Pensions Bill

House of Commons

Session 2007 - 08
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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