Pensions Act 2008

• (6) Notice of any determination under this paragraph must be published in such manner as the Board considers appropriate.

SCHEDULE 6

Part 1 — Amendments of the Matrimonial Causes Act 1973

1

The Matrimonial Causes Act 1973 (c. 18) is amended as follows.

2

After section 21A (pension sharing orders) insert—

(21B) (1) For the purposes of this Act, a pension compensation sharing order is an order which— (a) provides that one party's shareable rights to PPF compensation that derive from rights under a specified pension scheme are to be subject to pension compensation sharing for the benefit of the other party, and (b) specifies the percentage value to be transferred. (2) In subsection (1)— (a) the reference to shareable rights to PPF compensation is to rights in relation to which pension compensation sharing is available under Chapter 1 of Part 3 of the Pensions Act 2008 or under corresponding Northern Ireland legislation; (b) “party” means a party to a marriage; (c) “specified” means specified in the order. (21C) In this Part— - “PPF compensation” means compensation payable under the pension compensation provisions; - “the pension compensation provisions” means— 1. Chapter 3 of Part 2 of the Pensions Act 2004 (pension protection) and any regulations or order made under it, 2. Chapter 1 of Part 3 of the Pensions Act 2008 (pension compensation on divorce etc) and any regulations or order made under it, and 3. any provision corresponding to the provisions mentioned in paragraph (a) or (b) in force in Northern Ireland.

3

After section 24D (pension sharing orders: apportionment of charges) insert—

(24E) (1) On granting a decree of divorce or a decree of nullity of marriage or at any time thereafter (whether before or after the decree is made absolute), the court may, on an application made under this section, make a pension compensation sharing order in relation to the marriage. (2) A pension compensation sharing order under this section is not to take effect unless the decree on or after which it is made has been made absolute. (3) A pension compensation sharing order under this section may not be made in relation to rights to PPF compensation that— (a) are the subject of pension attachment, (b) derive from rights under a pension scheme that were the subject of pension sharing between the parties to the marriage, (c) are the subject of pension compensation attachment, or (d) are or have been the subject of pension compensation sharing between the parties to the marriage. (4) For the purposes of subsection (3)(a), rights to PPF compensation “are the subject of pension attachment” if any of the following three conditions is met. (5) The first condition is that— (a) the rights derive from rights under a pension scheme in relation to which an order was made under section 23 imposing a requirement by virtue of section 25B(4), and (b) that order, as modified under section 25E(3), remains in force. (6) The second condition is that— (a) the rights derive from rights under a pension scheme in relation to which an order was made under section 23 imposing a requirement by virtue of section 25B(7), and (b) that order— (i) has been complied with, or (ii) has not been complied with and, as modified under section 25E(5), remains in force. (7) The third condition is that— (a) the rights derive from rights under a pension scheme in relation to which an order was made under section 23 imposing a requirement by virtue of section 25C, and (b) that order remains in force. (8) For the purposes of subsection (3)(b), rights under a pension scheme “were the subject of pension sharing between the parties to the marriage” if the rights were at any time the subject of a pension sharing order in relation to the marriage or a previous marriage between the same parties. (9) For the purposes of subsection (3)(c), rights to PPF compensation “are the subject of pension compensation attachment” if there is in force a requirement imposed by virtue of section 25F relating to them. (10) For the purposes of subsection (3)(d), rights to PPF compensation “are or have been the subject of pension compensation sharing between the parties to the marriage” if they are or have ever been the subject of a pension compensation sharing order in relation to the marriage or a previous marriage between the same parties. (24F) (1) No pension compensation sharing order may be made so as to take effect before the end of such period after the making of the order as may be prescribed by regulations made by the Lord Chancellor. (2) The power to make regulations under this section shall be exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament. (24G) The court may include in a pension compensation sharing order provision about the apportionment between the parties of any charge under section 117 of the Pensions Act 2008 (charges in respect of pension compensation sharing costs), or under corresponding Northern Ireland legislation.

4

• (1) Section 25 (matters to which court is to have regard) is amended as follows.

• (2) In the heading, for “and 24A” substitute “ , 24A, 24B and 24E ”.

• (3) In subsections (1) and (2), for “or 24B” substitute “ , 24B or 24E ”.

5

In section 25A(1) (exercise of court's powers in favour of party to marriage on decree of divorce or nullity of marriage), for “or 24B” substitute “ , 24B or 24E ”.

6

In section 25E(9) (the Pension Protection Fund), omit the definition of “PPF compensation”.

7

After section 25E insert—

(25F) (1) This section applies where, having regard to any PPF compensation to which a party to the marriage is or is likely to be entitled, the court determines to make an order under section 23. (2) To the extent to which the order is made having regard to such compensation, the order may require the Board of the Pension Protection Fund, if at any time any payment in respect of PPF compensation becomes due to the party with compensation rights, to make a payment for the benefit of the other party. (3) The order must express the amount of any payment required to be made by virtue of subsection (2) as a percentage of the payment which becomes due to the party with compensation rights. (4) Any such payment by the Board of the Pension Protection Fund— (a) shall discharge so much of its liability to the party with compensation rights as corresponds to the amount of the payment, and (b) shall be treated for all purposes as a payment made by the party with compensation rights in or towards the discharge of that party's liability under the order. (5) Where the party with compensation rights has a right to commute any PPF compensation, the order may require that party to exercise it to any extent; and this section applies to any payment due in consequence of commutation in pursuance of the order as it applies to other payments in respect of PPF compensation. (6) The power conferred by subsection (5) may not be exercised for the purpose of commuting compensation payable to the party with compensation rights to compensation payable to the other party. (7) The power conferred by subsection (2) or (5) may not be exercised in relation to rights to PPF compensation that— (a) derive from rights under a pension scheme that were at any time the subject of a pension sharing order in relation to the marriage, or a previous marriage between the same parties, or (b) are or have ever been the subject of a pension compensation sharing order in relation to the marriage or a previous marriage between the same parties. (25G) (1) The Lord Chancellor may by regulations— (a) make provision, in relation to any provision of section 25F which authorises the court making an order under section 23 to require the Board of the Pension Protection Fund to make a payment for the benefit of the other party, as to the person to whom, and the terms on which, the payment is to be made; (b) make provision, in relation to payment under a mistaken belief as to the continuation in force of a provision included by virtue of section 25F in an order under section 23, about the rights or liabilities of the payer, the payee or the person to whom the payment was due; (c) require notices to be given in respect of changes of circumstances relevant to orders under section 23 which include provision made by virtue of section 25F; (d) make provision for the Board of the Pension Protection Fund to be discharged in prescribed circumstances from a requirement imposed by virtue of section 25F; (e) make provision about calculation and verification in relation to the valuation of PPF compensation for the purposes of the court's functions in connection with the exercise of any of its powers under this Part. (2) Regulations under subsection (1)(e) may include— (a) provision for calculation or verification in accordance with guidance from time to time prepared by a prescribed person; (b) provision by reference to regulations under section 112 of the Pensions Act 2008. (3) Regulations under subsection (1) may make different provision for different cases. (4) The power to make regulations under subsection (1) is exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament. (5) In this section and section 25F— - “the party with compensation rights” means the party to the marriage who is or is likely to be entitled to PPF compensation, and “the other party” means the other party to the marriage; - “prescribed” means prescribed by regulations.

8

• (1) Section 31 (variation, discharge etc of certain orders for financial relief) is amended as follows.

• (2) In subsection (2)(dd)—

• (a) omit “or” at the end of sub-paragraph (i);

• (b) at the end of sub-paragraph (ii) add “ or ”;

• (c) after that sub-paragraph insert—

(iii) section 25F(2),

;

• (d) in the closing words, after “pension rights” insert “ or pension compensation rights ”.

• (3) In subsection (2)(g), after “a pension sharing order under section 24B above” insert “ , or a pension compensation sharing order under section 24E above, ”.

• (4) In subsection (4B), after “pension sharing order” insert “ , or a pension compensation sharing order, ”.

• (5) In subsection (4C), after “pension sharing order” insert “ , or a pension compensation sharing order, ”.

• (6) In subsection (5), after “pension sharing order” insert “ or pension compensation sharing order ”.

• (7) In subsection (7B), after paragraph (ba) insert

(bb) a pension compensation sharing order;

.

• (8) After subsection (7G) insert—

(7H) Subsections (3) to (10) of section 24E above apply in relation to a pension compensation sharing order under subsection (7B) above as they apply in relation to a pension compensation sharing order under that section.

