and
(b)
any benefit to which a member, or a person in respect of a member,
remains entitled at the end of the period for which the freezing order
had effect is an amount which falls due to the member or, as the case
may be, the person at the end of that period.
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(5)
If an order made under this section in relation to a scheme is not complied with,
section 10 of the 1995 Act (civil penalties) applies to a trustee or a manager of
the scheme who has failed to take all reasonable steps to secure compliance.
(6)
Subsection (7) applies if—
(a)
an order is made under this section in relation to a scheme,
25
(b)
the order contains a requirement as described in subsection (3)(b) that
a contribution of a specified amount must be paid by or on behalf of the
employer within a specified period, and
(c)
the contribution is not paid within that period.
(7)
In such a case—
30
(a)
section 10 of the 1995 Act applies to the employer if he has failed,
without reasonable excuse, to secure compliance,
(b)
the amount which for the time being remains unpaid after the end of
the specified period is to be treated as a debt due from the employer to
the trustees or managers of the scheme, and
35
(c)
except in prescribed circumstances, the trustees or managers must,
within a prescribed period, give notice of the failure to pay to the
Regulator and to the member.
(8)
If in any case subsection (7)(c) is not complied with, section 10 of the 1995 Act
applies to any trustee or manager who has failed to take all reasonable steps to
40
secure compliance.
(9)
In this section “specified” means specified in an order under this section.
28
Notification of trustees, managers, employers and members
(1)
This section applies where—
(a)
a freezing order is made in relation to a scheme,
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Part 1 — The Pensions Regulator
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(b)
an order is made under section 23 validating action taken in
contravention of a freezing order made in relation to a scheme,
(c)
an order is made under section 25 directing specified steps to be taken
following the winding up of a scheme, or
(d)
an order is made under section 27 in relation to a scheme where a
5
freezing order ceases to have effect.
(2)
The Regulator must, as soon as reasonably practicable after the order has been
made, notify—
(a)
the trustees or managers of the scheme, and
(b)
the employer in relation to the scheme,
10

of the fact that the order has been made and of its effect.
(3)
The Regulator may by order direct the trustees or managers of the scheme to
notify—
(a)
all the members of the scheme, or
(b)
the members of the scheme specified in the order,
15

of the fact that the order mentioned in subsection (1) has been made and of its
effect.
(4)
Notification is to be within the period and in the manner specified in the order
under subsection (3).
(5)
If the trustees or managers of a scheme fail to comply with a direction to them
20
contained in an order made under subsection (3), section 10 of the Pensions Act
1995 (c. 26) (civil penalties) applies to any trustee or manager who has failed to
take all reasonable steps to secure compliance.
29
Supplementary provision relating to orders under sections 20 to 28
(1)
An order may be made in relation to a scheme under any of sections 20, 22, 23,
25
25, 27 and 28—
(a)
in spite of any enactment or rule of law, or any rule of the scheme,
which would otherwise operate to prevent the order being made, and
(b)
without regard to any such enactment, rule of law or rule of the scheme
as would otherwise require, or might otherwise be taken to require, the
30
implementation of any procedure or the obtaining of any consent, with
a view to the making of the order.
(2)
Subsection (1) does not have effect to authorise the Regulator to make an order
as mentioned in that subsection if its doing so would be unlawful as a result of
section 6(1) of the Human Rights Act 1998 (c. 42) (unlawful for public authority
35
to act in contravention of a Convention right).
Trustees of occupational pension schemes
30
Prohibition orders
For section 3 of the Pensions Act 1995 (prohibition orders) substitute—
“3
Prohibition orders
40
(1)
The Authority may by order prohibit a person from being a trustee of —
(a)
a particular trust scheme,
(b)
a particular description of trust schemes, or

