Pensions Act 2004 (c. 35)

(The document as of February, 2008)

-- Back --

Page 3

Pages: P.1 | P.2 | P.3 | P.4 | P.5 | P.6 | P.7 | P.8 | P.9 | P.10 | P.11 | P.12 | P.13 | P.14 | P.15 | P.16 | P.17 | P.18 | P.19 | P.20 | P.21 | P.22 | P.23 | P.24 | P.25 | P.26 | P.27 | P.28 | P.29 | P.30 | P.31 | P.32 | P.33 | P.34

(11) In this section "specified" means specified in the freezing order.

24 Consequences of freezing order

(1) If a freezing order is made in relation to a scheme any action taken in contravention of the order is void except to the extent that the action is validated by an order under section 26.

(2) A freezing order in relation to a scheme does not prevent any increase in a benefit which is an increase which would otherwise accrue in accordance with the scheme or any enactment during the period for which the order has effect, unless the order contains a direction to the contrary.

(3) A freezing order in relation to a scheme does not prevent the scheme being wound up in pursuance of an order under section 11 of the Pensions Act 1995 (power to wind up occupational pension schemes).

(4) If a freezing order contains a direction under section 23(4)(b) that no further contributions, or no further specified contributions, are to be paid towards a scheme during the period for which the order has effect--

(a) any contributions which are the subject of the direction and which would otherwise be due to be paid towards the scheme during that period are to be treated as if they do not fall due, and

(b) any obligation to pay those contributions (including any obligation under section 49(8) of the Pensions Act 1995 to pay amounts deducted corresponding to such contributions) is to be treated as if it does not arise.

(5) If a freezing order contains a direction under section 23(4)(f) (no transfers or discharge of member's rights) it does not prevent--

(a) giving effect to a pension sharing order or provision, or

(b) giving effect to a pension earmarking order in a case where--

(i) the order requires a payment to be made if a payment in respect of any benefits under the scheme becomes due to a person, and

(ii) a direction under section 23(4)(d) or (e) does not prevent the payment becoming due.

(6) For the purposes of subsection (5)--

"pension sharing order or provision" means an order or provision falling within section 28(1) of the Welfare Reform and Pensions Act 1999 (c. 30) (activation of pension sharing);
"pension earmarking order" means--
(a)
an order under section 23 of the Matrimonial Causes Act 1973 (c. 18) (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 Family Law (Scotland) Act 1985 (c. 37) (powers in relation to pension lump sums when making a capital sum order), or
(c)
an order under Article 25 of the Matrimonial Causes (Northern Ireland) Order 1978 (S.I. 1978/1045 (N.I.15)) 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)).

(7) Regulations may modify any provisions of--

(a) Chapter 4 of Part 4 of the Pension Schemes Act 1993 (c. 48) (protection for early leavers: transfer values), or

(b) Chapter 5 of that Part (protection for early leavers: cash transfer sums and contribution refunds),

in their application to an occupational pension scheme in relation to which a freezing order is made containing a direction under section 23(4)(f), (g) or (h) (no transfers etc in respect of member's rights or refunds of contributions etc from the scheme).

(8) Disregarding subsection (1), if a freezing order made in relation to a scheme is not complied with, section 10 of the Pensions Act 1995 (c. 26) (civil penalties) applies to any trustee or manager of the scheme who has failed to take all reasonable steps to secure compliance.

(9) Subsection (8) does not apply in the case of non-compliance with a direction under section 23(4)(c) (direction that certain deducted contributions are to be repaid by the employer).

(10) In such a case, section 10 of the Pensions Act 1995 (civil penalties) applies to an employer who, without reasonable excuse, fails to repay an amount as required by the direction.

25 Period of effect etc of freezing order

(1) A freezing order must specify the period for which it has effect.

(2) The period specified must not exceed three months.

(3) The Regulator may on one or more occasions by order extend the period for which the order has effect.

(4) But the total period for which the order has effect must not exceed six months.

(5) This section is subject to sections 27, 28 and 29 (effect of winding up and assessment period on freezing orders).

26 Validation of action in contravention of freezing order

(1) If a freezing order is made in relation to a scheme, the Regulator may by order validate action taken in contravention of the order.

(2) Any of the following persons may apply to the Regulator for an order under this section validating particular action--

(a) the trustees or managers of the scheme;

(b) any person directly affected by the action.

