Amendments to Pensions Act 1995

295.     Paragraph 32 amends section 149 of the PA1995. Section 149 gives a power to the Secretary of State to make regulations providing for schemes which provide both pensions capable of being contracted out by virtue of section 9(2) and pensions capable of being contracted out by virtue of section 9(3) to be treated as two separate schemes. The effect of the amendment is that schemes which provide both pensions capable of being contracted out by virtue of section 9(2), and pensions satisfying the requirements mentioned in new section 25A(3) are to be treated as two separate schemes for the purposes of Part 3 of the PSA1993.

Amendments to Welfare Reform and Pensions Act 1999

296.     Paragraph 33 omits section 1(10). The amendment removes the current condition that a stakeholder pension scheme which is a personal pension scheme must be an appropriate scheme. A consequential amendment is made to section 1(1).

297.     Paragraph 34 omits section 7, which allows orders under section 42B and 45A of the PSA1993 to specify different percentages in orders made under those sections for the purposes of for stakeholder schemes. Those sections are to be repealed and so section 7 is no longer needed.

Amendment to Pensions Act 2004

298.     Paragraph 35 omits section 257(7) of the PA2004. This subsection means that the pensions protection on transfer of undertakings protection of employment is not provided to employees in a contracted-out money purchase occupational pension schemes where the scheme only makes contributions based on the contracted-out rebate (minimum payments). The need for such an exemption will cease to exist after the abolition date.

Part 2

299.     The amendments in Part 2 are intended to be brought into force at a date later than the abolition date. The purpose of bringing the amendments in Part 2 of the Schedule into force at a later date is to ensure that the existing statutory mechanisms for HMRC to deal with administrative matters concerning the contracted-out rebate and certification of schemes etc. can remain in place until any matters outstanding at the date of abolition of COMPs and APPs have been dealt with before the relevant legislation is repealed.

Social Security Contributions and Benefits Act 1992

300.     Paragraph 36 makes amendments to section 4C (regulation-making power in respect of retrospective tax legislation) to reflect the abolition of COMPs and APPs.

301.     Paragraphs 37 and 38 make amendments to sections 8 and 9 respectively (calculation of primary and secondary Class 1 contributions) to remove references to section 42A of the PSA1993, which is to be repealed.

302.     Paragraph 39 makes amendments to Schedule 1, which deals with the calculation of national insurance contributions in cases where an earner is employed in more than one employment, to reflect the fact that COMPs and APPs will have been abolished.

Pension Schemes Act 1993

303.     Paragraph 41 omits section 8(3), which allows for regulations to be made in relation to the manner in which minimum payments are to be made etc. Minimum payments derive from the contracted-out rebate and are paid to a COMP in respect of earners in contracted out employment.

304.     Paragraph 42 omits section 40(b), which currently provides for contributions to be paid by HMRC in respect of earners who are members of COMPs and APPs.

305.     Paragraph 43 omits section 42A, which provides for the calculation of national insurance rebates in respect of contracted-out employment in a COMP.

306.     Paragraph 44 omits section 43, which provides for HMRC to make minimum contributions to an APP which is an earner's chosen scheme.

307.     Paragraph 45 omits section 45, which provides for the calculation of minimum contributions.

308.     Paragraph 46 omits section 45B, which provides a power to make regulations dealing with the verification of ages for the purpose for determining "appropriate age-related percentages", and provides a power to disclose information in connection with contracted-out rebates.

309.     Paragraphs 47, 48 and 49 amend sections 50, 164 and 177 respectively to reflect the repeal of sections 42A, 43 and 45.

310.     Paragraph 50 omits the definition of "minimum contributions" in section 181(1) and omits a reference to section 43 in section 181(4). Minimum contributions are made to APPs, and will therefore no longer be required.

311.     Paragraph 51 amends Schedule 2 (certification regulations) by making a correction to paragraphs 4 and 6 to reflect the fact that section 66 has been repealed, and by amending the list of provisions in paragraph 5 to reflect repeals in this Schedule.

