House of Commons Amendments

House of Commons

Session 2007 - 08
Internet Publications
Other Bills before Parliament

49
265
Page 84, line 2, after first “compensation” insert “that derive from rights under a

specified pension scheme are to”
266
Page 84, line 8, at end insert—

  “(3)
In sub-paragraph (1) “specified” means specified in the order.”
267
Page 84, line 19, leave out from beginning to “the” and insert “are”
268
Page 84 leave out lines 26 to 32 and insert—

      “()
For the purposes of sub-paragraph (1)(a), rights to PPF compensation

“are the subject of pension attachment” if any of the following three

conditions is met.

      ()
The first condition is that—

(a)
the rights derive from rights under a pension scheme in relation

to which an order was made under Part 1 imposing a

requirement by virtue of paragraph 25(2), and

(b)
that order, as modified under paragraph 31, remains in force.

      ()
The second condition is that—

(a)
the rights derive from rights under a pension scheme in relation

to which an order was made under Part 1 imposing a

requirement by virtue of paragraph 25(5), and

(b)
that order—

(i)
has been complied with, or

(ii)
has not been complied with and, as modified under

paragraph 32, remains in force.

      ()
The third condition is that—

(a)
the rights derive from rights under a pension scheme in relation

to which an order was made under Part 1 imposing a

requirement by virtue of paragraph 26, and

(b)
that order remains in force.”
Schedule 6
269
Page 89, line 38, leave out from “which” to “subject” in line 40 and insert “is”
270
Page 90, line 9, leave out “or have been”
271
Page 90, line 25, leave out “93(2)” and insert “(Activation of pension compensation

sharing: supplementary (Scotland))(1)”
272
Page 91, line 31, leave out from “which” to “subject” in line 33 and insert “is”
273
Page 91, line 45, leave out “or have been”
274
Page 92, line 25, after “compensation” insert “that derive from rights under a

specified compensation scheme (that is, specified in the order) are to”
275
Page 92, line 28, after “value” insert “or amount”
Schedule 7
276
Page 93, line 6, at end insert—

“
In paragraph 11(8) after “paragraph 24 (commutation),” insert—

50

“paragraph 25E (terminal illness lump sum),”.


In paragraph 13, after sub-paragraph (3) insert—

“(3A)
For the purposes of this paragraph, a person’s entitlement

under paragraph 11 is to be determined disregarding

paragraph 25E(1)(b) (successful applicant for terminal illness

lump sum loses entitlement to periodic compensation).”


In paragraph 14(9) after “paragraph 20 (compensation in respect of

scheme right to transfer payment or contribution refund),” insert—

“paragraph 25E (terminal illness lump sum),”.


In paragraph 15(6) after “paragraph 24 (commutation),” insert—

“paragraph 25E (terminal illness lump sum),”.


In paragraph 18, after sub-paragraph (3) insert—

“(3A)
For the purposes of this paragraph, a person’s entitlement

under paragraph 15 is to be determined disregarding

paragraph 25E(1)(b) (successful applicant for terminal illness

lump sum loses entitlement to periodic compensation).”


In paragraph 19(8) after “This paragraph is subject to—” insert—

“paragraph 25E (terminal illness lump sum),”.”
277
Page 94, line 12, at end insert—

“
After paragraph 25A (inserted by paragraph 7 above) insert—

“Terminal illness lump sum: eligibility

25B(1)
This paragraph applies to a person in relation to whom all of

the following conditions are met—

(a)
the person is terminally ill;

(b)
if the person lived to the relevant age, the person

would become entitled on attaining that age to relevant

compensation in relation to the scheme;

(c)
the person has not yet become entitled to any

compensation under the pension compensation

provisions in relation to the scheme;

(d)
the whole or any part of the person’s lifetime

allowance is available.

      (2)
A person to whom this paragraph applies may make an

application to the Board to commute the future entitlement

mentioned in sub-paragraph (1)(b) for a lump sum (“a

terminal illness lump sum”) payable on the granting of the

application.

      (3)
For the purposes of this Chapter a person is “terminally ill” at

any time if at that time the person suffers from a progressive

disease and the person’s death in consequence of that disease

can reasonably be expected within 6 months.

      (4)
In this paragraph—

“lifetime allowance”, in relation to a person, has the same

meaning as in Part 4 of the Finance Act 2004 (c. 12)

(pension schemes etc) (see section 218 of that Act);

51

“relevant age”, in relation to a person, means—

(a)
in relation to compensation entitlement to which

has been accelerated or deferred under

regulations under paragraph 25 or (as the case

may be) 25A, the age at which the person becomes

entitled to the compensation in accordance with

the regulations;

(b)
in relation to compensation entitlement to which

has not been so accelerated or deferred, normal

pension age (or, in a case to which paragraph 21

applies, normal benefit age).