27 Effect of determination to wind up scheme on freezing order

(1) This section applies where--

(a) the Regulator determines to make an order under section 11 of the Pensions Act 1995 (c. 26) (power to wind up occupational pension schemes) in relation to a scheme ("a winding up order"),

(b) that determination is made during the period for which a freezing order has effect in relation to the scheme,

(c) the case is not one to which the special procedure in section 98 applies (immediate exercise of powers where immediate risk to assets etc), and

(d) the winding up order accordingly cannot be made until the expiry of the period specified in section 96(5) (no exercise during period of referral to the Tribunal etc).

(2) In such a case the freezing order is to continue to have effect until--

(a) where the winding up order is made, it ceases to have effect under section 28 from the time when that order is made, or

(b) the determination to make the winding up order is revoked.

(3) Subsection (2) is subject to the Regulator's power under section 101 to revoke the freezing order at any time.

28 Effect of winding up order on freezing order

(1) This section applies where--

(a) an order is made under section 11 of the Pensions Act 1995 ("the 1995 Act") (power to wind up occupational pension schemes) in relation to a scheme, and

(b) the order is made during the period for which a freezing order has effect in relation to the scheme.

(2) In such a case--

(a) the winding up of the scheme in pursuance of the order under section 11 of the 1995 Act is to be taken as beginning at the time when the freezing order took effect, and

(b) the freezing order ceases to have effect from the time when the order under section 11 of the 1995 Act is made.

(3) The Regulator may by order direct any specified person--

(a) to take such specified steps as it considers are necessary as a result of the winding up of the scheme being deemed under subsection (2)(a) to have begun at the time when the freezing order took effect, and

(b) to take those steps within a specified period.

(4) If the trustees or managers of a scheme fail to comply with a direction to them contained in an order under this section, section 10 of the 1995 Act (civil penalties) applies to any trustee or manager who has failed to take all reasonable steps to secure compliance.

(5) That section also applies to any other person who, without reasonable excuse, fails to comply with a direction to him contained in an order under this section.

(6) In this section "specified" means specified in an order under this section.

29 Effect of assessment period under Part 2 on freezing order

Where an assessment period (within the meaning of section 132) begins in relation to a scheme, any freezing order in relation to the scheme ceases to have effect when the assessment period begins.

30 Power to give a direction where freezing order ceases to have effect

(1) This section applies where--

(a) the Regulator revokes a freezing order in relation to a scheme or it otherwise ceases to have effect, and

(b) at the time when the freezing order ceases to have effect, the Regulator has not made an order under section 11 of the Pensions Act 1995 (c. 26) ("the 1995 Act") in relation to the scheme.

(2) In such a case the Regulator may make an order under this section in relation to the scheme containing a direction that, if specified conditions are met, specified benefits are to accrue under the scheme rules to, or in respect of, specified members of the scheme in respect of specified periods of service being service in employment which but for the freezing order would have qualified the member in question for those benefits under the scheme rules.

(3) The conditions mentioned in subsection (2) may include--

(a) a requirement that specified benefits do not accrue to, or in respect of, a member or a specified member unless a contribution of a specified amount is paid by or on behalf of the member towards the scheme within a specified period;

(b) a requirement that a contribution of a specified amount must be paid by or on behalf of the employer within a specified period;

(c) a requirement that such contributions as are specified under paragraph (a) or (b) are to be accepted for the period for which the freezing order had effect or any part of that period.

(4) Where the freezing order contained a direction under section 23(4)(d) or (e) and any amount of any benefit under the scheme rules was not paid as a result of the direction--

(a) the direction does not affect any entitlement to that benefit, and

(b) any benefit to which a member, or a person in respect of a member, remains entitled at the end of the period for which the freezing order had effect is an amount which falls due to the member or, as the case may be, the person at the end of that period.

(5) If an order made under this section in relation to a scheme is not complied with, section 10 of the 1995 Act (civil penalties) applies to a trustee or a manager of the scheme who has failed to take all reasonable steps to secure compliance.

(6) Subsection (7) applies if--

(a) an order is made under this section in relation to a scheme,

(b) the order contains a requirement as described in subsection (3)(b) that a contribution of a specified amount must be paid by or on behalf of the employer within a specified period, and

(7) In such a case--

(a) section 10 of the 1995 Act applies to the employer if he has failed, without reasonable excuse, to secure compliance,

(b) the amount which for the time being remains unpaid after the end of the specified period is to be treated as a debt due from the employer to the trustees or managers of the scheme, and

(c) except in prescribed circumstances, the trustees or managers must, within a prescribed period, give notice of the failure to pay to the Regulator and to the member.

