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
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“stakeholder pension scheme” and “work-based pension scheme” have
the same meaning as in section 5 (Regulator’s objectives).
New powers in respect of ocupational and personal pension schemes
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Improvement notices
(1)
If the Regulator is of the opinion that a person—
5
(a)
is contravening one or more provisions of the pensions legislation, or
(b)
has contravened one or more of those provisions in circumstances that
make it likely that the contravention will continue or be repeated,

it may issue a notice (an “improvement notice”) to that person directing him to
take such steps as are specified in the notice to remedy or prevent a recurrence
10
of the contravention.
(2)
An improvement notice must—
(a)
state that the Regulator is of that opinion and specify the provision or
provisions of the pensions legislation in question,
(b)
contain a statement of the matters which it is asserted constitute the
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contravention and of the evidence on which that opinion is based, and
(c)
in respect of each step specified in the notice, state the period (being a
period of not less than 21 days beginning with the date of the notice)
within which it must be complied with.
(3)
Directions in an improvement notice—
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(a)
may be framed to any extent by reference to a code of practice issued
by the Regulator under section 79, and
(b)
may be framed so as to afford the person to whom the notice is issued
a choice between different ways of remedying or preventing the
recurrence of the contravention.
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(4)
Directions in an improvement notice may be expressed to be conditional on
compliance by a third party with a specified direction, or specified directions,
contained in a notice under section 15 (third party notices).
(5)
An improvement notice may direct the person to whom it is issued to inform
the Regulator, within such period as may be specified in the notice, of the steps
30
that he has taken, or is taking, in pursuance of the notice.
(6)
Where a contravention of a provision of the pensions legislation consists of a
failure to take action within a time limit, for the purposes of this section the
contravention continues until such time as the action is taken.
(7)
In this section “pensions legislation” means any enactment contained in or
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made by virtue of—
(a)
the Pension Schemes Act 1993 (c. 48),
(b)
Part 1 of the Pensions Act 1995 (c. 26), other than sections 62 to 66A of
that Act (equal treatment),
(c)
Part 1 or section 33 of the Welfare Reform and Pensions Act 1999 (c. 30),
40
or
(d)
this Act.
(8)
If the trustees or managers of an occupational or personal pension scheme fail
to comply with an improvement notice issued to them, section 10 of the

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Part 1 — The Pensions Regulator
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Pensions Act 1995 (civil penalties) applies to any trustee or manager who has
failed to take all reasonable steps to secure compliance.
(9)
That section also applies to any other person who, without reasonable excuse,
fails to comply with an improvement notice issued to him.
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Third party notices
5
(1)
Where the Regulator is of the opinion that—
(a)
a person—
(i)
is contravening one or more provisions of the pensions
legislation, or
(ii)
has contravened one or more of those provisions in
10
circumstances that make it likely that the contravention will
continue or be repeated,
(b)
the contravention is or was, wholly or partly, a result of a failure of
another person (“the third party”) to do any thing, and
(c)
that failure is not itself a contravention of the pensions legislation,
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the Regulator may issue a notice (a “third party notice”) directing the third
party to take such steps as are specified in the notice to remedy or prevent a
recurrence of his failure.
(2)
A third party notice must—
(a)
state that the Regulator is of that opinion and specify the provision or
20
provisions of the pensions legislation in question,
(b)
contain a statement of—
(i)
the matters which it is asserted constitute the contravention of
the provision or provisions, and
(ii)
the matters which it is asserted constitute the failure by the third
25
party,

and the evidence on which that opinion is based, and
(c)
in respect of each step specified in the notice, state the period (being a
period of not less than 21 days beginning with the date of the notice)
within which it must be complied with.
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(3)
Directions in a third party notice may be framed so as to afford the third party
a choice between different ways of remedying or preventing the recurrence of
his failure.
(4)
A third party notice may direct the third party to inform the Regulator, within
such period as may be specified in the notice, of the steps that he has taken, or
35
is taking, in pursuance of the notice.
(5)
Where a contravention of a provision of the pensions legislation consists of a
failure to take action within a time limit, for the purposes of this section the
contravention continues until such time as the action is taken.
(6)
Section 10 of the Pensions Act 1995 (c. 26) (civil penalties) applies to a person
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who, without reasonable excuse, fails to comply with a third party notice
issued to him.
(7)
No duty to which a person is subject is to be regarded as contravened merely
because of anything required to be done in compliance with a third party
notice.
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This is subject to section 268 (protected items).

