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
15

scheme: requirement for guaranteed minimum pension) insert—
“(1A)
But a scheme may be amended so as to omit provision of the kind
specified in subsection (1)(a) and (b) if the conditions specified in
section 24B are satisfied.”
(2)
After section 17(1) of that Act (minimum pension for survivors) insert—
5
“(1A)
But a scheme may be amended so as to omit provision of the kind
specified in subsection (1) if the conditions specified in section 24B are
satisfied.”
(3)
Before section 25 of that Act (before the italic cross-heading) insert—
“24A
Conversion of guaranteed minimum pension into other benefits:
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introduction
In this section and sections 24B to 24H—
(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
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to an earner so that it no longer contains the guaranteed
minimum pension rules,
(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
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takes effect,
(e)
“the pre-conversion benefits” means the benefits provided
under the scheme immediately before the conversion date
(disregarding money purchase benefits),
(f)
“the post-conversion benefits” means the benefits which are
25
provided under the converted scheme (disregarding money
purchase benefits),
(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,
30
managers or other persons responsible under the scheme for
effecting amendments of it.
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
35
pension).
(2)
Condition 1 is that the post-conversion benefits must be actuarially at
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
40
converted scheme does not provide for a reduction of, or have the effect
of reducing, the amount of that pension immediately after conversion.
(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.
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Pensions Bill
Part 2 — Occupational and personal pension schemes
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(5)
Condition 4 is that the converted scheme provides survivors’ benefits
in accordance with section 24D in such circumstances, and during such
periods, as are prescribed by regulations.
(6)
Condition 5 is that the procedural requirements of section 24E have
been complied with.
5
(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
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
10
pension under the scheme.
24C
Actuarial equivalence
Regulations may make provision for determining actuarial equivalence
for the purpose of Condition 1 of section 24B.
24D
Survivors’ benefits
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(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
pension of at least half the value of the pension to which the earner
20
would have been entitled by reference to employment during the
period—
(a)
beginning with 6th April 1978, and
(b)
ending with 5th April 1997.
(3)
The second benefit is that if the earner dies (whether before or after
25
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—
(a)
beginning with 6th April 1988, and
30
(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.
(2)
The employer in relation to the scheme must consent to the GMP
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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
conversion before, or as soon as is reasonably practicable after,
40
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
(b)
that it affects the earner.
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Pensions Bill
Part 2 — Occupational and personal pension schemes
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24F
Transfer out
(1)
Regulations may prescribe—
(a)
restrictions on the transfer of the earner’s accrued rights under
a GMP-converted scheme;
(b)
conditions which must be complied with on the transfer of the
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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
adjust any guaranteed cash equivalent so as to reflect rights that would
10
have accrued if the scheme had been subject to GMP conversion in
accordance with Conditions 1 to 4 of section 24B.
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
15
earners, pensioners or survivors) in accordance with the conditions in
section 24B.
(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
20
power enables GMP conversion in accordance with the conditions in
section 24B.
(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.
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(4)
Where an occupational pension scheme is being wound up, the trustees
may, before the winding up is completed, adjust rights under the
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.
30
(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
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
35
have not been satisfied in relation to an amendment, modification or
adjustment effected in accordance with any of sections 13(1A), 17(1A),
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,
40
(b)
to a specified extent, and
(c)
as from a specified time.
(2)
Where the Regulatory Authority makes an order under subsection (1)
it may—
(a)
require the trustees of the scheme concerned to take specified
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steps;

Pensions Bill
Part 2 — Occupational and personal pension schemes
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(b)
declare that specified action of the trustees shall not be treated
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
5
amendment, modification or adjustment takes effect.
(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—
10
(a)
prohibit the taking of further steps in the GMP conversion
(whether generally or in relation to specified steps), and
(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
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trustee who has failed to take all reasonable steps to secure compliance
with the conditions of section 24B in relation to an amendment,
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
20
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)
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
25
Commissioners for Her Majesty’s Revenue and Customs, he would
have been entitled but for the amendment of a scheme so that it no
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
30
(9) the Commissioners shall assume the application of section 16(1)
after the transfer.
(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
35
procedure) after paragraph (t) insert—
“(ta)
a power under section 24H of the Pension Schemes Act 1993;”.
(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
40
conversion of guaranteed minimum pension).”
15
Abolition of contracting-out for defined contribution pension schemes
(1)
Any certificate which is either—
(a)
a contracting-out certificate in relation to a money purchase contracted-
out scheme, or
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Pensions Bill
Part 2 — Occupational and personal pension schemes
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(b)
an appropriate scheme certificate,

and is in force immediately before the abolition date, ceases to have effect on
that date.
(2)
The Secretary of State may (whether before, or on or after, the abolition date)
by regulations amend, repeal or revoke any protected rights provisions.
5
(3)
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”
and “appropriate scheme certificate” have the meanings given by
10
section 181(1) of the Pension Schemes Act 1993 (c. 48) (as in force
immediately before that day);
“protected rights provisions” means provisions contained in, or in
subordinate legislation made under—
(a)
any of sections 26 to 33A of that Act, or
15
(b)
any other provision of that Act if and so far as the provisions
relate to, or otherwise have effect in relation to, protected rights
within the meaning of that Act (see section 10 of the Act).
(3)
In Schedule 4—
(a)
Parts 1 and 2 contain amendments which are consequential on, or
20
related to, the provision made by subsection (1), and
(b)
Part 3 contains savings relating to amendments made by Part 1.
(4)
The amendments made by Part 1 of that Schedule have effect as from the
abolition date.
(5)
The Secretary of State may by regulations make—
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(a)
such consequential, incidental or supplemental provision, and
(b)
such transitional, transitory or saving provision,

as he thinks necessary or expedient in connection with, or in consequence of,
the provisions of subsection (1) and Schedule 4 or any amendment, repeal or
revocation of any protected rights provisions by virtue of subsection (2).
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(6)
Regulations under subsection (5) may in particular amend, repeal or revoke
any provision of any Act or subordinate legislation (whenever passed or
made).
(7)
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 and
35
approved by a resolution of each House of Parliament.
(8)
A statutory instrument containing regulations under this section that do not
fall within subsection (7) is subject to annulment in pursuance of a resolution
of either House of Parliament.
Dispute resolution
40
16
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.

Pensions Bill
Part 2 — Occupational and personal pension schemes
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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”.
5
(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
10
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
15
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
20
trustees or managers in a case where an application for the resolution
of a pension dispute is made to them.”
(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
25
“under section 50 must” substitute “in pursuance of section 50(4) must (in
accordance with section 50(6))”.
(8)
For subsection (3) of that section substitute—
“(3)
The procedure—
(a)
may include provision about the time limits for making an
30
application for the resolution of a pension dispute in cases not
within paragraph (b);
(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
35
of such reasonable period as is specified.”
(9)
In subsection (4) of that section, in paragraph (c), after “required” insert “in
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
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decisions of the trustees or managers to be taken on their behalf by one
or more of their number.”