(8) If in any case subsection (7)(c) is not complied with, section 10 of the 1995 Act applies to any trustee or manager who has failed to take all reasonable steps to secure compliance.

(9) In this section "specified" means specified in an order under this section.

31 Notification of trustees, managers, employers and members

(1) This section applies where--

(a) a freezing order is made in relation to a scheme,

(b) an order is made under section 26 validating action taken in contravention of a freezing order made in relation to a scheme,

(d) an order is made under section 30 in relation to a scheme where a freezing order ceases to have effect.

(2) The Regulator must, as soon as reasonably practicable after the order has been made, notify--

(a) the trustees or managers of the scheme, and

(b) the employer in relation to the scheme,

of the fact that the order has been made and of its effect.

(3) The Regulator may by order direct the trustees or managers of the scheme to notify--

(a) all the members of the scheme, or

(b) the members of the scheme specified in the order,

of the fact that the order mentioned in subsection (1) has been made and of its effect.

(4) Notification is to be within the period and in the manner specified in the order under subsection (3).

(5) If the trustees or managers of a scheme fail to comply with a direction to them contained in an order made under subsection (3), section 10 of the Pensions Act 1995 (c. 26) (civil penalties) applies to any trustee or manager who has failed to take all reasonable steps to secure compliance.

32 Sections 23 to 31: supplementary

(1) An order may be made in relation to a scheme under any of sections 23, 25, 26, 28, 30 and 31--

(a) in spite of any enactment or rule of law, or any rule of the scheme, which would otherwise operate to prevent the order being made, and

(b) without regard to any such enactment, rule of law or rule of the scheme as would otherwise require, or might otherwise be taken to require, the implementation of any procedure or the obtaining of any consent, with a view to the making of the order.

(2) Subsection (1) does not have effect to authorise the Regulator to make an order as mentioned in that subsection if its doing so would be unlawful as a result of section 6(1) of the Human Rights Act 1998 (c. 42) (unlawful for public authority to act in contravention of a Convention right).

Trustees of occupational pension schemes

33 Prohibition orders

For section 3 of the Pensions Act 1995 (c. 26) (prohibition orders) substitute--

" 3 Prohibition orders

(1) The Authority may by order prohibit a person from being a trustee of--

(a) a particular trust scheme,

(b) a particular description of trust schemes, or

if they are satisfied that he is not a fit and proper person to be a trustee of the scheme or schemes to which the order relates.

(2) Where a prohibition order is made under subsection (1) against a person in respect of one or more schemes of which he is a trustee, the order has the effect of removing him.

(3) The Authority may, on the application of any person prohibited under this section, by order revoke the order either generally or in relation to a particular scheme or description of schemes.

(4) An application under subsection (3) may not be made--

(a) during the period within which the determination to exercise the power to make the prohibition order may be referred to the Tribunal under section 96(3) or 99(7) of the Pensions Act 2004, and

(b) if the determination is so referred, until the reference, and any appeal against the Tribunal's determination, has been finally disposed of.

(5) A revocation made at any time under this section cannot affect anything done before that time.

(6) The Authority must prepare and publish a statement of the policies they intend to adopt in relation to the exercise of their powers under this section.

(7) The Authority may revise any statement published under subsection (6) and must publish any revised statement.

(8) In this section "the Tribunal" means the Pensions Regulator Tribunal established under section 102 of the Pensions Act 2004. "

34 Suspension orders

In section 4 of the Pensions Act 1995 (c. 26) (suspension orders)--

(a) after subsection (1)(a) insert--

" (aa) pending consideration being given to the institution of proceedings against him for an offence involving dishonesty or deception, " ,

(b) in subsection (2)--

(i) in paragraph (a) after "paragraph (a)" insert "or (aa)",

(ii) after "have effect" insert "in relation to a trust scheme", and

(iii) after "section 3(1)" insert "in relation to that scheme",

" (5A) An application under subsection (5) may not be made--

(a) during the period within which the determination to exercise the power to make an order under subsection (1) may be referred to the Tribunal under section 96(3) or 99(7) of the Pensions Act 2004, and

(b) if the determination is so referred, until the reference, and any appeal against the Tribunal's determination, has been finally disposed of. " , and

