Pensions Bill

House of Commons

Session 2006 - 07
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Other Bills before Parliament

Pensions Bill

Pensions Bill
Schedule 4 — Abolition of contracting-out for defined contribution pension schemes
Part 1 — Amendments having effect as from abolition date
47

(a)
after “ceasing to be such a scheme” insert “(including by virtue of
section 15(1) of the Pensions Act 2007)”;
(b)
in paragraph (a) after “other than” insert “one that was”;
(c)
in paragraph (b) for “in the case of a” substitute “in the case of an
occupational pension scheme that was a”.
5
      (3)
In subsection (2) (HMRC to issue a certificate if they withdraw etc. approval
for arrangements) after “whether by” insert “virtue of section 15(1) of the
Pensions Act 2007, by”.
      (4)
In subsection (4) (regulations may provide for various provisions of the Act
to have effect with modifications where arrangements are approved) for “26
10
to 33” substitute “25A to 33”.
      (5)
In subsection (6) (approval of arrangements for salary related occupational
scheme may be withdrawn at any time) for “which is not a money purchase
contracted-out scheme” substitute “to which subsection (1)(a) applies”.
21    (1)
Section 52 (supervision of schemes which have ceased to be certified) is
15
amended as follows.
      (2)
In subsection (2) (occupational pension schemes to which section applies) in
paragraph (a) after “contracted-out scheme” insert “(whether by virtue of
section 15(1) of the Pensions Act 2007 or otherwise)”.
      (3)
In subsection (3) (personal pension schemes to which section applies) in
20
paragraph (a) after “appropriate scheme” insert “(whether by virtue of
section 15(1) of the Pensions Act 2007 or otherwise)”.
22
In section 55 (payment of state scheme premiums on termination of certified
status) in subsection (2) (prescribed person to pay contributions equivalent
premium) in paragraph (a) omit “(other than a money purchase contracted-
25
out scheme)”.
23
In section 68A (safeguarded rights) in subsection (5) (interpretation) for “or
(3)” substitute “or a money purchase contracted-out scheme”.
24
In section 87 (general protection principle) in subsection (1) (when
subsection applies) in paragraph (a)(i), for “which is not a money purchase
30
contracted out scheme” substitute “that satisfies the requirements of section
9(2)”.
25
In section 96 (further provisions concerning exercise of option to take cash
equivalent under section 95) in subsection (2) (circumstances in which
option must be exercised in relation to balance of cash equivalent after
35
deducting amount sufficient to meet certain liabilities of trustees etc.) in
paragraph (a)(ii) omit “which is not an appropriate scheme”.
26    (1)
Section 156 (information for the purposes of contracting-out) is amended as
follows.
      (2)
In subsection (1) (Secretary of State or HMRC may give information to
40
managers or trustees of scheme) for “or appropriate scheme” substitute “or
personal pension scheme”.
      (3)
In the sidenote, for “contracting-out” substitute “of obligations under Part
III”.

Pensions Bill
Schedule 4 — Abolition of contracting-out for defined contribution pension schemes
Part 1 — Amendments having effect as from abolition date
48

27
In section 163 (exemption of certain schemes from rule against perpetuities)
in subsection (2) (schemes to which the exemption applies) omit paragraph
(c) (appropriate schemes).
28
In section 164 (Crown employment) for subsection (2) substitute—
“(2)
A person who is employed by or under the Crown shall be treated as
5
an employed earner for the purposes of—
(a)
sections 25A to 33A, so far as they relate to personal pension
schemes;
(b)
sections 38, 43 and 45;
(c)
section 48, so far as it relates to minimum contributions;
10
(d)
section 50, so far as it relates to personal pension schemes;
(e)
section 54;
(f)
section 111 (and Part VIII and section 153 so far as they have
effect for the purposes of section 111);
(g)
sections 117, 154 and 155;
15
(h)
section 159, so far as it relates to protected rights payments;
and
(i)
sections 160 and 166.”
29
In section 177 (general financial arrangements) in subsection (3) (amounts to
be paid out of National Insurance Fund into Consolidated Fund) in
20
paragraph (b) (administrative expenses incurred in carrying into effect
remaining provisions of the Act) for sub-paragraph (ii) substitute—
“(ii)
sections 25A to 33A, so far as they relate to personal
pension schemes;
(iii)
section 38;
25
(iv)
section 50, so far as it relates to personal pension
schemes;
(v)
section 54;
(vi)
section 111 (and Part VIII and section 153 so far as
they have effect for the purposes of section 111);
30
(vii)
sections 117, 154 and 155;
(viii)
section 159, so far as it relates to protected rights
payments; and
(ix)
sections 160 and 166;”.
30    (1)
Section 181 (general interpretation) is amended as follows.
35
      (2)
In subsection (1)—
(a)
in the appropriate places insert—
““abolition date” means the day appointed for the
commencement of section 15(1) of the Pensions Act
2007;”;
40
““HMRC” means the Commissioners for Her Majesty’s
Revenue and Customs;”;
(b)
for the definition of “appropriate scheme certificate” and references
to an appropriate scheme, substitute—
““appropriate scheme” and “appropriate scheme
45
certificate” are to be construed in accordance with
section 181A;”;

