Office of Public Sector Information
PART 5 continued
(1) A member of an occupational pension scheme loses any right acquired by him under section 101AB—
(a) if the scheme is wound up, or
(b) subject to subsection (2), if he fails to exercise the right on or before the reply date.
(2) If the member has failed to exercise any such right on or before the reply date, the trustees or managers of the scheme may allow him to exercise it on or before such later date as they may determine on the application of the member.
(3) Where the trustees or managers determine a later date under subsection (2)—
(a) they must give a notice in writing to that effect to the member, and
(b) subsection (1)(b) applies in relation to the member as if the reference to the reply date were a reference to the later date.
(4) For the purposes of subsection (3) and sections 101AC(2) and 101AD(2), a document or notice may be given to a person—
(a) by delivering it to him,
(b) by leaving it at his proper address, or
(c) by sending it by post to him at that address.
(5) For the purposes of subsection (4), and section 7 of the Interpretation Act 1978 (service of documents by post) in its application to that subsection, the proper address of a person is—
(a) in the case of a body corporate, the address of the registered or principal office of the body, and
(b) in any other case, the last known address of the person.
(6) This Chapter is subject to any provision made by or under section 61 (deduction of contributions equivalent premium from refund of scheme contributions)—
(a) permitting any amount to be deducted from any payment of a contribution refund, or
(b) requiring the payment of a contribution refund to be delayed.
(7) In this Chapter, except where the context otherwise requires, the following expressions have the following meanings—
“the applicable rules” means—
the rules of the scheme, except so far as overridden by a relevant legislative provision,
the relevant legislative provisions, to the extent that they have effect in relation to the scheme and are not reflected in the rules of the scheme, and
any provision which the rules of the scheme do not contain but which the scheme must contain if it is to conform with the requirements of Chapter 1 of this Part;
“member” has the meaning given in section 101AA(5);
“permitted way”, in relation to a cash transfer sum, means any of the ways specified in section 101AE(2) in which the sum may be used;
“relevant benefits” means benefits which are not attributable (directly or indirectly) to a pension credit;
“reply date”, in relation to a member whose pensionable service has terminated, has the meaning given in section 101AC(3)(c).
(8) For the purposes of subsection (7)—
(a) “relevant legislative provision” means any provision contained in any of the following provisions—
(i) Schedule 5 to the Social Security Act 1989 (equal treatment for men and women);
(ii) this Chapter or Chapter 2, 3 or 4 of this Part of this Act or regulations made under this Chapter or any of those Chapters;
(iii) Part 4A of this Act or regulations made under that Part;
(iv) section 110(1) of this Act;
(v) Part 1 of the Pensions Act 1995 (occupational pensions) or subordinate legislation made or having effect as if made under that Part;
(vi) section 31 of the Welfare Reform and Pensions Act 1999 (pension debits: reduction of benefit);
(vii) any provision mentioned in section 306(2) of the Pensions Act 2004;
(b) a relevant legislative provision is to be taken to override any of the provisions of the scheme if, and only if, it does so by virtue of any of the following provisions—
(i) paragraph 3 of Schedule 5 to the Social Security Act 1989;
(ii) section 129(1) of this Act;
(iii) section 117(1) of the Pensions Act 1995;
(iv) section 31(4) of the Welfare Reform and Pensions Act 1999;
(v) section 306(1) of the Pensions Act 2004.”
(1) In Schedule 5 to the Social Security Act 1989 (c. 24) (employment-related schemes for pensions or other benefits: equal treatment), after paragraph 5 insert—
5A (1) Where an employment-related benefit scheme includes any unfair paternity leave provisions (irrespective of any differences on the basis of sex in the treatment accorded to members under those provisions), then—
(a) the scheme shall be regarded to that extent as not complying with the principle of equal treatment; and
(b) subject to sub-paragraph (3), this Schedule shall apply accordingly.
(2) In this paragraph “unfair paternity leave provisions”, in relation to an employment-related benefit scheme, means any provision—
(a) which relates to continuing membership of, or the accrual of rights under, the scheme during any period of paid paternity leave in the case of any member who is (or who, immediately before the commencement of such a period, was) an employed earner and which treats such a member otherwise than in accordance with the normal employment requirement; or
(b) which requires the amount of any benefit payable under the scheme to or in respect of any such member, to the extent that it falls to be determined by reference to earnings during a period which included a period of paid paternity leave, to be determined otherwise than in accordance with the normal employment requirement.
