Office of Public Sector Information
PART I continued
(1) For the purposes of sections 16 to 21, the appropriate rules are rules which—
(a) make the provision required or authorised by this section, and no other provision, and
(b) are for the time being approved under the statutory consultation procedure or, if no rules are for the time being so approved, are prescribed rules;
and the arrangements required by section 16 or 18 to be made must not make any provision which is required or authorised to be made by the rules.
(2) The appropriate rules—
(a) must determine the procedure for the nomination and selection of a person to fill a vacancy as a member-nominated trustee, and
(b) may determine, or provide for the determination of, the conditions required of a person for filling such a vacancy.
(3) The appropriate rules must provide for a member-nominated trustee to be eligible for re-selection at the end of his period of service.
(4) Where a vacancy for a member-nominated trustee is not filled because insufficient nominations are received, the appropriate rules must provide for determining the next period in which persons may be nominated and selected in accordance with the rules, being a period ending at a prescribed time.
(5) The appropriate rules must provide that, where the employer so requires, a person who is not a member of the scheme must have the employer’s approval to qualify for selection as a member-nominated trustee.
(6) Where section 18 applies to a trust scheme, references in this section to a member-nominated trustee include a member-nominated director.
(1) If, in the case of a trust scheme—
(a) such arrangements as are required by section 16(1) or 17(2) to be made have not been made, or
(b) arrangements required by section 16(1) or 17(2) to be implemented, or the appropriate rules, are not being implemented,
sections 3 and 10 apply to any trustee who has failed to take all such steps as are reasonable to secure compliance.
(2) If, in the case of a company which is a trustee of a trust scheme—
(a) such arrangements as are required by section 18(1) or 19(2) to be made have not been made, or
(b) arrangements required by section 18(1) or 19(2) to be implemented, or the appropriate rules, are not being implemented,
sections 3 and 10 apply to the company.
(3) No such arrangements or rules as are required by section 16(1) or 17(2), or any corresponding provisions in force in Northern Ireland, to be made or implemented shall be treated as effecting an alteration to the scheme in question for the purposes of section 591B of the Taxes Act 1988.
(4) Regulations may make provision for determining the time by which—
(a) such arrangements (or further arrangements) as are referred to in section 16(1), 17(2), 18(1) or 19(2) are required to be made, and
(b) trustees or directors are required to be selected in pursuance of the appropriate rules.
(5) Regulations may make provision for determining when any approval under the statutory consultation procedure—
(a) of the appropriate rules, or
(b) of arrangements for selecting the trustees of a scheme, or the directors of a company, given on a proposal by the employer,
is to cease to have effect.
(6) The Secretary of State may by regulations modify sections 16 to 20 and this section in their application to prescribed cases.
(7) In sections 16 to 20 and this section, “the statutory consultation procedure” means the prescribed procedure for obtaining the views of members of schemes.
(8) For the purposes of this and those sections—
(a) approval of the appropriate rules, or of arrangements, under the statutory consultation procedure must be given by—
(i) the active and pensioner members of the scheme, and
(ii) if the trustees so determine, such deferred members of the scheme as the trustees may determine,
taken as a whole, and
(b) references to the approval of the appropriate rules, or of arrangements under section 17 or 19, by any persons under the statutory consultation procedure are to prescribed conditions in respect of those rules or, as the case may be, arrangements being satisfied in the case of those persons in pursuance of the procedure, and those conditions may relate to the extent to which those persons have either endorsed, or not objected to, the rules or, as the case may be, arrangements.
(1) This section applies in relation to a trust scheme—
(a) if a person (referred to in this section and sections 23 to 26 as “the practitioner”) begins to act as an insolvency practitioner in relation to a company which, or an individual who, is the employer in relation to the scheme, or
(b) if the official receiver becomes—
(i) the liquidator or provisional liquidator of a company which is the employer in relation to the scheme, or
(ii) the receiver and the manager, or the trustee, of the estate of a bankrupt who is the employer in relation to the scheme.
(2) Where this section applies in relation to a scheme, it ceases to do so—
(a) if some person other than the employer mentioned in subsection (1) becomes the employer, or
(b) if at any time neither the practitioner nor the official receiver is acting in relation to the employer;
but this subsection does not affect the application of this section in relation to the scheme on any subsequent occasion when the conditions specified in subsection (1)(a) or (b) are satisfied in relation to it.
