42 Regulations restricting creation of new non-scale default arrangements
(1) The appropriate authority may make regulations for the purpose of restricting the ability of the provider of a pension scheme to begin operating a non-scale default arrangement.
(2) The regulations may, in particular, make provision—
(a) prohibiting the provider of a pension scheme from beginning to operate a non-scale default arrangement unless the arrangement is approved by the appropriate regulator;
(b) about the criteria which the appropriate regulator must apply in deciding whether to approve a non-scale default arrangement;
(c) about the conditions which the appropriate regulator may or must attach to approval;
(d) about the ongoing requirements to which the provider of a pension scheme is to be subject in relation to a non-scale default arrangement approved under the regulations;
(e) where assets of a pension scheme are held subject to a non-scale default arrangement that is being operated in breach of the regulations, requiring the provider of the pension scheme in question to ensure that the assets are held subject to a different arrangement of a description specified in the regulations;
(f) conferring functions on the appropriate regulator, including functions involving the exercise of a discretion;
(g) for ensuring compliance with the regulations, including provision for the imposition of civil penalties not exceeding £100,000;
(h) for the making of a reference to the First-tier Tribunal or Upper Tribunal in respect of anything done under the regulations.
(3) Regulations under this section are subject to the affirmative procedure.
44 Regulations about consolidation of non-scale default arrangements
(1) The appropriate authority may make regulations about the consolidation of non-scale default arrangements into approved main scale default arrangements.
(2) The regulations may, in particular, make provision—
(a) requiring the provider of a pension scheme, subject to any exemptions specified in the regulations, to consolidate a non-scale default arrangement operated by it into an approved main scale default arrangement operated by it;
(b) requiring the provider of a pension scheme to prepare, and provide the appropriate regulator with, an action plan about how and when a non-scale default arrangement operated by it is to be so consolidated;
(c) conferring functions on the appropriate regulator, including functions involving the exercise of a discretion;
(d) for ensuring compliance with the regulations, including provision for the imposition of civil penalties not exceeding £100,000;
(e) for the making of a reference to the First-tier Tribunal or Upper Tribunal in respect of a decision made under the regulations.
(3) Regulations under this section—
(a) may not be made until the review under section 43 has been completed and the report on it published, and
(b) must take account of the review’s conclusions.
(4) Regulations under this section are subject to the affirmative procedure.
(1) The Financial Services and Markets Act 2000 is amended as follows.
(2) After Part 7 insert—
Part 7A Unilateral changes to pension schemes
Pension schemes to which this Part applies
117A (1) This Part applies to a pension scheme—
(a) that is FCA-regulated, and
(b) in relation to which any of the following conditions is met.
(2) The conditions are—
(a) that the scheme is an auto-enrolment scheme;
(b) that the scheme is a workplace personal pension scheme that is not an auto-enrolment scheme;
(c) that the scheme is a pension scheme of a prescribed description.
(3) For the purposes of subsection (2)(a) and (b) a pension scheme is an “auto-enrolment scheme” if any individual is or at any time was an active member of the scheme in consequence of arrangements under section 3(2), 5(2) or 7(3) of the Pensions Act 2008 or section 3(2), 5(2) or 7(3) of the Pensions (No. 2) Act (Northern Ireland) 2008 (c. 13 (N.I.)) (arrangements for jobholder to become active member of automatic enrolment scheme).
(4) In subsection (3) “active member” means an active member within the meaning of Part 1 of the Pensions Act 2008 (see section 99 of that Act) or Part 1 of the Pensions (No. 2) Act (Northern Ireland) 2008 (c. 13 (N.I.)) (see section 78 of that Act).
(5) For the purposes of subsection (2)(b) a pension scheme is a “workplace personal pension scheme” if—
(a) the scheme is a personal pension scheme,
(b) direct payment arrangements exist, or have at any time existed, in relation to the scheme, and
(c) contributions have been paid under the arrangements in respect of, or on behalf of, two or more employees.
(6) In subsection (5) “direct payment arrangements” means direct payment arrangements within the meaning of section 111A of the Pension Schemes Act 1993 or section 107A of the Pension Schemes (Northern Ireland) Act 1993.
Unilateral changes
117B (1) The provider of a pension scheme to which this Part applies may—
(a) amend the terms of the scheme as regards a description of pension pot held by the scheme,
(b) change the investments comprised in a description of pension pot held by the scheme,
(c) transfer a description of pension pot held by the scheme to a different pension scheme operated by the same provider, or
(d) transfer a description of pension pot held by the scheme to a pension scheme operated by a different provider.
(2) A change or transfer within subsection (1)(b) to (d) may be effected notwithstanding that it breaches a term of the pension scheme (such as a requirement for consent); and any such breach is to be disregarded for all purposes.
(3) Subsection (1) is subject to—
(a) subsection (5), sections 117D to 117F and any regulations under section 117H(1)(c), and
(b) any other provision of legislation (including any rule) which restricts or otherwise affects the provider’s power to do anything within subsection (1).
(4) In subsection (1)(c) and (d), a reference to a pension scheme to which a description of pension pot may be transferred includes a pension scheme to which this Part does not apply.
(5) A transfer to a pension scheme operated by a different provider may not be effected under subsection (1)(d) without the consent of that provider.
(6) A reference in this Part to the terms of a pension scheme is to the terms of any instrument or agreement—
(a) in which the scheme is comprised, or
(b) to which the provider of the scheme and any member are parties in connection with the scheme.
(7) In this Part, “unilateral change” means an amendment, change or transfer within any of paragraphs (a) to (d) of subsection (1).
Effect of transfer of pension pot on membership of scheme etc
117C (1) This section applies where a pension pot is transferred under section 117B(1)(c) or (d) to a different pension scheme (“the receiving scheme”).
(2) The individual—
(a) becomes a member of the receiving scheme in relation to the pot, and
(b) in a case in which there is more than one arrangement under the receiving scheme, becomes, in relation to the pot, a member of the arrangement specified in the unilateral change notice under section 117F(3)(b),
and acquires the rights, and becomes subject to the obligations, of membership.
(3) Where being a member of the receiving scheme in relation to the pot, or of the arrangement under the receiving scheme under which the pot is to be held, entails being a party to a contract with the provider of the receiving scheme, a contract is treated as entered into between the individual and the provider—
(a) at the time at which the pension pot is transferred to the receiving scheme, and
(b) on the terms communicated to the individual in the unilateral change notice under section 117F(3)(c).
Best interests test
117D (1) The provider of a pension scheme to which this Part applies may effect a unilateral change under section 117B(1) only if—
(a) the provider concludes, before doing so, that the best interests test is met in relation to the unilateral change, and
(b) it is reasonable for the provider to have reached that conclusion at that time.
(2) “The best interests test”, in relation to a unilateral change, is that it is reasonably likely that effecting it will achieve—
(a) a better outcome for the directly affected members of the scheme (taken as a whole), and
(b) no worse an outcome for the other members of the scheme (taken as a whole),
than the relevant alternative action or, where there is more than one alternative action, each of them.
(3) For the purposes of this Part, the members of a pension scheme who are “directly affected” by a unilateral change are the members for whom the scheme holds pension pots of the description in question.
(4) The following are “relevant alternative actions” for the purposes of subsection (2) in relation to a unilateral change—
(a) not effecting the unilateral change, and
(b) where the unilateral change is an internal change, each other internal change that could be made in accordance with this Part in relation to pension pots of the description in question.
(5) In subsection (4) “internal change” means a unilateral change that results in a description of pension pot held by the scheme being held—
(a) subject to a different arrangement under the same scheme, or
(b) subject to a particular arrangement under a different pension scheme operated by the same provider (including where there is only one arrangement under that scheme).
(6) The FCA must make general rules specifying considerations or information that must be taken into account in determining whether the best interests test is met.
Certification by independent person
117E (1) The provider of a pension scheme to which this Part applies may effect a unilateral change under section 117B(1) only if, before effecting it—
(a) the provider has appointed a person to review the proposed unilateral change, and
(b) the person appointed has given the provider a certificate under this section in relation to the proposed unilateral change.
(2) The person appointed must—
(a) be independent of the provider, and
(b) have such expertise as is specified in general rules made by the FCA.
(3) The certificate must certify that, in the opinion of the independent person—
(a) the pension scheme is a pension scheme to which this Part applies,
(b) the proposed unilateral change is within section 117B(1)(a) to (d),
(c) section 117B(1) is not disapplied in relation to the proposed unilateral change by regulations under section 117H(1)(a),
(d) any conditions prescribed under section 117H(1)(c) are met,
(e) the best interests test is met in relation to the proposed unilateral change, and
(f) the provider has complied with such other requirements as may be specified in general rules made by the FCA.
(4) The FCA must make general rules about appointments and certification under this section, including provision—
(a) for determining for the purposes of this section whether a person is independent of the provider of a pension scheme;
(b) specifying terms on which an appointment under this section must be made;
(c) about the form of a certificate and when it must be given.
(5) In this Part “the independent person”, in relation to a proposed unilateral change, means the person appointed under subsection (1)(a) to review it.
Unilateral change notice
117F (1) The provider of a pension scheme to which this Part applies may effect a unilateral change under section 117B(1) only after—
(a) the provider has sent a unilateral change notice to each of the required recipients, and
(b) the required notice period has expired.
(2) “A unilateral change notice” means a notice that includes such information relating to the unilateral change as is specified in general rules made by the FCA.
(3) General rules made pursuant to subsection (2) must, in the case of a unilateral change under section 117B(1)(c) or (d), require the unilateral change notice to—
(a) specify the pension scheme (“the receiving scheme”) to which it is proposed the pensions pots in question are to be transferred,
(b) specify, in a case in which there is more than one arrangement under the receiving scheme, the arrangement subject to which it is proposed the pots be held after the transfer, and
(c) where membership of the receiving scheme, or of an arrangement specified under paragraph (b), entails being a party to a contract with the provider of the receiving scheme, set out, or otherwise communicate, the terms of such a contract.
(4) “The required recipients” means—
(a) the members of the scheme directly affected by the change, and
(b) such other persons as may be specified in general rules made by the FCA.
(5) A unilateral change notice must be in such form, and be sent by such means, as is specified in general rules made by the FCA.
(6) In subsection (1) “the required notice period” means such period as is specified in general rules made by the FCA.
Further duties to make FCA general rules
117G (1) The FCA must make general rules—
(a) about the fees that may or may not be charged by the provider of a pension scheme in relation to unilateral changes effected under section 117B(1);
(b) imposing requirements on the provider of a pension scheme who proposes to effect, or effects, a unilateral change under section 117B(1) to provide information to the independent person;
(c) imposing requirements on the provider of a pension scheme who proposes to effect, or effects, a unilateral change under section 117B(1), as to the records they must keep and retain for the purposes of this Part.
(2) The rules made by virtue of subsection (1) must apply in relation to pension schemes established before, as well as those established after, those rules (or this section) came into force.
Treasury regulations
117H (1) The Treasury may by regulations—
(a) provide that section 117B(1) does not apply in relation to unilateral changes of a description specified in the regulations;
(b) amend section 117D (best interests test);
(c) prescribe further conditions (in addition to those in sections 117D to 117F) that must be met in relation to a unilateral change for it to be permitted under section 117B(1);
(d) require the FCA to make general rules in compliance with section 117E(4)(b) that require the inclusion, in the terms of an appointment under that section, of a term providing that members of the pension scheme may in their own right enforce the terms of appointment under section 1 of the Contracts (Rights of Third Parties) Act 1999;
(e) disapply any legislation, or require the FCA to disapply any general rule, so far as it restricts or otherwise affects the power in section 117B(1);
(f) make provision consequential on this Part.
(2) The Treasury must by regulations require the FCA to include provision of a description specified in the regulations in general rules made in compliance with section 117E(4)(a) (how to determine whether a person is independent), alongside any other provision included in such general rules.
(3) Regulations under subsection (2) must in particular require the FCA to include in such general rules provision designed to ensure that the independent person does not have a conflict of interest.
(4) The power to make regulations under subsection (1) is capable of being exercised so as to amend or repeal any provision of primary legislation.