9

After section 40A (appeals relating to pension sharing orders which have taken effect) insert—

(40B) (1) This section applies where an appeal against a pension compensation sharing order is begun on or after the day on which the order takes effect. (2) If the Board of the Pension Protection Fund has acted to its detriment in reliance on the taking effect of the order the appeal court— (a) may not set aside or vary the order; (b) may make such further orders (including a pension compensation sharing order) as it thinks fit for the purpose of putting the parties in the position it considers appropriate. (3) In determining for the purposes of subsection (2) whether the Board has acted to its detriment the appeal court may disregard any detriment which in the court's opinion is insignificant. (4) Section 24F (duty to stay) only applies to a pension compensation sharing order under this section if the decision of the appeal court can itself be the subject of an appeal.

Part 2 — Amendments of the Matrimonial and Family Proceedings Act 1984

10

The Matrimonial and Family Proceedings Act 1984 (c. 42) is amended as follows.

11

In section 17 (orders for financial provision and property adjustment), at the end of subsection (1) add—

(c) if the marriage has been dissolved or annulled, make an order which would, within the meaning of that Part of that Act, be a pension compensation sharing order in relation to the marriage.

12

In section 18(7) (matters to which court to have regard), for paragraph (c) substitute—

(c) “PPF compensation” means compensation payable under— (i) Chapter 3 of Part 2 of the Pensions Act 2004 (pension protection) or any regulations or order made under it, (ii) Chapter 1 of Part 3 of the Pensions Act 2008 (pension compensation sharing) or any regulations or order made under it, or (iii) any provision corresponding to the provisions mentioned in sub-paragraph (i) or (ii) in force in Northern Ireland.

13

• (1) Section 21 (application of certain provisions of Part 2 of the Matrimonial Causes Act 1973) is amended as follows.

• (2) After subsection (1)(bc) insert—

(bca) section 24E(3) to (10) (provisions about pension compensation orders in relation to divorce and nullity); (bcb) section 24F (duty to stay pension compensation sharing orders); (bcc) section 24G (apportionment of pension compensation sharing charges);

.

• (3) After subsection (1)(bf) insert—

(bg) section 25F (power, by financial provision order, to attach pension compensation payments, or to require the exercise of a right of commutation of pension compensation);

.

• (4) After subsection (1)(l) add—

(m) section 40B (appeals relating to pension compensation sharing orders which have taken effect).

• (5) In subsection (2), for “and (be)” substitute “ , (be) and (bg) ”.

• (6) In subsection (4), at the end add “ or under subsections (1) to (3) of section 25G of that Act ”.

Part 3 — Amendments of the Civil Partnership Act 2004

14

The Civil Partnership Act 2004 (c. 33) is amended as follows.

15

After Part 4 of Schedule 5 (pension sharing orders on or after dissolution or nullity order) insert—

(19A) (1) The court may make a pension compensation sharing order— (a) on making a dissolution or nullity order, or (b) at any time afterwards. (2) In this Schedule “pension compensation sharing order” means a pension compensation sharing order under this Part. (19B) (1) A pension compensation sharing order is an order which— (a) provides that one civil partner's shareable rights to PPF compensation that derive from rights under a specified pension scheme are to be subject to pension compensation sharing for the benefit of the other civil partner, and (b) specifies the percentage value to be transferred. (2) Shareable rights to PPF compensation are rights in relation to which pension compensation sharing is available under— (a) Chapter 1 of Part 3 of the Pensions Act 2008, or (b) corresponding Northern Ireland legislation. (3) In sub-paragraph (1) “specified” means specified in the order. (19C) The court may include in a pension compensation sharing order provision about the apportionment between the civil partners of any charge under— (a) section 117 of the Pensions Act 2008 (charges in respect of pension compensation sharing costs), or (b) corresponding Northern Ireland legislation. (19D) (1) A pension compensation sharing order may not be made in relation to rights to PPF compensation that— (a) are the subject of pension attachment, (b) derive from rights under a pension scheme that were the subject of pension sharing between the civil partners, (c) are the subject of pension compensation attachment, or (d) are or have been the subject of pension compensation sharing between the civil partners. (2) For the purposes of sub-paragraph (1)(a), rights to PPF compensation “are the subject of pension attachment” if any of the following three conditions is met. (3) The first condition is that— (a) the rights derive from rights under a pension scheme in relation to which an order was made under Part 1 imposing a requirement by virtue of paragraph 25(2), and (b) that order, as modified under paragraph 31, remains in force. (4) The second condition is that— (a) the rights derive from rights under a pension scheme in relation to which an order was made under Part 1 imposing a requirement by virtue of paragraph 25(5), and (b) that order— (i) has been complied with, or (ii) has not been complied with and, as modified under paragraph 32, remains in force. (5) The third condition is that— (a) the rights derive from rights under a pension scheme in relation to which an order was made under Part 1 imposing a requirement by virtue of paragraph 26, and (b) that order remains in force. (6) For the purposes of sub-paragraph (1)(b), rights under a pension scheme “were the subject of pension sharing between the civil partners” if the rights were at any time the subject of a pension sharing order in relation to the civil partnership or a previous civil partnership between the same parties. (7) For the purposes of sub-paragraph (1)(c), rights to PPF compensation “are the subject of pension compensation attachment” if there is in force a requirement imposed by virtue of Part 6 relating to them. (8) For the purposes of sub-paragraph (1)(d), rights to PPF compensation “are or have been the subject of pension compensation sharing between the civil partners” if they are or have ever been the subject of a pension compensation sharing order in relation to the civil partnership or a previous civil partnership between the same parties. (19E) (1) A pension compensation sharing order is not to take effect unless the dissolution or nullity order on or after which it is made has been made final. (2) No pension compensation sharing order may be made so as to take effect before the end of such period after the making of the order as may be prescribed by regulations made by the Lord Chancellor. (3) The power to make regulations under sub-paragraph (2) is exercisable by statutory instrument which is subject to annulment in pursuance of a resolution of either House of Parliament. (19F) In this Schedule— - “PPF compensation” means compensation payable under the pension compensation provisions; - “the pension compensation provisions” means— 1. Chapter 3 of Part 2 of the Pensions Act 2004 (pension protection) and any regulations or order made under it, 2. Chapter 1 of Part 3 of the Pensions Act 2008 (pension compensation sharing) and any regulations or order made under it, and 3. any provision corresponding to the provisions mentioned in paragraph (a) or (b) in force in Northern Ireland.

16

• (1) Part 5 of Schedule 5 (matters to which court is to have regard under Parts 1 to 4) is amended as follows.

• (2) In the heading of the Part for “4” substitute “ 4A ”.

• (3) In paragraph 20—

• (a) omit “or” at the end of paragraph (a)(iii);

• (b) for “and” at the end of paragraph (a)(iv) substitute “ or ”;

• (c) after that provision insert—

(v) any provision of Part 4A (pension compensation sharing orders) other than paragraph 19C (apportionment of charges), and

.

• (4) In paragraph 21(1)—

• (a) omit “or” at the end of paragraph (c);

• (b) at the end of paragraph (d) insert “ , or ”;

• (c) after that paragraph insert—

(e) Part 4A (pension compensation sharing orders).

• (5) In paragraph 23(1)—

• (a) omit “or” at the end of paragraph (c);

• (b) at the end of paragraph (d) insert “ or ”;

• (c) after that paragraph insert—

(e) Part 4A (pension compensation sharing orders),

.

17

• (1) Part 7 of Schedule 5 (pension protection fund compensation etc) is amended as follows.

• (2) Omit paragraph 30(3) (definition of PPF compensation).

• (3) After paragraph 34 insert—

(34A) (1) This paragraph applies if, having regard to any PPF compensation to which a civil partner is or is likely to be entitled, the court decides to make an order under Part 1. (2) To the extent to which the Part 1 order is made having regard to such compensation, it may require the Board, if at any time any payment in respect of PPF compensation becomes due to the civil partner with compensation rights, to make a payment for the benefit of the other civil partner. (3) The Part 1 order must express the amount of any payment required to be made by virtue of sub-paragraph (2) as a percentage of the payment which becomes due to the civil partner with compensation rights. (4) Any such payment by the Board— (a) discharges so much of its liability to the civil partner with compensation rights as corresponds to the amount of the payment, and (b) is to be treated for all purposes as a payment made by the civil partner with compensation rights in or towards the discharge of that civil partner's liability under the order. (5) If the civil partner with compensation rights has a right to commute any PPF compensation, the Part 1 order may require that civil partner to exercise it to any extent. (6) This paragraph applies to any payment due in consequence of commutation in pursuance of the Part 1 order as it applies to other payments in respect of PPF compensation. (7) The power conferred by sub-paragraph (5) may not be exercised for the purpose of commuting a benefit payable to the civil partner with compensation rights to a benefit payable to the other civil partner. (8) The powers conferred by sub-paragraphs (2) and (5) may not be exercised in relation to rights to PPF compensation that— (a) derive from rights under a pension scheme that were at any time the subject of a pension sharing order in relation to the civil partnership or a previous civil partnership between the same parties, or (b) are or have ever been the subject of a pension compensation sharing order in relation to the civil partnership or a previous civil partnership between the same parties.