312.     Paragraph 52 amends Schedule 4 (priority in bankruptcy) to reflect the fact that COMPs will no longer exist.

Part 3 - Savings

313.     Paragraph 53 allows HMRC to continue to deal with COMP and APP certificates which are still outstanding at the abolition date.

314.     Paragraph 54 allows HMRC to continue to cancel, vary etc. COMP and APP certificates retrospectively after the abolition date.

Clause 16: Dispute resolution arrangements

315.     Clause 16 amends section 273 of the PA2004. That section of that Act (pensions disputes) substitutes a new section 50 into the PA1995 and adds new sections 50A and 50B. Section 273 has not yet been brought into force.

316.     Subsections (2), (3) and (9) make minor textual amendments.

317.     Subsection (4) inserts subsection (4A) into the new section 50. Subsection (4A) provides trustees or managers of an occupational pension scheme with the option of adopting two-stage dispute resolution arrangements. Schemes must provide for disputes to be considered by the trustees or managers, but the trustees or managers can choose for disputes to be considered by another person first. Any decision by the trustees or managers will confirm or replace any first-stage decision.

318.     Subsection (5) inserts subsection (5A) into the new section 50. The effect is that the requirements of new section 50(5) apply equally to any first-stage arrangements. This means any decision on an application made under a discretionary first stage must be made and notified to the applicant within a reasonable period.

319.     Subsections (6) and (7) make minor amendments to make it clear that the requirements of section 50B relating to the dispute resolution procedure apply only to applications to the trustees or managers, and not any discretionary first stage process.

320.     Subsection (8) substitutes a new version of section 50B(3). The amendment replaces references to a fixed six-month time limit for applications to the trustees or managers for certain applicants with reference to a reasonable period. This will give the trustees or managers the flexibility to adopt time limits to suit either one or two stage arrangements.

321.     Subsection (10) inserts a new subsection (4A) into new section 50B. This amendment makes it clear that a decision by the trustees or managers can be made by one or more of the trustees on behalf of the whole board.

Clause 17: Removal of Secretary of State's role in approving actuarial guidance

322.     The clause introduces Schedule 5 which amends pensions legislation and other legislation to remove the requirement for the Secretary of State to approve certain actuarial guidance.

Schedule 5: Removal of Secretary of State's role in approving actuarial guidance

323.     This Schedule amends provisions which require actuarial guidelines to have been approved by the Secretary of State.

324.     Paragraphs 1 and 2 amend sections 36C and 36F of the Bankruptcy (Scotland) Act 1985 and paragraphs 3 and 4 amend sections 342C and 342F of the Insolvency Act 1986 respectively to remove the requirement that guidance prepared by a prescribed person to calculate the value of a pension scheme is to have been approved by the Secretary of State.

325.     Paragraphs 5 and 6 amend the PSA1993. Section 12A is amended to remove the requirement for the Secretary of State's approval in the case of prescribed guidance to determine whether a pension scheme which has applied to contract out under section 9(2B) meets the statutory standard and section 113 is amended to remove the requirement for the Secretary of State's approval in the case of prescribed guidance on the information to be given about schemes to members.

326.     Paragraphs 7 and 8 amend the PA1995. Section 67D is amended to remove the power to make regulations to require prescribed guidance to calculate the actuarial value of an affected member's subsisting rights to have been approved by the Secretary of State. Section 119 is amended to remove the power to make regulations to require the prescribed guidance to value a scheme's assets and liabilities to have been so approved.

327.     Paragraph 9 amends section 230 of the PA2004 to remove the power to make regulations to require the Secretary of State's approval in the case of prescribed actuarial guidance.