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Part 1 — The Pensions Regulator
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(8)
In this section “pensions legislation” has the same meaning as in section 14.
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Injunctions and interdicts
(1)
If, on the application of the Regulator, the court is satisfied that—
(a)
there is a reasonable likelihood that a particular person will do any act
which constitutes a misuse or misappropriation of any of the assets of
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an occupational or personal pension scheme, or
(b)
a particular person has done any such act and there is a reasonable
likelihood that he will continue or repeat the act in question or do a
similar act,

the court may grant an injunction restraining him from doing so or, in
10
Scotland, an interdict prohibiting him from doing so.
(2)
The jurisdiction conferred by this section is exercisable by the High Court or
the Court of Session.
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Restitution
(1)
If, on the application of the Regulator, the court is satisfied that there has been
15
a misuse or misappropriation of any of the assets of an occupational or
personal pension scheme, it may order any person involved to take such steps
as the court may direct for restoring the parties to the position in which they
were before the misuse or misappropriation occurred.
(2)
For this purpose a person is “involved” if he appears to the court to have been
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knowingly concerned in the misuse or misappropriation of the assets.
(3)
The jurisdiction conferred by this section is exercisable by the High Court or
the Court of Session.
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Power of the Regulator to recover unpaid contributions
(1)
Where any employer contribution payable towards an occupational or
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personal pension scheme is not paid on or before its due date, the Regulator
may, on behalf of the trustees or managers of the scheme, exercise such powers
as the trustees or managers have to recover that contribution.
(2)
For the purposes of subsection (1), any employer contribution payable towards
a personal pension scheme which is not paid on or before its due date is, if not
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a debt due from the employer to the trustees or managers apart from this
subsection, to be treated as if it were such a debt.
(3)
In this section—

“due date”—
(a)
in relation to employer contributions payable towards an
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occupational pension scheme in accordance with a schedule of
contributions under section 208, has the same meaning as in
section 209,
(b)
in relation to employer contributions payable in accordance
with a payment schedule under section 87 of the Pensions Act
40
1995 (c. 26) (schedules of payments to money purchase
schemes), has the meaning given in subsection (2)(c) of that
section, and

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Part 1 — The Pensions Regulator
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(c)
in relation to employer contributions payable towards a
personal pension scheme, has the same meaning as in section
111A of the Pension Schemes Act 1993 (c. 48) (monitoring of
employer payments to personal pension schemes);

“employer contribution”—
5
(a)
in relation to an occupational pension scheme, means any
contribution payable by or on behalf of the employer towards
the scheme in accordance with a schedule of contributions
under section 208 of this Act or a payment schedule under
section 87 of the Pensions Act 1995 (c. 26) (schedules of
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payments to money purchase schemes) whether—
(i)
on the employer’s own account (but in respect of one or
more employees), or
(ii)
on behalf of an employee out of deductions from the
employee’s earnings, and
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(b)
in relation to a personal pension scheme, means any
contribution payable towards the scheme under direct payment
arrangements.
Powers in relation to winding up of occupational pension schemes
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Powers to wind up occupational pension schemes
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In section 11 of the Pensions Act 1995 (powers to wind up occupational pension
schemes)—
(a)
omit subsection (3),
(b)
before subsection (4) insert—
“(3A)
The Authority may, during an assessment period (within the
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meaning of section 119 of the Pensions Act 2004 (meaning of
“assessment period” for the purposes of Part 2 of that Act)) in
relation to an occupational pension scheme, by order direct the
scheme to be wound up if they are satisfied that it is necessary
to do so in order—
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(a)
to ensure that the scheme’s protected liabilities do not
exceed its assets, or
(b)
if those liabilities do exceed its assets, to keep the excess
to a minimum.
(3B)
In subsection (3A)—
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(a)
“protected liabilities” has the meaning given in section
118 of the Pensions Act 2004, and
(b)
references to the assets of the scheme are references to
those assets excluding any assets representing the value
of any rights in respect of money purchase benefits
40
(within the meaning of that Act) under the scheme.”,
(c)
at the end of subsection (4) insert—

“This subsection is subject to sections 25, 122 and 201 of the
Pensions Act 2004 (winding up order made when freezing
order has effect in relation to scheme or during assessment
45
period under Part 2 of that Act).”, and

