Legalize / United Kingdom / Public General Act

Pensions Act 2004

Type Public General Act

Publication 2004-11-18

Last updated 2024-11-18

State In force

Department Statute Law Database

Source legislation.gov.uk

articles Not indexed

Reform history JSON API

(a) require the Board to provide information of prescribed descriptions to such persons as may be prescribed at prescribed times, or

(b) require trustees or managers of occupational pension schemes to provide such information—

(i) relating to the exercise of the Board’s functions in relation to any scheme of which they are trustees or managers,

(ii) relating to any notice issued or application or determination made under Chapter 2, 3 or 4 which relates to any such scheme, or

(iii) otherwise relating to the Board’s involvement with any such scheme,

as may be prescribed to prescribed persons at prescribed times or in prescribed circumstances.

(2) Section 197 does not preclude the disclosure of restricted information by the Board which relates to the entitlement of a particular individual to compensation under Chapter 3 if the disclosure is made to that individual or to a person authorised by him.

(3) Section 197 does not preclude the disclosure of restricted information by the Board if—

(a) the information relates to the exercise of the Board’s functions in relation to an occupational pension scheme,

(b) the disclosure is made to—

(i) all affected persons, or

(ii) all affected persons of a particular description, and

(4) In subsection (3) “affected person”, in relation to an occupational pension scheme, means a person—

(a) who is a member of the scheme, or

(b) who is for the time being nominated by a member of the scheme for the purposes of that subsection.

(5) A nomination by a member of the scheme under subsection (4)(b)—

(a) may be made by notice in writing given by the member,

(b) becomes effective when the notice is received by the Board, and

(6) In the case of an occupational pension scheme, section 197 does not preclude the disclosure of restricted information by the Board if—

(a) the disclosure is made to any of the following in relation to the scheme—

(i) a trustee or manager,

(ii) any professional adviser,

(iii) the employer,

(iv) the insolvency practitioner in relation to the employer,

(b) the information is relevant to the exercise of that person’s functions in relation to the scheme, and

(c) the Board considers that it is reasonable in all the circumstances to make the disclosure for the purpose of facilitating the exercise of those functions.

Interpretation

Sections 190 to 203: interpretation

204

(1) This section applies for the purposes of sections 190 to 203.

(2) “Document” includes information recorded in any form, and any reference to production of a document, in relation to information recorded otherwise than in a legible form, is to producing a copy of the information—

(a) in a legible form, or

(b) in a form from which it can readily be produced in a legible form.

(3) Where the Board has assumed responsibility for a scheme—

(a) any reference to the Board’s functions in relation to the scheme includes a reference to the functions which it has by virtue of having assumed responsibility for the scheme, and

(b) any reference to a trustee, manager, professional adviser or employer in relation to the scheme is to be read as a reference to a person who held that position in relation to the scheme before the Board assumed responsibility for it.

Reports

Publishing reports etc

205

(1) The Board may, if it considers it appropriate to do so in any particular case, publish a report of the exercise of, or any matter arising out of or connected with the exercise of, any of its functions in that case.

(2) The publication of a report under subsection (1) may be in such form and manner as the Board considers appropriate.

(3) For the purposes of the law of defamation, the publication of any matter by the Board is privileged unless the publication is shown to be made with malice.

Chapter 6 — Reviews, appeals and maladministration

Review etc by the Board

Meaning of “reviewable matters”

206

(1) For the purposes of this Chapter, “reviewable matter” means a matter mentioned in Schedule 9.

(2) Regulations may provide, in relation to any reference in that Schedule to a failure by the Board to do any act or make any determination, that—

(a) the reference is to be construed as a reference to a failure by the Board to do the act or make the determination within a prescribed period, and

(b) the reference is to be construed as not including a failure to do the act or make the determination which first occurs after a prescribed time.

(3) Regulations may make provision suspending the effect of any determination, direction or other act of the Board, or any notice given or issued by it, which relates to a reviewable matter until—

(a) the period within which the matter may be reviewed by virtue of this Chapter has expired, and

(b) if the matter is so reviewed—

(i) the review and any reconsideration,

(ii) any reference to the PPF Ombudsman in respect of the matter, and

(iii) any appeal against his determination or directions,

has been finally disposed of.

(4) Regulations may amend Schedule 9 by—

(a) adding to it any other description of determination, act or failure of, or matter determined or for determination by, the Board, or

(b) removing from it any such determination, act, failure or matter for the time being mentioned in it.

(5) Regulations under subsection (4) may also modify any provision of this Part in consequence of provision made by virtue of paragraph (a) or (b) of that subsection.

Review and reconsideration by the Board of reviewable matters

207

(1) Regulations must—

(a) provide for the Board, on the written application of an interested person, to give a decision (“a review decision”) on any reviewable matter, and

(b) require a committee of the Board constituted for the purposes of this section (the “Reconsideration Committee”), on the written application of an interested person following a review decision, to reconsider the reviewable matter and give a decision (“a reconsideration decision”).

(2) In subsection (1), “interested person” in relation to a reviewable matter, means a person of a description prescribed in relation to reviewable matters of that description.

(3) Regulations under subsection (1) may—

(a) permit a review decision in respect of a reviewable matter of a prescribed description to be made otherwise than on an application, and

(b) permit a reconsideration decision in respect of such a matter to be made otherwise than on an application.

(4) Regulations under subsection (1) must provide for the Board’s powers on making a review decision or reconsideration decision to include power—

(a) to vary or revoke the determination, direction or other decision already made by the Board in respect of the reviewable matter,

(b) to substitute a different determination, direction or decision,

(c) to provide for such variations, revocations or substitutions, or any determinations, directions or other decisions made as a result of the review decision or reconsideration decision, to be treated as if they were made at such time (which may be a time prior to the making of the review decision or reconsideration decision) as the Board considers appropriate,

(d) to provide for any notice varied, substituted, issued or given by the Board as a result of the review decision or reconsideration decision, to be treated as if it were issued or given at such time (which may be a time prior to the making of the review decision or reconsideration decision) as the Board considers appropriate,

(e) generally to deal with the matters arising on the review decision or reconsideration decision as if they had arisen on the original determination, direction or decision,

(f) to pay such compensation as the Board considers appropriate to such persons as it may determine, and

(g) to make savings and transitional provision.

