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Pensions Bill


Pensions Bill
Schedule 4 — Pension compensation payable on discharge of pension compensation credit
Part 4 — Provisions applicable irrespective of age of transferee on transfer day

76

 

paragraph of Schedule 7 that is attributable to the transferor’s post-1997

service.

           

Paragraph 28(4) of that Schedule applies for the purpose of attributing

amounts to the transferor’s post-1997 service under this sub-paragraph.

      (6)  

Where the transferor’s PPF compensation is payable otherwise than as

5

mentioned in sub-paragraph (5), “the indexed proportion” is such

proportion as is determined in accordance with regulations made by the

Secretary of State.

      (7)  

Where the compensation payable to the transferee is—

(a)   

reduced as a result of the commutation of periodic compensation

10

under paragraph 9, or

(b)   

restricted under regulations under paragraph 13 (compensation

cap),

           

the references in the definition of “the underlying rate” in sub-paragraph (4)

above to the initial annual compensation rate and the revaluation amount

15

are to that rate and that amount as so restricted or reduced.

      (8)  

The definition of “the appropriate percentage” in sub-paragraph (4) is

subject to paragraph 15 (power of Board to alter rates of revaluation and

indexation).

      (9)  

In this paragraph—

20

“post-1997 service” has the same meaning as in paragraph 28 of

Schedule 7 to the Pensions Act 2004 (c. 35) (annual increase in

periodic pension compensation);

“the commutation percentage”, in relation to periodic compensation,

means the percentage of that compensation commuted under

25

paragraph 9.

Compensation cap

13    (1)  

The Secretary of State may by regulations make provision for restricting the

amount of periodic compensation payable under this Schedule in a case in

which, on the transfer day, the transferor is not entitled to present payment

30

of PPF compensation.

      (2)  

Without prejudice to the generality of sub-paragraph (1), the regulations

may restrict an amount payable to a person in any period by reference to the

compensation cap specified by the Secretary of State by order under

paragraph 26(7) of Schedule 7 to the Pensions Act 2004 (compensation cap).

35

Compensation in form of dependant’s benefits

14    (1)  

The Secretary of State may by regulations make provision for compensation

to be payable to—

(a)   

prescribed descriptions of partners, or

(b)   

prescribed descriptions of dependants,

40

           

of prescribed descriptions of transferees.

      (2)  

The regulations may, in particular—

(a)   

provide for compensation in the form of periodic or lump sum

payments;

 
 

Pensions Bill
Schedule 5 — Pension compensation on divorce etc: England and Wales
Part 1 — Amendments of the Matrimonial Causes Act 1973

77

 

(b)   

provide for periodic compensation to be payable for a prescribed

period;

(c)   

apply paragraph 12 (annual increases in respect of periodic

compensation), with or without modifications, in respect of

compensation in the form of periodic payments.

5

Board’s power to alter rates of revaluation and indexation

15    (1)  

The Board may determine the percentage that is to be—

(a)   

the maximum revaluation rate for the purposes of paragraph 8(4)(b);

(b)   

the appropriate percentage for the purposes of paragraph 12(2).

      (2)  

Before making a determination under this paragraph the Board must—

10

(a)   

consult such persons as it considers appropriate, and

(b)   

publish details of the proposed determination in such manner as it

considers appropriate and consider any representations made in

respect of it.

      (3)  

The rate determined under this paragraph may be nil.

15

      (4)  

A determination under this paragraph may be expressed so as to have effect

for a limited period.

      (5)  

A determination under sub-paragraph (1)(b)—

(a)   

has effect in relation to future increases under paragraph 12 only,

and

20

(b)   

may be expressed to have effect—

(i)   

in all cases (whether the entitlement to the periodic

compensation first arose before or after the date the

determination is made), or

(ii)   

only in cases where entitlement to the periodic compensation

25

first arose on or after a date determined by the Board.