“relevant compensation” means—

(a)
periodic compensation under paragraph 11 or 15,

or

(b)
lump sum compensation under paragraph 14 or

19;

Terminal illness lump sum: application

25C
An application for a terminal illness lump sum—

(a)
must be made in writing, either on a form approved by

the Board for the purposes of this paragraph or in such

other manner as the Board may accept as sufficient in

the circumstances of the case;

(b)
must be accompanied by such information as the

Board may require for the purpose of determining the

application.

Terminal illness lump sum: determination of application

25D(1)
The Board must determine an application for a terminal illness

lump sum in accordance with this paragraph.

      (2)
The Board must—

(a)
if satisfied that the conditions in paragraph 25B(1) are

met in relation to the applicant, grant the application;

(b)
in any other case (subject to sub-paragraph (3)), reject

the application.

      (3)
The Board may hold over the application for determination at

a later date if it is satisfied that—

(a)
although the condition in paragraph 25B(1)(a) is not

met in relation to the applicant, the applicant suffers

from a progressive disease and may become terminally

ill within six months, and

(b)
the conditions in paragraph 25B(1)(b) to (d) are met in

relation to the applicant.

Terminal illness lump sum: effect of successful application

25E(1)
If the Board grants an application for a terminal illness lump

sum, the applicant—

(a)
becomes entitled to a terminal illness lump sum

calculated in accordance with this paragraph, and

52

(b)
loses the entitlement the applicant otherwise would

have had on attaining the relevant age to relevant

compensation in relation to the scheme.

      (2)
The amount of the terminal illness lump sum is 2 times the

sum of—

(a)
the periodic compensation annual amount, and

(b)
the lump sum compensation annual amount.

      (3)
In sub-paragraph (2) “the periodic compensation annual

amount” means the annual amount to which the applicant

would have been entitled under paragraph 11 or 15 in relation

to the scheme in the year following the granting of the

application, if the applicant had attained the relevant age on

the granting of the application.

      (4)
In sub-paragraph (2) “the lump sum compensation annual

amount” means the annualised value of the lump sum to

which the applicant would have been entitled under

paragraph 14 or 19 in relation to the scheme on the granting of

the application, if the applicant had attained the relevant age

on the granting of the application.

      (5)
In sub-paragraph (4) “the annualised value” of a lump sum

means the annualised actuarially equivalent amount of that

sum, determined in accordance with actuarial factors

published by the Board.

      (6)
In this paragraph “relevant compensation” and “the relevant

age” have the same meanings as in paragraph 25B.

Terminal illness lump sum: information

25F(1)
Relevant information held by the Secretary of State about an

individual may be disclosed to the Board for use for a purpose

relating to—

(a)
the Board’s functions under paragraphs 25B to 25E;

(b)
the compliance of the trustees or managers of a pension

scheme with section 138 (limit on amount of scheme

benefits payable during an assessment period).

      (2)
In sub-paragraph (1) “relevant information” means

information held for the purposes of any function of the

Secretary of State relating to—

(a)
social security, or

(b)
any scheme made under section 286 (financial

assistance scheme).”
Before Schedule 8
278
Insert the following new Schedule—

53

“Contribution notices and financial support directions under Pensions Act

2004

Introduction

1
The Pensions Act 2004 (c. 35) is amended as follows.

Contribution notices: material detriment test

2    (1)
In section 38(5)(a) (main purpose or one of main purposes of act or

failure to prevent recovery of employer debt under section 75 of the

Pensions Act 1995 (c. 26) etc.), after “is of the opinion that” insert “the

material detriment test is met in relation to the act or failure (see section

38A) or that”.

      (2)
After section 38 insert—

“38A
Section 38 contribution notice: meaning of “material detriment

test”

(1)
For the purposes of section 38 the material detriment test is met

in relation to an act or failure if the Regulator is of the opinion

that the act or failure has detrimentally affected in a material way

the likelihood of accrued scheme benefits being received

(whether the benefits are to be received as benefits under the

scheme or otherwise).

(2)
In this section any reference to accrued scheme benefits being

received is a reference to benefits the rights to which have

accrued by the relevant time being received by, or in respect of,

the persons who were members of the scheme before that time.

(3)
In this section “the relevant time” means—

(a)
in the case of an act, the time of the act, or

(b)
in the case of a failure—

(i)
the time when the failure occurred, or

(ii)
where the failure continued for a period of time,

the time which the Regulator determines and

which falls within that period;


and, in the case of acts or failures to act forming part of a series,

any reference in this subsection to an act or failure is a reference

to the last of the acts or failures in that series.

