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Pension Schemes Act (Northern Ireland) 2021

Type Act of the Northern Ireland Assembly

Publication 2021-08-09

State In force

Jurisdiction Northern Ireland

Department Statute Law Database

Source legislation.gov.uk

Reform history JSON API

PART 1 — Master Trusts

Definition of a Master Trust scheme

Master Trust schemes: definition

1

(1) In this Act, “Master Trust scheme” means an occupational pension scheme which—

(a) provides money purchase benefits (whether alone or in conjunction with other benefits),

(b) is used, or intended to be used, by two or more employers,

(d) is not a relevant public service pension scheme.

(2) Where a Master Trust scheme provides money purchase benefits in conjunction with other benefits, references in the following provisions of this Act to a Master Trust scheme are to a Master Trust scheme only to the extent that it provides money purchase benefits, except as provided in section 39(2) to (4).

(3) For the purposes of this section, an employer (“A”) is connected with another employer (“B”)—

(a) where A is, or has been a group undertaking in relation to B within the meaning of section 1161(5) of the Companies Act 2006, or

(b) in circumstances specified in regulations made by the Department.

(4) In this section—

“employer”, in relation to an occupational pension scheme, means a person who employs or engages persons who are, or are entitled to become, members of the scheme;

“money purchase benefits” has the same meaning as in the Pension Schemes (Northern Ireland) Act 1993 (in this Act referred to as “the Pension Schemes Act”) (see section 176 of that Act);

“occupational pension scheme” has the same meaning as in the Pension Schemes Act (see section 1(1) of that Act);

“relevant public service pension scheme” has the meaning given in section 2.

(5) Regulations under this section are subject to the confirmatory procedure.

Relevant public service pension schemes

2

(1) For the purposes of section 1, a pension scheme is a relevant public service pension scheme if it falls within subsection (2) or (3).

(2) A scheme falls within this subsection if it is a public service pension scheme within the meaning of the Pension Schemes Act (see section 1(1) of that Act).

(3) A scheme falls within this subsection if it is—

(a) a scheme under section 1 of the Public Service Pensions Act (Northern Ireland) 2014 (new public service schemes),

(b) a new public body pension scheme (as defined in section 31 of that Act), or

(c) a statutory pension scheme which is connected with a scheme referred to in paragraph (a) or (b) (and for this purpose “statutory pension scheme” and “connected” have the meanings given in that Act; see sections 34 and 4(6) of that Act).

(4) But a scheme does not fall within subsection (3) if it is a scheme specified in an order made under Article 2(6A)(b) of the Pensions (Northern Ireland) Order 2005 (in this Act referred to as “the 2005 Order”) (schemes excluded from the definition of “public service pension scheme”).

Authorisation: applications etc

Prohibition on operating a scheme unless authorised

3

(1) A person may not operate a Master Trust scheme unless the scheme is authorised.

(2) Article 10 of the Pensions (Northern Ireland) Order 1995 (in this Act referred to as “the 1995 Order”) (civil penalties) applies to a person who breaches subsection (1).

(3) If the Regulator becomes aware that a Master Trust scheme is operating without authorisation, it must notify the trustees of the scheme that the scheme is not authorised.

(4) The notification must include an explanation that it is a triggering event for the purposes of sections 20 to 33 and of the trustees’ duties under those sections.

(5) For the purposes of this Part, a person “operates” a Master Trust scheme if the person—

(a) accepts money from members or employers (or prospective members or employers), in respect of fees, charges, contributions or otherwise, in relation to the scheme, or

(b) enters into an agreement with an employer that relates to the provision of pension savings for employees or other workers,

and references to a scheme that is “operating” or “in operation” are to be construed accordingly.

Application for authorisation

4

(1) The trustees of a Master Trust scheme may apply to the Regulator for authorisation.

(2) The application must include the following—

(a) the scheme’s latest accounts;

(b) the latest accounts of each scheme funder;

(d) the scheme’s continuity strategy (see section 12).

(3) In considering an application, the Regulator may take into account any matters it considers appropriate, including—

(a) additional information provided by the applicant, and

(b) subsequent changes to the application or to any information provided by the applicant.

(4) The application must be made in the manner and form specified by the Regulator.

(5) The Department may make regulations setting out—

(a) other information to be included in an application, and

(b) the application fee payable to the Regulator.

(6) Regulations under this section are subject to negative resolution.

Decision on application

5

(1) Where an application is made for authorisation of a Master Trust scheme under section 4, the Regulator must decide whether it is satisfied that the scheme meets the authorisation criteria.