(5) Regulations under subsection (1) must include provision—

(a) about applications under the regulations for a review decision or reconsideration decision in respect of a reviewable matter, including the times by which they are to be made,

(b) requiring notice—

(i) of such applications, or

(ii) of a decision of the Board or the Reconsideration Committee by virtue of subsection (3) to give a review decision or reconsider a reviewable matter otherwise than on such an application,

to be given to interested persons in relation to the matter,

(c) with a view to securing that individuals concerned in giving a reconsideration decision were not concerned in the reviewable matter in respect of which the decision is to be made,

(d) as to the procedure for reaching and giving decisions under the regulations, including—

(i) rights of interested persons to make representations to the Reconsideration Committee on a reconsideration under regulations made under subsection (1)(b), and

(ii) the times by which decisions are to be given, and

(e) requiring notice of the review decision or the reconsideration decision in respect of a reviewable matter to be given to interested persons in relation to the matter.

(6) Provision required by subsection (5)(c) may modify paragraphs 15 and 16 of Schedule 5 (membership and procedure of committees of the Board).

Investigation by the Board of complaints of maladministration

208

(1) Regulations must make provision for dealing with relevant complaints.

(2) For the purposes of this Chapter, “relevant complaint” means a complaint—

(a) by a person who is or might become entitled to compensation under the pension compensation provisions, or

(b) by a person who has or may make an application under section 182 (fraud compensation),

alleging that he has sustained injustice in consequence of maladministration in connection with any act or omission by the Board or any person exercising functions on its behalf.

(3) Regulations under subsection (1) must—

(a) provide for the Board to investigate and give decisions on matters complained of in relevant complaints, and

(b) provide for a committee of the Board, on applications following such decisions, to investigate matters complained of and give decisions on them.

(4) Such regulations may, in particular, make provision—

(a) about the making of relevant complaints and applications under the regulations, including the times by which they are to be made,

(b) with a view to securing that individuals concerned in giving a decision were not concerned in the matter which is the subject of the relevant complaint in question,

(i) rights of prescribed persons to make representations to the Board, on an investigation under regulations made under subsection (3)(b), and

(ii) the times by which decisions are to be given, and

(d) requiring notice—

(i) of a relevant complaint under the regulations, or

(ii) of a decision under the regulations in respect of the complaint,

to be given to prescribed persons in relation to the matter.

(5) Regulations under subsection (1) may confer power on the Board to pay such compensation as it considers appropriate to such persons as it considers have sustained injustice in consequence of the matters complained of.

(6) The power conferred by subsection (4)(b) includes power to modify paragraphs 15 and 16 of Schedule 5 (membership and procedure of committees of the Board).

The PPF Ombudsman

The Ombudsman for the Board of the Pension Protection Fund

209

(1) There is to be a commissioner to be known as the Ombudsman for the Board of the Pension Protection Fund (in this Act referred to as “the PPF Ombudsman”).

(2) The PPF Ombudsman is to be appointed by the Secretary of State on such terms and conditions as are determined by the Secretary of State.

(3) The PPF Ombudsman—

(a) is to hold and vacate office in accordance with the terms and conditions of his appointment, and

(b) may resign or be removed from office in accordance with those terms and conditions.

(4) The Secretary of State may by order make provision—

(a) about the payment, or provision for payment, of remuneration, compensation for loss of office, pension, allowances or gratuities to or in respect of the PPF Ombudsman;

(b) about the reimbursement of the PPF Ombudsman in respect of any expenses incurred by him in the performance of his functions;

(d) about the delegation of the functions of the PPF Ombudsman to his staff or to any such additional staff;

(e) authorising the PPF Ombudsman—

(i) to charge such fees as are specified in the order;

(ii) to charge fees sufficient to meet such costs as are specified in the order;

(f) conferring powers to enable the PPF Ombudsman to obtain such information and documents as he may require for the performance of his functions;

(g) about restrictions on the disclosure of information held by him.

(5) An order under subsection (4)(e)—

(a) may prescribe, or authorise the PPF Ombudsman to determine, the time at which any fee is due, and

(b) provide that any fee which is owed to the PPF Ombudsman by virtue of an order under subsection (4)(e) may be recovered as a debt due to the PPF Ombudsman.

(6) The Secretary of State must pay to the PPF Ombudsman out of money provided by Parliament such sums as may be required to be paid by the Secretary of State to or in respect of the PPF Ombudsman by virtue of an order under subsection (4).

(7) Regulations may provide for the imposition of a levy in respect of eligible schemes for the purpose of meeting expenditure of the Secretary of State under subsection (6).

(8) Where regulations make such provision, subsections (2), (3), (5), (6) and (7) of section 117 (administration levy) apply in relation to the levy as they apply in relation to an administration levy (within the meaning of that section), except that in subsection (7) the reference to subsection (1) of that section is to be read as a reference to subsection (7) of this section.

Deputy PPF Ombudsmen

210

(1) The Secretary of State may appoint one or more persons to act as a deputy to the PPF Ombudsman (in this Chapter referred to as “a Deputy PPF Ombudsman”).

(2) Any such appointment is to be on such terms and conditions as the Secretary of State determines.

(3) A Deputy PPF Ombudsman—

(a) is to hold and vacate office in accordance with the terms and conditions of his appointment, and

(b) may resign or be removed from office in accordance with those terms and conditions.

(4) A Deputy PPF Ombudsman may perform the functions of the PPF Ombudsman—

(a) during any vacancy in that office,

(b) at any time when the PPF Ombudsman is for any reason unable to discharge his functions, or

(5) References to the PPF Ombudsman in relation to the performance of his functions are accordingly to be construed as including references to a Deputy PPF Ombudsman in relation to the performance of those functions.

(6) An order by the Secretary of State under section 209(4) may make provision—

(a) about the payment, or provision for payment, of remuneration, compensation for loss of office, pension, allowances or gratuities to or in respect of a Deputy PPF Ombudsman;

(b) about the reimbursement of any expenses incurred by a Deputy PPF Ombudsman in the performance of any of the PPF Ombudsman’s functions.

