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Welfare Reform and Pensions Bill - continued        House of Lords
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  PART II
  PENSIONS: GENERAL
 
Payments by employers to pension schemes
Monitoring of employers' payments to personal pension schemes.     9. In Part VI of the Pension Schemes Act 1993 (further requirements for protection of scheme members), after section 111 there shall be inserted-
 
 
"Monitoring of employers' payments to personal pension schemes.     111A. - (1) This section applies where-
 
    (a) an employee is a member of a personal pension scheme; and
 
    (b) direct payment arrangements exist between the employee and his employer.
      (2) In this section "direct payment arrangements" means arrangements under which contributions fall to be paid by or on behalf of the employer towards the scheme-
 
 
    (a) on the employer's own account (but in respect of the employee); or
 
    (b) on behalf of the employee out of deductions from the employee's earnings.
      (3) The employer must secure that there is prepared, maintained and from time to time revised a record of the direct payment arrangements which complies with subsection (4).
 
      (4) The record must-
 
 
    (a) show the rates and due dates of contributions payable under the direct payment arrangements, and
 
    (b) satisfy prescribed requirements.
      (5) The employer must, within the prescribed period after the preparation or any revision of the record, send a copy of the record or (as the case may be) of the revised record to the trustees or managers of the scheme.
 
      (6) Except in prescribed circumstances, the trustees or managers of the scheme must, where any contribution shown by the record to be payable under the direct payment arrangements has not been paid on or before its due date, give notice of that fact, within the prescribed period, to the Regulatory Authority and the employee.
 
      (7) The trustees or managers of the scheme must before the end of prescribed intervals send the employee a statement setting out the amounts and dates of the payments made under the direct payment arrangements during a prescribed period.
 
      (8) If-
 
 
    (a) the employer fails to take all such steps as are reasonable to secure compliance with subsection (3) or (5), or
 
    (b) a contribution payable under the direct payment arrangements is not paid to the trustees or managers of the scheme on or before its due date,

section 10 of the Pensions Act 1995 (power of the Regulatory Authority to impose civil penalties) applies to the employer.
      (9) If subsection (6) or (7) is not complied with, section 10 of the Pensions Act 1995 applies to any trustee or manager of the scheme who has failed to take all such steps as are reasonable to secure compliance.
 
      (10) If-
 
 
    (a) subsection (6) or (7) is not complied with, and
 
    (b) the scheme-
 
      (i) is established under a trust, and
 
      (ii) is or has been registered under section 2 of the Welfare Reform and Pensions Act 1999 (stakeholder schemes),

section 3 of the Pensions Act 1995 (power of the Regulatory Authority to remove trustees) applies to any trustee of the scheme who has failed to take all such steps as are reasonable to secure compliance.
      (11) A person shall not be required by virtue of subsection (8)(b) above to pay a penalty under section 10 of the Pensions Act 1995 in respect of a failure if in respect of that failure he has been-
 
 
    (a) required to pay a penalty under that section by virtue of section 3(6) of the Welfare Reform and Pensions Act 1999 (failures in respect of stakeholder pensions), or
 
    (b) convicted of an offence under subsection (12) below.
      (12) A person is guilty of an offence if he is knowingly concerned in the fraudulent evasion of the direct payment arrangements so far as they are arrangements for the payment by him or any other person of any such contribution towards the scheme as is mentioned in subsection (2)(b).
 
      (13) A person guilty of an offence under subsection (12) is liable-
 
 
    (a) on summary conviction, to a fine not exceeding the statutory maximum; and
 
    (b) on conviction on indictment, to imprisonment for a term not exceeding seven years or a fine or both.
      (14) No prosecution shall be brought against the Crown for an offence under subsection (12), but that subsection applies to persons in the public service of the Crown as to other persons.
 
      (15) In this section "due date", in relation to a contribution payable under the direct payment arrangements, means-
 
 
    (a) if the contribution falls to be paid on the employer's own account, the latest day under the arrangements for paying it;
 
    (b) if the contribution falls to be paid on behalf of the employee, the last day of a prescribed period.
      (16) Regulations may provide for this section to apply with such modifications as may be prescribed in a case where-
 
 
    (a) the direct payment arrangements give effect to a requirement arising under subsection (5) of section 3 of the Welfare Reform and Pensions Act 1999 (deduction and payment of employee's contributions to stakeholder scheme), and
 
    (b) in accordance with regulations under that subsection, that requirement is for the employer to pay contributions to a person prescribed by such regulations (instead of to the trustees or managers of the scheme).
      (17) Nothing in this section shall be taken as varying the provisions of the direct payment arrangements or as affecting their enforceability.
 
