Welfare Reform and Pensions Act 1999 (c. 30)

(The document as of February, 2008)

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(5) The power conferred by subsection (4) includes power to provide for calculation or verification--

(a) in such manner as may, in the particular case, be approved by a prescribed person; or

(b) in accordance with guidance--

(i) from time to time prepared by a prescribed person, and

(ii) approved by the Secretary of State.

(6) References in the recovery provisions to the person responsible for a pension arrangement are to--

(a) the trustees, managers or provider of the arrangement, or

(b) the person having functions in relation to the arrangement corresponding to those of a trustee, manager or provider.

(7) In this section and sections 36A and 36B--

"the recovery provisions" means this section and sections 36A and 36B;
"regulations" means regulations made by the Secretary of State.

(8) Regulations under the recovery provisions may contain such incidental, supplemental and transitional provisions as appear to the Secretary of State necessary or expedient. "

Miscellaneous

17 Compensating occupational pension schemes

(1) In subsection (1)(d) of section 81 of the [1995 c. 26.] Pensions Act 1995 (compensation not payable by the Pensions Compensation Board unless assets of salary-related trust scheme worth less than 90 per cent. of its liabilities), for "90 per cent. of the amount of the liabilities of the scheme" there shall be substituted "the protection level".

(2) After subsection (2) of that section there shall be inserted--

" (2A) In subsection (1)(d) "the protection level" means the aggregate of--

(a) the amount of the liabilities of the scheme to, or in respect of, its pensioner members and such other of its members as fall within a prescribed class or description,

(b) 90 per cent. of the amount of the liabilities of the scheme to, or in respect of, any other members of the scheme, and

and references in this subsection to liabilities to, or in respect of, members of the scheme are references to liabilities in respect of pensions or other benefits. "

(3) Section 83 of that Act (amount of compensation) shall be amended as follows.

(4) In subsection (3)(a) (compensation not to exceed 90 per cent. of shortfall), the words "90 per cent. of" shall be omitted.

(5) In subsection (3)(b) (compensation not to cause value of salary-related trust scheme's assets to exceed 90 per cent. of amount of its liabilities), for the words from "90 per cent." onwards there shall be substituted "the aggregate of the protected liabilities."

(6) After subsection (3) there shall be added--

" (4) In subsection (3) "the protected liabilities" means--

(a) the amount on the settlement date of the liabilities of the scheme to, or in respect of, its pensioner members and such other of its members as fall within a prescribed class or description,

(b) 90 per cent. of the amount on that date of the liabilities of the scheme to, or in respect of, any other members of the scheme, and

(c) the amount on that date of the liabilities of the scheme which are not liabilities to, or in respect of, its members;

and references in this subsection to liabilities to, or in respect of, members of the scheme are to liabilities in respect of pensions or other benefits. "

18 Miscellaneous amendments

Schedule 2 (which contains amendments of the law relating to pensions) shall have effect.

Part III Pensions on divorce etc.

Pension sharing orders

19 Orders in England and Wales

Schedule 3 (which amends the [1973 c. 18.] Matrimonial Causes Act 1973 for the purpose of enabling the court to make pension sharing orders in connection with proceedings in England and Wales for divorce or nullity of marriage, and for supplementary purposes) shall have effect.

20 Orders in Scotland

(1) The [1985 c. 37.] Family Law (Scotland) Act 1985 shall be amended as follows.

(2) In section 8(1) (orders for financial provision), after paragraph (b) there shall be inserted--

" (baa) a pension sharing order. "

(3) In section 27 (interpretation), in subsection (1), there shall be inserted at the appropriate place--

" "pension sharing order" is an order which--

(a) provides that one party's--

(i)

shareable rights under a specified pension arrangement, or

(ii)

shareable state scheme rights,

be subject to pension sharing for the benefit of the other party, and

(b) specifies the percentage value, or the amount, to be transferred; " .