• (4) Before paragraph 35 insert—

(34B) (1) Regulations may— (a) make provision, in relation to any provision of paragraph 34A which authorises the court making a Part 1 order to require the Board to make a payment for the benefit of the other civil partner, as to the person to whom, and the terms on which, the payment is to be made; (b) make provision, in relation to payment under a mistaken belief as to the continuation in force of a provision included by virtue of paragraph 34A in a Part 1 order, about the rights or liabilities of the payer, the payee or the person to whom the payment was due; (c) require notices to be given in respect of changes of circumstances relevant to Part 1 orders which include provision made by virtue of paragraph 34A; (d) make provision for the Board to be discharged in prescribed circumstances from a requirement imposed by virtue of paragraph 34A; (e) make provision about calculation and verification in relation to the valuation of PPF compensation for the purposes of the court's functions in connection with the exercise of any of its powers under this Schedule. (2) Regulations under sub-paragraph (1)(e) may include— (a) provision for calculation or verification in accordance with guidance from time to time prepared by a prescribed person; (b) provision by reference to regulations under section 112 of the Pensions Act 2008.

• (5) In paragraph 37(1) of that Schedule—

• (a) after the definition of “the Board” insert—

“the civil partner with compensation rights” means the civil partner who is or is likely to be entitled to PPF compensation;

;

• (b) after the definition of “occupational pension scheme” insert—

prescribed” means prescribed by regulations;

.

18

• (1) Part 11 of Schedule 5 (variation, discharge etc of certain orders for financial relief) is amended as follows.

• (2) In paragraph 50(1)(f)—

• (a) omit “or” at the end of sub-paragraph (i);

• (b) at the end of sub-paragraph (ii) insert “ or ”;

• (c) after that sub-paragraph insert—

(iii) paragraph 34A(2),

;

• (d) in the closing words after “pension rights” insert “ or pension compensation rights ”.

• (3) In paragraph 50(1)(i) after “a pension sharing order” insert “ , or a pension compensation sharing order, ”.

• (4) After paragraph 53(2)(c) insert—

(ca) a pension compensation sharing order;

.

• (5) After paragraph 54(5) insert—

(6) Paragraph 19D (restrictions on making pension compensation sharing orders) applies in relation to a pension compensation sharing order under paragraph 53 as it applies in relation to any other pension compensation sharing order.

• (6) In the italic heading before paragraph 56 for “and pension sharing orders” substitute “ , pension sharing and pension compensation sharing orders ”.

• (7) In the following provisions of paragraph 57, after “pension sharing order” insert “ or pension compensation sharing order ”

• (a) the opening words of sub-paragraph (1);

• (b) sub-paragraph (1)(a)(i);

• (c) sub-paragraph (1)(b);

• (d) sub-paragraph (2);

• (e) sub-paragraph (3).

• (8) In paragraph 58(2) for “or pension sharing order” substitute “ , pension sharing order or pension compensation sharing order ”.

19

In Part 14 of Schedule 5 (miscellaneous and supplementary) after paragraph 79 insert—

(79A) (1) This paragraph applies where an appeal against a pension compensation sharing order is begun on or after the day on which the order takes effect. (2) If the Board of the Pension Protection Fund has acted to its detriment in reliance on the taking effect of the order the appeal court— (a) may not set aside or vary the order; (b) may make such further orders (including a pension compensation sharing order) as it thinks fit for the purpose of putting the parties in the position it considers appropriate. (3) In determining for the purposes of sub-paragraph (2) whether the Board has acted to its detriment the appeal court may disregard any detriment which in the court's opinion is insignificant. (4) Paragraph 19E only applies to a pension compensation sharing order under this paragraph if the decision of the appeal court can itself be the subject of an appeal.

20

• (1) In Schedule 7 (financial relief in England and Wales after overseas dissolution etc of a civil partnership), in the italic heading before paragraph 9, for “and pension sharing” substitute “ , pension sharing and pension compensation sharing ”.

• (2) In paragraph 9(2) of that Schedule—

• (a) for “or 4” substitute “ , 4 or 4A ”;

• (b) for “and pension sharing” substitute “ , pension sharing and pension compensation sharing ”.

• (3) In paragraph 10(9)(c) of that Schedule omit “Part 7 of”.

• (4) In paragraph 14 of that Schedule—

• (a) after sub-paragraph (1)(c) insert—

(ca) paragraphs 19C, 19D and 19E(2) and (3) (pension compensation sharing);

;

• (b) in sub-paragraph (1)(e) for “37” substitute “ 34 and 35 to 37 ”;

• (c) after that provision insert—

(ea) paragraph 34A (orders under Part 1 relating to pension compensation attachment);

;

• (d) in sub-paragraph (1)(i) for “79” substitute “ 79A ”;

• (e) in that provision for “and pension-sharing appeals” substitute “ , pension-sharing appeals and pension compensation-sharing appeals ”;

• (f) in sub-paragraph (2) after “Sub-paragraph (1)(d)” insert “ and (ea) ”;

• (g) in sub-paragraph (4) at the end add “ or under paragraphs 34B to 36 of that Schedule (supplementary provision about orders relating to pension compensation) ”.

SCHEDULE 7

1

The Family Law (Scotland) Act 1985 (c. 37) is amended as follows.

2

In section 8 (orders for financial provision)—

• (a) in subsection (1)—

• (i) after paragraph (baa) insert—

(bab) a pension compensation sharing order;

,

• (ii) after paragraph (ba) insert—

(bb) an order under section 12B(2);

,

• (b) subsection (4A) is repealed,

• (c) after subsection (7) add—

(8) The court shall not, in the same proceedings, make both a pension compensation sharing order and an order under section 12B(2) in relation to the same PPF compensation. (9) The court shall not make a pension compensation sharing order in relation to rights to PPF compensation that— (a) derive from rights under a pension scheme which is subject to an order made under section 12A(2) or (3) in relation to the marriage or (as the case may be) civil partnership or a previous one between the same persons, (b) derive from rights under a pension scheme which were at any time the subject of a pension sharing order in relation to the marriage or (as the case may be) civil partnership or a previous one between the same persons, (c) are or have been the subject of a pension compensation sharing order in relation to the marriage or (as the case may be) civil partnership or a previous one between the same persons, or (d) are the subject of an order made under section 12B(2) in relation to the marriage or (as the case may be) civil partnership or a previous one between the same persons. (10) Where, as regards PPF compensation, the parties to a marriage or the partners in a civil partnership have in effect a qualifying agreement which contains a term relating to pension compensation sharing, the court shall not— (a) make an order under section 12B(2); or (b) make a pension compensation sharing order, relating to the compensation unless it also sets aside the agreement or term under section 16(1)(b) of this Act. (11) For the purposes of subsection (10)— (a) the expression “term relating to pension compensation sharing” is to be construed by reference to section 16(2AA) of this Act; and (b) a qualifying agreement is one to which section 110(1) of the Pensions Act 2008 relates.

3

After section 8A insert—

(8B) The court may include in a pension compensation sharing order provision about apportionment between the parties of any charge under section 117 of the Pensions Act 2008 or under corresponding Northern Ireland legislation.

4

In section 10 (sharing of value of matrimonial property or partnership property)—

• (a) in subsection (5A), for the words from “compensation payable” to “that Chapter” substitute “ PPF compensation ”,

• (b) for subsection (8B) substitute—

(8B) The Scottish Ministers may by regulations make provision for the purposes of this Act about— (a) calculation and verification of PPF compensation, (b) apportionment of PPF compensation. (8C) Regulations under subsection (8B) may include provision— (a) for calculation or verification in a manner approved by a prescribed person, (b) by reference to regulations under section 112 of the Pensions Act 2008.

5

In section 12A (orders for payment of capital sum: pensions lump sums), in subsection (7ZC), for the words “Notwithstanding the provisions of section 8(4A), for” substitute “ For ”.

