Pension Schemes Act 1993 (c. 48)

(The document as of February, 2008)

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Pension Schemes Act 1993 (c. 48)

1993 CHAPTER 48

ARRANGEMENT OF SECTIONS

An Act to consolidate certain enactments relating to pension schemes with amendments to give effect to recommendations of the Law Commission and the Scottish Law Commission.

[5th November 1993]

Be it enacted by the Queen's most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:--

Part I Preliminary

1 Categories of pension schemes

In this Act, unless the context otherwise requires--

• "occupational pension scheme" means any scheme or arrangement which is comprised in one or more instruments or agreements and which has, or is capable of having, effect in relation to one or more descriptions or categories of employments so as to provide benefits, in the form of pensions or otherwise, payable on termination of service, or on death or retirement, to or in respect of earners with qualifying service in an employment of any such description or category;

• "personal pension scheme" means any scheme or arrangement which is comprised in one or more instruments or agreements and which has, or is capable of having, effect so as to provide benefits, in the form of pensions or otherwise, payable on death or retirement to or in respect of employed earners who have made arrangements with the trustees or managers of the scheme for them to become members of it;

• "public service pension scheme" means an occupational pension scheme established by or under an enactment or the Royal prerogative or a Royal charter, being a scheme--

  (a)

  all the particulars of which are set out in, or in a legislative instrument made under, an enactment, Royal warrant or charter, or

  (b)

  which cannot come into force, or be amended, without the scheme or amendment being approved by a Minister of the Crown or government department,

  and includes any occupational pension scheme established, with the concurrence of the Treasury, by or with the approval of any Minister of the Crown and any occupational pension scheme prescribed by regulations made by the Secretary of State and the Treasury jointly as being a scheme which ought in their opinion to be treated as a public service pension scheme for the purposes of this Act.

Part II Administration

The Occupational Pensions Board

2 Constitution and functions of the Board

(1) There shall continue to be a body corporate by the name of the Occupational Pensions Board (in this Act referred to as "the Board").

(2) The Board shall have--

(a) the functions conferred on them by this Act (or any corresponding provisions in force in Northern Ireland); and

(b) such advisory or other functions as may be conferred on them by the Secretary of State in respect of occupational pension schemes (including public service pension schemes).

3 Membership of the Board

(1) The Board shall consist of--

(a) a chairman,

(b) a deputy chairman, and

(c) not less than 8 nor more than 12 other members,

all of whom shall be appointed by the Secretary of State.

(2) Of the members other than the chairman and deputy chairman--

(a) one shall be appointed after consultation with organisations representative of employers, and

(b) one shall be appointed after consultation with organisations representative of employed earners,

being in either case such organisations as the Secretary of State thinks it appropriate to consult.

4 Reports of the Board

(1) The Secretary of State may from time to time direct the Board to make a report to him on the exercise of their functions.

(2) It shall be the duty of the Board to comply with any such direction as soon as is practicable.

(3) The Secretary of State shall lay before each House of Parliament a copy of any report made to him in response to a direction under subsection (1).

5 Further provisions as to constitution and procedure of the Board

Schedule 1 shall have effect for the purpose of making further provision with respect to the Board.

Registration of schemes

6 Registration of occupational and personal pension schemes

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

(a) for the compilation and maintenance of a register of occupational and personal pension schemes (in this Act referred to as "the register");

(b) for the appointment of a Registrar of Occupational and Personal Pension Schemes (in this Act referred to as "the Registrar"); and

(c) for conferring on the Registrar such functions relating to the compilation and maintenance of the register as may be specified in the regulations.

(2) The regulations--

(a) may make provision with respect to any of the following matters, that is to say--

(i) the remuneration and expenses, and any pensions, allowances or gratuities, or compensation for loss of office, payable to or in respect of the Registrar;

(ii) the staff and other facilities that are to be available to the Registrar;

(iii) the other terms and conditions upon which the Registrar is to hold office; and

(iv) the removal of the Registrar from office; and

(b) may confer upon the Registrar power to appoint an agent to perform any of his functions on his behalf.

(3) The register--

(a) may consist of one or more parts, as may be prescribed;

(b) shall be organised in such manner, and contain such information relating to occupational and personal pension schemes, as may be prescribed; and

(c) subject to the regulations, may be kept in such manner and form as the Registrar may think fit.

(4) The regulations may make provision--

(a) for the register, or extracts from the register, or for copies of the register or of extracts from the register, to be open to inspection by, and

(b) for copies of the register, or of extracts from it, to be supplied to,

such persons, in such manner, at such times, upon payment of such fees, and subject to such other terms and conditions, as may be prescribed.

