Pensions Bill

House of Commons

Session 2003 - 04
Internet Publications
Other Bills before Parliament

Pensions Bill

Pensions Bill
Part 1 — The Pensions Regulator
21

(b)
at any time, not within paragraph (a), when the scheme
is authorised under section 136 of that Act (closed
schemes) to continue as a closed scheme.”, and
(d)
after subsection (2A) (inserted by paragraph (c) above) insert—
“(2B)
The responsible person must, as soon as reasonably practicable,
5
give notice of an event within subsection (2C) to—
(a)
the Authority,
(b)
the Board of the Pension Protection Fund, and
(c)
the trustees of the scheme.
(2C)
The events are—
10
(a)
the practitioner beginning to act as mentioned in
subsection (1)(a), if immediately before he does so this
section does not apply in relation to the scheme;
(b)
the practitioner ceasing to so act, if immediately after he
does so this section does not apply in relation to the
15
scheme;
(c)
the official receiver beginning to act in a capacity
mentioned in subsection (1)(b)(i), (ia) or (ii), if
immediately before he does so this section does not
apply in relation to the scheme;
20
(d)
the official receiver ceasing to act in such a capacity, if
immediately after he does so this section does not apply
in relation to the scheme.
(2D)
For the purposes of subsection (2B) “the responsible person”
means—
25
(a)
in the case of an event within subsection (2C)(a) or (b)
the practitioner, and
(b)
in the case of an event within subsection (2C)(c) or (d),
the official receiver.
(2E)
Regulations may require prescribed persons in prescribed
30
circumstances where this section begins or ceases to apply in
relation to a trust scheme by virtue of subsection (2A) to give a
notice to that effect to—
(a)
the Authority,
(b)
the Board of the Pension Protection Fund, and
35
(c)
the trustees of the scheme.
(2F)
A notice under subsection (2B), or regulations under subsection
(2E), must be in writing and contain such information as may be
prescribed.”
(3)
For sections 23 and 24 (appointment of independent trustees) substitute—
40
23
Power to appoint independent trustees
(1)
While section 22 applies in relation to a trust scheme, the Authority
may by order appoint as a trustee of the scheme a person who—
(a)
is an independent person in relation to the scheme, and
(b)
is registered in the register maintained by the Authority in
45
accordance with regulations under subsection (4).

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Part 1 — The Pensions Regulator
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(2)
In relation to a particular trust scheme, no more than one trustee may
at any time be an independent trustee appointed under subsection (1).
(3)
For the purposes of this section a person is independent in relation to a
trust scheme only if—
(a)
he has no interest in the assets of the employer or of the scheme
5
otherwise than as trustee of the scheme,
(b)
he is neither connected with, nor an associate of—
(i)
the employer,
(ii)
any person for the time being acting as an insolvency
practitioner in relation to the employer, or
10
(iii)
the official receiver acting in any of the capacities
mentioned in section 22(1)(b) in relation to the
employer, and
(c)
he satisfies any prescribed requirements;

and any reference in this Part to an independent trustee is to be
15
construed accordingly.
(4)
Regulations must provide for the Authority to compile and maintain a
register of persons who satisfy the prescribed conditions for
registration.
(5)
Regulations under subsection (4) may provide—
20
(a)
for copies of the register or of extracts from it to be provided to
prescribed persons in prescribed circumstances;
(b)
for the inspection of the register by prescribed persons in
prescribed circumstances.
(6)
The circumstances which may be prescribed under subsection (5)(a) or
25
(b) include the payment by the person to whom the copy is to be
provided, or by whom the register is to be inspected, of such reasonable
fee as may be determined by the Regulator.
(7)
This section is without prejudice to the powers conferred by section 7.”
(4)
In section 25 (appointment and powers of independent trustees: further
30
provision)—
(a)
for subsection (4)(a) substitute—
“(a)
he must as soon as reasonably practicable give written
notice of that fact to the Authority, and”,
(b)
after subsection (5) insert—
35
“(5A)
Section 10 applies to any person who, without reasonable
excuse, fails to comply with subsection (4)(a).”, and
(c)
for subsection (6) substitute—
“(6)
An order under section 23(1) may provide for any fees and
expenses of the trustee appointed under the order to be paid—
40
(a)
by the employer,
(b)
out of the resources of the scheme, or
(c)
partly by the employer and partly out of those
resources.
(7)
Such an order may also provide that an amount equal to the
45
amount (if any) paid out of the resources of the scheme by

