Welfare Reform and Pensions Act 1999

• Citation: 1999 c. 30
• Sections: 340

Section 1 Meaning of “stakeholder pension scheme”.

(1) A pension scheme is a stakeholder pension scheme for the purposes of this Part if it is registered as such a scheme under section 2 and each of the following is fulfilled, namely—

(a) the conditions set out in subsections (2) to (9) ; and

(b) such other conditions as may be prescribed.

(2) The first condition is that the scheme is established under a trust or in such other way as may be prescribed.

(3) The second condition is that the provisions made by the instruments establishing the scheme comply with such requirements as may be prescribed.

(4) The third condition is that, subject to such exceptions as may be prescribed, the benefits provided by the scheme are money purchase benefits within the meaning given by section 181 of the Pension Schemes Act 1993 (“ the 1993 Act ”).

(5) The fourth condition is that the scheme complies with such requirements as may be prescribed as regards the extent to which, and the circumstances in which—

(a) any payment made to the scheme by, or on behalf or in respect of, a member of the scheme,

(b) any income or capital gain arising from the investment of such a payment, or

(c) the value of rights under the scheme,

may be used to defray the administrative expenses of the scheme, to pay commission or in any other way which does not result in the provision of benefits for or in respect of members.

(6) The fifth condition is that the scheme complies with such of the requirements of regulations under section 113 of the 1993 Act (disclosure of information about schemes to members etc. ) as are applicable to it.

(7) The sixth condition is that, subject to such minimum contribution levels and other restrictions as may be prescribed, members of the scheme may make such contributions to the scheme as they think appropriate.

(8) The seventh condition is that ... the scheme accepts transfer payments in respect of members’ rights under—

(a) other pension schemes;

(b) contracts and schemes that became registered pension schemes by virtue of paragraph 1(1)(f) of Schedule 36 to the Finance Act 2004 (pension schemes etc. : transitional provisions and savings)

(c) annuities and insurance policies purchased or transferred for the purpose of giving effect to rights under pension schemes; and

(d) annuities purchased or entered into for the purpose of discharging liability in respect of pension credits under section 29(1)(b) or under corresponding Northern Ireland legislation.

(9) The eighth condition is that the scheme is a registered pension scheme under section 153 of the Finance Act 2004 (registration of pension schemes).

(10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 2 Registration of stakeholder pension schemes.

(1) The Authority shall keep a register of stakeholder pension schemes.

(2) Subject to subsection (3), the Authority shall register a pension scheme under this section if the trustees of the scheme, or any person or persons prescribed in relation to the scheme—

(a) make an application for the purpose and pay such fee as the Authority may determine; and

(b) declare that each of the following is fulfilled in relation to the scheme, namely—

(i) the conditions set out in subsections (2) to (9) of section 1; and

(ii) such other conditions as may be prescribed under subsection (1) of that section.

(3) Where the Authority are satisfied on reasonable grounds that any of those conditions is not fulfilled in relation to a pension scheme, the Authority may by direction —

(a) refuse to register the scheme; or

(b) where the scheme is registered under this section, remove it from the register.

(4) Section 10 of the Pensions Act 1995 (“ the 1995 Act ”) (civil penalties) applies to any trustee of a pension scheme which is or has been registered under this section, and to any person prescribed in relation to such a scheme, if—

(a) he fails to take all such steps as are reasonable to secure that each of those conditions is fulfilled in relation to the scheme or (as the case may be) while the scheme was so registered he failed to take all such steps as were reasonable to secure that each of those conditions was so fulfilled; or

(b) where the scheme was registered on his application, any of those conditions was not fulfilled in relation to the scheme at the time of the application.

(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7) The Secretary of State may by regulations 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, on payment of such fees, and subject to such other terms and conditions, as may be prescribed.

Section 3 Duty of employers to facilitate access to stakeholder pension schemes.

(1) Except in so far as regulations otherwise provide, it shall be the duty of an employer of relevant employees to comply with the requirement in subsection (5) .

(1A) A relevant employee, in relation to an employer, is an employee of the employer who, on the relevant date, satisfies the conditions in subsection (1B).

(1B) The conditions are that—

(a) the employee is a member of a stakeholder pension scheme;

(b) the employee made a request under subsection (5) before the relevant date and that request has not been withdrawn;

(c) the employee pays contributions (which are deducted in accordance with that request) to the scheme at regular intervals;

(d) at least one deduction has been made before the relevant date in accordance with that request.

(1C) A person ceases to be a relevant employee—

(a) on ceasing to be employed by the employer;

(b) on withdrawing a request under subsection (5);

(c) on ceasing to pay contributions at regular intervals.

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

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

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

(5) The ... requirement is that, subject to such exceptions and qualifications as may be prescribed, the employer shall, if he is requested to do so by a relevant employee ...—

(a) deduct the employee’s contributions to the stakeholder pension scheme from his remuneration; and

(b) pay them to the trustees or managers of the scheme or, if regulations so provide, to a prescribed person.

(5A) That requirement only applies in relation to a request to make deductions made before the relevant date (whether or not that request is varied after that date).

(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7) Section 10 of the 1995 Act (civil penalties) applies to an employer who fails to comply with the requirement set out above.

(8) An employer is not, while subject to the requirement in subsection (5) , under any duty—

(a) to make any enquiries, or act on any information, about the scheme for any purpose not connected with—

(i) ascertaining whether the scheme is for the time being registered under section 2,

(ii) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(iii) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) in particular, to investigate or monitor, or make any judgment as to, the past, present or future performance of the scheme.

(9) In this section—

“ employer ” means any employer, whether or not resident or incorporated in any part of the United Kingdom;

“ relevant date ” means the date on which section 87 of the Pensions Act 2008 comes into force.

...

...

Section 4 Obtaining information with respect to compliance with section 3 and corresponding Northern Ireland legislation.

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Section 5 Powers of inspection for securing compliance with section 3 and corresponding Northern Ireland legislation.

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Section 6 Application of certain enactments.

(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

(3) Schedule 1 (application of the 1993 and 1995 Acts to registered schemes) shall have effect.

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

Section 7 Reduced rates of contributions etc : power to specify different percentages.

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Section 8 Interpretation and application of Part I.

(1) In this Part—

“ the 1993 Act ” means the Pension Schemes Act 1993;

“ the 1995 Act ” means the Pensions Act 1995;

“ the Authority ” means the Pensions Regulator;

...

“ occupational pension scheme ” and “ personal pension scheme ” have the meanings given by section 1 of the 1993 Act;

“ pension scheme ” means an occupational pension scheme or a personal pension scheme;

“ prescribed ” means prescribed by regulations made by the Secretary of State;

“ stakeholder pension scheme ” shall be construed in accordance with section 1.