Status etc of the PPF Ombudsman and deputies

211

(1) In Part 3 of Schedule 1 to the House of Commons Disqualification Act 1975 (c. 24) (other disqualifying offices), at the appropriate place insert— “ Ombudsman for the Board of the Pension Protection Fund and any deputy to that Ombudsman appointed under section 210 of the Pensions Act 2004. ”

(2) In Part 3 of Schedule 1 to the Northern Ireland Assembly Disqualification Act 1975 (c. 25) (other disqualifying offices), at the appropriate place insert— “ Ombudsman for the Board of the Pension Protection Fund and any deputy to that Ombudsman appointed under section 210 of the Pensions Act 2004. ”

(3) The persons to whom section 1 of the Superannuation Act 1972 (c. 11) (persons to or in respect of whom benefits may be provided by schemes under that section) applies are to include—

the PPF Ombudsman

a Deputy PPF Ombudsman

the employees of the PPF Ombudsman.

(4) The PPF Ombudsman must pay to the Minister for the Civil Service, at such times as he may direct, such sums as he may determine in respect of the increase attributable to subsection (3) in the sums payable out of money provided by Parliament under that Act.

(5) In Schedule 4 to the Parliamentary Commissioner Act 1967 (c. 13) (relevant tribunals for the purposes of section 5(7) of that Act), at the appropriate place insert— “ The Ombudsman for the Board of the Pension Protection Fund established under section 209 of the Pensions Act 2004. ”

Annual reports to Secretary of State

212

(1) The PPF Ombudsman must prepare a report on the discharge of his functions for each financial year.

(2) The PPF Ombudsman must send each report to the Secretary of State as soon as practicable after the end of the financial year for which it is prepared.

(3) The Secretary of State must arrange for the publication of each report sent to him under subsection (2).

(4) In this section “financial year” means—

(a) the period beginning with the date on which the PPF Ombudsman is established and ending with the next following 31st March, and

(b) each successive period of 12 months.

References to the PPF Ombudsman

Reference of reviewable matter to the PPF Ombudsman

213

(1) Regulations must make provision—

(a) for a reviewable matter to be referred to the PPF Ombudsman following a reconsideration decision under regulations made under subsection (1)(b) or by virtue of subsection (3)(b) of section 207 in respect of the matter, and

(b) for the PPF Ombudsman—

(i) to investigate and determine what (if any) is the appropriate action for the Board to take in relation to the matter, and

(ii) to remit the matter to the Board with directions for the purpose of giving effect to his determination.

(2) Regulations under subsection (1) must make provision about the making of references to the PPF Ombudsman, including provision—

(a) about the descriptions of persons who may make them,

(b) about the manner of making such references, including the times by which they are to be made, and

(i) references made under the regulations, and

(ii) determinations and directions given under the regulations.

(3) Regulations under subsection (1) must—

(a) require the PPF Ombudsman to conduct an oral hearing in relation to any reviewable matter referred to him under the regulations or to dispose of the matter on the basis of written representations,

(b) enable the PPF Ombudsman to consider evidence relating to the matter which was not available to the Board or the Reconsideration Committee, and

(c) make other provision about the procedure for conducting investigations, and reaching and giving determinations, under the regulations, including the times by which determinations are to be given.

(4) The provision that may be made by virtue of subsection (3)(c) includes provision—

(a) conferring rights on prescribed persons—

(i) to make representations to the PPF Ombudsman in relation to a reviewable matter referred to him by virtue of this section,

(ii) to be heard or represented at any oral hearing by the PPF Ombudsman in relation to such a matter,

(b) about the consideration of evidence by the PPF Ombudsman, including—

(i) production of documents,

(ii) oral hearings,

(iii) expert evidence,

(iv) attendance of witnesses,

(c) conferring rights on prescribed persons to continue a reference made by a person who has died or is otherwise unable to act for himself,

(d) as to the costs or expenses of prescribed persons,

(e) conferring rights on prescribed persons to apply for a stay (or in Scotland, for a sist) in relation to prescribed legal proceedings which begin after the reference is made and conferring power on the relevant court to make an order staying (or sisting) the proceedings if it is satisfied of prescribed matters, and

(f) for securing that any determination or direction of the PPF Ombudsman under the regulations is binding on prescribed persons.

(5) Regulations under subsection (1) may include provision—

(a) conferring power on the PPF Ombudsman to direct the Board to pay such compensation as he considers appropriate to such persons as he may direct,

(b) conferring power on the Board to make such payments,

(i) any determinations, directions or other decisions which are made by the Board in accordance with any determination or direction given by him, or

(ii) any variations, revocations or substitutions of its determinations, directions or other decisions which are made by the Board in accordance with any determination or direction given by him,

are to be treated as if they were made at such time (which may be a time prior to his determination or direction) as he considers appropriate,

(d) conferring power on the PPF Ombudsman to direct that any notice varied, substituted, issued or given by the Board in accordance with any determination or direction given by him is to be treated—

(i) as if it were issued or given at such time (which may be a time prior to his determination or direction) as he considers appropriate;

(ii) as if it became binding for the purposes of this Part at the time at which he gives his determination or direction or at such later time as he considers appropriate,

(e) prescribing the circumstances in which any determination or other act of the Board in accordance with any determination or direction given by the PPF Ombudsman, is not to be treated as being a reviewable matter for the purposes of this Chapter, and

(f) conferring such other powers on the Board as may be required when a matter is remitted to it (including such powers as the Board may have on making a review decision or a reconsideration decision under regulations made under section 207(1)).

Investigation by PPF Ombudsman of complaints of maladministration

214

(1) Regulations must provide for the investigation and determination by the PPF Ombudsman of such matters as may be prescribed following decisions on relevant complaints given by the Board or the committee of the Board referred to in section 208(3)(b) under regulations made under that section.

