Legalize / United Kingdom / Public General Act

Pension Schemes Act 2021

Type Public General Act

Publication 2021-02-11

State In force

Department Statute Law Database

Source legislation.gov.uk

Reform history JSON API

PART 1 — Collective money purchase benefits

Definitions

Triggering event periods

1

(1) For the purposes of this Part, a benefit provided under a pension scheme is a “collective money purchase benefit” if—

(a) the benefit is a qualifying benefit (see section 2), and

(b) the scheme is a qualifying scheme (see sections 3 and 4).

(2) In this Part “collective money purchase scheme” means—

(a) a qualifying scheme, or

(b) a section of a qualifying scheme (see sections 3(6) to (9) and 5),

under which all of the benefits that may be provided are qualifying benefits.

Qualifying benefits

2

(1) A benefit provided under a pension scheme is a “qualifying benefit” if—

(a) the benefit is provided out of the available assets of the scheme,

(b) under the rules of the scheme, the rate or amount of the benefit is subject to periodic adjustments designed to achieve a balance between the value of the available assets of the scheme and the required amount, and

(2) In subsection (1)—

“the available assets of the scheme” means all the assets that—arise or derive from the payments made by or in respect of members of the scheme, andare available (subject to any deductions that fall to be made in respect of administration charges) for the provision of benefits to or in respect of the members of the scheme collectively;

“the required amount” means the amount expected to be required, applying appropriate actuarial assumptions, for the purpose of providing benefits under the scheme to or in respect of the members of the scheme collectively.

(3) Regulations under subsection (1)(c) are subject to affirmative resolution procedure.

(4) Where a scheme is divided into sections, this section has effect as if—

(a) the reference to the scheme in subsection (1)(a) were a reference to a section of the scheme, and

(b) the other references to the scheme were references to that section of it.m,.

Qualifying schemes

3

(1) A pension scheme is a “qualifying scheme” if it meets the requirements in this section.

(2) The scheme must be an occupational pension scheme established under an irrevocable trust by a person or persons to whom section 1(2)(a) (employer) of the Pension Schemes Act 1993 applied when the scheme was established (without other persons).

(3) The scheme must be used, or intended to be used, only by—

(a) a single employer, or

(b) two or more employers that are connected with each other.

(4) The scheme must not be a relevant public service pension scheme (see section 4).

(5) The qualifying benefits provided under the scheme must consist of or include the payment of a pension.

(6) If the scheme provides both qualifying benefits and other benefits, there must be appropriate separation of the qualifying benefits.

(7) There is “appropriate separation” of qualifying benefits and other benefits if (and only if)—

(a) the scheme is divided into sections,

(b) none of the sections under which qualifying benefits are provided provides other types of benefit,

(c) payments made by or in respect of members of the scheme for the purpose of providing qualifying benefits under a section of the scheme are allocated to that section, and

(d) a proportion of the assets of the scheme is attributable to each section of the scheme and cannot be used for the purposes of any other section.

(8) If the scheme provides a combination of qualifying benefits with different characteristics that is described in regulations made by the Secretary of State, there must be appropriate separation of those qualifying benefits.

(9) There is “appropriate separation” of qualifying benefits with different characteristics if (and only if)—

(a) the scheme is divided into sections,

(b) each of the different types of qualifying benefit is provided under a different section,

(c) payments made by or in respect of members of the scheme for the purpose of providing qualifying benefits under a section of the scheme are allocated to that section, and

(d) a proportion of the assets of the scheme is attributable to each section of the scheme and cannot be used for the purposes of any other section.

(10) Regulations under subsection (8) are subject to negative resolution procedure.

Qualifying schemes: supplementary

4

(1) For the purposes of section 3(4) a pension scheme is a relevant public service pension scheme if it is—

(a) a public service pension scheme within the meaning of the Pension Schemes Act 1993 (see section 1(1) of that Act),

(b) a scheme under section 1 of the Public Service Pensions Act 2013 (new public service schemes),

(d) a statutory pension scheme that is connected with a scheme referred to in paragraph (b) or (c).