(2) The Secretary of State may by regulations make provision for a stakeholder pension scheme which—

(a) is prescribed or is of a prescribed description, and

(b) would (apart from the regulations) be an occupational pension scheme,

to be treated for all purposes, or for such purposes as may be prescribed, as if it were a personal pension scheme and not an occupational pension scheme.

(3) This Part applies to a pension scheme managed by or on behalf of the Crown as it applies to other pension schemes; and, accordingly, references in this Part to a person in his capacity as a trustee or manager of, or person prescribed in relation to, a pension scheme include the Crown, or a person acting on behalf of the Crown, in that capacity.

(4) This Part applies to persons employed by or under the Crown in like manner as if such persons were employed by a private person; and references in this Part to a person in his capacity as an employer include the Crown, or a person acting on behalf of the Crown, in that capacity.

(5) Subsections (3) and (4) do not apply to any provision of this Part under or by virtue of which a person may be prosecuted for an offence; but such a provision applies to persons in the public service of the Crown as it applies to other persons.

(6) Nothing in this Part applies to Her Majesty in Her private capacity (within the meaning of the Crown Proceedings Act 1947).

Section 9 Monitoring of employers’ payments to personal pension schemes.

In Part VI of the Pension Schemes Act 1993 (further requirements for protection of scheme members), after section 111 there shall be inserted—

Monitoring of employers’ payments to personal pension schemes.

(111A)

(1) This section applies where—

(a) an employee is a member of a personal pension scheme; and

(b) direct payment arrangements exist between the employee and his employer.

(2) In this section “ direct payment arrangements ” means arrangements under which contributions fall to be paid by or on behalf of the employer towards the scheme—

(a) on the employer’s own account (but in respect of the employee); or

(b) on behalf of the employee out of deductions from the employee’s earnings.

(3) The employer must secure that there is prepared, maintained and from time to time revised a record of the direct payment arrangements which complies with subsection (4).

(4) The record must—

(a) show the rates and due dates of contributions payable under the direct payment arrangements, and

(b) satisfy prescribed requirements.

(5) The employer must, within the prescribed period after the preparation or any revision of the record, send a copy of the record or (as the case may be) of the revised record to the trustees or managers of the scheme.

(6) Except in prescribed circumstances, the trustees or managers of the scheme must, where any contribution shown by the record to be payable under the direct payment arrangements has not been paid on or before its due date, give notice of that fact, within the prescribed period, to the Regulatory Authority and the employee.

(7) The trustees or managers of the scheme must before the end of prescribed intervals send the employee a statement setting out the amounts and dates of the payments made under the direct payment arrangements during a prescribed period.

(8) If—

(a) the employer fails to take all such steps as are reasonable to secure compliance with subsection (3) or (5), or

(b) a contribution payable under the direct payment arrangements is not paid to the trustees or managers of the scheme on or before its due date,

section 10 of the Pensions Act 1995 (power of the Regulatory Authority to impose civil penalties) applies to the employer.

(9) If subsection (6) or (7) is not complied with, section 10 of the Pensions Act 1995 applies to any trustee or manager of the scheme who has failed to take all such steps as are reasonable to secure compliance.

(10) If—

(a) subsection (6) or (7) is not complied with, and

(b) the scheme—

(i) is established under a trust, and

(ii) is or has been registered under section 2 of the Welfare Reform and Pensions Act 1999 (stakeholder schemes),

section 3 of the Pensions Act 1995 (power of the Regulatory Authority to remove trustees) applies to any trustee of the scheme who has failed to take all such steps as are reasonable to secure compliance.

(11) A person shall not be required by virtue of subsection (8)(b) above to pay a penalty under section 10 of the Pensions Act 1995 in respect of a failure if in respect of that failure he has been—

(a) required to pay a penalty under that section by virtue of section 3(7) of the Welfare Reform and Pensions Act 1999 (failures in respect of stakeholder pensions), or

(b) convicted of an offence under subsection (12) below.

(12) A person is guilty of an offence if he is knowingly concerned in the fraudulent evasion of the direct payment arrangements so far as they are arrangements for the payment by him or any other person of any such contribution towards the scheme as is mentioned in subsection (2)(b).

(13) A person guilty of an offence under subsection (12) is liable—

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

(b) on conviction on indictment, to imprisonment for a term not exceeding seven years or a fine or both.

(14) No prosecution shall be brought against the Crown for an offence under subsection (12), but that subsection applies to persons in the public service of the Crown as to other persons.

(15) In this section “ due date ”, in relation to a contribution payable under the direct payment arrangements, means—

(a) if the contribution falls to be paid on the employer’s own account, the latest day under the arrangements for paying it;

(b) if the contribution falls to be paid on behalf of the employee, the last day of a prescribed period.

(16) Regulations may provide for this section to apply with such modifications as may be prescribed in a case where—

(a) the direct payment arrangements give effect to a requirement arising under subsection (5) of section 3 of the Welfare Reform and Pensions Act 1999 (deduction and payment of employee’s contributions to stakeholder scheme), and

(b) in accordance with regulations under that subsection, that requirement is for the employer to pay contributions to a person prescribed by such regulations (instead of to the trustees or managers of the scheme).

(17) Nothing in this section shall be taken as varying the provisions of the direct payment arrangements or as affecting their enforceability.

Obtaining information for purposes of section 111A and corresponding Northern Ireland legislation.

(111B)

(1) Any person appearing to the Regulatory Authority to be a person who holds, or is likely to hold, information which is relevant to the issue—

(a) whether any provision made by or under section 111A is being, or has been, complied with by an employer or the trustees or managers of a personal pension scheme,

(b) whether, in the case of any direct payment arrangements existing between an employee and his employer, there has been such a failure to pay a contribution as is mentioned in subsection (8)(b) of that section, or

(c) whether an offence has been committed under subsection (12) of that section in relation to any such arrangements,

must, if required to do so by the Regulatory Authority by notice in writing, produce any document which is so relevant.

(2) To comply with subsection (1) the document must be produced in such a manner, at such a place and within such a period as may be specified in the notice.

(3) An inspector may, for the purposes of investigating any of the matters set out in subsection (1)(a) to (c), at any reasonable time enter premises liable to inspection and, while there—

(a) may make such examination and inquiry as may be necessary for such purposes,

(b) may require any person on the premises to produce for his inspection, or secure the production for his inspection of, any document relevant—

(i) to compliance with any provision made by or under section 111A, or with the direct payment arrangements, or

(ii) to the issue whether an offence has been committed under subsection (12) of that section in relation to those arrangements, and

(c) may, as to any matter so relevant, examine, or require to be examined, either alone or in the presence of another person, any person on the premises whom he has reasonable cause to believe to be able to give information relevant to that matter.

(4) An inspector applying for admission to any premises in pursuance of subsection (3) must, if so required, produce his certificate of appointment.