(3) In this section and sections 23 to 26—
“acting as an insolvency practitioner” and “official receiver” shall be construed in accordance with sections 388 and 399 of the [1986 c. 45.] Insolvency Act 1986,
“bankrupt” has the meaning given by section 381 of the Insolvency Act 1986,
“company” means a company within the meaning given by section 735(1) of the [1985 c. 6.] Companies Act 1985 or a company which may be wound up under Part V of the Insolvency Act 1986 (unregistered companies), and
“interim trustee” and “permanent trustee” have the same meanings as they have in the [1985 c. 66.] Bankruptcy (Scotland) Act 1985.
(1) While section 22 applies in relation to a scheme, the practitioner or official receiver must—
(a) satisfy himself that at all times at least one of the trustees of the scheme is an independent person, and
(b) if at any time he is not so satisfied, appoint under this paragraph, or secure the appointment of, an independent person as a trustee of the scheme.
(2) The duty under subsection (1)(b) must be performed as soon as reasonably practicable and, if a period is prescribed for the purposes of that subsection, within that period.
(3) For the purposes of subsection (1) a person is independent only if—
(a) he has no interest in the assets of the employer or of the scheme, otherwise than as trustee of the scheme,
(b) he is neither connected with, nor an associate of—
(i) the employer,
(ii) any person for the time being acting as an insolvency practitioner in relation to the employer, or
(iii) the official receiver, acting in any of the capacities mentioned in section 22(1)(b) in relation to the employer, and
(c) he satisfies any prescribed requirements;
and any reference in this Part to an independent trustee shall be construed accordingly.
(4) Where, apart from this subsection, the duties imposed by subsection (1) in relation to a scheme would fall to be discharged at the same time by two or more persons acting in different capacities, those duties shall be discharged—
(a) if the employer is a company, by the person or persons acting as the company’s liquidator, provisional liquidator or administrator, or
(b) if the employer is an individual, by the person or persons acting as his trustee in bankruptcy or interim receiver of his property or as permanent or interim trustee in the sequestration of his estate.
(5) References in this section to an individual include, except where the context otherwise requires, references to a partnership and to any debtor within the meaning of the [1985 c. 66.] Bankruptcy (Scotland) Act 1985.
(1) If—
(a) section 22 applies in relation to a trust scheme, but
(b) the practitioner or official receiver neglects or refuses to discharge any duty imposed on him by section 23(1) in relation to the scheme,
any member of the scheme may apply to the appropriate court for an order requiring him to discharge his duties under section 23(1).
(2) In subsection (1) “the appropriate court” means—
(a) if the employer in question is a company—
(i) where a winding-up order has been made or a provisional liquidator appointed, the court which made the order or appointed the liquidator,
(ii) in any other case, any court having jurisdiction to wind up the company, and
(b) in any other case—
(i) in England and Wales, the court (as defined in section 385 of the [1986 c. 45.] Insolvency Act 1986), or
(ii) in Scotland, where a sequestration has been awarded or, by virtue of the proviso to section 13(1) of the [1985 c. 66.] Bankruptcy (Scotland) Act 1985 (petition presented by creditor or trustee acting under trust deed) an interim trustee has been appointed, the court which made the award or appointment and, if no such award or appointment has been made, any court having jurisdiction under section 9 of that Act.
(1) If, immediately before the appointment of an independent trustee under section 23(1)(b), there is no trustee of the scheme other than the employer, the employer shall cease to be a trustee upon the appointment of the independent trustee.
(2) While section 22 applies in relation to a scheme—
(a) any power vested in the trustees of the scheme and exercisable at their discretion may be exercised only by the independent trustee, and
(b) any power—
(i) which the scheme confers on the employer (otherwise than as trustee of the scheme), and
(ii) which is exercisable by him at his discretion but only as trustee of the power,
may be exercised only by the independent trustee,
but if, in either case, there is more than one independent trustee, the power may also be exercised with the consent of at least half of those trustees by any person who could exercise it apart from this subsection.
(3) While section 22 applies in relation to a scheme, no independent trustee of the scheme may be removed from being a trustee by virtue only of any provision of the scheme.
(4) If a trustee appointed under section 23(1)(b) ceases to be an independent person, then—
(a) he must immediately give written notice of that fact to the practitioner or official receiver by whom the duties under that provision fall to be discharged, and
(b) subject to subsection (5), he shall cease to be a trustee of the scheme.
(5) If, in a case where subsection (4) applies, there is no other trustee of the scheme than the former independent trustee, he shall not cease by virtue of that subsection to be a trustee until such time as another trustee is appointed.
(6) A trustee appointed under section 23(1)(b) is entitled to be paid out of the scheme’s resources his reasonable fees for acting in that capacity and any expenses reasonably incurred by him in doing so, and to be so paid in priority to all other claims falling to be met out of the scheme’s resources.