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Part 1 — The Pensions Regulator
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(d)
after subsection (6) insert—
“(6A)
Subsection (6) does not have effect to authorise the Authority to
make an order as mentioned in paragraph (a) or (b) of that
subsection, if their doing so would be unlawful as a result of
section 6(1) of the Human Rights Act 1998 (unlawful for public
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authority to act in contravention of a Convention right).”
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Freezing orders
(1)
This section applies to an occupational pension scheme which is not a money
purchase scheme.
(2)
The Regulator may make a freezing order in relation to such a scheme if and
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only if—
(a)
the order is made pending consideration being given to the making of
an order in relation to the scheme under section 11(1)(c) of the Pensions
Act 1995 (c. 26) (power to wind up schemes where necessary to protect
the generality of members), and
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(b)
the Regulator is satisfied that—
(i)
there is, or is likely to be if the order is not made, an immediate
risk to the interests of members under the scheme or the assets
of the scheme, and
(ii)
it is necessary to make the freezing order to protect the interests
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of the generality of the members of the scheme.

But no freezing order may be made in relation to a scheme during an
assessment period (within the meaning of section 119) in relation to the scheme
(see section 122(7)).
(3)
A freezing order is an order directing that during the period for which it has
25
effect—
(a)
no benefits are to accrue under the scheme to, or in respect of, members
of the scheme, and
(b)
winding up of the scheme may not begin.
(4)
A freezing order may also contain one or more of the following directions
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which have effect during the period for which the order has effect—
(a)
a direction that no new members, or no specified classes of new
member, are to be admitted to the scheme;
(b)
a direction that—
(i)
no further contributions or payments, or
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(ii)
no further specified contributions or payments,

are to be paid towards the scheme by or on behalf of the employer, any
members or any specified members of the scheme;
(c)
a direction that any amount or any specified amount which—
(i)
corresponds to any contribution which would be due to be paid
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towards the scheme on behalf of a member but for a direction
under paragraph (b), and
(ii)
has been deducted from a payment of any earnings in respect of
an employment,

is to be repaid to the member in question by the employer;
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(d)
a direction that no benefits, or no specified benefits, are to be paid to or
in respect of any members or any specified members under the scheme;

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Part 1 — The Pensions Regulator
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(e)
a direction that payments of all benefits or specified benefits under the
scheme to or in respect of all the members or specified members may
only be made from the scheme if they are reduced in a specified manner
or by a specified amount;
(f)
a direction that—
5
(i)
no transfers or no specified transfers of, or no transfer payments
or no specified transfer payments in respect of, any member’s
rights under the scheme are to be made from the scheme, or
(ii)
transfers or specified transfers of, or transfer payments or
specified transfer payments in respect of, any member’s rights
10
under the scheme may only be made from the scheme if the
amounts paid out from the scheme in respect of the transfers or
transfer payments are determined in a specified manner and the
transfers or transfer payments satisfy such other conditions as
may be specified;
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(g)
a direction that no statements of entitlement are to be provided to
members of the scheme under section 93A of the Pension Schemes Act
1993 (c. 48) (salary related schemes: right to statement of entitlement).
(5)
In subsection (4)(b)—
(a)
the references to contributions do not include contributions due to be
20
paid before the order takes effect, and
(b)
the references to payments towards a scheme include payments in
respect of pension credits where the person entitled to the credit is a
member of the scheme.
(6)
A freezing order may not contain a direction under subsection (4)(d) or (e)
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which reduces the benefits payable to or in respect of a member, for the period
during which the order has effect, below the level to which the trustees or
managers of the scheme would have power to reduce them if a winding up of
the scheme had begun at the time when the freezing order took effect.
(7)
A freezing order may also require the trustees or managers of the scheme to
30
obtain an actuarial valuation within a specified period.
(8)
A freezing order containing such a requirement must specify—
(a)
the date by reference to which the assets and liabilities are to be valued,
(b)
the assets and liabilities which are to be taken into account,
(c)
the manner in which the valuation must be prepared,
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(d)
the information and statements which it must contain, and
(e)
any other requirements that the valuation must satisfy.
(9)
For the purposes of subsection (7)—

“an actuarial valuation” means a written valuation of the scheme’s assets
and liabilities prepared and signed by the actuary, and
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“the actuary” means—
(a)
the actuary appointed under section 47(1)(b) of the Pensions Act
1995 (c. 26) (professional advisers) in relation to the scheme, or
(b)
if no such actuary has been appointed—
(i)
a person with prescribed qualifications or experience, or
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(ii)
a person approved by the Secretary of State.
(10)
In this section “specified” means specified in the freezing order.