(2) The Regulator must make that decision within the period of six months beginning with the day on which it received the application.

(3) The authorisation criteria are—

(a) that the persons involved in the scheme are fit and proper persons (see section 7),

(b) that the scheme is financially sustainable (see section 8),

(d) that the systems and processes used in running the scheme are sufficient to ensure that it is run effectively (see section 11), and

(e) that the scheme has an adequate continuity strategy (see section 12).

(4) If the Regulator is satisfied that the Master Trust scheme meets the authorisation criteria, it must—

(a) grant the authorisation,

(b) notify the applicant of its decision, and

(5) If the Regulator is not satisfied that the Master Trust scheme meets the authorisation criteria, it must—

(a) refuse to grant the authorisation, and

(b) notify the applicant of its decision.

(6) A notification under subsection (5) must also include—

(a) the reasons for the decision, and

(b) details of the right of referral to the First-tier Tribunal or Upper Tribunal (see section 6).

Referral to Tribunal of refusal to grant authorisation

6

(1) If the Regulator refuses to grant authorisation to a Master Trust scheme, the decision may be referred to the Tribunal by—

(a) the trustees, or

(b) any other person who appears to the Tribunal to be directly affected by the decision.

(2) For the purposes of this Act, any reference in section 3 of the Tribunals, Courts and Enforcement Act 2007 to “any other Act” includes a reference to an Act of the Assembly.

(3) In this section—

“the Tribunal”, in relation to a referral under subsection (1), means— the First-tier Tribunal, in any case where it is determined by or under Tribunal Procedure Rules that the First-tier Tribunal is to hear the reference; the Upper Tribunal, in any other case;

“First-tier Tribunal” and “Upper Tribunal” mean those tribunals established under section 3 of the Tribunals, Courts and Enforcement Act 2007;

“Tribunal Procedure Rules” has the same meaning as in the Tribunals, Courts and Enforcement Act 2007.

Authorisation criteria

Fit and proper persons requirement

7

(1) This section applies for the purposes of enabling the Regulator to decide whether it is satisfied that the persons involved in a Master Trust scheme are fit and proper persons (see section 5(3)(a)).

(2) The Regulator must assess whether each of the following is a fit and proper person to act in relation to the scheme in the capacity mentioned—

(a) a person who establishes the scheme;

(b) a trustee;

(d) a person who (alone or with others) has power to vary the terms of the trust under which the scheme is established (where the scheme is established under a trust);

(e) a person who (alone or with others) has power to vary the scheme (where the scheme is not established under a trust);

(f) a scheme funder;

(g) a scheme strategist;

(h) a person acting in a capacity specified in regulations made by the Department.

(3) The Regulator may also assess whether each of the following is a fit and proper person to act in relation to the scheme in the capacity mentioned—

(a) a person who promotes or markets the scheme;

(b) a person acting in a capacity specified in regulations made by the Department.

(4) In assessing whether a person is a fit and proper person to act in a particular capacity, the Regulator—

(a) must take into account any matters specified in regulations made by the Department, and

(b) may take into account such other matters as it considers appropriate (including, in particular, matters relating to a person connected with that person).

(5) For the purposes of this section, a person (“A”) is connected with another person (“B”) if—

(a) A is an associate of B;

(b) where B is a company, A is a director or shadow director of B or an associate of a director or shadow director of B;

(i) the beneficiaries of the trust include B or an associate of B, or

(ii) the terms of the trust confer a power that may be exercised for the benefit of B or an associate of B.

(6) In this section—

“associate” has the meaning given by Article 4 of the Insolvency (Northern Ireland) Order 1989;

“director” and “shadow director” have the meanings given by Article 5 of that Order.

(7) The first regulations that are made under subsection (4) are subject to the confirmatory procedure.

(8) Any subsequent regulations under subsection (4), and regulations under subsections (2) and (3), are subject to negative resolution.

Financial sustainability requirement

8

(1) This section applies for the purposes of enabling the Regulator to decide whether it is satisfied that a Master Trust scheme is financially sustainable (see section 5(3)(b)).

(2) In order to be satisfied that a Master Trust scheme is financially sustainable, the Regulator must be satisfied—

(a) that the business strategy relating to the scheme is sound, and

(b) that the scheme has sufficient financial resources to meet the costs mentioned in subsection (3).

(3) The costs are—

(a) the costs of setting up and running the scheme, and

(b) in the event of a triggering event occurring—

(i) the costs of complying with the duties in sections 20 to 33, and

(ii) the costs of continuing to run the scheme for such period (which must be at least six months and no more than two years) as the Regulator thinks appropriate for the scheme.

