Pension Schemes Act 1993

Part I — Preliminary

Categories of pension schemes.

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• (1) In this Act, unless the context otherwise requires—

• “occupational pension scheme” means a pension scheme—that—for the purpose of providing benefits to, or in respect of, people with service in employments of a description, orfor 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, andthat has its main administration in the United Kingdom or outside the EEA states,or a pension scheme that is prescribed or is of a prescribed description;

• “personal pension scheme” means a pension scheme that— is not an occupational pension scheme, andis established by a person within ... section 154(1) of the Finance Act 2004;

• “public service pension scheme” means an occupational pension scheme established by or under an enactment or the Royal prerogative or a Royal charter, being a scheme—all the particulars of which are set out in, or in a legislative instrument made under, an enactment, Royal warrant or charter, orwhich cannot come into force, or be amended, without the scheme or amendment being approved by a Minister of the Crown or government department or by the Scottish Ministers,and includes any occupational pension scheme established, with the concurrence of the Treasury, by or with the approval of any Minister of the Crown or established by or with the approval of the Scottish Ministers and any occupational pension scheme prescribed by regulations made by the Secretary of State and the Treasury jointly as being a scheme which ought in their opinion to be treated as a public service pension scheme for the purposes of this Act.

• (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.

Part II — Administration

The Occupational Pensions Board

Constitution and functions of the Board.

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Membership of the Board.

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Reports of the Board.

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Further provisions as to constitution and procedure of the Board.

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Registration of schemes

Registration of occupational and personal pension schemes.

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Part III — Schemes that were contracted-out etc and Effects on Members’ State Scheme Rights ...

Chapter I — Schemes that were contracted-out: guaranteed minimum pensions and alteration of scheme rules etc

Preliminary

Issue of contracting-out certificates.

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Meaning of “the first abolition date” and “the second abolition date”

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In this Act—

• “the first abolition date” means 6 April 2012 (the date appointed for the commencement of section 15(1) of the Pensions Act 2007 (abolition of contracting-out for defined contribution pension schemes));

• “the second abolition date” means 6 April 2016 (the date on which section 56(4) of the Pensions Act 2014 provides for the commencement of section 24(1) of that Act (abolition of contracting-out for salary related schemes)).

Meaning of “contracted-out scheme” and “appropriate scheme” etc.

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• (1) This section applies for the interpretation of this Act.

• (2) An occupational pension scheme was “contracted-out” at a time if, at that time, there was in force a certificate under section 7 (as it then had effect) stating that the employment of an earner in employed earner's employment was contracted-out employment by reference to the scheme.

• (3) “Contracting-out certificate” means a certificate of the kind mentioned in subsection (2).

• (4) An occupational pension scheme was a “salary related contracted-out scheme” at a time if, at that time, the scheme was contracted-out by virtue of satisfying section 9(2) (as it then had effect).

• (5) An occupational pension scheme was a “money purchase contracted-out scheme” at a time if, at that time, the scheme was contracted-out by virtue of satisfying section 9(3) (as it then had effect).

• (6) A personal pension scheme was an “appropriate scheme” at a time if, at that time, there was in force a certificate issued under section 7(1)(b) (as it then had effect) stating that the scheme was an appropriate scheme.

• (7) “Appropriate scheme certificate” means a certificate of the kind mentioned in subsection (6).

• (8) An appropriate scheme certificate that was in force in relation to a scheme is to be taken as conclusive that the scheme was, at that time, an appropriate scheme.

Meaning of “contracted-out employment”, “guaranteed minimum pension” and “minimum payment”.

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• (1) In relation to any period before the second abolition date, the employment of an earner in employed earner's employment was “contracted-out employment” in relation to the earner during that period if—

• (a) the earner was under pensionable age;

• (b) the earner's service in the employment was service which qualified the earner for a pension provided by a salary related contracted-out scheme; and

• (c) there was in force a contracting-out certificate issued in accordance with this Chapter (as it then had effect) stating that the employment was contracted-out employment by reference to the scheme.