Interpretation of Part
117I (1) In this Part—
“the best interests test” has the meaning given by section 117D(2);
“directly affected”, in relation to a unilateral change, has the meaning given by section 117D(3);
“FCA-regulated”, in relation to a pension scheme, has the meaning given by subsection (2);
“the independent person”, in relation to a proposed unilateral change, has the meaning given by section 117E(5);
“money purchase benefits” means money purchase benefits within the meaning of the Pension Schemes Act 1993 (see section 181(1) of that Act) or the Pension Schemes (Northern Ireland) Act 1993 (see section 176(1) of that Act);
“pension pot” has the meaning given by subsection (3);
“pension scheme” has the meaning given by section 1(5) of the Pension Schemes Act 1993;
“personal pension scheme” means a personal pension scheme within the meaning of the Pension Schemes Act 1993 (see section 1(1) of that Act) or the Pension Schemes (Northern Ireland) Act 1993 (see section 1(1) of that Act);
“provider”—
in relation to an FCA-regulated pension scheme, means the person referred to in subsection (2)(b);
in relation to any other pension scheme, means the trustees or managers of the scheme;
“terms” , in relation to a pension scheme, has the meaning given by section 117B(6);
“transfer”, in relation to a pension pot, includes a transfer of an amount representing its value;
“trustees or managers”, in relation to a pension scheme, means—
in the case of a scheme established under a trust, the trustees of the scheme, and
in any other case, the persons responsible for the management of the scheme;
“unilateral change” has the meaning given by section 117B(7);
“unilateral change notice” has the meaning given by section 117F(2).
(2) A pension scheme is “FCA-regulated” if the operation of the scheme—
(a) is a regulated activity, and
(b) is carried on in the United Kingdom by an authorised person.
(3) “Pension pot” means sums or assets held for the purpose of providing money purchase benefits to or in respect of a member of a pension scheme; and—
(a) a reference to the pension scheme that holds a pension pot is to that pension scheme;
(b) a reference to the individual for whom a pension pot is held is to that member.
(3) In section 105 (insurance business transfer schemes), in subsection (3), at the end insert—
Case 6
Where the scheme is effected under Part 7A (unilateral changes to pension schemes).
(4) In section 168 (appointment of persons to carry out investigations in particular cases), in subsection (4), after paragraph (i) insert—
(iza) a person has effected, or has purported to effect, a unilateral change under subsection (1) of section 117B (unilateral changes by providers of pension schemes), but any of the provisions mentioned in subsection (3) of that section may have been contravened in relation to it;
.
(5) In section 429 (Parliamentary control of statutory instruments), in subsection (2B), after paragraph (ab) insert—
(ac) provision made under section 117H which amends or repeals any provision of primary legislation;
.
(1) Subject to section 51(1), the trustees or managers of a relevant scheme must—
(a) design, and make available to each eligible member of the scheme, one or more default pension benefit solutions;
(b) at least in such circumstances or at such times or intervals as may be prescribed, review the design (and if appropriate the number) of the default pension benefit solutions.
(2) In this Chapter “pension benefit solution”, in relation to a pension scheme, means a contractual or other arrangement for making pension payments in respect of members’ accrued rights.
(3) In this Chapter “default pension benefit solution”, in relation to a relevant scheme, means a pension benefit solution which—
(a) is designed for delivering money purchase benefits under the scheme to—
(i) the eligible members of the scheme generally, or
(ii) a subset of those eligible members,
(b) is designed to provide a regular income for the eligible members concerned in their retirement (whether or not together with other benefits),
(c) is for the time being designated by the trustees or managers of the scheme as the pension benefit solution under which—
(i) the eligible members of the scheme generally, or
(ii) a subset of those eligible members,
will receive pension payments unless they choose to receive pension payments under a different pension benefit solution, and
(d) meets any other conditions that may be prescribed.
(4) The trustees or managers of a relevant scheme must, in determining what default pension benefit solutions the scheme should make available (generally or to subsets of eligible members), take account of—
(a) the needs and interests of—
(i) the scheme’s membership as a whole, and
(ii) any subset of the scheme’s membership that the trustees or managers consider appropriate;
(b) the circumstances of different eligible members of the scheme (for example the normal pension ages of such members or the value or expected value of their money purchase benefits under the scheme);
(c) the possibility that a member may already have received some of their benefits (for example as a lump sum) before deciding to make use of a default pension benefit solution;
(d) such other factors as may be prescribed.
(5) Regulations may make provision about how trustees or managers of a scheme are to assess the needs and interests of the scheme’s membership for the purposes of subsection (4)(a).
(6) Regulations may—
(a) specify descriptions of eligible members in relation to which subsection (3) is to have effect with the omission of paragraph (b) of that subsection;
(b) make provision about the meaning for the purposes of subsection (3)(b) of—
(i) “designed to provide a regular income”;
(ii) “retirement”.
(7) In this Chapter—
“eligible member”, in relation to a relevant scheme, means any member who is accruing, or has an actual or prospective right to, benefits falling within paragraph (a) of the definition of “money purchase benefits” in section 181(1) of the Pension Schemes Act 1993 and is not of a description excepted by regulations;
“relevant scheme” means an occupational pension scheme which—
provides benefits falling within paragraph (a) of the definition of “money purchase benefits” in section 181(1) of the Pension Schemes Act 1993,
is a registered pension scheme, and
is not of a description excepted by regulations.
(8) Regulations under this section—
(a) are subject to the negative procedure if they are made under subsection (1)(b) or (6)(a)
(b) otherwise, are subject to the affirmative procedure.
(1) The trustees or managers of a relevant scheme (“the principal scheme”) are not required to comply with section 50(1) in relation to eligible members of the scheme (whether comprising the members of the scheme generally or a subset of those members) in relation to whom the first or second condition is met; and such members are referred to in this Chapter as “transferable members”.
(2) The first condition is that the trustees or managers of the principal scheme have determined that it is not reasonably practicable for them to design and make available to the members concerned default pension benefit solutions.
(3) The second condition is that the trustees or managers of the principal scheme have determined that a qualifying pension benefit solution of a qualifying scheme (other than the principal scheme) will provide a better outcome for the members concerned than any default pension benefit solution that the trustees or managers of the principal scheme could design and make available to them.
(4) Where the principal scheme has transferable members, the trustees or managers must take the steps set out in subsection (5) in respect of them.
(5) The steps mentioned in subsection (4) are to—
(a) identify a qualifying scheme (the “receiving scheme”) that is able to and agrees to—
(i) receive a transfer in respect of the accrued rights of the transferable member (a “relevant transfer”), and
(ii) make a qualifying pension benefit solution available to the transferable member;
(b) at such times or in such circumstances as may be prescribed, enter into arrangements (“transfer arrangements”) with the receiving scheme with a view to effecting a relevant transfer to that scheme;
(c) take any other prescribed steps.
(6) In carrying out the step in subsection (5)(a), the trustees or managers of the principal scheme must have regard to the matters mentioned in section 50(4) (and for that purpose references in those paragraphs to “the scheme” are to the principal scheme).
(7) Section 50(5) applies for the purposes of subsection (6) as it applies for the purposes of section 50(4).
(8) The trustees or managers of the principal scheme must, at least in such circumstances or at such times or intervals as may be prescribed, review the suitability of any qualifying pension benefit solution in respect of which they have identified a qualifying scheme as mentioned in subsection (5)(a).
(9) In this Chapter, “qualifying pension benefit solution”, in relation to a qualifying scheme, means a pension benefit solution designed and maintained by the trustees or managers of the scheme that—
(a) is designed for delivering money purchase benefits under that scheme to—
(i) the members of the scheme generally, or
(ii) a subset of those members,
(b) is designed to provide a regular income for the members concerned in their retirement (whether or not together with other benefits), and
(c) meets any other conditions that may be prescribed.
(10) Nothing in this Chapter authorises any transfer in respect of a person’s accrued rights under a relevant scheme without that person’s consent.
(11) In this section “qualifying scheme” means—
(a) an occupational pension scheme, or
(b) a personal pension scheme,
that is a registered scheme and meets any prescribed conditions.
(12) If a transferable member accepts in writing a proposal of the principal scheme for the transferable member’s accrued rights to be transferred to the receiving scheme—
(a) the trustees or managers of the principal scheme must communicate that proposal to the receiving scheme, and
(b) the proposal is to be treated as requiring the receiving scheme to enrol the transferable member as a member of the receiving scheme and use the cash equivalent to provide rights for the member under that scheme.
(13) Regulations may make provision about the conditions in subsections (2) and (3), including about the basis on which the determinations mentioned in those subsections are to be made.
(14) Regulations may require a pension scheme of a prescribed description to agree to receive a transfer in respect of the accrued rights of a transferable member where—
(a) the principal scheme has been unable, having used reasonable endeavours, to identify a qualifying scheme that is able and willing to do so, and
(b) any other prescribed conditions are met.
(15) A requirement under subsection (14) may only be imposed on a pension scheme that is one or both of the following—
(a) a Master Trust scheme within the meaning of the Pension Schemes Act 2017;
(b) a consolidator scheme within the meaning of Chapter 2 of Part 2 (consolidation of small dormant pension pots).
(16) Regulations may prohibit or limit the charging of fees in respect of transfers made under transfer arrangements.
(17) Regulations may provide for the manner in which cash equivalents are to be calculated and verified.
(18) Regulations under subsection (8), (16) or (17) are subject to the negative procedure; and other regulations under this section are subject to the affirmative procedure.
(1) Where only one pension benefit solution is available to the members of a relevant scheme, the trustees or managers must ensure that each eligible member of the scheme is given at a prescribed time a communication which—
(a) describes the pension benefit solution, and
(b) sets out the trustees’ or managers’ opinion as to what might be the circumstances (in terms of age, pension savings etc) of a person for whom the pension benefit solution is suitable.
(2) Where more than one pension benefit solution is available to the eligible members of a relevant scheme, the trustees or managers must ensure that, at a prescribed time, each eligible member of the scheme is given a communication which—
(a) describes the default pension benefit solution or qualifying pension benefit solution that the trustees or managers consider to be the most appropriate to the member (“the specified solution”), and
(b) sets out the trustees’ or managers’ opinion as to what might be the circumstances (in terms of age, pension savings etc) of a person for whom the specified solution is suitable.
(3) Regulations may make provision about how a pension benefit solution is to be presented to a member when the member applies to receive benefits.
(4) The trustees or managers of a relevant scheme must ensure that each eligible member of the scheme is given at prescribed times or intervals—
(a) information about basic features of the member’s pension, including that it has—
(i) an accumulation phase, and
(ii) a decumulation phase;
(b) general information about the availability to the member of a default pension benefit solution or qualifying pension benefit solution and an explanation that such a solution is designed to provide a regular income during retirement.
(5) Regulations may require the trustees or managers of a relevant scheme to communicate to each eligible member at prescribed times or intervals—
(a) information about the pension benefit solutions available to the eligible members;
(b) general information about other options that may be available to the member for receiving benefits in respect of their contributions;
(c) information describing a particular pension benefit solution that the trustees or managers consider to be suitable for the eligible member in question;
(d) where information within paragraph (c) is included in a communication, the trustees’ or managers’ opinion as to what might be the circumstances (in terms of age, pension savings etc) of a person for whom the pension benefit solution is suitable;
(e) any general information prescribed for the purpose of assisting eligible members in deciding how to receive their pension benefits.
(6) Communications made under or by virtue of any of subsections (1) to (5) must be in clear and plain language.
(7) The trustees or managers of a relevant scheme may request from eligible members of the scheme any information the trustees or managers consider reasonably necessary for the purpose of—
(a) designing or reviewing, or in the case of transferable members identifying, pension benefit solutions;
(b) determining what pension benefit solution may be appropriate for the member, including what rate of decumulation may be appropriate,
which may for example include information about the member’s financial circumstances or plans for retirement.
(8) Regulations may require the trustees or managers of relevant schemes to request from eligible members any information the trustees or managers consider appropriate for the purposes specified in subsection (7).
