Pensions Bill

House of Commons

Session 2007 - 08
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Other Bills before Parliament

Pensions Bill

Pensions Bill
Schedule 6 — Pension compensation on divorce etc: Scotland
90

(b)
derive from rights under a pension scheme which were at
any             time the subject of a pension sharing order in relation
to the marriage or (as              the case may be) civil partnership or
a previous one between the same persons,
(c)
are or have been the subject of a pension compensation
5
sharing order              in relation to the marriage or (as the case
may be) civil partnership or a previous one between the
same persons, or
(d)
are or have been the subject of an order made under
section 12B(2) in              relation to the marriage or (as the case
10
may be) civil partnership or a previous one between the
same persons.
     (10)
Where, as regards PPF compensation, the parties to a marriage or
the partners in a civil partnership have in effect a qualifying
agreement which contains a term relating to pension
15
compensation sharing, the court shall not—
(a)
make an order under section 12B(2); or
(b)
make a pension compensation sharing order,

relating to the compensation unless it also sets aside the
agreement or term under section 16(1)(b) of this Act.
20
     (11)
For the purposes of subsection (10)—
(a)
the expression “term relating to pension compensation
sharing” is to be construed by reference to section 16(2AA)
of this Act; and
(b)
a qualifying agreement is one to which section 92(2) of the
25
Pensions Act 2008 relates.”
3
After section 8A insert—
“8B
Pension compensation sharing orders: apportionment of charges

The court may include in a pension compensation sharing order
provision about apportionment between the parties of any charge
30
under section 99 of the Pensions Act                2008 or under corresponding
Northern Ireland legislation.”
4
In section 10 (sharing of value of matrimonial property or partnership
property)—
(a)
in subsection (5A), for the words from “compensation payable” to
35
“that Chapter” substitute “PPF compensation”,
(b)
for subsection (8B) substitute—
“(8B)
The Scottish Ministers may by regulations make provision
for the purposes of                     this Act about—
(a)
calculation and verification of PPF compensation,
40
(b)
apportionment of PPF compensation.
(8C)
Regulations under subsection (8B) may include provision—
(a)
for calculation or verification in a manner approved
by a            prescribed person,
(b)
by reference to regulations under section 94 of the
45
Pensions Act 2008.”

Pensions Bill
Schedule 6 — Pension compensation on divorce etc: Scotland
91

5
In section 12A (orders for payment of capital sum: pensions lump sums), in
subsection (7ZC), for the words “Notwithstanding the provisions of section
8(4A), for” substitute “For”.
6
After section 12A insert—
“12B
Order for payment of capital sum: pension compensation
5
(1)
This section applies where the court makes an order under section
8(2) for payment of a capital sum (a “capital sum order”) by a party
to a marriage or a partner in a civil partnership (“the liable person”)
in circumstances where the matrimonial or (as the case may be)
partnership property within the meaning of section 10 includes any
10
rights to PPF compensation.
(2)
On making the capital sum order, the court may make an additional
order requiring the Board of the Pension Protection Fund, if at any
time any payment in respect of PPF compensation becomes due to
the liable person, to pay the whole or part of that payment to the
15
other party or (as the case may be) other partner (“the other person”).
(3)
Any such payment by the Board of the Pension Protection Fund—
(a)
shall discharge so much of its liability to the liable person as
corresponds to the amount of the payment, and
(b)
shall be treated for all purposes as a payment made by the
20
liable person in or towards the discharge of the person’s
liability under the capital sum order.
(4)
Where the liability of the liable person under the capital sum order
has been discharged in whole or in part, other than by a payment by
the Board of the Pension Protection Fund, the court may, on an
25
application by any person having an interest, recall the order or vary
the amount specified in such an order as appears to the court
appropriate in the circumstances.
(5)
The court may not make an additional order under subsection (2) in
relation to rights to PPF compensation that—
30
(a)
derive from rights under a pension scheme which, at the time
the Board of the Pension Protection Fund assumed
responsibility for the scheme, was subject to an order made
under section 12A(2) or (3) in relation to the marriage or (as
the case may be) civil partnership or a previous one between
35
the same persons,
(b)
derive from rights under a pension scheme which were at
any time the subject of a pension sharing order in relation to
the marriage or (as the case may be) civil partnership or a
previous one between the same persons,
40
(c)
are or have been the subject of a pension compensation
sharing order in relation to the marriage or (as the case may
be) civil partnership or a previous one between the same
persons, or
(d)
are or have been the subject of an order made under
45
subsection (2) in relation to the marriage or (as the case may
be) civil partnership or a previous one between the same
persons.”