(2) Regulations under this section must make provision—

(a) prescribing the descriptions of person who may refer matters to the PPF Ombudsman under the regulations,

(b) about the manner in which such references may be made, including the times by which they are to be made,

(c) about the procedure for conducting investigations, and reaching and giving determinations, on such references, including the times by which the determinations are to be given,

(d) about the powers of the PPF Ombudsman on making such determinations, including—

(i) the power to direct the Board to pay such compensation as he considers appropriate to such persons as he considers have sustained injustice in consequence of the matters complained of, and

(ii) the power to direct the Board to take or refrain from taking such other steps as he may specify,

(e) conferring such powers on the Board as are necessary to comply with such requirements,

(f) for prescribed persons to be notified of—

(i) references to the PPF Ombudsman under the regulations, and

(ii) determinations and directions by the PPF Ombudsman under the regulations,

(g) conferring rights on prescribed persons—

(i) to make representations to the PPF Ombudsman in relation to a matter referred to him by virtue of this section,

(ii) to be heard or represented at any oral hearing by the PPF Ombudsman in relation to such a matter,

(h) about the consideration of evidence by the PPF Ombudsman, including—

(i) production of documents,

(ii) oral hearings,

(iii) expert evidence,

(iv) attendance of witnesses,

(i) conferring rights on prescribed persons to continue a reference made by a person who has died or is otherwise unable to act for himself,

(j) as to the costs or expenses of prescribed persons,

(k) conferring rights on prescribed persons to apply for a stay (or in Scotland, for a sist) in relation to prescribed legal proceedings which begin after the reference is made and conferring power on the relevant court to make an order staying (or sisting) the proceedings if it is satisfied of prescribed matters, and

(l) for securing that any determination or direction of the PPF Ombudsman under the regulations is binding on prescribed persons.

Referral of questions of law

215

The PPF Ombudsman may refer any question of law arising for determination in connection with—

(a) a reviewable matter referred to him by virtue of regulations under section 213, or

(b) a matter referred to him by virtue of regulations under section 214,

to, in England and Wales, the High Court or, in Scotland, the Court of Session.

Publishing reports etc

216

(1) If the PPF Ombudsman considers it appropriate to do so in any particular case, he may publish in such form and manner as he considers appropriate a report of any investigation carried out by virtue of regulations under section 213 or 214 and of the result of that investigation.

(2) For the purposes of the law of defamation, the publication of any matter by the PPF Ombudsman under or by virtue of any provision of this Chapter shall be absolutely privileged.

Determinations of the PPF Ombudsman

217

(1) A person bound by a determination or direction by the PPF Ombudsman by virtue of regulations made under section 213 or 214 may appeal on a point of law arising from the determination or direction—

(a) in England and Wales, to the High Court, or

(b) in Scotland, to the Court of Session.

(2) Any determination or direction of the PPF Ombudsman is enforceable—

(a) in England and Wales, in the county court as if it were a judgment or order of that court, and

(b) in Scotland, in like manner as an extract registered decree arbitral bearing warrant for execution issued by the sheriff court of any sheriffdom in Scotland.

Obstruction etc of the PPF Ombudsman

218

(1) This section applies if any person—

(a) without lawful excuse obstructs the PPF Ombudsman in the performance of his functions, or

(b) is guilty of any act or omission in relation to an investigation by the PPF Ombudsman under regulations made under section 213 or 214, which, if that investigation were a proceeding in the court, would constitute contempt of court.

(2) The PPF Ombudsman may certify the offence to the court.

(3) Where an offence is certified under subsection (2), the court may—

(a) inquire into the matter,

(b) hear any witnesses who may be produced against or on behalf of the person charged with the offence and any statement that may be offered in defence, and

(c) deal with him in any manner in which the court could deal with him if he had committed the like offence in relation to the court.

(4) This section is to be construed, in its application to Scotland, as if contempt of court were categorised as an offence in Scots law.

(5) In this section “the court” means—

(a) in England and Wales, the county court;

(b) in Scotland, the sheriff.

Chapter 7 — Miscellaneous

Backdating the winding up of eligible schemes

219

(1) Subsection (3) applies where—

(a) a qualifying insolvency event occurs in relation to the employer in relation to an eligible scheme, and

(b) the winding up of the scheme begins at or after the time of that event but not later than the first of the following events in relation to the scheme—

(i) a scheme failure notice or a withdrawal notice issued under section 122(2) in relation to the scheme becoming binding,

(ii) a withdrawal notice issued under section 148 in relation to the scheme becoming binding, or

(iii) a notice issued under section 122(4) becoming binding in a case where section 148 does not apply.

(2) Subsection (3) also applies where—

(a) the trustees or managers of an eligible scheme—

(i) make an application to the Board under subsection (1) of section 129, or

(ii) receive a notice from the Board under subsection (5)(a) of that section, and

(b) the winding up of the scheme begins—

(i) at or after the time the application is made or notice is received, but

(ii) not later than a scheme failure notice or a withdrawal notice issued under section 130(2) or (3) in relation to the scheme becoming binding.

(3) The winding up of the scheme is to be taken as beginning immediately before the event within subsection (1)(a) or, as the case may be, subsection (2)(a) if—

(a) the winding up is in pursuance of an order of the Regulator under section 11 of the Pensions Act 1995 (c. 26) directing the winding up of the scheme, or

(b) in any other case, the trustees or managers of the scheme so determine.

(4) In a case where subsection (3) applies, 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 the winding up of the scheme beginning in accordance with that subsection, and

(b) to take those steps within a period specified in the order.

(5) If the trustees or managers of a scheme fail to comply with a direction to them contained in an order under subsection (4), 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.

(6) 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 (4).

(7) For the purposes of this section “qualifying insolvency event” has the same meaning as in section 127.

(8) Subsection (4) of section 128 applies for the purposes of subsection (2) of this section as it applies for the purposes of subsection (1) of that section.

(9) This section is to be read subject to section 135 (which restricts the winding up of an eligible scheme during an assessment period).

220

(1) Regulations may modify any of the provisions of this Part as it applies in relation to—

(a) cases where a person’s shareable rights under an eligible scheme have (at any time) become subject to a pension debit;

(b) cases where—

(i) a pension sharing order or provision in respect of such rights is made before the time a transfer notice under section 160 is received by the trustees or managers of the eligible scheme, and

(ii) that order or provision takes effect on or after the receipt by them of the notice.

