Pensions Bill

House of Commons

Session 2007 - 08
Internet Publications
Other Bills before Parliament

Pensions Bill

Pensions Bill
Part 2 — Simplification etc
43

87
Revaluation of accrued benefits etc
(1)
Schedule 2, which—
(a)
amends Schedule 3 to the Pension Schemes Act 1993 (c. 48) (methods of
revaluing accrued pension benefits),
(b)
amends Schedule 7 to the Pensions Act 2004 (c. 35) (pension
5
compensation provisions), and
(c)
makes consequential amendments,

has effect.
(2)
The amendments made by Parts 1 and 3 of Schedule 2 do not apply in relation
to a revaluation period ending before this section comes into force.
10
(3)
In subsection (2) “revaluation period” has the same meaning as in paragraph 2
of Schedule 3 to the Pension Schemes Act 1993.
State pensions etc
88
Additional State Pension consolidation: Category A and graduated retirement
benefit
15
(1)
The Social Security Contributions and Benefits Act 1992 (c. 4) (the 1992 Act) is
amended as follows.
(2)
Section 45 (the additional pension in a Category A retirement pension) is
amended as follows.
(3)
In subsection (2) after “1999” insert “but before 6th April 2020”.
20
(4)
After subsection (2) insert—
“(2A)
The weekly rate of the additional pension in a Category A retirement
pension in any case where the pensioner attained pensionable age in a
tax year after 5th April 2020 shall be the sum of the following—
(a)
in relation to any tax year before the flat rate introduction year,
25
the uprated consolidated amount, calculated in accordance
with Schedule 4C to this Act; and
(b)
in relation to the flat rate introduction year and subsequent
years, the weekly equivalent of the amount calculated in
accordance with Schedule 4B to this Act.”
30
(5)
In subsection (6), for “and (2)” substitute “(2) and (2A)”.
(6)
Schedule 3, which inserts Schedule 4C to the 1992 Act, has effect.
(7)
In section 47 (increase of Category A retirement pension for invalidity), after
subsection (4) insert—
“(4A)
Any part of an additional pension resulting from an amount calculated
35
under paragraph 3 of Schedule 4C to this Act is to be disregarded for
the purposes of this section.”
(8)
Section 36 of the National Insurance Act 1965 (c. 51) (graduated retirement
benefit), as it continues in force as mentioned in section 62 of the 1992 Act, has
effect in relation to a person over pensionable age only if the person attained
40
pensionable age before 6th April 2020.

Pensions Bill
Part 3 — Pension compensation
Chapter 1 — Pension compensation on divorce etc
44

89
State pension credit: extension of assessed income period for those aged 75 or
over
(1)
Section 9 of the State Pension Credit Act 2002 (c. 16) (duration of assessed
income period) is amended as set out in subsections (2) to (4).
(2)
For subsection (1) substitute—
5
“(1)
An assessed income period shall (subject to the following subsections)
be—
(a)
in the case of a claimant who is under the age of 75 on the day
on which the relevant decision takes effect, the period of 5 years
beginning with that day;
10
(b)
in the case of a claimant who is aged 75 or over on that day, an
indefinite period beginning with that day.”
(3)
In paragraph (b) of subsection (2), for the words from “may” to “years”
substitute “shall specify a period that is shorter than 5 years”.
(4)
After subsection (5) insert—
15
“(6)
Where—
(a)
an assessed income period is brought to an end by the expiry of
a period of 5 years or more, and
(b)
the claimant is aged 80 or over at that time,

the assessed income period shall be treated as not ending at that time
20
but, subject to subsection (4) and provision made under subsection (5),
as continuing indefinitely.”
(5)
The amendments made by subsections (2) and (3) apply only where the
relevant decision (within the meaning given by section 6(5) of the State Pension
Credit Act 2002) takes effect on or after 6 April 2009.
25
(6)
The subsection inserted by subsection (4) ceases to have effect on 6 April 2014.
Part 3
Pension compensation
Chapter 1
Pension compensation on divorce etc
30
90
Scope of mechanism
(1)
Pension compensation sharing is available under this Chapter in relation to a
person’s shareable rights to PPF compensation.
(2)
For the purposes of this Chapter, a right of a person to PPF compensation is
“shareable” unless it is of a description specified by regulations made by the
35
Secretary of State.
91
Interpretation
In this Chapter—
“the Board” means the Board of the Pension Protection Fund;

