Pensions Act 2004 (c. 35)

(The document as of February, 2008)

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(i) the Chief Executive, and

(ii) the ordinary members appointed from the staff of the Board, and

(b) references to non-executive members of the Board are to members who are not executive members.

109 Further provision about the Board

Schedule 5 makes further provision about the Board, including provision as to--

the appointment of members,
the terms of appointment, tenure and remuneration of members,
the appointment of the Chief Executive and other staff,
the proceedings of the Board,
its accounts, and
the status and liability of the Board, its members and staff.

General provision about functions

110 Board's functions

(1) The Board must hold, manage and apply, in accordance with this Part and any provision in force in Northern Ireland corresponding to it--

(a) a fund to be known as the Pension Protection Fund, and

(b) a fund to be known as the Fraud Compensation Fund.

(2) Sections 175 and 189 make provision for contributions to those funds to be levied by the Board.

(3) The Board also has such other functions as are conferred on it by, or by virtue of, this or any other enactment.

111 Supplementary powers

The Board may do anything which--

(a) is calculated to facilitate the exercise of its functions, or

(b) is incidental or conducive to their exercise.

Non-executive functions

112 Non-executive functions

(1) The functions listed in subsection (4) (in this Part referred to as "the non-executive functions") are functions of the Board.

(2) The Board must establish a committee to discharge the non-executive functions on its behalf.

(3) Only non-executive members of the Board may be members of that committee.

(4) The non-executive functions are--

(a) the duty to keep under review the question whether the Board's internal financial controls secure the proper conduct of its financial affairs;

(b) the duty to determine under sub-paragraph (5)(a) of paragraph 12 of Schedule 5, subject to the approval of the Secretary of State, the terms and conditions as to remuneration of any Chief Executive appointed under sub-paragraph (4) of that paragraph;

(c) the duty to determine under paragraph 13(3)(a) of that Schedule, subject to the approval of the Secretary of State, the terms and conditions as to remuneration of any member of the staff who is also to be an executive member of the Board;

(d) the duty to determine under paragraph 13(3)(b) of that Schedule, the terms and conditions as to remuneration of any member of the staff of a description prescribed for the purposes of that provision.

(5) The committee established under this section must prepare a report on the discharge of the non-executive functions for inclusion in the Board's annual report to the Secretary of State under section 119.

(6) The committee's report must relate to the same period as that covered by the Board's report.

(7) The members of any sub-committee of the committee (established by virtue of paragraph 15(2) of Schedule 5)--

(a) may include persons who are not members of the committee, but

(b) must not include persons who are executive members or other staff of the Board.

(8) The committee may authorise any of its sub-committees to discharge on its behalf--

(a) any of the non-executive functions;

(b) the duty to prepare a report under subsection (5).

Financial matters

113 Investment of funds

(1) The Board may invest for the purposes of the prudent management of its financial affairs.

(2) When exercising the power conferred by subsection (1) in relation to the Pension Protection Fund, the Board must have regard to--

(a) the interests of persons who are or may become entitled to compensation under the pension compensation provisions (see section 162) or any corresponding provisions in force in Northern Ireland, and

(b) the effect of the exercise of the power on the rate of any levy which may be imposed under section 174 or 175 or any corresponding provision in force in Northern Ireland and the interests which persons have in the rate of any such levy.

(3) When exercising the power conferred by subsection (1) in relation to the Fraud Compensation Fund, the Board must have regard to--

(a) the interests of members of occupational pension schemes in relation to which section 189(1), or any corresponding provision in force in Northern Ireland, applies, and

(b) the effect of the exercise of the power on the level of any levy which may be imposed under section 189 or any corresponding provision in force in Northern Ireland and the interests which persons have in the rate of any such levy.

(4) For the purposes of subsection (1) there must be at least two fund managers.

(5) For this purpose "fund manager" means an individual who or firm which is appointed by the Board to manage the fund maintained under section 173 (the Pension Protection Fund).

