Pensions Bill

House of Commons

Session 2006 - 07
Internet Publications
Other Bills before Parliament

Pensions Bill

Pensions Bill
Part 2 — Occupational and personal pension schemes
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(a)
the rules specified in sections 13(1)(a) and (b) and 17(1) are
referred to as the “guaranteed minimum pension rules”,
(b)
“GMP conversion” means amendment of the scheme in relation
to an earner so that it no longer contains the guaranteed
minimum pension rules,
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(c)
a “GMP-converted scheme” is a scheme which has been subject
to GMP conversion,
(d)
“the conversion date” means the date on which that amendment
takes effect,
(e)
“the pre-conversion benefits” means the benefits provided
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under the scheme immediately before the conversion date
(disregarding money purchase benefits),
(f)
“the post-conversion benefits” means the benefits which are
provided under the converted scheme (disregarding money
purchase benefits),
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(g)
“the converted scheme” means the scheme as it has effect
immediately after conversion, and
(h)
“the trustees” in relation to a scheme means the trustees,
managers or other persons responsible under the scheme for
effecting amendments of it.
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24B
The conversion conditions
(1)
This section specifies the conditions referred to in sections 13(1A) and
17(1A) (for exemption from the requirement to guarantee a minimum
pension).
(2)
Condition 1 is that the post-conversion benefits must be actuarially at
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least equivalent to the pre-conversion benefits.
(3)
Condition 2 is that if the earner was entitled immediately before the
conversion date to the payment of a pension under the scheme, the
converted scheme does not provide for a reduction of, or have the effect
of reducing, the amount of that pension immediately after conversion.
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(4)
Condition 3 is that the post-conversion benefits must not include
money purchase benefits, apart from any money purchase benefits
provided under the scheme immediately before the conversion date.
(5)
Condition 4 is that the converted scheme provides survivors’ benefits
in accordance with section 24D in such circumstances, and during such
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periods, as are prescribed by regulations.
(6)
Condition 5 is that the procedural requirements of section 24E have
been complied with.
(7)
In applying these conditions to a scheme in respect of an earner—
(a)
it is immaterial whether or not on the conversion date the
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scheme was also converted in respect of other earners, and
(b)
it is immaterial (except for Condition 2) whether or not on the
conversion date the earner was entitled to the payment of a
pension under the scheme.
24C
Actuarial equivalence
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Regulations may make provision for determining actuarial equivalence
for the purpose of Condition 1 of section 24B.

Pensions Bill
Part 2 — Occupational and personal pension schemes
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24D
Survivors’ benefits
(1)
This section specifies the benefits mentioned in Condition 4 of section
24B.
(2)
The first benefit is that if the earner dies (whether before or after
attaining normal pension age) leaving a widow, she is entitled to a
5
pension of at least half the value of the pension to which the earner
would have been entitled by reference to employment during the
period—
(a)
beginning with 6th April 1978, and
(b)
ending with 5th April 1997.
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(3)
The second benefit is that if the earner dies (whether before or after
attaining normal pension age) leaving a widower or surviving civil
partner, he or she is entitled to a pension of at least half the value of the
pension to which the earner would have been entitled by reference to
employment during the period—
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(a)
beginning with 6th April 1988, and
(b)
ending with 5th April 1997.
24E
Procedural requirements
(1)
This section specifies the procedural requirements that must be
complied with in order to satisfy Condition 5 of section 24B.
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(2)
The employer in relation to the scheme must consent to the GMP
conversion in advance.
(3)
The trustees must take all reasonable steps to—
(a)
consult the earner in advance, and
(b)
notify all members, and survivors, affected by the GMP
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conversion before, or as soon as is reasonably practicable after,
the conversion date.
(4)
The Commissioners for Her Majesty’s Revenue and Customs must be
notified on or before the conversion date—
(a)
that the GMP conversion will occur or has occurred, and
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(b)
that it affects the earner.
24F
Transfer out
(1)
Regulations may prescribe—
(a)
restrictions on the transfer of the earner’s accrued rights under
a GMP-converted scheme;
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(b)
conditions which must be complied with on the transfer of the
earner’s accrued rights under a GMP-converted scheme.
(2)
Section 20(2) and (5) shall apply to regulations under this section.
(3)
Where a member of a non-GMP-converted scheme makes an
application under section 95(1), the trustees may with his consent
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adjust any guaranteed cash equivalent so as to reflect rights that would
have accrued if the scheme had been subject to GMP conversion in
accordance with Conditions 1 to 4 of section 24B.

