(1) Section 1 of the Pension Schemes Act 1993 (c. 48) (categories of pension scheme) is amended as follows.
(2) The provisions of the section shall become subsection (1) of the section.
(3) In that subsection, for the definitions of “occupational pension scheme” and “personal pension scheme” substitute—
““occupational pension scheme” means a pension scheme—
(a) that—
for the purpose of providing benefits to, or in respect of, people with service in employments of a description, or
for that purpose and also for the purpose of providing benefits to, or in respect of, other people,
is established by, or by persons who include, a person to whom subsection (2) applies when the scheme is established or (as the case may be) to whom that subsection would have applied when the scheme was established had that subsection then been in force, and
(b) that has its main administration in the United Kingdom or outside the member States,
or a pension scheme that is prescribed or is of a prescribed description;
“personal pension scheme” means a pension scheme that—
(a) is not an occupational pension scheme, and
(b) is established by a person within any of the paragraphs of section 154(1) of the Finance Act 2004;”.
(4) After that subsection insert—
“(2) This subsection applies—
(a) where people in employments of the description concerned are employed by someone, to a person who employs such people,
(b) to a person in an employment of that description, and
(c) to a person representing interests of a description framed so as to include—
(i) interests of persons who employ people in employments of the description mentioned in paragraph (a), or
(ii) interests of people in employments of that description.
(3) For the purposes of subsection (2), if a person is in an employment of the description concerned by reason of holding an office (including an elective office) and is entitled to remuneration for holding it, the person responsible for paying the remuneration shall be taken to employ the office-holder.
(4) In the definition in subsection (1) of “occupational pension scheme”, the reference to a description includes a description framed by reference to an employment being of any of two or more kinds.
(5) In subsection (1) “pension scheme” (except in the phrases “occupational pension scheme”, “personal pension scheme” and “public service pension scheme”) means a scheme or other arrangements, comprised in one or more instruments or agreements, having or capable of having effect so as to provide benefits to or in respect of people—
(a) on retirement,
(b) on having reached a particular age, or
(c) on termination of service in an employment.
(6) The power of the Treasury under section 154(4) of the Finance Act 2004 (power to amend sections 154 and 155) includes power consequentially to amend—
(a) paragraph (a) of the definition in subsection (1) of “personal pension scheme”, and
(b) any provision in force in Northern Ireland corresponding to that paragraph.”
(1) In section 125 of the Pensions Act 1995 (c. 26) (supplementary provision relating to interpretation), in subsection (3) (extension of meaning of “employer”)—
(a) after “include” insert “—
(a)”, and
(b) after “scheme” insert “;
(b) such other persons as may be prescribed”.
(2) In section 175 of that Act (parliamentary control of orders and regulations), in subsection (2) (instruments subject to affirmative resolution procedure), omit “or” at end of paragraph (c) and after that paragraph insert—
“(ca) section 125(3)(b), or”.
(1) The trustees of an occupational trust scheme must secure—
(a) that, within a reasonable period of the commencement date, arrangements are in place which provide for at least one-third of the total number of trustees to be member-nominated trustees, and
(b) that those arrangements are implemented.
(2) “Member-nominated trustees” are trustees of an occupational trust scheme who—
(a) are nominated as the result of a process in which at least the following are eligible to participate—
(i) all the active members of the scheme or an organisation which adequately represents the active members, and
(ii) all the pensioner members of the scheme or an organisation which adequately represents the pensioner members, and
(b) are selected as a result of a process which involves some or all of the members of the scheme.
(3) The “commencement date”, in relation to a scheme, is—
(a) the date upon which this section first applies in relation to the scheme, or
(b) in the case of a scheme to which this section has ceased to apply and then reapplies, the date on which the section reapplies to it.
(4) The arrangements may provide for a greater number of member-nominated trustees than that required to satisfy the one-third minimum mentioned in subsection (1)(a) only if the employer has approved the greater number.
