House of Commons Amendments

House of Commons

Session 2007 - 08
Internet Publications
Other Bills before Parliament

56

(a)
before becoming a party to the first of the acts or failures

in the group, condition A is met in relation to the effect of

the acts or failures in the group taken together,

(b)
condition B is (where applicable) met in relation to that

effect, and

(c)
condition C is then met in relation to each of the acts or

failures in the group (determined at the time at which

each act or failure concerned occurred or first occurred).

(10)
If at any time P considers that condition C will not be met in

relation to any particular act or failure in the group—

(a)
the previous acts or failures in the group are to be

regarded as a separate group for the purposes of

subsection (8), and

(b)
P may then select another group consisting of the

particular act or failure concerned, and any subsequent

act or failure, in relation to which P shows the matters

mentioned in subsection (9).


Nothing in paragraph (b) is to be read as preventing P from

showing the matters mentioned in subsection (8)(a).

(11)
If—

(a)
P is unable to show in the case of each of the acts or

failures in the series that the matters set out in subsection

(8)(a) or (b) are met, but

(b)
does show in the case of some of them that those matters

are met,


the acts or failures within paragraph (b) are not to count for the

purposes of section 38A as acts or failures to act in the series.

(12)
In this section—

(a)
“a warning notice” means a notice given as mentioned in

section 96(2)(a);

(b)
any reference to an act or failure to which a person is a

party has the same meaning as in section 38(6)(a);

(c)
any reference to the accrued scheme benefits being

received has the same meaning as in section 38A;


and subsection (9) of section 38A applies for the purposes of

conditions A to C as it applies for the purposes of that section.

(13)
Regulations may amend this section.”

3
In section 90(2) (the matters in relation to which the Pensions Regulator

must issue codes of practice), after paragraph (a) insert—

“(aa)
the circumstances in which the Regulator expects to issue

contribution notices under section 38 as a result of being

of the opinion that the material detriment test is met in

relation to an act or failure;”.

4
In section 96 (standard procedure), after subsection (1) insert—

“(1A)
In any case where—

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

contribution notice under section 38, and

(b)
the contribution notice under consideration would be

issued wholly or partly by reference to the Regulator’s

57

opinion that the material detriment test is met in relation

to an act or failure,


the standard procedure must provide for the following matters.

(1B)
The matters are—

(a)
a requirement for the warning notice to explain the

general effect of section 38B, and

(b)
a requirement for the person to be given an opportunity

before the contribution notice is issued to show the

matters mentioned in subsection (2) of that section.”

5
In section 316(2) (subordinate legislation that is subject to affirmative

resolution procedure), before paragraph (a) insert—

“(za)
regulations under section 38A(10) or 38B(13) (section 38

contribution notices: “the material detriment test”);”.

Contribution notices: acting or failing to act otherwise than in good faith

6
In section 38(5) (acts or failures to act in relation to which Pensions

Regulator may issue contribution notices), in paragraph (a)(ii), omit

“otherwise than in good faith,”.

Whether reasonable for Pensions Regulator to issue contribution notice

7    (1)
Section 38 (contribution notices where avoidance of employer debt) is

amended as follows.

      (2)
In subsection (3) (conditions which must be met before Pensions

Regulator can issue contribution notice), for paragraph (d) substitute—

“(d)
the Regulator is of the opinion that it is reasonable to

impose liability on the person to pay the sum specified in

the notice, having regard to—

(i)
the extent to which, in all the circumstances of the

case, it was reasonable for the person to act, or fail

to act, in the way that the person did, and

(ii)
such other matters as the Regulator considers

relevant, including (where relevant) the matters

falling within subsection (7).”

      (3)
In subsection (7) (list of relevant matters for purposes of subsection

(3)(d))—

(a)
for the words from the beginning to “the following matters—”

substitute “The matters within this subsection are—”; and

(b)
after paragraph (e) insert—

“(ea)
the value of any benefits which directly or

indirectly the person receives, or is entitled to

receive, from the employer or under the scheme;

(eb)
the likelihood of relevant creditors being paid and

the extent to which they are likely to be paid;”.

      (4)
After that subsection insert—

“(7A)
In subsection (7)(eb) “relevant creditors” means—

(a)
creditors of the employer, and

(b)
creditors of any other person who has incurred a liability

or other obligation (including one that is contingent or

58

otherwise might fall due) to make a payment, or transfer

an asset, to the scheme.”

Contribution notices: series of acts or failures to act

8    (1)
In section 38 (contribution notices where avoidance of employer debt), at

the end insert—

“(12)
Subsection (13) applies if the Regulator is of the opinion that—

(a)
a person was a party to a series of acts or failures to act,

(b)
each of the acts or failures in the series falls within

subsection (5)(b) and (c), and

(c)
the material detriment test is met in relation to the series,

or the main purpose or one of the main purposes of the

series was as mentioned in subsection (5)(a)(i) or (ii).

