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Public Bill Committee: 5th February 2008                

283

 

Pensions Bill, continued

 
 

Defined benefit schemes: amendment of rules

 

Mr Nigel Waterson

 

Andrew Selous

 

Stewart Jackson

 

Mr John Greenway

 

Miss Julie Kirkbride

 

NC19

 

To move the following Clause:—

 

‘The Secretary of State shall lay regulations prescribing circumstances in which

 

a statutory override can be applied that enables scheme rules to be amended to

 

reflect the Pensions Act 2004 changes to the indexation cap for service going

 

forward and for the change in the revaluation cap introduced under section 79.’.

 

Member’s explanatory statement

 

The purpose of this Clause is to provide further reassurance to defined benefit schemes by allowing

 

schemes to change their rules to take advantage of regulatory reforms that have already been

 

introduced.

 


 

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”.

 

Part 2

 

Annual Increase in Rate of Pension


 
 

Public Bill Committee: 5th February 2008                

284

 

Pensions Bill, continued

 
 

2          

The Pensions Act 1995 (c.26) (Annual Increase in Rate of Pension) is amended

 

as follows—

 

            

After section 51(1)(iii) there is added “(iv) which is not a conditionally indexed

 

scheme which complies with such requirements in relation to increases in the

 

rate of a pension as may be prescribed”.

 

Part 3

 

Restriction on Powers to Alter Schemes

 

3          

Section 67 of the Pensions Act 1995 (c.26) (Restriction to Alter Schemes), is

 

amended as follows—

 

            

After section 67(3)(b) there is added “(c) for a prescibed purpose relating to the

 

operation of a conditionally indexed scheme”.

 

Part 4

 

Pensions Compensation Provisions

 

4          

Schedule 7 to the Pensions Act 2004 (c.35) (Pensions Compensation

 

Provisions) is amended as follows—

 

            

After paragraph 2 to the Schedule there is added “2A This Schedule shall be

 

modified in relation to a conditionally indexed scheme in such manner as may

 

be prescribed.”.’.

 


 

Mr Mike O’Brien

 

NS2

 

Parliamentary Star - white    

To move the following Schedule:—

 

‘Pension compensation on divorce etc: Scotland

 

1          

The Family Law (Scotland) Act 1985 (c. 37) is amended as follows.

 

2          

In section 8 (orders for financial provision)—

 

(a)    

in subsection (1)—

 

(i)    

after paragraph (baa) insert—

 

“(bab)    

a pension compensation sharing order;”,

 

(ii)    

after paragraph (ba) insert—

 

“(bb)    

an order under section 12B(2);”,

 

(b)    

subsection (4A) is repealed,

 

(c)    

after subsection (7) add—

 

  “(8)  

The court shall not, in the same proceedings, make both a pension                 

 

compensation sharing order and an order under section 12B(2) in

 

relation to the same                               PPF compensation.

 

      (9)  

The court shall not make a pension compensation sharing order in

 

relation to                     rights to PPF compensation that—

 

(a)    

derive from rights under a pension scheme which, at the

 

time the              Board of the Pension Protection Fund assumed

 

responsibility for the scheme,            was subject to an order made

 

under section 12A(2) or (3) in relation to the marriage or


 
 

Public Bill Committee: 5th February 2008                

285

 

Pensions Bill, continued

 
 

(as the case may be) civil partnership or a previous one

 

between                      the same persons,

 

(b)    

derive from rights under a pension scheme which were at

 

any              time the subject of a pension sharing order in relation

 

to the marriage or (as               the case may be) civil partnership or

 

a previous one between the same persons,

 

(c)    

are or have been the subject of a pension compensation

 

sharing order               in relation to the marriage or (as the case may

 

be) civil partnership or a previous one between the same

 

persons, or

 

(d)    

are or have been the subject of an order made under section

 

12B(2) in               relation to the marriage or (as the case may be)

 

civil partnership or a previous one between the same

 

persons.