(5) The regulations may require--

(a) any person who is or has been--

(i) a trustee or manager of an occupational or personal pension scheme or an administrator of a public service pension scheme, or

(ii) the employer in relation to employment of any description or category to which an occupational pension scheme relates, and

(b) such other persons as may be prescribed,

to provide the Registrar with such information for the purposes of the register in such form and within such time as may be prescribed.

(6) The Secretary of State may direct the Registrar to submit to him, in such form and at such intervals as may be specified in the direction, such statistical and other reports as the Secretary of State may require; and the Secretary of State may determine at his discretion whether or not to publish a report submitted to him under this subsection.

(7) Subsections (2) to (5) are without prejudice to the generality of subsection (1).

(8) Nothing in this Act shall be taken to imply that the Board may not be appointed as the Registrar.

Part III Certification of Pension Schemes and Effects on Members' State Scheme Rights and Duties

Chapter I Certification

Preliminary

7 Issue of contracting-out and appropriate scheme certificates

(1) Regulations shall provide for the Board to issue certificates stating--

(a) that the employment of an earner in employed earner's employment is contracted-out employment by reference to an occupational pension scheme; or

(b) that a personal pension scheme is an appropriate scheme;

and in this Act a certificate under paragraph (a) is referred to as "a contracting-out certificate" and a certificate under paragraph (b) as "an appropriate scheme certificate".

(2) The regulations shall provide for contracting-out certificates to be issued to employers and to specify--

(a) the employments which are to be treated, either generally or in relation to any specified description of earners, as contracted-out employments; and

(b) the occupational pension schemes by reference to which those employments are to be so treated.

(3) An occupational pension scheme is a contracted-out scheme in relation to an earner's employment if it is for the time being specified in a contracting-out certificate in relation to that employment; and references in this Act to the contracting-out of a scheme are references to its inclusion in such a certificate.

(4) A personal pension scheme is an appropriate scheme if there is in force an appropriate scheme certificate issued by the Board in accordance with this Chapter that it is such a scheme.

(5) An appropriate scheme certificate for the time being in force in relation to a scheme shall be conclusive that the scheme is an appropriate scheme.

(6) Regulations shall provide that any question whether a personal pension scheme is or at any time was an appropriate scheme shall be determined by the Board.

(7) Except in prescribed circumstances, no contracting-out certificate or appropriate scheme certificate shall have effect from a date earlier than that on which the certificate is issued.

8 Meaning of "contracted-out employment", "guaranteed minimum pension" and "minimum payment"

(1) The employment of an earner in employed earner's employment is "contracted-out employment" in relation to him during any period in which he is under pensionable age and--

(a) either--

(i) his service in the employment is for the time being service which qualifies him for a guaranteed minimum pension provided by an occupational pension scheme, or

(ii) his employer makes minimum payments in respect of his employment to an occupational pension scheme which is contracted-out by virtue of satisfying section 9(3) (in this Act referred to as "a money purchase contracted-out scheme"); and

(b) there is in force a contracting-out certificate issued by the Board in accordance with this Chapter stating that the employment is contracted-out employment by reference to the scheme.

(2) In this Act--

• "guaranteed minimum pension" means any pension which is provided by an occupational pension scheme in accordance with the requirements of sections 13 and 17 to the extent to which its weekly rate is equal to the earner's or, as the case may be, the earner's widow's or widower's guaranteed minimum as determined for the purposes of those sections respectively; and

• "minimum payment", in relation to an earner's employment in any tax week, means the rebate percentage of so much of the earnings paid to or for the benefit of the earner in that week as exceeds the current lower earnings limit but not the current upper earnings limit (or the prescribed equivalents if he is paid otherwise than weekly);

and for the purposes of this subsection "rebate percentage" means the sum of the percentages for the time being mentioned in paragraphs (a) and (b) of section 41(1).