(d) after subsection (6) insert--

" (7) In this section "the Tribunal" means the Pensions Regulator Tribunal established under section 102 of the Pensions Act 2004. "

35 Appointments of trustees by the Regulator

(1) In section 7 of the Pensions Act 1995 (appointment of trustees)--

(a) omit subsection (4), and

(b) after subsection (5) insert--

" (5A) An application may be made to the Authority in relation to a trust scheme by--

(a) the trustees of the scheme,

(b) the employer, or

for the appointment of a trustee of the scheme under subsection (3)(a) or (c). "

(2) In section 8 of that Act (consequences of appointment of trustees under section 7), for subsections (1) and (2) substitute--

" (1) An order under section 7 appointing a trustee may provide for any fees and expenses of trustees appointed under the order to be paid--

(a) by the employer,

(b) out of the resources of the scheme, or

(2) Such an order may also provide that an amount equal to the amount (if any) paid out of the resources of the scheme by virtue of subsection (1)(b) or (c) is to be treated for all purposes as a debt due from the employer to the trustees of the scheme. "

36 Independent trustees

(1) Part 1 of the Pensions Act 1995 (c. 26) (occupational pension schemes) is amended as follows.

(2) In section 22 (circumstances in which provisions relating to independent trustees apply)--

(a) in subsection (1)(b) omit "or" at the end of sub-paragraph (i) and after that sub-paragraph insert--

" (ia) the interim receiver of the property of a person who is the employer in relation to the scheme, or " ,

(b) in subsection (2), after "a scheme" insert "by virtue of subsection (1)",

" (2A) To the extent that it does not already apply by virtue of subsection (1), this section also applies in relation to a trust scheme--

(a) at any time during an assessment period (within the meaning of section 132 of the Pensions Act 2004) in relation to the scheme, and

(b) at any time, not within paragraph (a), when the scheme is authorised under section 153 of that Act (closed schemes) to continue as a closed scheme. " , and

(d) after subsection (2A) (inserted by paragraph (c) above) insert--

" (2B) The responsible person must, as soon as reasonably practicable, give notice of an event within subsection (2C) to--

(a) the Authority,

(b) the Board of the Pension Protection Fund, and

(2C) The events are--

(a) the practitioner beginning to act as mentioned in subsection (1)(a), if immediately before he does so this section does not apply in relation to the scheme;

(b) the practitioner ceasing to so act, if immediately after he does so this section does not apply in relation to the scheme;

(c) the official receiver beginning to act in a capacity mentioned in subsection (1)(b)(i), (ia) or (ii), if immediately before he does so this section does not apply in relation to the scheme;

(d) the official receiver ceasing to act in such a capacity, if immediately after he does so this section does not apply in relation to the scheme.

(2D) For the purposes of subsection (2B) "the responsible person" means--

(a) in the case of an event within subsection (2C)(a) or (b) the practitioner, and

(b) in the case of an event within subsection (2C)(c) or (d), the official receiver.

(2E) Regulations may require prescribed persons in prescribed circumstances where this section begins or ceases to apply in relation to a trust scheme by virtue of subsection (2A) to give a notice to that effect to--

(a) the Authority,

(b) the Board of the Pension Protection Fund, and

(2F) A notice under subsection (2B), or regulations under subsection (2E), must be in writing and contain such information as may be prescribed. "

(3) For sections 23 and 24 (appointment of independent trustees) substitute--

" 23 Power to appoint independent trustees

(1) While section 22 applies in relation to a trust scheme, the Authority may by order appoint as a trustee of the scheme a person who--

(a) is an independent person in relation to the scheme, and

(b) is registered in the register maintained by the Authority in accordance with regulations under subsection (4).

(2) In relation to a particular trust scheme, no more than one trustee may at any time be an independent trustee appointed under subsection (1).

(3) For the purposes of this section a person is independent in relation to a trust scheme only if--

(a) he has no interest in the assets of the employer or of the scheme otherwise than as trustee of the scheme,

(b) he is neither connected with, nor an associate of--

(i) the employer,

(ii) any person for the time being acting as an insolvency practitioner in relation to the employer, or

(iii) the official receiver acting in any of the capacities mentioned in section 22(1)(b) in relation to the employer, and

and any reference in this Part to an independent trustee is to be construed accordingly.

(4) Regulations must provide for the Authority to compile and maintain a register of persons who satisfy the prescribed conditions for registration.