(3) In the case of any unfair paternity leave provision—
(a) the more favourable treatment required by paragraph 3(1) is treatment no less favourable than would be accorded to the member in accordance with the normal employment requirement; and
(b) paragraph 3(2) does not authorise the making of any such election as is there mentioned;
but, in respect of any period of paid paternity leave, a member shall only be required to pay contributions on the amount of contractual remuneration or statutory paternity pay actually paid to or for him in respect of that period.
(4) In this paragraph—
“period of paid paternity leave”, in the case of a member, means a period—
throughout which the member is absent from work in circumstances where sub-paragraph (5), (6) or (7) applies, and
for which the employer (or if he is no longer in his employment, his former employer) pays him any contractual remuneration or statutory paternity pay; and
“the normal employment requirement” is the requirement that any period of paid paternity leave shall be treated as if it were a period throughout which the member in question works normally and receives the remuneration likely to be paid for doing so.
(5) This sub-paragraph applies if—
(a) the member’s absence from work is due to the birth or expected birth of a child, and
(b) the member satisfies the conditions prescribed under section 171ZA(2)(a)(i) and (ii) of the Social Security Contributions and Benefits Act 1992 in relation to that child.
(6) This sub-paragraph applies if—
(a) the member’s absence from work is due to the placement or expected placement of a child for adoption under the law of any part of the United Kingdom, and
(b) the member satisfies the conditions prescribed under section 171ZB(2)(a)(i) and (ii) of that Act in relation to that child.
(7) This sub-paragraph applies if—
(a) the member’s absence from work is due to the adoption or expected adoption of a child who has entered the United Kingdom in connection with or for the purposes of adoption which does not involve the placement of the child for adoption under the law of any part of the United Kingdom, and
(b) the member satisfies the conditions prescribed under section 171ZB(2)(a)(i) and (ii) of that Act (as applied by virtue of section 171ZK of that Act (adoption cases not involving placement under the law of the United Kingdom)) in relation to that child.
5B (1) Where an employment-related benefit scheme includes any unfair adoption leave provisions (irrespective of any differences on the basis of sex in the treatment accorded to members under those provisions), then—
(a) the scheme shall be regarded to that extent as not complying with the principle of equal treatment; and
(b) subject to sub-paragraph (3), this Schedule shall apply accordingly.
(2) In this paragraph “unfair adoption leave provisions”, in relation to an employment-related benefit scheme, means any provision—
(a) which relates to continuing membership of, or the accrual of rights under, the scheme during any period of paid adoption leave in the case of any member who is (or who, immediately before the commencement of such a period, was) an employed earner and which treats such a member otherwise than in accordance with the normal employment requirement; or
(b) which requires the amount of any benefit payable under the scheme to or in respect of any such member, to the extent that it falls to be determined by reference to earnings during a period which included a period of paid adoption leave, to be determined otherwise than in accordance with the normal employment requirement.
(3) In the case of any unfair adoption leave provision—
(a) the more favourable treatment required by paragraph 3(1) is treatment no less favourable than would be accorded to the member in accordance with the normal employment requirement; and
(b) paragraph 3(2) does not authorise the making of any such election as is there mentioned;
but, in respect of any period of paid adoption leave, a member shall only be required to pay contributions on the amount of contractual remuneration or statutory adoption pay actually paid to or for him in respect of that period.
(4) In this paragraph—
“period of paid adoption leave”, in the case of a member, means a period—
throughout which the member is absent from work in circumstances where sub-paragraph (5) or (6) applies, and
for which the employer (or, if he is no longer in his employment, his former employer) pays him any contractual remuneration or statutory adoption pay; and
“the normal employment requirement” is the requirement that any period of paid adoption leave shall be treated as if it were a period throughout which the member in question works normally and receives the remuneration likely to be paid for doing so.
(5) This sub-paragraph applies if—
(a) the member’s absence from work is due to the placement, or expected placement, of a child for adoption under the law of any part of the United Kingdom, and
(b) the member is a person with whom the child is, or is expected to be, placed for such adoption.
(6) This sub-paragraph applies if—
(a) the member’s absence from work is due to the adoption or expected adoption of a child who has entered the United Kingdom in connection with or for the purposes of adoption which does not involve the placement of the child for adoption under the law of any part of the United Kingdom, and
(b) the member is a person by whom the child has been or is expected to be adopted.”
(2) The provision that may be made under section 142(1) of the Adoption and Children Act 2002 (c. 38) (power to make consequential etc provision to give full effect to any provision of that Act) includes provision modifying paragraph 5A or 5B of Schedule 5 to the Social Security Act 1989 (c. 24) (as inserted by subsection (1) above).
(1) Section 91 of the Pensions Act 1995 (c. 26) (inalienability of occupational pension) is amended as follows.