(4)
In deciding for the purposes of section 38 whether the material

detriment test is met in relation to an act or failure, the Regulator

must have regard to such matters as it considers relevant,

including (where relevant)—

(a)
the value of the assets or liabilities of the scheme or of any

relevant transferee scheme,

(b)
the effect of the act or failure on the value of those assets

or liabilities,

(c)
the scheme obligations of any person,

(d)
the effect of the act or failure on any of those obligations

(including whether the act or failure causes the country or

territory in which any of those obligations would fall to

be enforced to be different),

54

(e)
the extent to which any person is likely to be able to

discharge any scheme obligation in any circumstances

(including in the event of insolvency or bankruptcy),

(f)
the extent to which the act or failure has affected, or might

affect, the extent to which any person is likely to be able

to do as mentioned in paragraph (e), and

(g)
such other matters as may be prescribed.

(5)
In subsection (4) “scheme obligation” means a liability or other

obligation (including one that is contingent or otherwise might

fall due) to make a payment, or transfer an asset, to—

(a)
the scheme, or

(b)
any relevant transferee scheme in respect of any persons

who were members of the scheme before the relevant

time.

(6)
In this section—

(a)
“relevant transferee scheme” means any work-based

pension scheme to which any accrued rights to benefits

under the scheme are transferred;

(b)
any reference to the assets or liabilities of any relevant

transferee scheme is a reference to those assets or

liabilities so far as relating to persons who were members

of the scheme before the relevant time.

(7)
For the purposes of subsection (6)(a) the reference to the transfer

of accrued rights of members of a pension scheme to another

pension scheme includes a reference to the extinguishing of those

accrued rights in consequence of the obligation to make a

payment, or transfer an asset, to that other scheme.

(8)
In this section—

(a)
“work-based pension scheme” has the meaning given by

section 5(3);

(b)
any reference to rights which have accrued is to be read

in accordance with section 67A(6) and (7) of the Pensions

Act 1995 (reading any reference in those subsections to a

subsisting right as a reference to a right which has

accrued).

(9)
In deciding for the purposes of this section whether an act or

failure has detrimentally affected in a material way the

likelihood of accrued scheme benefits being received, the

following provisions of this Act are to be disregarded—

(a)
Chapter 3 of Part 2 (the Board of the Pension Protection

Fund: pension protection), and

(b)
section 286 (the financial assistance scheme for members

of certain pension schemes).

(10)
Regulations may amend any provision of subsections (4) to (8).

38B
Section 38 contribution notice issued by reference to material

detriment test: defence

(1)
This section applies where—

(a)
a warning notice is given to any person (“P”) in respect of

a contribution notice under section 38, and

55

(b)
the contribution notice under consideration would be

issued wholly or partly by reference to the Regulator’s

opinion that the material detriment test is met in relation

to an act or deliberate failure to act to which P was a

party.

(2)
If the Regulator is satisfied that P has shown that—

(a)
conditions A and C are met, and

(b)
where applicable, condition B is met,


the Regulator must not issue the contribution notice by reference

to its being of the opinion mentioned in subsection (1)(b).

(3)
Condition A is that, before becoming a party to the act or failure,

P gave due consideration to the extent to which the act or failure

might detrimentally affect in a material way the likelihood of

accrued scheme benefits being received.

(4)
Condition B is that, in any case where as a result of that

consideration P considered that the act or failure might have

such an effect, P took all reasonable steps to eliminate or

minimise the potential detrimental effects that the act or failure

might have on the likelihood of accrued scheme benefits being

received.

(5)
Condition C is that, having regard to all relevant circumstances

prevailing at the relevant time, it was reasonable for P to

conclude that the act or failure would not detrimentally affect in

a material way the likelihood of accrued scheme benefits being

received.

(6)
P is to be regarded as giving the consideration mentioned in

condition A only if P has made the enquiries, and done the other

acts, that a reasonably diligent person would have made or done

in the circumstances.

(7)
For the purposes of condition C—

(a)
“the relevant time” means the time at which the act

occurred or the failure to act first occurred;

(b)
the reference to the circumstances mentioned in that

condition is a reference to those circumstances of which P

was aware, or ought reasonably to have been aware, at

that time (including acts or failures to act which have

occurred before that time and P’s expectation at that time

of other acts or failures to act occurring).

(8)
In the case of acts or failures to act forming part of a series, P is to

be regarded as having shown the matters mentioned in

subsection (2) if P shows in the case of each of the acts or failures

in the series that—

(a)
conditions A and C are met, and (where applicable)

condition B is met, in relation to the act or failure, or

(b)
the act or failure was one of a number of acts or failures (a

“group” of acts or failures) selected by P in relation to

which the following matters are shown.

(9)
The matters to be shown are that—