(9) In exercising their functions under subsection (7) trustees and managers must comply with any requirements that may be prescribed.
(10) Regulations may make provision about the format of any communications authorised or required to be made under this section.
(11) Before making regulations under this section the Secretary of State must consult any persons the Secretary of State thinks appropriate.
(12) Regulations under this section are subject to the negative procedure.
53 Information etc in connection with selection of benefit solution
(1) Regulations may require trustees or managers of a relevant scheme to provide or make available to eligible members, at prescribed times or intervals, information expressed in clear and plain language which would or may assist in—
(a) the selection of a pension benefit solution, or
(b) decisions that may need to be made with respect to a pension benefit solution.
(2) Regulations may require that information provided or made available to a member by virtue of subsection (1) must, as far as possible, be based on information about the member’s circumstances.
(3) Regulations may require trustees or managers of a relevant scheme to—
(a) monitor the rate of decumulation under pension benefit solutions used by members, and
(b) inform the member concerned if the trustees or managers consider that the rate of decumulation should be reviewed.
(4) Regulations under this section are subject to the affirmative procedure.
(1) The trustees or managers of a relevant scheme must determine, and from time to time review and if necessary revise, a strategy (a “pension benefits strategy”) for ensuring that the trustees or managers—
(a) identify and carry out the steps they need to take for the purpose of understanding the requirements of eligible members of the scheme with regard to pension benefit solutions;
(b) design, or in the case of transferable members identify, pension benefit solutions that take account of those needs;
(c) communicate effectively with eligible members of the scheme with regard to pension benefit solutions and comply with any regulations under section 53.
(2) The trustees or managers must publish the strategy and ensure that a copy of it is provided on request to—
(a) the Pensions Regulator;
(b) any member of the scheme.
(3) Regulations may—
(a) specify any objectives, principles or matters the trustees or managers must take into account in determining or revising a strategy;
(b) make provision about the level of detail required in a pensions benefit strategy;
(c) authorise the Secretary of State to—
(i) determine the format in which a benefits strategy is to be set out, or
(ii) delegate that function to the Pensions Regulator;
(d) make provision as to the period within which a pension benefits strategy must be determined;
(e) specify the intervals at which the strategy must be reviewed;
(f) require the trustees or managers of relevant schemes to—
(i) to take account, in determining or revising a strategy, any guidance issued by the Pensions Regulator;
(ii) provide in the strategy evidence of how they have taken account of any matters prescribed by virtue of subsection (3)(a).
(4) Regulations may require the trustees or managers of a relevant scheme to publish, alongside a pension benefits strategy (or revised pension benefits strategy), prescribed information or evidence as to whether and how they have complied with the requirements imposed by virtue of this Chapter.
(5) Regulations under this section—
(a) are subject to the affirmative procedure if they are under subsection (3)(a);
(b) otherwise are subject to the negative procedure.
(1) Regulations may make provision with a view to ensuring the compliance of any person with any provision of or under this Chapter.
(2) The regulations may in particular—
(a) provide for the Pensions Regulator to issue a notice (a “compliance notice”) to a person with a view to ensuring the person's compliance with a provision of or under this Chapter;
(b) provide for the Pensions Regulator to issue a notice (a “third party compliance notice”) to a person with a view to ensuring another person's compliance with a provision of or under this Chapter;
(c) provide for the Pensions Regulator to issue a notice (a “penalty notice”) imposing a penalty on a person where the person—
(i) has failed to comply with a compliance notice or third party compliance notice, or
(ii) has contravened a provision of or under this Chapter;
(d) provide for the making of a reference to the First-tier Tribunal or Upper Tribunal in respect of the issue of a penalty notice or the amount of a penalty;
(e) confer other functions on the Regulator.
(3) The regulations may make provision for determining the amount, or the maximum amount, of a penalty in respect of a failure or contravention.
(4) But the amount of a penalty imposed under the regulations in respect of a failure or contravention must not exceed—
(a) £10,000, in the case of an individual, and
(b) £100,000, in any other case.
(5) Any penalty payable under the regulations is recoverable by the Regulator.
(6) In England and Wales, any such penalty is, if the county court so orders, recoverable under section 85 of the County Courts Act 1984 or otherwise as if it were payable under an order of that court.
(7) In Scotland, a penalty notice is enforceable as if it were an extract registered decree arbitral bearing a warrant for execution issued by the sheriff court of any sheriffdom.
(8) The Regulator must pay into the Consolidated Fund any penalty recovered under this section.
(9) Section 7 of the Pensions Act 1995 (appointment of trustees) is amended as follows.
(10) In subsection (3), at the end of paragraph (c) omit “or”, and after that paragraph insert—
(ca) to secure compliance with the duties of trustees under Chapter 6 of Part 2 of the Pension Schemes Act 2026, or
.
(11) Regulations under this section are subject to the affirmative procedure.
(1) The Regulator may authorise a superfund if satisfied, based on the superfund’s organisation, staff, plans, policies and procedures, that it is likely to comply with the requirements of Chapters 4 and 5 (ongoing requirements for superfunds).
(2) An application for authorisation must be made jointly by—
(a) the trustees of the superfund scheme, and
(b) a body corporate that is incorporated in the United Kingdom and that is involved in the scheme’s management or administration.
(3) An application for authorisation must be made in the manner and form specified by the Regulator.
(4) The Secretary of State may by regulations make provision about applications for authorisation, including provision—
(a) about the documents and information that an application must include;
(b) requiring a fee to be paid to the Regulator in respect of an application.
(5) The Regulator must maintain and publish a list of authorised superfunds.
(6) Where a superfund has not yet received a superfund transfer, the Regulator may withdraw the superfund’s authorisation if no longer satisfied as described in subsection (1).
(7) Regulations under subsection (4) are subject to the negative procedure.
(1) The Regulator may approve a superfund transfer if—
(a) the receiving superfund is authorised,
(b) the ceding scheme does not have any active members, and
(c) the Regulator is satisfied, based on evidence provided by the trustees of the ceding scheme and by the responsible body of the receiving superfund, that each of the onboarding conditions is met in relation to the transfer.
(2) For the purposes of this Part, “the onboarding conditions” in relation to a superfund transfer are—
(a) that, as at the date of the application, the financial position of the ceding scheme is not strong enough to enable the trustees to arrange an insurer buyout;
(b) that the superfund transfer will make it more likely that the transferred liabilities will be satisfied in full;
(c) that it is reasonable to expect that the capital adequacy threshold will be met in relation to the receiving superfund immediately following the superfund transfer;
(d) that it is reasonable to expect that the technical provisions threshold will be met in relation to the receiving superfund at the end of the period specified in regulations made by the Secretary of State;
(e) that the receiving superfund is likely to comply with the requirements of Chapters 4 and 5 (ongoing requirements of superfunds) after the superfund transfer takes place.
(3) Approval under this section may be given subject to conditions, including as to—
(a) the superfund transfer being made on terms of a specified description;
(b) the superfund transfer being made within a period of a specified description;
(c) any of the onboarding conditions continuing to be met for a period of a specified description after approval is given but before the superfund transfer is made.
(4) The Secretary of State may by regulations amend this section for the purpose of substituting another condition relating to the financial position of the ceding scheme for the onboarding condition for the time being in subsection (2)(a).
(5) The Secretary of State may by regulations make provision about the onboarding conditions, including provision about—
(a) the information and evidence that the trustees of the ceding scheme and the responsible body of the receiving superfund must provide for the purpose of satisfying the Regulator that an onboarding condition is met;
(b) how the Regulator is to assess whether an onboarding condition is met;
(c) the conditions that may or must be imposed under subsection (3).
(6) The Secretary of State may by regulations modify subsection (2) in its application to a superfund transfer of a kind described in section 61(3) (merger of sections etc).
(7) In relation to a superfund transfer—
“the ceding scheme” means the scheme from which the transferred liabilities are transferred (or intended to be transferred);
“the receiving superfund” means the superfund that includes the superfund scheme to which the transferred liabilities are transferred (or intended to be transferred);
“the transferred liabilities” means the liabilities that are transferred (or intended to be transferred).
(8) In subsection (1), “active members” has the same meaning as in Part 1 of the Pensions Act 1995 (see section 124 of that Act).
(9) Regulations under subsection (2)(d) are subject to the negative procedure.
(10) Regulations under subsection (4) or (5) are subject to the affirmative procedure.
(11) Regulations under subsection (6) are subject to the negative procedure.
(12) See also section 67 (which makes special provision in relation to schemes that are being wound up in particular circumstances).
(1) An application for approval under section 66 must be made jointly by—
(a) the trustees of the ceding scheme, and
(b) the responsible body of the receiving superfund.
(2) The application must be made in the manner and form specified by the Regulator.
(3) The Regulator must decide whether or not to approve a superfund transfer, and must notify the applicants of its decision, as soon as reasonably practicable after receiving the application.
(4) The Secretary of State may by regulations make provision about applications for approval, including about the documents and information that must be included in an application.
(5) Regulations under subsection (4) are subject to the negative procedure.
(1) The responsible body of an operating superfund must ensure, so far as reasonably practicable, that the superfund has policies and procedures in place—
(a) that allow for the superfund to be managed and administered effectively in the interests of members of the superfund scheme,
(b) that ensure the superfund’s compliance with the requirements of this Part and any other legislation relating to pensions, and
(c) that are proportionate to the scale and nature of the superfund’s activities.
(2) Those policies and procedures must, in particular, address the following matters—
(a) how the responsible body, the other members of the superfund group, and the trustees of the superfund scheme are to interact with each other, and how any conflicts are to be resolved;
(b) how investment decisions are to be taken in relation to the capital buffer and the superfund scheme;
(c) the implications of receiving new superfund transfers;
(d) the management of risks.
(3) The responsible body of an operating superfund must ensure that the superfund meets any conditions specified in regulations made by the Secretary of State as to—
(a) the corporate form, jurisdiction of incorporation or jurisdiction of tax residence of a member of the superfund group;
(b) the structure of the superfund group;
(c) the terms of the capital buffer arrangement (including as to how, by whom, in what jurisdiction and on what terms the capital buffer may be held);
(d) compliance with tax legislation.
(4) Section 10 of the Pensions Act 1995 (civil penalties) applies to the responsible body if it breaches subsection (1) or (3).
(5) The Secretary of State may by regulations amend this section for the purpose of adding, removing or varying a matter which the policies and procedures mentioned in subsection (1) must address.
(6) Regulations under subsection (3) or (5) are subject to the affirmative procedure.
(1) The responsible body of an operating superfund must ensure that each of the management documents—
(a) is prepared in relation to the superfund,
(b) complies with any requirements as to form or content specified in regulations made by the Secretary of State, and
(c) is kept under review and revised if appropriate.
(2) The responsible body of an operating superfund must ensure, so far as reasonably practicable, that the superfund is managed and administered in accordance with the management documents.
(3) “The management documents” means—
(a) a business plan;
(b) a governance manual;
(c) a continuity strategy;
(d) a fees and expenses policy.
(4) In subsection (3)—
“continuity strategy” means a strategy for protecting the interests of members of the superfund scheme if an event of concern occurs;
“fees and expenses policy” means a document setting out how fees and expenses incurred by the superfund will be funded;
“governance manual” means a document setting out how and by whom the superfund is managed and administered.
(5) Section 10 of the Pensions Act 1995 (civil penalties) applies to the responsible body if it breaches subsection (1) or (2).
(6) The Secretary of State may by regulations amend this section for the purpose of adding, removing or varying a management document in subsection (3).
(7) Regulations under subsection (1)(b) are subject to the negative procedure.
(8) Regulations under subsection (6) are subject to the affirmative procedure.
(1) “The financial thresholds” means—
(a) the capital adequacy threshold,
(b) the technical provisions threshold,
(c) the protected liabilities threshold, and
(d) the scheme solvency threshold.
(2) “The capital adequacy threshold” is met in relation to a superfund if the total value of the assets of the scheme and the capital buffer is such that there is a very high likelihood that the liabilities of the scheme to and in respect of its members will be satisfied in full.
