Pensions Act 1995

• Citation: 1995 c. 26
• Sections: 424

Section 1 The new authority.

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Section 2 Reports to Secretary of State.

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Section 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

(c) trust schemes in general,

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 a 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 determination of the tribunal concerned , 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.

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Section 3A Prohibition orders: directors of corporate trustees etc

(1) A company or Scottish partnership is prohibited from being a trustee of a trust scheme at any time when an individual who is a director of the company or a partner in the partnership is prohibited from being a trustee of the scheme by an order under section 3.

(2) Where a company or partnership which is a trustee of a trust scheme becomes prohibited under subsection (1) in relation to the scheme, that subsection has the effect of removing the company or partnership as a trustee.

(3) The Authority may, on the application of a company or Scottish partnership, give notice in writing to the applicant waiving the prohibition under subsection (1)—

(a) in relation to an individual against whom an order under section 3 has been made, and

(b) either generally or in relation to a particular scheme or particular description of schemes.

(4) A notice may be given under subsection (3) only if the Authority is satisfied that the applicant would be a fit and proper person to be a trustee of the scheme or schemes to which the notice relates despite the individual being, or even if the individual were to become, a director of or partner in the applicant.

(5) A notice given at any time under subsection (3) cannot affect anything done before that time.

(6) An application under subsection (3) may not be made—

(a) during the period within which the determination to exercise the power to make the order against the individual may be referred to the Tribunal under section 96(3) or 99(7) of the Pensions Act 2004 (whether by a company or partnership which became prohibited under subsection (1) on the making of the order or by another person), and

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

(7) 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.

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

(9) References in this section to an order under section 3 are to an order under that section made on or after the date on which section 46(2) of the Pensions Act 2014 comes fully into force.

Section 4 Suspension orders.

(1) The Authority may by order suspend a trustee of a trust scheme—

(a) pending consideration being given to the making of an order against him under section 3(1),

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

(b) where proceedings have been instituted against him for an offence involving dishonesty or deception and have not been concluded,

(ba) where an application has been made under section 263H of the Insolvency Act 1986 for an order making him bankrupt and the application has not been determined,

(c) where a petition has been presented to the court for an order adjudging him bankrupt, or for the sequestration of his estate, and proceedings on the petition have not been concluded or an application has been made by him for a debt relief order (under Part 7A of the Insolvency Act 1986) and the application has not been determined ,

(d) where the trustee is a company, if a petition for the winding up of the company has been presented to the court and proceedings on the petition have not been concluded,

(e) where an application has been made to the court for a disqualification order against him under the Company Directors Disqualification Act 1986 or under the Company Directors Disqualification (Northern Ireland) Order 2002 and proceedings on the application have not been concluded, or

(f) where the trustee is a company or Scottish partnership and, if any director or, as the case may be, partner were a trustee, the Authority would have power to suspend him under paragraph (aa), (b), (c) or (e).

(2) An order under subsection (1)—

(a) if made by virtue of paragraph (a) or (aa) or, in a case where the Authority would have power to suspend a director or partner under paragraph (aa), by virtue of paragraph (f) , has effect for an initial period not exceeding twelve months, and

(b) in any other case, has effect until the proceedings in question are concluded or, in the case of an application for a debt relief order, the application is determined ;

but the Authority may by order extend the initial period referred to in paragraph (a) for a further period of twelve months, and any order suspending a person under subsection (1) ceases to have effect in relation to a trust scheme if an order is made against that person under section 3(1) in relation to that scheme .

(3) An order under subsection (1) has the effect of prohibiting the person suspended, during the period of his suspension, from exercising any functions as trustee of any trust scheme to which the order applies; and the order may apply to a particular trust scheme, a particular description of trust schemes or trust schemes in general.

(4) An order under subsection (1) may be made on one of the grounds in paragraphs (b) to (e) whether or not the proceedings were instituted, petition presented or application made (as the case may be) before or after the coming into force of that subsection.

(5) The Authority may, on the application of any person suspended under subsection (1), by order revoke the order, either generally or in relation to a particular scheme or a particular description of schemes; but a revocation made at any time cannot affect anything done before that time.

(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 a 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 determination of the tribunal concerned , has been finally disposed of.

(6) An order under this section may make provision as respects the period of the trustee’s suspension for matters arising out of it, and in particular for enabling any person to execute any instrument in his name or otherwise act for him and for adjusting any rules governing the proceedings of the trustees to take account of the reduction in the number capable of acting.

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Section 5 Removal of trustees: notices.

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Section 6 Removal or suspension of trustees: consequences.

(1) A person who purports to act as trustee of a trust scheme while prohibited from being a trustee of the scheme under section 3 or 3A or suspended in relation to the scheme under section 4 is guilty of an offence and liable—

(a) on summary conviction, to a fine not exceeding the statutory maximum, and

(b) on conviction on indictment, to a fine or imprisonment or both.

(2) An offence under subsection (1) may be charged by reference to any day or longer period of time; and a person may be convicted of a second or subsequent offence under that subsection by reference to any period of time following the preceding conviction of the offence.

(3) Things done by a person purporting to act as trustee of a trust scheme while prohibited from being a trustee of the scheme under section 3 or 3A or suspended in relation to the scheme under section 4 are not invalid merely because of that prohibition or suspension.

(4) Nothing in section 3 , 3A or 4 or this section affects the liability of any person for things done, or omitted to be done, by him while purporting to act as trustee of a trust scheme.

