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25 | Quality requirement: personal pension schemes |
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(1) | A personal pension scheme satisfies the quality requirement in relation to a |
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jobholder if the following conditions are satisfied. |
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(2) | The first condition is that all of the benefits that may be provided to the |
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jobholder under the scheme are money purchase benefits. |
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(3) | The second condition is that, in relation to the jobholder, there is an agreement |
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between the scheme and the employer under which— |
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(a) | the employer must pay contributions in respect of the jobholder; |
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(b) | the employer’s contribution must be at least 3% of the amount of the |
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jobholder’s qualifying earnings in the pay reference period. |
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(4) | In subsection (5), “shortfall” means the difference (if any) between— |
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(a) | the employer’s contribution in respect of the jobholder, and |
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(b) | 8% of the amount of the jobholder’s qualifying earnings in the pay |
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(5) | The third condition is that if there is a shortfall there is an agreement between |
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the scheme and the jobholder under which the jobholder must pay |
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contributions which at least equal the shortfall. |
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(6) | The fourth condition is that, in relation to the jobholder, there are direct |
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payment arrangements (within the meaning of section 111A of the Pension |
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Schemes Act 1993 (c. 48)) between the jobholder and the employer. |
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(7) | The Secretary of State may by regulations provide that, where the scheme is an |
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appropriate scheme within the meaning of section 7(5) of the Pension Schemes |
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Act 1993, subsections (3)(b) and (4)(b) have effect with prescribed |
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(8) | A scheme does not fail to satisfy the quality requirement under this section |
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merely because the trustees or managers of the scheme may on any occasion |
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refuse to accept a contribution below an amount prescribed for the purposes of |
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this section on the grounds that it is below that amount. |
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26 | Transitional periods for money purchase and personal pension schemes |
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(1) | During the first transitional period for money purchase and personal pension |
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(a) | sections 19(1)(b) and 25(3)(b) have effect as if for “3%” there were |
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(b) | sections 19(1)(c) and 25(4)(b) have effect as if for “8%” there were |
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(2) | The first transitional period is a prescribed period of at least one year, |
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beginning with the coming into force of section 19. |
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(3) | During the second transitional period for money purchase and personal |
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(a) | sections 19(1)(b) and 25(3)(b) have effect as if for “3%” there were |
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(b) | sections 19(1)(c) and 25(4)(b) have effect as if for “8%” there were |
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(4) | The second transitional period is a prescribed period of at least one year, |
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beginning with the end of the first transitional period. |
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27 | Transitional period for defined benefits and hybrid schemes |
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(1) | Subsection (3) applies if, in relation to a person who on the employer’s first |
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enrolment date is a jobholder to whom section 3 applies, the conditions in |
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subsection (2) are satisfied, and continue to be satisfied during the transitional |
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period for defined benefits and hybrid schemes. |
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(2) | The conditions are that— |
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(a) | the jobholder has been employed by the employer for a continuous |
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period beginning before the employer’s first enrolment date, |
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(b) | at a time in that period before the employer’s first enrolment date, the |
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jobholder became entitled to become an active member of a defined |
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benefits scheme or a hybrid scheme, |
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(c) | the jobholder is, and has always since that time been, entitled to become |
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an active member of a defined benefits scheme or a hybrid scheme, and |
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(d) | the scheme to which that entitlement relates is a qualifying scheme, and |
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any scheme to which it has related on or after the employer’s first |
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enrolment date has been a qualifying scheme. |
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(3) | Where this subsection applies, section 3 has effect in relation to the jobholder |
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with the substitution for subsection (2) of the following subsection— |
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“(2) | The employer must make prescribed arrangements by which the |
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jobholder becomes an active member, with effect from the end of the |
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transitional period for defined benefits and hybrid schemes, of an |
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automatic enrolment scheme which is a defined benefits scheme or a |
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(4) | If at any time in the transitional period for defined benefits and hybrid schemes |
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the condition in subsection (2)(c) or (d) of this section ceases to be satisfied, |
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subsection (5) applies instead of subsection (3) (and the day after the last day |
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on which that condition is satisfied is referred to as “the closure date”). |
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(5) | Where this subsection applies, section 3 has effect in relation to the jobholder |
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with the substitution for subsection (2) of the following subsection— |
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“(2) | The employer must make prescribed arrangements by which the |
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(a) | becomes an active member, with effect from the closure date, of |
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an automatic enrolment scheme which is a defined benefits |
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scheme or a hybrid scheme, or |
