Office of Public Sector Information
PART 5 continued
(1) Subsections (2) and (3) apply to an occupational pension scheme that has its main administration outside the member States.
(2) An employer based in any part of the United Kingdom may cause a contribution to be paid to the scheme in respect of an employee (whether or not employed in the United Kingdom) only if the conditions in subsection (4) are satisfied at the time of payment.
(3) An employer based outside the United Kingdom may cause a contribution to be paid to the scheme in respect of an employee employed in the United Kingdom only if the conditions in subsection (4) are satisfied at the time of payment.
(4) Those conditions are—
(a) that the scheme is established under irrevocable trusts, and
(b) that a trustee of the scheme is resident in the United Kingdom.
(5) 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.
(6) Section 10 of the Pensions Act 1995 (c. 26) (civil penalties) applies to an employer who causes a contribution to be paid to an occupational pension scheme that has its main administration outside the member States if—
(a) subsection (2) or (3) applies in relation to the payment of the contribution,
(b) the conditions in subsection (4) are not satisfied at the time of payment, and
(c) the employer does not have a reasonable excuse for causing payment to occur at a time when those conditions are not satisfied.
(7) In this section “based”—
(a) in relation to an employer who is a body corporate, means incorporated, and
(b) in relation to any other employer, means resident.
(1) In the case of an occupational pension scheme that has its main administration outside the member States, a reference in pensions legislation to the trustees, or a trustee, of the scheme includes a person who is for the time being appointed by the trustees of the scheme to be a representative of the scheme for the purposes of this section.
(2) Subsection (1) does not apply to a prescribed reference.
(3) In subsection (1) “pensions legislation” means any enactment contained in or made by virtue of—
(a) the Pension Schemes Act 1993 (c. 48),
(b) the Pensions Act 1995,
(c) Parts 1 to 4 of the Welfare Reform and Pensions Act 1999 (c. 30), or
(d) this Act.
(1) If an occupational pension scheme has its main administration in the United Kingdom, the trustees or managers of the scheme must secure that the activities of the scheme are limited to retirement-benefit activities.
(2) Subsection (1) does not apply to a scheme if it is a prescribed scheme or a scheme of a prescribed description.
(3) Section 10 of the Pensions Act 1995 (civil penalties) applies to a trustee or manager of a scheme to which subsection (1) applies if—
(a) the scheme has activities that are not retirement-benefit activities, and
(b) the trustee or manager has failed to take all reasonable steps to secure that the activities of the scheme are limited to retirement-benefit activities.
(4) In this section “retirement-benefit activities” means—
(a) operations related to retirement benefits, and
(b) activities arising from operations related to retirement benefits.
(5) In subsection (4) “retirement benefits” means—
(a) benefits paid by reference to reaching, or expecting to reach, retirement, and
(b) benefits that are supplementary to benefits within paragraph (a) and that are provided on an ancillary basis—
(i) in the form of payments on death, disability or termination of employment, or
(ii) in the form of support payments or services in the case of sickness, poverty or need, or death.
(1) No amount may be paid out of the assets of an occupational or personal pension scheme for the purpose of reimbursing, or providing for the reimbursement of, any trustee or manager 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 or by virtue of section 10 of the Pensions Act 1995 (c. 26) or section 168(4) of the Pension Schemes Act 1993 (c. 48) (civil penalties).
(2) For the purposes of subsection (1), providing for the reimbursement of a trustee or manager 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 an occupational or personal pension scheme in contravention of this section, section 10 of the Pensions Act 1995 (civil penalties) applies to any trustee or manager who fails to take all reasonable steps to secure compliance.
(4) Where a trustee or manager of an occupational or personal pension 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 mentioned 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 reasonable steps 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 for a term not exceeding two years, or a fine, or both.