(3) “The technical provisions threshold” is met in relation to a superfund if the total value of the assets of the scheme and the capital buffer is greater than or equal to the scheme’s technical provisions.
(4) “The protected liabilities threshold” is met in relation to a superfund if the total value of the assets of the scheme and the capital buffer exceeds a specified percentage of the amount of the scheme’s protected liabilities.
(5) “The scheme solvency threshold” is met in relation to a superfund on a given day if there is no material likelihood that the scheme will fail to satisfy all the liabilities to and in respect of members that it is required to satisfy during the 6 months beginning with that day.
(6) In this section—
“protected liabilities” has the same meaning as in Chapter 3 of Part 2 of the Pensions Act 2004 (see section 131 of that Act);
“specified” means specified in regulations made by the Secretary of State;
“technical provisions” has the same meaning as in section 222 of the Pensions Act 2004 (and a superfund scheme’s technical provisions are to be calculated for the purposes of this section in the same way as its technical provisions would be calculated for the purposes of that section).
(7) The Secretary of State may by regulations make provision about how to determine whether any of the financial thresholds is met, including about—
(a) how and by whom the value of the assets, liabilities or protected liabilities of the scheme, or the value of the capital buffer, is to be determined;
(b) how and by whom the likelihood of something happening is to be assessed;
(c) what constitutes a “very high” or “material” likelihood (including provision defining those expressions by reference to particular percentages or particular criteria).
(8) Regulations under subsection (7) may confer a discretion.
(9) Regulations under subsection (4) or (7) are subject to the affirmative procedure.
(1) A person that is a party to the capital buffer arrangement in relation to an operating superfund must ensure, so far as it is in their power to do so, that the capital buffer arrangement requires the release of the capital buffer to the trustees of the superfund scheme if and to the extent that the release is required by—
(a) an approved response plan (see sections 88 and 89), or
(b) a direction of the Regulator under section 90 (direction-making powers following event of concern).
(2) The capital buffer is “released” to the extent that it is transferred or made available to any person otherwise than—
(a) in the ordinary course of the investment of the capital buffer, or
(b) in payment of fees, expenses, taxes or other charges incurred (in each case) in connection with the management or administration of the capital buffer.
(3) Section 88A of the Pensions Act 2004 (civil penalties) applies to the person if they breach subsection (1).
74 Capital buffer: permitted release to other persons
(1) A person that is a party to the capital buffer arrangement in relation to an operating superfund must ensure, so far as it is in their power to do so, that the capital buffer arrangement does not permit the release of the capital buffer to a person other than the trustees of the superfund scheme except in accordance with subsection (2) or (3).
(2) The capital buffer arrangement may permit the release of the whole capital buffer if—
(a) the superfund scheme has satisfied all of its liabilities to and in respect of its members, or
(b) an insurer buyout has taken effect in relation to the superfund scheme.
(3) The capital buffer arrangement may permit the release of an amount of the capital buffer to the extent that the release is a permitted profit extraction.
(4) “Permitted profit extraction”, in relation to a superfund, means a release of the capital buffer—
(a) that takes place at a time when the capital adequacy threshold is exceeded to an extent, and has been exceeded for a period of time, specified in regulations made by the Secretary of State,
(b) that is made to a person of a description specified in the regulations, and
(c) in relation to which any other requirements specified in the regulations are met (which may include a requirement for the Regulator’s consent),
and for the purposes of paragraph (a) the capital adequacy threshold is “exceeded” if and to the extent that the total value of the assets of the scheme and the capital buffer is greater than the amount required in order for that threshold to be met.
(5) A person commits an offence if they cause or permit the capital buffer to be released (to any extent)—
(a) to a person other than the trustees of the superfund scheme, and
(b) otherwise than in accordance with the capital buffer arrangement.
(6) A person guilty of an offence under subsection (5) is liable—
(a) on summary conviction in England and Wales, to a fine;
(b) on summary conviction in Scotland, to a fine not exceeding the statutory maximum;
(c) on conviction on indictment, to imprisonment for a term not exceeding seven years or a fine or both.
(7) Section 88A of the Pensions Act 2004 (civil penalties) applies to a person who causes or permits the capital buffer to be released (to any extent)—
(a) to a person other than the trustees of the superfund scheme, and
(b) otherwise than in accordance with the capital buffer arrangement
(but see subsection (10) of that section, which prevents a penalty from being imposed in respect of an act where the person has been convicted of an offence in respect of the same act, or where proceedings for such an offence are ongoing).
(8) Section 10 of the Pensions Act 1995 (civil penalties) applies to a person who breaches subsection (1).
(9) Regulations under subsection (4) are subject to the affirmative procedure.
(1) The responsible body of an operating superfund must ensure that this section is complied with.
(2) The capital buffer must be invested in accordance with a strategy prepared by or under the supervision of the responsible body (“the capital buffer investment strategy”).
(3) The capital buffer investment strategy must comply with any requirements specified in regulations made by the Secretary of State.
(4) The requirements that may be specified by virtue of subsection (3) include requirements as to—
(a) the principles to be followed, and the matters to be taken into account, in investing the capital buffer;
(b) the form and content of the capital buffer investment strategy.
(5) The capital buffer investment strategy may not be materially altered except with the agreement of the trustees of the superfund scheme.
(6) The Secretary of State may by regulations make provision about what counts as a “material” alteration for the purposes of subsection (5).
(7) Section 10 of the Pensions Act 1995 (civil penalties) applies to the responsible body if it breaches subsection (1).
(8) Regulations under subsection (3) are subject to the affirmative procedure.
(9) Regulations under subsection (6) are subject to the negative procedure.
(1) The responsible body of an operating superfund must ensure that there is at all times at least one individual responsible for each key function.
(2) Each of the following activities is a “key function” in relation to a superfund—
(a) taking management decisions;
(b) taking financial decisions;
(c) taking investment decisions;
(d) risk management;
(e) internal audit;
(f) marketing and promotion.
(3) An activity is not a key function so far as it relates only to the superfund scheme and not to any other part of the superfund.
(4) Section 10 of the Pensions Act 1995 (civil penalties) applies to the responsible body if it breaches this section.
(5) The Secretary of State may by regulations amend this section for the purpose of adding, removing or varying a key function in subsection (2).
(6) Regulations under subsection (5) are subject to the affirmative procedure.
78 Approval of individuals responsible for key functions
(1) An individual may not be responsible for a key function in relation to an operating superfund unless they are approved by the Regulator to be responsible for that key function in relation to the superfund.
(2) The Regulator may approve an individual only if satisfied that they are a fit and proper person to be responsible for that key function in relation to the superfund.
(3) In deciding whether it is so satisfied the Regulator must take into account, in particular, any matters specified in regulations made by the Secretary of State.
(4) The Regulator may not approve an individual to be responsible for risk management if the individual is already responsible for taking investment decisions, and vice versa.
(5) An application for approval must be made in the manner and form specified by the Regulator.
(6) Approval may be given for a specified period or subject to specified conditions (in which case the person is only approved to be responsible for the key function in question for that period or while those conditions are met).
(7) Approval may be given in advance of the superfund being authorised or becoming an operating superfund.
(8) If no longer satisfied as described in subsection (2) in relation to an individual, the Regulator may by notice to the responsible body—
(a) suspend its approval in relation to the individual for a period specified in the notice, or
(b) revoke its approval in relation to the individual with effect from a date specified in the notice.
(9) Subsection (1) does not apply to an individual while—
(a) they are responsible for a key function on a temporary basis, and
(b) the Regulator agrees, in light of the particular circumstances of the case, to the person’s being responsible for the key function on that basis without approval.
(10) If an individual is responsible for a key function in relation to an operating superfund in breach of subsection (1), section 10 of the Pensions Act 1995 (civil penalties) applies to—
(a) the individual, and
(b) the responsible body.
(11) Regulations under subsection (3) are subject to the negative procedure.
79 Certification of staff supporting individuals responsible for key functions
(1) The responsible body of an operating superfund must ensure, so far as reasonably practicable, that no individual carries out a key function in relation to the superfund unless the responsible body—
(a) is satisfied, having conducted due diligence in relation to the individual, that the individual is a fit and proper person to carry out the key function, and
(b) has issued a certificate to the individual confirming that it is so satisfied.
(2) The responsible body must keep a register of certificates issued under subsection (1).
(3) In deciding whether it is satisfied as described in subsection (1)(a), the responsible body must take into account, in particular, any matters specified in regulations made by the Secretary of State.
(4) The Secretary of State may by regulations make provision about certificates issued under subsection (1), including about the period of time for which a certificate is valid.
(5) Section 10 of the Pensions Act 1995 (civil penalties) applies to the responsible body if it breaches subsection (1).
(6) Regulations under subsection (3) or (4) are subject to the negative procedure.
(1) A person may not be a trustee of an operating superfund scheme unless they are approved by the Regulator to be a trustee of the scheme.
(2) The Regulator may approve a person to be a trustee of a superfund scheme only if satisfied they are a fit and proper person to be a trustee of the scheme.
(3) In assessing whether a person is a fit and proper person, the Regulator must take into account, in particular, any matters specified in regulations made by the Secretary of State.
(4) The Regulator may not approve a person to be a trustee of a superfund scheme if the person is employed by, or involved in the management or administration of, a member of the superfund group.
(5) An application for approval must be made in the manner and form specified by the Regulator.
(6) Approval may be given for a specified period or subject to specified conditions (in which case the person is approved to be a trustee only for that period or only while those conditions are met).
(7) Approval may be given in advance of the superfund being authorised or becoming an operating superfund.
(8) If no longer satisfied as described in subsection (2) in relation to a person, the Regulator may by notice to the person—
(a) suspend its approval in relation to the person for a period specified in the notice, or
(b) revoke its approval in relation to the person with effect from a date specified in the notice.
(9) Subsection (1) does not apply to a person while—
(a) they serve as a trustee of a superfund scheme on a temporary basis, and
(b) the Regulator agrees, in light of the particular circumstances of the case, to their being a trustee on that basis without approval.
(10) If a person becomes a trustee of an operating superfund scheme in breach of subsection (1), section 10 of the Pensions Act 1995 applies to—
(a) the person, and
(b) the person who appointed them.
(11) Regulations under subsection (3) are subject to the negative procedure.
(1) The responsible body of an operating superfund must notify the Regulator of any of the following—
(a) a material deterioration in the investment performance of the capital buffer;
(b) a material change to any of the management documents;
(c) a material change to the capital buffer arrangement;
(d) a release of any of the capital buffer by way of permitted profit extraction;
(e) the bringing of proceedings against, or the launching of an investigation by a public body into, a member of the superfund group;
(f) a breach of any requirement of this Chapter.
(2) The trustees of an operating superfund scheme must notify the Regulator of any of the following—
(a) a material deterioration in the investment performance of the scheme;
(b) a material change to the rules of the scheme;
(c) the bringing of proceedings against, or the launching of an investigation by a public body into, the trustees.
(3) A notification under this section must be made—
(a) where the person responsible for the notification is aware in advance that the event in question is to take place, as soon as reasonably practicable after it becomes so aware;
(b) otherwise, as soon as reasonably practicable after the event takes place.
(4) A notification under this section must be made in the manner and form specified by the Regulator.
(5) Section 10 of the Pensions Act 1995 (civil penalties) applies to a person who breaches this section.
(6) The Secretary of State may by regulations make provision (including provision amending this section)—
(a) for the purpose of adding, removing or varying a matter to be notified under subsection (1) or (2);
(b) about what counts as “material” for the purposes of any paragraph of subsection (1) or (2).
(7) Regulations under subsection (6) are subject to the affirmative procedure.
(1) The trustees of an operating superfund scheme must provide the Regulator with regular reports about the financial position of the superfund.
(2) The reports must comply with any requirements specified in regulations made by the Secretary of State, which may in particular include requirements as to—
(a) the form and content of reports;
(b) the times at which, and intervals at which, reports are to be provided.
(3) Section 10 of the Pensions Act 1995 (civil penalties) applies to the trustees if they breach this section.
(4) Regulations under subsection (2) are subject to the negative procedure.