Pensions Bill
Schedule 4 — Abolition of contracting-out for defined contribution pension schemes
Part 1 — Amendments having effect as from abolition date
49

(c)
in the definition of “contracting-out certificate” and references to
contracted-out scheme and to contracting-out, at the end insert “and
section 181A”;
(d)
for the definition of “money purchase contracted-out scheme”
substitute—
5
““money purchase contracted-out scheme” is to be
construed in accordance with section 181A;”.
      (3)
In subsection (4) (regulations may prescribe the persons who are to be
regarded as members or prospective members of an occupational scheme
etc.) omit “, 44”.
10
31
After section 181 insert—
“181A
Interpretation of references to money purchase contracted-out
schemes or appropriate schemes after abolition date
(1)
This section applies for the interpretation of this Act on and after the
abolition date.
15
(2)
An occupational pension scheme was a money purchase contracted-
out scheme at a time before the abolition date if, at that time, the
scheme was contracted-out by virtue of satisfying section 9(3) (as it
then had effect).
(3)
A money purchase contracted-out scheme was, at a time before the
20
abolition date, a contracted-out scheme in relation to an earner’s
employment if it was, at that time, specified in a contracting-out
certificate in relation to that employment; and references to the
contracting-out of a scheme are, in relation to a money purchase
contracted-out scheme, references to its inclusion in such a
25
certificate.
(4)
Any reference to a contracting-out certificate is, in relation to a
money purchase contracted-out scheme, a reference to a certificate
issued by virtue of section 7, as it had effect before the abolition date,
in relation to the employment of an earner in employed earner’s
30
employment which was contracted-out by reference to that scheme.
(5)
Any certificate so issued that was, at a time before the abolition date,
in force in respect of an employed earner’s employment is to be taken
as conclusive that the employment was, at that time, contracted-out
employment.
35
(6)
A personal pension scheme was an appropriate scheme at a time
before the abolition date if, at that time, there was in force a certificate
issued under section 7(1)(b) (as it then had effect) stating that the
scheme was an appropriate scheme; and “appropriate scheme
certificate” means such a certificate.
40
(7)
Any appropriate scheme certificate in force in relation to a scheme at
any time before the abolition date is to be taken as conclusive that the
scheme was, at that time, an appropriate scheme.”
Pensions Act 1995 (c. 26)
32    (1)
Section 149 of the Pensions Act 1995 (hybrid occupational pension schemes)
45
is amended as follows.

Pensions Bill
Schedule 4 — Abolition of contracting-out for defined contribution pension schemes
Part 2 — Further amendments
50