(1) This section applies in relation to a person (“the employee”) where—
(a) there is a transfer of an undertaking, or part of an undertaking, to which the TUPE Regulations apply,
(b) by virtue of the transfer the employee ceases to be employed by the transferor and becomes employed by the transferee, and
(c) at the time immediately before the employee becomes employed by the transferee—
(i) there is an occupational pension scheme (“the scheme”) in relation to which the transferor is the employer, and
(ii) one of subsections (2), (3) and (4) applies.
(2) This subsection applies where—
(a) the employee is an active member of the scheme, and
(b) if any of the benefits that may be provided under the scheme are money purchase benefits—
(i) the transferor is required to make contributions to the scheme in respect of the employee, or
(ii) the transferor is not so required but has made one or more such contributions.
(3) This subsection applies where—
(a) the employee is not an active member of the scheme but is eligible to be such a member, and
(b) if any of the benefits that may be provided under the scheme are money purchase benefits, the transferor would have been required to make contributions to the scheme in respect of the employee if the employee had been an active member of it.
(4) This subsection applies where—
(a) the employee is not an active member of the scheme, nor eligible to be such a member, but would have been an active member of the scheme or eligible to be such a member if, after the date on which he became employed by the transferor, he had been employed by the transferor for a longer period, and
(b) if any of the benefits that may be provided under the scheme are money purchase benefits, the transferor would have been required to make contributions to the scheme in respect of the employee if the employee had been an active member of it.
(5) For the purposes of this section, the condition in subsection (1)(c) is to be regarded as satisfied in any case where it would have been satisfied but for any action taken by the transferor by reason of the transfer.
(6) In subsection (1)(a), the reference to an undertaking, or part of an undertaking, has the same meaning as in the TUPE Regulations.
(7) In the case of a scheme which is contracted-out by virtue of section 9 of the Pension Schemes Act 1993 (c. 48), the references in subsections (2)(b), (3)(b) and (4)(b) to contributions mean contributions other than minimum payments (within the meaning of that Act).
(8) In this section—
the “TUPE Regulations” means the Transfer of Undertakings (Protection of Employment) Regulations 1981 (S.I. 1981/1794);
references to the transferor include any associate of the transferor, and section 435 of the Insolvency Act 1986 (c. 45) applies for the purposes of this section as it applies for the purposes of that Act.
(1) In a case where section 257 applies, it is a condition of the employee’s contract of employment with the transferee that the requirements in subsection (2) or the requirement in subsection (3) are complied with.
(2) The requirements in this subsection are that—
(a) the transferee secures that, as from the relevant time, the employee is, or is eligible to be, an active member of an occupational pension scheme in relation to which the transferee is the employer, and
(b) in a case where the scheme is a money purchase scheme, as from the relevant time—
(i) the transferee makes relevant contributions to the scheme in respect of the employee, or
(ii) if the employee is not an active member of the scheme but is eligible to be such a member, the transferee would be required to make such contributions if the employee were an active member, and
(c) in a case where the scheme is not a money purchase scheme, as from the relevant time the scheme—
(i) satisfies the statutory standard referred to in section 12A of the Pension Schemes Act 1993 (c. 48), or
(ii) if regulations so provide, complies with such other requirements as may be prescribed.
(3) The requirement in this subsection is that, as from the relevant time, the transferee makes relevant contributions to a stakeholder pension scheme of which the employee is a member.
(4) The requirement in subsection (3) is for the purposes of this section to be regarded as complied with by the transferee during any period in relation to which the condition in subsection (5) is satisfied.
(5) The condition in this subsection is that the transferee has offered to make relevant contributions to a stakeholder pension scheme of which the employee is eligible to be a member (and the transferee has not withdrawn the offer).
(6) Subsection (1) does not apply in relation to a contract if or to the extent that the employee and the transferee so agree at any time after the time when the employee becomes employed by the transferee.
