Welfare Reform and Pensions Act 1999 (c. 30)

(The document as of February, 2008)

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(4) Section 68 of the 1995 Act (as so applied) shall have effect as if the purposes specified in subsection (2) included enabling the conditions set out in section 1 to be fulfilled in relation to the scheme.

(5) Section 124(1) of the 1995 Act (as so applied) shall have effect as if the definition of "member" were omitted.

2 (1) Sections 98 to 100 of the 1995 Act (gathering information: the Authority) shall apply as if any pension scheme which--

(a) is not an occupational pension scheme, but

(b) is or has been registered under section 2,

were an occupational pension scheme.

(2) Section 99 of the 1995 Act (as applied by sub-paragraph (1)) shall have effect as if the regulatory provisions, for the purposes of subsection (1) of that section, were--

(a) provisions made by or under the provisions specified in paragraph 1(2), other than section 110 of the 1995 Act;

(b) sections 111, 115 and 116 of that Act;

(d) sections 1 and 2(4) to (6).

(3) Section 100 of the 1995 Act (as so applied) shall have effect as if the references in subsections (1)(c)(i) and (4)(b) to that Act included references to section 2(5).

(4) Any reference in this paragraph or paragraph 3 which is or includes a reference to, or to any subsection of, section 1 or 2 includes a reference to any provision in force in Northern Ireland corresponding to that section or (as the case may be) that subsection; and the reference in sub-paragraph (1) to any pension scheme includes a personal pension scheme (as well as an occupational scheme) within the meaning of the [1993 c. 49.] Pension Schemes (Northern Ireland) Act 1993.

3 (1) Section 99 of the 1995 Act shall have effect in relation to any occupational pension scheme which is or has been registered under section 2 as if the regulatory provisions for the purposes of subsection (1) of section 99 included sections 1 and 2(4) to (6).

(2) Section 100 of the 1995 Act shall have effect in relation to any occupational pension scheme which is or has been registered under section 2 as if the references in subsections (1)(c)(i) and (4)(b) to that Act included references to section 2(5).

Section 18.

SCHEDULE 2 Pensions: miscellaneous amendments

Income payments orders against pension payments

1 In section 32(2) of the [1985 c. 66.] Bankruptcy (Scotland) Act 1985 (vesting of estate, and dealings of debtor, after sequestration), at the beginning insert "Notwithstanding anything in section 11 or 12 of the Welfare Reform and Pensions Act 1999,".

2 In section 310(7) of the [1986 c. 45.] Insolvency Act 1986 (bankrupt's income against which income payments orders may be made includes certain payments under pension schemes), after "employment and" insert "(despite anything in section 11 or 12 of the Welfare Reform and Pensions Act 1999)".

Extended meaning of "personal pension scheme"

3 (1) In the [1993 c. 48.] Pension Schemes Act 1993--

(a) in section 1 (categories of pension schemes), in the definition of "personal pension scheme", for "employed earners" substitute "earners (whether employed or self-employed)"; and

(b) in section 181(1) (general interpretation), for the definition of "employed earner" substitute--

" "employed earner" and "self-employed earner" have the meanings given by section 2 of the [1992 c. 4.] Social Security Contributions and Benefits Act 1992; " .

(2) In consequence of sub-paragraph (1), the following provisions of that Act shall cease to have effect, namely--

(a) in subsection (2)(a)(ii) of section 73 (short service benefit), the words "or a self-employed pension arrangement" and "or arrangement";

(b) in subsection (2)(a) of section 96 (exercise of option under section 95), sub-paragraph (iii) and the word "or" immediately preceding that sub-paragraph; and

Revaluation of earnings factors: meaning of "relevant year"

4 In section 16(5) of the [1993 c. 48.] Pension Schemes Act 1993 (revaluation of earnings factors for purposes of section 14: early leavers etc.), for the definition of "relevant year" substitute--

" "relevant year" means any tax year in the earner's working life, " .

Interim arrangements

5 (1) Section 28 of the [1993 c. 48.] Pension Schemes Act 1993 (ways of giving effect to protected rights) is amended as follows.

(2) In subsection (1)--

(a) omit paragraph (aa) (but not the final "and"); and

(b) in paragraph (b), for "permitted" substitute "provided for".

(3) For subsection (1A) substitute--

" (1A) Where the scheme is a personal pension scheme which provides for the member to elect to receive payments in accordance with this subsection, and the member so elects, effect shall be given to his protected rights during the interim period by the making of payments under an interim arrangement which--

(a) complies with section 28A, and

(b) satisfies such conditions as may be prescribed;

and in such a case subsections (2) to (4) accordingly apply as regards giving effect to his protected rights as from the end of that period. "

(4) In subsection (3) for "(1A)(a) or" substitute "(1A) or".