Section 7 Appointment of trustees.

(1) Where a trustee of a trust scheme is removed by an order under section 3, by section 3A or ... by reason of his disqualification, the Authority may by order appoint another trustee in his place.

(2) Where a trustee appointed under subsection (1) is appointed to replace a trustee appointed under section 23(1) , sections 22 to 26 shall apply to the replacement trustee as they apply to a trustee appointed under section 23(1) .

(3) The Authority may also by order appoint a trustee of a trust scheme where they are satisfied that it is reasonable to do so in order—

(a) to secure that the trustees as a whole have, or exercise, the necessary knowledge and skill for the proper administration of the scheme,

(b) to secure that the number of trustees is sufficient for the proper administration of the scheme, ...

(c) to secure the proper use or application of the assets of the scheme , or

(d) otherwise to protect the interests of the generality of the members of the scheme.

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(5) The power to appoint a trustee by an order under this section includes power by such an order—

(a) to determine the appropriate number of trustees for the proper administration of the scheme,

(b) to require a trustee appointed by the order to be paid fees and expenses out of the scheme’s resources,

(c) to provide for the removal or replacement of such a trustee.

(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

(c) any member of the scheme,

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

(6) Regulations may make provision about the descriptions of persons who may or may not be appointed trustees under this section.

Section 8 Appointment of trustees: consequences.

(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

(c) partly by the employer and partly out of those resources.

(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.

(3) Subject to subsection (4), a trustee appointed under that section shall, unless he is the independent trustee and section 22 applies in relation to the scheme, have the same powers and duties as the other trustees.

(4) Such an order may make provision—

(a) for restricting the powers or duties of a trustee so appointed, ...

(b) for powers or duties to be exercisable by a trustee so appointed to the exclusion of other trustees.

Section 9 Removal and appointment of trustees: property.

Where the Authority have power under this Part to appoint or remove a trustee or a trustee is removed under section 3A , they may exercise by order the same jurisdiction and powers as are exercisable by the High Court or, in relation to a trust scheme subject to the law of Scotland, the Court of Session for vesting any property in, or transferring any property to, trustees in consequence of the appointment or of the removal.

Section 10 Civil penalties.

(1) Where the Authority are satisfied that by reason of any act or omission this section applies to any person, they may by notice in writing require him to pay, within a prescribed period, a penalty in respect of that act or omission not exceeding the maximum amount.

(2) In this section “ the maximum amount ” means—

(a) £5,000 in the case of an individual and £50,000 in any other case, or

(b) such lower amount as may be prescribed in the case of an individual or in any other case,

and the Secretary of State may by order amend paragraph (a) by substituting higher amounts for the amounts for the time being specified in that paragraph.

(3) Regulations made by virtue of this Part may provide for any person who has contravened any provision of such regulations to pay, within a prescribed period, a penalty under this section not exceeding an amount specified in the regulations; and the regulations must specify different amounts in the case of individuals from those specified in other cases and any amount so specified may not exceed the amount for the time being specified in the case of individuals or, as the case may be, others in subsection (2)(a).

(4) An order made under subsection (2) or regulations made by virtue of subsection (3) do not affect the amount of any penalty recoverable under this section by reason of an act or omission occurring before the order or, as the case may be, regulations are made.

(5) Where—

(a) apart from this subsection, a penalty under this section is recoverable from a body corporate or Scottish partnership by reason of any act or omission of the body or partnership ... , and

(b) the act or omission was done with the consent or connivance of, or is attributable to any neglect on the part of, any persons mentioned in subsection (6),

this section applies to each of those persons who consented to or connived in the act or omission or to whose neglect the act or omission was attributable.

(6) The persons referred to in subsection (5)(b)—

(a) in relation to a body corporate, are—

(i) any director, manager, secretary, or other similar officer of the body, or a person purporting to act in any such capacity, and

(ii) where the affairs of a body corporate are managed by its members, any member in connection with his functions of management, and

(b) in relation to a Scottish partnership, are the partners.

(7) Where the Authority requires any person to pay a penalty by virtue of subsection (5), they may not also require the body corporate, or Scottish partnership, in question to pay a penalty in respect of the same act or omission.

(8) A penalty under this section is recoverable by the Authority.

(8A) Any penalty recoverable under this section—

(a) shall, if the county court so orders, be recoverable under section 85 of the County Courts Act 1984 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.

(9) The Authority must pay to the Secretary of State any penalty recovered under this section.

(10) The Authority may not require a person to pay a penalty under this section in respect of an act or omission if the Authority have issued a notice to the person under section 88A of the Pensions Act 2004 (financial penalties) in respect of the same act or omission.

Section 11 Powers to wind up schemes.

(1) Subject to the following provisions of this section, the Authority may by order direct or authorise an occupational pension scheme to be wound up if they are satisfied that—

(a) the scheme, or any part of it, ought to be replaced by a different scheme,

(b) the scheme is no longer required, or

(c) it is necessary in order to protect the interests of the generality of the members of the scheme that it be wound up.

(2) The Authority may not make an order under this section on either of the grounds referred to in subsection (1)(a) or (b) unless they are satisfied that the winding up of the scheme—

(a) cannot be achieved otherwise than by means of such an order, or

(b) can only be achieved in accordance with a procedure which—

(i) is liable to be unduly complex or protracted, or

(ii) involves the obtaining of consents which cannot be obtained, or can only be obtained with undue delay or difficulty,

and that it is reasonable in all the circumstances to make the order.