(13)
The series of acts or failures to act is to be regarded as an act or

failure to act falling within subsection (5) (and, accordingly, the

reference in subsection (6)(b)(i) to the act or failure to act falling

with subsection (5) is to the first of the acts or failures to act in the

series).”

      (2)
In section 39 (the sum specified in a section 38 contribution notice)—

(a)
in subsection (4), after “means” insert “(subject to subsection

(4A)”; and

(b)
after subsection (4) insert—

“(4A)
In the case of a series of acts or failures to act, “the

relevant time” is determined by reference to whichever of

the acts or failures in the series is, in the Regulator’s

opinion, most appropriate.”

Contribution notices and financial support directions: bulk transfers

9
After section 39 (the sum specified in a section 38 contribution notice)

insert—

“39A
Section 38 contribution notice: transfer of members of the scheme

(1)
This section applies where—

(a)
the Regulator is of the opinion that in relation to a scheme

(“the initial scheme”) in relation to which section 38

applies—

(i)
an act or failure to act falling within subsection (5)

of that section has occurred (or first occurred) at

any time, and

(ii)
the other conditions in that section for issuing a

contribution notice are met in relation to the initial

scheme (or, but for any transfer falling within

paragraph (b), would be met), and

(b)
the accrued rights of at least two persons who were

members of the initial scheme are transferred at that or

any subsequent time to one or more work-based pension

schemes (whether by virtue of the act or otherwise).

(2)
The Regulator may issue a contribution notice under section 38

in relation to any transferee scheme (and, accordingly, any

59

reference in section 40 or 41 to the scheme is to the transferee

scheme).

(3)
In the case of any contribution notice issued by virtue of

subsection (2) to any transferee scheme which is not within

subsection (5)(a) or (b), section 39 has effect as if any reference in

that section to the scheme were a reference to whichever of—

(a)
the initial scheme, and

(b)
the transferee scheme,


the Regulator determines to be more appropriate in the

circumstances.

(4)
In any case where section 39 has effect in relation to the transferee

scheme by virtue of subsection (3), any reference in that section

to a debt under section 75 of the 1995 Act is a reference to so much

of that debt as, in the Regulator’s opinion, is attributable to those

members of the transferee scheme who were members of the

initial scheme.

(5)
In the case of any contribution notice issued by virtue of

subsection (2) to any transferee scheme which is—

(a)
a scheme to which section 75 of the 1995 Act does not

apply, or

(b)
a scheme to which that section does apply in a case where

the liabilities of the scheme that would be taken into

account for the purposes of that section do not relate to

the members of the initial scheme,


the sum specified by the Regulator in the notice is determined in

accordance with regulations (and not in accordance with section

39).

(6)
The Regulator may also issue a direction to the trustees or

managers of any transferee scheme requiring them to take

specified steps to secure that the sum payable under the notice is

applied for the benefit of the members of the transferee scheme

who were members of the initial scheme.

(7)
If the trustees or managers fail to comply with a direction issued

to them under subsection (6), section 10 of the 1995 Act (civil

penalties) applies to any trustee or manager who has failed to

take all reasonable steps to secure compliance.

39B
Section 39A: supplemental

(1)
In section 39A a “transferee scheme”, in relation to any time,

means any work-based pension scheme—

(a)
to which the accrued rights of at least two persons who

were members of the initial scheme have been

transferred, and

(b)
of which any of those persons are members at that time.

(2)
For the purposes of section 39A(1) and subsection (1) above it

does not matter whether any rights are transferred to a work-

based pension scheme directly from the initial scheme or

following one or more other transfers to other work-based

pension schemes.

60

(3)
For the purposes of section 39A and this section references to the

transfer of accrued rights of members of a pension scheme to

another pension scheme include references to the extinguishing

of those accrued rights in consequence of the obligation to make

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

(4)
In section 39A and this section—

(a)
“the 1995 Act” means the Pensions Act 1995;

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

section 5(3);

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

in accordance with section 67A(6) and (7) of the 1995 Act

(reading any reference in those subsections to a subsisting

right as a reference to a right which has accrued).

(5)
Section 39A applies even if the initial scheme—

(a)
is wound up as a result of any transfer falling within

subsection (1)(b) of that section, or

(b)
otherwise ceases to exist at the time of the transfer or at

any subsequent time.

(6)
Accordingly, in any such case, in subsection (1) of that section—

(a)
the reference to a scheme to which section 38 applies is a

reference to a scheme which was such a scheme before the

transfer;

(b)
the reference to any conditions in section 38 being met is

a reference to any conditions in that section that, but for

the transfer, would have been met in relation to the

scheme.

(7)
Nothing in section 39A or this section is to be read as preventing

the Regulator from issuing a contribution notice in relation to the

initial scheme.