(5) For the purposes of subsection (3) premises are liable to inspection if the inspector has reasonable grounds to believe that—

(a) employees of the employer are employed there,

(b) documents relevant to the administration of—

(i) the employer’s business,

(ii) the direct payment arrangements, or

(iii) the scheme to which those arrangements relate,

are kept there, or

(c) either of the following is being carried out there, namely—

(i) the administration of the employer’s business, the arrangements or the scheme, or

(ii) work connected with the administration of the employer’s business, the arrangements or the scheme,

unless the premises are a private dwelling-house not used by, or by permission of, the occupier for the purposes of a trade or business.

(6) Section 100 of the Pensions Act 1995 (warrants) shall have effect as if references to section 98(1) or 99(1)(b) of that Act included references to subsection (1) or (3)(b).

(7) Sections 101 to 103 of that Act (penalties, savings and reports) shall have effect as if references which are or include references to section 98 or 99 of that Act included references to this section.

(8) In this section—

“ direct payment arrangements ” has the same meaning as in section 111A;

“ document ” includes information recorded in any form, and any reference to production of a document, in relation to information recorded otherwise than in legible form, is to producing a copy of the information in legible form;

“ inspector ” means a person appointed by the Regulatory Authority as an inspector.

(9) References in this section to, or to any provision of, section 111A include references to corresponding provisions of Northern Ireland legislation; and in this section as it has effect in relation to those corresponding provisions, “ employee ” and “ employer ” have the meaning they have for the purposes of those provisions.

Section 10 Late payments by employers to occupational pension schemes.

(1) For section 49(8) of the Pensions Act 1995 (offence where deduction from earnings not paid in timely fashion to occupational pension scheme) there shall be substituted—

(8) Where on making a payment of any earnings in respect of any employment there is deducted any amount corresponding to any contribution payable on behalf of an active member of an occupational pension scheme, the amount deducted is to be paid, within a prescribed period, to the trustees or managers of the scheme.

(9) If in any case there is a failure to comply with subsection (8)—

(a) section 10 applies to the employer; and

(b) except in prescribed circumstances, the trustees or managers must give notice of the failure, within the prescribed period, to the Authority and the member.

(10) If in any case subsection (9)(b) is not complied with—

(a) section 3 applies to any trustee who has failed to take all such steps as are reasonable to secure compliance; and

(b) section 10 applies to any trustee or manager who has failed to take all such steps.

(11) If any person is knowingly concerned in the fraudulent evasion of the obligation imposed by subsection (8) in any case, he is guilty of an offence.

(12) A person guilty of an offence under subsection (11) is liable—

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

(b) on conviction on indictment, to imprisonment for a term not exceeding seven years or a fine or both.

(13) A person shall not be required by virtue of subsection (9)(a) above to pay a penalty under section 10 in respect of a failure if in respect of that failure he has been—

(a) required to pay a penalty under that section by virtue of section 3(7) of the Welfare Reform and Pensions Act 1999 (failures in respect of stakeholder pensions), or

(b) convicted of an offence under subsection (11) above.

(2) In section 88(3) of that Act (civil penalty where contributions by or on behalf of employer to occupational pension scheme not paid by due date), after “by or on behalf of the employer” there shall be inserted “ on the employer’s own account ” .

Section 11 Effect of bankruptcy on pension rights: approved arrangements.

(1) Where a bankruptcy order is made against a person on a bankruptcy application made or petition presented after the coming into force of this section, any rights of his under an approved pension arrangement are excluded from his estate.

(2) In this section “ approved pension arrangement ” means—

(a) a pension scheme registered under section 153 of the Finance Act 2004;

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

(c) an occupational pension scheme set up by a government outside the United Kingdom for the benefit, or primarily for the benefit, of its employees;

(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(g) an annuity purchased for the purpose of giving effect to rights under a scheme falling within paragraph (a), including an annuity in payment before 6th April 2006, giving effect to rights under any scheme approved—

(i) before that date under Chapters 1, 3 or 4 of Part 14 of the Taxes Act; or

(ii) any relevant statutory scheme, as defined in section 611 of that Act;

(h) any pension arrangements of any description which may be prescribed by regulations made by the Secretary of State.

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

(4) Subsection (5) applies if—

(a) at the time when a bankruptcy order is made against a person, an appeal against a decision not to register a pension scheme has been made under section 156 of the Finance Act 2004, and

(b) the decision of the tribunal (see section 156(3) of that Act) is to uphold the decision of Her Majesty’s Revenue and Customs not to register the scheme.

(5) Any rights of that person under the scheme shall (without any conveyance, assignment or transfer) vest in his trustee in bankruptcy, as part of his estate, immediately on—

(a) the tribunal’s decision being made, or

(b) (if later) the trustee’s appointment taking effect or, in the case of the official receiver, his becoming trustee.

(6) Subsection (7) applies if, at any time after a bankruptcy order is made against a person Her Majesty’s Revenue and Customs—

(a) give notice withdrawing registration of the pension scheme under section 157 of the Finance Act 2004, and

(b) the date specified as being that from which de-registration occurs under sub-section (4) of that section (“the de-registration date”) is the date from which the scheme ceases to be a registered pension scheme.

(7) Any rights of that person under the scheme or arising by virtue of the arrangements, and any rights of his under any related annuity, shall (without any conveyance, assignment or transfer) vest in his trustee in bankruptcy, as part of his estate, immediately on—

(a) the giving of the notice, or

(b) (if later) the trustee’s appointment taking effect or, in the case of the official receiver, his becoming trustee.

(8) In subsection (7) “ related annuity ” means an annuity purchased on or after the de-registration date for the purpose of giving effect to rights under the scheme or (as the case may be) to rights arising by virtue of the arrangements.

(9) Where under subsection (5) or (7) any rights vest in a person’s trustee in bankruptcy, the trustee’s title to them has relation back to the commencement of the person’s bankruptcy; but where any transaction is entered into by the trustees or managers of the scheme in question—

(a) in good faith, and

(b) without notice of the making of the decision mentioned in subsection (4)(b) or (as the case may be) the giving of the notice mentioned in subsection (6),

the trustee in bankruptcy is not in respect of that transaction entitled by virtue of this subsection to any remedy against them or any person whose title to any property derives from them.

(10) Without prejudice to section 83, regulations under subsection (2)(h) may, in the case of any description of arrangements prescribed by the regulations, make provision corresponding to any provision made by subsections (4) to (9).

(11) In this section—

(a) “occupational pension scheme” has the meaning given in section 150(5) of the Finance Act 2004;

(b) “pension scheme” has the meaning given in section 150(1) of the Finance Act 2004 and “registered pension scheme” means a pension scheme registered under section 153 of the Finance Act 2004;

(c) “ estate ”, in relation to a person against whom a bankruptcy order is made, means his estate for the purposes of Parts VIII to XI of the Insolvency Act 1986;

(d) “ the Taxes Act ” means the Income and Corporation Taxes Act 1988.