(6) The Board must not appoint an individual or firm as a fund manager unless it is satisfied--

(a) in the case of an individual, that the individual has the appropriate knowledge and experience for managing the investments of the Pension Protection Fund, or

(b) in the case of a firm, that arrangements are in place to secure that any individual who will exercise functions which the firm has as fund manager will, at the time he exercises those functions, have the appropriate knowledge and experience for managing the investments of that Fund.

114 Investment principles

(1) The Board must secure--

(a) that a statement of investment principles is prepared and maintained, and

(b) that the statement is reviewed at such intervals, and on such occasions, as may be prescribed and, if necessary, revised.

(2) In this section "statement of investment principles" means a written statement of the investment principles governing determinations about investments made by or on behalf of the Board.

(3) Before preparing or revising a statement of investment principles, the Board must comply with any prescribed requirements.

(4) A statement of investment principles must be in the prescribed form and cover, amongst other things, the prescribed matters.

115 Borrowing

(1) The Board may--

(a) borrow from a deposit-taker such sums as it may from time to time require for exercising any of its functions;

(b) give security for any money borrowed by it.

(2) The Board may not borrow if the effect would be--

(a) to take the aggregate amount outstanding in respect of the principal of sums borrowed by it over its borrowing limit, or

(b) to increase the amount by which the aggregate amount so outstanding exceeds that limit.

(3) In this section--

"borrowing limit" means such limit as the Secretary of State may specify by order;
"deposit-taker" means--
(a)
a person who has permission under Part 4 of the Financial Services and Markets Act 2000 (c. 8) to accept deposits, or
(b)
an EEA firm of the kind mentioned in paragraph 5(b) of Schedule 3 to that Act which has permission under paragraph 15 of that Schedule (as a result of qualifying for authorisation under paragraph 12 of that Schedule) to accept deposits.

(4) The definition of "deposit-taker" in subsection (3) must be read with--

(a) section 22 of the Financial Services and Markets Act 2000,

(b) any relevant order under that section, and

116 Grants

The Secretary of State may pay the Board out of money provided by Parliament such sums as he may determine towards any of its expenses, other than expenditure which by virtue of section 173(3) or 188(3) is payable out of--

(a) the Pension Protection Fund, or

(b) the Fraud Compensation Fund.

117 Administration levy

(1) Regulations may provide for the imposition of a levy ("administration levy") in respect of eligible schemes (see section 126) for the purpose of meeting--

(a) expenditure of the Secretary of State relating to the establishment of the Board;

(b) any expenditure of the Secretary of State under section 116.

(2) An administration levy is payable to the Secretary of State by or on behalf of--

(a) the trustees or managers of an eligible scheme, or

(b) any other prescribed person.

(3) An administration levy is payable at the prescribed rate and at prescribed times.

(4) Before prescribing a rate under subsection (3), the Secretary of State must consult the Board.

(5) An amount payable by a person on account of an administration levy is a debt due from him to the Secretary of State.

(6) An amount so payable is recoverable by the Secretary of State or, if he so determines, by the Regulator on his behalf.

(7) Without prejudice to the generality of subsections (1), (5) and (6), regulations under this section may include provision relating to--

(a) the collection and recovery of amounts payable by way of levy under this section;

(b) the circumstances in which any such amount may be waived.

118 Fees

(1) Regulations may authorise the Board--

(a) to charge prescribed fees;

(b) to charge fees sufficient to meet prescribed costs.

(2) Regulations under subsection (1) may prescribe, or authorise the Board to determine, the time at which any fee is due.

(3) Any fee which is owed to the Board by virtue of regulations under this section may be recovered as a debt due to the Board.

Annual reports

119 Annual reports to Secretary of State

(1) The Board must prepare a report for each financial year.

(2) Each report--

(a) must deal with the activities of the Board in the financial year for which it is prepared, including the matters mentioned in subsection (3), and

(b) must include the report prepared under subsection (5) of section 112 by the committee established under that section.