(2) Regulations may also modify any of the provisions of Chapter 1 of Part 4 of the Welfare Reform and Pensions Act 1999 (c. 30) (pension sharing) as it applies in relation to—

(a) cases within subsection (1)(a) where any liability of the trustees or managers of the eligible scheme in respect of a pension credit was not discharged before the time a transfer notice under section 160 was received by the trustees or managers of the eligible scheme;

(b) cases within subsection (1)(b).

(3) In this section—

“pension debit” and “shareable rights” have the same meaning as in Chapter 1 of Part 4 of the Welfare Reform and Pensions Act 1999 (c. 30) (pension sharing);

“pension sharing order or provision” means an order or provision falling within section 28(1) of that Act (activation of pension sharing).

Part 3 — Scheme funding

Introductory

Pension schemes to which this Part applies

221

(1) The provisions of this Part apply to every occupational pension scheme other than—

(a) a money purchase scheme, or

(b) a prescribed scheme or a scheme of a prescribed description.

(2) Regulations under subsection (1)(b) may provide for exemptions from all or any of the provisions of this Part.

Scheme funding

The statutory funding objective

222

(1) Every scheme is subject to a requirement (“the statutory funding objective”) that it must have sufficient and appropriate assets to cover its technical provisions.

(2) A scheme’s “technical provisions” means the amount required, on an actuarial calculation, to make provision for the scheme’s liabilities.

(2A) The scheme's technical provisions shall be calculated in a way that is consistent with the scheme's funding and investment strategy, as set out in the scheme's statement of strategy.

(3) For the purposes of this Part—

(a) the assets to be taken into account and their value shall be determined, calculated and verified in a prescribed manner, and

(b) the liabilities to be taken into account shall be determined in a prescribed manner and , subject to subsection (2A), the scheme’s technical provisions shall be calculated in accordance with any prescribed methods and assumptions.

(4) Regulations may—

(a) provide for alternative prescribed methods and assumptions,

(b) provide that it is for the trustees or managers to determine which methods and assumptions are to be used in calculating a scheme’s technical provisions, and

(c) require the trustees or managers, in making their determination, to take into account prescribed matters and follow prescribed principles.

(5) Any provision of the scheme rules that limits the amount of the scheme’s liabilities by reference to the value of its assets shall be disregarded.

Statement of funding principles

223

(1) The trustees or managers must prepare, and from time to time review and if necessary revise, a written statement of—

(a) their policy for securing that the statutory funding objective is met, and

(b) such other matters as may be prescribed.

This is referred to in this Part as a “statement of funding principles”.

(2) The statement must, in particular, record any decisions by the trustees or managers as to—

(a) the methods and assumptions to be used in calculating the scheme’s technical provisions, and

(b) the period within which, and manner in which, any failure to meet the statutory funding objective is to be remedied.

(3) Provision may be made by regulations—

(a) as to the period within which a statement of funding principles must be prepared, and

(b) requiring it to be reviewed, and if necessary revised, at such intervals, and on such occasions, as may be prescribed.

(4) Where any requirement of this section is not complied with, section 10 of the Pensions Act 1995 (c. 26) (civil penalties) applies to a trustee or manager who has failed to take all reasonable steps to secure compliance.

Actuarial valuations and reports

224

(1) The trustees or managers must obtain actuarial valuations—

(a) at intervals of not more than one year or, if they obtain actuarial reports for the intervening years, at intervals of not more than three years, and

(b) in such circumstances and on such other occasions as may be prescribed.

(2) In this Part—

(a) an “actuarial valuation” means a written report, prepared and signed by the actuary, valuing the scheme’s assets and calculating its technical provisions,

(b) the effective date of an actuarial valuation is the date by reference to which the assets are valued and the technical provisions calculated,

(c) an “actuarial report” means a written report, prepared and signed by the actuary, on developments affecting the scheme’s technical provisions since the last actuarial valuation was prepared, and

(d) the effective date of an actuarial report is the date by reference to which the information in the report is stated.

(3) The intervals referred to in subsection (1)(a) are between effective dates of the valuations, and—

(a) the effective date of the first actuarial valuation must be not more than one year after the establishment of the scheme, and

(b) the effective date of any actuarial report must be not more than one year after the effective date of the last actuarial valuation, or, if more recent, the last actuarial report.

(4) The trustees or managers must ensure that a valuation or report obtained by them is received by them within the prescribed period after its effective date.

(5) Nothing in this section affects any power or duty of the trustees or managers to obtain actuarial valuations or reports at more frequent intervals or in other circumstances or on other occasions.

(6) An actuarial valuation or report (whether obtained under this section or in pursuance of any other power or duty) must be prepared in such a manner, give such information, contain such statements and satisfy such other requirements as may be prescribed.

(7) The trustees or managers must secure that any actuarial valuation or report obtained by them (whether obtained under this section or in pursuance of any other power or duty) is made available to the employer within seven days of their receiving it.

(7A) As soon as reasonably practicable after receiving an actuarial valuation, the trustees or managers must send a copy of it to the Regulator, together with such other information as may be prescribed.

(8) Where subsection (1), (4) or (7) , (7) or (7A) is not complied with, section 10 of the Pensions Act 1995 (c. 26) (civil penalties) applies to a trustee or manager who has failed to take all reasonable steps to secure compliance.

Certification of technical provisions

225

(1) When an actuarial valuation is carried out, the calculation of the technical provisions must be certified by the actuary.

(2) The certificate must state that in the opinion of the actuary the calculation is made in accordance with regulations under section 222.

(3) If the actuary cannot give the certificate required by subsection (2) he must report the matter in writing to the Regulator within a reasonable period after the end of the period within which the valuation must be received by the trustees or managers.

Section 10 of the Pensions Act 1995 (civil penalties) applies to the actuary if he fails without reasonable excuse to comply with this subsection.