(12) For the purposes of this section a person shall be treated as having a right under an approved pension arrangement where—

(a) he is entitled to a credit under section 29(1)(b) as against the person responsible for the arrangement (within the meaning of Chapter I of Part IV), and

(b) the person so responsible has not discharged his liability in respect of the credit.

Section 12 Effect of bankruptcy on pension rights: unapproved arrangements.

(1) The Secretary of State may by regulations make provision for or in connection with enabling rights of a person under an unapproved pension arrangement to be excluded, in the event of a bankruptcy order being made against that person, from his estate for the purposes of Parts VIII to XI of the Insolvency Act 1986.

(2) Regulations under this section may, in particular, make provision—

(a) for rights under an unapproved pension arrangement to be excluded from a person’s estate—

(i) by an order made on his application by a prescribed court, or

(ii) in accordance with a qualifying agreement made between him and his trustee in bankruptcy;

(b) for the court’s decision whether to make such an order in relation to a person to be made by reference to—

(i) future likely needs of him and his family, and

(ii) whether any benefits (by way of a pension or otherwise) are likely to be received by virtue of rights of his under other pension arrangements and (if so) the extent to which they appear likely to be adequate for meeting any such needs;

(c) for the prescribed persons in the case of any pension arrangement to provide a person or his trustee in bankruptcy on request with information reasonably required by that person or trustee for or in connection with the making of such applications and agreements as are mentioned in paragraph (a).

(3) In this section—

“ prescribed ” means prescribed by regulations under this section;

“ qualifying agreement ” means an agreement entered into in such circumstances, and satisfying such requirements, as may be prescribed;

“ unapproved pension arrangement ” means a pension arrangement which—

is not an approved pension arrangement within the meaning of section 11, and

is of a prescribed description.

(4) For the purposes of this section a person shall be treated as having a right under an unapproved pension arrangement where—

(a) he is entitled to a credit under section 29(1)(b) as against the person responsible for the arrangement (within the meaning of Chapter I of Part IV), and

(b) the person so responsible has not discharged his liability in respect of the credit.

Section 13 Sections 11 and 12: application to Scotland.

(1) This section shall have effect for the purposes of the application of sections 11 and 12 to Scotland.

(2) A reference to—

(a) the making of a bankruptcy order against a person is a reference to the award of sequestration on his estate or the making of the appointment on his estate of a judicial factor under section 41 of the Solicitors (Scotland) Act 1980;

(b) the estate of a person is a reference to his estate for the purposes of the Bankruptcy (Scotland) Act 1985 2016 or of the Solicitors (Scotland) Act 1980, as the case may be;

(c) assignment is a reference to assignation;

(d) a person’s trustee in bankruptcy is a reference to his permanent trustee trustee or interim trustee in a sequestration under the Bankruptcy (Scotland) Act 2016 or judicial factor, as the case may be;

(e) the commencement of a person’s bankruptcy is a reference to the date of sequestration (within the meaning of section 12(4) of the Bankruptcy (Scotland) Act 1985 22(7) of the Bankruptcy (Scotland) Act 2016 ) or of the judicial factor’s appointment taking effect, as the case may be.

(3) For paragraph (b) of each of subsections (5) and (7) of section 11 there shall be substituted—

(b) if later, the date of sequestration (within the meaning of section 12(4) of the Bankruptcy (Scotland) Act 1985 22(7) of the Bankruptcy (Scotland) Act 2016 ) or of the judicial factor’s appointment taking effect, as the case may be.

Section 14 No forfeiture on bankruptcy of rights under pension schemes.

(1) In the Pension Schemes Act 1993, after section 159 there shall be inserted—

No forfeiture on bankruptcy of rights under personal pension schemes.

(159A)

(1) A person’s rights under a personal pension scheme cannot be forfeited by reference to his bankruptcy.

(2) For the purposes of this section—

(a) a person shall be treated as having a right under a personal pension scheme where—

(i) he is entitled to a credit under section 29(1)(b) of the Welfare Reform and Pensions Act 1999 (sharing of rights on divorce etc.),

(ii) he is so entitled as against the person responsible for the scheme (within the meaning of Chapter I of Part IV of that Act), and

(iii) the person so responsible has not discharged his liability in respect of the credit; and

(b) forfeiture shall be taken to include any manner of deprivation or suspension.

(2) In section 159(6) of that Act (application of section 159 to Scotland), after “this section” there shall be inserted “ and section 159A ” .

(3) In section 92(2) of the Pensions Act 1995 (exceptions to the rule preventing forfeiture of rights under occupational pension schemes), paragraph (b) (which allows forfeiture of such rights by reference to a scheme member’s bankruptcy) shall cease to have effect.

Section 15 Excessive pension contributions made by persons who have become bankrupt.

For sections 342A to 342C of the Insolvency Act 1986 there shall be substituted—

Recovery of excessive pension contributions.

(342A)

(1) Where an individual who is adjudged bankrupt—

(a) has rights under an approved pension arrangement, or

(b) has excluded rights under an unapproved pension arrangement,

the trustee of the bankrupt’s estate may apply to the court for an order under this section.

(2) If the court is satisfied—

(a) that the rights under the arrangement are to any extent, and whether directly or indirectly, the fruits of relevant contributions, and

(b) that the making of any of the relevant contributions (“ the excessive contributions ”) has unfairly prejudiced the individual’s creditors,

the court may make such order as it thinks fit for restoring the position to what it would have been had the excessive contributions not been made.

(3) Subsection (4) applies where the court is satisfied that the value of the rights under the arrangement is, as a result of rights of the individual under the arrangement or any other pension arrangement having at any time become subject to a debit under section 29(1)(a) of the Welfare Reform and Pensions Act 1999 (debits giving effect to pension-sharing), less than it would otherwise have been.

(4) Where this subsection applies—

(a) any relevant contributions which were represented by the rights which became subject to the debit shall, for the purposes of subsection (2), be taken to be contributions of which the rights under the arrangement are the fruits, and

(b) where the relevant contributions represented by the rights under the arrangement (including those so represented by virtue of paragraph (a)) are not all excessive contributions, relevant contributions which are represented by the rights under the arrangement otherwise than by virtue of paragraph (a) shall be treated as excessive contributions before any which are so represented by virtue of that paragraph.

(5) In subsections (2) to (4) “ relevant contributions ” means contributions to the arrangement or any other pension arrangement—

(a) which the individual has at any time made on his own behalf, or

(b) which have at any time been made on his behalf.

(6) The court shall, in determining whether it is satisfied under subsection (2)(b), consider in particular—

(a) whether any of the contributions were made for the purpose of putting assets beyond the reach of the individual’s creditors or any of them, and

(b) whether the total amount of any contributions—

(i) made by or on behalf of the individual to pension arrangements, and

(ii) represented (whether directly or indirectly) by rights under approved pension arrangements or excluded rights under unapproved pension arrangements,

is an amount which is excessive in view of the individual’s circumstances when those contributions were made.