(2) In subsection (1)(d) “connected” and “statutory pension scheme” have the same meaning as in the Public Service Pensions Act 2013 (see sections 4(6) and 37 of that Act).

(3) The reference to a pension in section 3(5) does not include income withdrawal or dependants' income withdrawal within the meaning of paragraphs 7 and 21 of Schedule 28 to the Finance Act 2004.

Schemes divided into sections

5

(1) The Secretary of State may by regulations make provision about when a pension scheme is or is not divided into sections for the purposes of this Part.

(2) The Secretary of State may by regulations provide that, where a collective money purchase scheme that is not divided into sections (an “undivided scheme”) becomes a collective money purchase scheme that is divided into sections, an authorisation previously granted in respect of the undivided scheme applies to any of those sections that—

(a) is a collective money purchase scheme by reason of section 1(2)(b), and

(b) satisfies conditions specified in the regulations.

(3) For the purposes of this Part, where—

(a) a qualifying scheme is divided into sections, and

(b) each of those sections is a collective money purchase scheme by reason of section 1(2)(b),

the qualifying scheme (taken as a whole) is to be treated as if it were not a collective money purchase scheme.

(4) Regulations under subsection (1) are subject to negative resolution procedure.

(5) Regulations under subsection (2) are subject to affirmative resolution procedure.

Amendment of definitions of “money purchase benefits” etc

6

(1) Schedule 1 contains amendments of definitions of “money purchase benefits” in—

(a) Schedule 10A to the Building Societies Act 1986 (disclosures about directors, other officers and employees in notes to accounts);

(b) the Pension Schemes Act 1993;

(2) In section 32 of the Pensions Act 2011 (power to amend definitions of “money purchase benefits” in certain Acts)—

(a) in subsection (1)—

(i) for “purpose the” substitute

purpose— (a) the

;

(ii) at the end insert

, or (b) section 2 of the Pension Schemes Act 2021 (collective money purchase benefits: meaning of “qualifying benefits”).

;

(b) in subsection (2), at the end insert “ or by Schedule 1 to the Pension Schemes Act 2021 ”.

Authorisation

Authorisation of collective money purchase schemes

7

(1) A person may not operate a collective money purchase scheme unless the scheme is authorised.

(2) Section 10 of the Pensions Act 1995 (civil penalties) applies to a person who breaches subsection (1).

(3) If the Pensions Regulator becomes aware that a collective money purchase scheme is being operated without authorisation, it must notify the trustees of the scheme that the scheme is not authorised.

(4) The notification must—

(a) explain that the notification is a triggering event (see section 31), and

(b) include an explanation of the trustees' duties under sections 31 to 45.

(5) For the purposes of this section a person “operates” a collective money purchase scheme if, in relation to the scheme, the person accepts—

(a) money paid by a member (or prospective member), or

(b) money paid by an employer (or prospective employer) in respect of contributions, fees, charges or anything else except—

(i) the costs of setting up the scheme, or

(ii) costs relating to obtaining authorisation for the scheme.

Application for authorisation

8

(1) The trustees of a collective money purchase scheme may apply to the Pensions Regulator for authorisation.

(2) An application must be made in the manner and form specified by the Pensions Regulator.

(3) An application must include—

(a) the scheme's viability report and viability certificate (see section 13), and

(b) the scheme's continuity strategy (see section 17).

(4) The Secretary of State may by regulations—

(a) specify other information that must be included in an application;

(b) require a fee to be paid to the Pensions Regulator in respect of an application.

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

(a) additional information provided by the applicant, and

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

(6) Regulations under subsection (4) are subject to negative resolution procedure.

Decision on application

9

(1) Where an application is made for authorisation of a collective money purchase scheme under section 8, the Pensions Regulator must decide whether it is satisfied that the scheme meets the authorisation criteria.

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

(3) The authorisation criteria are—

(a) that the persons involved in the scheme are fit and proper persons (see section 11),

(b) that the design of the scheme is sound (see section 12),

(d) that the scheme has adequate systems and processes for communicating with members and others (see section 15),

(e) that the systems and processes used in running the scheme are sufficient to ensure that it is run effectively (see section 16), and

(f) that the scheme has an adequate continuity strategy (see section 17).