(4) In deciding whether it is satisfied about the matters mentioned in subsection (2)(a) and (b), the Regulator must take into account any matters specified in regulations made by the Department.

(5) The regulations may include provision specifying—

(a) the information that the Regulator must take into account, such as—

(i) the scheme’s business plan and supporting documents and information (see section 9);

(ii) the scheme’s accounts and the accounts of a scheme funder;

(b) requirements to be met by the scheme or by a scheme funder relating to its financing, such as requirements relating to assets, capital or liquidity.

(6) The first regulations that are made under this section are subject to the confirmatory procedure.

(7) Any subsequent regulations under this section are subject to negative resolution.

Financial sustainability requirement: business plan

9

(1) A scheme strategist of a Master Trust scheme must prepare a business plan for the scheme.

(2) The Department may make regulations setting out—

(a) information that must be included in a business plan, and

(b) any other requirements with which a business plan must comply.

(3) The scheme strategist must review the business plan at least once a year, and revise it if appropriate.

(4) The scheme strategist must revise the business plan at any time if there is any significant change to the information included in it.

(5) The business plan, and any revisions to it, must be approved by each scheme funder, any other scheme strategist and the trustees.

(6) The scheme strategist or the trustees must provide the Regulator with the most recent business plan, and any supporting information or documents required by the Regulator—

(a) on application for authorisation (see section 4);

(b) within three months of the plan being revised;

(7) The first regulations that are made under this section are subject to the confirmatory procedure.

(8) Any subsequent regulations under this section are subject to negative resolution.

Scheme funder requirements

10

(1) This section makes provision about the requirements that a scheme funder must meet in order for the scheme to meet the authorisation criterion mentioned in section 5(3)(c).

(2) The first requirement is that the scheme funder is a body corporate or a partnership that is a legal person under the law by which it is governed.

(3) The second requirement is that the scheme funder only carries out activities that relate directly to Master Trust schemes in relation to which it is a scheme funder or prospective scheme funder.

(4) The Department may make regulations providing for exceptions from the second requirement.

(5) The regulations may include provision excepting a scheme funder from the second requirement—

(a) where the scheme funder meets additional requirements specified in the regulations (such as requirements relating to a scheme funder’s financial position, its financial arrangements with the Master Trust scheme in question or its business activities);

(b) where the scheme funder applies to the Regulator and provides the Regulator with information specified in the regulations, or such other information as the Regulator may require in order to satisfy the Regulator that the Master Trust scheme is financially sustainable.

(6) The Department may make regulations setting out requirements relating to a scheme funder’s accounts.

(7) The regulations may include provision—

(a) setting out requirements relating to the audit of accounts;

(b) applying some or all of the provisions of Parts 15 and 16 of the Companies Act 2006 (accounts and reports; audit), with or without modifications.

(8) The first regulations that are made under subsection (4) are subject to the confirmatory procedure.

(9) Any subsequent regulations under subsection (4), and regulations under subsection (6), are subject to negative resolution.

Systems and processes requirements

11

(1) This section applies for the purposes of enabling the Regulator to decide whether it is satisfied that the systems and processes used in running the scheme are sufficient to ensure that it is run effectively (see section 5(3)(d)).

(2) In deciding whether it is satisfied that the systems and processes used in running the scheme are sufficient for those purposes, the Regulator must take into account any matters specified in regulations made by the Department.

(3) Regulations about the systems used in running a scheme may include provision about—

(a) the features and functionality required of the IT systems used in running the scheme;

(b) standards that those IT systems must meet (for example, in relation to quality and security of data);

(4) Regulations about the processes used in running a scheme may include provision about—

(a) records management;

(b) risk management;

(d) processes relating to transactions and investment decisions;

(e) processes relating to the appointment and removal of trustees, and their professional development;

(f) processes relating to the roles and responsibilities of a scheme strategist and a scheme funder;

(g) processes relating to the appointment, removal, roles and responsibilities of—

(i) persons (other than those mentioned in paragraphs (e) and (f)) involved in running the scheme, and

(ii) persons providing services in relation to the scheme.

(5) The first regulations that are made under this section are subject to the confirmatory procedure.

(6) Any subsequent regulations under this section are subject to negative resolution.

Continuity strategy requirement

12

(1) This section applies for the purposes of enabling the Regulator to decide whether it is satisfied that a Master Trust scheme has an adequate continuity strategy (see section 5(3)(e)).

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