(7) In this section—
“the relevant time” means—
in a case where section 257 applies by virtue of the application of subsection (2) or (3) of that section, the time when the employee becomes employed by the transferee;
in a case where that section applies by virtue of the application of subsection (4) of that section, the time at which the employee would have been a member of the scheme referred to in subsection (1)(c)(i) of that section or (if earlier) would have been eligible to be such a member;
“relevant contributions” means such contributions in respect of such period or periods as may be prescribed;
“stakeholder pension scheme” means a pension scheme which is registered under section 2 of the Welfare Reform and Pensions Act 1999 (c. 30).
(1) Regulations may require any prescribed person who is the employer in relation to an occupational pension scheme and who—
(a) proposes to make a prescribed decision in relation to the scheme, or
(b) has been notified by the trustees or managers of the scheme that they propose to make a prescribed decision in relation to the scheme,
to consult prescribed persons in the prescribed manner before the decision is made.
(2) Regulations may require the trustees or managers of an occupational pension scheme not to make a prescribed decision in relation to the scheme unless—
(a) they have notified the employer of the proposed decision, and
(b) they are satisfied that the employer has undertaken any consultation required by virtue of subsection (1).
(3) The validity of any decision made in relation to an occupational pension scheme is not affected by any failure to comply with regulations under this section.
(4) Section 261 contains further provisions about regulations under this section.
(1) Regulations may require any prescribed person who—
(a) is the employer in relation to a personal pension scheme where direct payment arrangements exist in respect of one or more members of the scheme who are his employees, and
(b) proposes to make a prescribed decision affecting the application of the direct payment arrangements in relation to those employees,
to consult prescribed persons in the prescribed manner before he makes the decision.
(2) The validity of any decision prescribed for the purposes of subsection (1)(b) is not affected by any failure to comply with regulations under this section.
(3) Section 261 contains further provisions about regulations under this section.
(1) In this section “consultation regulations” means regulations under section 259 or 260.
(2) Consultation regulations may—
(a) make provision about the time to be allowed for consultation;
(b) prescribe the information which must be provided to the persons who are required to be consulted;
(c) confer a discretion on the employer in prescribed cases as to the persons who are to be consulted;
(d) make provision about the representatives the employees may have for the purposes of the regulations and the methods by which those representatives are to be selected;
(e) require or authorise the holding of ballots;
(f) amend, apply with or without modifications, or make provision similar to, any provision of the Employment Rights Act 1996 (c. 18) (including, in particular, Parts 5, 10 and 13), the Employment Tribunals Act 1996 (c. 17) or the Trade Union and Labour Relations (Consolidation) Act 1992 (c. 52);
(g) enable any requirement for consultation imposed by the regulations to be waived or relaxed by order of the Regulator;
(h) require the employer to communicate to the trustees and managers of the scheme any representations received by the employer in response to any consultation required by the regulations.
(3) Persons on whom obligations are imposed by consultation regulations, either as employers or as the trustees or managers of occupational pension schemes, must, if so required by the Regulator, provide information to the Regulator about the action taken by them for the purpose of complying with the regulations.
(4) Consultation regulations may make provision as to—
(a) the information to be provided under subsection (3);
(b) the form and manner in which the information is to be provided;
(c) the period within which the information is to be provided.
(5) Nothing in consultation regulations is to be regarded as affecting any duty to consult arising otherwise than under the regulations.
For section 67 of the Pensions Act 1995 (c. 26) substitute—
(1) The subsisting rights provisions apply to any power conferred on any person by an occupational pension scheme to modify the scheme, other than a power conferred by—
(a) a public service pension scheme, or
(b) a prescribed scheme or a scheme of a prescribed description.
(2) Any exercise of such a power to make a regulated modification is voidable in accordance with section 67G unless the following are satisfied in respect of the modification—
(a) in the case of each affected member—
(i) if the modification is a protected modification, the consent requirements (see section 67B),
(ii) if it is not, either the consent requirements or the actuarial equivalence requirements (see section 67C),
(b) the trustee approval requirement (see section 67E), and
(c) the reporting requirement (see section 67F).