(2) In subsection (5) (exceptions to the rule of inalienability) at the end insert—
“(f) subject to subsection (6), a charge or lien on, or set-off against, the person in question’s entitlement, or right, for the purpose of discharging some monetary obligation due from the person in question to the scheme arising out of a payment made in error in respect of the pension.”
(3) In subsection (6) (limits on the charge, lien or set-off under subsection (5)(d) or (e)) for “or (e)” substitute “, (e) or (f)”.
(1) Omit section 111 of the Pension Schemes Act 1993 (c. 48) (requirements for schemes to provide facilities for members to pay voluntary contributions, and relating to any such contributions).
(2) In section 132 of that Act (duty to bring schemes into conformity with indirectly-applying requirements) omit from “or the voluntary” to third “requirements”.
(3) In section 181(1) of that Act (general interpretation) omit the definition of “voluntary contributions requirements”.
(1) Section 111A of the Pension Schemes Act 1993 (c. 48) (monitoring of employers' payments to personal pension schemes) is amended as follows.
(2) For subsections (3) to (7) substitute—
“(3) The trustees or managers of the scheme must monitor the payment of contributions by or on behalf of the employer under the direct payment arrangements.
(4) The trustees or managers may request the employer to provide them, (or arrange for them to be provided) with the payment information specified in the request.
(5) For the purposes of subsection (4) “payment information” is information required by the trustees or managers to enable them to discharge the duty imposed by subsection (3).
(6) The employer must comply with a request under subsection (4) within a reasonable period.
(7) Where, as a result of the employer’s failure to so comply, the trustees or managers are unable to discharge the duty imposed by subsection (3), they must give notice to that effect to the Regulatory Authority within a reasonable period.
(7A) Where—
(a) a contribution payable under the direct payment arrangements has not been paid on or before its due date, and
(b) the trustees or managers have reasonable cause to believe that the failure to pay the contribution is likely to be of material significance in the exercise by the Regulatory Authority of any of their functions,
they must give notice to that effect to the Regulatory Authority and the employee within a reasonable period after the due date.”
(3) In subsection (8) (employer’s liability for civil penalties) for “subsection (3) or (5)” substitute “subsection (6) and as a result the trustees or managers of the scheme are unable to discharge the duty imposed by subsection (3)”.
(4) In subsection (9) (liability of trustees or managers for civil penalties) for “subsection (6) or (7)” substitute “subsection (7) or (7A)”.
(1) In section 49 of the Pensions Act 1995 (c. 26) (other responsibilities of trustees, employers, etc), in subsection (9) (duty of trustee etc to report a failure by employer to pay contributions deducted from earnings on time) for paragraph (b) substitute—
“(b) if the trustees or managers have reasonable cause to believe that the failure is likely to be of material significance in the exercise by the Authority of any of their functions, they must, except in prescribed circumstances, give notice of the failure to the Authority and the member within a reasonable period after the end of the prescribed period under subsection (8).”
(2) In section 88 of that Act (schedules of payments to money purchase schemes), for subsection (1) (duty of trustees or managers to report a failure to pay amounts on time) substitute—
“(1) Where, in the case of an occupational pension scheme to which section 87 applies—
(a) there is a failure to pay on or before the due date any amounts payable in accordance with the payment schedule, and
(b) the trustees or managers have reasonable cause to believe that the failure is likely to be of material significance in the exercise by the Authority of any of their functions,
they must, except in prescribed circumstances, give notice of the failure to the Authority and to the members of the scheme within a reasonable period after the due date.”
(1) For section 73 of the Pensions Act 1995 (c. 26) (preferential liabilities on winding up) substitute—
(1) This section applies where an occupational pension scheme to which this section applies is being wound up to determine the order in which the assets of the scheme are to be applied towards satisfying the liabilities of the scheme in respect of pensions and other benefits.
(2) This section applies to an occupational pension scheme other than a scheme which is—
(a) a money purchase scheme, or
(b) a prescribed scheme or a scheme of a prescribed description.
(3) The assets of the scheme must be applied first towards satisfying the amounts of the liabilities mentioned in subsection (4) and, if the assets are insufficient to satisfy those amounts in full, then—
(a) the assets must be applied first towards satisfying the amounts of the liabilities mentioned in earlier paragraphs of subsection (4) before the amounts of the liabilities mentioned in later paragraphs, and
(b) where the amounts of the liabilities mentioned in one of those paragraphs cannot be satisfied in full, those amounts must be satisfied in the same proportions.