Effect of certain orders on guaranteed minimum pensions

6 In section 47 of the Pension Schemes Act 1993 (entitlement to guaranteed minimum pension for the purposes of the relationship with social security benefits), after subsection (6) (which is inserted by section 32(4) of this Act) add--

" (7) 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 order under section 342A of the [1986 c. 45.] Insolvency Act 1986 (recovery of excessive pension contributions) or under section 36A of the [1985 c. 66.] Bankruptcy (Scotland) Act 1985. "

Mandatory payment of contributions equivalent premiums

7 (1) In section 55 of the [1993 c. 48.] Pension Schemes Act 1993 (contributions equivalent premiums)--

(a) in subsection (2), after "the prescribed person" insert "shall, if subsection (2B) applies, pay and otherwise";

(b) in subsection (2A), omit the words following paragraph (e); and

" (2B) Except in prescribed circumstances, this subsection applies in any case where the earner has no accrued right to any benefit under the scheme.

(2C) Where a contributions equivalent premium is required to be paid in respect of an earner by virtue of subsection (2), the prescribed person must notify the Inland Revenue of that fact within the prescribed period and in the prescribed manner. "

(2) In section 51 of the [1993 c. 49.] Pension Schemes (Northern Ireland) Act 1993 (contributions equivalent premiums)--

(a) in subsection (2), after "the prescribed person" insert "shall, if subsection (2B) applies, pay and otherwise";

(b) in subsection (2A), omit the words following paragraph (e); and

" (2B) Except in prescribed circumstances, this subsection applies in any case where the earner has no accrued right to any benefit under the scheme.

Payment by Secretary of State of unpaid pension contributions

8 (1) Paragraph 2 of Schedule 4 to the [1993 c. 48.] Pension Schemes Act 1993 (priority in bankruptcy for amounts paid by Secretary of State in respect of unpaid pension contributions) is amended as follows.

(2) For sub-paragraphs (1) to (3) substitute--

" (1) This Schedule applies to any sum owed on account of an employer's contributions to a salary related contracted-out scheme which were payable in the period of 12 months immediately preceding the relevant date.

(1A) The amount of the debt having priority by virtue of sub-paragraph (1) shall be taken to be an amount equal to the appropriate amount.

(2) This Schedule applies to any sum owed on account of an employer's minimum payments to a money purchase contracted-out scheme falling to be made in the period of 12 months immediately preceding the relevant date.

(3) In so far as payments cannot from the terms of the scheme be identified as falling within sub-paragraph (2), the amount of the debt having priority by virtue of that sub-paragraph shall be taken to be an amount equal to the appropriate amount.

(3A) In sub-paragraph (1A) or (3) "the appropriate amount" means the aggregate of--

(a) the percentage for non-contributing earners of the total reckonable earnings paid or payable, in the period of 12 months referred to in sub-paragraph (1) or (2) (as the case may be), to or for the benefit of non-contributing earners; and

(b) the percentage for contributing earners of the total reckonable earnings paid or payable, in that period, to or for the benefit of contributing earners. "

(3) In sub-paragraph (4), for "sub-paragraph (3)" substitute "sub-paragraph (3A)".

Supervision by the Occupational Pensions Regulatory Authority

9 In section 3(2)(b) of the [1995 c. 26.] Pensions Act 1995 (power of Authority to remove pension scheme trustee to whom section 3 applies by virtue of any other provision of Part I of the Act), for "this Part" substitute "this or any other Act".

10 In section 8(4) of the [1995 c. 26.] Pensions Act 1995 (provision which may be contained in orders made by the Authority appointing pension scheme trustees), omit the word "or" at the end of paragraph (a).

11 In section 10 of the [1995 c. 26.] Pensions Act 1995 (imposition of civil penalties by the Authority), after subsection (8) insert--

" (8A) Any penalty recoverable under this section--

(a) shall, if a county court so orders, be recoverable by execution issued from the county court or otherwise as if it were payable under an order of that court; and

(b) may be enforced as if it were an extract registered decree arbitral bearing a warrant for execution issued by the sheriff court of any sheriffdom in Scotland. "

Occupational pension schemes: institutions who may hold money deposited by trustees etc.

12 (1) Section 49 of the Pensions Act 1995 (other responsibilities of trustees, employers, etc.) is amended as follows.

(2) In each of subsections (1) and (5) (money to be kept by trustees or employers in accounts with institutions authorised under the [1987 c. 22.] Banking Act 1987), for "an institution authorised under the Banking Act 1987" substitute "a relevant institution".