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(3A) The Authority may, during an assessment period (within the meaning of section 132 of the Pensions Act 2004 (meaning of “ assessment period ” for the purposes of Part 2 of that Act)) in relation to an occupational pension scheme, by order direct the scheme to be wound up if they are satisfied that it is necessary to do so in order—

(a) to ensure that the scheme’s protected liabilities do not exceed its assets, or

(b) if those liabilities do exceed its assets, to keep the excess to a minimum.

(3B) In subsection (3A)—

(a) “ protected liabilities ” has the meaning given by section 131 of the Pensions Act 2004, and

(b) references to the assets of the scheme are references to those assets excluding any assets representing the value of any rights in respect of money purchase benefits (within the meaning of that Act) under the scheme.

(4) An order under this section authorising a scheme to be wound up must include such directions with respect to the manner and timing of the winding up as the Authority think appropriate having regard to the purposes of the order.

This subsection is subject to sections 28, 135 and 219 of the Pensions Act 2004 (winding up order made when freezing order has effect in relation to scheme, during assessment period under Part 2 of that Act etc).

(5) The winding up of a scheme in pursuance of an order of the Authority under this section is as effective in law as if it had been made under powers conferred by or under the scheme.

(6) An order under this section may be made and complied with in relation to a scheme—

(a) in spite of any enactment or rule of law, or any rule of the scheme, which would otherwise operate to prevent the winding up, or

(b) except for the purpose of the Authority determining whether or not they are satisfied as mentioned in subsection (2), 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 winding up.

(6A) Subsection (6) does not have effect to authorise the Authority to make an order as mentioned in paragraph (a) or (b) of that subsection, if their doing so would be unlawful as a result of section 6(1) of the Human Rights Act 1998 (unlawful for public authority to act in contravention of a Convention right).

(7) In the case of a public service pension scheme—

(a) an order under subsection (1) directing or authorising the scheme to be wound up may only be made on the grounds referred to in paragraph (c), and

(b) such an order may, as the Authority think appropriate, adapt, amend or repeal any enactment (including the Scottish Parliamentary Pensions Act 2009 (asp 1)) in which the scheme is contained or under which it is made.

Section 12 Powers to wind up public service schemes.

(1) The appropriate authority may by order direct a public service pension scheme to be wound up if they are satisfied that—

(a) the scheme, or any part of it, ought to be replaced by a different scheme, or

(b) the scheme is no longer required.

(2) Subsection (2) of section 11 applies for the purposes of this section as it applies for the purposes of that, but as if references to the Authority were to the appropriate authority.

(3) In this section “ the appropriate authority ”, in relation to a scheme, means such Minister of the Crown or government department as may be designated by the Treasury as having responsibility for the particular scheme.

(4) An order under this section must include such directions with respect to the manner and timing of the winding up as that authority think appropriate.

(5) Such an order may, as that authority think appropriate, adapt, amend or repeal any enactment in which the scheme is contained or under which it is made.

Section 13 Injunctions and interdicts.

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Section 14 Restitution.

(1) If, on the application of the Authority, the court is satisfied—

(a) that a power to make a payment, or distribute any assets, to the employer, has been exercised in contravention of section 37, 76 or 77, or

(b) that any act or omission of the trustees or managers of an occupational pension scheme was in contravention of section 40,

the court may order the employer and any other person who appears to the court to have been knowingly concerned in the contravention to take such steps as the court may direct for restoring the parties to the position in which they were before the payment or distribution was made, or the act or omission occurred.

(2) The jurisdiction conferred by this section is exercisable by the High Court or the Court of Session.

Section 15 Directions.

(1) The Authority may, where in the case of any trust scheme the employer fails to comply with any requirement included in regulations by virtue of section 49(5), direct the trustees to make arrangements for the payment to the members of the benefit to which the requirement relates.

(2) The Authority may—

(a) where in the case of any trust scheme an annual report is published, direct the trustees to include a statement prepared by the Authority in the report, and

(b) in the case of any trust scheme, direct the trustees to send to the members a copy of a statement prepared by the Authority.

(3) A direction under this section must be given in writing.

(4) Where a direction under this section is not complied with, section 10 applies to any trustee who has failed to take all such steps as are reasonable to secure compliance.

Section 16 Requirement for member-nominated trustees.

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Section 17 Exceptions.

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Section 18 Corporate trustees: member-nominated directors.

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Section 19 Corporate trustees: exceptions.

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Section 20 Selection, and eligibility, of member-nominated trustees and directors.

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Section 21 Member-nominated trustees and directors: supplementary.

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Section 22 Circumstances in which following provisions apply.

(1) This section applies in relation to a trust scheme—

(a) if a person (referred to in this section and sections 23 to 26 as “the practitioner”) begins to act as an insolvency practitioner in relation to a company which, or an individual who, is the employer in relation to the scheme, or

(b) if the official receiver becomes—

(i) the liquidator or provisional liquidator of a company which is the employer in relation to the scheme, ...

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

(ii) the receiver and the manager, or the trustee, of the estate of a bankrupt who is the employer in relation to the scheme.

(2) Where this section applies in relation to a scheme by virtue of subsection (1) , it ceases to do so—

(a) if some person other than the employer mentioned in subsection (1) becomes the employer, or

(b) if at any time neither the practitioner nor the official receiver is acting in relation to the employer;

but this subsection does not affect the application of this section in relation to the scheme on any subsequent occasion when the conditions specified in subsection (1)(a) or (b) are satisfied in relation to it.

