Pensions Bill

House of Commons

Session 2007 - 08
Internet Publications
Other Bills before Parliament

Pensions Bill

Pensions Bill
Part 1 — Pension scheme membership for jobholders
Chapter 1 — Employers’ duties
1

A
Bill
To
Make provision relating to pensions, and for connected purposes.
Be it enacted by the Queen’s most Excellent Majesty, by and with the advice and
consent of the Lords Spiritual and Temporal, and Commons, in this present
Parliament assembled, and by the authority of the same, as follows:—
Part 1
Pension scheme membership for jobholders
Chapter 1
Employers’ duties
Jobholders
5
1
Jobholders
(1)
For the purposes of this Part a jobholder is an employee or worker—
(a)
who is working or ordinarily works in Great Britain under a contract,
(b)
who is aged at least 16 and under 75, and
(c)
to whom qualifying earnings (defined in section 11) are payable by the
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employer.
(2)
Where a jobholder has more than one employer, or a succession of employers,
this Chapter applies separately in relation to each employment.
(3)
Accordingly—
(a)
references to the employer are references to the employer concerned;
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(b)
references to membership of a pension scheme are references to
membership in relation to the employment concerned.

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Pensions Bill
Part 1 — Pension scheme membership for jobholders
Chapter 1 — Employers’ duties
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Employers’ duties
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Continuity of scheme membership
(1)
If a jobholder is an active member of a qualifying scheme, the employer must
not take any action, or make any omission, by which the jobholder ceases to be
an active member of the scheme.
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(2)
Subsection (1) is not contravened if the jobholder remains an active member of
another qualifying scheme.
(3)
Subsection (1) is not contravened if the jobholder becomes an active member of
another qualifying scheme within the prescribed period.
(4)
Subsection (1) is not contravened if the action or omission is at the jobholder’s
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request.
(5)
In this Part as it applies in the case of any jobholder, references to a qualifying
scheme are references to a pension scheme which is a qualifying scheme in
relation to that jobholder (see section 14).
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Automatic enrolment
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(1)
This section applies to a jobholder who—
(a)
is aged at least 22, and
(b)
has not reached pensionable age.
(2)
The employer must make prescribed arrangements by which the jobholder
becomes an active member of an automatic enrolment scheme with effect from
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the automatic enrolment date.
(3)
Subsection (2) does not apply if the jobholder was an active member of a
qualifying scheme on the automatic enrolment date.
(4)
Subsection (2) does not apply if, within the prescribed period before the
automatic enrolment date, the jobholder ceased to be an active member of a
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qualifying scheme because of any action or omission by the jobholder.
(5)
The Secretary of State may by regulations provide that subsection (2) does not
apply if there are prescribed arrangements under which the jobholder is
entitled to become an active member, with effect from the automatic enrolment
date, of a qualifying scheme which is a personal pension scheme of a
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prescribed description.
(6)
The automatic enrolment date, in relation to any person, is the first day on
which this section applies to the person as a jobholder of the employer.
(7)
In this Part as it applies in the case of any jobholder, references to an automatic
enrolment scheme are references to a pension scheme which is an automatic
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enrolment scheme in relation to that jobholder (see section 15).
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Postponement of automatic enrolment
(1)
The Secretary of State may by regulations provide that, for the purposes of
arrangements of a prescribed description that are made in accordance with
section 3(2) or with regulations under section 3(5), the automatic enrolment
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date is a date, determined in accordance with regulations under this section,
which is later than the date specified in section 3(6).

Pensions Bill
Part 1 — Pension scheme membership for jobholders
Chapter 1 — Employers’ duties
3

