House of Commons Amendments

House of Commons

Session 2007 - 08
Internet Publications
Other Bills before Parliament

Public Bill Committee: 21st February 2008
366

Pensions Bill, continued

Open market option as the default for the annuitisation of personal accounts

Danny Alexander

Paul Rowen

NC22

To move the following Clause:—

‘(1)
An annuity bought with funds saved through the scheme established under

section 50 or a qualifying scheme is a lifetime annuity if—

(a)
it is payable by an insurance company,

(b)
the member was required to select the insurance company from the open

market,

(c)
it is payable until the member’s death or until the later of the member’s

death and the end of a term certain not exceeding ten years, and

(d)
it is a level annuity, an increasing annuity or a relevant linked annuity.

(2)
An annuity is a level annuity if its amount does not vary from year to year.

(3)
An annuity is an increasing annuity if its amount increases from year to year.

(4)
An annuity is a relevant linked annuity if its amount varies from year to year but

only in line with changes in (or by an amount which does not exceed the amount

by which it would vary if it varied in line with changes in)—

(a)
the retail prices index,

(b)
the market value of freely marketable assets, or

(c)
an index reflecting the market value of freely marketable assets.

(5)
“Freely marketable assets” means assets which are sold on the open market at a

price not determined by the member.’.

Member’s explanatory statement

The pupose of this New Clause is to ensure that individuals make the most of their pension by

taking advantage of the open market in annuities.

Financial Assistance Scheme to cover certain pension schemes

Mr Robert Flello

NC28


To move the following Clause:—

‘The Financial Assistance Scheme shall cover those pension schemes which have

registered with the Department for Work and Pensions by 1st January 2008 and

which would have been entititled to assistance by either the FAS or the PPF but

for decisions taken by the company sponsoring the pension scheme or by the

Trustees of the pension scheme where the insolvency event occurred before the

setting up of the PPF but the winding up occurred after that date.’.

Public Bill Committee: 21st February 2008
367

Pensions Bill, continued

NEW SCHEDULES

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

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—

Public Bill Committee: 21st February 2008
368

Pensions Bill, continued


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

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

(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,

Public Bill Committee: 21st February 2008
369

Pensions Bill, continued


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.”

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

Public Bill Committee: 21st February 2008
370

Pensions Bill, continued

(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”.

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

Public Bill Committee: 21st February 2008
371

Pensions Bill, continued

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.

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

Public Bill Committee: 21st February 2008
372

Pensions Bill, continued

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

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