Recovery plan

226

(1) If having obtained an actuarial valuation it appears to the trustees or managers of a scheme that the statutory funding objective was not met on the effective date of the valuation, they must, within the prescribed time—

(a) if there is no existing recovery plan in force, prepare a recovery plan;

(b) if there is an existing recovery plan in force, review and if necessary revise it.

(2) A recovery plan must set out—

(a) the steps to be taken to meet the statutory funding objective, and

(b) the period within which that is to be achieved.

(3) A recovery plan must comply with any prescribed requirements and must be appropriate having regard to the nature and circumstances of the scheme.

(3A) Provision may be made by regulations as to the matters to be taken into account, or the principles to be followed, in determining for the purposes of subsection (3) whether a recovery plan is appropriate having regard to the nature and circumstances of the scheme.

(4) In preparing or revising a recovery plan the trustees or managers must take account of prescribed matters.

(5) Provision may be made by regulations as to other circumstances in which a recovery plan may or must be reviewed and if necessary revised.

(6) The trustees or managers must, except in prescribed circumstances, send a copy of any recovery plan to the Regulator within a reasonable period after it is prepared or, as the case may be, revised.

The copy of any recovery plan sent to the Regulator must be accompanied by the prescribed information.

(7) Where any requirement of this section is not complied with, section 10 of the Pensions Act 1995 (c. 26) (civil penalties) applies to a trustee or manager who has failed to take all reasonable steps to secure compliance.

Schedule of contributions

227

(1) The trustees or managers must prepare, and from time to time review and if necessary revise, a schedule of contributions.

(2) A “schedule of contributions” means a statement showing—

(a) the rates of contributions payable towards the scheme by or on behalf of the employer and the active members of the scheme, and

(b) the dates on or before which such contributions are to be paid.

(3) Provision may be made by regulations—

(a) as to the period within which, after the establishment of a scheme, a schedule of contributions must be prepared,

(b) requiring the schedule of contributions to be reviewed, and if necessary revised, at such intervals, and on such occasions, as may be prescribed, and

(4) The schedule of contributions must satisfy prescribed requirements.

(5) The schedule of contributions must be certified by the actuary and—

(a) the duty to prepare or revise the schedule is not fulfilled, and

(b) the schedule shall not come into force,

until it has been so certified.

(6) The certificate must state that, in the opinion of the actuary—

(a) the schedule of contributions is consistent with the statement of funding principles, and

(b) the rates shown in the schedule are such that—

(i) where the statutory funding objective was not met on the effective date of the last actuarial valuation, the statutory funding objective can be expected to be met by the end of the period specified in the recovery plan, or

(ii) where the statutory funding objective was met on the effective date of the last actuarial valuation, the statutory funding objective can be expected to continue to be met for the period for which the schedule is to be in force.

(7) Where the statutory funding objective was not met on the effective date of the last actuarial valuation, the trustees or managers must send a copy of the schedule of contributions to the Regulator within a reasonable period after it is prepared or, as the case may be, revised.

(8) Where any requirement of the preceding provisions of this section is not complied with, section 10 of the Pensions Act 1995 (civil penalties) applies to a trustee or manager who has failed to take all reasonable steps to secure compliance.

(9) If the actuary is unable to give the certificate required by subsection (6), he must report the matter in writing to the Regulator within a reasonable period after the end of the period within which the schedule is required to be prepared or, as the case may be, revised.

Section 10 of the Pensions Act 1995 (c. 26) (civil penalties) applies to the actuary if he fails without reasonable excuse to comply with this subsection.

(10) The provisions of subsections (1), (3) and (5) to (9) above do not apply in relation to a schedule of contributions imposed by the Regulator under section 231 or, as the case may be, where such a schedule of contributions is in force.

Failure to make payments

228

(1) This section applies where an amount payable in accordance with the schedule of contributions by or on behalf of the employer or an active member of a scheme is not paid on or before the due date.

(2) If the trustees or managers have reasonable cause to believe that the failure is likely to be of material significance in the exercise by the Regulator of any of its functions, they must, except in prescribed circumstances, give notice of the failure to the Regulator and to the members within a reasonable period.

(3) The amount unpaid (whether payable by the employer or not), if not a debt due from the employer to the trustees or managers apart from this subsection, shall be treated as such a debt.

(4) Section 10 of the Pensions Act 1995 (civil penalties) applies—

(a) where subsection (2) above is not complied with, to a trustee or manager who has failed to take all reasonable steps to secure compliance with that subsection;

(b) to the employer if he fails without reasonable excuse to make a payment required of him—

(i) in accordance with the schedule of contributions, or

(ii) by virtue of subsection (3) above.

(5) This section applies in relation to a schedule of contributions imposed by the Regulator under section 231 as in relation to one agreed between the trustees or managers and the employer.

Matters requiring agreement of the employer

229

(1) The trustees or managers must obtain the agreement of the employer to—

(za) the scheme's funding and investment strategy, as set out in the scheme's statement of strategy;

(a) any decision as to the methods and assumptions to be used in calculating the scheme’s technical provisions (see section 222(4));

(b) any matter to be included in the statement of funding principles (see section 223);

(d) any matter to be included in the schedule of contributions (see section 227).

(2) If it appears to the trustees or managers that it is not otherwise possible to obtain the employer’s agreement within the prescribed time to any such matter, they may (if the employer agrees) by resolution modify the scheme as regards the future accrual of benefits.

(3) No modification may be made under subsection (2) that 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.

For this purpose “subsisting right” and “survivor” have the meanings given by section 67A of the Pensions Act 1995 (c. 26).

(4) Any such modification must be—

(a) recorded in writing by the trustees or managers, and

(b) notified to the active members within one month of the modification taking effect.

(5) If the trustees or managers are unable to reach agreement with the employer within the prescribed time on any such matter as is mentioned in subsection (1), they must report the failure in writing to the Regulator within a reasonable period.

(6) Where subsection (1), (4) or (5) is not complied with, section 10 of the Pensions Act 1995 (civil penalties) applies to a trustee or manager who has failed to take all reasonable steps to secure compliance.