(5) The arrangements—
(a) must provide for the nomination and selection process to take place within a reasonable period of any requirement arising under the arrangements to appoint a member-nominated trustee,
(b) must provide, where a vacancy is not filled because insufficient nominations are received, for the nomination and selection process to be repeated at reasonable intervals until the vacancy is filled,
(c) 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, and
(d) subject to paragraph (c), may provide that, where the number of nominations received is equal to or less than the number of appointments required, the nominees are deemed to be selected.
(6) The arrangements must provide that the removal of a member-nominated trustee requires the agreement of all the other trustees.
(7) Nothing in the arrangements or in the provisions of the scheme may exclude member-nominated trustees from the exercise of functions exercisable by other trustees by reason only of the fact that they are member-nominated trustees.
(8) This section does not apply in relation to an occupational trust scheme if—
(a) every member of the scheme is a trustee of the scheme and no other person is such a trustee,
(b) every trustee of the scheme is a company, or
(c) the scheme is of a prescribed description.
(9) If, in the case of an occupational trust scheme, the arrangements required by subsection (1)—
(a) are not in place as required by subsection (1)(a), or
(b) are not being implemented,
section 10 of the Pensions Act 1995 (c. 26) (civil penalties) applies to any trustee who has failed to take all reasonable steps to secure compliance.
(1) Where a company is a trustee of an occupational trust scheme and every trustee of the scheme is a company, the company must secure—
(a) that, within a reasonable period of the commencement date, arrangements are in place which provide for at least one-third of the total number of directors of the company to be member-nominated directors, and
(b) that those arrangements are implemented.
(2) “Member-nominated directors” are directors of the company in question who—
(a) are nominated as the result of a process in which at least the following are eligible to participate—
(i) all the active members of the occupational trust scheme or an organisation which adequately represents the active members, and
(ii) all the pensioner members of the occupational trust scheme or an organisation which adequately represents the pensioner members, and
(b) are selected as a result of a process which involves some or all of the members of that scheme.
(3) The “commencement date”, in relation to a company, is—
(a) the date upon which this section first applies in relation to the company, or
(b) in the case of a company to which this section has ceased to apply and then reapplies, the date on which the section reapplies to it.
(4) The arrangements may provide for a greater number of member-nominated directors than that required to satisfy the one-third minimum mentioned in subsection (1)(a) only if the employer has approved the greater number.
(5) The arrangements—
(a) must provide for the nomination and selection process to take place within a reasonable period of any requirement arising under the arrangements to appoint a member-nominated director,
(b) must provide, where a vacancy is not filled because insufficient nominations are received, for the nomination and selection process to be repeated at reasonable intervals until the vacancy is filled,
(c) 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 director, and
(d) subject to paragraph (c), may provide that, where the number of nominations received is equal to or less than the number of appointments required, the nominees are deemed to be selected.
(6) The arrangements must provide that the removal of a member-nominated director requires the agreement of all the other directors.
(7) Nothing in the arrangements may exclude member-nominated directors from the exercise of functions exercisable by other directors by reason only of the fact that they are member-nominated directors.
(8) Where the same company is a trustee of two or more occupational trust schemes by reference to each of which this section applies to the company, then, subject to subsection (9), the preceding provisions of this section have effect as if—
(a) the schemes were a single scheme,
(b) the members of each of the schemes were members of that single scheme, and
(c) the references to “the employer” were references to all the employers in relation to the schemes.
(9) Where, apart from this subsection, subsection (8) would apply in relation to a company, the company may elect that subsection (8)—
(a) is not to apply as mentioned in that subsection, or
(b) is to apply but only in relation to some of the schemes to which it would otherwise apply.
(10) This section does not apply in relation to an occupational trust scheme if the scheme is of a prescribed description.
(11) If, in the case of a company which is a trustee of an occupational trust scheme, the arrangements required by subsection (1)—
(a) are not in place as required by subsection (1)(a), or
(b) are not being implemented,
section 10 of the Pensions Act 1995 (c. 26) (civil penalties) applies to the company.
(1) The Secretary of State may, by order, amend sections 241(1)(a) and (4) and 242(1)(a) and (4) by substituting, in each of those provisions, “one-half” for “one-third”.