Pensions Bill
Part 2 — Occupational and personal pension schemes
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24G
Powers to amend schemes
(1)
The trustees of an occupational pension scheme may by resolution
modify it so as to effect GMP conversion (whether in relation to present
earners, pensioners or survivors) in accordance with the conditions in
section 24B.
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(2)
The subsisting rights provisions within the meaning of section 67 of the
Pensions Act 1995 (c. 26) shall not apply to a power conferred by an
occupational pension scheme to modify the scheme in so far as the
power enables GMP conversion in accordance with the conditions in
section 24B.
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(3)
Where a scheme is amended to effect GMP conversion the trustees may
include other amendments which they think are necessary or desirable
as a consequence of, or to facilitate, the GMP conversion.
(4)
Where an occupational pension scheme is being wound up, the trustees
may, before the winding up is completed, adjust rights under the
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scheme so as to reflect what would have happened if the scheme had
been subject to GMP conversion in accordance with Conditions 1 to 4
of section 24B.
(5)
In the application of section 24E by virtue of subsection (1) above, a
reference to the earner includes a reference to a pensioner or survivor
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whose pension is subjected to GMP conversion.
24H
Enforcement of GMP conversion conditions
(1)
If the Regulatory Authority thinks that the conditions of section 24B
have not been satisfied in relation to an amendment, modification or
adjustment effected in accordance with any of sections 13(1A), 17(1A),
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24F and 24G, the Regulatory Authority may make an order declaring
the amendment, modification or adjustment void—
(a)
in respect of a specified person or class of person,
(b)
to a specified extent, and
(c)
as from a specified time.
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(2)
Where the Regulatory Authority makes an order under subsection (1)
it may—
(a)
require the trustees of the scheme concerned to take specified
steps;
(b)
declare that specified action of the trustees shall not be treated
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as a contravention of the scheme if it would not have been a
contravention if the order under subsection (1) had not been
made.
(3)
An order may be made under subsection (1) before or after the
amendment, modification or adjustment takes effect.
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(4)
If the Regulatory Authority thinks that the process of effecting a GMP
conversion of a scheme has been commenced and that a relevant
condition of section 24B is not being complied with, or may not be
complied with, the Regulatory Authority may by order—
(a)
prohibit the taking of further steps in the GMP conversion
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(whether generally or in relation to specified steps), and

Pensions Bill
Part 2 — Occupational and personal pension schemes
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(b)
require the trustees of the scheme to take specified steps before
resuming the process of GMP conversion.
(5)
Section 10 of the Pensions Act 1995 (civil penalties) shall apply to a
trustee who has failed to take all reasonable steps to secure compliance
with the conditions of section 24B in relation to an amendment,
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modification or adjustment effected in accordance with any of sections
13(1A), 17(1A), 24F and 24G.”
(4)
In section 9(2A) of the Pension Schemes Act 1993 (c. 48) (requirements for
certification) for “sections 13 to 23” substitute “sections 13 to 24E”.
(5)
At the end of section 47 of that Act (deductions from social security payments)
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add—
“(9)
For the purposes of section 46, a person shall be treated as entitled to a
guaranteed minimum pension to which, in the opinion of the
Commissioners for Her Majesty’s Revenue and Customs, he would
have been entitled but for the amendment of a scheme so that it no
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longer contains the guaranteed minimum pension rules.
(10)
Where the earner’s accrued rights have been transferred after the
amendment of the scheme, in making the calculation under subsection
(9) the Commissioners shall assume the application of section 16(1)
after the transfer.
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(11)
In making the calculation under subsection (9) the Commissioners shall
ignore any effect of the scheme being wound up.”
(6)
In section 97(5) of the Pensions Act 2004 (c. 35) (Pensions Regulator: special
procedure) after paragraph (t) insert—
“(ta)
a power under section 24H of the Pension Schemes Act 1993;”.
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(7)
At the end of Part 1 of Schedule 2 to that Act (reserved regulatory functions:
Pension Schemes Act 1993) add—
“3A
A power under section 24H (compliance with conditions of
conversion of guaranteed minimum pension).”
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Abolition of contracting-out for defined contribution pension schemes
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(1)
Any certificate which is either—
(a)
a contracting-out certificate in relation to a money purchase contracted-
out scheme, or
(b)
an appropriate scheme certificate,

and is in force immediately before the abolition date, ceases to have effect on
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that date.
(2)
In this section—
“the abolition date” means the day appointed under section 28 for the
coming into force of subsection (1);
“contracting-out certificate”, “money purchase contracted-out scheme”
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and “appropriate scheme certificate” have the meanings given by
section 181(1) of the Pension Schemes Act 1993 (as in force immediately
before that day).
(3)
Parts 1 and 2 of Schedule 4 contain consequential and related amendments.

Pensions Bill
Part 2 — Occupational and personal pension schemes
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(4)
Part 3 of that Schedule contains saving provisions.
(5)
The amendments made by Part 1 of that Schedule have effect as from the
abolition date.
(6)
The Secretary of State may by regulations make—
(a)
such consequential, incidental or supplemental provision, and
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(b)
such transitional, transitory or saving provision,