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(b) | becomes an active member, with effect from the automatic |
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enrolment date, of an automatic enrolment scheme which is a |
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(6) | If the jobholder becomes a member of a scheme under arrangements made |
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under subsection (2)(b) of that section (as substituted by subsection (5))— |
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(a) | the employer’s contributions are payable with effect from the |
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automatic enrolment date; |
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|
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(b) | any requirement of the scheme rules (in accordance with section 19(1)) |
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for contributions to be payable by the jobholder does not apply in |
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respect of the period of the jobholder’s membership before the closure |
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(c) | regulations made for the purposes of section 3(2)(b) must secure that |
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the jobholder may pay, within a period prescribed by the regulations, |
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any contributions which would have been payable by the jobholder but |
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for paragraph (b) of this subsection. |
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(7) | Where subsection (3) or (5) of this section applies, section 3(3) and (4) apply as |
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if references to the automatic enrolment date were references to the day on |
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which arrangements would by virtue of this section fall to be made in respect |
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(8) | The transitional period for defined benefits and hybrid schemes is a prescribed |
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period beginning with the day on which section 3 comes into force. |
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(9) | In this section the “employer’s first enrolment date” means the first day on |
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which section 3 applies in the case of the employer (where that date falls within |
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the transitional period for defined benefits and hybrid schemes). |
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28 | Power of trustees to modify by resolution |
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(1) | The trustees of an occupational pension scheme may by resolution modify the |
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scheme with a view to enabling the scheme to comply with the conditions in |
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(2) | No modification may be made by virtue of subsection (1) without the consent |
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of the employer in relation to the scheme. |
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(3) | In the application of subsection (2) to a scheme in relation to which there is |
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more than one employer, references to the employer have effect as if they were |
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references to a person nominated by the employers, or by the rules of the |
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scheme, to act as the employers’ representative for the purposes of this section |
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or, if no such nomination is made, to all of the employers. |
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(4) | Regulations may provide that this section does not apply to occupational |
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pension schemes within a prescribed class or description. |
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29 | Deduction of contributions |
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An employer who arranges for a person to become a member of an |
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occupational pension scheme in accordance with section 3(2), 5(2), 6(3) or 8(2) |
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may deduct the person’s contributions to the scheme from the person’s |
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remuneration and pay them to the trustees or managers of the scheme. |
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Effect of failure to comply |
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30 | Effect of failure to comply |
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(1) | Contravention of any of the employer duty provisions does not give rise to a |
| 5 |
right of action for breach of statutory duty. |
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(2) | But nothing in the employer duty provisions or this Chapter affects any right |
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of action arising apart from those provisions. |
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(3) | In this Chapter, references to the employer duty provisions are references to |
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any provision of sections 2 to 10 or of regulations under those sections. |
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(4) | In relation to section 8 this Chapter applies as if references to a jobholder |
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included references to a worker to whom that section applies. |
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Compliance notices and unpaid contributions notices |
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(1) | The Pensions Regulator (referred to in this Chapter as the “Regulator”) may |
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issue a compliance notice to an employer if the Regulator is of the opinion that |
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the employer has contravened one or more of the employer duty provisions. |
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(2) | A compliance notice is a notice directing the employer to take, or refrain from |
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taking, the steps specified in the notice in order to remedy the contravention. |
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(3) | A compliance notice may, in particular— |
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(a) | state the period within which any step must be taken or must cease to |
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(b) | require the employer to provide within a specified period specified |
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information relating to the contravention; |
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(c) | require the employer to inform the Regulator, within a specified period, |
| 25 |
how the employer has complied or is complying with the notice; |
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(d) | state that, if the employer fails to comply with the requirements of the |
| |
notice, the Regulator may issue a fixed penalty notice under section 35. |
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(4) | The steps specified in the notice may, in particular, include such steps as the |
| |
Regulator thinks appropriate for placing the jobholder in the same position (as |
| 30 |
nearly as possible) as if the contravention had not occurred. |
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(5) | If the compliance notice is issued in respect of a failure to comply with an |
| |
enrolment duty and the specified steps relate to membership of a defined |
| |
benefits scheme, the notice may, in particular, require the employer to ensure |
| |
that the jobholder is entitled to the same benefits under the scheme as if the |
| 35 |
employer had complied with that duty. |
| |
(6) | The Secretary of State may by regulations make provision about the |
| |
application of sections 2 to 9 in relation to an employer to whom a compliance |
| |
notice is issued in respect of a failure to comply with an enrolment duty. |
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