The Occupational and Personal Pension Schemes (Consultation by Employers and Miscellaneous Amendment) Regulations 2006

Made: 15th February 2006

Coming into force in accordance with regulation 1(2) and (3)

These Regulations are made in exercise of the powers conferred by sections 10(5)(a), 259(1) and (2), 260(1), 261(2) and (4), 286(1) and (3)(g), 315(2), (3) and (5) and 318(1), (4)(a) and (5) of the Pensions Act 2004 .

In accordance with section 317(1) of that Act, the Secretary of State for Work and Pensions has consulted with such persons as he considers appropriate, except in the case of regulation 22, to which section 317(2)(b) of that Act applies, as it appears to the Secretary of State that by reason of urgency consultation is inexpedient.

A draft of this instrument has been laid before Parliament in accordance with section 316(2)(m) and (n) of the Pensions Act 2004 and approved by a resolution of each House of Parliament.

Accordingly, the Secretary of State for Work and Pensions makes the following Regulations:

Introductory

Citation, commencement and extent

1

• (1) These Regulations may be cited as the Occupational and Personal Pension Schemes (Consultation by Employers and Miscellaneous Amendment) Regulations 2006.

• (2) Subject to paragraph (3), these Regulations shall come into force on 6th April 2006.

• (3) Regulation 22 shall come into force on the day after the day on which these Regulations are made.

• (4) Regulation 22 extends to Northern Ireland.

Interpretation

2

In these Regulations—

• active member”—in relation to an occupational pension scheme, has the meaning given by section 124 of the Pensions Act 1995 (interpretation), andin relation to a personal pension scheme, means any member in respect of whom employer contributions fall to be paid;

• “affected members” has the meaning given by regulation 7(4);

• “employer contributions”, in relation to an occupational or personal pension scheme, means contributions payable by or on behalf of the employer in relation to the scheme on his own account (but in respect of one or more employees);

• “member contributions”, in relation to an occupational or personal pension scheme, means contributions, other than voluntary contributions, by or on behalf of active members of the scheme which are payable out of deductions from the member's earnings;

• “listed change” has the meaning given by regulation 6(2);

• “multi-employer scheme” has the meaning given by section 307 of the Pensions Act 2004 (modification of Act in relation to certain categories of schemes);

• “personal pension scheme” has the meaning given by regulation 3(3);

• prospective member”—in relation to an occupational pension scheme, means any person who, under the terms of his contract of service or the rules of the scheme—is able, at his own option, to become a member of the scheme,will become so able if he continues in the same employment for a sufficiently long period,will be admitted to the scheme automatically unless he makes an election not to become a member, ormay be admitted to it subject to the consent of his employer;in relation to a personal pension scheme, means any person who, under the terms of his contract of service, is eligible if he becomes a member of the scheme for employer contributions to be paid in respect of him;

• “the Regulator” means the Pensions Regulator established under section 1 of the Pensions Act 2004 (the Pensions Regulator); and

• “relevant employer” has the meaning given by regulation 3(2).

Application of Regulations

Application

3

• (1) These Regulations apply to—

• (a) in the case of an occupational pension scheme which is not a multi-employer scheme—

• (i) any relevant employer, and

• (ii) if there is a relevant employer, the trustees or managers of the scheme;

• (b) in the case of a multi-employer scheme in relation to which there are one or more relevant employers—

• (i) each relevant employer,

• (ii) the trustees or managers of the scheme, and

• (iii) any other person who, under the rules of the scheme, has the power to make a listed change affecting the scheme ; and

• (c) in the case of a personal pension scheme where direct payment arrangements exist in respect of one or more members of the scheme who are his employees, a relevant employer.

• (2) For the purposes of these Regulations “relevant employer” means—

• (a) an employer employing in Great Britain at least the number of employees specified in paragraph (2A); and

• (b) in the case of—

• (i) an occupational pension scheme, an employer in relation to the scheme other than one who is excluded by regulation 4, and

• (ii) a personal pension scheme, an employer in relation to the scheme other than one who is excluded by regulation 5.

• (2A) The number of employees referred to in paragraph (2)(a) is—

• (a) 150 from 6th April 2006 to 5th April 2007,

• (b) 100 from 6th April 2007 to 5th April 2008, and

• (c) 50 from 6th April 2008 onwards.

• (2B) For the purposes of paragraph (2)(a)—

• (a) the number of people employed by an employer is to be determined using the same method of calculation as is set out in regulation 4 of the Information and Consultation of Employees Regulations 2004 (calculation of number of employees), but

• (b) references in that regulation to the previous twelve months are to be taken as references to the period of twelve months ending with the date of the proposal to make a listed change to which regulation 6 of these Regulations applies.