(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.

(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

(c) the trustees of the scheme.

(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

(c) the trustees of the scheme.

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

(3) In this section and sections 23 to 26 —

“acting as an insolvency practitioner” and “official receiver” shall be construed in accordance with sections 388 and 399 of the Insolvency Act 1986,

“ bankrupt ” has the meaning given by section 381 of the Insolvency Act 1986,

“ company ” means a company as defined in section 1(1) of the Companies Act 2006 or a company which may be wound up under Part V of the Insolvency Act 1986 (unregistered companies), ...

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Section 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

(c) he satisfies any prescribed requirements;

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.

Section 24 Members’ powers to apply to court to enforce duty.

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Section 25 Appointment and powers of independent trustees: further provisions.

(1) If, immediately before the appointment of an independent trustee under section 23(1) , there is no trustee of the scheme other than the employer, the employer shall cease to be a trustee upon the appointment of the independent trustee.

(2) While section 22 applies in relation to a scheme and there is an independent trustee of the scheme appointed under section 23(1) —

(a) any power vested in the trustees of the scheme and exercisable at their discretion may be exercised only by the independent trustee, and

(b) any power—

(i) which the scheme confers on the employer (otherwise than as trustee of the scheme), and

(ii) which is exercisable by him at his discretion but only as trustee of the power,

may be exercised only by the independent trustee.

...

(3) While section 22 applies in relation to a scheme and there is an independent trustee of the scheme appointed under section 23(1), the independent trustee may not be removed from being a trustee by virtue only of any provision of the scheme.

(4) If a trustee appointed under section 23(1) ceases to be an independent person (within the meaning of section 23(3)) , then—

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

(b) subject to subsection (5), he shall cease to be a trustee of the scheme.

(5) If, in a case where subsection (4) applies, there is no other trustee of the scheme than the former independent trustee, he shall not cease by virtue of that subsection to be a trustee until such time as another trustee is appointed.

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

(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

(c) partly by the employer and partly out of those resources.

(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.

Section 26 Insolvency practitioner or official receiver to give information to trustees.

(1) Notwithstanding anything in section 155 of the Insolvency Act 1986 (court orders for inspection etc. ), while section 22 applies in relation to a scheme by virtue of subsection (1) of that section , the practitioner or official receiver must provide the trustees of the scheme, as soon as practicable after the receipt of a request, with any information which the trustees may reasonably require for the purposes of the scheme.

(2) Any expenses incurred by the practitioner or official receiver in complying with a request under subsection (1) are recoverable by him as part of the expenses incurred by him in discharge of his duties.

(3) The practitioner or official receiver is not required under subsection (1) to take any action which involves expenses that cannot be so recovered, unless the trustees of the scheme undertake to meet them.

Section 26A Information to be given to the Authority in a s. 22 case

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Section 26B Information to be given in cases where s. 22 disapplied

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Section 26C Construction of ss. 26A and 26B

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Section 27 Trustee not to be auditor or actuary of the scheme.

(1) A trustee of a trust scheme, and any person who is connected with, or an associate of, such a trustee, is ineligible to act as an auditor or actuary of the scheme.

(2) Subsection (1) does not make a person who is a director, partner or employee of a firm of actuaries ineligible to act as an actuary of a trust scheme merely because another director, partner or employee of the firm is a trustee of the scheme.

(3) Subsection (1) does not make a person who falls within a prescribed class or description ineligible to act as an auditor or actuary of a trust scheme.

(4) A person must not act as an auditor or actuary of a trust scheme if he is ineligible under this section to do so.

(5) In this section and section 28 references to a trustee of a trust scheme do not include—

(a) a trustee, or

(b) a trustee of a scheme,

falling within a prescribed class or description.

Section 28 Section 27: consequences.

(1) Any person who acts as an auditor or actuary of a trust scheme in contravention of section 27(4) is guilty of an offence and liable—

(a) on summary conviction, to a fine not exceeding the statutory maximum, and

(b) on conviction on indictment, to imprisonment or a fine, or both.

(2) An offence under subsection (1) may be charged by reference to any day or longer period of time; and a person may be convicted of a second or subsequent offence under that subsection by reference to any period of time following the preceding conviction of the offence.

(3) Acts done as an auditor or actuary of a trust scheme by a person who is ineligible under section 27 to do so are not invalid merely because of that fact.

(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 29 Persons disqualified for being trustees.

(1) Subject to subsection (5), a person is disqualified for being a trustee of any trust scheme if—

(a) he has been convicted of any offence involving dishonesty or deception,

(b) he has been made bankrupt or sequestration of his estate has been awarded and (in either case) he has not been discharged or he is the subject of a bankruptcy restrictions order or an interim bankruptcy restrictions order ,

(ba) a moratorium period under a debt relief order (under Part 7A of the Insolvency Act 1986) applies in relation to him or he is the subject of a debt relief restrictions order or an interim debt relief restrictions order (under Schedule 4ZB of the Insolvency Act 1986),

(c) where the person is a company, if any director of the company is disqualified under this section,

(d) where the person is a Scottish partnership, if any partner is disqualified under this section,

(e) he has made a composition contract or an arrangement with, or granted a trust deed for the behoof of, his creditors and has not been discharged in respect of it, or

(f) he is subject to a disqualification order or disqualification undertaking under the Company Directors Disqualification Act 1986 or the Company Directors Disqualification (Northern Ireland) Order 2002 or to an order made under section 429(2)(b) of the Insolvency Act 1986 (failure to pay under county court administration order).