(7) For the purposes of this section and sections 342B and 342C (“ the recovery provisions ”), rights of an individual under an unapproved pension arrangement are excluded rights if they are rights which are excluded from his estate by virtue of regulations under section 12 of the Welfare Reform and Pensions Act 1999.

(8) In the recovery provisions—

“ approved pension arrangement ” has the same meaning as in section 11 of the Welfare Reform and Pensions Act 1999;

“ unapproved pension arrangement ” has the same meaning as in section 12 of that Act.

Orders under section 342A.

(342B)

(1) Without prejudice to the generality of section 342A(2), an order under section 342A may include provision—

(a) requiring the person responsible for the arrangement to pay an amount to the individual’s trustee in bankruptcy,

(b) adjusting the liabilities of the arrangement in respect of the individual,

(c) adjusting any liabilities of the arrangement in respect of any other person that derive, directly or indirectly, from rights of the individual under the arrangement,

(d) for the recovery by the person responsible for the arrangement (whether by deduction from any amount which that person is ordered to pay or otherwise) of costs incurred by that person in complying in the bankrupt’s case with any requirement under section 342C(1) or in giving effect to the order.

(2) In subsection (1), references to adjusting the liabilities of the arrangement in respect of a person include (in particular) reducing the amount of any benefit or future benefit to which that person is entitled under the arrangement.

(3) In subsection (1)(c), the reference to liabilities of the arrangement does not include liabilities in respect of a person which result from giving effect to an order or provision falling within section 28(1) of the Welfare Reform and Pensions Act 1999 (pension sharing orders and agreements).

(4) The maximum amount which the person responsible for an arrangement may be required to pay by an order under section 342A is the lesser of—

(a) the amount of the excessive contributions, and

(b) the value of the individual’s rights under the arrangement (if the arrangement is an approved pension arrangement) or of his excluded rights under the arrangement (if the arrangement is an unapproved pension arrangement).

(5) An order under section 342A which requires the person responsible for an arrangement to pay an amount (“ the restoration amount ”) to the individual’s trustee in bankruptcy must provide for the liabilities of the arrangement to be correspondingly reduced.

(6) For the purposes of subsection (5), liabilities are correspondingly reduced if the difference between—

(a) the amount of the liabilities immediately before the reduction, and

(b) the amount of the liabilities immediately after the reduction,

is equal to the restoration amount.

(7) An order under section 342A in respect of an arrangement—

(a) shall be binding on the person responsible for the arrangement, and

(b) overrides provisions of the arrangement to the extent that they conflict with the provisions of the order.

Orders under section 342A: supplementary.

(342C)

(1) The person responsible for—

(a) an approved pension arrangement under which a bankrupt has rights,

(b) an unapproved pension arrangement under which a bankrupt has excluded rights, or

(c) a pension arrangement under which a bankrupt has at any time had rights,

shall, on the bankrupt’s trustee in bankruptcy making a written request, provide the trustee with such information about the arrangement and rights as the trustee may reasonably require for, or in connection with, the making of applications under section 342A.

(2) Nothing in—

(a) any provision of section 159 of the Pension Schemes Act 1993 or section 91 of the Pensions Act 1995 (which prevent assignment and the making of orders that restrain a person from receiving anything which he is prevented from assigning),

(b) any provision of any enactment (whether passed or made before or after the passing of the Welfare Reform and Pensions Act 1999) corresponding to any of the provisions mentioned in paragraph (a), or

(c) any provision of the arrangement in question corresponding to any of those provisions,

applies to a court exercising its powers under section 342A.

(3) Where any sum is required by an order under section 342A to be paid to the trustee in bankruptcy, that sum shall be comprised in the bankrupt’s estate.

(4) Regulations may, for the purposes of the recovery provisions, make provision about the calculation and verification of—

(a) any such value as is mentioned in section 342B(4)(b);

(b) any such amounts as are mentioned in section 342B(6)(a) and (b).

(5) The power conferred by subsection (4) includes power to provide for calculation or verification—

(a) in such manner as may, in the particular case, be approved by a prescribed person; or

(b) in accordance with guidance—

(i) from time to time prepared by a prescribed person, and

(ii) approved by the Secretary of State.

(6) References in the recovery provisions to the person responsible for a pension arrangement are to—

(a) the trustees, managers or provider of the arrangement, or

(b) the person having functions in relation to the arrangement corresponding to those of a trustee, manager or provider.

(7) In this section and sections 342A and 342B—

“ prescribed ” means prescribed by regulations;

“ the recovery provisions ” means this section and sections 342A and 342B;

“ regulations ” means regulations made by the Secretary of State.

(8) Regulations under the recovery provisions may—

(a) make different provision for different cases;

(b) contain such incidental, supplemental and transitional provisions as appear to the Secretary of State necessary or expedient.

(9) Regulations under the recovery provisions shall be made by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament.

Section 16 Excessive pension contributions made by persons who have become bankrupt: Scotland.

For sections 36A to 36C of the Bankruptcy (Scotland) Act 1985 there shall be substituted—

Recovery of excessive pension contributions.

(36A)

(1) Where a debtor’s estate has been sequestrated and he—

(a) has rights under an approved pension arrangement, or

(b) has excluded rights under an unapproved pension arrangement,

the permanent trustee may apply to the court for an order under this section.

(2) If the court is satisfied—

(a) that the rights under the arrangement are to any extent, and whether directly or indirectly, the fruits of relevant contributions, and

(b) that the making of any of the relevant contributions (“ the excessive contributions ”) has unfairly prejudiced the debtor’s creditors,

the court may make such order as it thinks fit for restoring the position to what it would have been had the excessive contributions not been made.

(3) Subsection (4) applies where the court is satisfied that the value of the rights under the arrangement is, as a result of rights of the debtor under the arrangement or any other pension arrangement having at any time become subject to a debit under section 29(1)(a) of the Welfare Reform and Pensions Act 1999 (debits giving effect to pension-sharing), less than it would otherwise have been.

(4) Where this subsection applies—

(a) any relevant contributions which were represented by the rights which became subject to the debit shall, for the purposes of subsection (2), be taken to be contributions of which the rights under the arrangement are the fruits, and

(b) where the relevant contributions represented by the rights under the arrangement (including those so represented by virtue of paragraph (a)) are not all excessive contributions, relevant contributions which are represented by the rights under the arrangement otherwise than by virtue of paragraph (a) shall be treated as excessive contributions before any which are so represented by virtue of that paragraph.

(5) In subsections (2) to (4) “ relevant contributions ” means contributions to the arrangement or any other pension arrangement—

(a) which the debtor has at any time made on his own behalf, or

(b) which have at any time been made on his behalf.