(4) The liabilities referred to in subsection (3) are—
(a) where—
(i) the trustees or managers of the scheme are entitled to benefits under a relevant pre-1997 contract of insurance entered into in relation to the scheme, and
(ii) either that contract may not be surrendered or the amount payable on surrender does not exceed the liability secured by the contract,
the liability so secured;
(b) any liability for pensions or other benefits to the extent that the amount of the liability does not exceed the corresponding PPF liability, other than a liability within paragraph (a);
(c) any liability for pensions or other benefits which, in the opinion of the trustees or managers, are derived from the payment by any member of voluntary contributions, other than a liability within paragraph (a) or (b);
(d) any other liability in respect of pensions or other benefits.
(5) For the purposes of subsection (4)—
“corresponding PPF liability” in relation to any liability for pensions or other benefits means—
where the liability is to a member of the scheme, the cost of securing benefits for or in respect of the member corresponding to the compensation which would be payable to or in respect of the member in accordance with the pension compensation provisions if the Board of the Pension Protection Fund assumed responsibility for the scheme in accordance with Chapter 3 of Part 2 of the Pensions Act 2004 (pension protection), and
where the liability is to another person in respect of a member of the scheme, the cost of securing benefits for that person corresponding to the compensation which would be payable to that person in respect of the member in accordance with the pension compensation provisions if the Board assumed responsibility for the scheme in accordance with that Chapter;
“relevant pre-1997 contract of insurance” means a contract of insurance which was entered into before 6th April 1997 with a view to securing the whole or part of the scheme’s liability for—
any pension or other benefit payable to or in respect of one particular person whose entitlement to payment of a pension or other benefit has arisen, and
any benefit which will be payable in respect of that person on his death.
(6) For the purposes of this section, when determining the corresponding PPF liability in relation to any liability of a scheme to, or in respect of, a member for pensions or other benefits, the pension compensation provisions apply with such modifications as may be prescribed.
(7) Regulations may modify subsection (4).
(8) For the purposes of that subsection—
(a) regulations may prescribe how it is to be determined whether a liability for pensions or other benefits which, in the opinion of the trustees or managers of the scheme, are derived from the payment by any member of voluntary contributions falls within paragraph (a) or (b) of that subsection;
(b) no pension or other benefit which is attributable (directly or indirectly) to a pension credit is to be regarded for the purposes of paragraph (c) of that subsection as derived from the payment of voluntary contributions.
(9) Where, on the commencement of the winding up period, a member becomes a person to whom Chapter 5 of Part 4 of the Pension Schemes Act 1993 (early leavers: cash transfer sums and contribution refunds) applies, that Chapter applies in relation to him with such modifications as may be prescribed.
(10) For the purposes of this section—
“assets” of a scheme to which this section applies do not include any assets representing the value of any rights in respect of money purchase benefits under the scheme rules;
“liabilities” of such a scheme do not include any liabilities in respect of money purchase benefits under the scheme rules;
“the pension compensation provisions” has the same meaning as in Part 2 of the Pensions Act 2004 (see section 162 of that Act);
“scheme rules” has the same meaning as in the Pensions Act 2004 (see section 318 of that Act);
“winding up period”, in relation to an occupational pension scheme to which this section applies, means the period which—
begins with the day on which the time immediately after the beginning of the winding up of the scheme falls, and
ends when the winding up of the scheme is completed.
(1) This section applies where an occupational pension scheme to which section 73 applies is being wound up.
(2) During the winding up period, the trustees or managers of the scheme—
(a) must secure that any pensions or other benefits (other than money purchase benefits) paid to or in respect of a member are reduced, so far as necessary, to reflect the liabilities of the scheme to or in respect of the member which will be satisfied in accordance with section 73, and
(b) may, for the purposes of paragraph (a), take such steps as they consider appropriate (including steps adjusting future payments) to recover any overpayment or pay any shortfall.
(3) During the winding up period—
(a) no benefits may accrue under the scheme rules to, or in respect of, members of the scheme, and
(b) no new members of any class may be admitted to the scheme.
(4) Subsection (3) does not prevent any increase, in a benefit, which would otherwise accrue in accordance with the scheme or any enactment.
(5) Subsection (3) does not prevent the accrual of money purchase benefits to the extent that they are derived from income or capital gains arising from the investment of payments which are made by, or in respect of, a member of the scheme.
(6) Where a person is entitled to a pension credit derived from another person’s shareable rights under the scheme, subsection (3) does not prevent the trustees or managers of the scheme discharging their liability in respect of the credit under Chapter 1 of Part 4 of the Welfare Reform and Pensions Act 1999 (sharing of rights under pension arrangements) by conferring appropriate rights under the scheme on that person.