(3) The matters referred to in subsection (2)(a) are--

(a) the strategic direction of the Board and the manner in which it has been kept under review;

(b) the steps taken to scrutinise the performance of the Chief Executive in securing that the Board's functions are exercised efficiently and effectively;

(4) The Board must send each report to the Secretary of State as soon as practicable after the end of the financial year for which it is prepared.

(5) The Secretary of State must lay before each House of Parliament a copy of every report received by him under this section.

(6) In this section "financial year" means--

(a) the period beginning with the date on which the Board is established and ending with the next following 31st March, and

(b) each successive period of 12 months.

Chapter 2 Information relating to employer's insolvency etc

Insolvency events

120 Duty to notify insolvency events in respect of employers

(1) This section applies where, in the case of an occupational pension scheme, an insolvency event occurs in relation to the employer.

(2) The insolvency practitioner in relation to the employer must give a notice to that effect within the notification period to--

(a) the Board,

(b) the Regulator, and

(3) For the purposes of subsection (2) the "notification period" is the prescribed period beginning with the later of--

(a) the insolvency date, and

(b) the date the insolvency practitioner becomes aware of the existence of the scheme.

(4) A notice under this section must be in such form and contain such information as may be prescribed.

121 Insolvency event, insolvency date and insolvency practitioner

(1) In this Part each of the following expressions has the meaning given to it by this section--

"insolvency event"
"insolvency date"
"insolvency practitioner".

(2) An insolvency event occurs in relation to an individual where--

(a) he is adjudged bankrupt or sequestration of his estate has been awarded;

(b) the nominee in relation to a proposal for a voluntary arrangement under Part 8 of the Insolvency Act 1986 (c. 45) submits a report to the court under section 256(1) or 256A(3) of that Act which states that in his opinion a meeting of the individual's creditors should be summoned to consider the debtor's proposal;

(c) a deed of arrangement made by or in respect of the affairs of the individual is registered in accordance with the Deeds of Arrangement Act 1914 (c. 47);

(d) he executes a trust deed for his creditors or enters into a composition contract;

(e) he has died and--

(i) an insolvency administration order is made in respect of his estate in accordance with an order under section 421 of the Insolvency Act 1986, or

(ii) a judicial factor appointed under section 11A of the Judicial Factors (Scotland) Act 1889 (c. 39) is required by that section to divide the individual's estate among his creditors.

(3) An insolvency event occurs in relation to a company where--

(a) the nominee in relation to a proposal for a voluntary arrangement under Part 1 of the Insolvency Act 1986 submits a report to the court under section 2 of that Act (procedure where nominee is not the liquidator or administrator) which states that in his opinion meetings of the company and its creditors should be summoned to consider the proposal;

(b) the directors of the company file (or in Scotland lodge) with the court documents and statements in accordance with paragraph 7(1) of Schedule A1 to that Act (moratorium where directors propose voluntary arrangement);

(d) the company enters administration within the meaning of paragraph 1(2)(b) of Schedule B1 to that Act;

(e) a resolution is passed for a voluntary winding up of the company without a declaration of solvency under section 89 of that Act;

(f) a meeting of creditors is held in relation to the company under section 95 of that Act (creditors' meeting which has the effect of converting a members' voluntary winding up into a creditors' voluntary winding up);

(g) an order for the winding up of the company is made by the court under Part 4 or 5 of that Act.

(4) An insolvency event occurs in relation to a partnership where--

(a) an order for the winding up of the partnership is made by the court under any provision of the Insolvency Act 1986 (c. 45) (as applied by an order under section 420 of that Act (insolvent partnerships));

(b) sequestration is awarded on the estate of the partnership under section 12 of the Bankruptcy (Scotland) Act 1985 (c. 66) or the partnership grants a trust deed for its creditors;

(c) the nominee in relation to a proposal for a voluntary arrangement under Part 1 of the Insolvency Act 1986 (as applied by an order under section 420 of that Act) submits a report to the court under section 2 of that Act (procedure where nominee is not the liquidator or administrator) which states that in his opinion meetings of the members of the partnership and the partnership's creditors should be summoned to consider the proposal;

(d) the members of the partnership file with the court documents and statements in accordance with paragraph 7(1) of Schedule A1 to that Act (moratorium where directors propose voluntary arrangement) (as applied by an order under section 420 of that Act);

(e) an administration order under Part 2 of that Act (as applied by section 420 of that Act) is made in relation to the partnership.