(6) The court shall, in determining whether it is satisfied under subsection (2)(b), consider in particular—

(a) whether any of the contributions were made for the purpose of putting assets beyond the reach of the debtor’s creditors or any of them, and

(b) whether the total amount of any contributions—

(i) made by or on behalf of the debtor to pension arrangements, and

(ii) represented (whether directly or indirectly) by rights under approved pension arrangements or excluded rights under unapproved pensions arrangements,

is an amount which is excessive in view of the debtor’s circumstances when those contributions were made.

(7) For the purposes of this section and sections 36B and 36C (“ the recovery provisions ”), rights of a debtor under an unapproved pension arrangement are excluded rights if they are rights which are excluded from his estate by virtue of regulations under section 12 of the Welfare Reform and Pensions Act 1999.

(8) In the recovery provisions—

“ approved pension arrangement ” has the same meaning as in section 11 of the Welfare Reform and Pensions Act 1999;

“ unapproved pension arrangement ” has the same meaning as in section 12 of that Act.

Orders under section 36A.

(36B)

(1) Without prejudice to the generality of section 36A(2) an order under section 36A may include provision—

(a) requiring the person responsible for the arrangement to pay an amount to the permanent trustee,

(b) adjusting the liabilities of the arrangement in respect of the debtor,

(c) adjusting any liabilities of the arrangement in respect of any other person that derive, directly or indirectly, from rights of the debtor under the arrangement,

(d) for the recovery by the person responsible for the arrangement (whether by deduction from any amount which that person is ordered to pay or otherwise) of costs incurred by that person in complying in the debtor’s case with any requirement under section 36C(1) or in giving effect to the order.

(2) In subsection (1), references to adjusting the liabilities of the arrangement in respect of a person include (in particular) reducing the amount of any benefit or future benefit to which that person is entitled under the arrangement.

(3) In subsection (1)(c), the reference to liabilities of the arrangement does not include liabilities in respect of a person which result from giving effect to an order or provision falling within section 28(1) of the Welfare Reform and Pensions Act 1999 (pension sharing orders and agreements).

(4) The maximum amount which the person responsible for an arrangement may be required to pay by an order under section 36A is the lesser of—

(a) the amount of the excessive contributions, and

(b) the value of the debtor’s rights under the arrangement (if the arrangement is an approved pension arrangement) or of his excluded rights under the arrangement (if the arrangement is an unapproved pension arrangement).

(5) An order under section 36A which requires the person responsible for an arrangement to pay an amount (“ the restoration amount ”) to the permanent trustee must provide for the liabilities of the arrangement to be correspondingly reduced.

(6) For the purposes of subsection (5), liabilities are correspondingly reduced if the difference between—

(a) the amount of the liabilities immediately before the reduction, and

(b) the amount of the liabilities immediately after the reduction,

is equal to the restoration amount.

(7) An order under section 36A in respect of an arrangement—

(a) shall be binding on the person responsible for the arrangement; and

(b) overrides provisions of the arrangement to the extent that they conflict with the provisions of the order.

Orders under section 36A: supplementary.

(36C)

(1) The person responsible for—

(a) an approved pension arrangement under which a debtor has rights,

(b) an unapproved pension arrangement under which a debtor has excluded rights, or

(c) a pension arrangement under which a debtor has at any time had rights,

shall, on the permanent trustee making a written request, provide the permanent trustee with such information about the arrangement and rights as the permanent trustee may reasonably require for, or in connection with, the making of applications under section 36A.

(2) Nothing in—

(a) any provision of section 159 of the Pensions Schemes Act 1993 or section 91 of the Pensions Act 1995 (which prevent assignation and the making of orders that restrain a person from receiving anything which he is prevented from assigning),

(b) any provision of any enactment (whether passed or made before or after the passing of the Welfare Reform and Pensions Act 1999) corresponding to any of the provisions mentioned in paragraph (a), or

(c) any provision of the arrangement in question corresponding to any of those provisions,

applies to a court exercising its powers under section 36A.

(3) Where any sum is required by an order under section 36A to be paid to the permanent trustee, that sum shall be comprised in the debtor’s estate.

(4) Regulations may, for the purposes of the recovery provisions, make provision about the calculation and verification of—

(a) any such value as is mentioned in section 36B(4)(b);

(b) any such amounts as are mentioned in section 36B(6)(a) and (b).

(5) The power conferred by subsection (4) includes power to provide for calculation or verification—

(a) in such manner as may, in the particular case, be approved by a prescribed person; or

(b) in accordance with guidance—

(i) from time to time prepared by a prescribed person, and

(ii) approved by the Secretary of State.

(6) References in the recovery provisions to the person responsible for a pension arrangement are to—

(a) the trustees, managers or provider of the arrangement, or

(b) the person having functions in relation to the arrangement corresponding to those of a trustee, manager or provider.

(7) In this section and sections 36A and 36B—

“ the recovery provisions ” means this section and sections 36A and 36B;

“ regulations ” means regulations made by the Secretary of State.

(8) Regulations under the recovery provisions may contain such incidental, supplemental and transitional provisions as appear to the Secretary of State necessary or expedient.

Section 17 Compensating occupational pension schemes.

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

Section 18 Miscellaneous amendments.

Schedule 2 (which contains amendments of the law relating to pensions) shall have effect.

Section 19 Orders in England and Wales.

Schedule 3 (which amends the Matrimonial Causes Act 1973 for the purpose of enabling the court to make pension sharing orders in connection with proceedings in England and Wales for divorce or nullity of marriage, and for supplementary purposes) shall have effect.

Section 20 Orders in Scotland.

(1) The Family Law (Scotland) Act 1985 shall be amended as follows.

(2) In section 8(1) (orders for financial provision), after paragraph (b) there shall be inserted—

(baa) a pension sharing order.

(3) In section 27 (interpretation), in subsection (1), there shall be inserted at the appropriate place—

“ pension sharing order ” is an order which—

(a) provides that one party’s—

(i) shareable rights under a specified pension arrangement, or

(ii) shareable state scheme rights,

be subject to pension sharing for the benefit of the other party, and

(b) specifies the percentage value, or the amount, to be transferred;

(4) In that section, after subsection (1) there shall be inserted—

(1A) In subsection (1), in the definition of “pension sharing order”—

(a) the reference to shareable rights under a pension arrangement is to rights in relation to which pension sharing is available under Chapter I of Part IV of the Welfare Reform and Pensions Act 1999, or under corresponding Northern Ireland legislation, and

(b) the reference to shareable state scheme rights is to rights in relation to which pension sharing is available under Chapter II of Part IV of the Welfare Reform and Pensions Act 1999, or under corresponding Northern Ireland legislation.

Section 21 Amendments.

