Office of Public Sector Information
PART I continued
(1) The trustees of a trust scheme may by resolution modify the scheme with a view to achieving any of the purposes specified in subsection (2).
(2) The purposes referred to in subsection (1) are—
(a) to extend the class of persons who may receive benefits under the scheme in respect of the death of a member of the scheme,
(b) to enable the scheme to conform with such arrangements as are required by section 16(1) or 17(2),
(c) to enable the scheme to comply with such terms and conditions as may be imposed by the Compensation Board in relation to any payment made by them under section 83 or 84,
(d) to enable the scheme to conform with section 37(2), 76(2), 91 or 92, and
(e) prescribed purposes.
(3) No modification may be made by virtue of subsection (2)(a) without the consent of the employer.
(4) Modifications made by virtue of subsection (2)(b) may include in particular—
(a) modification of any limit on the number of, or of any category of, trustees, or
(b) provision for the transfer or vesting of property.
(5) Nothing done by virtue of subsection (2)(d), or any corresponding provisions in force in Northern Ireland, shall be treated as effecting an alteration to the scheme in question for the purposes of section 591B (cessation of approval) of the Taxes Act 1988.
(6) Regulations may provide that this section does not apply to trust schemes falling within a prescribed class or description.
(1) The Authority may, on an application made to them by persons competent to do so, make an order in respect of an occupational pension scheme (other than a public service pension scheme)—
(a) authorising the modification of the scheme with a view to achieving any of the purposes mentioned in subsection (3), or
(b) modifying the scheme with a view to achieving any such purpose.
(2) Regulations may make provision about the manner of dealing with applications under this section.
(3) The purposes referred to in subsection (1) are—
(a) in the case of a scheme to which Schedule 22 to the Taxes Act 1988 (reduction of pension fund surpluses in certain exempt approved schemes) applies, to reduce or eliminate on any particular occasion any excess in accordance with any proposal submitted under paragraph 3(1) of that Schedule, where any requirements mentioned in section 37(4), and any other prescribed requirements, will be satisfied in relation to the reduction or elimination,
(b) in the case of an exempt approved scheme (within the meaning given by section 592(1) of the Taxes Act 1988) which is being wound up, to enable assets remaining after the liabilities of the scheme have been fully discharged to be distributed to the employer, where prescribed requirements in relation to the distribution are satisfied, or
(c) to enable the scheme to be so treated during a prescribed period that an employment to which the scheme applies may be contracted-out employment by reference to it.
(4) The persons competent to make an application under this section are—
(a) in the case of the purposes referred to in paragraph (a) or (b) of subsection (3), the trustees of the scheme, and
(b) in the case of the purposes referred to in paragraph (c) of that subsection—
(i) the trustees or managers of the scheme,
(ii) the employer, or
(iii) any person other than the trustees or managers who has power to alter the rules of the scheme.
(5) An order under subsection (1)(a) must be framed—
(a) if made with a view to achieving either of the purposes referred to in subsection (3)(a) or (b), so as to confer the power of modification on the trustees, and
(b) if made with a view to achieving the purposes referred to in subsection (3)(c), so as to confer the power of modification on such persons (who may include persons who were not parties to the application made to the Authority) as the Authority think appropriate.
(6) Regulations may provide that in prescribed circumstances this section does not apply to occupational pension schemes falling within a prescribed class or description or applies to them with prescribed modifications.
(1) The Authority may not make an order under section 69 unless they are satisfied that the purposes for which the application for the order was made—
(a) cannot be achieved otherwise than by means of such an order, or
(b) can only be achieved in accordance with a procedure which—
(i) is liable to be unduly complex or protracted, or
(ii) involves the obtaining of consents which cannot be obtained, or can only be obtained with undue delay or difficulty.
(2) The extent of the Authority’s powers to make such an order is not limited, in relation to any purposes for which they are exercisable, to the minimum necessary to achieve those purposes.
(3) The Authority may not make an order under section 69 with a view to achieving the purpose referred to in subsection (3)(c) of that section unless they are satisfied that it is reasonable in all the circumstances to make it.
(1) An order under paragraph (a) of subsection (1) of section 69 may enable those exercising any power conferred by the order to exercise it retrospectively (whether or not the power could otherwise be so exercised) and an order under paragraph (b) of that subsection may modify a scheme retrospectively.
(2) Any modification of a scheme made in pursuance of an order of the Authority under section 69 is as effective in law as if it had been made under powers conferred by or under the scheme.