(2) Regulations may modify sections 241 and 242 (including any of the provisions mentioned in subsection (1)) in their application to prescribed cases.
(3) In sections 241 and 242—
“company” means a company within the meaning given by section 735(1) of the Companies Act 1985 (c. 6) or a company which may be wound up under Part 5 of the Insolvency Act 1986 (c. 45) (unregistered companies);
“occupational trust scheme” means an occupational pension scheme established under a trust.
For section 35 of the Pensions Act 1995 (investment principles) substitute—
(1) The trustees of a trust scheme must secure—
(a) that a statement of investment principles is prepared and maintained for the scheme, and
(b) that the statement is reviewed at such intervals, and on such occasions, as may be prescribed and, if necessary, revised.
(2) In this section “statement of investment principles”, in relation to a trust scheme, means a written statement of the investment principles governing decisions about investments for the purposes of the scheme.
(3) Before preparing or revising a statement of investment principles, the trustees of a trust scheme must comply with any prescribed requirements.
(4) A statement of investment principles must be in the prescribed form and cover, amongst other things, the prescribed matters.
(5) Neither a trust scheme nor a statement of investment principles may impose restrictions (however expressed) on any power to make investments by reference to the consent of the employer.
(6) If in the case of a trust scheme—
(a) a statement of investment principles has not been prepared, is not being maintained or has not been reviewed or revised, as required by this section, or
(b) the trustees have not complied with the obligation imposed on them by subsection (3),
section 10 applies to any trustee who has failed to take all reasonable steps to secure compliance.
(7) Regulations may provide that this section is not to apply to any scheme which is of a prescribed description.”
(1) Section 36 of the Pensions Act 1995 (c. 26) (choosing investments) is amended as follows.
(2) For subsection (1) substitute—
“(1) The trustees of a trust scheme must exercise their powers of investment in accordance with regulations and in accordance with subsections (3) and (4), and any fund manager to whom any discretion has been delegated under section 34 must exercise the discretion in accordance with regulations.
(1A) Regulations under subsection (1) may, in particular—
(a) specify criteria to be applied in choosing investments, and
(b) require diversification of investments.”
(3) Omit subsection (2).
(4) In subsection (3) for “the matters mentioned in subsection (2) and” substitute “the requirements of regulations under subsection (1), so far as relating to the suitability of investments, and to”.
(5) For subsection (8) substitute—
“(8) If the trustees of a trust scheme—
(a) fail to comply with regulations under subsection (1), or
(b) do not obtain and consider advice in accordance with this section,
section 10 applies to any trustee who has failed to take all reasonable steps to secure compliance.”
(6) After subsection (8) insert—
“(9) Regulations may exclude the application of any of the preceding provisions of this section to any scheme which is of a prescribed description.”
After section 36 of the Pensions Act 1995 insert—
Regulations may prohibit the trustees of a trust scheme, or the fund manager to whom any discretion has been delegated under section 34, from borrowing money or acting as a guarantor, except in prescribed cases.”
(1) This section applies to every individual who is a trustee of an occupational pension scheme.
(2) In this section, “relevant scheme”, in relation to an individual, means any occupational pension scheme of which he is a trustee.
(3) An individual to whom this section applies must, in relation to each relevant scheme, be conversant with—
(a) the trust deed and rules of the scheme,
(b) any statement of investment principles for the time being maintained under section 35 of the Pensions Act 1995 (c. 26),
(c) in the case of a relevant scheme to which Part 3 (scheme funding) applies, the statement of funding principles most recently prepared or revised under section 223, and
(d) any other document recording policy for the time being adopted by the trustees relating to the administration of the scheme generally.
(4) An individual to whom this section applies must have knowledge and understanding of—
(a) the law relating to pensions and trusts,
(b) the principles relating to—
(i) the funding of occupational pension schemes, and
(ii) investment of the assets of such schemes, and
(c) such other matters as may be prescribed.
(5) The degree of knowledge and understanding required by subsection (4) is that appropriate for the purposes of enabling the individual properly to exercise his functions as trustee of any relevant scheme.
