Office of Public Sector Information
PART 2 continued CHAPTER 3 continued
(1) Where subsection (2) or (3) applies in relation to an eligible scheme, the trustees or managers of the scheme may make an application to the Board under this section for it to assume responsibility for the scheme in accordance with this Chapter.
(2) This subsection applies where—
(a) a scheme failure notice has been issued under section 122(2)(a) in relation to the scheme, that notice has become binding and the trustees or managers have received a copy of the binding notice under section 125(3),
(b) the valuation obtained by the Board under section 143 in respect of the scheme has become binding, and
(c) the Board would have been required to assume responsibility for the scheme under section 127 but for the fact that the condition in subsection (2)(a) of that section was not satisfied.
(3) This subsection applies where—
(a) the Board has issued a scheme failure notice under subsection (2) of section 130 in relation to the scheme, that notice has become binding and the trustees or managers have received a copy of the binding notice under subsection (7) of that section,
(b) the valuation obtained by the Board under section 143 in respect of the scheme has become binding, and
(c) the Board would have been required to assume responsibility for the scheme under section 128 but for the fact that the condition in subsection (2)(a) of that section was not satisfied.
(4) An application under this section must be in the prescribed form, contain the prescribed information and be accompanied by—
(a) a protected benefits quotation in the prescribed form, and
(b) audited scheme accounts for a period which—
(i) begins with such date as may be determined in accordance with regulations, and
(ii) ends with a date which falls within the prescribed period ending with the day on which the application is made.
(5) An application under this section must be made within the authorised period.
(6) In this section “the authorised period” means the prescribed period which begins—
(a) where subsection (2) applies, with the later of—
(i) the day on which the trustees or managers received the copy of the binding notice mentioned in paragraph (a) of that subsection, and
(ii) the day on which they received a copy of the binding valuation mentioned in paragraph (b) of that section, and
(b) where subsection (3) applies, with the later of—
(i) the day on which the trustees or managers received the copy of the binding notice mentioned in paragraph (a) of that subsection, and
(ii) the day on which they received a copy of the binding valuation mentioned in paragraph (b) of that subsection.
(7) Where the Board receives an application under subsection (1), it must give a copy of the application to the Regulator.
(8) For the purposes of this section—
“audited scheme accounts”, in relation to a scheme, means—
accounts obtained by the trustees or managers of the scheme (“the scheme accounts”) which are prepared in accordance with subsections (9) to (11) and audited by the auditor in relation to the scheme, and
a report by the auditor, in the prescribed form, as to whether or not such requirements as may be prescribed are satisfied in relation to the scheme accounts;
“auditor”, in relation to a scheme, has the meaning given by section 47 of the Pensions Act 1995 (c. 26);
“protected benefits quotation”, in relation to a scheme, means a quotation for one or more annuities from one or more insurers, being companies willing to accept payment in respect of the members from the trustees or managers of the scheme, which would provide in respect of each member of the scheme from the reconsideration time—
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 assumed responsibility for the scheme by virtue of this section, or
benefits in accordance with the member’s entitlement or accrued rights (including pension credit rights within the meaning of section 124(1) of the Pensions Act 1995 (c. 26)) under the scheme rules (other than his entitlement or rights in respect of money purchase benefits),
whichever benefits can, in the case of that member, be secured at the lower cost;
“the reconsideration time”, in relation to an application under this section, means the time immediately before the end of the period to which the audited scheme accounts mentioned in subsection (4)(b) relate.
(9) The scheme accounts are prepared in accordance with this subsection if, subject to subsections (10) and (11), they—
(a) include a statement of the assets of the scheme (excluding any assets representing the value of any rights in respect of money purchase benefits under the scheme rules) as at the reconsideration time, and
(b) are prepared in accordance with such other requirements as may be prescribed.
(10) Subject to subsection (11), regulations under subsection (4) of section 143 (other than regulations made by virtue of subsection (5) of that section), and guidance under subsection (6) of that section, apply to the scheme accounts as they apply for the purposes of a valuation under that section.
(11) Regulations may provide that, where an asset of a prescribed description has been acquired during the assessment period, the value assigned to the asset as at the reconsideration time is to be determined, for the purposes of the scheme accounts, in the prescribed manner.
(12) For the purposes of this section—
(a) regulations may prescribe how the cost of securing the benefits mentioned in paragraph (a) of the definition of “protected benefits quotation” in subsection (8) is to be determined, calculated and verified, and
(b) subject to any provision made under paragraph (a), that cost is to be determined, calculated and verified in accordance with guidance issued by the Board.