Obtaining information for purposes of section 111A.     111B. - (1) Any person appearing to the Regulatory Authority to be a person who holds, or is likely to hold, information which is relevant to the issue-
 
 
    (a) whether any provision made by or under section 111A is being, or has been, complied with by an employer or the trustees or managers of a personal pension scheme,
 
    (b) whether, in the case of any direct payment arrangements existing between an employee and his employer, there has been such a failure to pay a contribution as is mentioned in subsection (8)(b) of that section, or
 
    (c) whether an offence has been committed under subsection (12) of that section in relation to any such arrangements,

must, if required to do so by the Regulatory Authority by notice in writing, produce any document which is so relevant.
      (2) To comply with subsection (1) the document must be produced in such a manner, at such a place and within such a period as may be specified in the notice.
 
      (3) An inspector may, for the purposes of investigating any of the matters set out in subsection (1)(a) to (c), at any reasonable time enter premises liable to inspection and, while there-
 
 
    (a) may make such examination and inquiry as may be necessary for such purposes,
 
    (b) may require any person on the premises to produce for his inspection, or secure the production for his inspection of, any document relevant-
 
      (i) to compliance with any provision made by or under section 111A, or with the direct payment arrangements, or
 
      (ii) to the issue whether an offence has been committed under subsection (12) of that section in relation to those arrangements, and
 
    (c) may, as to any matter so relevant, examine, or require to be examined, either alone or in the presence of another person, any person on the premises whom he has reasonable cause to believe to be able to give information relevant to that matter.
      (4) An inspector applying for admission to any premises in pursuance of subsection (3) must, if so required, produce his certificate of appointment.
 
      (5) For the purposes of subsection (3) premises are liable to inspection if the inspector has reasonable grounds to believe that-
 
 
    (a) employees of the employer are employed there,
 
    (b) documents relevant to the administration of-
 
      (i) the employer's business,
 
      (ii) the direct payment arrangements, or
 
      (iii) the scheme to which those arrangements relate,

are kept there, or
 
    (c) either of the following is being carried out there, namely-
 
      (i) the administration of the employer's business, the arrangements or the scheme, or
 
      (ii) work connected with the administration of the employer's business, the arrangements or the scheme,

unless the premises are a private dwelling-house not used by, or by permission of, the occupier for the purposes of a trade or business.
      (6) Section 100 of the Pensions Act 1995 (warrants) shall have effect as if references to section 98(1) or 99(1)(b) of that Act included references to subsection (1) or (3)(b).
 
      (7) Sections 101 to 103 of that Act (penalties, savings and reports) shall have effect as if references which are or include references to section 98 or 99 of that Act included references to this section.
 
      (8) In this section-
 
 
    "direct payment arrangements" has the same meaning as in section 111A;
 
    "document" includes information recorded in any form, and any reference to production of a document, in relation to information recorded otherwise than in legible form, is to producing a copy of the information in legible form;
 
    "inspector" means a person appointed by the Regulatory Authority as an inspector."
Late payments by employers to occupational pension schemes.     10. - (1) For section 49(8) of the Pensions Act 1995 (offence where deduction from earnings not paid in timely fashion to occupational pension scheme) there shall be substituted-
 
 
    "(8) Where on making a payment of any earnings in respect of any employment there is deducted any amount corresponding to any contribution payable on behalf of an active member of an occupational pension scheme, the amount deducted is to be paid, within a prescribed period, to the trustees or managers of the scheme.
 
      (9) If in any case there is a failure to comply with subsection (8)-
 
 
    (a) section 10 applies to the employer; and
 
    (b) except in prescribed circumstances, the trustees or managers must give notice of the failure, within the prescribed period, to the Authority and the member.
      (10) If in any case subsection (9)(b) is not complied with-
 
 
    (a) section 3 applies to any trustee who has failed to take all such steps as are reasonable to secure compliance; and
 
    (b) section 10 applies to any trustee or manager who has failed to take all such steps.
      (11) If any person is knowingly concerned in the fraudulent evasion of the obligation imposed by subsection (8) in any case, he is guilty of an offence.
 
      (12) A person guilty of an offence under subsection (11) is liable-
 
 
    (a) on summary conviction, to a fine not exceeding the statutory maximum; and
 
    (b) on conviction on indictment, to imprisonment for a term not exceeding seven years or a fine or both.
      (13) A person shall not be required by virtue of subsection (9)(a) above to pay a penalty under section 10 in respect of a failure if in respect of that failure he has been-
 
 
    (a) required to pay a penalty under that section by virtue of section 3(6) of the Welfare Reform and Pensions Act 1999 (failures in respect of stakeholder pensions), or
 
    (b) convicted of an offence under subsection (11) above."
      (2) In section 88(3) of that Act (civil penalty where contributions by or on behalf of employer to occupational pension scheme not paid by due date), after "by or on behalf of the employer" there shall be inserted "on the employer's own account".
 