Part 3: Personal Accounts Delivery Authority

Clause 18: Personal Accounts Delivery Authority

328.     Clause 18 establishes a body corporate called the 'Personal Accounts Delivery Authority' (the "Authority") upon Royal Assent of the Bill to cover the whole of Great Britain and Northern Ireland. The Authority is not a servant or agent of the Crown, and as such does not enjoy the associated status, immunity or privileges. The clause also introduces Schedule 6, which contains provisions about the membership of the Authority and other matters.

Clause 19: Initial function of the Authority

329.     The Authority may do what it thinks appropriate to prepare for the implementation of, or for advising on the modification of, any relevant proposals about personal accounts.

330.     In this clause the phrase 'advising on the modification of any relevant proposals about personal accounts' relates to the Authority's advisory role in understanding the commercial and operational implications on implementation of

policy proposals. This could amount to suggesting additions, omissions or variations in the proposals to reflect, for example, industry best practice.

331.     Subsection (2) defines the meaning of 'relevant proposals' as being any proposals made by the Secretary of State connected with the establishment of a national low-cost portable pensions savings scheme, and any additional proposals that relate to this subject matter, or relate to matters that are incidental or supplemental to the proposals or to consequential or transitional matters. Proposals are to be considered relevant whether or not Parliament has given the approval on which their implementation would depend. The Government will make proposals relating to personal accounts and the Authority needs to be able to prepare for these before Parliament has given its approval. However, by virtue of subsection (4) the Authority will not be able to implement any proposals requiring the approval of Parliament in advance of Parliament giving its approval.

332.     Subsection (3) provides the Authority with incidental powers in connection with the discharge of its main function.

333.     Subsection (4) provides that the Authority may not implement any of the proposals requiring Parliament's approval unless such approval has been received. Before any such approval is given the Authority can only formulate proposals and take preparatory steps towards their implementation when approved.

334.     Subsection (5) provides that the Authority may not borrow money for the purpose of, or in connection with, performing its functions from anyone.

335.     Subsection (6) provides that the Secretary of State may issue guidance to the Authority from time to time about the discharge of the Authority's functions as outlined in this clause.

336.     Subsection (7) obliges the Authority to have regard to any guidance that may be issued by the Secretary of State under subsection (6) in discharging its function as outlined in this clause.

Clause 20: Management of the Authority

337.     Clause 20 places the Authority under a duty, when managing its affairs, to have regard to such guidance concerning the management of public bodies as they consider appropriate and, subject to such guidance and insofar as they are applicable to the Authority, to generally accepted principles of good corporate governance.

338.     Guidance on the running of public bodies includes that provided by the Cabinet Office, for example the Guidance on Codes of Practice for Board Members of Public Bodies (February 2000). Principles of good corporate governance are currently set out in the Combined Code published by the Committee on Corporate Governance in June 1998, which combines the provisions of the Cadbury and Greenbury codes on corporate governance with the Committee's own work.

339.     Subsection (2) qualifies the obligation on the Authority to have regard to accepted principles of good corporate governance so that it is subject to general guidance detailed in subsection (1)(a) and it only applies to the extent that may be regarded as reasonably applicable to a statutory corporation.

Clause 21: Winding up of the Authority on abandonment etc. of proposals

340.     Subsection (1) provides that if the Secretary of State considers that it is no longer necessary for the Authority to continue to exist because the condition of subsection (3) is met, namely, that as a result of the abandonment or modification of relevant proposals on the personal accounts scheme it is no longer necessary for the Authority to exist, he may by order provide for the winding up and dissolution of the Authority.

341.     Subsection (2) provides that if the Secretary of State considers that it is no longer necessary for the Authority to continue to exist because the condition of subsection (3) is met at any time after 2008 he must, as soon as is reasonably practicable, make an order providing for the dissolution of the Authority.

342.     Subsection (4) clarifies that the Secretary of State is not obliged to reintroduce an order for the Authority's dissolution by virtue of subsection (2) if such an order has been previously defeated in either House of Parliament.