(1) An “event of concern” takes place in relation to a superfund if any of the following takes place—
(a) any one of the financial thresholds ceases to be met (subject to subsection (4));
(b) a debt falls due to the trustees of the superfund scheme under section 75 of the Pensions Act 1995;
(c) the capital buffer is released otherwise than in accordance with the capital buffer arrangement;
(d) an insolvency event becomes, in the opinion of the directors of the responsible body, likely to occur in relation to the responsible body;
(e) an insolvency event occurs in relation to a member of the superfund group;
(f) the responsible body notifies the Regulator that it wishes to cease to be the responsible body;
(g) a material transaction takes place;
(h) a superfund transfer is made to the superfund scheme without approval under Chapter 3;
(i) an application is made under Chapter 3 for approval of a superfund transfer in relation to which the ceding scheme is itself a superfund scheme;
(j) an application is made under Chapter 3 for approval of a superfund transfer of a kind described in section 61(3) (merger of sections etc);
(k) the responsible body or the trustees of the superfund scheme receive a notice from the Regulator stating that, in the Regulator’s opinion, the recipient of the notice—
(i) has breached a requirement of this Part or of any other legislation relating to pensions that applies to them in respect of the superfund, or
(ii) is likely to breach such a requirement if remedial action is not taken;
(l) the Regulator withdraws the superfund’s authorisation under section 94.
(2) “Period of concern”, in relation to an event of concern, means the period beginning when the event takes place and ending—
(a) when the Regulator gives the responsible body a notice under section 88(5) (event of concern resolved) in respect of the event, or
(b) when the superfund scheme is wound up.
(3) In subsection (1)(g) “material transaction” means—
(a) a change in the person or persons who have control of the responsible body, or
(b) a sale by a member of the superfund group of all or substantially all of its assets.
(4) The Secretary of State may by regulations provide that an event of concern within subsection (1)(a) does not take place—
(a) unless the Regulator is satisfied that the financial threshold in question is not met, or
(b) unless the threshold is not met for a period, or in circumstances, specified in the regulations (and for that purpose the period or circumstances specified may involve the exercise of a discretion by the Regulator).
(5) The Secretary of State may by regulations amend this section for the purpose of adding, removing or varying—
(a) an event of concern in subsection (1);
(b) a material transaction in subsection (3).
(6) In this section—
“control” has the same meaning as in section 435 of the Insolvency Act 1986;
“director” includes any person occupying the position of director, by whatever name called;
“insolvency event” has the same meaning as in Part 2 of the Pensions Act 2004 (see section 121 of that Act).
(7) Regulations under this section are subject to the affirmative procedure.
(1) The requirements mentioned in section 88(2)(a) are the following.
(2) A response plan must specify—
(a) the outcome which the plan is intended to achieve,
(b) the key steps which are to be taken to achieve that outcome,
(c) when and by whom those steps are to be taken, and
(d) how members of the superfund scheme are to be kept informed about the carrying out of the plan.
(3) Where the event of concern is the technical provisions threshold ceasing to be met, the response plan must require the whole of the capital buffer to be released to the trustees.
(4) Where the event of concern is the scheme solvency threshold ceasing to be met, the response plan must require so much of the capital buffer to be released to the trustees as equals the lower of the following—
(a) the amount that would enable the superfund scheme to meet the requirement in section 222(1) of the Pensions Act 2004 (requirement to cover technical provisions);
(b) the total value of the capital buffer.
(5) Where the event of concern is a debt falling due to the trustees of the superfund scheme under section 75 of the Pensions Act 1995, the response plan must require so much of the capital buffer to be released to the trustees as equals the lower of the following—
(a) the amount of the debt;
(b) the total value of the capital buffer.
(6) Where the event of concern is the protected liabilities threshold ceasing to be met, the response plan must require the immediate winding up of the superfund scheme.
(7) A response plan must take account of the superfund’s continuity strategy (but may deviate from it if, in the opinion of the person proposing the plan, the course of action contemplated by the continuity strategy is not appropriate in the circumstances).
(8) A response plan must not require the release of the capital buffer (to any extent) except as set out in subsection (3), (4) or (5).
(9) A response plan must meet any other requirements specified in regulations made by the Secretary of State, including in particular as to how the value of the capital buffer, or of any assets released from it, is to be determined for the purposes of a requirement within subsection (4) or (5).
(10) Regulations under subsection (9) are subject to the negative procedure.
91 Directions to pause payments or transfers of liabilities: supplementary provision
(1) This section applies to a direction under section 90(1)(d) (a “pause direction”).
(2) The Regulator may make a pause direction only if satisfied that doing so is reasonably necessary to protect the interests of members of the superfund scheme.
(3) A pause direction may make different provision for different purposes.
(4) The Regulator must cancel a pause direction if no longer satisfied as described in subsection (2).
(5) A pause direction, so far as not already cancelled, ceases to have effect when the period of concern to which it relates comes to an end.
(6) A payment that would have fallen due but for a pause direction falls due when the pause direction ceases to have effect.
(7) A pause direction within section 90(1)(d)(ii) (no transfers of liabilities) does not affect an order or provision falling within section 28(1) of the Welfare Reform and Pensions Act 1999 (pension sharing orders or provisions).
(8) The Secretary of State may by regulations modify any provision of Part 4ZA of the Pension Schemes Act 1993 (transfer rights etc) in its application to a superfund scheme in relation to which a pause direction has effect containing provision within section 90(1)(d)(ii) (no transfer of liabilities).
(9) Regulations under subsection (8) are subject to the affirmative procedure.
(1) The Regulator may issue a fixed penalty notice to a person if it considers that the person has failed to comply with a requirement imposed by or under section 87, 88 or 90.
(2) A “fixed penalty notice” is a notice requiring the person to whom it is issued to pay a penalty within the period specified in the notice.
(3) The penalty—
(a) is to be determined in accordance with regulations made by the Secretary of State, and
(b) must not exceed £100,000.
(4) A fixed penalty notice must—
(a) state the amount of the penalty,
(b) state the date before which the penalty must be paid, which must be at least 28 days after the date on which the notice is issued,
(c) specify the failure to which the penalty relates,
(d) state that the Regulator may issue an escalating penalty notice under section 93 if the person fails to comply with the requirement in question, and
(e) notify the person to whom the notice is issued of the review process under section 43 of the Pensions Act 2008 and the right of referral to a tribunal under section 44 of that Act (as applied by subsection (5)).
(5) The following sections of the Pensions Act 2008 apply to a penalty notice under this section as they apply to a penalty notice under section 40 of that Act—
(a) section 42 (penalty notices: recovery);
(b) section 43 (review of penalty notices);
(c) section 44 (references to First-tier Tribunal or Upper Tribunal).
(6) Regulations under subsection (3)(a) are subject to the negative procedure.
(1) The Regulator may issue an escalating penalty notice to a person if—
(a) it considers that the person has failed to comply with a requirement imposed by virtue of section 87, 88 or 90,
(b) it has already issued the person with a fixed penalty notice under section 92 in respect of that failure, and
(c) the period for paying the penalty specified in that notice has passed without the requirement to which that notice related being complied with.
(2) An “escalating penalty notice” is a notice requiring a person to pay a penalty calculated by reference to a daily rate if the person fails before a specified date to comply with the requirement to which the notice relates.
(3) The daily rate—
(a) is to be determined in accordance with regulations made by the Secretary of State, and
(b) must not exceed £20,000.
(4) The Regulator may not issue an escalating penalty notice to a person if—
(a) the person has exercised the right of referral to a tribunal under section 44 of the Pensions Act 2008 (as applied by section 92(5)) in respect of a fixed penalty notice issued under section 92,
(b) the escalating penalty notice relates to the same failure as the fixed penalty notice, and
(c) the reference in respect of the fixed penalty notice has not been determined.
(5) An escalating penalty notice must—
(a) specify the failure to which the penalty relates,
(b) state that, if the person fails to comply with the requirement to which the notice relates before a specified date, the person will be liable to pay an escalating penalty,
(c) state the daily rate of the escalating penalty and the way in which the penalty is calculated,
(d) state the date from which the escalating penalty will be payable,
(e) state that the escalating penalty will continue to be payable at the daily rate until the date on which the person complies with the requirement to which the notice relates or an earlier date specified in the notice, and
(f) notify the person to whom the notice is issued of the review process under section 43 of the Pensions Act 2008 and the right of referral to a tribunal under section 44 of that Act (as applied by subsection (6)).
(6) The following sections of the Pensions Act 2008 apply to an escalating penalty notice under this section as they apply to an escalating penalty notice under section 41 of that Act—
(a) section 42 (penalty notices: recovery);
(b) section 43 (review of penalty notices);
(c) section 44 (references to First-tier Tribunal or Upper Tribunal).
(7) Regulations under subsection (3)(a) are subject to the negative procedure.
96 Power to extend superfunds legislation to similar structures
(1) The Secretary of State may by regulations—
(a) apply any superfunds legislation, with or without modifications, to a similar structure;
(b) make, in relation to a similar structure, provision that is similar to or that corresponds to any superfunds legislation.
(2) “Superfunds legislation” means provision made by this Act (including provision amending other legislation) so far as it applies in relation to superfunds.
(3) “Similar structure” means arrangements to which this Part does not (ignoring this section) apply but that involve a trust-based occupational pension scheme—
(a) that has defined-benefit liabilities, and
(b) that is not supported by a substantive employer covenant
(whether or not the scheme receives, or is managed or administered with a view to its receiving, transfers of defined-benefit liabilities from other schemes).
(4) The power under subsection (1) can be exercised so as to amend an Act.
(5) Regulations under subsection (1) are subject to the affirmative procedure.
(1) In this Part—
“approved response plan” means a response plan which has been approved by the Regulator under section 88;
“assets”, in relation to the capital buffer, includes cash;
“associate”, in relation to a body corporate, has the meaning given in section 435(6) of the Insolvency Act 1986 (read with section 435(11));
“authorised”, in relation to a superfund, means authorised under Chapter 2 (except in section 99);
“the capital adequacy threshold” has the meaning given by section 72(2);
“capital buffer” has the meaning given by section 60(3);
“the capital buffer arrangement”, in relation to the capital buffer, means the contract or other arrangement referred to in section 60(2);
“the ceding scheme” has the meaning given by section 66(7);
“continuity strategy” has the meaning given by section 70(4);
“defined benefits” has the same meaning as in Part 1 of the Pensions Act 2008 (see section 99 of that Act);
“defined-benefit liability” means a liability to pay defined benefits to a member of a pension scheme;
“the employer”, in relation to an occupational pension scheme, means the employer of persons in the description of employment to which the scheme in question relates (and see also section 97);
“event of concern” has the meaning given by section 86(1);
“the financial thresholds” has the meaning given by section 72(1);
“insurer buyout”, in relation to a pension scheme, means an arrangement under which an insurer takes on responsibility for satisfying all the liabilities of the scheme in full;
“key function” has the meaning given by section 77(2) and (3);
“liabilities”, in relation to a pension scheme, includes present and future liabilities;
“the management documents” has the meaning given by section 70(3);
“not supported by a substantive employer covenant” has the meaning given by section 60(4);
“occupational pension scheme” has the same meaning as in the Pension Schemes Act 1993 (see section 1 of that Act and section 97 above);
“the onboarding conditions” has the meaning given by section 66(2) (read with any regulations under section 66(4));
“operating superfund” means a superfund of which the superfund scheme is an operating superfund scheme;
“operating superfund scheme” means a superfund scheme—
that is part of an authorised superfund or of a superfund whose authorisation has been withdrawn under section 94, and
to which one or more superfund transfers have been made;
“pension scheme” has the meaning given by section 1(5) of the Pension Schemes Act 1993;
“period of concern” has the meaning given by section 86(2);
“permitted profit extraction” has the meaning given by section 74(4);
“the protected liabilities threshold” has the meaning given by section 72(4);
“the receiving superfund” has the meaning given by section 66(7);
“the Regulator” means the Pensions Regulator;
“release”, in relation to the capital buffer, has the meaning given by section 73(2);
“response plan” has the meaning given by section 88(1);
“the responsible body”, in relation to an authorised superfund, means—
the body corporate that applied for the superfund to be authorised (see section 63(2)), or
where the Regulator has directed under section 90(4) that another person is to become the responsible body, that other person;
“the rules of the scheme”, in relation to a trust-based occupational pension scheme, includes the trust deed;
“the scheme solvency threshold” has the meaning given by section 72(5);
“section” has the meaning given by section 61;
“superfund” has the meaning given by section 60(5);
“superfund group”, in relation to a superfund, means the responsible body and every body corporate—
that is involved in the management or administration of the superfund, and
that is an associate of the responsible body;
“superfund scheme” has the meaning given by section 60(1) (read with section 61);
“superfund transfer” has the meaning given by section 60(6);
“supported by a capital buffer” has the meaning given by section 60(2);
“the technical provisions threshold” has the meaning given by section 72(3);
“transfer”, in relation to liabilities of a pension scheme, is to be read with subsection (2);
“the transferred liabilities” has the meaning given by section 66(7);
“trust-based occupational pension scheme” means an occupational pension scheme established under a trust.
