Pensions Bill

House of Commons

Session 2003 - 04
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Other Bills before Parliament

Pensions Bill

Pensions Bill
Part 5 — Occupational and personal pension schemes: miscellaneous provisions
149

224
Requirement for knowledge and understanding: individual trustees
(1)
This section applies to every individual who is a trustee of an occupational
pension scheme.
(2)
In this section, “relevant scheme”, in relation to an individual, means any
occupational pension scheme of which he is a trustee.
5
(3)
An individual to whom this section applies must, in relation to each relevant
scheme, be conversant with—
(a)
the trust deed and scheme rules,
(b)
any statement of investment principles for the time being maintained
under section 35 of the Pensions Act 1995 (c. 26),
10
(c)
in the case of a relevant scheme to which Part 3 (scheme funding)
applies, the statement of funding principles most recently prepared or
revised under section 204, and
(d)
any other document recording policy for the time being adopted by the
trustees relating to the administration of the scheme generally.
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(4)
An individual to whom this section applies must have knowledge and
understanding of—
(a)
the law relating to pensions and trusts,
(b)
the principles relating to—
(i)
the funding of occupational pension schemes, and
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(ii)
investment of the assets of such schemes, and
(c)
such other matters as may be prescribed.
(5)
The degree of knowledge and understanding required by subsection (4) is that
appropriate for the purposes of enabling the individual properly to exercise his
functions as trustee of any relevant scheme.
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225
Requirement for knowledge and understanding: corporate trustees
(1)
This section applies to any company which is a trustee of an occupational
pension scheme.
(2)
In this section, “relevant scheme”, in relation to a company, means any
occupational pension scheme of which it is a trustee.
30
(3)
A company to which this section applies must, in relation to each relevant
scheme, secure that each individual who exercises any function which the
company has as trustee of the scheme is conversant with each of the documents
mentioned in subsection (4) so far as it is relevant to the exercise of the function.
(4)
Those documents are—
35
(a)
the trust deed and scheme rules,
(b)
any statement of investment principles for the time being maintained
under section 35 of the Pensions Act 1995,
(c)
in the case of a relevant scheme to which Part 3 (scheme funding)
applies, the statement of funding principles most recently prepared or
40
revised under section 204, and
(d)
any other document recording policy for the time being adopted by the
trustees relating to the administration of the scheme generally.

Pensions Bill
Part 5 — Occupational and personal pension schemes: miscellaneous provisions
150

(5)
A company to which this section applies must secure that any individual who
exercises any function which the company has as trustee of any relevant
scheme has knowledge and understanding of—
(a)
the law relating to pensions and trusts,
(b)
the principles relating to—
5
(i)
the funding of occupational pension schemes, and
(ii)
investment of the assets of such schemes, and
(c)
such other matters as may be prescribed.
(6)
The degree of knowledge and understanding required by subsection (5) is that
appropriate for the purposes of enabling the individual properly to exercise the
10
function in question.
(7)
References in this section to the exercise by an individual of any function of a
company are to anything done by the individual on behalf of the company
which constitutes the exercise of the function by the company.
226
Requirement for knowledge and understanding: supplementary
15
(1)
For the purposes of sections 224 and 225, a person’s functions as trustee of a
relevant scheme are any functions which he has by virtue of being such a
trustee and include, in particular—
(a)
any functions which he has as one of the trustees authorised under
section 34(5)(a) of the Pensions Act 1995 (c. 26) (delegation of
20
investment discretions) in the case of the scheme, and
(b)
any functions which he otherwise has as a member of a committee of
the trustees of the scheme.
(2)
Regulations may provide for any provision in section 224 or 225—
(a)
not to apply, or
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(b)
to apply with modifications,

