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Public Service Pensions Act 2013

Type Public General Act

Publication 2013-04-25

State In force

Department Statute Law Database

Source legislation.gov.uk

Reform history JSON API

Establishment of new schemes

Schemes for persons in public service

1

(1) Regulations may establish schemes for the payment of pensions and other benefits to or in respect of persons specified in subsection (2).

(2) Those persons are—

(a) civil servants;

(b) the judiciary;

(d) teachers for England, Wales and Scotland;

(e) health service workers for England, Wales and Scotland;

(f) fire and rescue workers for England, Wales and Scotland;

(g) members of police forces for England, Wales and Scotland;

(h) the armed forces.

(3) These terms are defined in Schedule 1.

(4) In this Act, regulations under this section are called “scheme regulations”.

Responsible authority for schemes

2

(1) The persons who may make scheme regulations are set out in Schedule 2.

(2) In this Act, the person who may make scheme regulations for any description of persons specified in section 1(2) is called the “responsible authority” for the scheme for those persons.

Scheme regulations

3

(1) Scheme regulations may, subject to this Act and Part 1 of PSPJOA 2022, make such provision in relation to a scheme under section 1 as the responsible authority considers appropriate.

(2) That includes in particular—

(a) provision as to any of the matters specified in Schedule 3;

(b) consequential, supplementary, incidental or transitional provision in relation to the scheme or any provision of this Act.

(c) consequential, supplementary, incidental or transitional provision in relation to any provision of Part 1 of PSPJOA 2022.

(3) Scheme regulations may—

(a) make different provision for different purposes or cases (including different provision for different descriptions of persons);

(b) make retrospective provision (but see section 23);

(4) The consequential provision referred to in subsection (2)(b) includes consequential provision amending any primary legislation passed before or in the same session as this Act (as well as consequential provision amending any secondary legislation).

(4A) In subsection (2)(c)—

(a) the reference to consequential provision includes consequential provision amending any primary legislation passed before or in the same session as PSPJOA 2022 (as well as consequential provision amending any secondary legislation);

(b) the reference to supplementary, incidental or transitional provision includes supplementary, incidental or transitional provision amending an existing scheme contained in primary legislation (as well as supplementary, incidental or transitional provision amending any secondary legislation).

(4B) See sections 37 and 74 of PSPJOA 2022 for provision under which certain powers to make provision under Part 1 of that Act by means of scheme regulations may be exercised by amending existing schemes.

(5) Scheme regulations require the consent of the Treasury before being made, unless one of the following exceptions applies.

(6) The exceptions are—

(a) scheme regulations of the Scottish Ministers relating to local government workers, fire and rescue workers and members of a police force;

(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7) A Treasury order may amend this section so as to add, remove or vary exceptions to the requirement in subsection (5).

(8) A Treasury order under subsection (7) is subject to the negative procedure.

Governance

Scheme manager

4

(1) Scheme regulations for a scheme under section 1 must provide for a person to be responsible for managing or administering—

(a) the scheme, and

(b) any statutory pension scheme that is connected with it.

(2) In this Act, that person is called the “scheme manager” for the scheme (or schemes).

(3) The scheme manager may in particular be the responsible authority.

(3A) Subsection (1) does not apply to a scheme under section 1 if—

(a) the scheme is connected with another scheme under section 1, and

(b) a scheme manager is provided for under subsection (1) in scheme regulations for that other scheme.

(4) Subsection (1) does not apply to a scheme under section 1 which is an injury or compensation scheme.

(5) Scheme regulations may comply with the requirement in subsection (1)(a) or (b) by providing for different persons to be responsible for managing or administering different parts of a scheme (and references in this Act to the “scheme manager”, in such a case, are to be construed accordingly).

(6) For the purposes of this Act, a scheme under section 1 and another statutory pension scheme are connected if and to the extent that the schemes make provision in relation to persons of the same description.

(6A) The reference in subsection (6) to a statutory pension scheme includes a statutory pension scheme established (under section 1 or otherwise) after the establishment of the scheme under section 1 mentioned in that subsection.

(7) Scheme regulations may specify exceptions to subsection (6).

Pension board

5

(1) Scheme regulations for a scheme under section 1 must provide for the establishment of a board with responsibility for assisting the scheme manager (or each scheme manager) in relation to the following matters.