(3) An order under section 69 may be made and complied with in relation to a scheme—
(a) in spite of any enactment or rule of law, or any rule of the scheme, which would otherwise operate to prevent the modification being made, or
(b) without regard to any such enactment, rule of law or rule of the scheme as would otherwise require, or might otherwise be taken to require, the implementation of any procedure or the obtaining of any consent, with a view to the making of the modification.
(4) In this section, “retrospectively” means with effect from a date before that on which the power is exercised or, as the case may be, the order is made.
(1) The appropriate authority may make such provision for the modification of a public service pension scheme as could be made in respect of a scheme other than a public service pension scheme by an order of the Authority under section 69(1)(b).
(2) In this section “the appropriate authority”, in relation to a scheme, means such Minister of the Crown or government department as may be designated by the Treasury as having responsibility for the particular scheme.
(3) The powers of the appropriate authority under this section are exercisable by means of an order—
(a) directly modifying the scheme (without regard, in the case of a scheme contained in or made under powers conferred by an enactment, to the terms of the enactment or any of its restrictions), or
(b) modifying an enactment under which the scheme was made or by virtue of which it has effect.
(4) Any such order may adapt, amend or repeal any such enactment as is referred to in paragraph (a) or (b) of subsection (3) as that authority thinks appropriate.
(1) This section applies, where a salary related occupational pension scheme to which section 56 applies is being wound up, to determine the order in which the assets of the scheme are to be applied towards satisfying the liabilities in respect of pensions and other benefits (including increases in pensions).
(2) The assets of the scheme must be applied first towards satisfying the amounts of the liabilities mentioned in subsection (3) 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 (3) 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.
(3) The liabilities referred to in subsection (2) are—
(a) any liability for pensions or other benefits which, in the opinion of the trustees, are derived from the payment by any member of the scheme of voluntary contributions,
(b) where a person’s entitlement to payment of pension or other benefit has arisen, liability for that pension or benefit and for any pension or other benefit which will be payable to dependants of that person on his death (but excluding increases to pensions),
(c) any liability for—
(i) pensions or other benefits which have accrued to or in respect of any members of the scheme (but excluding increases to pensions), or
(ii) (in respect of members with less than two years pensionable service) the return of contributions,
(d) any liability for increases to pensions referred to in paragraphs (b) and (c);
and, for the purposes of subsection (2), the amounts of the liabilities mentioned in paragraphs (b) to (d) are to be taken to be the amounts calculated and verified in the prescribed manner.
(4) To the extent that any liabilities, as calculated in accordance with the rules of the scheme, have not been satisfied under subsection (2), any remaining assets of the scheme must then be applied towards satisfying those liabilities (as so calculated) in the order provided for in the rules of the scheme.
(5) If the scheme confers power on any person other than the trustees or managers to apply the assets of the scheme in respect of pensions or other benefits (including increases in pensions), it cannot be exercised by that person but may be exercised instead by the trustees or managers.
(6) If this section 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.
(7) Regulations may modify subsection (3).
(8) This section does not apply to an occupational pension scheme falling within a prescribed class or description.
(9) This section shall have effect with prescribed modifications in cases where part of a salary related occupational pension scheme to which section 56 applies is being wound up.
(1) This section applies where a salary related occupational pension scheme to which section 56 applies, other than a scheme falling within a prescribed class or description, is being wound up.
(2) A liability to or in respect of a member of the scheme in respect of pensions or other benefits (including increases in pensions) is to be treated as discharged (to the extent that it would not be so treated apart from this section) if the trustees or managers of the scheme have, in accordance with prescribed arrangements, provided for the discharge of the liability in one or more of the ways mentioned in subsection (3).
(3) The ways referred to in subsection (2) are—
(a) by acquiring transfer credits allowed under the rules of another occupational pension scheme which satisfies prescribed requirements and the trustees or managers of which are able and willing to accept payment in respect of the member,
(b) by acquiring rights allowed under the rules of a personal pension scheme which satisfies prescribed requirements and the trustees or managers of which are able and willing to accept payment in respect of the member’s accrued rights,
(c) by purchasing one or more annuities which satisfy prescribed requirements from one or more insurance companies, being companies willing to accept payment in respect of the member from the trustees or managers,
(d) by subscribing to other pension arrangements which satisfy prescribed requirements.