Pensions Bill
Part 3 — Pension compensation
Chapter 1 — Pension compensation on divorce etc
45

“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 (pension protection)
and any regulations or order made under it,
5
(b)
this Chapter and any regulations or order made under it, and
(c)
any provision corresponding to the provisions mentioned in
paragraph (a) or (b) in force in Northern Ireland;
“prescribed” means prescribed by regulations made by the Secretary of
State;
10
“the relevant order or provision” means the pension compensation
sharing order, or provision contained in a qualifying agreement, which
gives rise to the pension compensation sharing;
“the transfer day” means the day on which the relevant order or provision
takes effect;
15
“the transferee” means the person for whose benefit the relevant order or
provision is made;
“the transferor” means the person to whose rights the relevant order or
provision relates.
92
Activation of pension compensation sharing
20
(1)
Section 93 applies on the taking effect of any of the following relating to a
person’s shareable rights to PPF compensation—
(a)
a pension compensation sharing order under the Matrimonial Causes
Act 1973 (c. 18);
(b)
a pension compensation sharing order under Schedule 5 to the Civil
25
Partnership Act 2004 (c. 33);
(c)
an order under Part 3 of the Matrimonial and Family Proceedings Act
1984 (c. 42) (financial relief in England and Wales in relation to overseas
divorce etc) corresponding to such an order as is mentioned in
paragraph (a);
30
(d)
an order under Schedule 7 to the Civil Partnership Act 2004 (financial
relief in England and Wales after overseas dissolution etc of a civil
partnership) corresponding to such an order as is mentioned in
paragraph (b);
(e)
an order under any provision corresponding to a provision mentioned
35
in any of paragraphs (a) to (d) in force in Northern Ireland.
(f)
a pension compensation sharing order under section 8 of the Family
Law (Scotland) Act 1985 (c. 37) (orders for financial provision);
(g)
any provision corresponding to provision which may be made by such
an order, and which—
40
(i)
is contained in a qualifying agreement between the parties to a
marriage or the partners in a civil partnership,
(ii)
is in such form as the Secretary of State may prescribe by
regulations, and
(iii)
takes effect on the grant, in relation to the marriage, of decree of
45
divorce or a declarator or nullity or (as the case may be) on the
grant, in relation to the civil partnership, of decree of
dissolution or of declarator of nullity,

except where the provision relates to the same rights to PPF
compensation as are the subject of an order made under section 12B(2)
50

Pensions Bill
Part 3 — Pension compensation
Chapter 1 — Pension compensation on divorce etc
46

of the Family Law (Scotland) Act 1985 (order for payment of capital
sum: pension compensation).
(2)
For the purposes of this Chapter, a qualifying agreement is an agreement
which—
(a)
has been entered into in such circumstances as the Secretary of State
5
may prescribe by regulations, and
(b)
is registered in the Books of Council and Session.
93
Creation of pension compensation debits and credits
(1)
On the application of this section—
(a)
the transferor’s shareable rights to PPF compensation become subject
10
to a debit of the appropriate amount, and
(b)
the transferee becomes entitled to a credit of that amount as against the
Board.
(2)
For the purposes of subsection (1) “the appropriate amount” means the
percentage specified in the relevant order or provision of the cash equivalent
15
of the relevant compensation on the valuation day.
(3)
For the purposes of subsection (2) “the relevant compensation” means the
payments or future payments to which, immediately before the transfer day,
the transferor is entitled under the pension compensation provisions by virtue
of the transferor’s shareable rights under those provisions.
20
(4)
The Secretary of State may by regulations provide for any description of
payment to be disregarded for the purposes of subsection (3).
(5)
For the purposes of this section “the valuation day” means such day within the
implementation period for the credit under subsection (1)(b) as the Board may
specify by notice in writing to the transferor and transferee.
25
(6)
The credit to which the transferee becomes entitled under subsection (1)(b) is
referred to in this Chapter as a “pension compensation credit”.
94
Cash equivalents
(1)
The Secretary of State may by regulations make provision about the calculation
and verification of cash equivalents for the purposes of section 93.
30
(2)
Regulations under this section may include provision for calculation and
verification in a manner approved by the Board.
95
Reduction of compensation
(1)
Where a person’s shareable rights to PPF compensation are subject to a pension
compensation debit, each payment or future payment—
35
(a)
to which the person is entitled under the pension compensation
provisions by virtue of those rights, and
(b)
which is a qualifying payment,

