Pensions Bill

House of Commons

Session 2003 - 04
Internet Publications
Other Bills before Parliament

Pensions Bill

Pensions Bill
Schedule 7 — Pension compensation provisions
250

(i)
to all payments of compensation which fall to be made after
such date as may be specified in the order (whether the
entitlement to the periodic compensation first arose before or
after that date), or
(ii)
only to payments of compensation to which a person first
5
becomes entitled after such a date.
      (7)
The date specified under sub-paragraph (6)(b)(i) or (ii) must not be earlier
than the date of the order.
Normal pension age
30    (1)
In this Schedule “normal pension age”, in relation to the scheme and any
10
pension or lump sum under it, means the age specified in the admissible
rules as the earliest age at which the pension or lump sum becomes payable
without actuarial adjustment (disregarding any admissible rule making
special provision as to early payment on the grounds of ill health).
      (2)
Where different ages are specified in relation to different parts of a pension
15
or lump sum—
(a)
this Schedule has effect as if those parts were separate pensions or, as
the case may be, lump sums, and
(b)
references in relation to a part of the pension or lump sum to the
normal pension age are to be read as references to the age specified
20
in the admissible rules as the earliest age at which that part becomes
payable under the scheme without actuarial adjustment
(disregarding any special provision as to early payment on grounds
of ill health or otherwise).
      (3)
In any case where the Board is satisfied that it is not possible to identify the
25
normal pension age from the admissible rules of the scheme, it may, having
regard to those rules, determine how the normal pension age is to be
determined.
Scheme rules, admissible rules etc
31    (1)
In this Schedule, in relation to the scheme, the following expressions have
30
the meaning given by this paragraph—
“scheme rules”,
“admissible rules”,
“recent rule changes”, and
“recent discretionary increase”.
35
      (2)
The “scheme rules” means—
(a)
the rules of the scheme, except so far as section 129 of the Pension
Schemes Act 1993 (c. 48), section 117 of the Pensions Act 1995 (c. 26)
or section 264 of this Act overrides them,
(b)
any provision of any of those Acts which overrides or modifies any
40
of the rules of the scheme by virtue of one of the provisions
mentioned in paragraph (a), and
(c)
any provision which the rules of the scheme do not contain but
which the scheme must contain if it is to conform with the
requirements of Chapter 1 of Part 4 of the Pension Schemes Act 1993
45
(preservation of benefit under occupational pension schemes).

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      (3)
“The admissible rules” means the scheme rules disregarding, if sub-
paragraph (4) applies, the recent rule changes.
      (4)
This sub-paragraph applies if the combined effect of the recent rule changes
and recent discretionary increases is such that, if account were taken of those
changes and increases in calculating the protected liabilities in relation to the
5
scheme at the relevant time, those protected liabilities would be greater than
they would be if all those changes and increases were disregarded.
      (5)
In sub-paragraph (4) “the relevant time” means the time immediately before
the assessment period which begins on the assessment date.
      (6)
Subject to sub-paragraph (7), “recent rule changes” means—
10
(a)
changes to the scheme rules which took effect in the period of three
years ending with the assessment date, or were made in that period
and took effect by reference to an earlier time, and
(b)
any scheme rules which come into operation on, or operate by
reference to—
15
(i)
the winding up of the scheme or any associated event,
(ii)
an insolvency event in relation to the employer or any
associated event, or
(iii)
any prescribed event relating to the future of the employer as
a going concern.
20
      (7)
“Recent rule changes” does not include—
(a)
changes attributable to section 129 of the Pension Schemes Act 1993
(c. 48), section 117 of the Pensions Act 1995 (c. 26) or section 264 of
this Act (overriding requirements),
(b)
changes required, or reasonably necessary, to comply with any
25
enactment, and
(c)
changes of a prescribed description.
      (8)
“Recent discretionary increase” means an increase in the rate of any pension
in payment or postponed pension under the scheme which took effect in the
period mentioned in sub-paragraph (6)(a).
30
      (9)
For the purposes of sub-paragraph (8) an increase (“the relevant increase”)
in the rate of a pension in payment or postponed pension is to be
disregarded to the extent that it does not exceed—
(a)
the amount by which the pension in question is required to be
increased by virtue of—
35
(i)
the admissible rules,
(ii)
sections 13(1) and 109 of the Pension Schemes Act 1993
(requirement to index and pay guaranteed minimum
pensions),
(iii)
section 87(3) of that Act (protection of increases in
40
guaranteed minimum pensions: “anti-franking”), or
(iv)
section 51 of the Pensions Act 1995(annual increase in rate of
pension), or
(b)
if greater, the appropriate percentage of the rate of that pension.
     (10)
For the purposes of sub-paragraph (9)(a), no increase in the rate of a pension
45
which is made at the discretion of the trustees or managers of the scheme,
the employer or any other person is to be regarded as an increase required
by virtue of the admissible rules.