(5) An insolvency event also occurs in relation to a person where an event occurs which is a prescribed event in relation to such a person.

(6) Except as provided by subsections (2) to (5), for the purposes of this Part an event is not to be regarded as an insolvency event in relation to a person.

(7) The Secretary of State may by order amend subsection (4)(e) to make provision consequential upon any order under section 420 of the Insolvency Act 1986 (insolvent partnerships) applying the provisions of Part 2 of that Act (administration) as amended by the Enterprise Act 2002 (c. 40).

(8) "Insolvency date", in relation to an insolvency event, means the date on which the event occurs.

(9) "Insolvency practitioner", in relation to a person, means--

(a) a person acting as an insolvency practitioner, in relation to that person, in accordance with section 388 of the Insolvency Act 1986;

(b) in such circumstances as may be prescribed, a person of a prescribed description.

(10) In this section--

"company" means a company within the meaning given by section 735(1) of the Companies Act 1985 (c. 6) or a company which may be wound up under Part 5 of the Insolvency Act 1986 (c. 45) (unregistered companies);
"person acting as an insolvency practitioner", in relation to a person, includes the official receiver acting as receiver or manager of any property of that person.

(11) In applying section 388 of the Insolvency Act 1986 under subsection (9) above--

(a) the reference in section 388(2)(a) to a permanent or interim trustee in sequestration must be taken to include a reference to a trustee in sequestration, and

(b) section 388(5) (which includes provision that nothing in the section applies to anything done by the official receiver or the Accountant in Bankruptcy) must be ignored.

Status of scheme

122 Insolvency practitioner's duty to issue notices confirming status of scheme

(1) This section applies where an insolvency event has occurred in relation to the employer in relation to an occupational pension scheme.

(2) An insolvency practitioner in relation to the employer must--

(a) if he is able to confirm that a scheme rescue is not possible, issue a notice to that effect (a "scheme failure notice"), or

(b) if he is able to confirm that a scheme rescue has occurred, issue a notice to that effect (a "withdrawal notice").

(3) Subsection (4) applies where--

(a) in prescribed circumstances, insolvency proceedings in relation to the employer are stayed or come to an end, or

(b) a prescribed event occurs.

(4) If a person who was acting as an insolvency practitioner in relation to the employer immediately before this subsection applies has not been able to confirm in relation to the scheme--

(a) that a scheme rescue is not possible, or

(b) that a scheme rescue has occurred,

he must issue a notice to that effect.

(5) For the purposes of this section--

(a) a person is able to confirm that a scheme rescue has occurred in relation to an occupational pension scheme if, and only if, he is able to confirm such matters as are prescribed for the purposes of this paragraph, and

(b) a person is able to confirm that a scheme rescue is not possible, in relation to such a scheme if, and only if, he is able to confirm such matters as are prescribed for the purposes of this paragraph.

(6) Where an insolvency practitioner or former insolvency practitioner in relation to the employer issues a notice under this section, he must give a copy of that notice to--

(a) the Board,

(b) the Regulator, and

(7) A person must comply with an obligation imposed on him by subsection (2), (4) or (6) as soon as reasonably practicable.

(8) Regulations may require notices issued under this section--

(a) to be in a prescribed form;

(b) to contain prescribed information.

123 Approval of notices issued under section 122

(1) This section applies where the Board receives a notice under section 122(6) ("the section 122 notice").

(2) The Board must determine whether to approve the section 122 notice.

(3) The Board must approve the section 122 notice if, and only if, it is satisfied--

(a) that the insolvency practitioner or former insolvency practitioner who issued the notice was required to issue it under that section, and

(b) that the notice complies with any requirements imposed by virtue of subsection (8) of that section.