to a trustee in prescribed circumstances.
(3)
Nothing in either of those sections affects any rule of law requiring a trustee to
have knowledge of, or expertise in, any matter.
No indemnification for fines or civil penalties
30
227
No indemnification for fines or civil penalties
(1)
No amount may be paid out of the assets of an occupational or personal
pension scheme for the purpose of reimbursing, or providing for the
reimbursement of, any trustee or manager of the scheme in respect of—
(a)
a fine imposed by way of penalty for an offence of which he is
35
convicted, or
(b)
a penalty which he is required to pay under or by virtue of section 10 of
the Pensions Act 1995 or section 168(4) of the Pension Schemes Act 1993
(c. 48) (civil penalties).
(2)
For the purposes of subsection (1), providing for the reimbursement of a
40
trustee or manager in respect of a fine or penalty includes (among other things)
providing for the payment of premiums in respect of a policy of insurance
where the risk is or includes the imposition of such a fine or the requirement to
pay such a penalty.

Pensions Bill
Part 5 — Occupational and personal pension schemes: miscellaneous provisions
151

(3)
Where any amount is paid out of the assets of an occupational or personal
pension scheme in contravention of this section, section 10 of the Pensions Act
1995 (c. 26) (civil penalties) applies to any trustee or manager who fails to take
all reasonable steps to secure compliance.
(4)
Where a trustee or manager of an occupational or personal pension scheme—
5
(a)
is reimbursed, out of the assets of the scheme or in consequence of
provision for his reimbursement made out of those assets, in respect of
any of the matters mentioned in subsection (1)(a) or (b), and
(b)
knows, or has reasonable grounds to believe, that he has been
reimbursed as mentioned in paragraph (a),
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then, unless he has taken all reasonable steps to secure that he is not so
reimbursed, he is guilty of an offence.
(5)
A person guilty of an offence under subsection (4) is liable—
(a)
on summary conviction, to a fine not exceeding the statutory
maximum, and
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(b)
on conviction on indictment, to imprisonment for a term not exceeding
two years, or a fine, or both.
Pension protection on transfer of employment
228
Conditions for pension protection
(1)
This section applies in relation to a person (“the employee”) where—
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(a)
there is a transfer of an undertaking, or part of an undertaking, to which
the TUPE Regulations apply,
(b)
by virtue of the transfer the employee ceases to be employed by the
transferor and becomes employed by the transferee, and
(c)
at the time immediately before the employee becomes employed by the
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transferee—
(i)
there is an occupational pension scheme (“the scheme”) in
relation to which the transferor is the employer, and
(ii)
one of subsections (2), (3) and (4) applies.
(2)
This subsection applies where—
30
(a)
the employee is an active member of the scheme, and
(b)
if any of the benefits that may be provided under the scheme are money
purchase benefits—
(i)
the transferor is required to make contributions to the scheme in
respect of the employee, or
35
(ii)
the transferor is not so required but has made one or more such
contributions.
(3)
This subsection applies where—
(a)
the employee is not an active member of the scheme but is eligible to be
such a member, and
40
(b)
if any of the benefits that may be provided under the scheme are money
purchase benefits, the transferor would have been required to make
contributions to the scheme in respect of the employee if the employee
had been an active member of it.
(4)
This subsection applies where—
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Pensions Bill
Part 5 — Occupational and personal pension schemes: miscellaneous provisions
152

(a)
the employee is not an active member of the scheme, nor eligible to be
such a member, but would have been an active member of the scheme
or eligible to be such a member if, after the date on which he became
employed by the transferor, he had been employed by the transferor for
a longer period, and
5
(b)
if any of the benefits that may be provided under the scheme are money
purchase benefits, the transferor would have been required to make
contributions to the scheme in respect of the employee if the employee
had been an active member of it.
(5)
For the purposes of this section, the condition in subsection (1)(c) is to be
10
regarded as satisfied in any case where it would have been satisfied but for any
action taken by the transferor by reason of the transfer.
(6)
In subsection (1)(a), the reference to an undertaking, or part of an undertaking,
has the same meaning as in the TUPE Regulations.
(7)
In the case of a scheme which is contracted-out by virtue of section 9 of the
15
Pension Schemes Act 1993 (c. 48), the references in subsections (2)(b), (3)(b) and
(4)(b) to contributions mean contributions other than minimum payments
(within the meaning of that Act).
(8)
In this section—