      (6)  

Notice of any determination under this paragraph must be published in

such manner as the Board considers appropriate.

Schedule 5

Section 102

 

Pension compensation on divorce etc: England and Wales

30

Part 1

Amendments of the Matrimonial Causes Act 1973

1          

The Matrimonial Causes Act 1973 (c. 18) is amended as follows.

2          

After section 21A (pension sharing orders) insert—

“21B    

Pension compensation sharing orders

35

(1)   

For the purposes of this Act, a pension compensation sharing order

is an order which—

 
 

Pensions Bill
Schedule 5 — Pension compensation on divorce etc: England and Wales
Part 1 — Amendments of the Matrimonial Causes Act 1973

78

 

(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.

(2)   

In subsection (1)—

5

(a)   

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;

(b)   

“party” means a party to a marriage.

10

21C     

Pension compensation: interpretation

In this Part—

“PPF compensation” means compensation payable under the

pension compensation provisions;

“the pension compensation provisions” means—

15

(a)   

Chapter 3 of Part 2 of the Pensions Act 2004 (pension

protection) and any regulations or order made under

it,

(b)   

Chapter 1 of Part 3 of the Pensions Act 2008 (pension

compensation on divorce etc) and any regulations or

20

order made under it, and

(c)   

any provision corresponding to the provisions

mentioned in paragraph (a) or (b) in force in Northern

Ireland.”

3          

After section 24D (pension sharing orders: apportionment of charges)

25

insert—

“24E    

Pension compensation sharing orders in connection with divorce

proceedings

(1)   

On granting a decree of divorce or a decree of nullity of marriage or

at any time thereafter (whether before or after the decree is made

30

absolute), the court may, on an application made under this section,

make a pension compensation sharing order in relation to the

marriage.

(2)   

A pension compensation sharing order under this section is not to

take effect unless the decree on or after which it is made has been

35

made absolute.

(3)   

A pension compensation sharing order under this section may not be

made in relation to rights to PPF compensation that—

(a)   

derive from rights under a pension scheme that were the

subject of pension attachment,

40

(b)   

derive from rights under a pension scheme that were the

subject of pension sharing between the parties to the

marriage,

(c)   

are the subject of pension compensation attachment, or

(d)   

are or have been the subject of pension compensation sharing

45

between the parties to the marriage.

 
 

Pensions Bill
Schedule 5 — Pension compensation on divorce etc: England and Wales
Part 1 — Amendments of the Matrimonial Causes Act 1973

79

 

(4)   

For the purposes of subsection (3)(a), rights under a pension scheme

“were the subject of pension attachment” if, at the time the Board of

the Pension Protection Fund assumed responsibility for the scheme

under Chapter 3 of Part 2 of the Pensions Act 2004 or under

corresponding Northern Ireland legislation, there was in force a

5

requirement imposed by virtue of section 25B or 25C below relating

to those rights.

(5)   

For the purposes of subsection (3)(b), rights under a pension scheme

“were the subject of pension sharing between the parties to the

marriage” if the rights were at any time the subject of a pension

10

sharing order in relation to the marriage or a previous marriage

between the same parties.

(6)   

For the purposes of subsection (3)(c), rights to PPF compensation

“are the subject of pension compensation attachment” if there is in

force a requirement imposed by virtue of section 25F relating to

15

them.

(7)   

For the purposes of subsection (3)(d), rights to PPF compensation

“are or have been the subject of pension compensation sharing

between the parties to the marriage” if they are or have ever been the

subject of a pension compensation sharing order in relation to the

20

marriage or a previous marriage between the same parties.

24F     

Pension compensation sharing orders: duty to stay

(1)   

No pension compensation sharing order may be made so as to take

effect before the end of such period after the making of the order as

may be prescribed by regulations made by the Lord Chancellor.

25

(2)   

The power to make regulations under this section shall be

exercisable by statutory instrument which shall be subject to

annulment in pursuance of a resolution of either House of

Parliament.