(2) References in this Part to a transfer of liabilities from one pension scheme to another are to any transaction whereby—
(a) a person who has present or future rights to receive defined benefits under the first scheme ceases to have those rights, and
(b) that person instead acquires present or future rights to receive defined benefits under the second scheme.
(3) The Secretary of State may by regulations amend this section for the purpose of changing the definition of “superfund group”.
(4) Regulations under subsection (3) are subject to the affirmative procedure.
(1) The following provisions of this section have effect for the purposes of this section and sections 102 to 104 .
(2) “GB scheme” means an occupational pension scheme that was a salary-related contracted-out scheme in England and Wales or Scotland; and for this purpose an occupational pension scheme was a salary-related contracted-out scheme in England and Wales or Scotland at any time if the scheme was contracted-out at that time by virtue of satisfying section 9(2) of the Pension Schemes Act 1993 (as it then had effect).
(3) “Scheme actuary”, in relation to a GB scheme, means—
(a) the person for the time being appointed as actuary for the scheme under section 47 of the Pensions Act 1995 (professional advisers), or
(b) if there is no person so appointed, a Fellow of the Institute and Faculty of Actuaries appointed by the trustees or managers of the scheme to carry out the functions of the scheme actuary under section 102.
(4) “Section 37(1)” refers to section 37(1) of the Pension Schemes Act 1993 (prohibition of alterations to rules of contracted-out schemes in certain circumstances).
(5) “Regulation 42” refers to regulation 42 of the Occupational Pension Schemes (Contracting-out) Regulations 1996 (S.I. 1996/1172) (requirements for alterations to rules of contracted-out schemes).
(6) References to non-compliance with the requirements of paragraph (2)(a) and (b) of regulation 42 include non-compliance with the requirement in either paragraph (2)(a) or (2)(b) (as well as with both requirements).
(7) An alteration purporting to have been made to the rules of a GB scheme is a “potentially remediable alteration” if—
(a) by virtue of section 37(1) and paragraphs (1) and (2) of regulation 42 (as they had effect at the time), the alteration could not be made unless the requirements of paragraph (2)(a), (b) and (c) of regulation 42 (as they then had effect) had been met,
(b) it was treated by the trustees or managers of the scheme, after it was purportedly made, as a valid alteration,
(c) no positive action has been taken by the trustees or managers of the scheme on the basis that they consider the alteration to be void (and so of no legal effect) by reason of non-compliance with the requirements of paragraph (2)(a) and (b) of regulation 42, and
(d) it is not excluded from the scope of remediation under sections 102 and 103 (see subsection (9)).
(8) In subsection (7)(c) “positive action”, in relation to the purported alteration, means—
(a) notifying any members of the scheme in writing to the effect that the trustees or managers consider the alteration to be void (by reason of non-compliance with the requirements of paragraph (2)(a) and (b) of regulation 42) and that the scheme will be administered on the basis that it has no legal effect, or
(b) notifying any members of the scheme in writing (in consequence of the trustees or managers being of the view mentioned in subsection (7)(c)) to the effect that the trustees or managers are taking (or have taken) any other step in relation to the administration of the scheme which has (or will have) the effect of altering payments to or in respect of members of the scheme.
(9) An alteration purporting to have been made to the rules of a GB scheme is excluded from the scope of remediation under sections 102 and 103 if any question relating to the validity of the alteration, so far as relating to the requirements of paragraph (2)(a) and (b) of regulation 42—
(a) has, before this section comes into force, been determined by the court in qualifying legal proceedings,
(b) was in issue on or before 5 June 2025 in qualifying legal proceedings, but has been settled by agreement between the parties at any time before this section comes into force, or
(c) was in issue on or before 5 June 2025 in qualifying legal proceedings and remains in issue in those proceedings when this section comes into force.
(10) In subsection (9) “legal proceedings” means proceedings for the determination of a dispute that have been brought before a court in the United Kingdom; and such proceedings are “qualifying legal proceedings” if —
(a) they will determine a dispute as to the rules of the scheme, and
(b) the parties are (or include)—
(i) the trustees or managers of the scheme, and
(ii) one or more members or other beneficiaries of the scheme (or a person acting on behalf of one or more members or other beneficiaries).
102 Validity of certain alterations to GB salary-related contracted-out pension schemes: subsisting schemes
(1) This section applies to any potentially remediable alteration purportedly made to a GB scheme other than a potentially remediable alteration to which section 103 applies.
(2) If the conditions mentioned in subsection (3) are met in relation to it, the alteration is to be treated for all purposes as having met the requirements of paragraph (2)(a) and (b) of regulation 42 before it was purportedly made, and so as having always been a valid alteration so far as those requirements are concerned.
(3) The conditions are—
(a) that the trustees or managers of the scheme have made a request in writing to the scheme actuary for the actuary to consider whether or not, on the assumption that it was validly made, the alteration would have prevented the scheme from continuing to satisfy the statutory standard, and
(b) that the scheme actuary has confirmed to the trustees or managers in writing that in the actuary’s opinion it is reasonable to conclude that, on the assumption that it was validly made, the alteration would not have prevented the scheme from continuing to satisfy the statutory standard.
In this subsection “the statutory standard” means the statutory standard for a contracted-out scheme under section 12A of the Pension Schemes Act 1993 as it had effect at the time the alteration was purportedly made.
(4) A scheme actuary who has received a request as mentioned in subsection (3)(a) in relation to a potentially remediable alteration to a scheme—
(a) may act on the basis of the information available to the actuary, as long as the actuary considers it sufficient for the purpose of forming an opinion on the subject-matter of the request;
(b) may take any professional approach (including making assumptions or relying on presumptions) that is open to the actuary in all the circumstances of the case.
(5) A condition mentioned in subsection (3) may be met by action taken before (as well as action taken after) this section comes into force.
(6) Subsection (7) applies to a scheme if —
(a) there is an assessment period in relation to the scheme within the meaning of Part 2 of the Pensions Act 2004, or
(b) the scheme is operating as a closed scheme under section 153 of that Act.
(7) The powers of the Board of the Pension Protection Fund under section 134 and section 155 of the Pensions Act 2004 to give directions includes power to give a direction to the trustees or managers of the scheme requiring them—
(a) to make a request under subsection (3)(a) above in relation to a potentially remediable alteration to the scheme, and
(b) to take any necessary action to enable or facilitate the making of a decision by the scheme actuary as to whether to give the confirmation described in subsection (3)(b) above in relation to that alteration.
(8) This section has effect, in relation to a potentially remediable alteration purportedly made to a public service scheme, as if the references in subsections (3) and (7) to the trustees or managers of the scheme were references to the responsible authority.
(9) In subsection (8)—
“public service scheme” means—
a pension scheme established under section 1 of the Public Service Pensions Act 2013, or
a statutory pension scheme which is connected with a scheme referred to in paragraph (a) (and for this purpose “statutory pension scheme” and “connected” have the meanings given in that Act);
“responsible authority”, in relation to a public service scheme, means the authority that is the responsible authority for the scheme by virtue of section 2 of, and Schedule 2 to, that Act.
103 Validity of certain alterations to GB salary-related contracted-out pension schemes: wound up schemes and other special cases
(1) This section applies to any potentially remediable alteration purportedly made to the rules of—
(a) a GB scheme, or a part of a GB scheme, which has been wound up before this section comes into force,
(b) a GB scheme, or a part of a GB scheme, for which the Board of the Pension Protection Fund has, before this section comes into force, assumed responsibility in accordance with Chapter 3 of Part 2 of the Pensions Act 2004 (see section 161 of that Act), or
(c) a GB scheme which is a qualifying pension scheme for the purposes of regulation 9 of the Financial Assistance Scheme Regulations 2005 (S.I. 2005/1986) and in respect of which payments are required to be made under section 286 of the Pensions Act 2004.
(2) The alteration is to be treated for all purposes as having met the requirements of paragraph (2)(a) and (b) of regulation 42 before it was purportedly made and so as having always been a valid alteration so far as those requirements are concerned.
104 Powers to amend provisions of Chapter 1 etc: Great Britain
(1) The Secretary of State may by regulations amend any of sections 101, 102 and 103 for the purpose of providing for purported alterations of any specified description to be outside the scope of remediation under either or both of sections 102 and 103.
(2) In subsection (1) “specified” means specified in the regulations; and a specified description of purported alterations may be framed by reference to features of the alterations or of the schemes purportedly altered by them (or a combination of both).
(3) Regulations under subsection (1) are subject to the negative procedure.
(4) The Secretary of State may by regulations make incidental, supplementary, consequential or transitional provision in connection with any provision of this Chapter (other than this section and section 108).
(5) Regulations under subsection (4) may amend any Act passed before or in the same Session as this Act.
(6) Regulations under subsection (4) are subject to the affirmative procedure if they contain provision made under subsection (5); otherwise they are subject to the negative procedure.
(1) The provisions of this section have effect for the purposes of this section and sections 106 to 108.
(2) “NI scheme” means an occupational pension scheme that was a salary-related contracted-out scheme in Northern Ireland; and for this purpose an occupational pension scheme was a salary-related contracted-out scheme in Northern Ireland at any time if the scheme was contracted-out at that time by virtue of satisfying section 5(2) of the Pension Schemes (Northern Ireland) Act 1993 (as it then had effect).
(3) “Scheme actuary”, in relation to an NI scheme, means—
(a) the person for the time being appointed as actuary for the scheme under Article 47 of the Pensions (Northern Ireland) Order 1995 (S.I. 1995/3213 (N.I. 22)) (professional advisers), or
(b) if there is no person so appointed, a Fellow of the Institute and Faculty of Actuaries appointed by the trustees or managers of the scheme to carry out the functions of the scheme actuary under section 106.
(4) “Section 33(1)” refers to section 33(1) of the Pension Schemes (Northern Ireland) Act 1993 (prohibition of alterations to rules of contracted-out schemes in certain circumstances).
(5) “Regulation 42” refers to regulation 42 of the Occupational Pension Schemes (Contracting-out) Regulations (Northern Ireland) 1996 (S.R. (N.I.) 1996 No. 493).
(6) References to non-compliance with the requirements of paragraph (2)(a) and (b) of regulation 42 include non-compliance with the requirement in either paragraph (2)(a) or (2)(b) (as well as with both requirements).
(7) An alteration purporting to have been made to the rules of an NI scheme is a “potentially remediable alteration” if—
(a) by virtue of section 33(1) and paragraphs (1) and (2) of regulation 42 (as they had effect at the time), the alteration could not be made unless the requirements of paragraph (2)(a), (b) and (c) of regulation 42 (as they then had effect) had been met,
(b) it was treated by the trustees or managers of the scheme, after it was purportedly made, as a valid alteration,
(c) no positive action has been taken by the trustees or managers of the scheme on the basis that they consider the alteration to be void (and so of no legal effect) by reason of non-compliance with the requirements of paragraph (2)(a) and (b) of regulation 42, and
(d) it is not excluded from the scope of remediation under sections 106 and 107 (see subsection (9)).