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Part 1 — The Pensions Regulator
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virtue of subsection (6)(b) or (c) is to be treated for all purposes
as a debt due from the employer to the trustees of the scheme.
(8)
Where, by virtue of subsection (6)(b) or (c), an order makes
provision for any fees or expenses of the trustee appointed
under the order to be paid out of the resources of the scheme,
5
the trustee is entitled to be so paid in priority to all other claims
falling to be met out of the scheme’s resources.”
34
Disqualification
In section 30 of the Pensions Act 1995 (c. 26) (consequences of disqualification
under section 29), for subsection (1) substitute—
10
“(1)
Where a person who is a trustee of a trust scheme becomes disqualified
under section 29 in relation to the scheme, his becoming so disqualified
has the effect of removing him as a trustee.”
Contribution notices where avoidance of employer debt
35
Contribution notices where avoidance of employer debt
15
(1)
This section applies in relation to an occupational pension scheme other than—
(a)
a money purchase scheme, or
(b)
a prescribed scheme or a scheme of a prescribed description.
(2)
The Regulator may issue a notice to a person stating that the person is under a
liability to pay the sum specified in the notice (a “contribution notice”)—
20
(a)
to the trustees or managers of the scheme, or
(b)
where the Board of the Pension Protection Fund has assumed
responsibility for the scheme under Chapter 3 of Part 2 (pension
protection), to the Board.
(3)
The Regulator may issue a contribution notice to a person only if—
25
(a)
the Regulator is of the opinion that the person was a party to an act or
a deliberate failure to act which falls within subsection (4),
(b)
the person was at any time in the relevant period—
(i)
the employer in relation to the scheme, or
(ii)
a person connected with, or an associate of, the employer, and
30
(c)
the Regulator is of the opinion that it is reasonable to impose liability
on the person to pay the sum specified in the notice.
(4)
An act or a failure to act falls within this subsection if—
(a)
the Regulator is of the opinion that the main purpose or one of the main
purposes of the act or failure was—
35
(i)
to prevent the recovery of the whole or any part of a debt which
was, or might become, due from the employer in relation to the
scheme under section 75 of the Pensions Act 1995 (deficiencies
in the scheme assets), or
(ii)
otherwise than in good faith, to prevent such a debt becoming
40
due or to reduce the amount of such a debt which was or would
otherwise become due, and
(b)
it is an act which occurred, or a failure to act which first occurred, on or
after 11th June 2003.

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(5)
For the purposes of subsection (3)—
(a)
the parties to an act or a deliberate failure include those persons who
knowingly assist in the act or failure, and
(b)
“the relevant period” means the period which—
(i)
begins with the time when the act falling within subsection (4)
5
occurs or the failure to act falling within that subsection first
occurs, and
(ii)
ends with the issuing of the contribution notice.
(6)
The Regulator, when deciding for the purposes of subsection (3)(c) whether it
is reasonable to impose liability on a particular person to pay the sum specified
10
in the notice, must have regard to such matters as the Regulator considers
relevant including, where relevant, the following matters—
(a)
the degree of involvement of the person in the act or failure to act which
falls within subsection (4),
(b)
the relationship which the person has or has had with the employer
15
(including, where the employer is a company, whether the person has
or has had control of the employer within the meaning of section
435(10) of the Insolvency Act 1986 (c. 45)),
(c)
any connection or involvement which the person has or has had with
the scheme,
20
(d)
if the act or failure to act was a notifiable event for the purposes of
section 58 (duty to notify the Regulator of certain events), any failure by
the person to comply with any obligation imposed on the person by
subsection (1) of that section to give the Regulator notice of the event,
(e)
the financial circumstances of the person, and
25
(f)
such other matters as may be prescribed.
(7)
In subsection (6)(b) “company” has the meaning given by section 735(1) of the
Companies Act 1985 (c. 6).
(8)
For the purposes of this section references to a debt due under section 75 of the
Pensions Act 1995 (c. 26) include a contingent debt under that section.
30
(9)
Accordingly, in the case of such a contingent debt, the reference in subsection
(4)(a)(ii) to preventing a debt becoming due is to be read as including a
reference to preventing the occurrence of any of the events specified in section
75(4B)(a) or (b) of that Act upon which the debt is contingent.
(10)
For the purposes of this section—
35
(a)
section 249 of the Insolvency Act 1986 (connected persons) applies as it
applies for the purposes of any provision of the first Group of Parts of
that Act,
(b)
section 435 of that Act (associated persons) applies as it applies for the
purposes of that Act, and
40
(c)
section 74 of the Bankruptcy (Scotland) Act 1985 (c. 66) (associated
persons) applies as it applies for the purposes of that Act.
36
The sum specified in a section 35 contribution notice
(1)
The sum specified by the Regulator in a contribution notice under section 35
may be either the whole or a specified part of the shortfall sum in relation to
45
the scheme.
(2)
Subject to subsection (3), the shortfall sum in relation to a scheme is—