(2)
Arrangements of a description prescribed under this section must be ones that
satisfy the following requirements.
(3)
The arrangements must apply to every person who—
(a)
would have been the subject of arrangements under section 3 by
reference to the earlier date, but for the regulations, and
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(b)
at the later date, is a jobholder of the employer and has not reached
pensionable age.
(4)
The arrangements must provide for the employer to be obliged not to take any
action or make any omission by which a person who becomes a member of a
scheme under the arrangements ceases to be a member of it within the
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minimum period.
(5)
The minimum period is so much of a prescribed period as the person remains
a jobholder of the employer.
(6)
Subsection (4) does not apply to any action or omission at the member’s
request.
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5
Automatic re-enrolment
(1)
This section applies to a jobholder who—
(a)
is aged at least 22, and
(b)
has not reached pensionable age.
(2)
The employer must make prescribed arrangements by which the jobholder
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becomes an active member of an automatic enrolment scheme with effect from
the automatic re-enrolment date.
(3)
Subsection (2) does not apply if the jobholder was an active member of a
qualifying scheme on the automatic re-enrolment date.
(4)
Subsection (2) does not apply if, within the prescribed period before the
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automatic re-enrolment date, the jobholder ceased to be an active member of a
qualifying scheme because of any action or omission by the jobholder.
(5)
The Secretary of State may by regulations provide that subsection (2) does not
apply if there are prescribed arrangements under which the jobholder is
entitled to become an active member, with effect from the automatic re-
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enrolment date, of a qualifying scheme which is a personal pension scheme of
a prescribed description.
(6)
Automatic re-enrolment dates are dates, after the automatic enrolment date,
that are to be determined in accordance with regulations made by the Secretary
of State.
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(7)
Regulations under subsection (2) must secure in the case of each employer, or
secure in the case of each jobholder of an employer, that there is not more than
one automatic re-enrolment date in any period of three years.
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Jobholder’s right to opt in
(1)
This section applies to a jobholder who is not an active member of a qualifying
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scheme.
(2)
But it does not apply at a time when—

Pensions Bill
Part 1 — Pension scheme membership for jobholders
Chapter 1 — Employers’ duties
4

(a)
arrangements are required to be made under section 3 or 5 in respect of
the jobholder, or
(b)
the jobholder’s automatic enrolment date is postponed under section 4.
(3)
The jobholder may by notice require the employer to arrange for the jobholder
to become an active member of an automatic enrolment scheme.
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(4)
The jobholder may not give notice to the employer under this section more
than once in any period of 12 months.
(5)
The Secretary of State may by regulations make provision—
(a)
about the form and content of the notice;
(b)
about the arrangements that the employer is required to make;
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(c)
for determining the date with effect from which the jobholder is to
become an active member under the arrangements.
(6)
The Secretary of State may by regulations provide that an employer may
comply with a notice by making prescribed arrangements under which the
jobholder is entitled to become an active member of a qualifying personal
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pension scheme of a prescribed description, with effect from a date determined
in accordance with the regulations.
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Jobholder’s right to opt out
(1)
This section applies to a jobholder to whom arrangements under section 3(2),
5(2) or 6(3) apply (arrangements for the jobholder to become an active member
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of an automatic enrolment scheme).
(2)
If the jobholder gives notice in the prescribed period in accordance with this
section, the jobholder is to be treated for all purposes as not having become a
member of the scheme.
(3)
Any contributions paid by the jobholder must be refunded in accordance with
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prescribed requirements.
(4)
Any contributions paid by the employer, on behalf of the jobholder, must be
refunded in accordance with prescribed requirements.
(5)
Regulations under subsection (3) or (4) may, in particular, make provision
about—
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(a)
the time within which contributions must be refunded;
(b)
how the amount to be refunded is calculated;
(c)
the procedure for refunding contributions.
(6)
The Secretary of State may by regulations make provision about the form and
content of a notice under this section.
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(7)
The regulations must provide for the notice—
(a)
to include information about the effect in relation to jobholders of
giving notice under this section, and
(b)
to be signed by the jobholder.
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Information to be given to jobholders
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(1)
The Secretary of State must make provision by regulations—