(8) In subsection (7)(c) “positive action”, in relation to the purported alteration, means—
(a) notifying any members of the scheme in writing to the effect that the trustees or managers consider the alteration to be void (by reason of non-compliance with the requirements of paragraph (2)(a) and (b) of regulation 42) and that the scheme will be administered on the basis that it has no legal effect, or
(b) notifying any members of the scheme in writing (in consequence of the trustees or managers being of the view mentioned in subsection (7)(c)) to the effect that the trustees or managers are taking (or have taken) any other step in relation to the administration of the scheme which has (or will have) the effect of altering payments to or in respect of members of the scheme.
(9) An alteration purporting to have been made to the rules of an NI scheme is excluded from the scope of remediation under sections 106 and 107 if any question relating to the validity of the alteration, so far as relating to the requirements of paragraph (2)(a) and (b) of regulation 42—
(a) has, before this section comes into force, been determined by the court in qualifying legal proceedings,
(b) was in issue on or before 5 June 2025 in qualifying legal proceedings, but has been settled by agreement between the parties at any time before this section comes into force, or
(c) was in issue on or before 5 June 2025 in qualifying legal proceedings and remains in issue in those proceedings when this section comes into force.
(10) In subsection (9) “legal proceedings” means proceedings for the determination of a dispute that have been brought before a court in the United Kingdom; and such proceedings are “qualifying legal proceedings” if—
(a) they will determine a dispute as to the rules of the scheme, and
(b) the parties are (or include)—
(i) the trustees or managers of the scheme, and
(ii) one or more members or other beneficiaries of the scheme (or a person acting on behalf of one or more members or other beneficiaries).
106 Validity of certain alterations to NI salary-related contracted-out pension schemes: subsisting schemes
(1) This section applies to any potentially remediable alteration purportedly made to an NI scheme other than a potentially remediable alteration to which section 107 applies.
(2) If the conditions mentioned in subsection (3) are met in relation to it, the alteration is to be treated for all purposes as having met the requirements of paragraph (2)(a) and (b) of regulation 42 before it was purportedly made, and so as having always been a valid alteration so far as those requirements are concerned.
(3) The conditions are—
(a) that the trustees or managers of the scheme have made a request in writing to the scheme actuary for the actuary to consider whether or not, on the assumption that it was validly made, the alteration would have prevented the scheme from continuing to satisfy the statutory standard, and
(b) that the scheme actuary has confirmed to the trustees or managers in writing that in the actuary’s opinion it is reasonable to conclude that, on the assumption that it was validly made, the alteration would not have prevented the scheme from continuing to satisfy the statutory standard.
In this subsection “the statutory standard” means the statutory standard for a contracted-out scheme under section 8A of the Pension Schemes (Northern Ireland) Act 1993 as it had effect at the time the alteration was purportedly made.
(4) A scheme actuary who has received a request as mentioned in subsection (3)(a) in relation to a potentially remediable alteration to a scheme—
(a) may act on the basis of the information available to the actuary, as long as the actuary considers it sufficient for the purpose of forming an opinion on the subject-matter of the request;
(b) may take any professional approach (including making assumptions or relying on presumptions) that is open to the actuary in all the circumstances of the case.
(5) A condition mentioned in subsection (3) may be met by action taken before (as well as action taken after) this section comes into force.
(6) Subsection (7) applies to an NI scheme if —
(a) there is an assessment period in relation to the scheme within the meaning of Part 3 of the Pensions (Northern Ireland) Order 2005 (S.I. 2005/255 (N.I. 1)), or
(b) the scheme is operating as a closed scheme under Article 137 of that Order.
(7) The powers of the Board of the Pension Protection Fund under Article 118 and 139 of the Pensions (Northern Ireland) Order 2005 to give directions include power to give a direction to the trustees or managers of the scheme requiring them—
(a) to make a request under subsection (3)(a) in relation to a potentially remediable alteration to the scheme, and
(b) to take any necessary action to enable or facilitate the making of a decision by the actuary as to whether to give the confirmation described in subsection (3)(b) in relation to that alteration.
(8) This section has effect, in relation to a potentially remediable alteration purportedly made to a public service scheme, as if the references in subsections (3) and (7) to the trustees or managers of the scheme were references to the responsible authority.
(9) In subsection (8)—
“public service scheme” means—
a pension scheme established under section 1 of the Public Service Pensions (Northern Ireland) Act 2014 (2014 c. 2), or
a statutory pension scheme which is connected with a scheme referred to in paragraph (a) (and for this purpose “statutory pension scheme” and “connected” have the meanings given in that Act);
“responsible authority”, in relation to a public service scheme, means the authority that is the responsible authority for the scheme by virtue of section 2 of and Schedule 2 to that Act.
107 Validity of certain alterations to NI salary-related contracted-out pension schemes: wound up schemes and other special cases
(1) This section applies to any potentially remediable alteration purportedly made to the rules of—
(a) an NI scheme, or a part of an NI scheme, which has been wound up before this section comes into force,
(b) an NI scheme, or a part of an NI scheme, for which the Board of the Pension Protection Fund has, before this section comes into force, assumed responsibility in accordance with Chapter 3 of Part 3 of the Pensions (Northern Ireland) Order 2005 (see Article 145 of that Order), or
(c) an NI scheme which is a qualifying pension scheme for the purposes of regulation 9 of the Financial Assistance Scheme Regulations 2005 (S.I. 2005/1986) and in respect of which payments are required to be made under section 286 of the Pensions Act 2004.
(2) The alteration is be treated for all purposes as having met the requirements of paragraph (2)(a) and (b) of regulation 42 before it was purportedly made and so as having always been a valid alteration so far as those requirements are concerned.
108 Powers to amend Chapter 1 etc: Northern Ireland
(1) The Department for Communities in Northern Ireland may by regulations amend any of sections 105, 106 and 107 for the purpose of providing for purported alterations of any specified description to be outside the scope of remediation under either or both of sections 106 and 107.
(2) In subsection (1) “specified” means specified in the regulations; and a specified description of purported alterations may be framed by reference to features of the alterations or of the schemes purportedly altered by them (or a combination of both).
(3) Regulations under subsection (1) are subject to negative resolution.
(4) The Department for Communities in Northern Ireland may by regulations make incidental, supplementary, consequential or transitional provision in connection with any provision of this Chapter (other than section 104 and this section).
(5) Regulations under subsection (4) may amend Northern Ireland legislation, or an Act of Parliament, passed or made before or in the same Session as this Act.
(6) Regulations under subsection (4) which contain provision made under subsection (5)—
(a) must be laid before the Northern Ireland Assembly after being made,
(b) take effect on such date as may be specified in the regulations, and
(c) cease to have effect on the expiry of the period of six months beginning with the day on which they take effect, unless the regulations have been approved during that period by resolution of the Assembly.
Paragraph (c) is without prejudice to the validity of anything done under the regulations or to the making of new regulations.
(7) Regulations under subsection (4) which do not contain provision made under subsection (5) are subject to negative resolution.
(8) In this section “subject to negative resolution” has the meaning given by section 41(6) of the Interpretation Act (Northern Ireland) 1954.
(9) The power of the Department for Communities in Northern Ireland to make regulations under this section is exercisable by statutory rule for the purposes of the Statutory Rules (Northern Ireland) Order 1979 (S.I. 1979/1573 (N.I. 12)).
109 Indexation of periodic compensation for pre-1997 service: Great Britain
(1) Schedule 7 to the Pensions Act 2004 (pension compensation provisions) is amended in accordance with subsections (2) and (3).
(2) In paragraph 28—
(a) for sub-paragraph (2) substitute—
(2) Where a person is entitled to periodic compensation under any of those paragraphs, the person is entitled, on the indexation date, to an increase under this paragraph of—
(a) where sub-paragraph (2A) applies, the aggregate of the amount mentioned in sub-paragraph (2C) and the amount mentioned in sub-paragraph (2E);
(b) where sub-paragraph (2B) applies, the aggregate of the amount mentioned in sub-paragraph (2D) and the amount mentioned in sub-paragraph (2E);
(c) in any other case, the amount mentioned in sub-paragraph (2E).
(2A) This sub-paragraph applies where, immediately before the assessment date—
(a) the admissible rules of the scheme included a requirement for all or any part of so much of the annual rate of a pension in payment under the scheme as is attributable to a person’s pre-1997 service to be increased annually,
(b) that requirement did not apply only in relation to a guaranteed minimum pension provided by the scheme or for the purposes of complying with a GMP equalisation obligation, and
(c) that requirement applied in relation to pre-1997 service in respect of which the compensation is payable.
(2B) This sub-paragraph applies where—
(a) the scheme provided a guaranteed minimum pension that accrued during the GMP indexation period,
(b) that accrual was in relation to GMP indexed service in respect of which the compensation is payable, and
(c) sub-paragraph (2A) does not apply.
(2C) The amount mentioned in this sub-paragraph is—
(a) the appropriate percentage of the amount of the pre-1997 underlying rate immediately before the indexation date, or
(b) where the person first became entitled to the periodic compensation during the period of 12 months ending immediately before that date, 1/12th of that amount for each full month for which the person was so entitled.
(2D) The amount mentioned in this sub-paragraph is—
(a) the appropriate percentage of the amount of the notional pre-1997 underlying rate immediately before the indexation date, or
(b) where the person first became entitled to the periodic compensation during the period of 12 months ending immediately before that date, 1/12th of that amount for each full month for which the person was so entitled.
(2E) The amount mentioned in this sub-paragraph is—
(a) the appropriate percentage of the amount of the post-1997 underlying rate immediately before the indexation date, or
(b) where the person first became entitled to the periodic compensation during the period of 12 months ending immediately before that date, 1/12th of that amount for each full month for which the person was so entitled.
(2F) In any case where it is unclear to the Board whether, immediately before the assessment date, the admissible rules of the scheme included a requirement of the kind mentioned in sub-paragraph (2A)(a), this paragraph has effect as if the scheme included such a requirement.
(2G) In any case where it is unclear to the Board whether, immediately before the assessment date, a requirement of the scheme of a kind mentioned in sub-paragraph (2A)(a) (including such a requirement included by virtue of sub-paragraph (2F)) applied in relation to particular pre-1997 service, this paragraph has effect as if the requirement applied in relation to such service.
(2H) In any case where it is unclear to the Board whether the scheme provided a guaranteed minimum pension that accrued during the GMP indexation period, this paragraph has effect as if the scheme so provided.
(2I) In any case where it is unclear to the Board whether the accrual of a guaranteed minimum pension provided by the scheme (including by virtue of sub-paragraph (2H)) was in relation to particular GMP indexed service, this paragraph has effect as if the accrual was in relation to such service.