(3) The subsisting rights provisions do not apply in relation to the exercise of a power—
(a) for a purpose connected with debits under section 29(1) of the Welfare Reform and Pensions Act 1999, or
(b) in a prescribed manner.
(4) References in this section and sections 67A to 67I to “the subsisting rights provisions” are to this section and those sections.
(5) Subsection (6) applies in relation to the exercise of a power to which the subsisting rights provisions apply to make a regulated modification where a member of the scheme dies before the requirements mentioned in subsection (2), so far as they apply in his case, have been complied with in respect of the modification if—
(a) before he died he had given his consent to the modification in accordance with section 67B(4)(b), or
(b) before he died, or before the trustees of the scheme had become aware that he had died, the trustees had complied with section 67C(4)(a), (b) and (d) in respect of the modification in his case.
(6) Any of the requirements mentioned in subsection (2), as it applies in respect of the modification—
(a) which is satisfied in the case of the member, or
(b) which would have been satisfied in his case had he not died before it was satisfied,
is to be taken to be satisfied in the case of any survivor of the member in respect of the modification.
(1) In the subsisting rights provisions, each of the following expressions has the meaning given to it by the following provisions of this section—
“regulated modification”
“protected modification”
“detrimental modification”
“affected member”
“subsisting right”
“scheme rules”.
(2) “Regulated modification” means a modification which is—
(a) a protected modification, or
(b) a detrimental modification,
or is both.
(3) “Protected modification” means a modification of an occupational pension scheme which—
(a) on taking effect would or might result in any subsisting right of—
(i) a member of the scheme, or
(ii) a survivor of a member of the scheme,
which is not a right or entitlement to money purchase benefits becoming, or being replaced with, a right or entitlement to money purchase benefits under the scheme rules,
(b) would or might result in a reduction in the prevailing rate of any pension in payment under the scheme rules, or
(c) is of a prescribed description.
For the purposes of paragraph (a), the reference in the definition of “money purchase benefits” in section 181(1) of the Pension Schemes Act 1993 to the widow or widower of a member of an occupational pension scheme is to be read as including any other survivor of the member.
(4) “Detrimental modification” means a modification of an occupational pension scheme which on taking effect would or might adversely affect any subsisting right of—
(a) any member of the scheme, or
(b) any survivor of a member of the scheme.
(5) A person is an “affected member”—
(a) in relation to a protected modification within paragraph (a) or (b) of subsection (3), if, at the time the modification takes effect, he is—
(i) a member of the scheme, or
(ii) a survivor of a member of the scheme,
and, on taking effect, the modification would or might affect any of his subsisting rights as mentioned in that paragraph,
(b) in relation to a protected modification within paragraph (c) of that subsection, if he is of a prescribed description, and
(c) in relation to a detrimental modification which is not a protected modification if, at the time the modification takes effect, he is—
(i) a member of the scheme, or
(ii) a survivor of a member of the scheme,
and, on taking effect, the modification would or might adversely affect any of his subsisting rights.
(6) “Subsisting right” means—
(a) in relation to a member of an occupational pension scheme, at any time—
(i) any right which at that time has accrued to or in respect of him to future benefits under the scheme rules, or
(ii) any entitlement to the present payment of a pension or other benefit which he has at that time, under the scheme rules, and
(b) in relation to the survivor of a member of an occupational pension scheme, at any time, any entitlement to benefits, or right to future benefits, which he has at that time under the scheme rules in respect of the member.
For this purpose, “right” includes a pension credit right.
(7) At any time when the pensionable service of a member of an occupational pension scheme is continuing, his subsisting rights are to be determined as if he had opted, immediately before that time, to terminate that service.