(2) In subsection (1)—

(a) paragraph (a) applies whether the conviction occurred before or after the coming into force of that subsection, but does not apply in relation to any conviction which is a spent conviction for the purposes of the Rehabilitation of Offenders Act 1974,

(b) paragraph (b) applies whether the adjudication of bankruptcy or the sequestration or the making of the bankruptcy restrictions order or an interim order occurred before or after the coming into force of that subsection,

(c) paragraph (e) applies whether the composition contract or arrangement was made, or the trust deed was granted, before or after the coming into force of that subsection, and

(d) paragraph (f) applies in relation to orders made before or after the coming into force of that subsection.

(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) The Authority may, on the application of any person disqualified under this section—

(a) give notice in writing to him waiving his disqualification,

(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

either generally or in relation to a particular scheme or particular description of schemes.

(6) A notice given ... at any time by virtue of subsection (5) cannot affect anything done before that time.

Section 30 Persons disqualified: consequences.

(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.

(2) Where—

(a) a trustee of a trust scheme becomes disqualified under section 29, ...

(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

the Authority may exercise by order the same jurisdiction and powers as are exercisable by the High Court or, in relation to a trust scheme subject to the law of Scotland, the Court of Session for vesting any property in, or transferring any property to, the trustees.

(3) A person who purports to act as a trustee of a trust scheme while he is disqualified under section 29 is guilty of an offence and liable—

(a) on summary conviction to a fine not exceeding the statutory maximum, and

(b) on conviction on indictment, to a fine or imprisonment or both.

(4) An offence under subsection (3) may be charged by reference to any day or longer period of time; and a person may be convicted of a second or subsequent offence under that subsection by reference to any period of time following the preceding conviction of the offence.

(5) Things done by a person disqualified under section 29 while purporting to act as trustee of a trust scheme are not invalid merely because of that disqualification.

(6) Nothing in section 29 or this section affects the liability of any person for things done, or omitted to be done, by him while purporting to act as trustee of a trust scheme.

(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 30A Accessibility of register of disqualified trustees

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Section 31 Trustees not to be indemnified for fines or civil penalties.

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Section 32 Decisions by majority.

(1) Decisions of the trustees of a trust scheme may, unless the scheme provides otherwise, be taken by agreement of a majority of the trustees.

(2) Where decisions of the trustees of a trust scheme may be taken by agreement of a majority of the trustees—

(a) the trustees may, unless the scheme provides otherwise, by a determination under this subsection require not less than the number of trustees specified in the determination to be present when any decision is so taken, and

(b) notice of any occasions at which decisions may be so taken must, unless the occasion falls within a prescribed class or description, be given to each trustee to whom it is reasonably practicable to give such notice.

(3) Notice under subsection (2)(b) must be given in a prescribed manner and not later than the beginning of a prescribed period.

(4) This section is subject to sections 8(4)(b) and 25(2) of this Act and section 241(6) of the Pensions Act 2004 .

(5) If subsection (2)(b) is not complied with, section 10 applies to any trustee who has failed to take all such steps as are reasonable to secure compliance.

Section 33 Investment powers: duty of care.

(1) Liability for breach of an obligation under any rule of law to take care or exercise skill in the performance of any investment functions, where the function is exercisable—

(a) by a trustee of a trust scheme, or

(b) by a person to whom the function has been delegated under section 34,

cannot be excluded or restricted by any instrument or agreement.

(2) In this section, references to excluding or restricting liability include—

(a) making the liability or its enforcement subject to restrictive or onerous conditions,

(b) excluding or restricting any right or remedy in respect of the liability, or subjecting a person to any prejudice in consequence of his pursuing any such right or remedy, or

(c) excluding or restricting rules of evidence or procedure.

(3) This section does not apply—

(a) to a scheme falling within any prescribed class or description, or

(b) to any prescribed description of exclusion or restriction.

Section 34 Power of investment and delegation.

(1) The trustees of a trust scheme have, subject to section 36(1) and to any restriction imposed by the scheme, the same power to make an investment of any kind as if they were absolutely entitled to the assets of the scheme.

(2) Any discretion of the trustees of a trust scheme to make any decision about investments—

(a) may be delegated by or on behalf of the trustees to a fund manager to whom subsection (3) applies to be exercised in accordance with section 36, but

(b) may not otherwise be delegated except under section 25 of the Trustee Act 1925 (delegation of trusts during absence abroad for period not exceeding twelve months ) or subsection (5) below.

(3) This subsection applies to a fund manager who, in relation to the investments, may take the decisions in question without contravening the prohibition imposed by section 19 of the Financial Services and Markets Act 2000 (prohibition on carrying on regulated activities unless authorised or exempt).

(4) The trustees are not responsible for the act or default of any fund manager in the exercise of any discretion delegated to him under subsection (2)(a) if they have taken all such steps as are reasonable to satisfy themselves or the person who made the delegation on their behalf has taken all such steps as are reasonable to satisfy himself—

(a) that the fund manager has the appropriate knowledge and experience for managing the investments of the scheme, and

(b) that he is carrying out his work competently and complying with section 36.