(7) Regulations may require the trustees or managers of the scheme, in prescribed circumstances—
(a) to adjust the entitlement of a person to a pension or other benefit under the scheme rules where the entitlement arises as a result of a discretionary award which takes effect during the winding up period;
(b) to adjust the entitlement of a person (“the survivor”) to a pension or other benefit under the scheme rules where—
(i) a member of the scheme, or a person who was (or might have become) entitled to a pension or other benefit in respect of a member, dies during the winding up period, and
(ii) the survivor’s entitlement is to a pension or other benefit in respect of the member (whether arising on the date of that death or subsequently).
(8) Regulations under subsection (7) may, in particular—
(a) prescribe how the required adjustments to entitlement are to be determined and the manner in which they are to be made;
(b) in a case where the commencement of the winding up of the scheme is backdated (whether in accordance with section 154 of the Pensions Act 2004 (requirement to wind up schemes with sufficient assets to meet protected liabilities) or otherwise), require any adjustment to a person’s entitlement to be made with effect from the time the award takes effect;
(c) without prejudice to sections 10(3) to (9), 73B(2) and 116, make provision about the consequences of breaching the requirements of the regulations.
(9) If the scheme confers power on any person other than the trustees or managers of the scheme to apply the assets of the scheme in respect of pensions or other benefits (including increases in pensions or benefits), it cannot be exercised by that person but may, subject to the provisions made by or by virtue of this section and sections 73 and 73B, be exercised instead by the trustees or managers.
(10) For the purposes of this section—
“appropriate rights” has the same meaning as in paragraph 5 of Schedule 5 to the Welfare Reform and Pensions Act 1999 (pension credits: mode of discharge);
“discretionary award” means an award of a prescribed description;
“shareable rights” has the same meaning as in Chapter 1 of Part 4 of the Welfare Reform and Pensions Act 1999 (sharing of rights under pension arrangements);
and subsection (10) of section 73 applies as it applies for the purposes of that section.
(1) Any action taken in contravention of section 73A(3) is void.
(2) If any provision made by or by virtue of the winding up provisions is not complied with in relation to a scheme to which section 73 applies, section 10 applies to any trustee or manager of the scheme who has failed to take all reasonable steps to secure compliance.
(3) For the purposes of subsection (2), when determining whether section 73A(3) has been complied with subsection (1) of this section is to be disregarded.
(4) Regulations may—
(a) prescribe how, for the purposes of the winding up provisions—
(i) the assets and liabilities of a scheme to which section 73 applies, and
(ii) their value or amount,
are to be determined, calculated and verified;
(b) modify any of the winding up provisions as it applies—
(i) to prescribed schemes or prescribed descriptions of schemes;
(ii) in relation to a scheme where only part of the scheme is being wound up;
(iii) in relation to a case where any liability of the scheme in respect of a member has been discharged by virtue of regulations under section 135(4) of the Pensions Act 2004 (power to make regulations permitting discharge of scheme’s liabilities during an assessment period).
(5) Without prejudice to the generality of subsection (4), regulations under paragraph (b)(i) of that subsection may, in particular, modify any of the winding up provisions as it applies in relation to a scheme in relation to which there is more than one employer.
(6) The winding up provisions do not apply—
(a) in relation to any liability for an amount by way of pensions or other benefits which a person became entitled to payment of, under the scheme rules, before commencement of the winding up period,
(b) in prescribed circumstances, in relation to any liability in respect of rights of a prescribed description to which a member of the scheme became entitled under the scheme rules by reason of his pensionable service under the scheme terminating before the commencement of the winding up period,
(c) in relation to any liability in respect of rights of prescribed descriptions to which a member of the scheme had become entitled under the scheme rules before the commencement of the winding up period, or
(d) in relation to any liability the discharge of which is validated under section 136 of the Pensions Act 2004 (power to validate actions taken during an assessment period to discharge liabilities of a scheme).
(7) But nothing in subsection (6) prevents the winding up provisions applying in relation to a liability under Chapter 4 of Part 4 of the Pension Schemes Act 1993 (transfer values) which—
(a) arose before the commencement of the winding up of the scheme, and
(b) was not discharged before the commencement of the winding up period.
(8) Regulations may provide that, in prescribed circumstances, where—
(a) an occupational pension scheme to which section 73 applies is being wound up,
(b) a member of the scheme died before the winding up began, and
(c) during the winding up period a person becomes entitled under the scheme rules to a benefit of a prescribed description in respect of the member,
his entitlement to payment of all or part of the benefit is, for the purposes of subsection (6), to be treated as having arisen immediately before the commencement of the winding up period.
Pensions Act 2004