(4) If the assets of the scheme are insufficient to satisfy in full the liabilities, as calculated in accordance with the rules of the scheme, in respect of pensions and other benefits (including increases in pensions), the reference in subsection (2) to providing for the discharge of any liability in one or more of the ways mentioned in subsection (3) is to applying any amount available, in accordance with section 73, in one or more of those ways.
(5) Regulations may provide for this section—
(a) to have effect in relation to so much of any liability as may be determined in accordance with the regulations, or
(b) to have effect with prescribed modifications in relation to schemes falling within a prescribed class or description.
(1) If, in the case of an occupational pension scheme which is not a money purchase scheme, the value at the applicable time of the assets of the scheme is less than the amount at that time of the liabilities of the scheme, an amount equal to the difference shall be treated as a debt due from the employer to the trustees or managers of the scheme.
(2) If in the case of an occupational pension scheme which is not a money purchase scheme—
(a) a relevant insolvency event occurs in relation to the employer, and
(b) a debt due from the employer under subsection (1) has not been discharged at the time that event occurs,
the debt in question shall be taken, for the purposes of the law relating to winding up, bankruptcy or sequestration as it applies in relation to the employer, to arise immediately before that time.
(3) In this section “the applicable time” means —
(a) if the scheme is being wound up before a relevant insolvency event occurs in relation to the employer, any time when it is being wound up before such an event occurs, and
(b) otherwise, immediately before the relevant insolvency event occurs.
(4) For the purposes of this section a relevant insolvency event occurs in relation to the employer—
(a) in England and Wales—
(i) where the employer is a company, when it goes into liquidation, within the meaning of section 247(2) of the [1986 c. 45.] Insolvency Act 1986, or
(ii) where the employer is an individual, at the commencement of his bankruptcy, within the meaning of section 278 of that Act, or
(b) in Scotland—
(i) where the employer is a company, at the commencement of its winding up, within the meaning of section 129 of that Act, or
(ii) where the employer is a debtor within the meaning of the [1985 c. 66.] Bankruptcy (Scotland) Act 1985, on the date of sequestration as defined in section 12(4) of that Act.
(5) For the purposes of subsection (1), the liabilities and assets to be taken into account, and their amount or value, must be determined, calculated and verified by a prescribed person and in the prescribed manner.
(6) In calculating the value of any liabilities for those purposes, a provision of the scheme which limits the amount of its liabilities by reference to the amount of its assets is to be disregarded.
(7) This section does not prejudice any other right or remedy which the trustees or managers may have in respect of a deficiency in the scheme’s assets.
(8) A debt due by virtue only of this section shall not be regarded—
(a) as a preferential debt for the purposes of the [1986 c. 45.] Insolvency Act 1986, or
(b) as a preferred debt for the purposes of the [1985 c. 66.] Bankruptcy (Scotland) Act 1985.
(9) This section does not apply to an occupational pension scheme falling within a prescribed class or description.
(10) Regulations may modify this section as it applies in prescribed circumstances.
(1) This section applies to a trust scheme in any circumstances if—
(a) it is an exempt approved scheme, within the meaning given by section 592(1) of the Taxes Act 1988,
(b) the scheme is being wound up, and
(c) in those circumstances power is conferred on the employer or the trustees to distribute assets to the employer on a winding up.
(2) The power referred to in subsection (1)(c) cannot be exercised unless the requirements of subsections (3) and (in prescribed circumstances) (4), and any prescribed requirements, are satisfied.
(3) The requirements of this subsection are that—
(a) the liabilities of the scheme have been fully discharged,
(b) where there is any power under the scheme, after the discharge of those liabilities, to distribute assets to any person other than the employer, the power has been exercised or a decision has been made not to exercise it,
(c) the annual rates of the pensions under the scheme which commence or have commenced are increased by the appropriate percentage, and
(d) notice has been given in accordance with prescribed requirements to the members of the scheme of the proposal to exercise the power.
(4) The requirements of this subsection are that the Authority are of the opinion that—
(a) any requirements prescribed by virtue of subsection (2) are satisfied, and
(b) the requirements of subsection (3) are satisfied.
(5) In subsection (3)—
(a) “annual rate” and “appropriate percentage” have the same meaning as in section 54, and
(b) “pension” does not include—
(i) any guaranteed minimum pension (as defined in section 8(2) of the [1993 c. 48.] Pension Schemes Act 1993) or any increase in such a pension under section 109 of that Act, or
(ii) any money purchase benefit (as defined in section 181(1) of that Act).