 
Pensions and bankruptcy
Effect of bankruptcy on pension rights: approved arrangements.     11. - (1) Where a bankruptcy order is made against a person on a petition presented after the coming into force of this section, any rights of his under an approved pension arrangement are excluded from his estate.
 
      (2) In this section "approved pension arrangement" means-
 
 
    (a) an exempt approved scheme;
 
    (b) a relevant statutory scheme;
 
    (c) a retirement benefits scheme set up by a government outside the United Kingdom for the benefit, or primarily for the benefit, of its employees;
 
    (d) a retirement benefits scheme which is being considered for approval under Chapter I of Part XIV of the Taxes Act;
 
    (e) a contract or scheme which is approved under Chapter III of that Part (retirement annuities);
 
    (f) a personal pension scheme which is approved under Chapter IV of that Part;
 
    (g) an annuity purchased for the purpose of giving effect to rights under a scheme falling within any of paragraphs (a) to (c) and (f);
 
    (h) any pension arrangements of any description which may be prescribed by regulations made by the Secretary of State.
      (3) The reference in subsection (1) to rights under an approved pension arrangement does not include rights under a personal pension scheme approved under Chapter IV of Part XIV of the Taxes Act unless those rights arise by virtue of approved personal pension arrangements.
 
      (4) Subsection (5) applies if-
 
 
    (a) at the time when a bankruptcy order is made against a person a retirement benefits scheme is being considered for approval under Chapter I of Part XIV of the Taxes Act, and
 
    (b) the decision of the Commissioners of Inland Revenue is that approval is not to be given to the scheme.
      (5) Any rights of that person under the scheme shall (without any conveyance, assignment or transfer) vest in his trustee in bankruptcy, as part of his estate, immediately on-
 
 
    (a) the Commissioners' decision being made, or
 
    (b) (if later) the trustee's appointment taking effect or, in the case of the official receiver, his becoming trustee.
      (6) Subsection (7) applies if, at any time after a bankruptcy order is made against a person, the Commissioners of Inland Revenue give notice-
 
 
    (a) withdrawing their approval under Chapter I of Part XIV of the Taxes Act from a retirement benefits scheme, or
 
    (b) withdrawing their approval under Chapter IV of that Part from a personal pension scheme or from any approved personal pension arrangements,

and the date specified as being that from which the approval is withdrawn ("the withdrawal date") is a date not later than that on which the bankruptcy order is made.
      (7) Any rights of that person under the scheme or arising by virtue of the arrangements, and any rights of his under any related annuity, shall (without any conveyance, assignment or transfer) vest in his trustee in bankruptcy, as part of his estate, immediately on-
 
 
    (a) the giving of the notice, or
 
    (b) (if later) the trustee's appointment taking effect or, in the case of the official receiver, his becoming trustee.
      (8) In subsection (7) "related annuity" means an annuity purchased on or after the withdrawal date for the purpose of giving effect to rights under the scheme or (as the case may be) to rights arising by virtue of the arrangements.
 
      (9) Where under subsection (5) or (7) any rights vest in a person's trustee in bankruptcy, the trustee's title to them has relation back to the commencement of the person's bankruptcy; but where any transaction is entered into by the trustees or managers of the scheme in question-
 
 
    (a) in good faith, and
 
    (b) without notice of the making of the decision mentioned in subsection (4)(b) or (as the case may be) the giving of the notice mentioned in subsection (6),

the trustee in bankruptcy is not in respect of that transaction entitled by virtue of this subsection to any remedy against them or any person whose title to any property derives from them.
      (10) Without prejudice to section 78, regulations under subsection (2)(h) may, in the case of any description of arrangements prescribed by the regulations, make provision corresponding to any provision made by subsections (4) to (9).
 
      (11) In this section-
 
 
    (a) "exempt approved scheme", "relevant statutory scheme" and "retirement benefits scheme" have the same meaning as in Chapter I of Part XIV of the Taxes Act;
 
    (b) "approved personal pension arrangements" and "personal pension scheme" have the same meaning as in Chapter IV of that Part;
 
    (c) "estate", in relation to a person against whom a bankruptcy order is made, means his estate for the purposes of Parts VIII to XI of the Insolvency Act 1986;
 
    (d) "the Taxes Act" means the Income and Corporation Taxes Act 1988.
      (12) For the purposes of this section a person shall be treated as having a right under an approved pension arrangement where-
 
 
    (a) he is entitled to a credit under section 25(1)(b) as against the person responsible for the arrangement (within the meaning of Chapter I of Part IV), and
 
    (b) the person so responsible has not discharged his liability in respect of the credit.
 
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Prepared 24 May 1999