(13) Where the scheme is being wound up, for the purposes of determining the benefits which fall within paragraph (b) of the definition of “protected benefits quotation” in subsection (8) no account is to be taken of the winding up of the scheme.
(1) This section applies where an application is made in respect of a scheme in accordance with section 151.
(2) The Board must assume responsibility for the scheme in accordance with this Chapter if it is satisfied that the value of the assets of the scheme at the reconsideration time is less than the aggregate of—
(a) the amount quoted in the protected benefits quotation accompanying the application,
(b) the amount at that time of the liabilities of the scheme which are not liabilities to, or in respect of, members of the scheme, and
(c) the estimated costs of winding up the scheme at that time.
(3) Where the Board makes a determination for the purposes of subsection (2), it must issue a determination notice and give a copy of that notice to—
(a) the trustees or managers of the scheme, and
(b) the Regulator.
(4) In subsection (3) “determination notice” means a notice which is in the prescribed form and contains such information about the determination as may be prescribed.
(5) But where the Board is satisfied of the matters mentioned in subsection (2), it is not required to assume responsibility for the scheme under subsection (2) until the determination notice issued under subsection (3) becomes binding.
(6) For the purposes of subsection (5) a determination notice is not binding until—
(a) the period within which the issue of the notice may be reviewed by virtue of Chapter 6 has expired, and
(b) if the issue of the notice is so reviewed—
(i) the review and any reconsideration,
(ii) any reference to the PPF Ombudsman in respect of the issue of the notice, and
(iii) any appeal against his determination or directions,
has been finally disposed of and the notice has not been revoked, varied or substituted.
(7) Where a determination notice issued under subsection (3) becomes binding, the Board must as soon as reasonably practicable give a notice to that effect together with a copy of the binding notice to—
(a) the trustees or managers of the scheme, and
(b) the Regulator.
(8) A notice under subsection (7) must be in the prescribed form and contain such information as may be prescribed.
(9) The Board may—
(a) for the purposes of subsection (2), obtain its own valuation of the assets of the scheme as at the reconsideration time (within the meaning of section 151), and
(b) for the purposes of subsection (2)(b), obtain its own valuation of the liabilities of the scheme as at that time;
and where it does so, subsections (9)(b), (10) and (11) of section 151 apply in relation to the valuation as they apply in relation to the scheme accounts (within the meaning of that section).
(10) Regulations under subsection (4) of section 143, and guidance under subsection (6) of that section, apply for the purposes of this section in relation to the estimated costs within subsection (2)(c) as they apply for the purposes of section 143 in relation to protected liabilities within section 131(1)(c).
(11) In this section references to the assets of the scheme do not include assets representing the value of any rights in respect of money purchase benefits under the scheme rules.
(12) This section is subject to sections 146 and 147 (refusal to assume responsibility for a scheme).
(1) This section applies where section 151(2) or (3) (scheme rescue not possible but scheme has sufficient assets to meet the protected liabilities) applies in relation to an eligible scheme.
(2) If the trustees or managers of the scheme are unable to obtain a full buy-out quotation, they must, within the authorised period, apply to the Board for authority to continue as a closed scheme.
(3) For the purposes of determining whether they must make an application under subsection (2), the trustees or managers of the scheme must take all reasonable steps to obtain a full buy-out quotation in respect of the scheme.
(4) An application under subsection (2) must—
(a) be in the prescribed form and contain the prescribed information, and
(b) be accompanied by evidence in the prescribed form which shows that the trustees or managers of the scheme have complied with the obligation under subsection (3) but were unable to obtain a full buy-out quotation.
(5) Where the Board receives an application under subsection (2), if it is satisfied that the trustees or managers have complied with the obligation under subsection (3) but were unable to obtain a full buy-out quotation, it must authorise the scheme to continue as a closed scheme.
(6) Where the Board determines an application in respect of a scheme under this section, it must issue a determination notice and give a copy of that notice to—
(a) the trustees or managers of the scheme, and
(b) the Regulator.
(7) In this section—
“authorised period” has the same meaning as in section 151;
“determination notice” means a notice which is in the prescribed form and contains such information about the determination as may be prescribed;
“full buy-out quotation”, in relation to a scheme, means a quotation for one or more annuities from one or more insurers (being companies willing to accept payment in respect of the members from the trustees or managers of the scheme) which would provide in respect of each member of the scheme, from a relevant date, benefits in accordance with the member’s entitlement or accrued rights, including pension credit rights, under the scheme rules (other than his entitlement or rights in respect of money purchase benefits);
“pension credit rights” has the meaning given by section 124(1) of the Pensions Act 1995 (c. 26);
“relevant date” means a date within the authorised period.