is reduced by the appropriate percentage.
(2)
For the purposes of subsection (1) a payment is “qualifying payment” if the
40
cash equivalent by reference to which the amount of the pension compensation
debit is determined includes an amount in respect of it.

Pensions Bill
Part 3 — Pension compensation
Chapter 1 — Pension compensation on divorce etc
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(3)
In this section “the appropriate percentage”, in relation to a pension
compensation debit, means the percentage specified in the pension
compensation sharing order or provision on which the debit depends.
96
Time for discharge of liability
(1)
This section applies where the Board is subject to a liability in respect of a
5
pension compensation credit.
(2)
The Board must discharge the liability before the end of the implementation
period for the credit.
(3)
The Secretary of State may make provision by regulations as to circumstances
in which the implementation period for the credit is extended for the purposes
10
of this section.
97
“Implementation period”
(1)
For the purposes of this Chapter, the implementation period for a pension
compensation credit is the period of 4 months beginning with the later of—
(a)
the transfer day, and
15
(b)
the first day on which the Board is in receipt of—
(i)
the relevant documents, and
(ii)
such information relating to the transferor and transferee as the
Secretary of State may prescribe by regulations.
(2)
In subsection (1)(b)(i) “the relevant documents” means copies of—
20
(a)
the relevant order or provision, and
(b)
the order or decree responsible for the divorce, dissolution or
annulment to which it relates.
(3)
Subsection (1) is subject to any provision made by regulations under section
99(2)(a).
25
(4)
The Secretary of State may by regulations—
(a)
make provision requiring the Board to notify the transferor and
transferee of the day on which the implementation period for the credit
begins;
(b)
provide for this section to have effect with modifications where the
30
credit depends on a pension compensation sharing order and the order
is the subject of an application for leave to appeal out of time.
98
Discharge of liability
(1)
This section applies where the Board is subject to a liability in respect of a
pension compensation credit.
35
(2)
The Board must discharge the liability by sending a notice to the transferee.
(3)
On the sending of the notice the transferee becomes entitled, with effect from
(and including) the transfer day, to compensation calculated in accordance
with Schedule 4.
(4)
For the purposes of that calculation, the initial annual rate of compensation is
40
an amount determined by the Board.