(5) Subject to any restriction imposed by a trust scheme—

(a) the trustees may authorise two or more of their number to exercise on their behalf any discretion to make any decision about investments, and

(b) any such discretion may, where giving effect to the decision would not constitute the carrying on, in the United Kingdom, of a regulated activity (within the meaning of the Financial Services and Markets Act 2000) , be delegated by or on behalf of the trustees to a fund manager to whom subsection (3) does not apply to be exercised in accordance with section 36;

but in either case the trustees are liable for any acts or defaults in the exercise of the discretion if they would be so liable if they were the acts or defaults of the trustees as a whole.

(6) Section 33 does not prevent the exclusion or restriction of any liability of the trustees of a trust scheme for the acts or defaults of a fund manager in the exercise of a discretion delegated to him under subsection (5)(b) where the trustees have taken all such steps as are reasonable to satisfy themselves, or the person who made the delegation on their behalf has taken all such steps as are reasonable to satisfy himself—

(a) that the fund manager has the appropriate knowledge and experience for managing the investments of the scheme, and

(b) that he is carrying out his work competently and complying with section 36;

and subsection (2) of section 33 applies for the purposes of this subsection as it applies for the purposes of that section.

(7) The provisions of this section override any restriction inconsistent with the provisions imposed by any rule of law or by or under any enactment, other than an enactment contained in, or made under, this Part or the Pension Schemes Act 1993.

Section 35 Investment principles.

(1) The trustees of a trust scheme must secure—

(a) that a statement of investment principles is prepared and maintained for the scheme, 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 ”, in relation to a trust scheme, means a written statement of the investment principles governing decisions about investments for the purposes of the scheme.

(3) Before preparing or revising a statement of investment principles, the trustees of a trust scheme 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.

(5) Neither a trust scheme nor a statement of investment principles may impose restrictions (however expressed) on any power to make investments by reference to the consent of the employer.

(6) If in the case of a trust scheme—

(a) a statement of investment principles has not been prepared, is not being maintained or has not been reviewed or revised, as required by this section, or

(b) the trustees have not complied with the obligation imposed on them by subsection (3),

section 10 applies to any trustee who has failed to take all reasonable steps to secure compliance.

(7) Regulations may provide that this section is not to apply to any scheme which is of a prescribed description.

Section 36 Choosing investments.

(1) The trustees of a trust scheme must exercise their powers of investment in accordance with regulations and in accordance with subsections (3) and (4), and any fund manager to whom any discretion has been delegated under section 34 must exercise the discretion in accordance with regulations.

(1A) Regulations under subsection (1) may, in particular—

(a) specify criteria to be applied in choosing investments, and

(b) require diversification of investments.

(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) Before investing in any manner (other than in a manner mentioned in Part I of Schedule 1 to the Trustee Investments Act 1961) the trustees must obtain and consider proper advice on the question whether the investment is satisfactory having regard to the requirements of regulations under subsection (1), so far as relating to the suitability of investments, and to the principles contained in the statement under section 35.

(4) Trustees retaining any investment must—

(a) determine at what intervals the circumstances, and in particular the nature of the investment, make it desirable to obtain such advice as is mentioned in subsection (3), and

(b) obtain and consider such advice accordingly.

(5) The trustees, or the fund manager to whom any discretion has been delegated under section 34, must exercise their powers of investment with a view to giving effect to the principles contained in the statement under section 35, so far as reasonably practicable.

(6) For the purposes of this section “ proper advice ” means—

(a) if the giving of the advice constitutes the carrying on, in the United Kingdom, of a regulated activity (within the meaning of the Financial Services and Markets Act 2000), advice given by a person who may give it without contravening the prohibition imposed by section 19 of that Act (prohibition on carrying on regulated activities unless authorised or exempt);

(b) in any other case, the advice of a person who is reasonably believed by the trustees to be qualified by his ability in and practical experience of financial matters and to have the appropriate knowledge and experience of the management of the investments of trust schemes.

(7) Trustees shall not be treated as having complied with subsection (3) or (4) unless the advice was given or has subsequently been confirmed in writing.

(8) If the trustees of a trust scheme—

(a) fail to comply with regulations under subsection (1), or

(b) do not obtain and consider advice in accordance with this section,

section 10 applies to any trustee who has failed to take all reasonable steps to secure compliance.

(9) Regulations may exclude the application of any of the preceding provisions of this section to any scheme which is of a prescribed description.

Section 36A Restriction on borrowing by trustees

Regulations may prohibit the trustees of a trust scheme, or the fund manager to whom any discretion has been delegated under section 34, from borrowing money or acting as a guarantor, except in prescribed cases.

Section 37 Payment of surplus to employer.

(1) This section applies to a trust scheme if—

(a) apart from this section power is conferred on the employer or any other person to make payments to the employer out of funds held for the purposes of the scheme, and

(b) the scheme is not being wound up.

(1A) But this section does not apply in the case of any of the payments listed in paragraphs (c) to (f) of section 175 of the Finance Act 2004 (authorised employer payments other than public service scheme payments or authorised surplus payments).

(2) Where the power referred to in subsection (1)(a) is conferred by the scheme on a person other than the trustees—

(a) it cannot be exercised by that person but may instead be exercised by the trustees, and

(b) any restriction imposed by the scheme on the exercise of the power shall, so far as capable of doing so, apply to its exercise by the trustees.