6

After section 12A insert—

(12B) (1) This section applies where the court makes an order under section 8(2) for payment of a capital sum (a “capital sum order”) by a party to a marriage or a partner in a civil partnership (“the liable person”) in circumstances where the matrimonial or (as the case may be) partnership property within the meaning of section 10 includes any rights to PPF compensation. (2) On making the capital sum order, the court may make an additional order requiring the Board of the Pension Protection Fund, if at any time any payment in respect of PPF compensation becomes due to the liable person, to pay the whole or part of that payment to the other party or (as the case may be) other partner (“the other person”). (3) Any such payment by the Board of the Pension Protection Fund— (a) shall discharge so much of its liability to the liable person as corresponds to the amount of the payment, and (b) shall be treated for all purposes as a payment made by the liable person in or towards the discharge of the person's liability under the capital sum order. (4) Where the liability of the liable person under the capital sum order has been discharged in whole or in part, other than by a payment by the Board of the Pension Protection Fund, the court may, on an application by any person having an interest, recall the order or vary the amount specified in such an order as appears to the court appropriate in the circumstances. (5) The court may not make an additional order under subsection (2) in relation to rights to PPF compensation that— (a) derive from rights under a pension scheme which is subject to an order made under section 12A(2) or (3) in relation to the marriage or (as the case may be) civil partnership or a previous one between the same persons, (b) derive from rights under a pension scheme which were at any time the subject of a pension sharing order in relation to the marriage or (as the case may be) civil partnership or a previous one between the same persons, (c) are or have been the subject of a pension compensation sharing order in relation to the marriage or (as the case may be) civil partnership or a previous one between the same persons, or (d) are the subject of an order made under subsection (2) in relation to the marriage or (as the case may be) civil partnership or a previous one between the same persons.

7

In section 13 (order for periodical allowance), in subsection (2)(b), after the words “pension sharing order” insert “ or pension compensation sharing order ”.

8

In section 16 (agreements on financial provision)—

• (a) in subsection (2)(b), for the words “does not contain a term relating to pension sharing” substitute “ contains neither a term relating to pension sharing nor a term relating to pension compensation sharing ”,

• (b) in subsection (2)(c), after the word “sharing” in the first place where it occurs insert “ or pension compensation sharing ”,

• (c) in subsection (2)(c)(i), after the word “sharing” insert “ or (as the case may be) the term relating to pension compensation sharing ”,

• (d) after subsection (2A), insert—

(2AA) For the purpose of subsection (2), a term relating to pension compensation sharing is a term corresponding to provision which may be made in a pension compensation sharing order and satisfying the requirements set out in section 109(g) of the Pensions Act 2008.

9

In section 27 (interpretation)—

• (a) in subsection (1), before the definition of “pension sharing order” insert—

“pension compensation sharing order” is an order which— (a) provides that one party's shareable rights to PPF compensation that derive from rights under a specified compensation scheme (that is, specified in the order) are to be subject to pension compensation sharing for the benefit of the other party, and (b) specifies the percentage value or amount to be transferred;

,

• (b) after subsection (1A) insert—

(1B) In subsection (1), in the definition of “pension compensation sharing order”, the reference to shareable rights to PPF compensation is to rights in relation to which pension compensation sharing is available under Chapter 1 of Part 3 of the Pensions Act 2008 or under corresponding Northern Ireland legislation. (1C) In this Act— - “PPF compensation” means compensation payable under the pension compensation provisions, - “the pension compensation provisions” means— 1. Chapter 3 of Part 2 of the Pensions Act 2004 and any regulations or order made under it, 2. Chapter 1 of Part 3 of the Pensions Act 2008 and any regulations or order made under it, 3. any provision corresponding to the provisions mentioned in paragraph (a) or (b) in force in Northern Ireland.

SCHEDULE 8

1

Schedule 7 to the Pensions Act 2004 (c. 35) (pension compensation provisions) is amended as follows.

2

In paragraph 3(6), at the end, add “ to the scheme ”.

3

In paragraph 5(5), at the end, add “ to the scheme ”.

4

In paragraph 11(8), after “paragraph 24 (commutation),” insert— “ paragraph 25E (terminal illness lump sum), ”.

5

In paragraph 13, after sub-paragraph (3) insert—

(3A) For the purposes of this paragraph, a person's entitlement under paragraph 11 is to be determined disregarding paragraph 25E(1)(b) (successful applicant for terminal illness lump sum loses entitlement to periodic compensation).

6

In paragraph 14(9), after “paragraph 20 (compensation in respect of scheme right to transfer payment or contribution refund),” insert— “ paragraph 25E (terminal illness lump sum), ”.

7

In paragraph 15(6), after “paragraph 24 (commutation),” insert— “ paragraph 25E (terminal illness lump sum), ”.

8

In paragraph 18, after sub-paragraph (3) insert—

(3A) For the purposes of this paragraph, a person's entitlement under paragraph 15 is to be determined disregarding paragraph 25E(1)(b) (successful applicant for terminal illness lump sum loses entitlement to periodic compensation).

9

In paragraph 19(8), after “This paragraph is subject to—” insert— “ paragraph 25E (terminal illness lump sum), ”.

10

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

11

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

12

In paragraph 25(3), after “before that person attains normal pension age” insert “ (or, in a case to which paragraph 21 applies, normal benefit age) ”.

13

After paragraph 25 insert—

(25A) (1) Regulations may prescribe circumstances in which, and conditions subject to which, a person may elect to defer entitlement to any relevant compensation until some time after attaining normal pension age (or, in a case to which paragraph 21 applies, normal benefit age). (2) For this purpose “any relevant compensation” means any compensation to which a person is or will be entitled under the pension compensation provisions, except for compensation payable in accordance with paragraph 3 (pensions in payment at assessment date). (3) The Board must determine the amount of the actuarial increase to be applied to compensation to which a person is entitled by virtue of this paragraph. (4) Where, by virtue of this paragraph, periodic compensation is payable to a person under paragraph 11 or 15 after that person attains normal pension age (or, in a case to which paragraph 21 applies, normal benefit age)— (a) paragraph 12(2) applies as if the reference to the date on which the active member attains normal pension age were a reference to the date on which the compensation is payable by virtue of this paragraph, and (b) paragraph 17(2)(b) applies as if the reference to the date on which the deferred member attains normal pension age were a reference to the date on which the compensation is payable by virtue of this paragraph.

14

After paragraph 25A (inserted by paragraph 13 above) insert—

(25B) (1) This paragraph applies to a person in relation to whom all of the following conditions are met— (a) the person is terminally ill; (b) if the person lived to the relevant age, the person would become entitled on attaining that age to relevant compensation in relation to the scheme; (c) the person has not yet become entitled to any compensation under the pension compensation provisions in relation to the scheme; (d) the whole or any part of the person's lifetime allowance is available. (2) A person to whom this paragraph applies may make an application to the Board to commute the future entitlement mentioned in sub-paragraph (1)(b) for a lump sum (“a terminal illness lump sum”) payable on the granting of the application. (3) For the purposes of this Chapter a person is “terminally ill” at any time if at that time the person suffers from a progressive disease and the person's death in consequence of that disease can reasonably be expected within 6 months. (4) In this paragraph— - “lifetime allowance”, in relation to a person, has the same meaning as in Part 4 of the Finance Act 2004 (c. 12) (pension schemes etc) (see section 218 of that Act); - “relevant age”, in relation to a person, means— 1. in relation to compensation entitlement to which has been accelerated or deferred under regulations under paragraph 25 or (as the case may be) 25A, the age at which the person becomes entitled to the compensation in accordance with the regulations; 2. in relation to compensation entitlement to which has not been so accelerated or deferred, normal pension age (or, in a case to which paragraph 21 applies, normal benefit age); - “relevant compensation” means— 1. periodic compensation under paragraph 11 or 15, or 2. lump sum compensation under paragraph 14 or 19. (25C) An application for a terminal illness lump sum— (a) must be made in writing, either on a form approved by the Board for the purposes of this paragraph or in such other manner as the Board may accept as sufficient in the circumstances of the case; (b) must be accompanied by such information as the Board may require for the purpose of determining the application. (25D) (1) The Board must determine an application for a terminal illness lump sum in accordance with this paragraph. (2) The Board must— (a) if satisfied that the conditions in paragraph 25B(1) are met in relation to the applicant, grant the application; (b) in any other case (subject to sub-paragraph (3)), reject the application. (3) The Board may hold over the application for determination at a later date if it is satisfied that— (a) although the condition in paragraph 25B(1)(a) is not met in relation to the applicant, the applicant suffers from a progressive disease and may become terminally ill within six months, and (b) the conditions in paragraph 25B(1)(b) to (d) are met in relation to the applicant. (25E) (1) If the Board grants an application for a terminal illness lump sum, the applicant— (a) becomes entitled to a terminal illness lump sum calculated in accordance with this paragraph, and (b) loses the entitlement the applicant otherwise would have had on attaining the relevant age to relevant compensation in relation to the scheme. (2) The amount of the terminal illness lump sum is 2 times the sum of— (a) the periodic compensation annual amount, and (b) the lump sum compensation annual amount. (3) In sub-paragraph (2) “the periodic compensation annual amount” means the annual amount to which the applicant would have been entitled under paragraph 11 or 15 in relation to the scheme in the year following the granting of the application, if the applicant had attained the relevant age on the granting of the application. (4) In sub-paragraph (2) “the lump sum compensation annual amount” means the annualised value of the lump sum to which the applicant would have been entitled under paragraph 14 or 19 in relation to the scheme on the granting of the application, if the applicant had attained the relevant age on the granting of the application. (5) In sub-paragraph (4) “the annualised value” of a lump sum means the annualised actuarially equivalent amount of that sum, determined in accordance with actuarial factors published by the Board. (6) In this paragraph “relevant compensation” and “the relevant age” have the same meanings as in paragraph 25B. (25F) (1) Relevant information held by the Secretary of State about an individual may be disclosed to the Board for use for a purpose relating to— (a) the Board's functions under paragraphs 25B to 25E; (b) the compliance of the trustees or managers of a pension scheme with section 138 (limit on amount of scheme benefits payable during an assessment period). (2) In sub-paragraph (1) “relevant information” means information held for the purposes of any function of the Secretary of State relating to— (a) social security, or (b) any scheme made under section 286 (financial assistance scheme).