Matters on which advice of actuary must be obtained

230

(1) The trustees or managers must obtain the advice of the actuary before doing any of the following—

(a) making any decision as to the methods and assumptions to be used in calculating the scheme’s technical provisions (see section 222(4));

(b) preparing or revising the statement of funding principles (see section 223);

(d) preparing or revising the schedule of contributions (see section 227);

(e) modifying the scheme as regards the future accrual of benefits under section 229(2).

(2) Regulations may require the actuary to comply with any prescribed requirements when advising the trustees or managers of a scheme on any such matter.

(3) The regulations may require the actuary to have regard to prescribed guidance.

“Prescribed guidance” means guidance that is prepared and from time to time revised by a prescribed body ....

(4) Where subsection (1) is not complied with, section 10 of the Pensions Act 1995 (civil penalties) applies to a trustee or manager who has failed to take all reasonable steps to secure compliance.

Powers of the Regulator

231

(1) The powers conferred by this section are exercisable where it appears to the Regulator with respect to a scheme (as a result of a report made to it or otherwise)—

(zza) that the trustees or managers have failed to comply with any of the requirements of section 221A (funding and investment strategy) or regulations under that section;

(za) that the trustees or managers, when determining the methods and assumptions to be used in calculating the scheme's technical provisions, have failed to comply with a requirement imposed under section 222(4)(c);

(a) that the trustees or managers have failed to comply with the requirements of section 223 with respect to the preparation or revision of a statement of funding principles;

(b) that the trustees or managers have failed to obtain an actuarial valuation as required by section 224(1);

(c) that the actuary is unable, on an actuarial valuation required by section 224(1), to certify the calculation of the scheme’s technical provisions;

(d) that the trustees or managers have failed to comply with the requirements of section 226 with respect to the preparation or revision of a recovery plan;

(e) that the trustees or managers have failed to comply with the requirements of section 227 with respect to the preparation or revision of a schedule of contributions;

(f) that the actuary is unable to certify a schedule of contributions (see section 227(6));

(g) that the employer has failed to make payments in accordance with the schedule of contributions, or that are required of him by virtue of section 228(3), and the failure is of material significance;

(h) that the trustees or managers have been unable to reach agreement with the employer within the prescribed time as to a matter in relation to which such agreement is required (see section 229(5)).

(2) In any of those circumstances the Regulator may by order exercise all or any of the following powers—

(a) it may modify the scheme as regards the future accrual of benefits;

(aa) it may give a direction requiring the trustees or managers to revise the scheme's funding and investment strategy in accordance with the direction;

(b) it may give directions as to—

(i) the manner in which the scheme’s technical provisions are to be calculated, including the methods and assumptions to be used in calculating the scheme’s technical provisions, or

(ii) the period within which, and manner in which, any failure to meet the statutory funding objective is to be remedied;

(i) the rates of contributions payable towards the scheme by or on behalf of the employer and the active members of the scheme, and

(ii) the dates on or before which such contributions are to be paid.

(3) No modification may be made under subsection (2)(a) that 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.

For this purpose “subsisting right” and “survivor” have the meanings given by section 67A of the Pensions Act 1995.

(4) In exercising any of the powers conferred by this section the Regulator must comply with any prescribed requirements.

(5) The powers conferred by this section are in addition to any other powers exercisable by the Regulator under this Act or the Pensions Act 1995 (c. 26).

Supplementary provisions

Power to modify provisions of this Part

232

Regulations may modify the provisions of this Part as they apply in prescribed circumstances.

Construction as one with the Pensions Act 1995

233

This Part shall be construed as one with Part 1 of the Pensions Act 1995 (c. 26).

Part 4 — Financial planning for retirement

Retirement planning

Promoting and facilitating financial planning for retirement

234

(1) The Secretary of State and the Northern Ireland Department may take action for the purpose of promoting or facilitating financial planning for retirement.

(2) The action may in particular include the provision of facilities for the purpose of enabling or assisting an individual or a person authorised by him—

(a) to estimate the financial resources the individual is likely to need after his retirement;

(b) to estimate the financial resources that are likely to be available to the individual after his retirement, from pensions and other sources;

(c) to ascertain what action might be taken with a view to increasing the financial resources available to the individual after his retirement.

(3) This section does not authorise the Secretary of State or the Northern Ireland Department to take action which the Secretary of State or the Northern Ireland Department would otherwise be prohibited from taking under section 21 of the Financial Services and Markets Act 2000 (c. 8) (restrictions on financial promotion).

(4) In this section “the Northern Ireland Department” means the Department for Social Development in Northern Ireland.

Supply of information for purposes of section 234

235

(1) This section applies to—

(a) information which is relevant for determining the pensions and other benefits that may become payable to or in respect of an individual;

(b) information which relates to the financial resources of, or available to, an individual;

(i) providing facilities for saving (for retirement or otherwise) by individuals, or

(ii) promoting or facilitating saving (for retirement or otherwise) by individuals.

(2) A person who holds information to which this section applies may supply it to—

(a) the Secretary of State or the Northern Ireland Department, or

(b) a person providing services to the Secretary of State or the Northern Ireland Department,

for use for the purposes of functions under section 234(1).

(3) Information supplied under subsection (2) must not be supplied by the recipient except—

(a) if the information relates to an individual—

(i) to the individual or a person authorised by him;

(ii) to another person, with the consent of the individual;

(b) in any case—

(i) to a person to whom it could be supplied under subsection (2);

(ii) to any person with a view to the institution of relevant criminal proceedings or otherwise for the purposes of relevant criminal proceedings.

(4) In subsection (3) “relevant criminal proceedings” means criminal proceedings under—

(a) the Pension Schemes Act 1993 (c. 48);

(b) the Pensions Act 1995 (c. 26);

(d) any enactment in force in Northern Ireland corresponding to an Act mentioned in any of paragraphs (a) to (c).

(5) In this section “the Northern Ireland Department” means the Department for Social Development in Northern Ireland.

(6) This section is subject to sections 88 and 202 (tax information disclosed to the Regulator or the Board).

Use and supply of information: private pensions policy and retirement planning

236

Schedule 10 (which makes provision about the use and supply of information for purposes relating to private pensions policy and retirement planning) has effect.