(3) After subsection (1) insert--

" (1A) In this section "relevant institution" means--

(a) an institution authorised under the Banking Act 1987;

(b) an institution within any of paragraphs 1 to 6 of Schedule 2 to that Act (institutions not requiring authorisation); or

(c) a European authorised institution within the meaning of the [S.I. 1992/3218] Banking Coordination (Second Council Directive) Regulations 1992 which may lawfully accept deposits in the United Kingdom in accordance with those regulations. "

Annual increase in rate of pension

13 In section 54(3) of the [1995 c. 26.] Pensions Act 1995 (supplementary provisions about annual increases in pensions), in the definition of "appropriate percentage", for the words from "the revaluation period" onwards substitute "the latest revaluation period specified in the order under paragraph 2 of Schedule 3 to the [1993 c. 48.] Pension Schemes Act 1993 (revaluation of accrued pension benefits) which is in force at the time of the increase (expressions used in this definition having the same meaning as ithat paragraph),".

Occupational pension schemes: certificates etc. relating to minimum funding requirement

14 (1) In section 58 of the [1995 c. 26.] Pensions Act 1995 (schedules of contributions), in subsection (6)(a) (certification by actuary of adequacy of rates of contributions to meet minimum funding requirement)--

(a) for the words from "on the date" to "is met," substitute "it appears to him that the minimum funding requirement was met on the prescribed date,"; and

(b) omit the words "continue to".

(2) In section 59 of that Act (determination of contributions: supplementary), in subsection (3) (duty of trustees etc. to prepare report of failure to meet minimum funding requirement), after "they must" insert ", within such further period as may be prescribed,".

Excess assets of wound-up schemes

15 In section 77(5) of the [1995 c. 26.] Pensions Act 1995 (penalties for trustees who deal improperly with excess assets of wound-up occupational pension schemes), for "section 3 applies" substitute "sections 3 and 10 apply".

Pensions Compensation Board

16 (1) In section 79(1) of the Pensions Act 1995 (annual reports of Pensions Compensation Board)--

(a) for "the first twelve months of their existence, and a report for each succeeding period of twelve months," substitute "each financial year of the Board"; and

(b) at the end insert--

" Sub-paragraph (4) of paragraph 17 of Schedule 2 (meaning of "financial year") applies for the purposes of this subsection as for those of that paragraph. "

(2) The amendments made by sub-paragraph (1) have effect in relation to the financial year beginning on the first 6th April falling after that sub-paragraph comes into force and to each subsequent financial year; and the period which begins with the last 1st August before, and ends with the 5th April immediately preceding, that 6th April shall be taken to be the last period in respect of which the Board are required to prepare a report under section 79(1) as originally enacted.

Diligence against pensions: Scotland

17 In section 94(3) of the [1995 c. 26.] Pensions Act 1995 (application of sections 91 and 92 to Scotland), at the end insert--

" (f) after subsection 91(4) there is inserted--

" (4A) Subject to section 73(3)(d) of the [1987 c. 18.] Debtors (Scotland) Act 1987, nothing in this section prevents any diligence mentioned in section 46 of that Act being done against a pension under an occupational pension scheme. " "

Pensionable service

18 In section 124(3) of the [1995 c. 26.] Pensions Act 1995 (matters to be disregarded in determining "pensionable service"), at the end insert-- " but, in its application for the purposes of section 51, paragraph (b) does not affect the operation of any rules of the scheme by virtue of which a period of service is to be rounded up or down by a period of less than a month. "

Occupational pension schemes: rights of employee who is director of corporate trustee

19 (1) The [1996 c. 18.] Employment Rights Act 1996 is amended as follows.

(2) In section 46 (employee who is a trustee of a pension scheme not to be subject to detriment referable to his carrying out his functions as such a trustee), after subsection (2) insert--

" (2A) This section applies to an employee who is a director of a company which is a trustee of a relevant occupational pension scheme as it applies to an employee who is a trustee of such a scheme (references to such a trustee being read for this purpose as references to such a director). "

(3) In section 58 (right to time off for pension scheme trustees), after subsection (2) insert--

(4) In section 102 (unfair dismissal of pension scheme trustees), after subsection (1) insert--

" (1A) This section applies to an employee who is a director of a company which is a trustee of a relevant occupational pension scheme as it applies to an employee who is a trustee of such a scheme (references to such a trustee being read for this purpose as references to such a director). "

Section 19.