Pensions Bill
Part 3 — Pension compensation
Chapter 1 — Pension compensation on divorce etc
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(5)
The Board must determine that amount in such a way as to secure that the cash
equivalent value of the compensation to which the transferee becomes entitled
under subsection (3) equals the amount of the credit.
(6)
The Secretary of State may by regulations make provision about the calculation
of cash equivalents for the purposes of subsection (5).
5
(7)
The notice sent under this section must—
(a)
state that the transferee is entitled to periodic pension compensation
calculated under Schedule 4, and
(b)
specify the amount determined under subsection (4).
(8)
Where the transferee dies before liability in respect of the credit has been
10
discharged—
(a)
subsections (2) to (7) do not have effect in relation to the discharge of
liability in respect of the credit, and
(b)
liability in respect of the credit must be discharged in accordance with
regulations made by the Secretary of State.
15
99
Charges in respect of pension compensation sharing costs
(1)
The Secretary of State may by regulations make provision for the purpose of
enabling the Board to recover from the parties to pension compensation
sharing prescribed charges in respect of prescribed descriptions of pension
compensation sharing activity.
20
(2)
Regulations under subsection (1) may include—
(a)
provision for the start of the implementation period for a pension
compensation credit to be postponed in prescribed circumstances;
(b)
provision, in relation to payments in respect of charges recoverable
under the regulations, for reimbursement as between the parties to
25
pension compensation sharing.
(3)
For the purposes of regulations under subsection (1), the question of how much
of a charge recoverable under the regulations is attributable to a party to
pension compensation sharing is to be determined as follows—
(a)
where the relevant order or provision includes provision (“provision
30
for apportionment”) about the apportionment of charges under this
section, there is attributable to the party so much of the charge as is
apportioned to that party by that provision for apportionment;
(b)
where the relevant order or provision does not include provision for
apportionment, the charge is attributable to the transferor.
35
(4)
In subsection (1) the reference to pension compensation sharing activity is to
activity attributable directly or indirectly to the application of section 93 by
virtue of the relevant order or provision.
100
Supply of information about pension compensation in relation to divorce etc
(1)
The Secretary of State may by regulations—
40
(a)
make provision imposing on the Board requirements with respect to
the supply of information relevant to any power with respect to—
(i)
financial relief under Part 2 of the Matrimonial Causes Act 1973
(c. 18) or Part 3 of the Matrimonial and Family Proceedings Act

Pensions Bill
Part 3 — Pension compensation
Chapter 1 — Pension compensation on divorce etc
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1984 (c. 42) (England and Wales powers in relation to domestic
and overseas divorce etc),
(ii)
financial relief under Schedule 5 or 7 to the Civil Partnership
Act 2004 (c. 33) (England and Wales powers in relation to
domestic and overseas dissolution of civil partnerships etc),
5
(iii)
financial relief under any provision corresponding to a
provision mentioned in sub-paragraph (i) or (ii) in force in
Northern Ireland,
(iv)
orders for financial provision under section 8 of the Family Law
(Scotland) Act 1985 (c. 37) (orders for financial provision), or
10
(v)
provision as to pension sharing, or pension compensation
sharing, that is contained in an agreement that is a qualifying
agreement for the purposes of section 28(1)(b) and (c) of the
Welfare Reform and Pensions Act 1999 (c. 30) (activation of
pension sharing) or this Chapter;
15
(b)
make provision about calculation and verification in relation to the
valuation of PPF compensation for the purposes of regulations under
paragraph (a);
(c)
make provision for the purpose of enabling the Board to recover
prescribed charges in respect of providing information in accordance
20
with regulations under paragraph (a).
(2)
Regulations under subsection (1)(b) may include provision for calculation and
verification in a manner approved by the Board.
(3)
Regulations under subsection (1)(c) may include provision for the application
in prescribed circumstances, with or without modification, of any provision
25
made by virtue of section 99(2).
101
Supply of information about pension compensation sharing
The Secretary of State may by regulations require the Board to supply, to such
persons as the Secretary of State may specify in the regulations, such
information relating to anything which follows from the application of section
30
93 as the Secretary of State may so specify.
102
Pension compensation sharing and attachment on divorce etc
Schedule 5 (which amends matrimonial and civil partnership legislation for
the purpose of enabling the court to make pension compensation sharing
orders, and orders for the attachment of pension compensation, in connection
35
with proceedings in England and Wales) and Schedule 6 (which amends in
relation to pension compensation sharing orders similar legislation applying in
Scotland) have effect.
103
Consequential amendment
In section 173(3)(b) of the Pensions Act 2004 (c. 35) (sums paid out of Pension
40
Protection Fund) after “the pension compensation provisions” insert “or
Chapter 1 of Part 3 of the Pensions Act 2008”.