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Pensions Bill, continued

“(2)	The employer must make prescribed arrangements by which the

jobholder becomes an active member, with effect from the end of the

transitional period for defined benefits and hybrid schemes, of an

automatic enrolment scheme which is a defined benefits scheme or a

hybrid scheme.”.

(4)	If at any time in the transitional period for defined benefits and hybrid schemes

the condition in subsection (2)(c) or (d) of this section ceases to be satisfied,

subsection (5) applies instead of subsection (3) (and the day after the last day on

which that condition is satisfied is referred to as “the closure date”).

(5)	Where this subsection applies, section 3 has effect in relation to the jobholder

with the substitution for subsection (2) of the following subsection —

“(2)	The employer must make prescribed arrangements by which the

jobholder either—

(a)	becomes an active member, with effect from the closure date, of

an automatic enrolment scheme which is a defined benefits

scheme or a hybrid scheme, or

(b)	becomes an active member, with effect from the automatic

enrolment date, of an authomatic enrolment scheme which is a

money purchase scheme.”.

(6)	If the jobholder becomes a member of a scheme under arrangements made under

subsection (2)(b) of that section (as substituted by subsection (5))—

(a)	the employer’s contributions are payable with effect from the automatic

enrolment date;

(b)	any requirement of the scheme rules (in accordance with section 18(1))

for contributions to be payable by the jobholder does not apply in respect

of the period of the jobholder’s membership before the closure date;

(c)	regulations made for the purposes of section 3(2)(b) must secure that the

jobholder may pay, within a period prescribed by the regulations, any

contributions which would have been payable by the jobholder but for

paragraph (b) of this subsection.

(7)	Where subsection (3) or (5) of this section applies, section 3(3) and (4) apply as

if references to the automatic enrolment date were references to the day on which

arrangements would by virtue of this section fall to be made in respect of the

jobholder.

(8)	The transitional period for defined benefits and hybrid schemes is a prescribed

period beginning with the day on which section 3 comes into force.

(9)	In this section the “employer’s first enrolment date” means the first day on which

section 3 applies in the case of the employer (where that date falls within the

transitional period for defined benefits and hybrid schemes).’.

Member’s explanatory statement

This New Clause is related to Amendment 138. The purpose of this amendment is to set out how

employers using defined benefits or hybrid schemes to discharge the employer duties will be per­

mitted to phase in the automatic enrolment of a defined group of jobholders.

Public Bill Committee: 22nd January 2008

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Pensions Bill, continued

Offence of offering financial inducements

Mr Nigel Waterson

Andrew Selous

Mr Stewart Jackson

Miss Julie Kirkbride

Mr John Greenway

NC1

To move the following Clause:—

‘An offence is committed if an employer offers financial inducements to opt out

of an automatic enrolment scheme.’.

Projections of numbers of those on means-tested benefits

Mr Nigel Waterson

Andrew Selous

Mr Stewart Jackson

Miss Julie Kirkbride

Mr John Greenway

NC2

To move the following Clause:—

‘(1)	On or before 1st April 2009 the Secretary of State shall publish his projections of

the numbers of people likely to be subject to means-tested benefits (including

housing benefit) and in ‘at risk’ groups following the introduction of personal

accounts.

(2)	If the projected figure published in accordance with subsection (1) exceeds 10 per

cent. of the pensioner population, the implementation of the scheme shall be

postponed for at least 12 months after the date of publication.

(3)	The Secretary of State shall publish any proposals for reform concurrently with

the publication of the projections under subsection (1).’

.

Restoring link with earnings

Mr Nigel Waterson

Andrew Selous

Mr Stewart Jackson

Miss Julie Kirkbride

Mr John Greenway

NC3

To move the following Clause:—

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125

Pensions Bill, continued

‘Before the coming into force of this Act, the Secretary of State shall announce to

Parliament his intention as to the timing of the implementation of Section 5 of the

Pensions Act 2007.’.

Transitional assistance

Mr Nigel Waterson

Andrew Selous

Mr Stewart Jackson

Miss Julie Kirkbride

Mr John Greenway

NC4

To move the following Clause:—

‘Before implementing Part 1 of this Act, the Secretary of State shall publish his

proposals to provide transitional assistance to small employers in implementing

the legislation.’.