SCHEDULE 3 Pension sharing orders: England and Wales

1 The [1973 c. 18.] Matrimonial Causes Act 1973 is amended as follows.

2 After section 21 there is inserted--

" 21A Pension sharing orders

(1) For the purposes of this Act, a 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 to be transferred.

(2) In subsection (1) above--

(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,

(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, and

3 In section 24 (property adjustment orders in connection with divorce proceedings, etc), in paragraphs (c) and (d) of subsection (1), there is inserted at the end ", other than one in the form of a pension arrangement (within the meaning of section 25D below)".

4 After section 24A there is inserted--

" 24B Pension sharing orders in connection with divorce proceedings etc

(1) On granting a decree of divorce or a decree of nullity of marriage or at any time thereafter (whether before or after the decree is made absolute), the court may, on an application made under this section, make one or more pension sharing orders in relation to the marriage.

(2) A pension sharing order under this section is not to take effect unless the decree on or after which it is made has been made absolute.

(3) A pension sharing order under this section may not be made in relation to a pension arrangement which--

(a) is the subject of a pension sharing order in relation to the marriage, or

(b) has been the subject of pension sharing between the parties to the marriage.

(4) A pension sharing order under this section may not be made in relation to shareable state scheme rights if--

(a) such rights are the subject of a pension sharing order in relation to the marriage, or

(b) such rights have been the subject of pension sharing between the parties to the marriage.

(5) A pension sharing order under this section may not be made in relation to the rights of a person under a pension arrangement if there is in force a requirement imposed by virtue of section 25B or 25C below which relates to benefits or future benefits to which he is entitled under the pension arrangement.

24C Pension sharing orders: duty to stay

(1) No pension sharing order may be made so as to take effect before the end of such period after the making of the order as may be prescribed by regulations made by the Lord Chancellor.

(2) The 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.

24D Pension sharing orders: apportionment of charges

If a pension sharing order relates to rights under a pension arrangement, the court may include in the order provision about the apportionment between the parties of any charge under section 41 of the Welfare Reform and Pensions Act 1999 (charges in respect of pension sharing costs), or under corresponding Northern Ireland legislation. "

5 In section 25 (matters to which the court is to have regard in deciding how to exercise its powers with respect to financial relief)--

(a) in subsection (1), for "or 24A" there is substituted ", 24A or 24B", and

(b) in subsection (2), for "or 24A" there is substituted ", 24A or 24B".

6 In section 25A(1) (court's duty to consider desirability of exercising power to achieve clean break), for "or 24A" there is substituted ", 24A or 24B".

7 (1) Section 31 (variation, discharge etc. of certain orders for financial relief) is amended as follows.

(2) In subsection (2), at the end there is inserted--

" (g) a pension sharing order under section 24B above which is made at a time before the decree has been made absolute. "

(3) After subsection (4) there is inserted--

" (4A) In relation to an order which falls within paragraph (g) of subsection (2) above ("the subsection (2) order")--

(a) the powers conferred by this section may be exercised--

(i) only on an application made before the subsection (2) order has or, but for paragraph (b) below, would have taken effect; and

(ii) only if, at the time when the application is made, the decree has not been made absolute; and

(b) an application made in accordance with paragraph (a) above prevents the subsection (2) order from taking effect before the application has been dealt with.

(4B) No variation of a pension sharing order shall be made so as to take effect before the decree is made absolute.

(4C) The variation of a pension sharing order prevents the order taking effect before the end of such period after the making of the variation as may be prescribed by regulations made by the Lord Chancellor. "

(4) In subsection (5)--

(a) for "(7F)" there is substituted "(7G)",

(b) for "or (e)" there is substituted ", (e) or (g)", and

(5) In subsection (7B), after paragraph (b) there is inserted--

" (ba) one or more pension sharing orders; " .

(6) After subsection (7F) there is inserted--

" (7G) Subsections (3) to (5) of section 24B above apply in relation to a pension sharing order under subsection (7B) above as they apply in relation to a pension sharing order under that section. "

(7) After subsection (14) there is inserted--

" (15) The power to make regulations under subsection (4C) above shall be exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament. "

8 In section 33A (consent orders), in subsection (3), in the definition of "order for financial relief", after "24A" there is inserted ", 24B".

9 In section 37 (avoidance of transactions intended to prevent or reduce financial relief), in subsection (1), after "24," there is inserted "24B,".

10 After section 40 there is inserted--

" 40A Appeals relating to pension sharing orders which have taken effect

(1) Subsections (2) and (3) below apply where an appeal against a pension sharing order is begun on or after the day on which the order takes effect.