as he thinks necessary or expedient in connection with, or in consequence of,
the provisions of this section and that Schedule.
(7)
Regulations under this section may in particular amend, repeal or revoke any
Act or subordinate legislation passed or made before the end of the Session in
10
which this Act is passed.
(8)
A statutory instrument containing regulations under this section is subject to
annulment in pursuance of a resolution of either House of Parliament.
(9)
But no regulations which amend or repeal any provision of an Act may be
made under this section unless a draft of the regulations has been laid before
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and approved by a resolution of each House of Parliament.
Dispute resolution
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Dispute resolution arrangements
(1)
Section 273 of the Pensions Act 2004 (c. 35), which substitutes new sections 50
to 50B for section 50 of the Pensions Act 1995 (c. 26), is amended as follows.
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(2)
In subsection (1) of the new section 50 (requirement for dispute resolution
arrangements) after “arrangements” insert “complying with the requirements
of this section”.
(3)
In subsection (2) of that section, for “such arrangements as are required by this
section” substitute “arrangements”.
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(4)
After subsection (4) of that section insert—
“(4A)
The dispute resolution arrangements may make provision for securing
that an application for the resolution of a pension dispute may not be
made to the trustees or managers unless—
(a)
the matters in dispute have been previously referred to a person
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of a description specified in the arrangements (“the specified
person”) in order for him to consider those matters, and
(b)
the specified person has given his decision on those matters,

and for enabling the specified person’s decision to be confirmed or
replaced by the decision taken by the trustees or managers on the
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application, after reconsidering those matters.”
(5)
After subsection (5) of that section insert—
“(5A)
In a case where a reference is made to the specified person in
accordance with provision made under subsection (4A), subsection (5)
applies in relation to the specified person as it applies in relation to the
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trustees or managers in a case where an application for the resolution
of a pension dispute is made to them.”

Pensions Bill
Part 3 — Personal Accounts Delivery Authority
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(6)
In subsection (6) of that section, after “arrangements” insert “in pursuance of
subsection (4)”.
(7)
In subsection (1) of the new section 50B (dispute resolution procedure) for
“under section 50 must” substitute “in pursuance of section 50(4) must (in
accordance with section 50(6))”.
5
(8)
For subsection (3) of that section substitute—
“(3)
The procedure—
(a)
may include provision about the time limits for making an
application for the resolution of a pension dispute in cases not
within paragraph (b);
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(b)
must, in the case of an application by a person with an interest
in a scheme as mentioned in section 50A(1)(e) or (f), include
provision requiring such an application to be made by the end
of such reasonable period as is specified.”
(9)
In subsection (4) of that section, in paragraph (c), after “required” insert “in
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relation to such an application”.
(10)
After subsection (4) of that section insert—
“(4A)
The provision made under subsection (4)(c) may include provision for
decisions of the trustees or managers to be taken on their behalf by one
or more of their number.”
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Actuarial guidance
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Removal of Secretary of State’s role in approving actuarial guidance
Schedule 5 contains amendments removing requirements for, or powers to
require, certain forms of actuarial guidance to be approved by the Secretary of
State.
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Part 3
Personal Accounts Delivery Authority
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Personal Accounts Delivery Authority
(1)
There is to be a body corporate known as the Personal Accounts Delivery
Authority (referred to in this Part as the “Authority”).
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(2)
The Authority is not to be regarded as the servant or agent of the Crown or as
enjoying any status, immunity or privilege of the Crown.
(3)
Schedule 6 makes provision about the Authority.
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Initial function of the Authority
(1)
The Authority may do anything it thinks appropriate for preparing for the
35
implementation of, or for advising on the modification of, any relevant
proposals about personal accounts.

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Part 3 — Personal Accounts Delivery Authority
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(2)
In this Part “relevant proposals about personal accounts” means proposals by
the Secretary of State (whether or not Parliament has given any approval on
which their implementation depends) which are—
(a)
proposals for the establishment of a national low-cost portable
pensions savings scheme, or
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(b)
proposals that are made in connection with proposals falling within
paragraph (a) and—
(i)
relate to the subject-matter of those proposals, or
(ii)
relate to matters that are incidental or supplemental to those
proposals or proposals falling within sub-paragraph (i), or to
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any consequential or transitional matters.
(3)
Subject to subsections (4) and (5), the Authority may do anything which is
calculated to facilitate, or is incidental or conducive to, the discharge of its
function under this section.
(4)
Nothing in this section is to be taken, in relation to proposals that have not yet
15
been approved by Parliament—
(a)
as dispensing with the need for any Parliamentary approval otherwise
required for the implementation of the proposals; or
(b)
as requiring the Authority, before any such approval is given, to carry
out any activities other than—
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(i)
the formulation of the proposals;
(ii)
the taking of preparatory steps towards their implementation
when approved;
(iii)
activities which are carried out in connection with activities
falling within sub-paragraph (i) or (ii).
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(5)
The Authority may not borrow money from any person for the purposes of, or
in connection with, its function under this section.
(6)
The Secretary of State may from time to time issue guidance to the Authority
about the discharge of its function under this section.
(7)
If guidance is issued under subsection (6), the Authority must have regard to
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it in discharging its function under this section.
(8)
In this Part “modification” includes omissions, alterations and additions.
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Management of the Authority
(1)
In managing its affairs, the Authority must have regard—
(a)
to such general guidance concerning the management of the affairs of
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public bodies as the Authority thinks appropriate, and
(b)
to generally accepted principles of good corporate governance.
(2)
But the obligation in subsection (1)(b)—
(a)
is subject to guidance falling within subsection (1)(a), and
(b)
applies only to the extent that the principles in question may
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reasonably be regarded as applicable in relation to a statutory
corporation.