House of Commons Public Bill Committee Proceedings

House of Commons

Session 2007 - 08
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Other Bills before Parliament

61

House of Commons

Thursday 21st February 2008

Public Bill Committee Proceedings

Pensions Bill

[Nineteenth and twentieth Sittings]

Provision for conditional indexation

Mr Nigel Waterson

Andrew Selous

Mr Stewart Jackson

Miss Julie Kirkbride

Mr John Greenway

Withdrawn  NC5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—

(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

Public Bill Committee Proceedings: 21st February 2008
62

Pensions Bill, continued

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

Trivial commutation limit

Danny Alexander

Paul Rowen

Not called  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”.’.

Role of the Information Commissioner

Danny Alexander

Paul Rowen

Withdrawn  NC7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—

(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.’.

Public Bill Committee Proceedings: 21st February 2008
63

Pensions Bill, continued

Retirement Income Fund

Mr Nigel Waterson

Andrew Selous

Mr Stewart Jackson

Mr John Greenway

Miss Julie Kirkbride

Not called  NC9

To move the following Clause:—

‘(1)
The Finance Act 2004 (c. 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

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

Public Bill Committee Proceedings: 21st February 2008
64

Pensions Bill, continued

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.’.

Withdrawal from a Retirement Income Fund

Mr Nigel Waterson

Andrew Selous

Mr Stewart Jackson

Mr John Greenway

Miss Julie Kirkbride

Not called  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”.’.

Minimum Retirement Income

Mr Nigel Waterson

Andrew Selous

Mr Stewart Jackson

Mr John Greenway

Miss Julie Kirkbride

Not called  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.

Public Bill Committee Proceedings: 21st February 2008
65

Pensions Bill, continued

(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.’.

Terminally ill claimants and the Pension Protection Fund

Nick Ainger

Mr David S. Borrow

Withdrawn  NC17

To move the following Clause:—

‘(1)
Where the Board is satisfied that a qualifying member is “terminally ill”, that

member, regardless of whether they have reached normal pension age, shall be

entitled to a lump sum payment of an amount equal to twice what would be their

annual entitlement under the scheme if they retired at normal pension age.

(2)
A person is “terminally ill” at any time if at that time they suffer from a

progressive disease and their death in consequence of that disease can reasonably

be expected within 6 months.’.

Open market option for annuities

Danny Alexander

Paul Rowen

Not selected  NC18

To move the following Clause:—

‘(1)
For the purposes of chapter one and four of this Act an annuity payable to the

member 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 payable until the end of a term certain even if it may, after the death

of the member during the term, end on the annuitant—

(a)
marrying,

(b)
reaching the age of 18, or

(c)
ceasing to be in full-time education.

(3)
An annuity is a level annuity if its amount does not vary from year to year.

(4)
An annuity is an increasing annuity if its amount increases from year to year.

(5)
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,

Public Bill Committee Proceedings: 21st February 2008
66

Pensions Bill, continued

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

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

(6)
“Freely marketable assets” means assets which are sold on the open market at a

price not determined by the member.’.

Defined benefit schemes: amendment of rules

Mr Nigel Waterson

Andrew Selous

Stewart Jackson

Mr John Greenway

Miss Julie Kirkbride

Withdrawn  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.’.

Personal account sharing on divorce

Mr Nigel Waterson

Andrew Selous

James Duddridge

Withdrawn  NC21

To move the following Clause:—

‘(1)
Any sum may be transferred from one personal account into another personal

account when—

(a)
a divorce or dissolution of a civil partnership leads to a court order or

agreement by mutual consent splitting the assets of the parties concerned;

(b)
the court order or agreement by mutual consent instructs that a proportion

of the value of the personal account of the transferor should be made the

property of the transferee; and

(c)
both the transferor and the transferee hold a personal account.

(2)
In this section “the transferor” and “the transferee” shall be defined as in section

83 of this Act.’.

Public Bill Committee Proceedings: 21st February 2008
67

Pensions Bill, continued

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

Danny Alexander

Paul Rowen

Withdrawn  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.’.

Financial Assistance Scheme to cover certain pension schemes

Mr Robert Flello

Withdrawn  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.’.