(3) Regulations may make provision--

(a) for the manner in which, and time at which or period within which, minimum payments are to be made;

(b) for the recovery by employers of amounts in respect of the whole or part of minimum payments by deduction from earnings;

(c) for calculating the amounts payable according to a scale prepared from time to time by the Secretary of State or otherwise adjusting them so as to avoid fractional amounts or otherwise facilitate computation;

(d) for requiring that the liability in respect of a payment made in a tax week, in so far as the liability depends on any conditions as to a person's age on retirement, shall be determined as at the beginning of the week or as at the end of it;

(e) for securing that liability is not avoided or reduced by the payment of earnings being made in accordance with any practice which is abnormal for the employment in respect of which the earnings are paid;

(f) without prejudice to paragraph (e), for enabling the Secretary of State, where he is satisfied as to the existence of any practice in respect of the payment of earnings whereby the incidence of minimum payments is avoided or reduced by means of irregular or unequal payments of earnings, to give directions for securing that minimum payments are payable as if that practice were not followed;

(g) for the intervals at which, for the purposes of minimum payments, payments of earnings are to be treated as made; and

(h) for this section to have effect, in prescribed cases, as if for any reference to a tax week there were substituted a reference to a prescribed period.

(4) Any contracting-out certificate for the time being in force in respect of an employed earner's employment shall be conclusive that the employment is contracted-out employment.

(5) Regulations shall provide for the determination by the Board of any question whether an employment is to be treated as contracted-out employment or as to the persons in relation to whom, or the period for which, an employment is to be so treated.

General requirements for certification

9 Requirements for certification of schemes: general

(1) Subject to subsection (4), an occupational pension scheme can be contracted-out in relation to an earner's employment only if it satisfies subsection (2) or (3).

(2) An occupational pension scheme satisfies this subsection only if--

(a) it complies in all respects with sections 13 to 24 or, in such cases or classes of case as may be prescribed, with those sections as modified by regulations; and

(b) the rules of the scheme applying to guaranteed minimum pensions are framed so as to comply with the relevant requirements.

(3) An occupational pension scheme satisfies this subsection only if--

(a) the requirements imposed by or by virtue of sections 22 and 26 to 32 and such other requirements as may be prescribed are satisfied in its case; and

(b) the rules of the scheme applying to protected rights are framed so as to comply with the relevant requirements.

(4) Where there are two or more occupational pension schemes in force in relation to an earner's employment, none of which can by itself be a contracted-out scheme, the Board may, if they think fit, treat them for contracting-out purposes as a single scheme.

(5) A personal pension scheme can be an appropriate scheme only if--

(a) the requirements imposed by or by virtue of sections 26 to 32 and such other requirements as may be prescribed are satisfied in its case; and

(b) the rules of the scheme applying to protected rights are framed so as to comply with the relevant requirements.

(6) In this section "relevant requirements" means--

(a) the requirements of any regulations prescribing the form and content of rules of contracted-out or, as the case may be, appropriate schemes; and

(b) such other requirements as to form and content (not inconsistent with regulations) as may be imposed by the Board as a condition of contracting-out or, as the case may be, of being an appropriate scheme, either generally or in relation to a particular scheme.

10 Protected rights and money purchase benefits

(1) Subject to subsections (2) and (3), the protected rights of a member of a pension scheme are his rights to money purchase benefits under the scheme.

(2) If the rules of an occupational pension scheme so provide, a member's protected rights are--

(a) his rights under the scheme which derive from the payment of minimum payments together with any payments by the Secretary of State to the scheme under section 7 of the [1986 c. 50.] Social Security Act 1986 in respect of the member;

(b) any rights of the member to money purchase benefits which derive from protected rights under another occupational pension scheme or under a personal pension scheme which have been the subject of a transfer payment; and

(c) such other rights as may be prescribed.

(3) If the rules of a personal pension scheme so provide, a member's protected rights are--

(a) his rights under the scheme which derive from any payment of minimum contributions to the scheme; and

(b) any rights of his to money purchase benefits which derive from protected rights under another personal pension scheme or protected rights under an occupational pension scheme which have been the subject of a transfer payment; and

(c) such other rights as may be prescribed.

11 Elections as to employments covered by contracting-out certificates

(1) Subject to the provisions of this Part, an employment otherwise satisfying the conditions for inclusion in a contracting-out certificate shall be so included if and so long as the employer so elects and not otherwise.

(2) Subject to subsections (3) and (4), an election may be so made, and an employment so included, either generally or in relation only to a particular description of earners.

(3) Except in such cases as may be prescribed, an employer shall not, in making or abstaining from making any election under this section, discriminate between different earners on any grounds other than the nature of their employment.

(4) If the Board consider that an employer is contravening subsection (3) in relation to any scheme, they may--

(a) refuse to give effect to any election made by him in relation to that scheme; or

(b) cancel any contracting-out certificate held by him in respect of it.