343.     Subsection (5) makes provision for the order to include, among other things, details on the transferring and dividing of the Authority's property, rights and liabilities on dissolution of the Authority.

344.     Subsection (6) provides for the order to include consequential, incidental, or supplemental provisions, and transitional, transitory or saving arrangements as determined appropriate by the Secretary of State as a result of the winding up and dissolution of the Authority.

345.     Subsection (7) enables the Secretary of State to use the order to remove what will be redundant provisions from the Bill in the event of the dissolution of the Authority.

346.     Subsection (8) provides that the power to make an order for the Authority's dissolution is subject to the affirmative resolution procedure in both Houses of Parliament.

Schedule 6: The Personal Accounts Delivery Authority

Part 1: Members and employees etc.

347.     Part 1 deals with the members and employees of the Authority. The table below summarises the appointment procedures for the Authority and its staff.

348.     Paragraph 1 specifies that both the Secretary of State and the Authority must aim to ensure the Authority's membership is between 3 and 9 members. The membership of the Authority is to consist of a chairman, appointed by the Secretary of State, non-executives appointed subject to sub-paragraphs (2) and (3) (namely that first non-executives will be appointed by the Secretary of State, with any subsequent appointments to be made by the Authority with Secretary of State approval), and any executive members appointed as mentioned in paragraph 6 of the Schedule.

349.     Paragraph 2 describes how the Secretary of State must, before appointing a chairman or another non-executive member, and from time to time once they have taken up their position, ensure that they do not have a conflict of interest, defined in sub-paragraph (6) as any interest, financial or otherwise, that is likely to affect prejudicially the way they carry out their functions.

350.     Sub-paragraph (3) provides that any person mentioned in sub-paragraph (4) must, if the Secretary of State requests, provide information that will allow the Secretary of State to satisfy himself that they do not have a conflict of interest.

351.     Sub-paragraph (5) states that sub-paragraphs (1) to (4) apply both when the Secretary of State makes an appointment and when he approves an appointment made by the Authority.

352.     Sub-paragraph (7) sets out the activities that are not to be considered a conflict of interest. These include being, or having been, involved on behalf of the relevant authority in activities connected with the discharge of the relevant authority's functions relating to occupational or personal pension schemes. They also include being, or having been, a trustee or manager of an occupational or personal pension scheme, or an employee of such a trustee or manager.

353.     Paragraph 24(1) defines the relevant authority as either the Secretary of State or the Department for Social Development in Northern Ireland.

354.     Paragraph 3 deals with the tenure of office of non-executive members including the terms of their appointment, the procedure for non-executive resignation and the grounds, under sub-paragraph (5), on which the Secretary of State may, by notice in writing, remove a non-executive from office.

355.     Paragraph 4 provides for the Authority to provide such remuneration, allowances, pensions or gratuities to non-executives, as determined by the Secretary of State.

356.     Sub-paragraph (3) provides for the Authority to pay compensation to the chairman or non-executive members if they cease to hold their position for a reason other than the expiry of their term of office and the Secretary of State thinks there are special circumstances that make compensation appropriate.

357.     Sub-paragraph (4) states that if a non-executive who is a participant of a pension scheme relevant to his membership ceases to be a non-executive and becomes instead an employee and/or an executive member of the Authority, the Secretary of State may, for the purposes of pension provision, determine that that person's service as employee/executive may be treated as if it were service as a non-executive member.

358.     Paragraph 5 provides for the Secretary of State to be able to appoint a non-executive member to the post of deputy chairman to discharge the functions of the chairman in such cases and in such a way as the Secretary of State or chairman may direct.

359.     Sub-paragraph (1) of paragraph 6 states the executive members of the Authority will be the chief executive of the Authority and other persons, if any, appointed in accordance with sub-paragraph (4) or (5).

360.     Sub-paragraph (2) states that the Authority is not required by sub-paragraph 1(1)(c) to have any executive members until the Secretary of State has appointed the initial chief executive.