(1) Notwithstanding anything in section 155 of the [1986 c. 45.] Insolvency Act 1986 (court orders for inspection etc.), while section 22 applies in relation to a scheme, the practitioner or official receiver must provide the trustees of the scheme, as soon as practicable after the receipt of a request, with any information which the trustees may reasonably require for the purposes of the scheme.
(2) Any expenses incurred by the practitioner or official receiver in complying with a request under subsection (1) are recoverable by him as part of the expenses incurred by him in discharge of his duties.
(3) The practitioner or official receiver is not required under subsection (1) to take any action which involves expenses that cannot be so recovered, unless the trustees of the scheme undertake to meet them.
(1) A trustee of a trust scheme, and any person who is connected with, or an associate of, such a trustee, is ineligible to act as an auditor or actuary of the scheme.
(2) Subsection (1) does not make a person who is a director, partner or employee of a firm of actuaries ineligible to act as an actuary of a trust scheme merely because another director, partner or employee of the firm is a trustee of the scheme.
(3) Subsection (1) does not make a person who falls within a prescribed class or description ineligible to act as an auditor or actuary of a trust scheme.
(4) A person must not act as an auditor or actuary of a trust scheme if he is ineligible under this section to do so.
(5) In this section and section 28 references to a trustee of a trust scheme do not include—
(a) a trustee, or
(b) a trustee of a scheme,
falling within a prescribed class or description.
(1) Any person who acts as an auditor or actuary of a trust scheme in contravention of section 27(4) is guilty of an offence and liable—
(a) on summary conviction, to a fine not exceeding the statutory maximum, and
(b) on conviction on indictment, to imprisonment or a fine, or both.
(2) An offence under subsection (1) may be charged by reference to any day or longer period of time; and a person may be convicted of a second or subsequent offence under that subsection by reference to any period of time following the preceding conviction of the offence.
(3) Acts done as an auditor or actuary of a trust scheme by a person who is ineligible under section 27 to do so are not invalid merely because of that fact.
(4) Where—
(a) a trustee of a trust scheme acts as auditor or actuary of the scheme, or
(b) a person acts as auditor or actuary of a trust scheme when he is ineligible under section 27 to do so by reason of being connected with, or an associate of, a trustee of the scheme,
section 3 applies to the trustee.
(1) Subject to subsection (5), a person is disqualified for being a trustee of any trust scheme if—
(a) he has been convicted of any offence involving dishonesty or deception,
(b) he has been adjudged bankrupt or sequestration of his estate has been awarded and (in either case) he has not been discharged,
(c) where the person is a company, if any director of the company is disqualified under this section,
(d) where the person is a Scottish partnership, if any partner is disqualified under this section,
(e) he has made a composition contract or an arrangement with, or granted a trust deed for the behoof of, his creditors and has not been discharged in respect of it, or
(f) he is subject to a disqualification order under the [1986 c. 46.] Company Directors Disqualification Act 1986 or to an order made under section 429(2)(b) of the [1986 c. 45.] Insolvency Act 1986 (failure to pay under county court administration order).
(2) In subsection (1)—
(a) paragraph (a) applies whether the conviction occurred before or after the coming into force of that subsection, but does not apply in relation to any conviction which is a spent conviction for the purposes of the [1974 c. 53.] Rehabilitation of Offenders Act 1974,
(b) paragraph (b) applies whether the adjudication of bankruptcy or the sequestration occurred before or after the coming into force of that subsection,
(c) paragraph (e) applies whether the composition contract or arrangement was made, or the trust deed was granted, before or after the coming into force of that subsection, and
(d) paragraph (f) applies in relation to orders made before or after the coming into force of that subsection.
(3) Where a person—
(a) is prohibited from being a trustee of a trust scheme by an order under section 3, or
(b) has been removed as a trustee of a trust scheme by an order made (whether before or after the coming into force of this subsection) by the High Court or the Court of Session on the grounds of misconduct or mismanagement in the administration of the scheme for which he was responsible or to which he was privy, or which he by his conduct contributed to or facilitated,
the Authority may, if in their opinion it is not desirable for him to be a trustee of any trust scheme, by order disqualify him for being a trustee of any trust scheme.
(4) The Authority may by order disqualify a person for being a trustee of any trust scheme where—
(a) in their opinion he is incapable of acting as such a trustee by reason of mental disorder (within the meaning of the [1983 c. 20.] Mental Health Act 1983 or, as respects Scotland, the [1984 c. 36.] Mental Health (Scotland) Act 1984), or
(b) the person is a company which has gone into liquidation (within the meaning of section 247(2) of the [1986 c. 45.] Insolvency Act 1986).