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Part 1 — The Pensions Regulator
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(a)
in a case where, at the relevant time, a debt was due from the employer
to the trustees or managers of the scheme under section 75 of the
Pensions Act 1995 (c. 26) (“the 1995 Act”) (deficiencies in the scheme
assets), the amount which the Regulator estimates to be the amount of
that debt at that time, and
5
(b)
in a case where, at the relevant time, no such debt was due, the amount
which the Regulator estimates to be the amount of the debt under
section 75 of the 1995 Act which would become due if—
(i)
subsection (2) of that section applied, and
(ii)
the time designated by the trustees or managers of the scheme
10
for the purposes of that subsection were the relevant time.
(3)
Where the Regulator is satisfied that the act or failure to act falling within
section 35(4) resulted—
(a)
in a case falling within paragraph (a) of subsection (2), in the amount of
the debt which became due under section 75 of the 1995 Act being less
15
than it would otherwise have been, or
(b)
in a case falling within paragraph (b) of subsection (2), in the amount of
any such debt calculated for the purposes of that paragraph being less
than it would otherwise have been,

the Regulator may increase the amounts calculated under subsection (2)(a) or
20
(b) by such amount as the Regulator considers appropriate.
(4)
For the purposes of this section “the relevant time” means—
(a)
in the case of an act falling within subsection (4) of section 35, the time
of the act, or
(b)
in the case of a failure to act falling within that subsection—
25
(i)
the time when the failure occurred, or
(ii)
where the failure continued for a period of time, the time which
the Regulator determines and which falls within that period.
(5)
For the purposes of this section—
(a)
references to a debt due under section 75 of the 1995 Act include a
30
contingent debt under that section, and
(b)
references to the amount of such a debt include the amount of such a
contingent debt.
37
Content and effect of a section 35 contribution notice
(1)
This section applies where a contribution notice is issued to a person under
35
section 35.
(2)
The contribution notice must—
(a)
contain a statement of the matters which it is asserted constitute the act
or failure to act which falls within subsection (4) of section 35,
(b)
specify the sum which the person is stated to be under a liability to pay,
40
and
(c)
identify any other persons to whom contribution notices have been or
are issued as a result of the act or failure to act in question and the sums
specified in each of those notices.
(3)
Where the contribution notice states that the person is under a liability to pay
45
the sum specified in the notice to the trustees or managers of the scheme, the