• (1A) In addition, in relation to any period before the first abolition date, the employment of an earner in employed earner's employment was “contracted-out employment” in relation to him during that period if—

• (a) he was under pensionable age;

• (b) his employer made minimum payments in respect of his employment to a money purchase contracted-out scheme, and

• (c) there was in force a contracting-out certificate issued in accordance with this Chapter (as it then had effect) stating that the employment was contracted-out employment by reference to the scheme.

• (1B) In the following provisions of this Act “earner”, in relation to a scheme, means a person who was an earner in contracted-out employment by reference to the scheme.

• (2) In this Act—

• “guaranteed minimum pension” means any pension which is provided , by a scheme that was a salary related contracted-out scheme, in accordance with the requirements of sections 13 and 17 to the extent to which its weekly rate is equal to the earner’s or, as the case may be, the earner’s widow's, widower’s , surviving same sex spouse's or surviving civil partner's guaranteed minimum as determined for the purposes of those sections respectively; and

• “minimum payment”, in relation to an earner’s employment in any tax week, means the rebate percentage of so much of the earnings paid to or for the benefit of the earner in that week as exceeds the current lower earnings limit but not the applicable limit (or the prescribed equivalents if he is paid otherwise than weekly);

and for the purposes of this subsection “rebate percentage” means the appropriate flat rate percentage for the tax year in which the week falls as specified in an order made under section 42B (as it had effect before the first abolition date).

• (2A) In subsection (2) “the applicable limit” means—

• (a) in relation to a tax year before 2009-10, the upper earnings limit;

• (b) in relation to 2009-10 or any subsequent tax year, the upper accrual point.

• (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (4) A contracting-out certificate that was in force in respect of an employed earner's employment is to be taken as conclusive that the employment was, at that time, contracted-out employment.

• (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

...

Requirements for certification of schemes: general.

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Protected rights and money purchase benefits.

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Elections as to employments covered by contracting-out certificates.

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Determination of basis on which scheme is contracted-out.

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The statutory standard

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Reference scheme

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Transfer, commutation, etc

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Entitlement to benefit

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Guaranteed minimum pensions

Former salary related contracted-out schemes to comply with GMP requirements

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• (1) A scheme that was a salary related contracted-out scheme is to be treated as including whatever provision it needs to contain to comply with the GMP requirements.

• (2) A scheme complies with the GMP requirements if, in relation to any earner's service before the principal appointed day, it complies in all respects with sections 13 to 24E.

• (3) Where—

• (a) a scheme is permitted by any of those sections to include provision subject to certain requirements, and

• (b) the scheme includes the provision but not the requirements,

the scheme is to be treated by subsection (1) as including the requirements.

• (4) This section overrides any provision of a scheme to the extent that the provision of the scheme conflicts with it.

Minimum pensions for earners.

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• (1) Subject to the provisions of this Part, the scheme must—

• (a) provide for the earner to be entitled to a pension under the scheme if he attains pensionable age; and

• (b) contain a rule to the effect that the weekly rate of the pension will be not less than his guaranteed minimum (if any) under sections 14 to 16.

• (1A) But a scheme may be amended so as to omit provision of the kind specified in subsection (1)(a) and (b) if the conditions specified in section 24B are satisfied.

• (2) In the case of an earner who was a married woman or widow who was liable to pay primary Class 1 contributions at a reduced rate by virtue of section 19(4) of the Social Security Contributions and Benefits Act 1992 at a time during a relevant year when she was in contracted-out employment by reference to the scheme, subject to the provisions of this Part, the scheme must—

• (a) provide for her to be entitled to a pension under the scheme if she attains pensionable age...; and

• (b) satisfy such other conditions as may be prescribed.

“Relevant year” has the meaning given by section 14(8).

• (3) Subject to subsection (4), the scheme must provide for the pension to commence on the date on which the earner attains pensionable age and to continue for his life.