(5) The Authority may, on the application of any person disqualified under this section—
(a) give notice in writing to him waiving his disqualification,
(b) in the case of a person disqualified under subsection (3) or (4), by order revoke the order disqualifying him,
either generally or in relation to a particular scheme or particular class of schemes.
(6) A notice given or revocation made at any time by virtue of subsection (5) cannot affect anything done before that time.
(1) A trustee of a trust scheme who becomes disqualified under section 29 shall, while he is so disqualified, cease to be a trustee.
(2) Where—
(a) a trustee of a trust scheme becomes disqualified under section 29, or
(b) in the case of a trustee of a trust scheme who has become so disqualified, his disqualification is waived or the order disqualifying him is revoked or he otherwise ceases to be disqualified,
the Authority may exercise the same jurisdiction and powers as are exercisable by the High Court or, in relation to a trust scheme subject to the law of Scotland, the Court of Session for vesting any property in, or transferring any property to, the trustees.
(3) A person who purports to act as a trustee of a trust scheme while he is disqualified under section 29 is guilty of an offence and liable—
(a) on summary conviction to a fine not exceeding the statutory maximum, and
(b) on conviction on indictment, to a fine or imprisonment or both.
(4) An offence under subsection (3) may be charged by reference to any day or longer period of time; and a person may be convicted of a second or subsequent offence under that subsection by reference to any period of time following the preceding conviction of the offence.
(5) Things done by a person disqualified under section 29 while purporting to act as trustee of a trust scheme are not invalid merely because of that disqualification.
(6) Nothing in section 29 or this section affects the liability of any person for things done, or omitted to be done, by him while purporting to act as trustee of a trust scheme.
(7) The Authority must keep, in such manner as they think fit, a register of all persons who are disqualified under section 29(3) or (4); and the Authority must, if requested to do so, disclose whether the name of a person specified in the request is included in the register in respect of a scheme so specified.
(1) No amount may be paid out of the assets of a trust scheme for the purpose of reimbursing, or providing for the reimbursement of, any trustee of the scheme in respect of—
(a) a fine imposed by way of penalty for an offence of which he is convicted, or
(b) a penalty which he is required to pay under section 10 or under section 168(4) of the [1993 c. 48.] Pension Schemes Act 1993.
(2) For the purposes of subsection (1), providing for the reimbursement of a trustee in respect of a fine or penalty includes (among other things) providing for the payment of premiums in respect of a policy of insurance where the risk is or includes the imposition of such a fine or the requirement to pay such a penalty.
(3) Where any amount is paid out of the assets of a trust scheme in contravention of this section, sections 3 and 10 apply to any trustee who fails to take all such steps as are reasonable to secure compliance.
(4) Where a trustee of a trust scheme—
(a) is reimbursed, out of the assets of the scheme or in consequence of provision for his reimbursement made out of those assets, in respect of any of the matters referred to in subsection (1)(a) or (b), and
(b) knows, or has reasonable grounds to believe, that he has been reimbursed as mentioned in paragraph (a),
then, unless he has taken all such steps as are reasonable to secure that he is not so reimbursed, he is guilty of an offence.
(5) A person guilty of an offence under subsection (4) is liable—
(a) on summary conviction, to a fine not exceeding the statutory maximum, and
(b) on conviction on indictment, to imprisonment, or a fine, or both.
(1) Decisions of the trustees of a trust scheme may, unless the scheme provides otherwise, be taken by agreement of a majority of the trustees.
(2) Where decisions of the trustees of a trust scheme may be taken by agreement of a majority of the trustees—
(a) the trustees may, unless the scheme provides otherwise, by a determination under this subsection require not less than the number of trustees specified in the determination to be present when any decision is so taken, and
(b) notice of any occasions at which decisions may be so taken must, unless the occasion falls within a prescribed class or description, be given to each trustee to whom it is reasonably practicable to give such notice.
(3) Notice under subsection (2)(b) must be given in a prescribed manner and not later than the beginning of a prescribed period.
(4) This section is subject to sections 8(4)(b), 16(3)(b) and 25(2).
(5) If subsection (2)(b) is not complied with, sections 3 and 10 apply to any trustee who has failed to take all such steps as are reasonable to secure compliance.
(1) Liability for breach of an obligation under any rule of law to take care or exercise skill in the performance of any investment functions, where the function is exercisable—
(a) by a trustee of a trust scheme, or
(b) by a person to whom the function has been delegated under section 34,
cannot be excluded or restricted by any instrument or agreement.