(4) If the Pensions Regulator is satisfied that the collective money purchase scheme meets the authorisation criteria, it must—

(a) grant the authorisation,

(b) notify the applicant of its decision, and

(5) If the Pensions Regulator is not satisfied that the collective money purchase scheme meets the authorisation criteria, it must—

(a) refuse to grant the authorisation, and

(b) notify the applicant of its decision.

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

(a) the reasons for the decision, and

(b) details of the right of referral to the First-tier Tribunal or Upper Tribunal (see section 10).

Reference to Tribunal of refusal to grant authorisation

10

(1) If the Pensions Regulator refuses to grant authorisation to a collective money purchase scheme, the decision may be referred to the Tribunal by—

(a) the trustees, or

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

(2) In this section “the Tribunal”, in relation to a reference under subsection (1), means—

(a) the First-tier Tribunal, in any case where it is determined by or under Tribunal Procedure Rules that the First-tier Tribunal is to hear the reference;

(b) the Upper Tribunal, in any other case.

Authorisation criteria

Fit and proper persons requirement

11

(1) This section applies for the purposes of enabling the Pensions Regulator to decide whether it is satisfied that the persons involved in a collective money purchase scheme are fit and proper persons (see section 9(3)(a)).

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

(a) a person who establishes the scheme;

(b) a trustee;

(d) a person who (alone or with others) has power to vary the provisions of the scheme;

(e) a person acting in a capacity specified in regulations made by the Secretary of State.

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

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

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

(4) Regulations under subsection (3)(a) may include provision requiring specified information to be provided to the Pensions Regulator.

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

(a) A is an associate of B;

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

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

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

(6) In this section—

“associate” has the meaning given in section 435 of the Insolvency Act 1986;

“director” and “shadow director” have the meaning given in section 251 of that Act.

(7) Regulations under subsection (3)(a) are subject to affirmative resolution procedure.

(8) Regulations under subsection (2)(e) are subject to negative resolution procedure.

Scheme design requirement

12

(1) This section applies for the purposes of enabling the Pensions Regulator to decide whether it is satisfied that the design of a collective money purchase scheme is sound (see section 9(3)(b)).

(2) In deciding whether the design of a collective money purchase scheme is sound, the Pensions Regulator must take into account—

(a) the scheme's viability report and viability certificate (see section 13);

(b) any matters specified in regulations made by the Secretary of State.

(3) Regulations under subsection (2)(b) may include provision requiring specified information to be provided to the Pensions Regulator.

(4) Regulations under subsection (2)(b) are subject to affirmative resolution procedure.

Viability report

13

(1) The trustees of a collective money purchase scheme must—

(a) prepare a document explaining the design of the scheme and the reasons that they consider the design to be sound (a “viability report”), and

(b) obtain a certificate from the scheme actuary certifying that, in the actuary's opinion, the design of the scheme is sound (a “viability certificate”).

(2) The scheme actuary may not give a viability certificate unless satisfied that the scheme has rules that meet the requirements of section 18 and any regulations under that section.

(3) The Secretary of State may by regulations—

(a) specify information that must be included in a viability report,

(b) specify other requirements with which a viability report must comply,

(d) specify matters to which the scheme actuary must have regard when providing a viability certificate, and

(e) make provision about additional information or documents that must be prepared or obtained in connection with a viability report.

(4) The trustees of a collective money purchase scheme must, at least once a year—

(a) review the most recent viability report,

(b) if appropriate, revise it, and

(5) If the most recent viability report becomes inaccurate or incomplete to any significant extent, the trustees must—

(a) revise the report, and

(b) obtain a new viability certificate in respect of the revised report.

(6) The trustees must provide the Pensions Regulator with the information and documents listed in subsection (7)—

(a) on applying for authorisation (see section 8),

(b) within three months of the viability report being revised, and

(7) The information and documents to be provided are—

(a) the most recent viability report;

(b) the most recent viability certificate;

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