• (4) Subject to subsection (5), the scheme may provide for the commencement of the earner’s guaranteed minimum pension to be postponed for any period for which he continues in employment after attaining pensionable age.

• (5) The scheme must provide for the earner’s consent to be required—

• (a) for any such postponement by virtue of employment to which the scheme does not relate; and

• (b) for any such postponement after the expiration of five years from the date on which he attains pensionable age.

• (6) Equivalent pension benefits for the purposes of the former legislation are not to be regarded as constituting any part of the earner’s guaranteed minimum pension.

• (7) The benefits referred to in subsection (6) are any to which the earner may be immediately or prospectively entitled in respect of a period of employment which—

• (a) was for him non-participating employment under that legislation; and

• (b) was not on its termination the subject of any payment in lieu of contributions;

but subsection (6) excludes only so much of those benefits as had to be provided in order that the employment should for that period be treated as non-participating.

• (8) In this section “the former legislation” means Part III of the National Insurance Act 1965 and the previous corresponding enactments.

Earner’s guaranteed minimum.

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• (1) An earner has a guaranteed minimum in relation to the pension provided by a scheme that was a salary related contracted-out scheme if in any tax week in a relevant year—

• (a) earnings were paid to or for the earner's benefit in respect of employment which was contracted-out by reference to the scheme; and

• (b) those earnings were in excess of the lower earnings limit for that tax week (or the prescribed equivalent if the earner was paid otherwise than weekly).

• (2) Subject to section 15(1), the guaranteed minimum shall be the weekly equivalent of an amount equal to the appropriate percentage of the total of the earner’s earnings factors for the relevant years, so far as derived from excess earnings mentioned in subsection (1)(b) upon which primary Class 1 contributions have been paid or treated as paid.

• (2A) Where any liability of a scheme in respect of an earner’s guaranteed minimum pension ceases by virtue of a civil recovery order, his guaranteed minimum in relation to the scheme is extinguished or reduced accordingly.

• (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (4) Where the amount of a person’s earnings for any period is relevant for any purpose of subsection (1) or (2) and the Inland Revenue are satisfied that records of those earnings have not been maintained or retained or are otherwise unobtainable, they may for that purpose—

• (a) compute, in such manner as they think fit, an amount which shall be regarded as the amount of those earnings; or

• (b) take their amount to be such sum as he they may specify in the particular case.

• (5) In subsection (2) the “appropriate percentage” means—

• (a) in respect of the earner’s earnings factors for any tax year not later than the tax year 1987-88—

• (i) if the earner was not more than 20 years under pensionable age on 6th April 1978, 1.25 per cent.;

• (ii) in any other case 25/N per cent.;

• (b) in respect of the earner’s earnings factors for the tax year 1988-89 and for subsequent tax years—

• (i) if the earner was not more than 20 years under pensionable age on 6th April 1978, 1 per cent.;

• (ii) in any other case 20/N per cent.;

where N is the number of years in the earner’s working life (assuming he will attain pensionable age) which fall after 5th April 1978.

• (6) Regulations may prescribe rules as to the circumstances in which earnings factors are derived from earnings for the purposes of subsection (2).

• (7) For the purposes of subsection (2) the weekly equivalent of the amount there mentioned shall be calculated by dividing that amount by 52.

• (8) In this section “relevant year” means any tax year in the earner’s working life (not being earlier than the tax year 1978-79 or later than the tax year ending immediately before the principal appointed day).

Increase of guaranteed minimum where commencement of guaranteed minimum pension postponed.

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• (1) Where in accordance with section 13(4) the commencement of an earner’s guaranteed minimum pension is postponed for any period and there are at least seven complete weeks in that period, his guaranteed minimum in relation to the scheme shall, for each complete week in that period, be increased by one-seventh per cent.—

• (a) of the amount of that minimum apart from this subsection; or

• (b) if for that week (or a period which includes that week) a pension is paid to him under the scheme at a weekly rate less than that minimum, of the difference between that pension and that minimum.

• (2) In subsection (1) “week” means any period of seven consecutive days.