(6) If, where this section applies to any trust scheme, the trustees purport to exercise the power referred to in subsection (1)(c) without complying with the requirements of this section, sections 3 and 10 apply to any of them who have failed to take all such steps as are reasonable to secure compliance.
(7) If, where this section applies to any trust scheme, any person other than the trustees purports to exercise the power referred to in subsection (1)(c) without complying with the requirements of this section, section 10 applies to him.
(8) Regulations may provide that, in prescribed circumstances, this section does not apply to schemes falling within a prescribed class or description, or applies to them with prescribed modifications.
(1) This section applies to a trust scheme in any circumstances if—
(a) it is an exempt approved scheme, within the meaning given by section 592(1) of the Taxes Act 1988,
(b) the scheme is being wound up,
(c) the liabilities of the scheme have been fully discharged,
(d) where there is any power under the scheme, after the discharge of those liabilities, to distribute assets to any person other than the employer, the power has been exercised or a decision has been made not to exercise it,
(e) any assets remain undistributed, and
(f) the scheme prohibits the distribution of assets to the employer in those circumstances.
(2) The annual rates of the pensions under the scheme which commence or have commenced must be increased by the appropriate percentage, so far as the value of the undistributed assets allows.
(3) In subsection (2)—
(a) “annual rate” and “appropriate percentage” have the same meaning as in section 54, and
(b) “pension” does not include—
(i) any guaranteed minimum pension (as defined in section 8(2) of the [1993 c. 48.] Pension Schemes Act 1993) or any increase in such a pension under section 109 of that Act, or
(ii) any money purchase benefit (as defined in section 181(1) of that Act).
(4) Where any assets remain undistributed after the discharge of the trustees' duty under subsection (2)—
(a) the trustees must use those assets for the purpose of providing additional benefits or increasing the value of any benefits, but subject to prescribed limits, and
(b) the trustees may then distribute those assets (so far as undistributed) to the employer.
(5) If, where this section applies to a trust scheme, the requirements of this section are not complied with, section 3 applies to any trustee who has failed to take all such steps as are reasonable to secure compliance.
(6) Regulations may modify this section as it applies in prescribed circumstances.
(1) There shall be a body corporate called the Pensions Compensation Board (referred to in this Part as “the Compensation Board”).
(2) The Compensation Board shall consist of not less than three members appointed by the Secretary of State, one of whom shall be so appointed as chairman.
(3) In addition to the chairman, the Board shall comprise—
(a) a member appointed after the Secretary of State has consulted—
(i) organisations appearing to him to be representative of employers, and
(ii) the chairman,
(b) a member appointed after the Secretary of State has consulted—
(i) organisations appearing to him to be representative of employees, and
(ii) the chairman,
and such other member or members as the Secretary of State may appoint after consultation with the chairman.
(4) Payments made by the Compensation Board may be made on such terms (including terms requiring repayment in whole or in part) and on such conditions as the Board think appropriate.
(5) The Compensation Board may borrow from an institution authorised under the [1987 c. 22.] Banking Act 1987 such sums as they may from time to time require for exercising any of their functions.
(6) The aggregate amount outstanding in respect of the principal of any money borrowed by the Compensation Board under subsection (5) must not exceed the prescribed amount.
(7) Neither the Compensation Board nor any person who is a member or employee of the Compensation Board shall be liable in damages for anything done or omitted in the discharge or purported discharge of the functions of the Compensation Board under this Part, or any corresponding provisions in force in Northern Ireland, unless it is shown that the act or omission was in bad faith.
(8) Schedule 2 (constitution, procedure, etc. of the Compensation Board) shall have effect.
(1) The Compensation Board must prepare a report for the first twelve months of their existence, and a report for each succeeding period of twelve months, and must send each report to the Secretary of State as soon as practicable after the end of the period for which it is prepared.
(2) A report prepared under this section for any period must deal with the activities of the Compensation Board in the period.
(3) The Secretary of State must lay before each House of Parliament a copy of every report received by him under this section.
(1) Subject to the following provisions of this section, any determination by the Compensation Board of a question which it is within their functions to determine shall be final.