(2) In this section, references to excluding or restricting liability include—
(a) making the liability or its enforcement subject to restrictive or onerous conditions,
(b) excluding or restricting any right or remedy in respect of the liability, or subjecting a person to any prejudice in consequence of his pursuing any such right or remedy, or
(c) excluding or restricting rules of evidence or procedure.
(3) This section does not apply—
(a) to a scheme falling within any prescribed class or description, or
(b) to any prescribed description of exclusion or restriction.
(1) The trustees of a trust scheme have, subject to any restriction imposed by the scheme, the same power to make an investment of any kind as if they were absolutely entitled to the assets of the scheme.
(2) Any discretion of the trustees of a trust scheme to make any decision about investments—
(a) may be delegated by or on behalf of the trustees to a fund manager to whom subsection (3) applies to be exercised in accordance with section 36, but
(b) may not otherwise be delegated except under section 25 of the [1925 c. 19.] Trustee Act 1925 (delegation of trusts during absence abroad) or subsection (5) below.
(3) This subsection applies to a fund manager who, in relation to the decisions in question, falls, or is treated as falling, within any of paragraphs (a) to (c) of section 191(2) of the [1986 c. 60.] Financial Services Act 1986 (occupational pension schemes: exemptions where decisions taken by authorised and other persons).
(4) The trustees are not responsible for the act or default of any fund manager in the exercise of any discretion delegated to him under subsection (2)(a) if they have taken all such steps as are reasonable to satisfy themselves or the person who made the delegation on their behalf has taken all such steps as are reasonable to satisfy himself—
(a) that the fund manager has the appropriate knowledge and experience for managing the investments of the scheme, and
(b) that he is carrying out his work competently and complying with section 36.
(5) Subject to any restriction imposed by a trust scheme—
(a) the trustees may authorise two or more of their number to exercise on their behalf any discretion to make any decision about investments, and
(b) any such discretion may, where giving effect to the decision would not constitute carrying on investment business in the United Kingdom (within the meaning of the [1986 c. 60.] Financial Services Act 1986), be delegated by or on behalf of the trustees to a fund manager to whom subsection (3) does not apply to be exercised in accordance with section 36;
but in either case the trustees are liable for any acts or defaults in the exercise of the discretion if they would be so liable if they were the acts or defaults of the trustees as a whole.
(6) Section 33 does not prevent the exclusion or restriction of any liability of the trustees of a trust scheme for the acts or defaults of a fund manager in the exercise of a discretion delegated to him under subsection (5)(b) where the trustees have taken all such steps as are reasonable to satisfy themselves, or the person who made the delegation on their behalf has taken all such steps as are reasonable to satisfy himself—
(a) that the fund manager has the appropriate knowledge and experience for managing the investments of the scheme, and
(b) that he is carrying out his work competently and complying with section 36;
and subsection (2) of section 33 applies for the purposes of this subsection as it applies for the purposes of that section.
(7) The provisions of this section override any restriction inconsistent with the provisions imposed by any rule of law or by or under any enactment, other than an enactment contained in, or made under, this Part or the [1993 c. 48.] Pension Schemes Act 1993.
(1) The trustees of a trust scheme must secure that there is prepared, maintained and from time to time revised a written statement of the principles governing decisions about investments for the purposes of the scheme.
(2) The statement must cover, among other things—
(a) the trustees' policy for securing compliance with sections 36 and 56, and
(b) their policy about the following matters.
(3) Those matters are—
(a) the kinds of investments to be held,
(b) the balance between different kinds of investments,
(c) risk,
(d) the expected return on investments,
(e) the realisation of investments, and
(f) such other matters as may be prescribed.
(4) Neither the trust scheme nor the statement may impose restrictions (however expressed) on any power to make investments by reference to the consent of the employer.
(5) The trustees of a trust scheme must, before a statement under this section is prepared or revised—
(a) obtain and consider the written advice of a person who is reasonably believed by the trustees to be qualified by his ability in and practical experience of financial matters and to have the appropriate knowledge and experience of the management of the investments of such schemes, and
(b) consult the employer.
(6) If in the case of any trust scheme—
(a) a statement under this section has not been prepared or is not being maintained, or
(b) the trustees have not obtained and considered advice in accordance with subsection (5),
sections 3 and 10 apply to any trustee who has failed to take all such steps as are reasonable to secure compliance.
(7) This section does not apply to any scheme which falls within a prescribed class or description.
Pensions Act 1995