(8) If the trustees or managers of the scheme fail to comply with subsection (2) or (3), section 10 of the Pensions Act 1995 (civil penalties) applies to any trustee or manager who has failed to take all reasonable steps to secure compliance.
(1) Where, in relation to an eligible scheme, an assessment period within section 132(2) or (4) comes to an end because the conditions in subsection (2) of this section are satisfied, the trustees or managers of the scheme must—
(a) wind up the scheme, or
(b) where the winding up of the scheme began before the assessment period (whether by virtue of section 219 or otherwise), continue the winding up of the scheme.
(2) The conditions are—
(a) that subsection (2) or (3) of section 151 (scheme rescue not possible but scheme has sufficient assets to meet the protected liabilities) applies in relation to the scheme,
(b) that—
(i) the trustees or managers did not make an application under that section or section 153(2) within the authorised period (within the meaning of section 151(6)) (or any such application has been withdrawn), or
(ii) if such an application was made, it has been finally determined, and
(c) that, if an application was made under section 151, the Board is not required to assume responsibility for the scheme by virtue of section 152(2).
(3) For the purposes of subsection (2)(b)(ii) an application is not finally determined until—
(a) the Board has issued a determination notice in respect of the application under section 152 or, as the case may be, section 153,
(b) the period within which the issue of the notice may be reviewed by virtue of Chapter 6 has expired, and
(c) if the issue of the notice is so reviewed—
(i) the review and any reconsideration,
(ii) any reference to the PPF Ombudsman in respect of the issue of the notice, and
(iii) any appeal against his determination or directions,
has been finally disposed of.
(4) Where, in relation to an eligible scheme, an assessment period within section 159(3) comes to an end because the conditions in subsection (5) of this section are satisfied, the trustees or managers of the scheme must continue the winding up of the scheme begun (whether in accordance with this section or otherwise) before that assessment period.
(5) The conditions are—
(a) that an application is made by, or notice is given to, the trustees or managers of the scheme under section 157 (applications and notifications where closed schemes have insufficient assets),
(b) that the valuation obtained by the Board in respect of the scheme under section 158(3) has become binding, and
(c) that the Board is not required to assume responsibility for the scheme by virtue of section 158(1) (duty to assume responsibility for closed scheme).
(6) Where a scheme is wound up in accordance with subsection (1)(a), the winding up is to be taken as beginning immediately before the assessment period.
(7) Without prejudice to the power to give directions under section 134, but subject to any order made under subsection (8), the Board may give the trustees or managers of the scheme directions relating to the manner of the winding up of the scheme under this section (and may vary or revoke any such direction given by it).
(8) The Regulator may by order direct any person specified in the order—
(a) to take such steps as are so specified as it considers are necessary as a result of—
(i) the winding up of the scheme beginning, by virtue of subsection (6), immediately before the assessment period, or
(ii) the winding up of the scheme being continued under subsection (1)(b), and
(b) to take those steps within a period specified in the order.
(9) If the trustees or managers of a scheme fail to comply with a direction to them under subsection (7), or contained in an order under subsection (8), section 10 of the Pensions Act 1995 (c. 26) (civil penalties) applies to any trustee or manager who has failed to take all reasonable steps to secure compliance.
(10) That section also applies to any other person who, without reasonable excuse, fails to comply with a direction to him contained in an order under subsection (8).
(11) The winding up of a scheme under this section is as effective in law as if it had been made under powers conferred by or under the scheme.
(12) This section must be 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 winding up, and
(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 winding up.
(13) Where an assessment period in relation to an eligible scheme comes to an end by virtue of the conditions in subsection (2) or (5) being satisfied, subsections (1) to (4) of section 150 apply as they apply where an assessment period comes to an end by virtue of the Board ceasing to be involved with the scheme, except that in subsection (2) of that section the reference to section 219 is to be read as a reference to subsection (6) of this section.
(14) Where a public service pension scheme is required to be wound up under this section, the appropriate authority may by order make provision modifying any enactment in which the scheme is contained or under which it is made.
(15) In subsection (14) “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.
(1) In this section “closed scheme” means an eligible scheme which is authorised under section 153 to continue as a closed scheme.