(5) Regulations under subsection (4) may provide--

(a) for copies of the register or of extracts from it to be provided to prescribed persons in prescribed circumstances;

(b) for the inspection of the register by prescribed persons in prescribed circumstances.

(6) The circumstances which may be prescribed under subsection (5)(a) or (b) include the payment by the person to whom the copy is to be provided, or by whom the register is to be inspected, of such reasonable fee as may be determined by the Authority.

(7) This section is without prejudice to the powers conferred by section 7. "

(4) In section 25 (appointment and powers of independent trustees: further provisions)--

(a) for subsection (4)(a) substitute--

" (a) he must as soon as reasonably practicable give written notice of that fact to the Authority, and " ,

(b) after subsection (5) insert--

" (5A) Section 10 applies to any person who, without reasonable excuse, fails to comply with subsection (4)(a). " , and

" (6) An order under section 23(1) may provide for any fees and expenses of the trustee appointed under the order to be paid--

(a) by the employer,

(b) out of the resources of the scheme, or

(7) Such an order may also provide that an amount equal to the amount (if any) paid out of the resources of the scheme by virtue of subsection (6)(b) or (c) is to be treated for all purposes as a debt due from the employer to the trustees of the scheme.

(8) Where, by virtue of subsection (6)(b) or (c), an order makes provision for any fees or expenses of the trustee appointed under the order to be paid out of the resources of the scheme, the trustee is entitled to be so paid in priority to all other claims falling to be met out of the scheme's resources. "

37 Disqualification

In section 30 of the Pensions Act 1995 (c. 26) (consequences of disqualification under section 29), for subsection (1) substitute--

" (1) Where a person who is a trustee of a trust scheme becomes disqualified under section 29 in relation to the scheme, his becoming so disqualified has the effect of removing him as a trustee. "

Contribution notices where avoidance of employer debt

38 Contribution notices where avoidance of employer debt

(1) This section applies in relation to an occupational pension scheme other than--

(a) a money purchase scheme, or

(b) a prescribed scheme or a scheme of a prescribed description.

(2) The Regulator may issue a notice to a person stating that the person is under a liability to pay the sum specified in the notice (a "contribution notice")--

(a) to the trustees or managers of the scheme, or

(b) where the Board of the Pension Protection Fund has assumed responsibility for the scheme in accordance with Chapter 3 of Part 2 (pension protection), to the Board.

(3) The Regulator may issue a contribution notice to a person only if--

(a) the Regulator is of the opinion that the person was a party to an act or a deliberate failure to act which falls within subsection (5),

(b) the person was at any time in the relevant period--

(i) the employer in relation to the scheme, or

(ii) a person connected with, or an associate of, the employer,

(c) the Regulator is of the opinion that the person, in being a party to the act or failure, was not acting in accordance with his functions as an insolvency practitioner in relation to another person, and

(d) the Regulator is of the opinion that it is reasonable to impose liability on the person to pay the sum specified in the notice.

(4) But the Regulator may not issue a contribution notice, in such circumstances as may be prescribed, to a person of a prescribed description.

(5) An act or a failure to act falls within this subsection if--

(a) the Regulator is of the opinion that the main purpose or one of the main purposes of the act or failure was--

(i) to prevent the recovery of the whole or any part of a debt which was, or might become, due from the employer in relation to the scheme under section 75 of the Pensions Act 1995 (c. 26) (deficiencies in the scheme assets), or

(ii) otherwise than in good faith, to prevent such a debt becoming due, to compromise or otherwise settle such a debt, or to reduce the amount of such a debt which would otherwise become due,

(b) it is an act which occurred, or a failure to act which first occurred--

(i) on or after 27th April 2004, and

(ii) before any assumption of responsibility for the scheme by the Board in accordance with Chapter 3 of Part 2, and

(i) an act which occurred during the period of six years ending with the determination by the Regulator to exercise the power to issue the contribution notice in question, or

(ii) a failure which first occurred during, or continued for the whole or part of, that period.

(6) For the purposes of subsection (3)--

(a) the parties to an act or a deliberate failure include those persons who knowingly assist in the act or failure, and

(b) "the relevant period" means the period which--

(i) begins with the time when the act falling within subsection (5) occurs or the failure to act falling within that subsection first occurs, and

(ii) ends with the determination by the Regulator to exercise the power to issue the contribution notice in question.

-- Back --

Stat