      (2)
In subsection (1) (regulations may make provision for hybrid schemes to be
treated as two contracted-out schemes) for “sections 9 and 12” substitute
“section 9”.
      (3)
In paragraph (b) of that subsection, for “section 9(3)” substitute “the
requirements mentioned in section 25A(3)”.
5
Welfare Reform and Pensions Act 1999 (c. 30)
33
In section 1 of the Welfare Reform and Pensions Act 1999 (meaning of
“stakeholder pension scheme”)—
(a)
in subsection (1) in paragraph (a), for “(10)” substitute “(9)”;
(b)
omit subsection (10) (stakeholder pension scheme must be
10
contracted-out).
34
Omit section 7 of that Act (reduced rates of contributions for money
purchase contracted-out schemes and appropriate personal pension
schemes etc.: power to specify different percentages).
Pensions Act 2004 (c. 35)
15
35
In section 257 of the Pensions Act 2004 (conditions for pension protection on
transfer of employment) omit subsection (7) (minimum payments made
under contracted-out money purchase scheme to be disregarded).
Part 2
Further amendments
20
Social Security Contributions and Benefits Act 1992 (c. 4)
36    (1)
Section 4C of the SSCBA (power to make provision in consequence of
provision made by or by virtue of section 4B(2) etc.) is amended as follows.
      (2)
In subsection (2) (purposes for which regulations may be made) omit
paragraph (d) (purposes relating to minimum payments).
25
      (3)
In subsection (5) (matters in respect of which regulations may have
retrospective effect)—
(a)
in paragraph (b) (amount of rebate under section 41(1D) or 42A(2C)
of the Pension Schemes Act 1993 (c. 48)) omit “or 42A(2C)”;
(b)
omit paragraphs (g) and (h) (liability to make, and amount of,
30
minimum payments);
(c)
omit paragraphs (i) and (j) (liability to make, and amount of,
payments under section 42A(3) of that Act or minimum
contributions).
37
In section 8 of the SSCBA (calculation of primary Class 1 contributions) in
35
subsection (3) (provisions to which calculation is subject) in paragraph (c)
for “sections 41 and 42A” substitute “section 41”.
38
In section 9 of the SSCBA (calculation of secondary Class 1 contributions) in
subsection (3) (provisions to which calculation is subject) in paragraph (c)
for “sections 41 and 42A” substitute “section 41”.
40
39    (1)
In Schedule 1 to the SSCBA (supplementary provisions relating to
contributions of Classes 1, 1A, 1B, 2 and 3) paragraph 1 (Class 1

Pensions Bill
Schedule 4 — Abolition of contracting-out for defined contribution pension schemes
Part 2 — Further amendments
51

contributions where earner is in more than one employment) is amended as
follows.
      (2)
In sub-paragraph (3) (determination of amount of primary Class 1
contributions where aggregate earnings include earnings from contracted-
out employment)—
5
(a)
omit paragraphs (a) and (b);
(b)
in paragraph (c), for sub-paragraphs (i) and (ii) substitute “to such
part of the aggregated earnings attributable to COSRS service as
exceeds the current primary threshold and does not exceed the
current upper earnings limit”;
10
(c)
in paragraph (d) for “part or parts attributable to COMPS or COSRS
service” substitute “part attributable to COSRS service”.
      (3)
In sub-paragraph (6) (determination of amount of secondary Class 1
contributions where aggregate earnings include earnings from contracted-
out employment) omit paragraphs (a) and (b).
15
      (4)
In sub-paragraph (9) (interpretation) omit the definition of “COMPS
service”.
Pension Schemes Act 1993 (c. 48)
40
The Pension Schemes Act 1993 has effect subject to the following
amendments.
20
41
In section 8 (meaning of, among other things, “minimum payment”) omit
subsection (3) (regulations may make provision about manner in which
minimum payments to be made etc.).
42
In section 40 (scope of Chapter 2 of Part 3) omit paragraph (b) (which relates
to contributions to be paid by HMRC in respect of members of money
25
purchase contracted-out schemes or of appropriate personal pension
schemes).
43
Omit section 42A (reduced rates of contributions, and rebates, for members
of money purchase contracted-out schemes etc.).
44
Omit section 43 (payment of minimum contributions to personal pension
30
schemes).
45
Omit section 45 (amount of minimum contributions).
46
Omit section 45B (money purchase and personal pension schemes:
verification of ages).
47
In section 50 (powers of HMRC to approve arrangements for scheme ceasing
35
to be certified) in subsection (4) (regulations may provide for various
provisions of the Act to have effect with modifications where arrangements
are approved) for “, 25A to 33 and 43 to 45” substitute “and 25A to 33”.
48
In section 164 (Crown employment) in subsection (2) (employees of Crown
to be treated as employed earners for certain purposes) in paragraph (b)
40
omit “, 43 and 45”.
49    (1)
Section 177 (general financial arrangements) is amended as follows.
      (2)
In subsection (2) (amounts to be paid out of the National Insurance Fund)—

Pensions Bill
Schedule 4 — Abolition of contracting-out for defined contribution pension schemes
Part 2 — Further amendments
52