Schedule 4 (which amends the sections about pensions inserted in the Matrimonial Causes Act 1973 by section 166 of the Pensions Act 1995) shall have effect.

Section 22 Extension to overseas divorces etc.

(1) Part III of the Matrimonial and Family Proceedings Act 1984 (financial relief in England and Wales after overseas divorce etc.) shall be amended as follows.

(2) In section 18 (matters to which the court is to have regard in exercising its powers to make orders for financial relief), after subsection (3) there shall be inserted—

(3A) The matters to which the court is to have regard under subsection (3) above—

(a) so far as relating to paragraph (a) of section 25(2) of the 1973 Act, include any benefits under a pension arrangement which a party to the marriage has or is likely to have (whether or not in the foreseeable future), and

(b) so far as relating to paragraph (h) of that provision, include any benefits under a pension arrangement which, by reason of the dissolution or annulment of the marriage, a party to the marriage will lose the chance of acquiring.

(3) In that section, at the end there shall be added—

(7) In this section—

(a) “ pension arrangement ” has the meaning given by section 25D(3) of the 1973 Act, and

(b) references to benefits under a pension arrangement include any benefits by way of pension, whether under a pension arrangement or not.

(4) In section 21 (application of provisions of Part II of the Matrimonial Causes Act 1973), the existing provision shall become subsection (1) and, in that subsection, after paragraph (b) there shall be inserted—

(bd) section 25B(3) to (7B) (power, by financial provision order, to attach payments under a pension arrangement, or to require the exercise of a right of commutation under such an arrangement);

(be) section 25C (extension of lump sum powers in relation to death benefits under a pension arrangement);

(5) In that section, after subsection (1) there shall be inserted—

(2) Subsection (1)(bd) and (be) above shall not apply where the court has jurisdiction to entertain an application for an order for financial relief by reason only of the situation in England or Wales of a dwelling-house which was a matrimonial home of the parties.

(3) Section 25D(1) of the 1973 Act (effect of transfers on orders relating to rights under a pension arrangement) shall apply in relation to an order made under section 17 above by virtue of subsection (1)(bd) or (be) above as it applies in relation to an order made under section 23 of that Act by virtue of section 25B or 25C of the 1973 Act.

(4) The Lord Chancellor may by regulations make for the purposes of this Part of this Act provision corresponding to any provision which may be made by him under subsections (2) to (2B) of section 25D of the 1973 Act.

(5) Power to make regulations under this section shall be exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.

Section 23 Supply of pension information in connection with divorce etc.

(1) The Secretary of State may by regulations—

(a) make provision imposing on the person responsible for a pension arrangement, or on the Secretary of State, requirements with respect to the supply of information relevant to any power with respect to—

(i) financial relief under Part II of the Matrimonial Causes Act 1973 or Part III of the Matrimonial and Family Proceedings Act 1984 (England and Wales powers in relation to domestic and overseas divorce etc.),

(ia) financial relief under Schedule 5 or 7 to the Civil Partnership Act 2004 (England and Wales powers in relation to domestic and overseas dissolution of civil partnerships etc. ),

(ii) financial provision under the Family Law (Scotland) Act 1985 or Part IV of the Matrimonial and Family Proceedings Act 1984 or Schedule 11 to the 2004 Act (corresponding Scottish powers), ...

(iii) financial relief under Part III of the Matrimonial Causes (Northern Ireland) Order 1978 or Part IV of the Matrimonial and Family Proceedings (Northern Ireland) Order 1989 (Northern Ireland powers corresponding to those mentioned in sub-paragraph (i)), or

(iv) financial relief under Schedule 15 or 17 to the 2004 Act (Northern Ireland powers corresponding to those mentioned in sub-paragraph (ia));

(b) make provision about calculation and verification in relation to the valuation of—

(i) benefits under a pension arrangement, or

(ii) shareable state scheme rights,

for the purposes of regulations under paragraph (a)(i) (ia), (iii) or (iv) ;

(c) make provision about calculation and verification in relation to—

(i) the valuation of shareable rights under a pension arrangement or shareable state scheme rights for the purposes of regulations under paragraph (a)(ii), so far as relating to the making of orders for financial provision (within the meaning of the Family Law (Scotland) Act 1985), or

(ii) the valuation of benefits under a pension arrangement for the purposes of such regulations, so far as relating to the making of orders under section 12A of that Act;

(d) make provision for the purpose of enabling the person responsible for a pension arrangement to recover prescribed charges in respect of providing information in accordance with regulations under paragraph (a).

(2) Regulations under subsection (1)(b) or (c) may include provision for calculation or verification in accordance with guidance from time to time prepared by a person prescribed by the regulations.

(3) Regulations under subsection (1)(d) may include provision for the application in prescribed circumstances, with or without modification, of any provision made by virtue of section 41(2).

(4) In subsection (1)—

(a) the reference in paragraph (c)(i) to shareable rights under a pension arrangement is to rights in relation to which pension sharing is available under Chapter I of Part IV, or under corresponding Northern Ireland legislation, and

(b) the references to shareable state scheme rights are to rights in relation to which pension sharing is available under Chapter II of Part IV, or under corresponding Northern Ireland legislation.

Section 24 Charges by pension arrangements in relation to earmarking orders.

The Secretary of State may by regulations make provision for the purpose of enabling the person responsible for a pension arrangement to recover prescribed charges in respect of complying with—

(a) an order under section 23 of the Matrimonial Causes Act 1973 (financial provision orders in connection with divorce etc.), so far as it includes provision made by virtue of section 25B or 25C of that Act (powers to include provision about pensions),

(aa) an order under Part 1 of Schedule 5 to the Civil Partnership Act 2004 (financial provision orders in connection with dissolution of civil partnerships etc. ) so far as it includes provision made by virtue of Part 6 of that Schedule (powers to include provision about pensions),

(b) an order under section 12A(2) or (3) of the Family Law (Scotland) Act 1985 (powers in relation to pensions lump sums when making a capital sum order), ...

(c) an order under Article 25 of the Matrimonial Causes (Northern Ireland) Order 1978, so far as it includes provision made by virtue of Article 27B or 27C of that Order (Northern Ireland powers corresponding to those mentioned in paragraph (a)) , or

(d) an order under Part 1 of Schedule 15 to the 2004 Act so far as it includes provision made by virtue of Part 5 of that Schedule (Northern Ireland powers corresponding to those mentioned in paragraph (aa)).

Section 25 Power to make consequential amendments of Part III.

(1) If any amendment by the Family Law Act 1996 of Part II or IV of the Matrimonial Causes Act 1973 comes into force before the day on which any provision of this Part comes into force, the Lord Chancellor may by order make such consequential amendment of that provision as he thinks fit.

(2) No order under this section may be made unless a draft of the order has been laid before and approved by resolution of each House of Parliament.

Section 26 Interpretation of Part III.