(4) In that section, after subsection (1) there shall be inserted--

" (1A) In subsection (1), in the definition of "pension sharing order"--

(a) the reference to shareable rights under a pension arrangement is to rights in relation to which pension sharing is available under Chapter I of Part IV of the Welfare Reform and Pensions Act 1999, or under corresponding Northern Ireland legislation, and

(b) the reference to shareable state scheme rights is to rights in relation to which pension sharing is available under Chapter II of Part IV of the Welfare Reform and Pensions Act 1999, or under corresponding Northern Ireland legislation. "

Sections 25B to 25D of the Matrimonial Causes Act 1973

21 Amendments

Schedule 4 (which amends the sections about pensions inserted in the [1973 c. 18.] Matrimonial Causes Act 1973 by section 166 of the [1995 c. 26.] Pensions Act 1995) shall have effect.

22 Extension to overseas divorces etc

(1) Part III of the [1984 c. 42.] Matrimonial and Family Proceedings Act 1984 (financial relief in England and Wales after overseas divorce etc.) shall be amended as follows.

(2) In section 18 (matters to which the court is to have regard in exercising its powers to make orders for financial relief), after subsection (3) there shall be inserted--

" (3A) The matters to which the court is to have regard under subsection (3) above--

(a) so far as relating to paragraph (a) of section 25(2) of the 1973 Act, include any benefits under a pension arrangement which a party to the marriage has or is likely to have (whether or not in the foreseeable future), and

(b) so far as relating to paragraph (h) of that provision, include any benefits under a pension arrangement which, by reason of the dissolution or annulment of the marriage, a party to the marriage will lose the chance of acquiring. "

(3) In that section, at the end there shall be added--

" (7) In this section--

(a) "pension arrangement" has the meaning given by section 25D(3) of the 1973 Act, and

(b) references to benefits under a pension arrangement include any benefits by way of pension, whether under a pension arrangement or not. "

(4) In section 21 (application of provisions of Part II of the [1973 c. 18.] Matrimonial Causes Act 1973), the existing provision shall become subsection (1) and, in that subsection, after paragraph (b) there shall be inserted--

" (bd) section 25B(3) to (7B) (power, by financial provision order, to attach payments under a pension arrangement, or to require the exercise of a right of commutation under such an arrangement);

(be) section 25C (extension of lump sum powers in relation to death benefits under a pension arrangement); " .

(5) In that section, after subsection (1) there shall be inserted--

" (2) Subsection (1)(bd) and (be) above shall not apply where the court has jurisdiction to entertain an application for an order for financial relief by reason only of the situation in England or Wales of a dwelling-house which was a matrimonial home of the parties.

(3) Section 25D(1) of the 1973 Act (effect of transfers on orders relating to rights under a pension arrangement) shall apply in relation to an order made under section 17 above by virtue of subsection (1)(bd) or (be) above as it applies in relation to an order made under section 23 of that Act by virtue of section 25B or 25C of the 1973 Act.

(4) The Lord Chancellor may by regulations make for the purposes of this Part of this Act provision corresponding to any provision which may be made by him under subsections (2) to (2B) of section 25D of the 1973 Act.

(5) Power to make regulations under this section shall be exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament. "

Miscellaneous

23 Supply of pension information in connection with divorce etc

(1) The Secretary of State may by regulations--

(a) make provision imposing on the person responsible for a pension arrangement, or on the Secretary of State, requirements with respect to the supply of information relevant to any power with respect to--

(i) financial relief under Part II of the [1973 c. 18] Matrimonial Causes Act 1973 or Part III of the [1984 c. 42.] Matrimonial and Family Proceedings Act 1984 (England and Wales powers in relation to domestic and overseas divorce etc.),

(ii) financial provision under the [1985 c. 37.] Family Law (Scotland) Act 1985 or Part IV of the Matrimonial and Family Proceedings Act 1984 (corresponding Scottish powers), or

(iii) financial relief under Part III of the [S.I. 1978/1045 (N.I. 15).] Matrimonial Causes (Northern Ireland) Order 1978 or Part IV of the [S.I. 1989/677 (N.I. 4).] Matrimonial and Family Proceedings (Northern Ireland) Order 1989 (corresponding Northern Ireland powers);

(b) make provision about calculation and verification in relation to the valuation of--

(i) benefits under a pension arrangement, or

(ii) shareable state scheme rights,

for the purposes of regulations under paragraph (a)(i) or (iii);

(i) the valuation of shareable rights under a pension arrangement or shareable state scheme rights for the purposes of regulations under paragraph (a)(ii), so far as relating to the making of orders for financial provision (within the meaning of the [1985 c. 37.] Family Law (Scotland) Act 1985), or

(ii) the valuation of benefits under a pension arrangement for the purposes of such regulations, so far as relating to the making of orders under section 12A of that Act;

(d) make provision for the purpose of enabling the person responsible for a pension arrangement to recover prescribed charges in respect of providing information in accordance with regulations under paragraph (a).