Provision for conditional indexation

Mr Nigel Waterson

Andrew Selous

Mr Stewart Jackson

Miss Julie Kirkbride

Mr John Greenway

NC5

To move the following Clause:—

‘(1)	Schedule [Provision for conditionally indexed arrangements etc] which—

(a)	amends section 84 and Schedule 3 of the Pension Schemes Act 1993

(Basis of Revaluation);

(b)	amends section 51 of the Pensions Act 1995 (annual increase in rate of

pension);

(c)	amends section 67 of the Pensions Act 1995 (restriction on powers to

alter schemes);

(d)	amends schedule 7 to the Pension Schemes Act 2004 (pension

compensation provision); and

(e)	makes provisions for consequential amendments for the operation of

conditional indexation in relation to a scheme that satisfies prescribed

conditions,

has effect.

(2)	The amendments made by Schedule [Provision for conditionally indexed

arrangements etc] do not apply in relation to any scheme or arrangement in

existence prior to the coming into force of this section.

(3)	In this section conditional indexation relates to benefits provided by conditional

indexed scheme, which—

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126

Pensions Bill, continued

(a)	was established after the coming into force of this section;

(b)	is not a money purchase scheme as defined by section 181(1) of the

Pension Schemes Act of 1993;

(c)	Provides that indexation of pensions both in deferment and in payment

may be modified in accordance with prescribed requirements; and

(d)	complies with such other requirements as may be prescribed.’.

Trivial commutation limit

Danny Alexander

Paul Rowen

NC6

To move the following Clause:—

‘The Finance Act 2004 is amended as follows—

In Schedule 29, paragraph 7, subsection (4) leave out from ‘is’ to ‘of’ and insert

“2 per cent”.’.

Member’s explanatory statement

The purpose of this Clause is to ensure that the effects of means testing can be mitigated by a dou­

bling of the trivial commutation limit.

Role of the Information Commissioner

Danny Alexander

Paul Rowen

NC7

To move the following Clause:—

‘(1)	The Information Commissioner shall have full jurisdiction over the workings of

the Personal Accounts Delivery Authority and the Pensions Regulator.

(2)	The Secretary of State must prepare, and keep under review, a code of practice

with respect to the disclosure of information relating to pensions by public

authorities.

(3)	Before preparing or altering the code, the Secretary of State must consult—

(a)	any specified public authority;

(b)	the Information Commissioner; and

(c)	such other persons as the Secretary of State considers appropriate.

(4)	A public authority must have regard to the code in (or in connection with)

disclosing information relating to pensions.

(5)	Nothing in this section applies in relation to any disclosure by a relevant public

authority of information whose subject-matter is a matter about which provision

would be within the legislative competence of the Scottish Parliament if it were

included in an Act of the Scottish Parliament.

(6)	The Secretary of State must—

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127

Pensions Bill, continued

(a)	lay a copy of the code, and of any alterations to it, before Parliament; and

(b)	from time to time publish the code as for the time being in force.’.

Member’s explanatory statement

The purpose of this Clause is to ensure that the Information Commissioner can properly oversee

the workings of the personal accounts system and that a code of best practice is effective and prop­

erly adhered to.

Retirement Income Fund

Mr Nigel Waterson

Andrew Selous

Mr Stewart Jackson

Mr John Greenway

Miss Julie Kirkbride

NC9

To move the following Clause:—

‘(1)	The Finance Act 2004 9c. 12) is amended as follows.

(2)	After section 152 (meaning of “arrangement”), insert—

“152A

Meaning of ‘Retirement Income Fund’

(1)	In this Part, a Retirement Income Fund means a scheme for the

reinvestment of savings in retirement which—

(a)	is operated by or on behalf of a person authorised to operate a

registered pension scheme,

(b)	is a scheme in which investments are approved by HM Revenue

and Customs, and

(c)	meets the conditions set out in subsections (2) to (9).

(2)	The first condition is that, subject to the other conditions in this section,

funds held in the Retirement Income Fund may be invested and

withdrawn by the member as and when he elects.

(3)	The second condition is that an authorised Retirement Income Fund

provider must set an annual maximum withdrawal allowance for each

member, based on an assessment of each member’s life expectancy, and

a member’s withdrawals from the fund in any one year must not exceed

that allowance.

(4)	The third condition is that, in setting annual maximum withdrawal

allowances, an authorised provider must ensure that no member’s total

future annual income falls below the Minimum Retirement Income level

(as set under section [Minimum Retirement Income] of the Pensions Act

2008) except in the circumstances provided for in the sixth condition.