(2) Those matters are—

(a) securing compliance with the scheme regulations and other legislation relating to the governance and administration of the scheme and any statutory pension scheme that is connected with it;

(b) securing compliance with requirements imposed in relation to the scheme and any connected scheme by the Pensions Regulator;

(2A) Subsection (1) does not apply to a scheme under section 1 if—

(a) the scheme is connected with another scheme under section 1, and

(b) a pension board is provided for under subsection (1) in scheme regulations for that other scheme.

(3) In making the regulations the responsible authority must have regard to the desirability of securing the effective and efficient governance and administration of the scheme and any connected scheme.

(4) The regulations must include provision—

(a) requiring the scheme manager—

(i) to be satisfied that a person to be appointed as a member of the board does not have a conflict of interest, and

(ii) to be satisfied from time to time that none of the members of the board has a conflict of interest;

(b) requiring a member of the board, or a person proposed to be appointed as a member of the board, to provide the scheme manager with such information as the scheme manager reasonably requires for the purposes of provision under paragraph (a);

(5) In subsection (4)(a) “conflict of interest”, in relation to a person, means a financial or other interest which is likely to prejudice the person's exercise of functions as a member of the board (but does not include a financial or other interest arising merely by virtue of membership of the scheme or any connected scheme).

(6) In subsection (4)(c)—

(a) “employer representatives” means persons appointed to the board for the purpose of representing employers for the scheme and any connected scheme;

(b) “member representatives” means persons appointed to the board for the purpose of representing members of the scheme and any connected scheme.

(7) Where the scheme manager of a scheme under section 1 is a committee of a local authority, the scheme regulations may provide for that committee also to be the board for the purposes of this section.

(8) In this Act, a board established under this section is called a “pension board”.

(9) This section does not apply to a scheme under section 1 which is an injury or compensation scheme.

Pension board: information

6

(1) The scheme manager for a scheme under section 1 and any statutory pension scheme that is connected with it must publish information about the pension board for the scheme or schemes (and keep that information up-to-date).

(2) That information must include information about—

(a) who the members of the board are,

(b) representation on the board of members of the scheme or schemes, and

(3) This section does not apply to a scheme under section 1 which is an injury or compensation scheme.

Scheme advisory board

7

(1) Scheme regulations for a scheme under section 1 which is a defined benefits scheme must provide for the establishment of a board with responsibility for providing advice to the responsible authority, at the authority's request, on—

(a) the desirability of changes to the scheme, or

(b) the desirability of changes to any other scheme under section 1 which—

(i) is connected with it, and

(ii) is not an injury or compensation scheme.

(1A) Subsection (1) does not apply to a scheme under section 1 if—

(a) the scheme is connected with another scheme under section 1 which is not an injury or compensation scheme, and

(b) a scheme advisory board is provided for under subsection (1) in scheme regulations for that other scheme.

(2) Where, by virtue of section 4(5), there is more than one scheme manager for a scheme mentioned in subsection (1) (and accordingly there is more than one pension board for the scheme), the regulations may also provide for the board to provide advice (on request or otherwise) to the scheme managers or the scheme's pension boards in relation to the effective and efficient administration and management of—

(a) the scheme and any statutory pension scheme that is connected with it, or

(b) any pension fund of the scheme and any connected scheme.

(3) A person to whom advice is given by virtue of subsection (1) or (2) must have regard to the advice.

(4) The regulations must include provision—

(a) requiring the responsible authority—

(i) to be satisfied that a person to be appointed as a member of the board does not have a conflict of interest, and

(ii) to be satisfied from time to time that none of the members of the board has a conflict of interest;

(b) requiring a member of the board, or a person proposed to be appointed as a member of the board, to provide the responsible authority with such information as the authority reasonably requires for the purposes of provision under paragraph (a).

(5) In subsection (4) (a) “conflict of interest”, in relation to a person, means a financial or other interest which is likely to prejudice the person's exercise of functions as a member of the board (but does not include a financial or other interest arising merely by virtue of membership of the scheme or any connected scheme).

(6) In this Act, a board established under this section is called a “scheme advisory board”.

Design

Types of scheme

8

(1) Scheme regulations may establish a scheme under section 1 as—

(a) a defined benefits scheme,

(b) a defined contributions scheme, or

(2) A scheme under section 1 which is a defined benefits scheme must be—

(a) a career average revalued earnings scheme, or

(b) a defined benefits scheme of such other description as Treasury regulations may specify.

(3) Treasury regulations may not specify a final salary scheme under subsection (2)(b).