(2) Regulations under subsection (1)(b) or (c) may include provision for calculation or verification in accordance with guidance from time to time prepared by a person prescribed by the regulations.

(3) Regulations under subsection (1)(d) may include provision for the application in prescribed circumstances, with or without modification, of any provision made by virtue of section 41(2).

(4) In subsection (1)--

(a) the reference in paragraph (c)(i) to shareable rights under a pension arrangement is to rights in relation to which pension sharing is available under Chapter I of Part IV, or under corresponding Northern Ireland legislation, and

(b) the references to shareable state scheme rights are to rights in relation to which pension sharing is available under Chapter II of Part IV, or under corresponding Northern Ireland legislation.

24 Charges by pension arrangements in relation to earmarking orders

The Secretary of State may by regulations make provision for the purpose of enabling the person responsible for a pension arrangement to recover prescribed charges in respect of complying with--

(a) an order under section 23 of the [1973 c. 18.] Matrimonial Causes Act 1973 (financial provision orders in connection with divorce etc.), so far as it includes provision made by virtue of section 25B or 25C of that Act (powers to include provision about pensions),

(b) an order under section 12A(2) or (3) of the [1985 c. 37.] Family Law (Scotland) Act 1985 (powers in relation to pensions lump sums when making a capital sum order), or

(c) an order under Article 25 of the [S.I. 1978/1045 (N.I. 15).] Matrimonial Causes (Northern Ireland) Order 1978, so far as it includes provision made by virtue of Article 27B or 27C of that Order (Northern Ireland powers corresponding to those mentioned in paragraph (a)).

Supplementary

25 Power to make consequential amendments of Part III

(1) If any amendment by the [1996 c. 27.] Family Law Act 1996 of Part II or IV of the [1973 c. 18.] Matrimonial Causes Act 1973 comes into force before the day on which any provision of this Part comes into force, the Lord Chancellor may by order make such consequential amendment of that provision as he thinks fit.

(2) No order under this section may be made unless a draft of the order has been laid before and approved by resolution of each House of Parliament.

26 Interpretation of Part III

(1) In this Part--

"occupational pension scheme" has the same meaning as in the [1993 c. 48.] Pension Schemes Act 1993;
"pension arrangement" means
(a)
an occupational pension scheme,
(b)
a personal pension scheme,
(c)
a retirement annuity contract,
(d)
an annuity or insurance policy purchased, or transferred, for the purpose of giving effect to rights under an occupational pension scheme or a personal pension scheme, and
(e)
an annuity purchased, or entered into, for the purpose of discharging liability in respect of a pension credit under section 29(1)(b) or under corresponding Northern Ireland legislation;
"personal pension scheme" has the same meaning as in the Pension Schemes Act 1993;
"prescribed" means prescribed by regulations made by the Secretary of State;
"retirement annuity contract" means a contract or scheme approved under Chapter III of Part XIV of the [1988 c. 1.] Income and Corporation Taxes Act 1988;
"trustees or managers", in relation to an occupational pension scheme or a personal pension scheme, means--
(a)
in the case of a scheme established under a trust, the trustees of the scheme, and
(b)
in any other case, the managers of the scheme.

(2) References to the person responsible for a pension arrangement are--

(a) in the case of an occupational pension scheme or a personal pension scheme, to the trustees or managers of the scheme,

(b) in the case of a retirement annuity contract or an annuity falling within paragraph (d) or (e) of the definition of "pension arrangement" above, the provider of the annuity, and

Part IV Pension sharing

Chapter I Sharing of rights under pension arrangements

Pension sharing mechanism

27 Scope of mechanism

(1) Pension sharing is available under this Chapter in relation to a person's shareable rights under any pension arrangement other than an excepted public service pension scheme.