(8)
Regulations may make provision applying, with or without

modifications, any provision made by or under section 39A or

this section in relation to any scheme or other arrangement in any

case where the accrued rights of persons who were members of

the initial scheme are transferred or extinguished directly or

indirectly in consequence of or otherwise in connection with—

(a)
the making of any payment at any time to or for the

benefit of the scheme or other arrangement,

(b)
the transfer of any asset at any time to or for the benefit of

the scheme or other arrangement,

(c)
the discharge (wholly or partly) at any time of any

liability incurred by or on behalf of the scheme or other

arrangement, or

(d)
the incurring at any time of any obligation to do any act

falling within paragraph (a) to (c).

(9)
Any reference in subsection (8)(a) to (d) to the doing of an act of

any description at any time in relation to the scheme or other

arrangement includes a reference to the doing of an act of that

description at any previous time in relation to any other scheme

or other arrangement.

(10)
Regulations under subsection (8) may—

61

(a)
make provision having effect in relation to any case

where rights are transferred or extinguished on or after

the date on which the Secretary of State publishes a

statement of the intention to make the regulations; and

(b)
without prejudice to section 315(5), make consequential

provision applying with modifications any provision of

this Act which relates to contribution notices under

section 38.”

10
After section 43 (financial support directions) insert—

“43A
Financial support directions: transfer of members of the scheme

(1)
This section applies where—

(a)
the Regulator is of the opinion by reference to any time

that the conditions in section 43 for issuing a financial

support direction are met in relation to a scheme (“the

initial scheme”) in relation to which that section applies

(or, but for any transfer falling within paragraph (b),

would be met), and

(b)
the accrued rights of at least two persons who were

members of the initial scheme are transferred at any

subsequent time to one or more work-based pension

schemes.

(2)
The Regulator may issue a financial support direction under that

section in relation to any transferee scheme (and, accordingly,

any reference in section 45 or any of sections 47 to 50 to the

scheme is to the transferee scheme).

(3)
The Regulator may also issue a direction to the trustees or

managers of any transferee scheme requiring them to take

specified steps to secure that the financial support is put in place

for the benefit of the members of the transferee scheme who were

members of the initial scheme.

(4)
If the trustees or managers fail to comply with a direction issued

to them under subsection (3), section 10 of the 1995 Act (civil

penalties) applies to any trustee or manager who has failed to

take all reasonable steps to secure compliance.

43B
Section 43A: supplemental

(1)
In section 43A a “transferee scheme”, in relation to any time,

means any work-based pension scheme—

(a)
to which the accrued rights of at least two persons who

were members of the initial scheme have been

transferred, and

(b)
of which any of those persons are members at that time.

(2)
For the purposes of section 43A(1) and subsection (1) above it

does not matter whether any rights are transferred to a work-

based pension scheme directly from the initial scheme or

following one or more other transfers to other work-based

pension schemes.

(3)
For the purposes of section 43A and this section references to the

transfer of accrued rights of members of a pension scheme to

another pension scheme include references to the extinguishing

62

of those accrued rights in consequence of the obligation to make

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

(4)
In section 43A and this section—

(a)
“the 1995 Act” means the Pensions Act 1995;

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

section 5(3);

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

in accordance with section 67A(6) and (7) of the 1995 Act

(reading any reference in those subsections to a subsisting

right as a reference to a right which has accrued).

(5)
Section 43A applies even if the initial scheme—

(a)
is wound up as a result of any transfer falling within

subsection (1)(b) of that section, or

(b)
otherwise ceases to exist at the time of the transfer or at

any subsequent time.

(6)
Accordingly, in any such case, in subsection (1) of that section—

(a)
the reference to a scheme to which section 43 applies is a

reference to a scheme which was such a scheme before the

transfer;

(b)
the reference to any conditions in section 43 being met is

a reference to any conditions in that section that, but for

the transfer, would have been met in relation to the

scheme.

(7)
Nothing in section 43A or this section is to be read as preventing

the Regulator from issuing a financial support direction in

relation to the initial scheme.

(8)
Regulations may make provision applying, with or without

modifications, any provision made by section 43A or this section

in relation to any scheme or other arrangement in any case where

the accrued rights of persons who were members of the initial

scheme are transferred or extinguished directly or indirectly in

consequence of or otherwise in connection with—

(a)
the making of any payment at any time to or for the

benefit of the scheme or other arrangement,

(b)
the transfer of any asset at any time to or for the benefit of

the scheme or other arrangement,

(c)
the discharge (wholly or partly) at any time of any

liability incurred by or on behalf of the scheme or other

arrangement, or

(d)
the incurring at any time of any obligation to do any act

falling within paragraph (a) to (c).

(9)
Any reference in subsection (8)(a) to (d) to the doing of an act of

any description at any time in relation to the scheme or other

arrangement includes a reference to the doing of an act of that

description at any previous time in relation to any other scheme

or other arrangement.

(10)
Regulations under subsection (8) may—

(a)
make provision having effect in relation to any case

where rights are transferred or extinguished on or after