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Part 1 — The Pensions Regulator
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sum is to be treated as a debt due from the person to the trustees or managers
of the scheme.
(4)
In such a case, the Regulator may, on behalf of the trustees or managers of the
scheme, exercise such powers as the trustees or managers have to recover the
debt.
5
(5)
But during any assessment period (within the meaning of section 119) in
relation to the scheme, the rights and powers of the trustees or managers of the
scheme in relation to any debt due to them by virtue of a contribution notice
are exercisable by the Board of the Pension Protection Fund to the exclusion of
the trustees or managers and the Regulator.
10
(6)
Where, by virtue of subsection (5), any amount is paid to the Board in respect
of a debt due by virtue of a contribution notice, the Board must pay the amount
to the trustees or managers of the scheme.
(7)
Where the contribution notice states that the person is under a liability to pay
the sum specified in the notice to the Board, the sum is to be treated as a debt
15
due from the person to the Board.
(8)
Where the contribution notice so specifies, the person to whom the notice is
issued (“P”) is to be treated as jointly and severally liable for the debt with any
persons specified in the notice who are persons to whom corresponding
contribution notices are issued.
20
(9)
For the purposes of subsection (8), a corresponding contribution notice is a
notice which—
(a)
is issued as a result of the same act or failure to act falling within
subsection (4) of section 35 as the act or failure as a result of which P’s
contribution notice is issued,
25
(b)
specifies the same sum as is specified in P’s contribution notice, and
(c)
specifies that the person to whom the contribution notice is issued is
jointly and severally liable with P for that sum.
(10)
A debt due by virtue of a contribution notice is not to be taken into account for
the purposes of section 75(2) and (4) of the Pensions Act 1995 (c. 26)
30
(deficiencies in the scheme assets) when ascertaining the amount or value of
the assets or liabilities of a scheme.
38
Section 35 contribution notice: relationship with employer debt
(1)
This section applies where a contribution notice is issued to a person under
section 35 and condition A or B is met.
35
(2)
Condition A is met if, at the time at which the contribution notice is issued,
there is a debt due under section 75 of the Pensions Act 1995 (“the 1995 Act”)
(deficiencies in the scheme assets) from the employer—
(a)
to the trustees or managers of the scheme, or
(b)
where the Board of the Pension Protection Fund has assumed
40
responsibility for the scheme under Chapter 3 of Part 2 (pension
protection), to the Board.
(3)
Condition B is met if, after the contribution notice is issued but before the
whole of the debt due by virtue of the notice is recovered, a debt becomes due
from the employer to the trustees or managers of the scheme under section 75
45
of the 1995 Act.

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(4)
The Regulator may issue a direction to the trustees or managers of the scheme
not to take any or any further steps to recover the debt due to them under
section 75 of the 1995 Act pending the recovery of all or a specified part of the
debt due to them by virtue of the contribution notice.
(5)
If the trustees or managers fail to comply with a direction issued to them under
5
subsection (4), 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.
(6)
Any sums paid—
(a)
to the trustees or managers of the scheme in respect of any debt due to
them by virtue of the contribution notice, or
10
(b)
to the Board in respect of any debt due to it by virtue of the contribution
notice,

are to be treated as reducing the amount of the debt due to the trustees or
managers or, as the case may be, to the Board under section 75 of the 1995 Act.
(7)
For the purposes of this section—
15
(a)
references to a debt due under section 75 of the 1995 Act include a
contingent debt under that section, and
(b)
references to the amount of such a debt include the amount of such a
contingent debt.
Financial support directions
20
39
Financial support directions
(1)
This section applies in relation to an occupational pension scheme other than—
(a)
a money purchase scheme, or
(b)
a prescribed scheme or a scheme of a prescribed description.
(2)
The Regulator may issue a financial support direction under this section in
25
relation to such a scheme if the Regulator is of the opinion that the employer in
relation to the scheme—
(a)
is a service company, or
(b)
is insufficiently resourced,

at a time determined by the Regulator which falls within subsection (7) (“the
30
relevant time”).
(3)
A financial support direction in relation to a scheme is a direction which
requires the person or persons to whom it is issued to secure—
(a)
that financial support for the scheme is put in place within the period
specified in the direction,
35
(b)
that thereafter that financial support or other financial support remains
in place while the scheme is in existence, and
(c)
that the Regulator is notified in writing of prescribed events in respect
of the financial support as soon as reasonably practicable after the event
occurs.
40
(4)
A financial support direction in relation to a scheme may be issued to such one
or more of the persons falling within subsection (5) as the Regulator considers
appropriate.
(5)
A person falls within this subsection if the person—