(a)
in paragraph (za) (payments by HMRC under various provisions)
omit “or section 42A(2C) or (3)”;
(b)
omit paragraph (a) (minimum contributions paid by HMRC under
section 43).
      (3)
In subsection (7) (amounts to be paid into National Insurance Fund) in
5
paragraph (a), omit “, 42A(2D) or (5) or 43(5) or (6)”.
50    (1)
Section 181 (interpretation) is amended as follows.
      (2)
In subsection (1), omit the definition of “minimum contributions”.
      (3)
In subsection (4) (regulations may prescribe the persons who are to be
regarded as members or prospective members of an occupational scheme
10
etc.) omit “, 43”.
51    (1)
Schedule 2 (certification regulations) is amended as follows.
      (2)
In Part 1 (occupational pension schemes) in paragraph 4 (regulations may
modify certain provisions of Part 3 in cases where person employed in two
or more employments) in sub-paragraph (1), for “and 66 to 68” substitute “,
15
67 and 68”.
      (3)
In paragraph 5 (state scheme premiums) in sub-paragraph (1) (regulations
may require provision of information to HMRC for purpose of certain
provisions) for the words from “sections 37” to the end substitute “sections
37, 38, 50 to 63 and 159(1) to (3) and (6) (except as they apply to personal
20
pension schemes, the members of such schemes or rights in respect of
them)”.
      (4)
In paragraph 6 (schemes covering different employers) in sub-paragraph (1)
(regulations may modify certain provisions in cases where earner under
different employers qualifies for benefits of same occupational pension
25
scheme) for “and 66 to 68” substitute “, 67 and 68”.
52    (1)
Paragraph 2 of Schedule 4 (priority in bankruptcy etc.: employer’s
contributions to occupational pension scheme) is amended as follows.
      (2)
Omit sub-paragraphs (2) and (3) (sums owed on account of employer’s
minimum payments to a money purchase contracted-out scheme).
30
      (3)
In sub-paragraph (3A) (definition of “the appropriate amount”)—
(a)
in the opening words, omit “or (3)”;
(b)
in paragraph (a), omit “or (2) (as the case may be)”.
      (4)
In sub-paragraph (5) (interpretation)—
(a)
in the definition of “the percentage for contributing earners”, for
35
paragraphs (a) and (b) substitute “3 per cent”;
(b)
in the definition of “the percentage for non-contributing earners”, for
paragraphs (a) and (b) substitute “4.8 per cent”.

Pensions Bill
Schedule 4 — Abolition of contracting-out for defined contribution pension schemes
Part 3 — Savings
53

Part 3
Savings
Issue and cancellation etc. of certificates for periods before the abolition date
53
Nothing in the relevant amendments and repeals affects the continued
operation of any regulations in force under section 7(1) and (7) of the PSA
5
1993 (issue of certificates) immediately before the abolition date in relation
to the issue of a certificate having effect for a period before the abolition date.
54    (1)
Nothing in the relevant amendments and repeals affects the continued
operation of section 34 of the PSA 1993 (cancellation, variation, surrender
and refusal of certificates), or any regulations in force under it immediately
10
before the abolition date, for the purposes of a retrospective act.
      (2)
In sub-paragraph (1) “a retrospective act” means the cancellation, variation,
surrender or refusal of a certificate, or the issue of an amended certificate,
where—
(a)
the certificate was in force for a period beginning before the abolition
15
date (or, in the case of a refusal of a certificate, would have related to
such a period if it had been issued), and
(b)
the cancellation, variation, surrender, refusal or issue—
(i)
is made after the abolition date, but
(ii)
has effect from a date before that date.
20
      (3)
An amended certificate issued by virtue of this paragraph must provide for
it to cease to have effect as from the abolition date.
      (4)
In this paragraph and paragraph 53 “a certificate” means an appropriate
scheme certificate or a contracting-out certificate in respect of a money
purchase contracted-out scheme, and each of those terms has the meaning
25
given by section 181(1) of the PSA 1993.
55
Nothing in the relevant amendments and repeals affects the continued
operation of section 164(2) of the PSA 1993 (persons employed by or under
the Crown to be treated as employed earners for the purposes of certain
provisions) in relation to the provisions of that Act saved by paragraphs 53
30
and 54.
56
Nothing in the relevant amendments and repeals affects the continued
operation of section 177(3)(b)(ii) of the PSA 1993 (administrative expenses of
the Secretary of State, other than those arising out of certain provisions, to be
paid out of the National Insurance Fund into the Consolidated Fund) in
35
relation to the estimated administrative expenses of the Secretary of State in
carrying into effect the provisions of that Act saved by paragraphs 53 and 54.
Determination of question whether scheme was appropriate scheme
57
Nothing in the relevant amendments and repeals affects the continued
operation of any regulations in force under section 7(6) of the PSA 1993
40
(issue of certificates) immediately before the abolition date.
Preservation of earner’s chosen scheme
58    (1)
Nothing in the relevant amendments and repeals—