(1) This section applies to any company which is a trustee of an occupational pension scheme.
(2) In this section, “relevant scheme”, in relation to a company, means any occupational pension scheme of which it is a trustee.
(3) A company to which this section applies must, in relation to each relevant scheme, secure that each individual who exercises any function which the company has as trustee of the scheme is conversant with each of the documents mentioned in subsection (4) so far as it is relevant to the exercise of the function.
(4) Those documents are—
(a) the trust deed and rules of the scheme,
(b) any statement of investment principles for the time being maintained under section 35 of the Pensions Act 1995,
(c) in the case of a relevant scheme to which Part 3 (scheme funding) applies, the statement of funding principles most recently prepared or revised under section 223, and
(d) any other document recording policy for the time being adopted by the trustees relating to the administration of the scheme generally.
(5) A company to which this section applies must secure that any individual who exercises any function which the company has as trustee of any relevant scheme has knowledge and understanding of—
(a) the law relating to pensions and trusts,
(b) the principles relating to—
(i) the funding of occupational pension schemes, and
(ii) investment of the assets of such schemes, and
(c) such other matters as may be prescribed.
(6) The degree of knowledge and understanding required by subsection (5) is that appropriate for the purposes of enabling the individual properly to exercise the function in question.
(7) References in this section to the exercise by an individual of any function of a company are to anything done by the individual on behalf of the company which constitutes the exercise of the function by the company.
(8) In this section “company” means a company within the meaning given by section 735(1) of the Companies Act 1985 (c. 6) or a company which may be wound up under Part 5 of the Insolvency Act 1986 (c. 45) (unregistered companies).
(1) For the purposes of sections 247 and 248, a person’s functions as trustee of a relevant scheme are any functions which he has by virtue of being such a trustee and include, in particular—
(a) any functions which he has as one of the trustees authorised under section 34(5)(a) of the Pensions Act 1995 (c. 26) (delegation of investment discretions) in the case of the scheme, and
(b) any functions which he otherwise has as a member of a committee of the trustees of the scheme.
(2) Regulations may provide for any provision in section 247 or 248—
(a) not to apply, or
(b) to apply with modifications,
to a trustee in prescribed circumstances.
(3) Nothing in either of those sections affects any rule of law requiring a trustee to have knowledge of, or expertise in, any matter.
For section 37 of the Pensions Act 1995 (payment of surplus to employer) substitute—
(1) This section applies to a trust scheme if—
(a) apart from this section power is conferred on the employer or any other person to make payments to the employer out of funds held for the purposes of the scheme, and
(b) the scheme is not being wound up.
(2) Where the power referred to in subsection (1)(a) is conferred by the scheme on a person other than the trustees—
(a) it cannot be exercised by that person but may instead be exercised by the trustees, and
(b) any restriction imposed by the scheme on the exercise of the power shall, so far as capable of doing so, apply to its exercise by the trustees.
(3) The power referred to in subsection (1)(a) may only be exercised if—
(a) the trustees have obtained a written valuation of the scheme’s assets and liabilities prepared and signed by a prescribed person;
(b) there is a certificate in force—
(i) stating that in the opinion of that person the prescribed requirements are met as at the date by reference to which the assets are valued and the liabilities are calculated, and
(ii) specifying what in the opinion of that person is the maximum amount of payment that may be made to the employer;
(c) the payment does not exceed the maximum amount specified in the certificate;
(d) the trustees are satisfied that it is in the interests of the members that the power is exercised in the manner proposed;
(e) where the power is conferred by the scheme on the employer, the employer has asked for the power to be exercised, or consented to its being exercised, in the manner proposed;
(f) there is no freezing order in force in relation to the scheme under section 23 of the Pensions Act 2004; and
(g) notice of the proposal to exercise the power has been given, in accordance with prescribed requirements, to the members of the scheme.