24G     

Pension compensation sharing orders: apportionment of charges

30

The court may include in a pension compensation sharing order

provision about the apportionment between the parties of any

charge under section 99 of the Pensions Act 2008 (charges in respect

of pension compensation sharing costs), or under corresponding

Northern Ireland legislation.”

35

4     (1)  

Section 25 (matters to which court is to have regard) is amended as follows.

      (2)  

In the heading, for “and 24A” substitute “, 24A, 24B and 24E”.

      (3)  

In subsections (1) and (2) for “or 24B” substitute “, 24B or 24E”.

5          

In section 25A(1) (exercise of court’s powers in favour of party to marriage

on decree of divorce or nullity of marriage) for “or 24B” substitute “, 24B or

40

24E”.

6          

In section 25E(9) (the Pension Protection Fund) omit the definition of “PPF

compensation”.

 
 

Pensions Bill
Schedule 5 — Pension compensation on divorce etc: England and Wales
Part 1 — Amendments of the Matrimonial Causes Act 1973

80

 

7          

After section 25E insert—

“25F    

Attachment of pension compensation

(1)   

This section applies where, having regard to any PPF compensation

to which a party to the marriage is or is likely to be entitled, the court

determines to make an order under section 23.

5

(2)   

To the extent to which the order is made having regard to such

compensation, the order may require the Board of the Pension

Protection Fund, if at any time any payment in respect of PPF

compensation becomes due to the party with compensation rights, to

make a payment for the benefit of the other party.

10

(3)   

The order must express the amount of any payment required to be

made by virtue of subsection (2) as a percentage of the payment

which becomes due to the party with compensation rights.

(4)   

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

(a)   

shall discharge so much of its liability to the party with

15

compensation rights as corresponds to the amount of the

payment, and

(b)   

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

party with compensation rights in or towards the discharge

of that party’s liability under the order.

20

(5)   

Where the party with compensation rights has a right to commute

any PPF compensation, the order may require that party to exercise

it to any extent; and this section applies to any payment due in

consequence of commutation in pursuance of the order as it applies

to other payments in respect of PPF compensation.

25

(6)   

The power conferred by subsection (5) may not be exercised for the

purpose of commuting compensation payable to the party with

compensation rights to compensation payable to the other party.

(7)   

The power conferred by subsection (2) or (5) may not be exercised in

relation to rights to PPF compensation that—

30

(a)   

derive from rights under a pension scheme that were at any

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

marriage, or a previous marriage between the same parties,

or

(b)   

are or have ever been the subject of a pension compensation

35

sharing order in relation to the marriage or a previous

marriage between the same parties.

25G     

Pension compensation: supplementary

(1)   

The Lord Chancellor may by regulations—

(a)   

make provision, in relation to any provision of section 25F

40

which authorises the court making an order under section 23

to require the Board of the Pension Protection Fund to make

a payment for the benefit of the other party, as to the person

to whom, and the terms on which, the payment is to be made;

(b)   

make provision, in relation to payment under a mistaken

45

belief as to the continuation in force of a provision included

by virtue of section 25F in an order under section 23, about

 
 

Pensions Bill
Schedule 5 — Pension compensation on divorce etc: England and Wales
Part 1 — Amendments of the Matrimonial Causes Act 1973

81

 

the rights or liabilities of the payer, the payee or the person to

whom the payment was due;

(c)   

require notices to be given in respect of changes of

circumstances relevant to orders under section 23 which

include provision made by virtue of section 25F;

5

(d)   

make provision for the Board of the Pension Protection Fund

to be discharged in prescribed circumstances from a

requirement imposed by virtue of section 25F;

(e)   

make provision about calculation and verification in relation

to the valuation of PPF compensation for the purposes of the

10

court’s functions in connection with the exercise of any of its

powers under this Part.