Pensions Bill
Schedule 6 — Pension compensation on divorce etc: Scotland
92

7
In section 13 (order for periodical allowance), in subsection (2)(b), after the
words                        “pension sharing order” insert “or pension compensation sharing
order”.
8
In section 16 (agreements on financial provision)—
(a)
in subsection (2)(b), for the words “does not contain a term relating
5
to pension sharing” substitute “contains neither a term relating to
pension sharing nor a term relating to pension compensation
sharing”,
(b)
in subsection (2)(c), after the word “sharing” in the first place where
it occurs insert “or pension compensation sharing”,
10
(c)
in subsection (2)(c)(i), after the word “sharing” insert “or (as the case
may be) the term relating to pension compensation sharing”,
(d)
after subsection (2A), insert—
“(2AA)
For the purpose of subsection (2), a term relating to pension
compensation sharing is a term corresponding to provision
15
which may be made in a pension compensation sharing order
and satisfying the requirements set out in section 92(1)(g) of
the Pensions Act 2008.”
9
In section 27 (interpretation)—
(a)
in subsection (1), before the definition of “pension sharing order”
20
insert—
““pension compensation sharing order” is an order
which—
(a)
provides that one party’s shareable rights to
PPF              compensation be subject to pension
25
compensation sharing for                the benefit of the
other party, and
(b)
specifies the percentage value to be
transferred;”,
(b)
after subsection (1A) insert—
30
“(1B)
In subsection (1), in the definition of “pension compensation
sharing                  order”, 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
35
Ireland legislation.
(1C)
In this Act—
   “PPF compensation” means compensation payable
under the pension      compensation provisions,
   “the pension compensation provisions” means—
40
(a)
Chapter 3 of Part 2 of the Pensions Act 2004
and any                regulations or order made under it,
(b)
Chapter 1 of Part 3 of the Pensions Act 2008
and any                regulations or order made under it,
(c)
any provision corresponding to the provisions
45
mentioned in               paragraph (a) or (b) in force in
Northern Ireland.”

Pensions Bill
Schedule 7 — Amendments of Schedule 7 to the Pensions Act 2004
93

Schedule 7
Section 104

Amendments of Schedule 7 to the Pensions Act 2004
1
Schedule 7 to the Pensions Act 2004 (c. 35) (pension compensation
provisions) is amended as follows.
2
In paragraph 3(6), at the end, add “to the scheme”.
5
3
In paragraph 5(5), at the end, add “to the scheme”.
4
In paragraph 21(1) for “15, 18 and 19” substitute “15 to 19”.
5
For paragraph 21(2)(b) and (c) substitute—
“(c)
for paragraph 15(5) substitute—
    “(5)
Subject to sub-paragraph (5A), for the purposes of this
10
paragraph and paragraphs 16 and 17, “the accrued
amount” means the amount equal to the initial annual rate
of the pension which, under the admissible rules, the
deferred member is entitled to receive at normal benefit
age by virtue of his pension credit rights.
15
     (5A)
For the purposes of calculating the amounts mentioned in
sub-paragraph (4)(b) and (c), the accrued amount is to be
treated as reduced by such amount as is not attributable to
rights of the deferred member that involve the member
being credited by the scheme with notional pensionable
20
service.”,
(ca)
in paragraph 16(2)(a) before “pensionable service” insert
“notional”,
(cb)
in paragraph 17(2)(b) the reference to normal pension age
is to be read as a reference to normal benefit age,
25
(cc)
in paragraph 17(6) omit “, “the accrued amount””.”
6
In paragraph 25(3), after “before that person attains normal pension age”
insert “(or, in a case to which paragraph 21 applies, normal benefit age)”.
7
After paragraph 25 insert—
“Deferral of compensation
30
25A   (1)
Regulations may prescribe circumstances in which, and
conditions subject to which, a person may elect to defer
entitlement to any relevant compensation until some time after
attaining normal pension age (or, in a case to which paragraph 21
applies, normal benefit age).
35
      (2)
For this purpose “any relevant compensation” means any
compensation to which a person is or will be entitled under the
pension compensation provisions, except for compensation
payable in accordance with paragraph 3 (pensions in payment at
assessment date).
40
      (3)
The Board must determine the amount of the actuarial increase to
be applied to compensation to which a person is entitled by virtue
of this paragraph.

Pensions Bill
Schedule 7 — Amendments of Schedule 7 to the Pensions Act 2004
94

      (4)
Where, by virtue of this paragraph, periodic compensation is
payable to a person under paragraph 11 or 15 after that person
attains normal pension age (or, in a case to which paragraph 21
applies, normal benefit age)—
(a)
paragraph 12(2) applies as if the reference to the date on
5
which the active member attains normal pension age were
a reference to the date on which the compensation is
payable by virtue of this paragraph, and
(b)
paragraph 17(2)(b) applies as if the reference to the date on
which the deferred member attains normal pension age
10
were a reference to the date on which the compensation is
payable by virtue of this paragraph.”
8
In paragraph 33 make the existing provision sub-paragraph (1) and at the
end add—
    “(2)
Where the scheme is a variable-rate scheme, regulations under
15
this paragraph may have the effect that the amount of periodic
compensation payable to a person is, from a specified time, to be
different from the amount that would otherwise be payable under
this Schedule.
      (3)
A “variable-rate scheme” is a scheme under which the annual rate
20
of pension to which a person is entitled would have increased
(otherwise than by way of revaluation) or decreased at any time
after the assessment date, had the scheme continued in existence
until that time (and had the scheme rules remained unchanged).
      (4)
Where the scheme is a fixed-term scheme, regulations under this
25
paragraph may have the effect that no periodic compensation is to
be payable to a person from a specified time.
      (5)
A “fixed-term scheme” is a scheme under which a person’s
entitlement to benefits would have ceased at any time after the
assessment date, had the scheme continued in existence until that
30
time (and had the scheme rules remained unchanged).
      (6)
In this paragraph “a specified time” means a time determined in
accordance with regulations under this paragraph.”
9
In paragraph 34(1) after “ill health” insert “or otherwise”.
10
For paragraph 35(2)(a) substitute—
35
“(a)
in the case of a scheme to which sub-paragraph (3) applies,
any recent rule changes, and”.
11
For paragraph 35(3) substitute—
    “(3)
This sub-paragraph applies to a scheme if, in calculating the
protected liabilities in relation to the scheme at the relevant time,
40
the effect of taking into account—
(a)
any recent rule changes, and
(b)
any recent discretionary increases,

is that those liabilities are greater than they otherwise would be.”