15

In paragraph 33, make the existing provision sub-paragraph (1) and at the end add—

(2) Where the scheme is a variable-rate scheme, regulations under this paragraph may have the effect that the amount of periodic compensation payable to a person is, from a specified time, to be different from the amount that would otherwise be payable under this Schedule. (3) A “variable-rate scheme” is a scheme under which the annual rate of pension to which a person is entitled would have increased (otherwise than by way of revaluation) or decreased at any time after the assessment date, had the scheme continued in existence until that time (and had the scheme rules remained unchanged). (4) Where the scheme is a fixed-term scheme, regulations under this paragraph may have the effect that no periodic compensation is to be payable to a person from a specified time. (5) A “fixed-term scheme” is a scheme under which a person's entitlement to benefits would have ceased at any time after the assessment date, had the scheme continued in existence until that time (and had the scheme rules remained unchanged). (6) In this paragraph “a specified time” means a time determined in accordance with regulations under this paragraph.

16

In paragraph 34(1), after “ill health” insert “ or otherwise ”.

17

For paragraph 35(2)(a) substitute—

(a) in the case of a scheme to which sub-paragraph (3) applies, any recent rule changes, and

.

18

For paragraph 35(3) substitute—

(3) This sub-paragraph applies to a scheme if, in calculating the protected liabilities in relation to the scheme at the relevant time, the effect of taking into account— (a) any recent rule changes, and (b) any recent discretionary increases, is that those liabilities are greater than they otherwise would be.

SCHEDULE 9

Introduction

1

The Pensions Act 2004 (c. 35) is amended as follows.

Contribution notices: material detriment test

2

• (1) In section 38(5)(a) (main purpose or one of main purposes of act or failure to prevent recovery of employer debt under section 75 of the Pensions Act 1995 (c. 26) etc.), after “is of the opinion that” insert “ the material detriment test is met in relation to the act or failure (see section 38A) or that ”.

• (2) After section 38 insert—

(38A) (1) For the purposes of section 38 the material detriment test is met in relation to an act or failure if the Regulator is of the opinion that the act or failure has detrimentally affected in a material way the likelihood of accrued scheme benefits being received (whether the benefits are to be received as benefits under the scheme or otherwise). (2) In this section any reference to accrued scheme benefits being received is a reference to benefits the rights to which have accrued by the relevant time being received by, or in respect of, the persons who were members of the scheme before that time. (3) In this section “the relevant time” means— (a) in the case of an act, the time of the act, or (b) in the case of a failure— (i) the time when the failure occurred, or (ii) where the failure continued for a period of time, the time which the Regulator determines and which falls within that period; and, in the case of acts or failures to act forming part of a series, any reference in this subsection to an act or failure is a reference to the last of the acts or failures in that series. (4) In deciding for the purposes of section 38 whether the material detriment test is met in relation to an act or failure, the Regulator must have regard to such matters as it considers relevant, including (where relevant)— (a) the value of the assets or liabilities of the scheme or of any relevant transferee scheme, (b) the effect of the act or failure on the value of those assets or liabilities, (c) the scheme obligations of any person, (d) the effect of the act or failure on any of those obligations (including whether the act or failure causes the country or territory in which any of those obligations would fall to be enforced to be different), (e) the extent to which any person is likely to be able to discharge any scheme obligation in any circumstances (including in the event of insolvency or bankruptcy), (f) the extent to which the act or failure has affected, or might affect, the extent to which any person is likely to be able to do as mentioned in paragraph (e), and (g) such other matters as may be prescribed. (5) In subsection (4) “scheme obligation” means a liability or other obligation (including one that is contingent or otherwise might fall due) to make a payment, or transfer an asset, to— (a) the scheme, or (b) any relevant transferee scheme in respect of any persons who were members of the scheme before the relevant time. (6) In this section— (a) “relevant transferee scheme” means any work-based pension scheme to which any accrued rights to benefits under the scheme are transferred; (b) any reference to the assets or liabilities of any relevant transferee scheme is a reference to those assets or liabilities so far as relating to persons who were members of the scheme before the relevant time. (7) For the purposes of subsection (6)(a) the reference to the transfer of accrued rights of members of a pension scheme to another pension scheme includes a reference to the extinguishing of those accrued rights in consequence of the obligation to make a payment, or transfer an asset, to that other scheme. (8) In this section— (a) “work-based pension scheme” has the meaning given by section 5(3); (b) any reference to rights which have accrued is to be read in accordance with section 67A(6) and (7) of the Pensions Act 1995 (reading any reference in those subsections to a subsisting right as a reference to a right which has accrued). (9) In deciding for the purposes of this section whether an act or failure has detrimentally affected in a material way the likelihood of accrued scheme benefits being received, the following provisions of this Act are to be disregarded— (a) Chapter 3 of Part 2 (the Board of the Pension Protection Fund: pension protection), and (b) section 286 (the financial assistance scheme for members of certain pension schemes). (10) Regulations may amend any provision of subsections (4) to (8). (38B) (1) This section applies where— (a) a warning notice is given to any person (“P”) in respect of a contribution notice under section 38, and (b) the contribution notice under consideration would be issued wholly or partly by reference to the Regulator's opinion that the material detriment test is met in relation to an act or deliberate failure to act to which P was a party. (2) If the Regulator is satisfied that P has shown that— (a) conditions A and C are met, and (b) where applicable, condition B is met, the Regulator must not issue the contribution notice by reference to its being of the opinion mentioned in subsection (1)(b). (3) Condition A is that, before becoming a party to the act or failure, P gave due consideration to the extent to which the act or failure might detrimentally affect in a material way the likelihood of accrued scheme benefits being received. (4) Condition B is that, in any case where as a result of that consideration P considered that the act or failure might have such an effect, P took all reasonable steps to eliminate or minimise the potential detrimental effects that the act or failure might have on the likelihood of accrued scheme benefits being received. (5) Condition C is that, having regard to all relevant circumstances prevailing at the relevant time, it was reasonable for P to conclude that the act or failure would not detrimentally affect in a material way the likelihood of accrued scheme benefits being received. (6) P is to be regarded as giving the consideration mentioned in condition A only if P has made the enquiries, and done the other acts, that a reasonably diligent person would have made or done in the circumstances. (7) For the purposes of condition C— (a) “the relevant time” means the time at which the act occurred or the failure to act first occurred; (b) the reference to the circumstances mentioned in that condition is a reference to those circumstances of which P was aware, or ought reasonably to have been aware, at that time (including acts or failures to act which have occurred before that time and P's expectation at that time of other acts or failures to act occurring). (8) In the case of acts or failures to act forming part of a series, P is to be regarded as having shown the matters mentioned in subsection (2) if P shows in the case of each of the acts or failures in the series that— (a) conditions A and C are met, and (where applicable) condition B is met, in relation to the act or failure, or (b) the act or failure was one of a number of acts or failures (a “group” of acts or failures) selected by P in relation to which the following matters are shown. (9) The matters to be shown are that— (a) before becoming a party to the first of the acts or failures in the group, condition A is met in relation to the effect of the acts or failures in the group taken together, (b) condition B is (where applicable) met in relation to that effect, and (c) condition C is then met in relation to each of the acts or failures in the group (determined at the time at which each act or failure concerned occurred or first occurred). (10) If at any time P considers that condition C will not be met in relation to any particular act or failure in the group— (a) the previous acts or failures in the group are to be regarded as a separate group for the purposes of subsection (8), and (b) P may then select another group consisting of the particular act or failure concerned, and any subsequent act or failure, in relation to which P shows the matters mentioned in subsection (9). Nothing in paragraph (b) is to be read as preventing P from showing the matters mentioned in subsection (8)(a). (11) If— (a) P is unable to show in the case of each of the acts or failures in the series that the matters set out in subsection (8)(a) or (b) are met, but (b) does show in the case of some of them that those matters are met, the acts or failures within paragraph (b) are not to count for the purposes of section 38A as acts or failures to act in the series. (12) In this section— (a) “a warning notice” means a notice given as mentioned in section 96(2)(a); (b) any reference to an act or failure to which a person is a party has the same meaning as in section 38(6)(a); (c) any reference to the accrued scheme benefits being received has the same meaning as in section 38A; and subsection (9) of section 38A applies for the purposes of conditions A to C as it applies for the purposes of that section. (13) Regulations may amend this section.