Pensions Bill
Part 1 — Pension scheme membership for jobholders
Chapter 1 — Employers’ duties
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(a)
for all jobholders to be given information about the effect of sections 2
to 7 in relation to them;
(b)
for a prescribed person to be required to provide the information.
(2)
Regulations under this section must state—
(a)
what information must be given;
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(b)
in what circumstances it must be given;
(c)
how and when it must be given.
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Information to be given to the Pensions Regulator
(1)
The Secretary of State may make regulations requiring employers to provide
the Pensions Regulator with information about action they have taken or
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intend to take for the purposes of any provision of, or of regulations under,
sections 2 to 8.
(2)
The regulations may in particular—
(a)
require an employer to provide information about pension schemes to
which any action relates;
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(b)
require an employer to identify which of any prescribed descriptions a
scheme falls within;
(c)
require an employer to provide information that appears to the
Secretary of State to be required for the performance by the Pensions
Regulator of its functions under Chapter 2 of this Part;
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(d)
make provision about how and in what form any information is to be
provided.
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Introduction of employers’ duties
(1)
The Secretary of State may by regulations provide that an employer of any
description does not become subject to requirements imposed by or under
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section 2, 3, 6 or 9 until such date after the commencement of those sections as
is prescribed in relation to employers of that description.
(2)
The Secretary of State may by regulations provide that, during a prescribed
period beginning on or after the commencement of those sections, this Chapter
applies with prescribed modifications in relation to schemes of a prescribed
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description or in relation to jobholders of a prescribed description.
Qualifying earnings
11
Qualifying earnings
(1)
A person’s qualifying earnings at any time in a pay reference period are the
part (if any) of the gross earnings payable to that person in that period that is—
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(a)
more than £5,035, and
(b)
not more than £33,540.
(2)
In the case of a pay reference period of less or more than 12 months, subsection
(1) applies as if the amounts in paragraphs (a) and (b) were proportionately less
or more.
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Pensions Bill
Part 1 — Pension scheme membership for jobholders
Chapter 1 — Employers’ duties
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(3)
In this section, “earnings”, in relation to a person, means sums of any of the
following descriptions that are payable to the person in connection with the
person’s employment—
(a)
salary, wages, commission, bonuses and overtime;
(b)
statutory sick pay under Part 11 of the Social Security Contributions
5
and Benefits Act 1992 (c. 4);
(c)
statutory maternity pay under Part 12 of that Act;
(d)
ordinary statutory paternity pay or additional statutory paternity pay
under Part 12ZA of that Act;
(e)
statutory adoption pay under Part 12ZB of that Act;
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(f)
sums prescribed by regulations for the purposes of this section.
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Review of qualifying earnings band
(1)
The Secretary of State must in each tax year determine whether the amounts in
section 11(1)(a) and (b) have maintained their value.
(2)
Changes in their value are to be assessed in any way that the Secretary of State
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considers appropriate.
(3)
The Secretary of State may in particular make a determination under
subsection (1) by reference to a review under section 148 of the Social Security
Administration Act 1992 (review of general level of earnings for revaluation of
earnings factors).
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(4)
If the Secretary of State determines under this section that the amounts in
section 11(1)(a) and (b) have not maintained their value, the Secretary of State
may make an order substituting in those provisions the amounts that the
Secretary of State considers appropriate for maintaining their value.
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Pay reference period
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(1)
In relation to any person a pay reference period is—
(a)
the period prescribed;
(b)
if no period is prescribed, twelve months.
(2)
The Secretary of State may by regulations—
(a)
make provision for determining a person’s earnings in any pay
30
reference period;
(b)
make provision for determining the first date of each pay reference
period in relation to a person.
Qualifying schemes and automatic enrolment schemes
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Qualifying schemes
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(1)
A pension scheme is a qualifying scheme in relation to a jobholder (J) if—
(a)
the scheme is an occupational pension scheme or a personal pension
scheme,
(b)
the scheme is registered under Chapter 2 of Part 4 of the Finance Act
2004 (c. 12),
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(c)
while J is an active member, the scheme satisfies the quality
requirement in relation to J.

Pensions Bill
Part 1 — Pension scheme membership for jobholders
Chapter 1 — Employers’ duties
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(2)
The Secretary of State may by regulations provide that a scheme is not a
qualifying scheme in relation to J if—
(a)
while J is an active member, the payments that must be made to the
scheme by, or on behalf or in respect of, J for purposes other than the
provision of benefits exceed a prescribed amount,
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(b)
while J is an active member, the contributions that must be paid to the
scheme by, or on behalf or in respect of, J exceed a prescribed amount,
or
(c)
the scheme provides for average salary benefits to be provided to or in
respect of J and contains prescribed features.
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Automatic enrolment schemes
(1)
A pension scheme is an automatic enrolment scheme in relation to a jobholder
(J) if—
(a)
the scheme is an occupational pension scheme which is a qualifying
scheme in relation to J, and
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(b)
the scheme satisfies the conditions in subsection (2).
(2)
The conditions are that—
(a)
no provision of the scheme prevents the employer from making
arrangements prescribed by regulations under section 3(2), 5(2) or 6(5)
for J to become an active member of the scheme;
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(b)
no provision of the scheme requires J to express a choice in relation to
any matter, or to provide any information, in order to remain an active
member.
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Occupational pension schemes
For the purposes of this Part, each of these is an occupational pension
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scheme—
(a)
an occupational pension scheme within the meaning of section 1(1) of
the Pension Schemes Act 1993 (c. 48) that has its main administration in
the United Kingdom;
(b)
an institution for occupational retirement provision within the
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meaning of Article 6(a) of the IORP Directive, that has its main
administration in an EEA State other than the United Kingdom;
(c)
a pension scheme that is prescribed or is of a prescribed description and
that has its main administration elsewhere than in an EEA State.
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Personal pension schemes
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For the purposes of this Part, a personal pension scheme is a pension scheme
that—
(a)
is not an occupational pension scheme, and
(b)
is established by a person within section 154(1)(b) of the Finance Act
2004 (c. 12).
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