(4) Where the Board makes a determination for the purposes of subsection (2), it must issue a determination notice and give a copy of that notice to--

(a) the Regulator,

(b) the trustees or managers of the scheme,

(d) any insolvency practitioner in relation to the employer (who does not fall within paragraph (c)), and

(e) if there is no insolvency practitioner in relation to the employer, the employer.

(5) In subsection (4) "determination notice" means a notice which is in the prescribed form and contains such information about the determination as may be prescribed.

Board's duties

124 Board's duty where there is a failure to comply with section 122

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

(a) the Board determines under section 123 not to approve a notice issued under section 122 by an insolvency practitioner or former insolvency practitioner in relation to the employer, or

(b) an insolvency practitioner or former insolvency practitioner in relation to the employer fails to issue a notice under section 122 and the Board is satisfied that such a notice ought to have been issued under that section.

(2) The obligations on the insolvency practitioner or former insolvency practitioner imposed by subsections (2) and (4) of section 122 are to be treated as obligations imposed on the Board and the Board must accordingly issue a notice as required under that section.

(3) Subject to subsections (4) and (5), where a notice is issued under section 122 by the Board by virtue of this section, it has effect as if it were a notice issued under section 122 by an insolvency practitioner or, as the case may be, former insolvency practitioner in relation to the employer.

(4) Where a notice is issued under section 122 by virtue of this section, section 122(6) does not apply and the Board must, as soon as reasonably practicable, give a copy of the notice to--

(a) the Regulator,

(b) the trustees or managers of the scheme,

(d) any insolvency practitioner in relation to the employer (who does not fall within paragraph (c)), and

(e) if there is no insolvency practitioner in relation to the employer, the employer.

(5) Where the Board--

(a) is required to issue a notice under section 122 by virtue of this section, and

(b) is satisfied that the notice ought to have been issued at an earlier time,

it must specify that time in the notice and the notice is to have effect as if it had been issued at that time.

125 Binding notices confirming status of scheme

(1) Subject to subsection (2), for the purposes of this Part, a notice issued under section 122 is not binding until--

(a) the Board issues a determination notice under section 123 approving the notice,

(b) the period within which the issue of the determination notice under that section may be reviewed by virtue of Chapter 6 has expired, and

(i) the review and any reconsideration,

(ii) any reference to the PPF Ombudsman in respect of the issue of the notice, and

(iii) any appeal against his determination or directions,

has been finally disposed of and the determination notice has not been revoked, varied or substituted.

(2) Where a notice is issued under section 122 by the Board by virtue of section 124, the notice is not binding until--

(a) the period within which the issue of the notice may be reviewed by virtue of Chapter 6 has expired, and

(b) if the issue of the notice is so reviewed--

(i) the review and any reconsideration,

(ii) any reference to the PPF Ombudsman in respect of the issue of the notice, and

(iii) any appeal against his determination or directions,

has been finally disposed of and the notice has not been revoked, varied or substituted.

(3) Where a notice issued under section 122 becomes binding, the Board must as soon as reasonably practicable give a notice to that effect together with a copy of the binding notice to--

(a) the Regulator,

(b) the trustees or managers of the scheme,

(c) the insolvency practitioner or former insolvency practitioner who issued the notice under section 122 or, where that notice was issued by the Board by virtue of section 124, the insolvency practitioner or former insolvency practitioner mentioned in subsection (1) of that section,

(d) any insolvency practitioner in relation to the employer (who does not fall within paragraph (c)), and

(e) if there is no insolvency practitioner in relation to the employer, the employer.

(4) A notice under subsection (3)--

(a) must be in the prescribed form and contain such information as may be prescribed, and

(b) where it is given in relation to a withdrawal notice issued under section 122(2)(b) which has become binding, must state the time from which the Board ceases to be involved with the scheme (see section 149).

Chapter 3 Pension protection

Eligible schemes

126 Eligible schemes

(1) Subject to the following provisions of this section, in this Part references to an "eligible scheme" are to an occupational pension scheme which--

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