3

In section 90(2) (the matters in relation to which the Pensions Regulator must issue codes of practice), after paragraph (a) insert—

(aa) the circumstances in which the Regulator expects to issue contribution notices under section 38 as a result of being of the opinion that the material detriment test is met in relation to an act or failure;

.

4

In section 96 (standard procedure), after subsection (1) insert—

(1A) In any case where— (a) a warning notice is given to any person in respect of a contribution notice under section 38, and (b) the contribution notice under consideration would be issued wholly or partly by reference to the Regulator's opinion that the material detriment test is met in relation to an act or failure, the standard procedure must provide for the following matters. (1B) The matters are— (a) a requirement for the warning notice to explain the general effect of section 38B, and (b) a requirement for the person to be given an opportunity before the contribution notice is issued to show the matters mentioned in subsection (2) of that section.

5

In section 316(2) (subordinate legislation that is subject to affirmative resolution procedure), before paragraph (a) insert—

(za) regulations under section 38A(10) or 38B(13) (section 38 contribution notices: “the material detriment test”);

.

Contribution notices: acting or failing to act otherwise than in good faith

6

In section 38(5) (acts or failures to act in relation to which Pensions Regulator may issue contribution notices), in paragraph (a)(ii), omit “otherwise than in good faith,”.

Whether reasonable for Pensions Regulator to issue contribution notice

7

• (1) Section 38 (contribution notices where avoidance of employer debt) is amended as follows.

• (2) In subsection (3) (conditions which must be met before Pensions Regulator can issue contribution notice), for paragraph (d) substitute—

(d) the Regulator is of the opinion that it is reasonable to impose liability on the person to pay the sum specified in the notice, having regard to— (i) the extent to which, in all the circumstances of the case, it was reasonable for the person to act, or fail to act, in the way that the person did, and (ii) such other matters as the Regulator considers relevant, including (where relevant) the matters falling within subsection (7).

• (3) In subsection (7) (list of relevant matters for purposes of subsection (3)(d))—

• (a) for the words from the beginning to “the following matters—” substitute “ The matters within this subsection are— ”; and

• (b) after paragraph (e) insert—

(ea) the value of any benefits which directly or indirectly the person receives, or is entitled to receive, from the employer or under the scheme; (eb) the likelihood of relevant creditors being paid and the extent to which they are likely to be paid;

.

• (4) After that subsection insert—

(7A) In subsection (7)(eb) “relevant creditors” means— (a) creditors of the employer, and (b) creditors of any other person who has incurred a liability or other obligation (including one that is contingent or otherwise might fall due) to make a payment, or transfer an asset, to the scheme.

Contribution notices: series of acts or failures to act

8

• (1) In section 38 (contribution notices where avoidance of employer debt), at the end insert—

(12) Subsection (13) applies if the Regulator is of the opinion that— (a) a person was a party to a series of acts or failures to act, (b) each of the acts or failures in the series falls within subsection (5)(b) and (c), and (c) the material detriment test is met in relation to the series, or the main purpose or one of the main purposes of the series was as mentioned in subsection (5)(a)(i) or (ii). (13) The series of acts or failures to act is to be regarded as an act or failure to act falling within subsection (5) (and, accordingly, the reference in subsection (6)(b)(i) to the act or failure to act falling with subsection (5) is to the first of the acts or failures to act in the series).

• (2) In section 39 (the sum specified in a section 38 contribution notice)—

• (a) in subsection (4), after “means” insert “ (subject to subsection (4A) ”; and

• (b) after subsection (4) insert—

(4A) In the case of a series of acts or failures to act, “the relevant time” is determined by reference to whichever of the acts or failures in the series is, in the Regulator's opinion, most appropriate.

Contribution notices and financial support directions: bulk transfers

9

After section 39 (the sum specified in a section 38 contribution notice) insert—

(39A) (1) This section applies where— (a) the Regulator is of the opinion that in relation to a scheme (“the initial scheme”) in relation to which section 38 applies— (i) an act or failure to act falling within subsection (5) of that section has occurred (or first occurred) at any time, and (ii) the other conditions in that section for issuing a contribution notice are met in relation to the initial scheme (or, but for any transfer falling within paragraph (b), would be met), and (b) the accrued rights of at least two persons who were members of the initial scheme are transferred at that or any subsequent time to one or more work-based pension schemes (whether by virtue of the act or otherwise). (2) The Regulator may issue a contribution notice under section 38 in relation to any transferee scheme (and, accordingly, any reference in section 40 or 41 to the scheme is to the transferee scheme). (3) In the case of any contribution notice issued by virtue of subsection (2) to any transferee scheme which is not within subsection (5)(a) or (b), section 39 has effect as if any reference in that section to the scheme were a reference to whichever of— (a) the initial scheme, and (b) the transferee scheme, the Regulator determines to be more appropriate in the circumstances. (4) In any case where section 39 has effect in relation to the transferee scheme by virtue of subsection (3), any reference in that section to a debt under section 75 of the 1995 Act is a reference to so much of that debt as, in the Regulator's opinion, is attributable to those members of the transferee scheme who were members of the initial scheme. (5) In the case of any contribution notice issued by virtue of subsection (2) to any transferee scheme which is— (a) a scheme to which section 75 of the 1995 Act does not apply, or (b) a scheme to which that section does apply in a case where the liabilities of the scheme that would be taken into account for the purposes of that section do not relate to the members of the initial scheme, the sum specified by the Regulator in the notice is determined in accordance with regulations (and not in accordance with section 39). (6) The Regulator may also issue a direction to the trustees or managers of any transferee scheme requiring them to take specified steps to secure that the sum payable under the notice is applied for the benefit of the members of the transferee scheme who were members of the initial scheme. (7) If the trustees or managers fail to comply with a direction issued to them under subsection (6), section 10 of the 1995 Act (civil penalties) applies to any trustee or manager who has failed to take all reasonable steps to secure compliance. (39B) (1) In section 39A a “transferee scheme”, in relation to any time, means any work-based pension scheme— (a) to which the accrued rights of at least two persons who were members of the initial scheme have been transferred, and (b) of which any of those persons are members at that time. (2) For the purposes of section 39A(1) and subsection (1) above it does not matter whether any rights are transferred to a work-based pension scheme directly from the initial scheme or following one or more other transfers to other work-based pension schemes. (3) For the purposes of section 39A and this section references to the transfer of accrued rights of members of a pension scheme to another pension scheme include references to the extinguishing of those accrued rights in consequence of the obligation to make a payment, or transfer an asset, to that other scheme. (4) In section 39A and this section— (a) “the 1995 Act” means the Pensions Act 1995; (b) “work-based pension scheme” has the meaning given by section 5(3); (c) any reference to rights which have accrued is to be read in accordance with section 67A(6) and (7) of the 1995 Act (reading any reference in those subsections to a subsisting right as a reference to a right which has accrued). (5) Section 39A applies even if the initial scheme— (a) is wound up as a result of any transfer falling within subsection (1)(b) of that section, or (b) otherwise ceases to exist at the time of the transfer or at any subsequent time. (6) Accordingly, in any such case, in subsection (1) of that section— (a) the reference to a scheme to which section 38 applies is a reference to a scheme which was such a scheme before the transfer; (b) the reference to any conditions in section 38 being met is a reference to any conditions in that section that, but for the transfer, would have been met in relation to the scheme. (7) Nothing in section 39A or this section is to be read as preventing the Regulator from issuing a contribution notice in relation to the initial scheme. (8) Regulations may make provision applying, with or without modifications, any provision made by or under section 39A or this section in relation to any scheme or other arrangement in any case where the accrued rights of persons who were members of the initial scheme are transferred or extinguished directly or indirectly in consequence of or otherwise in connection with— (a) the making of any payment at any time to or for the benefit of the scheme or other arrangement, (b) the transfer of any asset at any time to or for the benefit of the scheme or other arrangement, (c) the discharge (wholly or partly) at any time of any liability incurred by or on behalf of the scheme or other arrangement, or (d) the incurring at any time of any obligation to do any act falling within paragraph (a) to (c). (9) Any reference in subsection (8)(a) to (d) to the doing of an act of any description at any time in relation to the scheme or other arrangement includes a reference to the doing of an act of that description at any previous time in relation to any other scheme or other arrangement. (10) Regulations under subsection (8) may— (a) make provision having effect in relation to any case where rights are transferred or extinguished on or after the date on which the Secretary of State publishes a statement of the intention to make the regulations; and (b) without prejudice to section 315(5), make consequential provision applying with modifications any provision of this Act which relates to contribution notices under section 38.