(2) The provisions mentioned in subsection (3) apply in relation to a closed scheme at any time when the trustees or managers of the scheme are required to wind up or continue winding up the scheme under section 154 as if that time fell within an assessment period in relation to the scheme.
(3) The provisions are—
(a) section 40(5) and (6) (Board to act as creditor for debt due by virtue of a contribution notice under section 38);
(b) section 49(5) and (6) (Board to act as creditor for debt due by virtue of a contribution notice under section 47);
(c) section 54(5) and (6) (Board to act as creditor for debt due by virtue of a restoration order under section 52);
(d) section 56(5) and (6) (Board to act as creditor for debt due by virtue of a contribution notice under section 55);
(e) section 133 (admission of new members, payment of contributions etc);
(f) section 134 (directions);
(g) section 137 (Board to act as creditor of the employer).
(4) Regulations may require the trustees or managers of a closed scheme in relation to which the provisions mentioned in subsection (3) apply to comply with such requirements as may be prescribed when providing for the discharge of any liability to, or in respect of, a member of the scheme for pensions or other benefits.
(1) Regulations may make provision requiring the trustees or managers of closed schemes to obtain actuarial valuations of the scheme at such intervals as may be prescribed for the purposes of enabling them to determine—
(a) the benefits payable under the scheme rules;
(b) whether to make an application under section 157.
(2) Regulations under this section may prescribe how—
(a) the assets, the full scheme liabilities and the protected liabilities in relation to closed schemes, and
(b) their amount or value,
are to be determined, calculated and verified.
(3) Subject to any provision made under subsection (2), those matters are to be determined, calculated and verified in accordance with guidance issued by the Board.
(4) In calculating the amount of any liabilities for the purposes of a valuation required by virtue of this section, a provision of the scheme rules which limits the amount of the scheme’s liabilities by reference to the value of its assets is to be disregarded.
(5) Nothing in regulations under this section may require the trustees or managers of a closed scheme to obtain an actuarial valuation of the scheme until—
(a) the period within which the issue of the determination notice, under section 153(6), in respect of the Board’s determination to authorise the scheme to continue as a closed scheme, may be reviewed by virtue of Chapter 6 has expired, and
(b) if the issue of the notice is so reviewed—
(i) the review and any reconsideration,
(ii) any reference to the PPF Ombudsman in respect of the issue of the notice, and
(iii) any appeal against his determination or directions,
has been finally disposed of and the notice has not been revoked, varied or substituted.
(6) In this section, in relation to a scheme—
“actuarial valuation” means a written valuation of—
the scheme’s assets,
the full scheme liabilities, and
the protected liabilities in relation to the scheme,
prepared and signed by the actuary;
“the actuary” means—
the actuary appointed under section 47(1)(b) of the Pensions Act 1995 (c. 26) (professional advisers) in relation to the scheme, or
if no such actuary has been appointed—
a person with prescribed qualifications or experience, or
a person approved by the Secretary of State;
“assets” do not include assets representing the value of any rights in respect of money purchase benefits under the scheme rules;
“closed scheme” has the same meaning as in section 155;
“full scheme liabilities” means—
the liabilities under the scheme rules to or in respect of members of the scheme,
other liabilities of the scheme, and
the estimated cost of winding up the scheme;
“liabilities” does not include liabilities in respect of money purchase benefits under the scheme rules.
(1) If at any time the trustees or managers of a closed scheme become aware that the value of the assets of the scheme is less than the amount of the protected liabilities in relation to the scheme, they must, before the end of the prescribed period beginning with that time, make an application to the Board for it to assume responsibility for the scheme.
(2) Where the Board receives an application under subsection (1), it must give a copy of the application to the Regulator.
(3) If at any time the Regulator becomes aware that the value of the assets of the scheme is less than the amount of the protected liabilities in relation to the scheme, it must give the Board a notice to that effect.
(4) Where the Board receives a notice under subsection (3), it must give the trustees or managers of the scheme a notice to that effect.
(5) The duty imposed by subsection (1) does not apply where the trustees or managers of a closed scheme become aware as mentioned in that subsection by reason of a notice given to them under subsection (4).
(6) The duty imposed by subsection (3) does not apply where the Regulator becomes aware as mentioned in that subsection by reason of a copy of an application made by the trustees or managers of the closed scheme being given to it under subsection (2).
(7) Regulations may require notices and applications under this section to be in the prescribed form and contain the prescribed information.