(2) If the pension sharing order relates to a person's rights under a pension arrangement, the appeal court may not set aside or vary the order if the person responsible for the pension arrangement has acted to his detriment in reliance on the taking effect of the order.

(3) If the pension sharing order relates to a person's shareable state scheme rights, the appeal court may not set aside or vary the order if the Secretary of State has acted to his detriment in reliance on the taking effect of the order.

(4) In determining for the purposes of subsection (2) or (3) above whether a person has acted to his detriment in reliance on the taking effect of the order, the appeal court may disregard any detriment which in its opinion is insignificant.

(5) Where subsection (2) or (3) above applies, the appeal court may make such further orders (including one or more pension sharing orders) as it thinks fit for the purpose of putting the parties in the position it considers appropriate.

(6) Section 24C above only applies to a pension sharing order under this section if the decision of the appeal court can itself be the subject of an appeal.

(7) In subsection (2) above, the reference to the person responsible for the pension arrangement is to be read in accordance with section 25D(4) above. "

11 In section 52 (interpretation), in subsection (2), for "and" at the end of paragraph (a) there is substituted--

" (aa) references to pension sharing orders shall be construed in accordance with section 21A above; and " .

Section 21.

SCHEDULE 4 Amendments of sections 25B to 25D of the Matrimonial Causes Act 1973

1 (1) Section 25B of the [1973 c. 18.] Matrimonial Causes Act 1973 is amended as follows.

(2) In subsection (1), for "scheme", wherever occurring, there is substituted "arrangement".

(3) Subsection (2) ceases to have effect.

(4) In subsection (3), for "scheme" there is substituted "arrangement".

(5) In subsection (4)--

(a) for "scheme", wherever occurring, there is substituted "arrangement", and

(b) for "trustees or managers of" there is substituted "person responsible for".

(6) For subsection (5) there is substituted--

" (5) The order must express the amount of any payment required to be made by virtue of subsection (4) above as a percentage of the payment which becomes due to the party with pension rights. "

(7) In subsection (6)--

(a) for "trustees or managers", in the first place, there is substituted "person responsible for the arrangement", and

(b) for "the trustees or managers", in the second place, there is substituted "his".

(8) In subsection (7)--

(a) for the words from "may require any" to "those benefits" there is substituted "has a right of commutation under the arrangement, the order may require him to exercise it to any extent",

(b) for "the payment of any amount commuted" there is substituted "any payment due in consequence of commutation", and

(9) After that subsection there is inserted--

" (7A) The power conferred by subsection (7) above may not be exercised for the purpose of commuting a benefit payable to the party with pension rights to a benefit payable to the other party.

(7B) The power conferred by subsection (4) or (7) above may not be exercised in relation to a pension arrangement which--

(a) is the subject of a pension sharing order in relation to the marriage, or

(b) has been the subject of pension sharing between the parties to the marriage.

(7C) In subsection (1) above, references to benefits under a pension arrangement include any benefits by way of pension, whether under a pension arrangement or not. "

2 (1) Section 25C of that Act is amended as follows.

(2) In subsection (1), for "scheme" there is substituted "arrangement".

(3) In subsection (2)--

(a) in paragraph (a)--

(i) for the words from "trustees" to "have" there is substituted "person responsible for the pension arrangement in question has", and

(ii) for "them" there is substituted "him", and

(b) in paragraph (c), for "trustees or managers of the pension scheme" there is substituted "person responsible for the pension arrangement".

(4) In subsection (3)--

(a) for "trustees or managers" there is substituted "person responsible for the arrangement", and

(b) for "the trustees, or managers," there is substituted "his".

(5) At the end there is inserted--

" (4) The powers conferred by this section may not be exercised in relation to a pension arrangement which--

(a) is the subject of a pension sharing order in relation to the marriage, or

(b) has been the subject of pension sharing between the parties to the marriage. "

3 (1) Section 25D of that Act is amended as follows.

(2) For subsection (1) there is substituted--

" (1) Where--

(a) an order made under section 23 above by virtue of section 25B or 25C above imposes any requirement on the person responsible for a pension arrangement ("the first arrangement") and the party with pension rights acquires rights under another pension arrangement ("the new arrangement") which are derived (directly or indirectly) from the whole of his rights under the first arrangement, and

(b) the person responsible for the new arrangement has been given notice in accordance with regulations made by the Lord Chancellor,

the order shall have effect as if it had been made instead in respect of the person responsible for the new arrangement. "

(3) In subsection (2)--

(a) for "Regulations may" there is substituted "The Lord Chancellor may by regulations",

(b) in paragraph (a), for "trustees or managers of a pension scheme" there is substituted "person responsible for a pension arrangement",

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