10

After section 43 (financial support directions) insert—

(43A) (1) This section applies where— (a) the Regulator is of the opinion by reference to any time that the conditions in section 43 for issuing a financial support direction are met in relation to a scheme (“the initial scheme”) in relation to which that section applies (or, but for any transfer falling within paragraph (b), would be met), and (b) the accrued rights of at least two persons who were members of the initial scheme are transferred at any subsequent time to one or more work-based pension schemes. (2) The Regulator may issue a financial support direction under that section in relation to any transferee scheme (and, accordingly, any reference in section 45 or any of sections 47 to 50 to the scheme is to the transferee scheme). (3) The Regulator may also issue a direction to the trustees or managers of any transferee scheme requiring them to take specified steps to secure that the financial support is put in place for the benefit of the members of the transferee scheme who were members of the initial scheme. (4) If the trustees or managers fail to comply with a direction issued to them under subsection (3), section 10 of the 1995 Act (civil penalties) applies to any trustee or manager who has failed to take all reasonable steps to secure compliance. (43B) (1) In section 43A a “transferee scheme”, in relation to any time, means any work-based pension scheme— (a) to which the accrued rights of at least two persons who were members of the initial scheme have been transferred, and (b) of which any of those persons are members at that time. (2) For the purposes of section 43A(1) and subsection (1) above it does not matter whether any rights are transferred to a work-based pension scheme directly from the initial scheme or following one or more other transfers to other work-based pension schemes. (3) For the purposes of section 43A and this section references to the transfer of accrued rights of members of a pension scheme to another pension scheme include references to the extinguishing of those accrued rights in consequence of the obligation to make a payment, or transfer an asset, to that other scheme. (4) In section 43A and this section— (a) “the 1995 Act” means the Pensions Act 1995; (b) “work-based pension scheme” has the meaning given by section 5(3); (c) any reference to rights which have accrued is to be read in accordance with section 67A(6) and (7) of the 1995 Act (reading any reference in those subsections to a subsisting right as a reference to a right which has accrued). (5) Section 43A applies even if the initial scheme— (a) is wound up as a result of any transfer falling within subsection (1)(b) of that section, or (b) otherwise ceases to exist at the time of the transfer or at any subsequent time. (6) Accordingly, in any such case, in subsection (1) of that section— (a) the reference to a scheme to which section 43 applies is a reference to a scheme which was such a scheme before the transfer; (b) the reference to any conditions in section 43 being met is a reference to any conditions in that section that, but for the transfer, would have been met in relation to the scheme. (7) Nothing in section 43A or this section is to be read as preventing the Regulator from issuing a financial support direction in relation to the initial scheme. (8) Regulations may make provision applying, with or without modifications, any provision made by section 43A or this section in relation to any scheme or other arrangement in any case where the accrued rights of persons who were members of the initial scheme are transferred or extinguished directly or indirectly in consequence of or otherwise in connection with— (a) the making of any payment at any time to or for the benefit of the scheme or other arrangement, (b) the transfer of any asset at any time to or for the benefit of the scheme or other arrangement, (c) the discharge (wholly or partly) at any time of any liability incurred by or on behalf of the scheme or other arrangement, or (d) the incurring at any time of any obligation to do any act falling within paragraph (a) to (c). (9) Any reference in subsection (8)(a) to (d) to the doing of an act of any description at any time in relation to the scheme or other arrangement includes a reference to the doing of an act of that description at any previous time in relation to any other scheme or other arrangement. (10) Regulations under subsection (8) may— (a) make provision having effect in relation to any case where rights are transferred or extinguished on or after the date on which the Secretary of State publishes a statement of the intention to make the regulations; and (b) without prejudice to section 315(5), make consequential provision applying with modifications any provision of this Act which relates to financial support directions under section 43.

11

In section 306(2) (overriding requirements)—

• (a) after paragraph (d) insert—

(da) any direction issued by the Regulator under section 39A(6);

; and

• (b) after paragraph (e) insert—

(ea) any direction issued by the Regulator under section 43A(3);

.

12

In section 316(2) (subordinate legislation that is subject to affirmative resolution procedure), after paragraph (za) (as inserted by paragraph 5 of this Schedule) insert—

(zb) regulations under section 39A(5), 39B(8) or 43B(8) (contribution notices and financial support directions: bulk transfers);

.

13

In Part 4 of Schedule 2 (the reserved regulatory functions of Pensions Regulator: functions under 2004 Act)—

• (a) after paragraph 30 insert—

(30A) The power to issue a direction under section 39A(6) to any person.

; and

• (b) after paragraph 33 insert—

(33A) The power to issue a direction under section 43A(3) to any person.

Financial support directions: meaning of “insufficiently resourced”

14

• (1) In section 44(3) (meaning of “insufficiently resourced”), for paragraph (b) substitute—

(b) condition A or B is met.

• (2) After subsection (3) insert—

(3A) Condition A is met if— (a) there is at that time a person who falls within section 43(6)(b) or (c), and (b) the value at that time of that person's resources is not less than the relevant deficit, that is to say the amount which is the difference between— (i) the value of the resources of the employer, and (ii) the amount which is the prescribed percentage of the estimated section 75 debt. (3B) Condition B is met if— (a) there are at that time two or more persons who— (i) fall within section 43(6)(b) or (c), and (ii) are connected with, or associates of, each other, and (b) the aggregate value at that time of the resources of the persons who fall within paragraph (a) (or any of them) is not less than the relevant deficit.

• (3) In subsection (4), for “subsection (3)” substitute “ subsections (3) to (3B) ”.

Effect of amendments made by this Schedule

15

• (1) The amendments made by paragraphs 2, 6 and 7 have effect in relation to any act occurring, or any failure to act first occurring, on or after 14 April 2008.

• (2) The amendments made by paragraph 8 have effect—

• (a) for the purposes of the material detriment test, where at least one of the acts or failures to act occurs or first occurs on or after 14 April 2008, and

• (b) for all other purposes, where at least one of the acts or failures to act occurs or first occurs on or after the day on which this Act is passed.

• (3) The amendments made by paragraphs 9 and 10 have effect in relation to any case where rights are transferred or extinguished on or after 14 April 2008.

• (4) The amendment made by paragraph 14 has effect so as to enable the Pensions Regulator to issue a financial support direction under section 43 of the Pensions Act 2004 by reference to any time falling on or after 14 April 2008.

Transitional provision

16

• (1) In the case of the first set of regulations made under subsection (8) of section 39B of that Act, subsection (10)(a) of that section has effect as if for the words from “the date” to “the regulations” there were substituted “ 20 October 2008 ”.

• (2) In the case of the first set of regulations made under subsection (8) of section 43B of that Act, subsection (10)(a) of that section has effect as if for the words from “the date” to “the regulations” there were substituted “ 20 October 2008 ”.

SCHEDULE 10

Pension Schemes Act 1993 (c. 48)

1

After section 175 of the Pension Schemes Act 1993 (levies towards certain expenditure) insert—

(175A) (1) Regulations may make provision for interest to be charged at the prescribed rate in the case of late payment of a levy imposed under section 175(1). (2) Interest is payable by or on behalf of the person or persons by or on behalf of whom the levy is payable. (3) Interest payable by a person by virtue of this section is a debt due from the person to the Secretary of State. (4) Interest is recoverable by the Secretary of State or, if the Secretary of State so determines, by the Regulatory Authority on the Secretary of State's behalf. (5) Without prejudice to the generality of subsection (1), regulations under this section may include provision relating to— (a) the collection and recovery of interest; (b) the circumstances in which interest may be waived.

Pensions Act 2004 (c. 35)

2

The Pensions Act 2004 is amended as follows.