 

    (10)  

Where, as regards PPF compensation, the parties to a marriage or

 

the partners in a civil partnership have in effect a qualifying

 

agreement which contains a term relating to pension compensation

 

sharing, the court shall not—

 

(a)    

make an order under section 12B(2); or

 

(b)    

make a pension compensation sharing order,

 

            

relating to the compensation unless it also sets aside the agreement

 

or term under section 16(1)(b) of this Act.

 

    (11)  

For the purposes of subsection (10)—

 

(a)    

the expression “term relating to pension compensation

 

sharing” is to be construed by reference to section 16(2AA)

 

of this Act; and

 

(b)    

a qualifying agreement is one to which section 84(2) of the

 

Pensions Act 2008 relates.”

 

3          

After section 8A insert—

 

“8B    

Pension compensation sharing orders: apportionment of charges

 

    

The court may include in a pension compensation sharing order

 

provision about apportionment between the parties of any charge

 

under section 91 of the Pensions Act                 2008 or under corresponding

 

Northern Ireland legislation.”

 

4          

In section 10 (sharing of value of matrimonial property or partnership

 

property)—

 

(a)    

in subsection (5A), for the words from “compensation payable” to           

 

“that Chapter” substitute “PPF compensation”,

 

(b)    

for subsection (8B) substitute—

 

“(8B)    

The Scottish Ministers may by regulations make provision for

 

the purposes of                      this Act about—

 

(a)    

calculation and verification of PPF compensation,

 

(b)    

apportionment of PPF compensation.

 

(8C)    

Regulations under subsection (8B) may include provision—

 

(a)    

for calculation or verification in a manner approved

 

by a             prescribed person,

 

(b)    

by reference to regulations under section 86 of the

 

Pensions Act 2008.”


 
 

Public Bill Committee: 5th February 2008                

286

 

Pensions Bill, continued

 
 

5          

In section 12A (orders for payment of capital sum: pensions lump sums), in

 

subsection (7ZC), for the words “Notwithstanding the provisions of section

 

8(4A), for” substitute “For”.

 

6          

After section 12A insert—

 

“12B  

Order for payment of capital sum: pension compensation

 

(1)    

This section applies where the court makes an order under section 8(2)

 

for payment of a capital sum (a “capital sum order”) by a party to a

 

marriage or a partner in a civil partnership (“the liable person”) in

 

circumstances where the matrimonial or (as the case may be)

 

partnership property within the meaning of section 10 includes any

 

rights to PPF compensation.

 

(2)    

On making the capital sum order, the court may make an additional

 

order requiring the Board of the Pension Protection Fund, if at any

 

time any payment in respect of PPF compensation becomes due to the

 

liable person, to pay the whole or part of that payment to the other

 

party or (as the case may be) other partner (“the other person”).

 

(3)    

Any such payment by the Board of the Pension Protection Fund—

 

(a)    

shall discharge so much of its liability to the liable person as

 

corresponds to the amount of the payment, and

 

(b)    

shall be treated for all purposes as a payment made by the

 

liable person in or towards the discharge of the person’s

 

liability under the capital sum order.

 

(4)    

Where the liability of the liable person under the capital sum order has

 

been discharged in whole or in part, other than by a payment by the

 

Board of the Pension Protection Fund, the court may, on an application

 

by any person having an interest, recall the order or vary the amount

 

specified in such an order as appears to the court appropriate in the

 

circumstances.