the “TUPE Regulations” means the Transfer of Undertakings (Protection
20
of Employment) Regulations 1981 (S.I. 1981/1794);

references to the transferor include any associate of the transferor, and
section 435 of the Insolvency Act 1986 (c. 45) applies for the purposes of
this section as it applies for the purposes of that Act.
229
Form of protection
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(1)
In a case where section 228 applies, it is a condition of the employee’s contract
of employment with the transferee that the requirements in subsection (2) or
the requirement in subsection (3) are complied with.
(2)
The requirements in this subsection are that—
(a)
the transferee secures that, as from the relevant time, the employee is,
30
or is eligible to be, an active member of an occupational pension scheme
in relation to which the transferee is the employer, and
(b)
in a case where the scheme is a money purchase scheme, as from the
relevant time—
(i)
the transferee makes relevant contributions to the scheme in
35
respect of the employee, or
(ii)
if the employee is not an active member of the scheme but is
eligible to be such a member, the transferee would be required
to make such contributions if the employee were an active
member, and
40
(c)
in a case where the scheme is not a money purchase scheme, as from the
relevant time the scheme—
(i)
satisfies the statutory standard referred to in section 12A of the
Pension Schemes Act 1993, or
(ii)
if regulations so provide, complies with such other
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requirements as may be prescribed.

Pensions Bill
Part 5 — Occupational and personal pension schemes: miscellaneous provisions
153

(3)
The requirement in this subsection is that, as from the relevant time, the
transferee makes relevant contributions to a stakeholder pension scheme of
which the employee is a member.
(4)
The requirement in subsection (3) is for the purposes of this section to be
regarded as complied with by the transferee during any period in relation to
5
which the condition in subsection (5) is satisfied.
(5)
The condition in this subsection is that the transferee has offered to make
relevant contributions to a stakeholder pension scheme of which the employee
is eligible to be a member (and the transferee has not withdrawn the offer).
(6)
Subsection (1) does not apply in relation to a contract if or to the extent that the
10
employee and the transferee so agree at any time after the time when the
employee becomes employed by the transferee.
(7)
In this section—

“the relevant time” means—
(a)
in a case where section 228 applies by virtue of the application
15
of subsection (2) or (3) of that section, the time when the
employee becomes employed by the transferee;
(b)
in a case where that section applies by virtue of the application
of subsection (4) of that section, the time at which the employee
would have been a member of the scheme referred to in
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subsection (1)(c)(i) of that section or (if earlier) would have been
eligible to be such a member;

“relevant contributions” means such contributions in respect of such
period or periods as may be prescribed;

“stakeholder pension scheme” means a pension scheme which is
25
registered under section 2 of the Welfare Reform and Pensions Act 1999
(c. 30).
Consultation by employers
230
Consultation by employers: occupational pension schemes
(1)
Regulations may require any prescribed person who is the employer in relation
30
to an occupational pension scheme and who—
(a)
proposes to make a prescribed decision in relation to the scheme, or
(b)
has been notified by the trustees or managers of the scheme that they
propose to make a prescribed decision in relation to the scheme,

to consult prescribed persons in the prescribed manner before the decision is
35
made.
(2)
Regulations may require the trustees or managers of an occupational pension
scheme not to make a prescribed decision in relation to the scheme unless—
(a)
they have notified the employer of the proposed decision, and
(b)
they are satisfied that the employer has undertaken any consultation
40
required by virtue of subsection (1).
(3)
The validity of any decision made in relation to an occupational pension
scheme is not affected by any failure to comply with regulations under this
section.
(4)
Section 232 contains further provisions about regulations under this section.
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