3

After section 117 (PPF administration levy) insert—

(117A) (1) Regulations may make provision for interest to be charged at the prescribed rate in the case of late payment of an administration levy. (2) Interest is payable by or on behalf of the person or persons by or on behalf of whom the levy is payable. (3) Interest payable by a person by virtue of this section is a debt due from the person to the Secretary of State. (4) Interest is recoverable by the Secretary of State or, if the Secretary of State so determines, by the Regulator on the Secretary of State's behalf. (5) Without prejudice to the generality of subsection (1), regulations under this section may include provision relating to— (a) the collection and recovery of interest; (b) the circumstances in which interest may be waived.

4

In section 173 (Pension Protection Fund), after subsection (1)(b) insert—

(ba) interest paid by virtue of section 181A (interest for late payment of pension protection levy),

.

5

After section 181 (calculation, collection and recovery of levies) insert—

(181A) (1) Regulations may make provision for interest to be charged at the prescribed rate in the case of late payment of a pension protection levy. (2) Interest is payable by or on behalf of the person or persons by or on behalf of whom the levy is payable. (3) Interest payable by a person by virtue of this section is a debt due from the person to the Board. (4) Interest is recoverable by the Board or, if the Board so determines, by the Regulator on its behalf. (5) Without prejudice to the generality of subsection (1), regulations under this section may include provision relating to— (a) the collection and recovery of interest; (b) the circumstances in which interest may be waived.

6

In section 188 (Fraud Compensation Fund), after subsection (1)(b) insert—

(ba) interest paid by virtue of section 189A (interest for late payment of fraud compensation levy),

.

7

After section 189 (fraud compensation levy) insert—

(189A) (1) Regulations may make provision for interest to be charged at the prescribed rate in the case of late payment of a fraud compensation levy. (2) Interest is payable by or on behalf of the person or persons by or on behalf of whom the levy is payable. (3) Interest payable by a person by virtue of this section is a debt due from the person to the Board. (4) Interest is recoverable by the Board or, if the Board so determines, by the Regulator on its behalf. (5) Without prejudice to the generality of subsection (1), regulations under this section may include provision relating to— (a) the collection and recovery of interest; (b) the circumstances in which interest may be waived.

8

In section 209 (Ombudsman for the Board of the Pension Protection Fund), at the end add—

(9) Where regulations make provision under subsection (7), section 117A (interest for late payment of administration levy) applies in relation to the levy as it applies in relation to an administration levy.

9

In section 323(2)(b)(i) (provisions extending to Northern Ireland), for “subsections (7) and (8)” substitute “ subsections (7) to (9) ”.

SCHEDULE 11

Part 1 — Pension scheme membership for jobholders

Part 2 — Safeguarded rights

Part 3 — Contracting-out: abolition of all protected rights

Part 4 — Pension compensation

Part 5 — Financial assistance scheme

Part 6 — Miscellaneous

Jobholders

Postponement or disapplication of automatic enrolment

15A

• (1) The Secretary of State may by order specify rounded figures for the purposes of section 3(6B), 5(7B) or 13(2) in the case of pay reference periods of any length specified in the order.

• (2) A rounded figure so specified applies in place of the amount that would otherwise apply (“the exact amount”).

• (3) The Secretary of State must decide in relation to any particular amount whether to specify—

• (a) a figure that is a whole number of pounds, or

• (b) a figure that is divisible by 10 pence, or

• (c) a figure that includes a whole number of pennies.

• (4) It is for the Secretary of State to decide whether to round any particular amount up or down.

Accordingly, a figure specified under this section may be the figure within paragraph (a) or (b) or (c) of subsection (3) that is closest to the exact amount or the one that is next closest to it (or, if two figures are joint closest, it may be either of those).

Power to specify rounded figures

Occupational pension schemes

Test scheme

Transitional period for defined benefits and hybrid schemes

Timing of automatic re-enrolment

Escalating penalty notices

Alternative quality requirements for UK defined benefits schemes

Quality requirement: non-UK occupational pension schemes

Monitoring of employers' payments to personal pension schemes

Right of employee not to be unfairly dismissed

Enforcement of the right

Right of employee not to be unfairly dismissed

Powers to require information and to enter premises

Transitional period for defined benefits and hybrid schemes

Power of trustees or managers to modify by resolution

Powers to require information and to enter premises

Monitoring of employers' payments to personal pension schemes

Monitoring of employers' payments to personal pension schemes

Right of employee not to be unfairly dismissed

Objectives of the Regulator

Scheme orders: general

Employment Appeal Tribunal

Restrictions on agreements to limit operation of this Part

Abolition of safeguarded rights

Information for private pensions policy and retirement planning

Objectives of the Regulator

Revaluation of accrued benefits etc

Stakeholder pension schemes

Scheme orders: general

Amendments of Schedule 7 to the Pensions Act 2004

99A

• (1) This section applies for the purposes of paragraph (a) of the definition of “money purchase benefits” in section 99.

• (2) A benefit other than a pension in payment falls within this section if its rate or amount is calculated solely by reference to assets which (because of the nature of the calculation) must necessarily suffice for the purposes of its provision to or in respect of the member.

• (3) A benefit which is a pension in payment falls within this section if—

• (a) its provision to or in respect of the member is secured by an annuity contract or insurance policy made or taken out with an insurer, and

• (b) at all times before coming into payment the pension was a benefit falling within this section by virtue of subsection (2).

• (4) For the purposes of subsection (2) it is immaterial if the calculation of the rate or amount of the benefit includes deductions for administrative expenses or commission.

• (5) In this section references to a pension do not include income withdrawal or dependants' income withdrawal (within the meaning of paragraphs 7 and 21 of Schedule 28 to the Finance Act 2004).

State pension credit: extension of assessed income period for those aged 75 or over

Consequential amendments

Persons in offshore employment

Money purchase benefits: supplementary

Interpretation

Creation of pension compensation debits and credits

Activation of pension compensation sharing: supplementary (Scotland)

Pension compensation sharing and attachment on divorce etc

Supply of information about pension compensation sharing

Financial assistance scheme

Restriction on purchase of annuities

Payments to employers

Payments to employers

Additional Class 3 contributions (Northern Ireland)

Payments to employers

Polish Resettlement Act 1947: effect of residence in Poland

Polish Resettlement Act 1947: effect of residence in Poland

War pensions: effect of later marriage or civil partnership

Orders and regulations: supplementary

Pre-1948 insurance: supplementary

Orders and regulations: supplementary

144A

In sections 303 to 305 of the Pensions Act 2004 (service of documents and electronic working) references to that Act are to be treated as including references to the following provisions of this Act—

• Chapters 2 and 3 of Part 1;

• section 60(1)(c);

• Chapter 1 of Part 3.

Members

Conflicts of interest

Disqualification and removal

Tenure of office

Remuneration etc

Staff

Committees and advisory committees

Proceedings

Disqualification for acting in relation to certain matters

Delegation

Validity of proceedings

Authentication of the trustee corporation's seal

Annual report

Finance

Accounts

Disqualification

Records and freedom of information

Equality

Interpretation

Amendments to Schedule 3 to the 1993 Act

Amendments to Schedule 7 to the 2004 Act

After Schedule 4B to the Social Security Contributions and Benefits Act 1992 (c. 4) insert—

Social Security Contributions and Benefits Act 1992 (c. 4)

Social Security Administration Act 1992 (c. 5)

Pension Schemes Act 1993 (c. 48)

Introductory

Interpretation

Pension compensation age

Compensation payable to transferee

Compensation payable to widow, widower or surviving civil partner

Compensation payable to transferee

Compensation payable to widow, widower or surviving civil partner

Revaluation

Commutation of periodic compensation

Early payment of compensation

Deferral of compensation

Terminal illness lump sum: eligibility

Terminal illness lump sum: application and evidence

Terminal illness lump sum: determination of application

Terminal illness lump sum: effect of successful application

Terminal illness lump sum: information

Annual increase in periodic compensation

Compensation cap

Compensation in form of dependant's benefits

Board's power to alter rates of revaluation and indexation

Introduction

Contribution notices: material detriment test

Contribution notices: acting or failing to act otherwise than in good faith

Whether reasonable for Pensions Regulator to issue contribution notice

Contribution notices: series of acts or failures to act

Contribution notices and financial support directions: bulk transfers

Financial support directions: meaning of “insufficiently resourced”

Effect of amendments made by this Schedule

Transitional provision

Pension Schemes Act 1993 (c. 48)

Pensions Act 2004 (c. 35)

Pensions Act 2007 (c. 22)

Editorial notes

[^c19535591]: S. 2 wholly in force at 30.6.2012; s. 2 in force for certain purposes at Royal Assent see s. 149(2)(k); s. 2 in force so far as not already in force at 30.6.2012 by S.I. 2012/1682, art. 2(1)(2)(a), Sch. 1