(3) The power referred to in subsection (1)(a) may only be exercised if—

(a) the trustees have obtained a written valuation of the scheme’s assets and liabilities prepared and signed by a prescribed person;

(b) there is a certificate in force—

(i) stating that in the opinion of that person the prescribed requirements are met as at the date by reference to which the assets are valued and the liabilities are calculated, and

(ii) specifying what in the opinion of that person is the maximum amount of payment that may be made to the employer;

(c) the payment does not exceed the maximum amount specified in the certificate;

(d) the trustees are satisfied that it is in the interests of the members that the power is exercised in the manner proposed;

(e) where the power is conferred by the scheme on the employer, the employer has asked for the power to be exercised, or consented to its being exercised, in the manner proposed;

(f) there is no freezing order in force in relation to the scheme under section 23 of the Pensions Act 2004; and

(g) notice of the proposal to exercise the power has been given, in accordance with prescribed requirements, to the members of the scheme.

(4) Provision may be made by regulations as to—

(a) the requirements (which may be alternative requirements) that must be met, in relation to any proposed payment to the employer out of funds held for the purposes of a scheme, with respect to the value of the scheme’s assets and the amount of its liabilities;

(b) the assets and liabilities to be taken into account for that purpose and the manner in which their value or amount is to be determined, calculated and verified;

(c) the maximum amount of the payment that may be made to the employer, having regard to the value of the scheme’s assets and the amount of its liabilities;

(d) the giving of a certificate as to the matters mentioned in paragraphs (a) and (c); and

(e) the period for which such a certificate is to be in force.

(5) The trustees must also comply with any other prescribed requirements in connection with the making of a payment under this section.

(6) If the trustees—

(a) purport to exercise the power referred to in subsection (1)(a) without complying with the requirements of this section, or

(b) fail to comply with any requirement of regulations under subsection (5),

section 10 applies to any of them who has failed to take all reasonable steps to secure compliance.

(7) If a person other than the trustees purports to exercise the power referred to in subsection (1)(a), section 10 applies to him.

(8) Regulations may provide that in prescribed circumstances this section does not apply, or applies with prescribed modifications, to schemes of a prescribed description.

Section 38 Power to defer winding up.

(1) If, apart from this section, the rules of a trust scheme would require the scheme to be wound up, the trustees may determine—

(a) that the scheme is not for the time being to be wound up but that no new members are to be admitted to it, or

(b) that the scheme is not for the time being to be wound up but that no new members, except pension credit members, are to be admitted to it.

(2) Where the trustees make a determination under subsection (1), they may also determine—

(a) that no further contributions are to be paid towards the scheme (other than those due to be paid before the determination is made) , or

(b) that no ...benefits are to accrue to, or in respect of, members of the scheme;

...

(2A) Subsection (2) does not authorise the trustees to determine—

(a) where there are accrued rights or pension credit rights to any benefit, that the benefit is not to be increased, or

(b) where the power conferred by that subsection is exercisable by virtue of a determination under subsection (1)(b), that members of the scheme may not acquire pension credit rights under it.

(3) This section does not apply to—

(a) a money purchase scheme, or

(b) a scheme falling within a prescribed class or description.

(4) This section also does not apply in relation to a trust scheme where the trustees are required to wind up, or continue the winding up, of the scheme under section 154(1) of the Pensions Act 2004 (requirement to wind up certain schemes with sufficient assets to meet protected liabilities).

Section 39 Exercise of powers by member trustees.

No rule of law that a trustee may not exercise the powers vested in him so as to give rise to a conflict between his personal interest and his duties to the beneficiaries shall apply to a trustee of a trust scheme, who is also a member of the scheme, exercising the powers vested in him in any manner, merely because their exercise in that manner benefits, or may benefit, him as a member of the scheme.

Section 40 Restriction on employer-related investments.

(1) The trustees or managers of an occupational pension scheme must secure that the scheme complies with any prescribed restrictions with respect to the proportion of its resources that may at any time be invested in, or in any description of, employer-related investments.

(2) In this section—

“ employer-related investments ” means—

shares or other securities issued by the employer or by any person who is connected with, or an associate of, the employer,

land which is occupied or used by, or subject to a lease in favour of, the employer or any such person,

property (other than land) which is used for the purposes of any business carried on by the employer or any such person,

loans to the employer or any such person, and

other prescribed investments,

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2A) In the definition of “employer-related investments” in subsection (2) “securities” means—

(a) shares,

(b) instruments creating or acknowledging indebtedness,

(c) instruments giving entitlements to investments,

(d) certificates representing securities.

(2B) Subsection (2A) must be read with—

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

(b) any relevant order made under that section, and

(c) Schedule 2 to that Act.

(3) To the extent (if any) that sums due and payable by a person to the trustees or managers of an occupational pension scheme remain unpaid—

(a) they shall be regarded for the purposes of this section as loans made to that person by the trustees or managers, and

(b) resources of the scheme shall be regarded as invested accordingly.

(4) If in the case of a trust scheme subsection (1) is not complied with, section 10 applies to any trustee who fails to take all such steps as are reasonable to secure compliance.

(5) If any resources of an occupational pension scheme are invested in contravention of subsection (1), any trustee or manager who agreed in the determination to make the investment is guilty of an offence and liable—

(a) on summary conviction, to a fine not exceeding the statutory maximum, and

(b) on conviction on indictment, to a fine or imprisonment, or both.

Section 41 Provision of documents for members.

(1) Regulations may require the trustees or managers of an occupational pension scheme—

(a) to obtain at prescribed times the documents mentioned in subsection (2), and

(b) to make copies of them, and of the documents mentioned in subsection (3), available to the persons mentioned in subsection (4).