(5)	The fourth condition is that an authorised provider must set an annual

minimum withdrawal allowance so that each member’s total income is at

least equivalent to the Minimum Retirement Income level, except in the

circumstances provided for in the sixth condition.

(6)	The fifth condition is that if a member chooses not to declare his total

annual income to the authorised provider he must withdraw funds

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128

Pensions Bill, continued

equivalent to the level of the Minimum Retirement Income level or his

annual maximum withdrawal allowance, whichever is the lower.

(7)	The sixth condition is that, where there are insufficient funds to enable

the annual minimum withdrawal allowance to be set so that a member’s

total income is at least equivalent to the Minimum Retirement Income

level, the allowance should be set out at the highest level consistent with

the assessment of the member’s life expectancy.

(8)	The seventh condition is that the maximum and minimum withdrawal

allowances must be set at the same level if a member’s total annual

income, including his maximum withdrawal allowance, is lower than the

Minimum Retirement Income level.

(9)	The eighth condition is that a Retirement Income Fund, and any income

derived from it, must not be capable of assignment or surrender by the

member.’.

Member’s explanatory statement

The purpose of this amendment is to introduce measures which would allow for the creation of Re­

tirement Income Funds, a kind of reinvestment vehicle providing an alternative to annuities.

Withdrawal from a Retirement Income Fund

Mr Nigel Waterson

Andrew Selous

Mr Stewart Jackson

Mr John Greenway

Miss Julie Kirkbride

NC10

To move the following Clause:—

‘(1)	Section 165 of the Finance Act 2004 (c. 12) (pension rules) is amended as

follows.

(2)	In subsection (1) (which sets out the pension rules)—

(a)	in Pension Rule 4, after paragraph (a), insert—

“(aa)

a withdrawal from a Retirement Income Fund,”;

(b)	in Pension Rule 4, after the second appearance of the words “scheme

pension”, insert the words “or a withdrawal from a Retirement Income

Fund”;

(c)	in Pension Rule 6, after paragraph (a), insert—

“(aa)

a withdrawal from a Retirement Income Fund,”;

(d)	in Pension Rule 6, after the second appearance of the words “scheme

pension”, insert the words “or a withdrawal from a Retirement Income

Fund”.’.

Member’s explanatory statement

This amendment alters the Finance Act 2004 to include in its definition of pension payment with­

drawals from Retirement Income Funds, in respect of money purchase schemes.

Public Bill Committee: 22nd January 2008

129

Pensions Bill, continued

Minimum Retirement Income

Mr Nigel Waterson

Andrew Selous

Mr Stewart Jackson

Mr John Greenway

Miss Julie Kirkbride

NC11

To move the following Clause:—

‘(1)	The amount of the Minimum Retirement Income in respect of each tax year shall

be set by the Chancellor of the Exchequer by order at the level of the standard

minimum guarantee prescribed under section 2 of the State Pension Credit Act

2002 (c. 16).

(2)	Before making an order under subsection (1), the Chancellor of the Exchequer

shall consult such persons as he considers appropriate.

(3)	An order under this section (other than the order that applies to the first tax year

during which this section is in force) must be made on or before 31st January of

the tax year before the tax year to which the order applies.’.

Member’s explanatory statement

The purpose of this amendment is to establish a minimum retirement income level, to be set by the

Chancellor of the Exchequer in each tax year.

NEW SCHEDULE

Mr Nigel Waterson

Andrew Selous

Mr Stewart Jackson

Miss Julie Kirkbride

Mr John Greenway

NS1

To move the following Schedule:—

‘Provision for conditional indexed arrangements etc

Part 1

Basis of Revaluation

1	The Pension Schemes Act 1993 (c.48) (Basis of Revaluation) is amended as

follows—

In section 84 after subsection (3) there is added—

“(3A)

If any benefit as is mentioned in paragraph (a) of section 83(1) is a

conditional indexation benefit that benefit shall be revalued using the

conditional indexation method”.

In Schedule 3 (Methods of Revaluation Accrued Pension Benefit) after

paragraph 4 there is added—

“(4A)

The conditional indexation method is to revalue the benefits which

have accrued to the member in respect of the pre-pension period in

such manner as may be prescribed”.

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Revised 22 January 2008