(5) Regulations may make provision--

(a) for regulating the manner in which an employer is to make an election with a view to the issue, variation or surrender of a contracting-out certificate;

(b) for requiring an employer to give a notice of his intentions in respect of making or abstaining from making any such election in relation to any existing or proposed scheme--

(i) to employees in any employment to which the scheme applies or to which it is proposed that it should apply;

(ii) to any independent trade union recognised to any extent for the purpose of collective bargaining in relation to those employees;

(iii) to the trustees and managers of the scheme; and

(iv) to such other persons as may be prescribed;

(c) for requiring an employer, in connection with any such notice, to furnish such information as may be prescribed and to undertake such consultations as may be prescribed with any such trade union as is mentioned in paragraph (b)(ii);

(d) for empowering the Board to refuse to give effect to an election made by an employer unless they are satisfied that he has complied with the requirements of the regulations;

(e) for referring to an industrial tribunal any question--

(i) whether an organisation is such a trade union as is mentioned in paragraph (b)(ii), or

(ii) whether the requirements of the regulations as to consultation have been complied with.

12 Determination of basis on which scheme is contracted-out

(1) A contracting-out certificate shall state whether the scheme is contracted-out by virtue of subsection (2) or (3) of section 9.

(2) Where a scheme satisfies both of those subsections the employers, in their application for a certificate, shall specify one of those subsections as the subsection by virtue of which they wish the scheme to be contracted-out.

(3) A scheme which has been contracted-out by virtue of one of those subsections may not become contracted-out by reason of the other except in prescribed circumstances.

Requirements for certification of occupational pension schemes providing guaranteed minimum pensions

13 Minimum pensions for earners

(1) Subject to the provisions of this Part, the scheme must--

(a) provide for the earner to be entitled to a pension under the scheme if he attains pensionable age; and

(b) contain a rule to the effect that the weekly rate of the pension will be not less than his guaranteed minimum (if any) under sections 14 to 16.

(2) In the case of an earner who is a married woman or widow who is liable to pay primary Class 1 contributions at a reduced rate by virtue of section 19(4) of the [1992 c. 4.] Social Security Contributions and Benefits Act 1992, subject to the provisions of this Part, the scheme must--

(a) provide for her to be entitled to a pension under the scheme if she attains pensionable age and does not have a guaranteed minimum under sections 14 to 16; and

(b) satisfy such other conditions as may be prescribed.

(3) Subject to subsection (4), the scheme must provide for the pension to commence on the date on which the earner attains pensionable age and to continue for his life.

(4) Subject to subsection (5), the scheme may provide for the commencement of the earner's guaranteed minimum pension to be postponed for any period for which he continues in employment after attaining pensionable age.

(5) The scheme must provide for the earner's consent to be required--

(a) for any such postponement by virtue of employment to which the scheme does not relate; and

(b) for any such postponement after the expiration of five years from the date on which he attains pensionable age.

(6) Equivalent pension benefits for the purposes of the former legislation are not to be regarded as constituting any part of the earner's guaranteed minimum pension.

(7) The benefits referred to in subsection (6) are any to which the earner may be immediately or prospectively entitled in respect of a period of employment which--

(a) was for him non-participating employment under that legislation; and

(b) was not on its termination the subject of any payment in lieu of contributions;

but subsection (6) excludes only so much of those benefits as had to be provided in order that the employment should for that period be treated as non-participating.

(8) In this section "the former legislation" means Part III of the [1965 c. 51.] National Insurance Act 1965 and the previous corresponding enactments.

14 Earner's guaranteed minimum

(1) An earner has a guaranteed minimum in relation to the pension provided by a scheme if in any tax week in a relevant year, earnings in excess of the current lower earnings limit (or the prescribed equivalent if he is paid otherwise than weekly) have been paid to or for his benefit in respect of employment which is contracted-out by reference to the scheme.

(2) Subject to section 15(1), the guaranteed minimum shall be the weekly equivalent of an amount equal to the appropriate percentage of the total of the earner's earnings factors for the relevant years, so far as derived from earnings such as are mentioned in subsection (1) upon which primary Class 1 contributions have been paid or treated as paid.

(3) In determining the guaranteed minimum in a case where--

(a) earnings such as are mentioned in subsection (1) have been paid to a married woman or widow who is liable to pay primary Class 1 contributions at a reduced rate by virtue of section 19(4) of the [1992 c. 4.] Social Security Contributions and Benefits Act 1992, and

(b) the tax week in which those earnings are paid falls in the tax year 1991-92 or any subsequent tax year,

the married woman or widow shall be treated for the purposes of this section as having such earnings factors derived from those earnings as she would have had if primary Class 1 contributions had been payable, and paid, upon them otherwise than at a reduced rate.

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