(2) For the purposes of this Chapter, a person's shareable rights under a pension arrangement are any rights of his under the arrangement, other than rights of a description specified by regulations made by the Secretary of State.

(3) For the purposes of subsection (1), a public service pension scheme is excepted if it is specified by order made by such Minister of the Crown or government department as may be designated by the Treasury as having responsibility for the scheme.

28 Activation of pension sharing

(1) Section 29 applies on the taking effect of any of the following relating to a person's shareable rights under a pension arrangement--

(a) a pension sharing order under the [1973 c. 18.] Matrimonial Causes Act 1973,

(b) provision which corresponds to the provision which may be made by such an order and which--

(i) is contained in a qualifying agreement between the parties to a marriage, and

(ii) takes effect on the dissolution of the marriage under the [1996 c. 27.] Family Law Act 1996,

(i) is contained in a qualifying agreement between the parties to a marriage or former marriage, and

(ii) takes effect after the dissolution of the marriage under the [1996 c. 27.] Family Law Act 1996,

(d) an order under Part III of the [1984 c. 42.] Matrimonial and Family Proceedings Act 1984 (financial relief in England and Wales in relation to overseas divorce etc.) corresponding to such an order as is mentioned in paragraph (a),

(e) a pension sharing order under the [1985 c. 37.] Family Law (Scotland) Act 1985,

(f) provision which corresponds to the provision which may be made by such an order and which--

(i) is contained in a qualifying agreement between the parties to a marriage,

(ii) is in such form as the Secretary of State may prescribe by regulations, and

(iii) takes effect on the grant, in relation to the marriage, of decree of divorce under the [1976 c. 39.] Divorce (Scotland) Act 1976 or of declarator of nullity,

(g) an order under Part IV of the [1984 c. 42.] Matrimonial and Family Proceedings Act 1984 (financial relief in Scotland in relation to overseas divorce etc.) corresponding to such an order as is mentioned in paragraph (e),

(h) a pension sharing order under Northern Ireland legislation, and

(i) an order under Part IV of the [S.I. 1989/677 (N.I. 4).] Matrimonial and Family Proceedings (Northern Ireland) Order 1989 (financial relief in Northern Ireland in relation to overseas divorce etc.) corresponding to such an order as is mentioned in paragraph (h).

(2) For the purposes of subsection (1)(b) and (c), a qualifying agreement is one which--

(a) has been entered into in such circumstances as the Lord Chancellor may prescribe by regulations, and

(b) satisfies such requirements as the Lord Chancellor may so prescribe.

(3) For the purposes of subsection (1)(f), a qualifying agreement is one which--

(a) has been entered into in such circumstances as the Secretary of State may prescribe by regulations, and

(b) is registered in the Books of Council and Session.

(4) Subsection (1)(b) does not apply if--

(a) the pension arrangement to which the provision relates is the subject of a pension sharing order under the [1973 c. 18.] Matrimonial Causes Act 1973 in relation to the marriage, or

(b) there is in force a requirement imposed by virtue of section 25B or 25C of that Act (powers to include in financial provision orders requirements relating to benefits under pension arrangements) which relates to benefits or future benefits to which the party who is the transferor is entitled under the pension arrangement to which the provision relates.

(5) Subsection (1)(c) does not apply if--

(a) the marriage was dissolved by an order under section 3 of the [1996 c. 27.] Family Law Act 1996 (divorce not preceded by separation) and the satisfaction of the requirements of section 9(2) of that Act (settlement of future financial arrangements) was a precondition to the making of the order,

(b) the pension arrangement to which the provision relates--

(i) is the subject of a pension sharing order under the [1973 c. 18.] Matrimonial Causes Act 1973 in relation to the marriage, or

(ii) has already been the subject of pension sharing between the parties, or

(c) there is in force a requirement imposed by virtue of section 25B or 25C of that Act which relates to benefits or future benefits to which the party who is the transferor is entitled under the pension arrangement to which the provision relates.

(6) Subsection (1)(f) does not apply if there is in force an order under section 12A(2) or (3) of the [1985 c. 37.] Family Law (Scotland) Act 1985 which relates to benefits or future benefits to which the party who is the transferor is entitled under the pension arrangement to which the provision relates.