 

(5)    

The court may not make an additional order under subsection (2) in

 

relation to rights to PPF compensation that—

 

(a)    

derive from rights under a pension scheme which, at the time

 

the Board of the Pension Protection Fund assumed

 

responsibility for the scheme, was subject to an order made

 

under section 12A(2) or (3) in relation to the marriage or (as

 

the case may be) civil partnership or a previous one between

 

the same persons,

 

(b)    

derive from rights under a pension scheme which were at any

 

time the subject of a pension sharing order in relation to the

 

marriage or (as the case may be) civil partnership or a

 

previous one between the same persons,

 

(c)    

are or have been the subject of a pension compensation

 

sharing order in relation to the marriage or (as the case may

 

be) civil partnership or a previous one between the same

 

persons, or

 

(d)    

are or have been the subject of an order made under subsection

 

(2) in relation to the marriage or (as the case may be) civil

 

partnership or a previous one between the same persons.”

 

7          

In section 13 (order for periodical allowance), in subsection (2)(b), after the

 

words                         “pension sharing order” insert “or pension compensation sharing

 

order”.


 
 

Public Bill Committee: 5th February 2008                

287

 

Pensions Bill, continued

 
 

8          

In section 16 (agreements on financial provision)—

 

(a)    

in subsection (2)(b), for the words “does not contain a term relating to

 

pension sharing” substitute “contains neither a term relating to pension

 

sharing nor a term relating to pension compensation sharing”,

 

(b)    

in subsection (2)(c), after the word “sharing” in the first place where it

 

occurs insert “or pension compensation sharing”,

 

(c)    

in subsection (2)(c)(i), after the word “sharing” insert “or (as the case

 

may be) the term relating to pension compensation sharing”,

 

(d)    

after subsection (2A), insert—

 

“(2AA)    

For the purpose of subsection (2), a term relating to pension

 

compensation sharing is a term corresponding to provision

 

which may be made in a pension compensation sharing order

 

and satisfying the requirements set out in section 84(1)(g) of

 

the Pensions Act 2008.”

 

9          

In section 27 (interpretation)—

 

(a)    

in subsection (1), before the definition of “pension sharing order”               

 

insert—

 

    

““pension compensation sharing order” is an order

 

  which—

 

(a)    

provides that one party’s shareable rights to

 

PPF               compensation be subject to pension

 

compensation sharing for                 the benefit of the

 

other party, and

 

(b)    

specifies the percentage value to be            

 

transferred;”,

 

(b)    

after subsection (1A) insert—

 

“(1B)    

In subsection (1), in the definition of “pension compensation

 

sharing                   order”, the reference to shareable rights to PPF

 

compensation is to                 rights in relation to which pension

 

compensation sharing is available under Chapter 1 of Part 3 of

 

the Pensions Act 2008 or under corresponding Northern

 

Ireland legislation.

 

(1C)    

In this Act—

 

    

“PPF compensation” means compensation payable

 

  under the pension         compensation provisions,

 

“the pension compensation provisions” means—

 

(a)    

Chapter 3 of Part 2 of the Pensions Act 2004

 

and any                 regulations or order made under it,

 

(b)    

Chapter 1 of Part 3 of the Pensions Act 2008

 

and any                 regulations or order made under it,

 

(c)    

any provision corresponding to the

 

provisions mentioned in                paragraph (a) or (b)

 

in force in Northern Ireland.”’.

 

Member’s explanatory statement

 

The new Schedule makes provision in relation to pension compensation sharing on divorce etc in

 

Scotland.

 



 
 

Public Bill Committee: 5th February 2008                

288

 

Pensions Bill, continued

 
 

Mr Mike O’Brien

 

That certain written evidence already reported to the House be appended to the

 

proceedings of the Committee.

 

 

Order of the House [7th january 2008]

 

That the following provisions shall apply to the Pensions Bill:

 

Committal

 

1.    

The Bill shall be committed to a Public Bill Committee.

 

Proceedings in Public Bill Committee

 

2.    

Proceedings in the Public Bill Committee shall (so far as not previously

 

concluded) be brought to a conclusion on Tuesday 26th February 2008.

 

3.    

The Public Bill Committee shall have leave to sit twice on the first day on

 

which it meets.

 

Consideration and Third Reading

 

4.    