• (3) In these Regulations references to a personal pension scheme are to a personal pension scheme falling within paragraph (1)(c).

Excluded employers: occupational pension schemes

4

• (1) This regulation excludes—

• (a) any employer in relation to a public service pension scheme;

• (b) any employer in relation to a small occupational pension scheme;

• (c) any employer in relation to an occupational pension scheme with fewer than two members;

• (d) any employer in relation to an occupational pension scheme which is an employer-financed retirement benefits scheme;

• (e) any employer in relation to an unregistered occupational pension scheme which has its main administration outside the United Kingdom; and

• (f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

• (4) In this regulation—

• “employer-financed retirement benefits scheme” has the meaning given by section 393A of the Income Tax (Earnings and Pensions) Act 2003 (employer-financed retirement benefits scheme);

• “public service pension scheme” has the meaning given by section 1(1) of the Pension Schemes Act 1993 ;

• “small occupational pension scheme” means— a scheme with fewer than twelve members where all of the members are trustees of the scheme and either—the provisions of the scheme provide that any decision made by the trustees is made by the unanimous agreement of the trustees who are members of the scheme, or the scheme has a trustee who is independent in relation to the scheme for the purposes of section 23 of the Pensions Act 1995 (power to appoint independent trustees) and is registered in the register maintained by the Regulator in accordance with regulations made under subsection (4) of that section; a scheme with fewer than twelve members where a company is the sole trustee of the scheme, and all the members of the scheme are directors of the company and either—the provisions of the scheme provide that any decision made by the company in its capacity as trustee is made by the unanimous agreement of the directors who are members of the scheme, orone of the directors of the company is independent in relation to the scheme for the purposes of section 23 of the Pensions Act 1995 and is registered in the register maintained by the Regulator in accordance with regulations made under subsection (4) of that section; and

• “unregistered occupational pension scheme” means an occupational pension scheme which is not registered under section 153 of the Finance Act 2004 (registration of pension schemes).

Excluded employers: personal pension schemes

5

This regulation excludes any employer in relation to a personal pension scheme where no employer contributions fall to be paid towards the scheme.

Restriction on decision-making pending completion of consultation

Consultation required before decisions to make listed changes affecting schemes

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• (1) No person falling within regulation 3(1) may decide to make a listed change that affects an occupational or personal pension scheme unless such consultation as is required by regulation 7(3) has been carried out.

• (2) For the purposes of these Regulations, a change affecting an occupational or personal pension scheme is a “listed change” if—

• (a) in relation to an occupational pension scheme, it is listed in regulation 8, or

• (b) in relation to a personal pension scheme, it is listed in regulation 9,

and it is not excluded by virtue of regulation 10.

• (3) Paragraph (1) does not require consultation to be carried out in any of the four cases described in paragraphs (4) to (7).

• (4) The first case is where the active or prospective members of the scheme to whom—

• (a) a listed change mentioned in regulation 8(1)(h) relates were notified before 6th April 2012 of the proposal to make that change, or

• (b) any other listed change relates were notified before 6th April 2006 of the proposal to make that change.

• (5) The second case is where, in relation to an occupational pension scheme—

• (a) consultation has already been carried out under these Regulations in respect of a proposal to prevent the future accrual of benefits, as described in regulation 8(1)(c), and

• (b) there is a further proposal as a result of that consultation to make a decision to reduce the rate of such accrual, as described in regulation 8(3)(d).

• (6) The third case is where, in relation to an occupational pension scheme—

• (a) consultation has already been carried out under these Regulations in respect of a proposal to remove the liability to make employer contributions, as described in regulation 8(1)(d), and

• (b) there is a further proposal as a result of that consultation to make a decision to reduce such contributions, as described in regulation 8(2).

• (7) The fourth case is where, in relation to a personal pension scheme—

• (a) consultation has already been carried out under these Regulations in respect of a proposal to cease employer contributions, as described in regulation 9(a), and

• (b) there is a further proposal as a result of that consultation to make a decision to reduce such contributions, as described in regulation 9(b).

Notifications to employers and duty to consult

7

• (1) Any person falling within regulation 3(1) who proposes to make a listed change affecting an occupational or personal pension scheme must give written notice of that change to each employer in relation to the scheme.

• (2) Paragraph (1) does not apply—

• (a) in any of the four cases described in regulation 6(4) to (7), or

• (b) where the person proposing the change is a relevant employer in relation to—

• (i) an occupational pension scheme which is not a multi-employer scheme, or

• (ii) a personal pension scheme. or

• (c) where the person proposing the change employs all the affected members.

• (3) A relevant employer must consult about the listed change in accordance with regulations 11 to 16 if—

• (a) it employs all the affected members, or

• (b) its employees appear to it to include affected members and it is a relevant employer who—

• (i) has been notified under paragraph (1), or

• (ii) falls within paragraph (2)(b).