;
(b) in sub-paragraph (3)—
(i) in the opening words for “sub-paragraph (2)” substitute “sub-paragraphs (2) to (2E)”;
(ii) for both definitions of “underlying rate” substitute—
“notional pre-1997 underlying rate” means, in the case of periodic compensation under paragraph 3 or 22, the aggregate of—
a prescribed percentage of so much of the amount mentioned in sub-paragraph (3)(a) of the paragraph in question as is attributable to pre-1997 service, and
so much of the amount within sub-paragraph (3)(b) of that paragraph as is referable to the amount within paragraph (a) of this definition immediately before the indexation date;
“notional pre-1997 underlying rate” means, in the case of periodic compensation under paragraph 5, 8, 11 or 15, the aggregate of—
a prescribed percentage of so much of the amount mentioned in sub-paragraph (3)(a) of the paragraph in question as is attributable to pre-1997 service,
a prescribed percentage of so much of the amount mentioned in sub-paragraph (3)(aa) of the paragraph in question as is attributable to pre-1997 service, and
so much of the amount within sub-paragraph (3)(b) of that paragraph as is referable to the amounts within paragraphs (a) and (b) of this definition immediately before the indexation date;
“post-1997 underlying rate” means, in the case of periodic compensation under paragraph 3 or 22, the aggregate of—
so much of the amount mentioned in sub-paragraph (3)(a) of the paragraph in question as is attributable to post-1997 service, and
so much of the amount within sub-paragraph (3)(b) of that paragraph as is referable to the amount within paragraph (a) of this definition immediately before the indexation date;
“post-1997 underlying rate” means, in the case of periodic compensation under paragraph 5, 8, 11 or 15, the aggregate of—
so much of the amount mentioned in sub-paragraph (3)(a) of the paragraph in question as is attributable to post-1997 service,
so much of the amount mentioned in sub-paragraph (3)(aa) of the paragraph in question as is attributable to post-1997 service, and
so much of the amount within sub-paragraph (3)(b) of that paragraph as is referable to the amounts within paragraphs (a) and (b) of this definition immediately before the indexation date;
“pre-1997 underlying rate” means, in the case of periodic compensation under paragraph 3 or 22, the aggregate of—
so much of the amount mentioned in sub-paragraph (3)(a) of the paragraph in question as is attributable to pre-1997 service, and
so much of the amount within sub-paragraph (3)(b) of that paragraph as is referable to the amount within paragraph (a) of this definition immediately before the indexation date;
“pre-1997 underlying rate” means, in the case of periodic compensation under paragraph 5, 8, 11 or 15, the aggregate of—
so much of the amount mentioned in sub-paragraph (3)(a) of the paragraph in question as is attributable to pre-1997 service,
so much of the amount mentioned in sub-paragraph (3)(aa) of the paragraph in question as is attributable to pre-1997 service, and
so much of the amount within sub-paragraph (3)(b) of that paragraph as is referable to the amounts within paragraphs (a) and (b) of this definition immediately before the indexation date.
;
(c) in sub-paragraph (5)—
(i) in paragraph (a), for “sub-paragraph (2), each definition of “underlying rate”” substitute “sub-paragraphs (2C) to (2E), each definition of “notional pre-1997 underlying rate”, “post-1997 underlying rate” and “pre-1997 underlying rate””;
(ii) in paragraph (c), for “sub-paragraph (2), the definition of “underlying rate”” substitute “sub-paragraphs (2C) to (2E), the definition of “notional pre-1997 underlying rate”, the definition of “post-1997 underlying rate” and the definition of “pre-1997 underlying rate””;
(d) in sub-paragraph (6), before the definition of “post-1997 service” insert—
“GMP equalisation obligation” means any obligation under an enactment, a rule of law or the scheme rules which relates to the removal of inequalities as between men and women in respect of the provision of a guaranteed minimum pension;
“GMP indexation period” means the period beginning with 6 April 1988 and ending with 5 April 1997;
“GMP indexed service” means—
pensionable service which is within paragraph 36(4)(a) and occurs during the GMP indexation period, or
pensionable service which is within paragraph 36(4)(b) and meets such requirements as may be prescribed;
“guaranteed minimum pension” has the same meaning as in the Pension Schemes Act 1993 (see section 8(2) of that Act);
;
(e) in sub-paragraph (7), for “and “pre-1997 service”” substitute “, “pre-1997 service” and “GMP indexed service””.
(3) In paragraph 29, for sub-paragraph (2) substitute—
(2) The Board may also determine the percentage that is to be—
(a) the appropriate percentage for the purposes of sub-paragraphs (2C) and (2D) of paragraph 28;
(b) the appropriate percentage for the purposes of sub-paragraph (2E) of that paragraph,
(and where it does so, the definition of “appropriate percentage” in paragraph 28(3) does not apply in relation to the sub-paragraph in question).
(4) Schedule 5 to the Pensions Act 2008 (pension compensation payable on discharge of pension compensation credit) is amended in accordance with subsections (5) and (6).
(5) In paragraph 17—
(a) for sub-paragraph (2) substitute—
(2) Subject to sub-paragraph (3), the transferee is entitled, on each indexation date, to an increase of—
(a) where sub-paragraph (2A) applies, the amount mentioned in sub-paragraph (2E);
(b) where sub-paragraph (2B) applies, the amount mentioned in sub-paragraph (2F);
(c) where sub-paragraph (2C) applies, the amount mentioned in sub-paragraph (2G);
(d) where sub-paragraph (2D) applies, the amount mentioned in sub-paragraph (2H).
(2A) This sub-paragraph applies where—
(a) the transferor's PPF compensation is payable in accordance with paragraph 3, 5, 8, 11, 15 or 22 of Schedule 7 to the Pensions Act 2004 (“the relevant Schedule 7 provisions”), and
(b) immediately before the assessment date—
(i) the admissible rules of the scheme in respect of which that compensation is payable included a requirement for all or any part of so much of the annual rate of a pension in payment under the scheme as is attributable to a person’s pre-1997 service to be increased annually,
(ii) that requirement did not apply only in relation to a guaranteed minimum pension provided by the scheme or for the purposes of complying with a GMP equalisation obligation, and
(iii) that requirement applied in relation to pre-1997 service in respect of which that compensation is payable.
(2B) This sub-paragraph applies where—
(a) the transferor's PPF compensation is payable in accordance with the relevant Schedule 7 provisions,
(b) the scheme in respect of which that compensation is payable provided a guaranteed minimum pension that accrued during the GMP indexation period,
(c) that accrual was in relation to GMP indexed service in respect of which that compensation is payable, and
(d) sub-paragraph (2A) does not apply.
(2C) This sub-paragraph applies where—
(a) the transferor's PPF compensation is payable in accordance with the relevant Schedule 7 provisions, and
(b) neither sub-paragraph (2A) nor sub-paragraph (2B) applies.
(2D) This sub-paragraph applies where the transferor's PPF compensation is payable otherwise than in accordance with the relevant Schedule 7 provisions.
(2E) The amount mentioned in this sub-paragraph is the aggregate of the appropriate percentage of the pre-1997 underlying rate and the appropriate percentage of the post-1997 underlying rate.
(2F) The amount mentioned in this sub-paragraph is the aggregate of the appropriate percentage of the notional pre-1997 underlying rate and the appropriate percentage of the post-1997 underlying rate.
(2G) The amount mentioned in this sub-paragraph is the appropriate percentage of the post-1997 underlying rate.
(2H) The amount mentioned in this sub-paragraph is the appropriate percentage of the general underlying rate.
;
(b) in sub-paragraph (3), for “(2)” substitute “(2E), (2F), (2G) or (2H) (as the case may be)”;
(c) after sub-paragraph (3) insert—
(3A) For the purposes of sub-paragraphs (2A) to (2C)—
(a) in any case where it is unclear to the Board whether, immediately before the assessment date, the admissible rules of the scheme included a requirement of the kind mentioned in sub-paragraph (2A)(b)(i), those sub-paragraphs have effect as if the scheme included such a requirement;
(b) in any case where it is unclear to the Board whether, immediately before the assessment date, a requirement of the scheme of a kind mentioned in sub-paragraph (2A)(b)(i) (including such a requirement included by virtue of paragraph (a)) applied in relation to particular pre-1997 service, those sub-paragraphs have effect as if the requirement applied in relation to such service;
(c) in any case where it is unclear to the Board whether the scheme provided a guaranteed minimum pension that accrued during the GMP indexation period, those sub-paragraphs have effect as if the scheme so provided;
(d) in any case where it is unclear to the Board whether the accrual of a guaranteed minimum pension provided by the scheme (including by virtue of paragraph (c)) was in relation to particular GMP indexed service, those sub-paragraphs have effect as if the accrual was in relation to such service.
;
(d) in sub-paragraph (4)—
(i) in the opening words, for “sub-paragraph (2)” substitute “sub-paragraphs (2) to (2H)”;
(ii) for the definition of “the underlying rate” substitute—
“the general underlying rate”, as at an indexation date, is the aggregate of—
the general indexed proportion of the aggregate of the initial annual rate of compensation and (in the case of compensation payable under paragraph 6), the revaluation amount,
so much of any actuarial increase under paragraph 16A as relates to the amount in paragraph (a), and
so much of any annual increase to which the transferee is entitled under this paragraph in respect of earlier indexation dates as relates to the amounts in paragraphs (a) and (b);
“the notional pre-1997 underlying rate”, as at an indexation date, is the aggregate of—
the notional pre-1997 indexed proportion of the aggregate of the initial annual rate of compensation and (in the case of compensation payable under paragraph 6), the revaluation amount,
so much of any actuarial increase under paragraph 16A as relates to the amount in paragraph (a), and
so much of any annual increase to which the transferee is entitled under this paragraph in respect of earlier indexation dates as relates to the amounts in paragraphs (a) and (b);
“the post-1997 underlying rate”, as at an indexation date, is the aggregate of—
the post-1997 indexed proportion of the aggregate of the initial annual rate of compensation and (in the case of compensation payable under paragraph 6), the revaluation amount,
so much of any actuarial increase under paragraph 16A as relates to the amount in paragraph (a), and
so much of any annual increase to which the transferee is entitled under this paragraph in respect of earlier indexation dates as relates to the amounts in paragraphs (a) and (b);
“the pre-1997 underlying rate”, as at an indexation date, is the aggregate of—
the pre-1997 indexed proportion of the aggregate of the initial annual rate of compensation and (in the case of compensation payable under paragraph 6), the revaluation amount,
so much of any actuarial increase under paragraph 16A as relates to the amount in paragraph (a), and
so much of any annual increase to which the transferee is entitled under this paragraph in respect of earlier indexation dates as relates to the amounts in paragraphs (a) and (b).
;
(e) omit sub-paragraphs (5) and (6);
(f) before sub-paragraph (7) insert—
(6A) For the purposes of paragraph (a) of the definition of “the general underlying rate”, “the general indexed proportion” is such proportion as is determined in accordance with regulations made by the Secretary of State.
(6B) For the purposes of paragraph (a) of the definition of “the notional pre-1997 underlying rate”, “the notional pre-1997 indexed proportion” is such proportion of the amount mentioned in sub-paragraph (3)(a) of the paragraph of Schedule 7 to the Pensions Act 2004 under which the transferor’s PPF compensation is payable that is attributable to pre-1997 service as may be prescribed.
(6C) For the purposes of paragraph (a) of the definition of “the post-1997 underlying rate”, “the post-1997 indexed proportion” is the proportion of the amount mentioned in sub-paragraph (3)(a) of the paragraph of that Schedule under which the transferor’s PPF compensation is payable that is attributable to post-1997 service.
(6D) For the purposes of paragraph (a) of the definition of “the pre-1997 underlying rate”, “the pre-1997 indexed proportion” is the proportion of the amount mentioned in sub-paragraph (3)(a) of the paragraph of that Schedule under which the transferor’s PPF compensation is payable that is attributable to pre-1997 service.
;
(g) in sub-paragraph (7), for ““the underlying rate”” substitute ““the general underlying rate”, the definition of “the notional pre-1997 underlying rate”, the definition of “the post-1997 underlying rate” and the definition of “the pre-1997 underlying rate””;
(h) in sub-paragraph (9), for the definition of “post-1997 service” substitute—
“GMP equalisation obligation” has the same meaning as in paragraph 28 of Schedule 7 to the Pensions Act 2004 (annual increase in periodic pension compensation);
“GMP indexation period” means the period beginning with 6 April 1988 and ending with 5 April 1997;
“guaranteed minimum pension” has the same meaning as in the Pension Schemes Act 1993 (see section 8(2) of that Act);
“post-1997 service”, “pre-1997 service” and “GMP indexed service” have the same meaning as in paragraph 28 of Schedule 7 to the Pensions Act 2004;
“the assessment date” and “admissible rules”, in relation to a pension scheme, have the same meaning as in that Schedule (see paragraphs 2 and 35 of that Schedule);
.
(6) In paragraph 20, in sub-paragraph (1)(b), for “for the purposes of paragraph 17(2)” substitute
—
(i) of the pre-1997 underlying rate and of the notional pre-1997 underlying rate for the purposes of sub-paragraphs (2E) and (2F) of paragraph 17;
(ii) of the post-1997 underlying rate for the purposes of sub-paragraphs (2E), (2F) and (2G) of that paragraph;
(iii) of the general underlying rate for the purposes of sub-paragraph (2H) of that paragraph.