361.     Sub-paragraph (4) of paragraph 7 states that if an executive who is a participant in a pension scheme relevant to his membership ceases to be an executive and becomes instead a non-executive member of the Authority, the Secretary of State may, for the purposes of pension provision, determine that that person's service as a non-executive is to be treated as if it were service as an employee.

362.     Sub-paragraph (5) states that if an executive member who is a participant in a pension scheme relevant to his membership ceases to be an executive member without ceasing to be an employee of the Authority, the Secretary of State may, for the purposes of pension provision, determine that that person's service as an employee is to be treated as if it were service as an executive member.

363.     Paragraphs 6(7) and 8 allow the Authority to appoint other employees of the Authority who are not executive members, and for the Authority to determine their terms and conditions.

364.     Paragraph 8(3) states that if an employee of the Authority is a participant in a pension scheme relevant to his employment, ceases to be an employee and becomes an executive or a non-executive member of the Authority, the Secretary of State may, for the purposes of pension provision, determine that that person's service is to be treated as if it were service as an employee.

Part 2: Proceedings etc.

365.     Paragraph 9 sets out the committees the Authority may establish and who their members may be.

366.     Sub-paragraph (1) provides that the Authority has the power to establish committees for the purpose of discharging any of its functions and for the purpose of giving advice to the Authority about matters relating to the discharge of its functions.

367.     Sub-paragraph (2) provides that the membership of those committees may consist of or include people who are neither members nor employees of the Authority.

368.     Sub-paragraph (3) provides that the committees must include at least one member or employee of the Authority except where:

• the committee has been established for the sole purpose of giving advice to the Authority about matters relating to the discharge of its functions; and

• it has not been authorised, by virtue of the delegation provisions in paragraph 14, to discharge functions on behalf of the Authority.

369.     Sub-paragraph (4) states the Authority may pay such remuneration or expenses to a member of a committee who is neither a member nor employee of the Authority as it determines.

370.     Paragraph 10 enables a committee of the Authority to establish a sub-committee.

371.     Sub-paragraph (2) provides that a member of a sub-committee must also be a member of the committee which established it.

372.     Paragraph 11 details how the Authority, its committees and sub-committees may regulate their proceedings.

373.     Sub-paragraph (1) states that the Authority may (subject to paragraph 13 - regarding disqualification for acting in relation to certain matters) regulate or determine its own, its committees' and its sub-committees' procedures. In addition it can enable a committee or sub-committee to regulate or determine its own affairs subject to any provision made by the Authority.

374.     Sub-paragraph (2) provides for the chairman and non-executive members of the Authority to determine, by a majority of non-executive members, the procedure for the discharge of separate functions conferred upon them.

375.     Sub-paragraph (3) clarifies that the power to regulate or determine procedure described in this paragraph includes the power to specify a quorum for meetings, to make provision that in specified circumstances the Authority or the chairman and non-executives can exercise their respective powers of appointment at a meeting which is inquorate, and to make provision for taking decisions by a majority.

376.     Sub-paragraph (4) requires the Authority to publish all these procedures.

377.     Paragraph 12 obliges the Authority to maintain proper records of its proceedings and those of its committees and sub-committees, a meeting of the chairman and other non-executive members and anything done by an employee or member of the Authority as a result of the delegation provisions made under paragraph 14(a) or (b).

378.     Paragraph 13 sets out the situations where a member of the Authority, the chairman or other non-executive members or any member of a committee or sub-committee will be unable to act at a meeting as a result of having an interest in a matter to be discussed at that meeting.

379.     Sub-paragraph (1) states that this paragraph applies at any meeting of the Authority, the chairman and other non-executives, or any committee or sub-committee when a participant has a direct or indirect interest in any matter that will be discussed at a meeting they are involved in.

380.     Sub-paragraph (2) obliges the person to declare the interest and requires the declaration to be recorded in the minutes of the meeting.