Proceedings on consideration shall (so far as not previously concluded) be

 

brought to a conclusion one hour before the moment of interruption on the

 

day on which those proceedings are commenced.

 

5.    

Proceedings on Third Reading shall (so far as not previously concluded) be

 

brought to a conclusion at the moment of interruption on that day.

 

6.    

Standing Order No. 83B (Programming committees) shall not apply to

 

proceedings on consideration and Third Reading.

 

Other proceedings

 

7.    

Any other proceedings on the Bill (including any proceedings on

 

consideration of Lords Amendments or on any further messages from the

 

Lords) may be programmed.

 

 

Order of the Committee [15th january 2008]

 

That—

 

(1)  

the Committee shall (in addition to its first meeting at 10.30 a.m. on Tuesday

 

15th January) meet—

 

(a)  

at 4.00 p.m. on Tuesday 15th January;

 

(b)  

at 9.00 a.m. and 1.00 p.m. on Thursday 17th January;

 

(c)  

at 10.30 a.m. and 4.00 p.m. on Tuesday 22nd January;

 

(d)  

at 9.30 a.m. and 1.00 p.m. on Thursday 24th January;

 

(e)  

at 10.30 a.m. and 4.00 p.m. on Tuesday 29th January;

 

(f)  

at 9.30 a.m. and 1.00 p.m. on Thursday 31st January;

 

(g)  

at 10.30 a.m. and 4.00 p.m. on Tuesday 5th February;

 

(h)  

at 9.30 a.m. and 1.00 p.m. on Thursday 7th February;

 

(i)  

at 10.30 a.m. and 4.00 p.m. on Tuesday 19th February;

 

(j)  

at 9.30 a.m. and 1.00 p.m. on Thursday 21st February;

 

(k)  

at 10.30 a.m. and 4.00 p.m. on Tuesday 26th February.

 

(2)  

the Committee shall hear oral evidence in accordance with the following


 
 

Public Bill Committee: 5th February 2008                

289

 

Pensions Bill, continued

 
 

Table:

 

TABLE

 

Date

Time

Witness

 
 

Tuesday 15th January

Until no later than 12 noon

Personal Accounts Delivery

 
   

Authority

 
 

Tuesday 15th January

Until no later than 5.10 p.m.

Association of British Insurers;

 
   

National Association of Pension

 
   

Funds; Investment Management

 
   

Association

 
 

Tuesday 15th January

Until no later than 6.40 p.m.

Trades Union Congress; Equality

 
   

and Human Rights Commission;

 
   

Which?; Age Concern; Help the

 
   

Aged

 
 

Thursday 17th January

Until no later than 9.45 a.m.

Pensions Policy Institute

 
 

Thursday 17th January

Until no later than 10.25 a.m.

British Chambers of Commerce;

 
   

Federation of Small Businesses

 
 

Thursday 17th January

Until no later than 2.10 p.m.

Engineering Employers

 
   

Federation; Confederation of

 
   

British Industry; Association of

 
   

Consulting Actuaries

 
 

Thursday 17th January

Until no later than 3.15 p.m.

Pensions Commission

 
 

Thursday 17th January

Until no later than 4.45 p.m.

Department of Work and Pensions

 
 

(3)  

the proceedings on consideration of the Bill in Committee shall be taken in

 

the following order: Clauses 1 to 57; Schedule 1; Clauses 58 to 79; Schedule

 

2; Clause 80; Schedule 3; Clauses 81 to 90; Schedule 4; Clauses 91 to 94;

 

Schedule 5; Clauses 95 and 96, Schedule 6; Clauses 97 and 98; Schedule 7;

 

Clauses 99 to 108; Schedule 8; Clauses 109 to 111; new Clauses; new

 

Schedules; remaining proceedings on the Bill;

 

(4)  

the proceedings shall (so far as not previously concluded) be brought to a

 

conclusion at 7.00 p.m. on Tuesday 26th February.

 


 
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