• (4) For the purposes of these Regulations “ affected members ”, in relation to a proposal to make a listed change affecting an occupational or personal pension scheme, means the active or prospective members of the scheme to whom the listed change relates.

Listed changes: occupational pension schemes

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• (1) Listed changes that affect occupational pension schemes are—

• (a) to increase the normal pension age specified in the scheme rules for members or members of a particular description;

• (b) to prevent new members, or new members of a particular description, from being admitted to the scheme;

• (c) to prevent the future accrual of benefits under the scheme for or in respect of members or members of a particular description;

• (d) to remove the liability to make employer contributions towards the scheme in respect of members or members of a particular description;

• (e) to introduce member contributions in any circumstances in which no such contributions were previously payable;

• (f) to make any increase in member contributions by or on behalf of members or members of a particular description;

• (g) to make any change specified in paragraph (2) or (3).

• (h) to change the rate at which—

• (i) pensions in payment under the scheme are increased, or

• (ii) pensions or other benefits payable under the scheme are revalued,

but only where that change would be, or would be likely to be, less generous to members or members of a particular description.

• (2) A listed change affecting only money purchase benefits is to make any reduction in the amount of employer contributions towards the scheme in respect of members or members of a particular description.

• (3) Listed changes affecting only benefits which are not money purchase benefits are—

• (a) to change to money purchase benefits some or all of the benefits that may be provided under the scheme to or in respect of members or members of a particular description;

• (b) to change, in whole or in part, the basis for determining the rate of future accrual of benefits under the scheme for or in respect of members or members of a particular description;

• (c) to modify the scheme under section 229(2) of the Pensions Act 2004 (matters requiring agreement of the employer) so as to reduce the rate of future accrual of benefits under the scheme for or in respect of members or members of a particular description;

• (d) to make any other reduction in the rate of future accrual of benefit under the scheme for or in respect of members or members of a particular description.

• (e) to change what elements of pay constitute pensionable earnings, or to change the proportion of or limit the amount of any element of pay that forms part of pensionable earnings, for or in respect of members or members of a particular description.

• (4) “ Normal pension age ” has the meaning given by section 180 of the Pension Schemes Act 1993 (normal pension age).

• (5) “Pensionable earnings” means the earnings by reference to which pension benefits are calculated, and an “element of pay” includes basic salary, a pay rise, an overtime payment, and a bonus payment.

Listed changes: personal pension schemes

9

Listed changes that affect personal pension schemes are—

• (a) to cease employer contributions towards the scheme in respect of members or members of a particular description;

• (b) to make any reduction in the amount of employer contributions towards the scheme in respect of members or members of a particular description;

• (c) to make any increase in member contributions by or on behalf of members or members of a particular description.

Listed changes: exclusions

10

• (1) For the purposes of regulations 8 and 9, no account is to be taken of any change which—

• (a) is made for the purposes of complying with a statutory provision,

• (aa) is made for the purposes of implementing an adjustment measure within regulation 10 of the Occupational Pension Scheme (Charges and Governance) Regulations 2015,

• (ab) is made for either or both of the purposes referred to in regulation 7C(1) (modification of schemes: revaluation of guaranteed minimum pensions) of the Occupational Pension Schemes (Modification of Schemes) Regulations 2006,

• (ac) ... is or results in an adjustment of the rate or amount of benefits provided under a collective money purchase scheme, provided that such adjustment is made in accordance with—

• (i) the most recent actuarial valuation or (as the case may be) any multi-annual reduction in effect, and

• (ii) the scheme rules,

• (ad) ... is made in respect of a collective money purchase scheme that is pursuing continuity option 1 in accordance with—

• (i) Schedule 6 to the Occupational Pension Schemes (Collective Money Purchase Schemes) Regulations 2022, or

• (ii) scheme rules made in accordance with that Schedule,

• (b) is made for the purposes of complying with a determination made by the Regulator, or

• (c) has no lasting effect on a person's rights to be admitted to a scheme or on the benefits that may be provided under it.

• (2) No change which is—

• (a) a regulated modification within the meaning of the subsisting rights provisions, and

• (b) subject to the requirements of those provisions,

falls within regulation 8.

• (3) “Statutory provision” means a provision comprised in—

• (a) an Act of Parliament or subordinate legislation made under such an Act, whenever passed or made,

• (b) an Act of the Scottish Parliament or subordinate legislation made under such an Act, whenever passed or made.

• (4) “Subsisting rights provisions” has the meaning given by section 67 of the Pensions Act 1995 (the subsisting rights provisions).

• (5) In this regulation—

• “actuarial valuation” in relation to a collective money purchase scheme, has the meaning given by section 20(2) of the Pension Schemes Act 2021;