(2) The Compensation Board may on the application of a person appearing to them to be interested—
(a) at any time review any such determination of theirs as is mentioned in subsection (1) (including a determination given by them on a previous review), if they are satisfied that there has been a relevant change of circumstances since the determination was made, or that the determination was made in ignorance of a material fact or based on a mistake as to a material fact or was erroneous in point of law, and
(b) at any time within a period of three months from the date of the determination, or within such longer period as they may allow in any particular case, review such a determination on any ground.
(3) The Compensation Board’s powers on a review under this section include power—
(a) to vary or revoke any determination previously made,
(b) to substitute a different determination, and
(c) generally to deal with the matters arising on the review as if they had arisen on the original determination;
and also include power to make savings and transitional provisions.
(4) Subject to subsection (5), regulations may make provision with respect to the procedure to be adopted on any application for a review under this section, or under any corresponding provision in force in Northern Ireland, and generally with respect to such applications and reviews.
(5) Nothing in subsection (4) shall be taken to prevent such a review being entered upon by the Compensation Board without an application being made.
(1) Subject to subsection (2), this section applies to an application for compensation under section 82 in respect of an occupational pension scheme if all the following conditions are met—
(a) the scheme is a trust scheme,
(b) the employer is insolvent,
(c) the value of the assets of the scheme has been reduced, and there are reasonable grounds for believing that the reduction was attributable to an act or omission constituting a prescribed offence,
(d) in the case of a salary related trust scheme, immediately before the date of the application the value of the assets of the scheme is less than 90 per cent. of the amount of the liabilities of the scheme, and
(e) it is reasonable in all the circumstances that the members of the scheme should be assisted by the Compensation Board paying to the trustees of the scheme, out of funds for the time being held by them, an amount determined in accordance with the compensation provisions.
(2) Subsection (1) does not apply in respect of a trust scheme falling within a prescribed class or description; and paragraph (c) applies only to reductions in value since the appointed day.
(3) In this Part the “compensation provisions” means the provisions of this section and sections 82 to 85; and below in the compensation provisions as they relate to a trust scheme—
(a) “the application date” means the date of the application for compensation under section 82,
(b) “the appointed day” means the day appointed under section 180 for the commencement of this section,
(c) “the insolvency date” means the date on which the employer became insolvent,
(d) “the settlement date” means the date determined by the Compensation Board, after consulting the trustees, to be the date after which further recoveries of value are unlikely to be obtained without disproportionate cost or within a reasonable time,
(e) “the shortfall at the application date” means the amount of the reduction falling within subsection (1)(c) or (if there was more than one such reduction) the aggregate of the reductions, being the amount or aggregate immediately before the application date,
(f) “recovery of value” means any increase in the value of the assets of the scheme, being an increase attributable to any payment received (otherwise than from the Compensation Board) by the trustees of the scheme in respect of any act or omission—
(i) which there are reasonable grounds for believing constituted a prescribed offence, and
(ii) to which any reduction in value falling within subsection (1)(c) was attributable.
(4) It is for the Compensation Board to determine whether anything received by the trustees of the scheme is to be treated as a payment received for any such act or omission as is referred to in subsection (3)(f); and in this section “payment” includes any money or money’s worth.
(5) Where this section applies to an application for compensation under section 82, the trustees must obtain any recoveries of value, to the extent that they may do so without disproportionate cost and within a reasonable time.
(6) If subsection (5) is not complied with, section 3 applies to any trustee who has failed to take all such steps as are reasonable to secure compliance.
(7) Section 56(3) and (4) applies for the purposes of the compensation provisions as it applies for the purposes of sections 56 to 61.
(8) Section 123 of the [1993 c. 48.] Pension Schemes Act 1993 (meaning of insolvency) applies for the purposes of the compensation provisions as it applies for the purposes of Chapter II of Part VII of that Act (unpaid scheme contributions).
(1) Compensation may be paid under section 83 only on an application to which section 81 applies made within the qualifying period by a prescribed person.
(2) An application under this section must be made in the manner, and give the information, required by the Compensation Board.
(3) For the purposes of this section the “qualifying period”, subject to subsection (5), is the period expiring with the period of twelve months mentioned in subsection (4).
(4) The period of twelve months referred to in subsection (3) is that beginning with the later of the following times—
(a) the insolvency date,
(b) when the auditor or actuary of the scheme, or the trustees, knew or ought reasonably to have known that a reduction of value falling within section 81(1)(c) had occurred,
being, in each case, a time after the appointed day.
(5) The Compensation Board may extend, or further extend, the qualifying period.
Pensions Act 1995