(4) A scheme under section 1 is a “career average revalued earnings scheme” if—

(a) the pension payable to or in respect of a person, so far as it is based on the person's pensionable service, is determined by reference to the person's pensionable earnings in each year of pensionable service, and

(b) those earnings, or a proportion of those earnings accrued as a pension, are under the scheme revalued each year until the person leaves pensionable service.

(4A) The extent to which a scheme under section 1 is a career average revalued earnings scheme is not affected by provision contained in scheme regulations that is made under section 78 of PSPJOA 2022 (local government schemes: power to pay final salary benefits).

(5) Treasury regulations under this section are subject to the negative Commons procedure.

Revaluation

9

(1) This section applies in relation to a scheme under section 1 which—

(a) requires a revaluation of pensionable earnings of a person, or a proportion of those earnings accrued as a pension, until the person leaves pensionable service, and

(b) requires such a revaluation to be by reference to a change in prices or earnings (or both) in a given period.

(2) The change in prices or earnings to be applied for the purposes of such a revaluation is to be such percentage increase or decrease as a Treasury order may specify in relation to the period.

(3) For the purposes of making such an order the Treasury may determine the change in prices or earnings in any period by reference to the general level of prices or earnings estimated in such manner as the Treasury consider appropriate.

(4) A Treasury order under this section—

(a) must be made in each year;

(b) may make different provision for different purposes.

(5) A Treasury order under this section is subject to—

(a) the affirmative Commons procedure, if the order specifies a percentage decrease for the purposes of subsection (2), and

(b) the negative Commons procedure, in any other case.

(6) For the purposes of subsection (1) any gap in the person's pensionable service which does not exceed five years is to be disregarded.

Pension age

10

(1) The normal pension age of a person under a scheme under section 1 must be—

(a) the same as the person's state pension age, or

(b) 65, if that is higher.

(2) Subsection (1) does not apply in relation to—

(a) fire and rescue workers who are firefighters,

(b) members of a police force, and

The normal pension age of such persons under a scheme under section 1 must be 60.

(3) The deferred pension age of a person under a scheme under section 1 must be—

(a) the same as the person's state pension age, or

(b) 65, if that is higher.

(4) Where—

(a) a person's state pension age changes, and

(b) the person's normal or deferred pension age under a scheme under section 1 changes as a result of subsection (1) or (3),

the change to the person's normal or deferred pension age must under the scheme apply in relation to all the benefits (including benefits already accrued under the scheme) which may be paid to or in respect of the person under the scheme and to which the normal or deferred pension age is relevant.

(5) In this Act—

(a) “normal pension age”, in relation to a person and a scheme, means the earliest age at which the person is entitled to receive benefits under the scheme (without actuarial adjustment) on leaving the service to which the scheme relates (and disregarding any special provision as to early payment of benefits on the grounds of ill-health or otherwise);

(b) “deferred pension age”, in relation to a person and a scheme, means the earliest age at which the person is entitled to receive benefits under the scheme (without actuarial adjustment) after leaving the service to which the scheme relates at a time before normal pension age (and disregarding any special provision as to early payment of benefits on the grounds of ill-health or otherwise);

(c) “state pension age”, in relation to a person, means the pensionable age of the person as specified from time to time in Part 1 of Schedule 4 to the Pensions Act 1995.

Cost control

Valuations

11

(1) Scheme regulations for a scheme under section 1 which is a defined benefits scheme must provide for actuarial valuations to be made of—

(a) the scheme, and

(b) any statutory pension scheme that is connected with it.

(1A) Subsection (1) does not apply to a scheme under section 1 if—

(a) the scheme is connected with another scheme under section 1, and

(b) actuarial valuations are provided for under subsection (1) in scheme regulations for that other scheme.

(2) Such a valuation is to be carried out in accordance with Treasury directions.

(3) Treasury directions under subsection (2) may in particular specify—

(a) how and when a valuation is to be carried out;

(b) the time in relation to which a valuation is to be carried out;

(d) the matters to be covered by a valuation;

(e) where a scheme under section 1 and another statutory pension scheme are connected, whether the schemes are to be valued separately or together (and if together, how);

(f) the period within which any changes to the employer contribution rate under a scheme under section 1 must take effect following a valuation.

(4) Treasury directions under subsection (2), and variations and revocations of such directions, may only be made after the Treasury has consulted the Government Actuary.

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