(8) If the trustees or managers of a closed scheme fail to comply with subsection (1), section 10 of the Pensions Act 1995 (c. 26) (civil penalties) applies to any trustee or manager who has failed to take all reasonable steps to secure compliance.
(9) In this section—
“assets”, in relation to a scheme, do not include assets representing the value of any rights in respect of money purchase benefits under the scheme rules;
“closed scheme” has the same meaning as in section 155.
(1) Where the trustees or managers of a closed scheme—
(a) make an application under subsection (1) of section 157, or
(b) receive a notice from the Board under subsection (4) of that section,
the Board must assume responsibility for the scheme in accordance with this Chapter if the value of the assets of the scheme at the relevant time was less than the amount of the protected liabilities at that time.
(2) In subsection (1) the reference to the assets of the scheme is a reference to those assets excluding any assets representing the value of any rights in respect of money purchase benefits under the scheme rules.
(3) For the purposes of determining whether the condition in subsection (1) is satisfied, the Board must, as soon as reasonably practicable, obtain an actuarial valuation (within the meaning of section 143) of the scheme as at the relevant time.
(4) Subject to subsection (6), subsection (3) of section 143 applies for those purposes as it applies for the purposes mentioned in subsection (2) of that section (and the definitions contained in paragraphs (b) and (d) of subsection (11) of that section apply accordingly).
(5) Subject to subsection (6), the following provisions apply in relation to a valuation obtained under subsection (3) as they apply in relation to a valuation obtained under section 143—
(a) subsections (4) to (7) and (11)(b) and (d) of that section;
(b) section 144 (approval of valuation), other than subsection (2)(b)(iii) (duty to give copy of approved valuation to employer’s insolvency practitioner);
(c) section 145 (binding valuations), other than subsection (3)(c) (duty to give copy of binding valuation to employer’s insolvency practitioner).
(6) In the application of sections 143 and 145 by virtue of subsection (4) or (5)—
(a) subsections (3), (5) and (11)(b) and (d) of section 143 apply as if the references to “the relevant time” were references to that term as defined in subsection (8) below, and
(b) subsection (2) of section 145 applies as if the reference to section 128(2)(a) included a reference to subsection (1) of this section.
(7) An application under subsection (1) of section 157, or notification under subsection (4) of that section, is to be disregarded for the purposes of subsection (1) if it is made or given during an assessment period (see sections 132 and 159) in relation to the scheme which began before the application was made or notification was given.
(8) In this section—
“closed scheme” has the same meaning as in section 155;
“the relevant time” means the time immediately before the application mentioned in subsection (1)(a) was made, or (as the case may be) the notice mentioned in subsection (1)(b) was received, by the trustees or managers of the scheme.
(1) Subsection (3) applies where—
(a) an application is made under subsection (1) of section 157 in relation to a closed scheme, or
(b) the trustees or managers of the scheme receive a notice under subsection (4) of that section.
(2) For the purposes of subsection (1) an application under subsection (1) of section 157, or notification under subsection (4) of that section, is to be disregarded if it is made or given during an assessment period (see section 132 and this section) in relation to the scheme which began before the application was made or notification was given.
(3) An assessment period—
(a) begins when the application is made or the notice is received by the trustees or managers of the scheme, and
(b) ends when—
(i) the trustees or managers receive a transfer notice under section 160, or
(ii) the conditions in section 154(5) (closed scheme with sufficient assets to meet protected liabilities etc) are satisfied in relation to the scheme,
whichever first occurs.
(4) In this section “closed scheme” has the same meaning as in section 155.
(1) This section applies where the Board is required to assume responsibility for a scheme under section 127, 128, 152 or 158.
(2) The Board must give the trustees or managers a notice (a “transfer notice”).
(3) In a case to which section 127 or 128 applies, a transfer notice may not be given until the valuation obtained under section 143 is binding.
(4) In a case to which section 158 applies, a transfer notice may not be given until the valuation obtained under subsection (3) of that section is binding.
(5) A transfer notice may not be given in relation to a scheme during any period when the issue of, or failure to issue, a withdrawal notice under or by virtue of section 146 or 147 (refusal to assume responsibility) is reviewable (see section 149(6)(b)).
(6) The Board must give a copy of any notice given under subsection (2) to—
(a) the Regulator, and
(b) any insolvency practitioner in relation to the employer or, if there is no such insolvency practitioner, the employer.
(7) This section is subject to section 172(1) and (2) (no transfer notice within first 12 months of assessment period or when fraud compensation application is pending).
Pensions Act 2004