(4) Provision may be made by regulations as to—
(a) the requirements (which may be alternative requirements) that must be met, in relation to any proposed payment to the employer out of funds held for the purposes of a scheme, with respect to the value of the scheme’s assets and the amount of its liabilities;
(b) the assets and liabilities to be taken into account for that purpose and the manner in which their value or amount is to be determined, calculated and verified;
(c) the maximum amount of the payment that may be made to the employer, having regard to the value of the scheme’s assets and the amount of its liabilities;
(d) the giving of a certificate as to the matters mentioned in paragraphs (a) and (c); and
(e) the period for which such a certificate is to be in force.
(5) The trustees must also comply with any other prescribed requirements in connection with the making of a payment under this section.
(6) If the trustees—
(a) purport to exercise the power referred to in subsection (1)(a) without complying with the requirements of this section, or
(b) fail to comply with any requirement of regulations under subsection (5),
section 10 applies to any of them who has failed to take all reasonable steps to secure compliance.
(7) If a person other than the trustees purports to exercise the power referred to in subsection (1)(a), section 10 applies to him.
(8) Regulations may provide that in prescribed circumstances this section does not apply, or applies with prescribed modifications, to schemes of a prescribed description.”
(1) This section applies to a scheme which immediately before the commencement of section 250 was one to which section 37 of the Pensions Act 1995 (c. 26) applied (see subsection (1) of that section, as it then had effect).
(2) No payment to the employer may be made out of funds held for the purposes of the scheme except by virtue of a resolution of the trustees under this section.
This applies even if the payment is one proposed to be made in fulfilment of an agreement or arrangement entered into before the commencement of this section.
(3) Where the scheme was so expressed as (apart from section 37, as it then applied) to confer power to make payments to the employer out of funds held for the purposes of the scheme otherwise than in pursuance of proposals approved under paragraph 6(1) of Schedule 22 to the Income and Corporation Taxes Act 1988 (c. 1), the trustees may resolve that the power—
(a) shall become exercisable according to its terms, or
(b) shall become so exercisable, but only in such circumstances and subject to such conditions as may be specified in the resolution.
(4) Where the scheme was so expressed as to confer power to make payments to the employer out of funds held for the purposes of the scheme only in pursuance of proposals approved under paragraph 6(1) of Schedule 22 to the Income and Corporation Taxes Act 1988, the trustees may resolve that the power shall instead be exercisable in such circumstances and subject to such conditions as may be specified in the resolution.
(5) In either case the trustees must be satisfied that it is in the interests of the members of the scheme that the power is exercised in the manner proposed.
(6) The power conferred by subsection (3) or (4)—
(a) may not be exercised unless notice of the proposal to exercise it has been given, in accordance with prescribed requirements, to the employer and to the members of the scheme,
(b) may only be exercised once, and
(c) ceases to be exercisable five years after the commencement of this section.
(7) The exercise of any power to make payments to the employer by virtue of a resolution under this section is subject to section 37 of the Pensions Act 1995 (c. 26) as substituted by section 250.
(1) Subsections (2) and (3) apply to an occupational pension scheme that has its main administration in the United Kingdom.
(2) If the scheme is not established under irrevocable trusts, the trustees or managers of the scheme must secure that no funding payment is accepted.
(3) If the rules stipulating—
(a) the benefits under the scheme, and
(b) any conditions subject to which benefits under the scheme accrue,
are not in force, or if those rules are not set out in writing, the trustees or managers of the scheme must secure that no funding payment is accepted.
(4) Subsection (2) or (3) does not apply to an occupational pension scheme if it is a prescribed scheme or a scheme of a prescribed description.
(5) Section 10 of the Pensions Act 1995 (civil penalties) applies to a trustee or manager of an occupational pension scheme that has its main administration in the United Kingdom if—
(a) subsection (2) or (3) requires the trustees or managers of the scheme to secure that no funding payment is accepted,
(b) a funding payment is accepted, and
(c) the trustee or manager has failed to take all reasonable steps to secure that no funding payment is accepted.
(6) In this section “funding payment”, in relation to a scheme, means a payment made to the scheme to fund benefits for, or in respect of, any or all of the members.