(7) For the purposes of this section, an order or provision falling within subsection (1)(e), (f) or (g) shall be deemed never to have taken effect if the person responsible for the arrangement to which the order or provision relates does not receive before the end of the period of 2 months beginning with the relevant date--

(a) copies of the relevant matrimonial documents, and

(b) such information relating to the transferor and transferee as the Secretary of State may prescribe by regulations under section 34(1)(b)(ii).

(8) The relevant date for the purposes of subsection (7) is--

(a) in the case of an order or provision falling within subsection (1)(e) or (f), the date of the extract of the decree or declarator responsible for the divorce or annulment to which the order or provision relates, and

(b) in the case of an order falling within subsection (1)(g), the date of disposal of the application under section 28 of the [1984 c. 42.] Matrimonial and Family Proceedings Act 1984.

(9) The reference in subsection (7)(a) to the relevant matrimonial documents is--

(a) in the case of an order falling within subsection (1)(e) or (g), to copies of the order and the order, decree or declarator responsible for the divorce or annulment to which it relates, and

(b) in the case of provision falling within subsection (1)(f), to--

(i) copies of the provision and the order, decree or declarator responsible for the divorce or annulment to which it relates, and

(ii) documentary evidence that the agreement containing the provision is one to which subsection (3)(a) applies.

(10) The sheriff may, on the application of any person having an interest, make an order--

(a) extending the period of 2 months referred to in subsection (7), and

(b) if that period has already expired, providing that, if the person responsible for the arrangement receives the documents and information concerned before the end of the period specified in the order, subsection (7) is to be treated as never having applied.

(11) In subsections (4)(b), (5)(c) and (6), the reference to the party who is the transferor is to the party to whose rights the provision relates.

29 Creation of pension debits and credits

(1) On the application of this section--

(a) the transferor's shareable rights under the relevant arrangement become subject to a debit of the appropriate amount, and

(b) the transferee becomes entitled to a credit of that amount as against the person responsible for that arrangement.

(2) Where the relevant order or provision specifies a percentage value to be transferred, the appropriate amount for the purposes of subsection (1) is the specified percentage of the cash equivalent of the relevant benefits on the valuation day.

(3) Where the relevant order or provision specifies an amount to be transferred, the appropriate amount for the purposes of subsection (1) is the lesser of--

(a) the specified amount, and

(b) the cash equivalent of the relevant benefits on the valuation day.

(4) Where the relevant arrangement is an occupational pension scheme and the transferor is in pensionable service under the scheme on the transfer day, the relevant benefits for the purposes of subsections (2) and (3) are the benefits or future benefits to which he would be entitled under the scheme by virtue of his shareable rights under it had his pensionable service terminated immediately before that day.

(5) Otherwise, the relevant benefits for the purposes of subsections (2) and (3) are the benefits or future benefits to which, immediately before the transfer day, the transferor is entitled under the terms of the relevant arrangement by virtue of his shareable rights under it.

(6) The Secretary of State may by regulations provide for any description of benefit to be disregarded for the purposes of subsection (4) or (5).

(7) For the purposes of this section, the valuation day is such day within the implementation period for the credit under subsection (1)(b) as the person responsible for the relevant arrangement may specify by notice in writing to the transferor and transferee.

(8) In this section--

"relevant arrangement" means the arrangement to which the relevant order or provision relates;
"relevant order or provision" means the order or provision by virtue of which this section applies;
"transfer day" means the day on which the relevant order or provision takes effect;
"transferor" means the person to whose rights the relevant order or provision relates;
"transferee" means the person for whose benefit the relevant order or provision is made.

30 Cash equivalents

(1) The Secretary of State may by regulations make provision about the calculation and verification of cash equivalents for the purposes of section 29.

(2) The power conferred by subsection (1) includes power to provide for calculation or verification--

(a) in such manner as may, in the particular case, be approved by a person prescribed by the regulations, or

(b) in accordance with guidance from time to time prepared by a person so prescribed.

Pension debits

31 Reduction of benefit

(1) Subject to subsection (2), where a person's shareable rights under a pension arrangement are subject to a pension debit, each benefit or future benefit--

(a) to which he is entitled under the arrangement by virtue of those rights, and

(b) which is a qualifying benefit,

is reduced by the appropriate percentage.