(2)   

Regulations under subsection (1)(e) may include—

(a)   

provision for calculation or verification in accordance with

guidance from time to time prepared by a prescribed person;

15

(b)   

provision by reference to regulations under section 94 of the

Pensions Act 2008.

(3)   

Regulations under subsection (1) may make different provision for

different cases.

(4)   

The power to make regulations under subsection (1) is exercisable by

20

statutory instrument which shall be subject to annulment in

pursuance of a resolution of either House of Parliament.

(5)   

In this section and section 25F—

“the party with compensation rights” means the party to the

marriage who is or is likely to be entitled to PPF

25

compensation, and “the other party” means the other party to

the marriage;

“prescribed” means prescribed by regulations.”

8     (1)  

Section 31 (variation, discharge etc of certain orders for financial relief) is

amended as follows.

30

      (2)  

In subsection (2)(dd)—

(a)   

omit “or” at the end of sub-paragraph (i);

(b)   

at the end of sub-paragraph (ii) add “or”;

(c)   

after that sub-paragraph insert—

“(iii)   

section 25F(2),”;

35

(d)   

in the closing words, after “pension rights” insert “or pension

compensation rights”.

      (3)  

In subsection (2)(g) after “a pension sharing order under section 24B above”

insert “, or a pension compensation sharing order under section 24E above,”.

      (4)  

In subsection (4B) after “pension sharing order” insert “, or a pension

40

compensation sharing order,”.

      (5)  

In subsection (4C) after “pension sharing order” insert “, or a pension

compensation sharing order,”.

      (6)  

In subsection (5) after “pension sharing order” insert “or pension

compensation sharing order”.

45

 
 

Pensions Bill
Schedule 5 — Pension compensation on divorce etc: England and Wales
Part 2 — Amendments of the Matrimonial and Family Proceedings Act 1984

82

 

      (7)  

In subsection (7B) after paragraph (ba) insert

“(bb)   

a pension compensation sharing order;”.

      (8)  

After subsection (7G) insert—

“(7H)   

Subsections (3) to (8) of section 24E above apply in relation to a

pension compensation sharing order under subsection (7B) above as

5

they apply in relation to a pension compensation sharing order

under that section.”

9          

After section 40A (appeals relating to pension sharing orders which have

taken effect) insert—

“40B    

Appeals relating to pension compensation sharing orders which have

10

taken effect

(1)   

This section applies where an appeal against a pension

compensation sharing order is begun on or after the day on which

the order takes effect.

(2)   

If the Board of the Pension Protection Fund has acted to its detriment

15

in reliance on the taking effect of the order the appeal court—

(a)   

may not set aside or vary the order;

(b)   

may make such further orders (including a pension

compensation sharing order) as it thinks fit for the purpose of

putting the parties in the position it considers appropriate.

20

(3)   

In determining for the purposes of subsection (2) whether the Board

has acted to its detriment the appeal court may disregard any

detriment which in the court’s opinion is insignificant.

(4)   

Section 24F (duty to stay) only applies to a pension compensation

sharing order under this section if the decision of the appeal court

25

can itself be the subject of an appeal.”

Part 2

Amendments of the Matrimonial and Family Proceedings Act 1984

10         

The Matrimonial and Family Proceedings Act 1984 (c. 42) is amended as

follows.

30

11         

In section 17 (orders for financial provision and property adjustment) at the

end of subsection (1) add—

“(c)   

if the marriage has been dissolved or annulled, make an

order which would, within the meaning of that Part of that

Act, be a pension compensation sharing order in relation to

35

the marriage.”

12         

In section 18(7) (matters to which court to have regard) for paragraph (c)

substitute—

“(c)   

“PPF compensation” means compensation payable under—

(i)   

Chapter 3 of Part 2 of the Pensions Act 2004 (pension

40

protection) or any regulations or order made under it,

(ii)   

Chapter 1 of Part 3 of the Pensions Act 2008 (pension

compensation sharing) or any regulations or order

made under it, or

 
 

 
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