(2) The documents referred to in subsection (1)(a) are—

(a) the accounts audited by the auditor of the scheme,

(b) the auditor’s statement about contributions under the scheme,

(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) The documents referred to in subsection (1)(b) are—

(a) any statement of funding principles prepared or revised under section 223 of the Pensions Act 2004,

(b) any valuation or report prepared by the actuary under section 224 of that Act,

(c) any certificate given by the actuary under section 225 or 227 of that Act.

(4) The persons referred to in subsection (1)(b) are—

(a) members and prospective members of the scheme,

(b) spouses or civil partners of members and of prospective members,

(c) persons within the application of the scheme and qualifying or prospectively qualifying for its benefits,

(d) independent trade unions recognised to any extent for the purposes of collective bargaining in relation to members and prospective members of the scheme.

(5) Regulations may in the case of occupational pension schemes provide for—

(a) prescribed persons,

(b) persons with prescribed qualifications or experience, or

(c) persons approved by the Secretary of State,

to act for the purposes of subsection (2) instead of scheme auditors or actuaries.

(5A) Regulations may impose duties on the trustees or managers of an occupational pension scheme to disclose information to, and make documents available to, a person acting under subsection (5).

(5B) If any duty imposed under subsection (5A) is not complied with, section 10 applies to any trustee, and to any manager, who has failed to take all such steps as are reasonable to secure compliance.

(6) Regulations shall make provision for referring to an employment tribunal any question whether an organisation is such a trade union as is mentioned in subsection (4)(d) and may make provision as to the form and content of any such document as is referred to in subsection (2).

Section 41A Climate change risk

(1) Regulations may impose requirements on the trustees or managers of an occupational pension scheme of a prescribed description with a view to securing that there is effective governance of the scheme with respect to the effects of climate change.

(2) The effects of climate change in relation to which provision may be made under subsection (1) include, in particular—

(a) risks arising from steps taken because of climate change (whether by governments or otherwise), and

(b) opportunities relating to climate change.

(3) The requirements which may be imposed by the regulations include, in particular, requirements about—

(a) reviewing the exposure of the scheme to risks of a prescribed description;

(b) assessing the assets of the scheme in a prescribed manner;

(c) determining, reviewing and (if necessary) revising a strategy for managing the scheme's exposure to risks of a prescribed description;

(d) determining, reviewing and (if necessary) revising targets relating to the scheme's exposure to risks of a prescribed description;

(e) measuring performance against such targets;

(f) preparing documents containing information of a prescribed description.

(4) Regulations under subsection (3)(b) may, in particular, require—

(a) that assets are assessed by reference to their exposure to risks of a prescribed description, and

(b) that an assessment includes determining the contribution of the assets of the scheme to climate change.

(5) The regulations may require the trustees or managers of the scheme to take into account—

(a) different ways in which the climate might change, and

(b) different steps that might be taken because of climate change.

(6) Regulations under subsection (5) may require the trustees or managers of the scheme to adopt prescribed assumptions as to future events, including assumptions about—

(a) the steps that might be taken for the purpose of achieving the Paris Agreement goal or other climate change goal, or

(b) the achievement of the Paris Agreement goal or other climate change goal.

(7) In complying with requirements imposed by the regulations, a trustee or manager must have regard to guidance prepared from time to time by the Secretary of State.

(8) In this section “ the Paris Agreement goal ” means the goal of holding the increase in the average global temperature to well below 2°C above pre-industrial levels referred to in Article 2(1)(a) of the agreement done at Paris on 12 December 2015.

Section 41B Climate change risk: publication of information

(1) Regulations may require the trustees or managers of an occupational pension scheme of a prescribed description to publish information of a prescribed description relating to the effects of climate change on the scheme (which may include information about matters to which regulations under section 41A may relate).

(2) Regulations under subsection (1) may, among other things—

(a) require the trustees or managers to publish a document of a prescribed description;

(b) require information or a document to be made available free of charge;

(c) require information or a document to be provided in a form that is or by means that are prescribed or of a prescribed description.

(3) In complying with requirements imposed by the regulations, a trustee or manager must have regard to guidance prepared from time to time by the Secretary of State.

Section 41C Sections 41A and 41B: compliance

(1) Regulations may make provision with a view to ensuring compliance with a provision of regulations under section 41A or 41B.

(2) The regulations may in particular—

(a) provide for the Authority to issue a notice (a “compliance notice”) to a person with a view to ensuring the person's compliance with a provision of regulations under section 41A or 41B;

(b) provide for the Authority to issue a notice (a “third party compliance notice”) to a person with a view to ensuring another person's compliance with a provision of regulations under section 41A or 41B;

(c) provide for the Authority to issue a notice (a “penalty notice”) imposing a penalty on a person where the Authority are of the opinion that the person—

(i) has failed to comply with a compliance notice or third party compliance notice, or

(ii) has contravened a provision of regulations under section 41A or 41B;

(d) provide for the making of a reference to the First-tier Tribunal or Upper Tribunal in respect of the issue of a penalty notice or the amount of a penalty;

(e) confer other functions on the Authority.

(3) The regulations may make provision for determining the amount, or the maximum amount, of a penalty in respect of a failure or contravention.

(4) But the amount of a penalty imposed under the regulations in respect of a failure or contravention must not exceed—

(a) £5,000, in the case of an individual, and

(b) £50,000, in any other case.