(2) Where a pension debit relates to the shareable rights under an occupational pension scheme of a person who is in pensionable service under the scheme on the transfer day, each benefit or future benefit--

(a) to which the person is entitled under the scheme by virtue of those rights, and

(b) which corresponds to a qualifying benefit,

is reduced by an amount equal to the appropriate percentage of the corresponding qualifying benefit.

(3) A benefit is a qualifying benefit for the purposes of subsections (1) and (2) if the cash equivalent by reference to which the amount of the pension debit is determined includes an amount in respect of it.

(4) The provisions of this section override any provision of a pension arrangement to which they apply to the extent that the provision conflicts with them.

(5) In this section--

"appropriate percentage", in relation to a pension debit, means--
(a)
if the relevant order or provision specifies the percentage value to be transferred, that percentage;
(b)
if the relevant order or provision specifies an amount to be transferred, the percentage which the appropriate amount for the purposes of subsection (1) of section 29 represents of the amount mentioned in subsection (3)(b) of that section;
"relevant order or provision", in relation to a pension debit, means the pension sharing order or provision on which the debit depends;
"transfer day", in relation to a pension debit, means the day on which the relevant order or provision takes effect.

32 Effect on contracted-out rights

(1) The [1993 c. 48.] Pension Schemes Act 1993 shall be amended as follows.

(2) In section 10 (protected rights), in subsection (1), for "subsections (2) and (3)" there shall be substituted "the following provisions of this section", and at the end there shall be added--

" (4) Where, in the case of a scheme which makes such provision as is mentioned in subsection (2) or (3), a member's rights under the scheme become subject to a pension debit, his protected rights shall exclude the appropriate percentage of the rights which were his protected rights immediately before the day on which the pension debit arose.

(5) For the purposes of subsection (4), the appropriate percentage is--

(a) if the order or provision on which the pension debit depends specifies the percentage value to be transferred, that percentage;

(b) if the order or provision on which the pension debit depends specifies an amount to be transferred, the percentage which the appropriate amount for the purposes of subsection (1) of section 29 of the Welfare Reform and Pensions Act 1999 (lesser of specified amount and cash equivalent of transferor's benefits) represents of the amount mentioned in subsection (3)(b) of that section (cash equivalent of transferor's benefits). "

(3) After section 15 there shall be inserted--

" 15A Reduction of guaranteed minimum in consequence of pension debit

(1) Where--

(a) an earner has a guaranteed minimum in relation to the pension provided by a scheme, and

(b) his right to the pension becomes subject to a pension debit,

his guaranteed minimum in relation to the scheme is, subject to subsection (2), reduced by the appropriate percentage.

(2) Where the earner is in pensionable service under the scheme on the day on which the order or provision on which the pension debit depends takes effect, his guaranteed minimum in relation to the scheme is reduced by an amount equal to the appropriate percentage of the corresponding qualifying benefit.

(3) For the purposes of subsection (2), the corresponding qualifying benefit is the guaranteed minimum taken for the purpose of calculating the cash equivalent by reference to which the amount of the pension debit is determined.

(4) For the purposes of this section the appropriate percentage is--

(a) if the order or provision on which the pension debit depends specifies the percentage value to be transferred, that percentage;

(4) In section 47 (entitlement to guaranteed minimum pensions for the purposes of the relationship with social security benefits), at the end there shall be added--

" (6) For the purposes of section 46, a person shall be treated as entitled to any guaranteed minimum pension to which he would have been entitled but for any reduction under section 15A. "

(5) In section 181(1), there shall be inserted at the appropriate place--

" "pension debit" means a debit under section 29(1)(a) of the Welfare Reform and Pensions Act 1999; " .

Pension credits

33 Time for discharge of liability

(1) A person subject to liability in respect of a pension credit shall discharge his liability before the end of the implementation period for the credit.

(2) Where the trustees or managers of an occupational pension scheme have not done what is required to discharge their liability in respect of a pension credit before the end of the implementation period for the credit--

(a) they shall, except in such cases as the Secretary of State may prescribe by regulations, notify the Regulatory Authority of that fact within such period as the Secretary of State may so prescribe, and

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