(8) “Scheme rules”, in relation to a scheme, means—
(a) the rules of the scheme, except so far as overridden by a relevant legislative provision,
(b) the relevant legislative provisions, to the extent that they have effect in relation to the scheme and are not reflected in the rules of the scheme, and
(c) any provision which the rules of the scheme do not contain but which the scheme must contain if it is to conform with the requirements of Chapter 1 of Part 4 of the Pension Schemes Act 1993 (preservation of benefit under occupational pension schemes).
(9) For the purposes of subsection (8)—
(a) “relevant legislative provision” means any provision contained in any of the following provisions—
(i) Schedule 5 to the Social Security Act 1989 (equal treatment for men and women);
(ii) Chapters 2 to 5 of Part 4 of the Pension Schemes Act 1993 (certain protection for early leavers) or regulations made under any of those Chapters;
(iii) Part 4A of that Act (requirements relating to pension credit benefit) or regulations made under that Part;
(iv) section 110(1) of that Act (requirement as to resources for annual increase of guaranteed minimum pensions);
(v) this Part of this Act (occupational pensions) or subordinate legislation made or having effect as if made under this Part;
(vi) section 31 of the Welfare Reform and Pensions Act 1999 (pension debits: reduction of benefit);
(vii) any provision mentioned in section 306(2) of the Pensions Act 2004;
(b) a relevant legislative provision is to be taken to override any of the provisions of the scheme if, and only if, it does so by virtue of any of the following provisions—
(i) paragraph 3 of Schedule 5 to the Social Security Act 1989;
(ii) section 129(1) of the Pension Schemes Act 1993;
(iii) section 117(1) of this Act;
(iv) section 31(4) of the Welfare Reform and Pensions Act 1999;
(v) section 306(1) of the Pensions Act 2004.
(10) For the purposes of this section—
(a) “survivor”, in relation to a member of an occupational pension scheme, means a person who—
(i) is the widow or widower of the member, or
(ii) has survived the member and has any entitlement to benefit, or right to future benefits, under the scheme rules in respect of the member, and
(b) a modification would or might adversely affect a person’s subsisting right if it would alter the nature or extent of the entitlement or right so that the benefits, or future benefits, to which the entitlement or right relates would or might be less generous.
(11) In the subsisting rights provisions, in relation to—
(a) the exercise of a power to modify an occupational pension scheme to which the subsisting rights provisions apply, or
(b) a modification made, or to be made, in exercise of such a power,
references to “the scheme” are to be read as references to the scheme mentioned in paragraph (a).
(1) References in the subsisting rights provisions to the consent requirements, in respect of a regulated modification, are to be read in accordance with this section.
(2) The consent requirements apply in the case of an affected member—
(a) if the modification is a protected modification;
(b) if it is not a protected modification, unless the actuarial equivalence requirements apply in his case.
(3) The consent requirements consist of—
(a) the informed consent requirement (see subsection (4)), and
(b) the timing requirement (see subsection (6)).
(4) The informed consent requirement is satisfied in the case of an affected member if before the modification is made—
(a) the trustees have—
(i) given him information in writing adequate to explain the nature of the modification and its effect on him,
(ii) notified him in writing that he may make representations to the trustees about the modification,
(iii) afforded him a reasonable opportunity to make such representations, and
(iv) notified him in writing that the consent requirements apply in his case in respect of the modification, and
(b) after the trustees have complied with paragraph (a)(i), (ii) and (iv), the affected member has given his consent in writing to the modification.
(5) If—
(a) the modification is not a protected modification, and
(b) before the modification is made the trustees notify an affected member in writing that—
(i) if he gives his consent to the modification for the purposes of the consent requirements, those requirements apply in his case in respect of the modification, but
(ii) otherwise, the actuarial equivalence requirements apply in his case in respect of the modification,
the trustees are to be taken to have complied with subsection (4)(a)(iv) in respect of him.
(6) The timing requirement is satisfied in the case of an affected member if the modification takes effect within a reasonable period after the member has given his consent to the modification in accordance with subsection (4)(b).
Pensions Act 2004