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Part 1 — The Pensions Regulator
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(c)
trust schemes in general,

if they are satisfied that he is not a fit and proper person to be a trustee
of the scheme or schemes to which the order relates.
(2)
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
5
order has the effect of removing him.
(3)
The Authority may, on the application of any person prohibited under
this section, by order revoke the order either generally or in relation to
a particular scheme or description of schemes.
(4)
An application under subsection (3) may not be made—
10
(a)
during the period within which the determination to exercise
the power to make the prohibition order may be referred to the
Tribunal under section 85(3) or 88(7) of the Pensions Act 2004,
and
(b)
if the determination is so referred, until the reference, and any
15
appeal against the Tribunal’s determination, has been finally
disposed of.
(5)
A revocation made at any time under this section cannot affect
anything done before that time.
(6)
The Authority must prepare and publish a statement of the policies
20
they intend to adopt in relation to the exercise of their powers under
this section.
(7)
The Authority may revise any statement published under subsection
(6) and must publish any revised statement.
(8)
In this section “the Tribunal” means the Pensions Regulator Tribunal
25
established under section 91 of the Pensions Act 2004.”
31
Suspension orders
In section 4 of the Pensions Act 1995 (c. 26) (suspension orders)—
(a)
after subsection (1)(a) insert—
“(aa)
pending consideration being given to the institution of
30
proceedings against him for an offence involving
dishonesty or deception,”,
(b)
in subsection (2)—
(i)
in paragraph (a) after “paragraph (a)” insert “or (aa)”,
(ii)
after “effect” insert “in relation to a trust scheme”, and
35
(iii)
after “section 3(1)” insert “in relation to that scheme”,
(c)
after subsection (5) insert—
“(5A)
An application under subsection (5) may not be made—
(a)
during the period within which the determination to
exercise the power to make an order under subsection
40
(1) may be referred to the Tribunal under section 85(3) or
88(7) of the Pensions Act 2004, and
(b)
if the determination is so referred, until the reference,
and any appeal against the Tribunal’s determination,
has been finally disposed of.”, and
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Part 1 — The Pensions Regulator
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(d)
After subsection (6) insert—
“(7)
In this section “the Tribunal” means the Pensions Regulator
Tribunal established under section 91 of the Pensions Act 2004.”
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Appointments by Regulator
(1)
In section 7 of the Pensions Act 1995 (c. 26) (appointment of trustees)—
5
(a)
omit subsection (4), and
(b)
after subsection (5) insert—
“(5A)
An application may be made to the Regulator in relation to a
trust scheme by—
(a)
the trustees of the scheme,
10
(b)
the employer, or
(c)
any member of the scheme,

for the appointment of a trustee of the scheme under subsection
(3)(a) or (c).”
(2)
In section 8 of that Act (consequences of appointment of trustees under section
15
7), for subsections (1) and (2) substitute—
“(1)
An order under section 7 appointing a trustee may provide for any fees
and expenses of trustees appointed under the order to be paid—
(a)
by the employer,
(b)
out of the resources of the scheme, or
20
(c)
partly by the employer and partly out of those resources.
(2)
Such an order may also provide that an amount equal to the amount (if
any) paid out of the resources of the scheme by virtue of subsection
(1)(b) or (c) is to be treated for all purposes as a debt due from the
employer to the trustees of the scheme.”
25
33
Independent trustees
(1)
Part 1 of the Pensions Act 1995 (occupational pension schemes) is amended as
follows.
(2)
In section 22 (circumstances in which provisions relating to independent
trustees apply)—
30
(a)
in subsection (1)(b) omit “or” at the end of sub-paragraph (i) and after
that sub-paragraph insert—
“(ia)
the interim receiver of the property of a person
who is the employer in relation to the scheme,
or”,
35
(b)
in subsection (2), after “a scheme” insert “by virtue of subsection (1)”,
(c)
after subsection (2) insert—
“(2A)
To the extent that it does not already apply by virtue of
subsection (1), this section also applies in relation to a trust
scheme—
40
(a)
at any time during an assessment period (within the
meaning of section 119 of the Pensions Act 2004) in
relation to the scheme, and