Combined pension forecasts

237

(1) Regulations may require the trustees or managers of an occupational or personal pension scheme to provide any member of the scheme with—

(a) the information specified in subsection (2), together with

(b) the information specified in subsection (3).

(2) The information referred to in subsection (1)(a) is information relating to the member which—

(a) is state pension information for the purposes of section 42 of the Child Support, Pensions and Social Security Act 2000 (c. 19),

(b) has been disclosed to the trustees or managers under that section (or, by virtue of that section, is treated as having been so disclosed), and

(3) The information referred to in subsection (1)(b) is information which—

(a) relates to the pensions and other benefits likely to accrue to the member, or capable of being secured by him, under the scheme, and

(b) is of a description specified in the regulations.

(4) Regulations under subsection (1) may require information referred to in that subsection to be provided at a time or times specified in the regulations.

Employee information and advice

Information and advice to employees

238

(1) Regulations may require employers to take action for the purpose of enabling employees to obtain information and advice about pensions and saving for retirement.

(2) Regulations under subsection (1) may in particular—

(a) provide that they are to apply in relation to employers of a prescribed description and employees of a prescribed description;

(b) make different provision for different descriptions of employers and employees;

(c) make provision as to the action to be taken by employers (including the frequency at which, and the time and place at which, action is to be taken);

(d) make provision as to the description of information and advice in relation to which requirements apply;

(e) make provision about the description of person authorised to provide any such information and advice.

(3) Employers to whom regulations under subsection (1) apply must provide information to the Regulator about the action taken by them for the purpose of complying with the regulations.

(4) 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;

(5) Section 10 of the Pensions Act 1995 (c. 26) (civil penalties) applies to any person who, without reasonable excuse, fails to comply with subsection (3).

(6) In this section “employer” means any employer, whether or not resident or incorporated in any part of the United Kingdom.

Part 5 — Occupational and personal pension schemes: miscellaneous provisions

Categories of pension scheme

239

(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— (i) for the purpose of providing benefits to, or in respect of, people with service in employments of a description, or (ii) 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.

Meaning of “employer” in Part 1 of the Pensions Act 1995

240

(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

Requirements for member-nominated trustees and directors

Requirement for member-nominated trustees

241

(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

(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.

Requirement for member-nominated directors of corporate trustees

242

(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

(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.

Member-nominated trustees and directors: supplementary

243

(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 as defined in section 1(1) of the Companies Act 2006 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.

Obligations of trustees of occupational pension schemes

Investment principles

244

For section 35 of the Pensions Act 1995 (investment principles) substitute—

(35) (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.

Power to make regulations governing investment by trustees

245

(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.

Borrowing by trustees

246

After section 36 of the Pensions Act 1995 insert—

(36A) 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.

Requirement for knowledge and understanding: individual trustees

247

(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

(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.

Requirement for knowledge and understanding: corporate trustees

248

(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

(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 as defined in section 1(1) of the Companies Act 2006 or a company which may be wound up under Part 5 of the Insolvency Act 1986 (c. 45) (unregistered companies).

Requirement for knowledge and understanding: supplementary

249

(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.

Payment of surplus to employer

250

For section 37 of the Pensions Act 1995 (payment of surplus to employer) substitute—

(37) (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.

Payment of surplus to employer: transitional power to amend scheme

251

(1) This section applies to a scheme

(a) which is one to which section 37 of the Pensions Act 1995 applies, and

(b) 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.

(2A) But subsection (2) does not apply in the case of any of the payments listed in paragraphs (c) to (f) of section 175 of the Finance Act 2004 (authorised employer payments other than public service scheme payments or authorised surplus payments).

(3) Where the scheme was so expressed as (apart from section 37, as it applied immediately before the commencement of section 250) 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,

(aa) may be exercised even if the payments to which it relates are, to any extent, payments to which subsection (2) does not apply,

(b) may be exercised, after the commencement of section 25 of the Pensions Act 2011, only once (whether or not also exercised before 6 April 2011), and

(6A) A resolution passed under this section after the commencement of section 25 of the Pensions Act 2011 may amend or revoke a resolution passed under this section before 6 April 2011.

(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.

Restrictions on payment into occupational pension schemes

UK-based scheme to be trust with effective rules

252

(1) Subsections (2) and (3) apply to an occupational pension scheme that has its main administration in the United Kingdom.

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Pensions Act 2004

Interpretation

Sections 190 to 203: interpretation

204

Reports

Publishing reports etc

205

Chapter 6 — Reviews, appeals and maladministration

Review etc by the Board

Meaning of “reviewable matters”

206

Review and reconsideration by the Board of reviewable matters

207

Investigation by the Board of complaints of maladministration

208

The PPF Ombudsman

The Ombudsman for the Board of the Pension Protection Fund

209

Deputy PPF Ombudsmen

210

Status etc of the PPF Ombudsman and deputies

211

Annual reports to Secretary of State

212

References to the PPF Ombudsman

Reference of reviewable matter to the PPF Ombudsman

213

Investigation by PPF Ombudsman of complaints of maladministration

214

Referral of questions of law

215

Publishing reports etc

216

Determinations of the PPF Ombudsman

217

Obstruction etc of the PPF Ombudsman

218

Chapter 7 — Miscellaneous

Backdating the winding up of eligible schemes

Backdating the winding up of eligible schemes

219

Pension sharing

Pension sharing

220

Part 3 — Scheme funding

Introductory

Pension schemes to which this Part applies

221

Scheme funding

The statutory funding objective

222

Statement of funding principles

223

Actuarial valuations and reports

224

Certification of technical provisions

225

Recovery plan

226

Schedule of contributions

227

Failure to make payments

228

Matters requiring agreement of the employer

229

Matters on which advice of actuary must be obtained

230

Powers of the Regulator

231

Supplementary provisions

Power to modify provisions of this Part

232

Construction as one with the Pensions Act 1995

233

Part 4 — Financial planning for retirement

Retirement planning

Promoting and facilitating financial planning for retirement

234

Supply of information for purposes of section 234

235