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     (11)
For the purposes of sub-paragraph (9)(b), “the appropriate percentage” is
the percentage increase in the general level of prices in Great Britain during
the period—
(a)
beginning when the rate of the pension was last increased or, if there
has been no previous increase, the date the pension first became
5
payable (or would have been payable but for its being postponed),
and
(b)
ending with the time the relevant increase was made.
Accrual rate, pensionable service and pensionable earnings
32    (1)
In this Schedule, in relation to a member’s entitlement to benefits under the
10
scheme, each of the following expressions has the meaning given by this
paragraph—
“accrual rate”,
“pensionable earnings”, and
“pensionable service”.
15
      (2)
“Accrual rate” means the rate at which under the admissible rules rights to
the benefits accrue over time by reference to periods of pensionable service.
      (3)
“Pensionable earnings” means the earnings by reference to which the
benefits are calculated under the admissible rules.
      (4)
Subject to sub-paragraphs (5) and (6), “pensionable service” means—
20
(a)
service in any description of category of employment to which the
scheme applies which qualifies the member (on the assumption that
it continues for the appropriate period) for benefits under the
scheme,
(b)
any service attributable to transfer credits, and
25
(c)
service which under the admissible rules of the scheme is
attributable to voluntary contributions paid by the member.
      (5)
The service within sub-paragraph (4)(a) does not include service notionally
attributable for any purpose of the scheme.
      (6)
In determining “pensionable service” no account is to be taken of admissible
30
rules by which a period of service can be treated for any purpose as being
longer or shorter than it actually is.
Other definitions
33    (1)
In this Schedule—
“deferred member”, in relation to the scheme, means a person who,
35
under the admissible rules, has accrued rights under the scheme
other than—
(a)
an active member, or
(b)
a person who in respect of his pensionable service under the
scheme or by reason of transfer credits is entitled to the
40
present payment of pension or other benefits;
“normal benefit age”, in relation to the scheme and a person with
rights to a pension or lump sum under it attributable (directly or
indirectly) to a pension credit, means the age specified in the
admissible rules as the earliest age at which that pension or lump
45
sum becomes payable without actuarial adjustment (disregarding

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Schedule 7 — Pension compensation provisions
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any scheme rule making special provision as to early payment on
grounds of ill health or otherwise);
“pension credit” means a credit under section 29(1)(b) of the Welfare
Reform and Pensions Act 1999 (c. 30);
“pension credit member”, in relation to the scheme, means a person
5
who has rights under the scheme which are attributable (directly or
indirectly) to a pension credit;
“pension credit rights”, in relation to the scheme, means rights to
future benefits under the scheme which are attributable (directly or
indirectly) to a pension credit;
10
“retail prices index” means—
(a)
the general index of retail prices (for all items) published by
the Office for National Statistics, or
(b)
where that index is not published for a month, any
substituted index or figures published by that Office;
15
“the scheme” is to be construed in accordance with paragraph 1;
“transfer credits” means rights allowed to a member under the
admissible rules of the scheme by reference to a transfer to that
scheme of his accrued rights from another scheme (including any
transfer credits allowed by that scheme).
20
      (2)
For the purposes of this Schedule the accrued rights of a member of the
scheme at any time are the rights (other than rights attributable (directly or
indirectly) to a pension credit) which, in accordance with the admissible
rules, have accrued to or in respect of him at that time to future benefits
under the scheme.
25
      (3)
In this Schedule references to a pension or lump sum under the admissible
rules of the scheme, or a right to such a pension or lump sum, do not include
a pension or lump sum, or right to a pension or lump sum, which is a money
purchase benefit.
      (4)
In this Schedule references to “ill health” are to be construed in accordance
30
with regulations under this sub-paragraph.