381.     Sub-paragraph (3) states that any person who declares an interest cannot then take part in any discussions or decisions relating to that matter unless:

• in the case of a meeting of the Authority, or a meeting of the chairman and the non-executives, the other members present resolve unanimously that the interest is to be disregarded; or

• in any other case, the other members of the committee or the sub-committee present resolve, in the manner authorised by the Authority, that the interest is to be disregarded.

382.     Sub-paragraph (4) states that in granting an authorisation under sub-paragraph (3)(b), so that a member of a committee or sub-committee may take part, the Authority must ensure that it does not allow a person to take part in a discussion or decision at a meeting of a committee (or sub-committee of such a committee) established by paragraph 9(1)(a) for the purpose of discharging any of the authority's functions unless:

• no less than two-thirds of those other members of the committee (or sub-committee) who are both present and able to vote are in favour of the resolution; and

• the number of other members in favour of the resolution is not less than the quorum of the committee (or sub-committee).

383.     Sub-paragraph (5) states that for the purposes of paragraph 13 a general notification given at or sent to a relevant meeting that a person has an interest as a member, officer, employee or otherwise in a specified body corporate or firm, or is connected with a specified person (other than a body corporate or firm) and is to be regarded as interested in any matter involving that body corporate, firm, or person is to be deemed to comply with sub-paragraph (2) for that meeting and any subsequent relevant meeting of the same type.

384.     Sub-paragraph (6) states that for the purpose of determining under sub-paragraph (5) whether a person is connected with another person, section 252 of the Companies Act 2006 (which determines whether a person is connected with a director of a company) is to apply.

385.     Sub-paragraph (7) states that a general notification for the purposes of sub-paragraph (5) remains in force until it is withdrawn.

386.     Sub-paragraph (8) lists 'relevant meetings' as those of the Authority, of the chairman and non-executive members or of a committee or sub-committee. It also sets out that a meeting is of the same type as another 'relevant meeting' if they both fall within the same paragraph of sub-paragraph (8).

387.     Sub-paragraph (9) provides that a person required to make a declaration to meet the requirements of this paragraph is not obliged to attend the meeting, and is to be considered to have complied with this paragraph if he takes reasonable steps to ensure that notice of his interest is read out and considered at the meeting.

388.     Sub-paragraph (10) sets out the activities that are not to be considered to constitute an interest for the purposes of this paragraph. These include being, or having been, involved on behalf of the relevant authority (see paragraph 24(1)), in activities connected with the discharge of the relevant authority's functions relating to occupational or personal pension schemes. These also include being, or having been, a trustee or manager of an occupational or personal pension scheme, or an employee of such a trustee or manager.

389.     Paragraph 24(1) defines the relevant authority referred to in sub-paragraph (10).

390.     Paragraph 14 enables the Authority to delegate any function conferred on it to a member, an employee or a committee.

391.     Paragraph 15(1) provides that:

• a vacancy among the Authority members, or its committees or sub-committees;

• any defect in the appointments of members of the Authority; or

• a failure to comply with the requirements of paragraph 11, relating to the proceedings of the Authority, committees and sub-committees;

will not affect the validity of any proceedings of the Authority, the chairman and other non-executive members, a committee or a sub-committee.

392.     Sub-paragraph (2), states that nothing in sub-paragraph (1)(c) validates proceedings of a meeting which is inquorate other than for the reasons set out in sub-paragraph (1)(a) or (b).

393.     Paragraph 16 provides for the authentication of the Authority's seal by the chairman or another member or any other person authorised by the Authority (generally or specifically).

394.     Sub-paragraph (3) states that this paragraph does not apply to Scotland. In Scotland documents are executed under signature and therefore application of the seal would not be appropriate.

395.     Paragraph 17 obliges the Authority to produce an annual report detailing that year's proceedings and its financial position and to send a copy to the Secretary of State, who must lay a copy of the report before Parliament.