(1) In this Part—

“ occupational pension scheme ” has the same meaning as in the Pension Schemes Act 1993;

“ pension arrangement ” means

an occupational pension scheme,

a personal pension scheme,

a retirement annuity contract,

an annuity or insurance policy purchased, or transferred, for the purpose of giving effect to rights under an occupational pension scheme or a personal pension scheme, and

an annuity purchased, or entered into, for the purpose of discharging liability in respect of a pension credit under section 29(1)(b) or under corresponding Northern Ireland legislation;

“ personal pension scheme ” has the same meaning as in the Pension Schemes Act 1993;

“ prescribed ” means prescribed by regulations made by the Secretary of State;

“retirement annuity contract” means an annuity contract or trust scheme approved under section 620 or 621 of the Income and Corporation Taxes Act 1988 or a substituted contract within the meaning of section 622(3) of that Act which became a registered pension scheme by virtue of paragraph 1(1)(f) of Schedule 36 to the Finance Act 2004,

“ trustees or managers ”, in relation to an occupational pension scheme or a personal pension scheme, means—

in the case of a scheme established under a trust, the trustees of the scheme, and

in any other case, the managers of the scheme.

(2) References to the person responsible for a pension arrangement are—

(a) in the case of an occupational pension scheme or a personal pension scheme, to the trustees or managers of the scheme,

(b) in the case of a retirement annuity contract or an annuity falling within paragraph (d) or (e) of the definition of “pension arrangement” above, the provider of the annuity, and

(c) in the case of an insurance policy falling within paragraph (d) of the definition of that expression, the insurer.

Section 27 Scope of mechanism.

(1) Pension sharing is available under this Chapter in relation to a person’s shareable rights under any pension arrangement other than an excepted public service pension scheme.

(2) For the purposes of this Chapter, a person’s shareable rights under a pension arrangement are any rights of his under the arrangement, other than rights of a description specified by regulations made by the Secretary of State.

(3) For the purposes of subsection (1), a public service pension scheme is excepted if it is specified by order made by such Minister of the Crown or government department as may be designated by the Treasury as having responsibility for the scheme.

Section 28 Activation of pension sharing.

(1) Section 29 applies on the taking effect of any of the following relating to a person’s shareable rights under a pension arrangement—

(a) a pension sharing order under the Matrimonial Causes Act 1973,

(aa) a pension sharing order under Schedule 5 to the Civil Partnership Act 2004,

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

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

(d) an order under Part III of the Matrimonial and Family Proceedings Act 1984 (financial relief in England and Wales in relation to overseas divorce etc.) corresponding to such an order as is mentioned in paragraph (a),

(da) an order under Schedule 7 to the 2004 Act (financial relief in England and Wales after overseas dissolution etc. of a civil partnership) corresponding to such an order as is mentioned in paragraph (aa),

(e) a pension sharing order under the Family Law (Scotland) Act 1985,

(f) provision which corresponds to the provision which may be made by such an order and which—

(i) is contained in a qualifying agreement between the parties to a marriage or between persons who are civil partners of each other,

(ii) is in such form as the Secretary of State may prescribe by regulations, and

(iii) takes effect on the grant, in relation to the marriage, of decree of divorce under the Divorce (Scotland) Act 1976 or of declarator of nullity or (as the case may be) on the grant, in relation to the civil partnership, of decree of dissolution or of declarator of nullity ,

(g) an order under Part IV of the Matrimonial and Family Proceedings Act 1984 (financial relief in Scotland in relation to overseas divorce etc.) or under Schedule 11 to the 2004 Act (financial provision in Scotland after overseas proceedings) corresponding to such an order as is mentioned in paragraph (e),

(h) a pension sharing order under the Matrimonial Causes (Northern Ireland) Order 1978 ( S.I. 1978/1045 (N.I. 15)),

(i) an order under Part IV of the Matrimonial and Family Proceedings (Northern Ireland) Order 1989 (financial relief in Northern Ireland in relation to overseas divorce etc.) corresponding to such an order as is mentioned in paragraph (h).

(j) a pension sharing order under Schedule 15 to the 2004 Act, and

(k) an order under Schedule 17 to the 2004 Act (financial relief in Northern Ireland after overseas dissolution etc. of a civil partnership) corresponding to such an order as is mentioned in paragraph (j).

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

(3) For the purposes of subsection (1)(f), a qualifying agreement is one which—

(a) has been entered into in such circumstances as the Secretary of State may prescribe by regulations, and

(b) is registered in the Books of Council and Session.

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

(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6) Subsection (1)(f) does not apply if there is in force an order under section 12A(2) or (3) of the Family Law (Scotland) Act 1985 which relates to benefits or future benefits to which the party who is the transferor is entitled under the pension arrangement to which the provision relates.

(7) For the purposes of this section, an order or provision falling within subsection (1)(e), (f) or (g) shall be deemed never to have taken effect if the person responsible for the arrangement to which the order or provision relates does not receive before the end of the period of 2 months beginning with the relevant date—

(a) copies of the relevant ... documents, and

(b) such information relating to the transferor and transferee as the Secretary of State may prescribe by regulations under section 34(1)(b)(ii).

(8) The relevant date for the purposes of subsection (7) is—

(a) in the case of an order or provision falling within subsection (1)(e) or (f), the date of the extract of the decree or declarator responsible for the divorce , dissolution or annulment to which the order or provision relates, and

(b) in the case of an order falling within subsection (1)(g), the date of disposal of the application under section 28 of the Matrimonial and Family Proceedings Act 1984 or, where the order is under Schedule 11 to the 2004 Act, the date of disposal of the application under paragraph 2 of that Schedule .

(9) The reference in subsection (7)(a) to the relevant ... documents is—

(a) in the case of an order falling within subsection (1)(e) or (g), to copies of the order and the order, decree or declarator responsible for the divorce , dissolution or annulment to which it relates, and

(b) in the case of provision falling within subsection (1)(f), to—

(i) copies of the provision and the order, decree or declarator responsible for the divorce , dissolution or annulment to which it relates, and

(ii) documentary evidence that the agreement containing the provision is one to which subsection (3)(a) applies.

(10) The Court of Session or the sheriff may, on the application of any person having an interest, make an order—

(a) extending the period of 2 months referred to in subsection (7), and

(b) if that period has already expired, providing that, if the person responsible for the arrangement receives the documents and information concerned before the end of the period specified in the order, subsection (7) is to be treated as never having applied.

(11) Subsection (6), the reference to the party who is the transferor is to the party to whose rights the provision relates.

Section 29 Creation of pension debits and credits.

(1) On the application of this section—

(a) the transferor’s shareable rights under the relevant arrangement become subject to a debit of the appropriate amount, and

(b) the transferee becomes entitled to a credit of that amount as against the person responsible for that arrangement.

(2) Where the relevant order or provision specifies a percentage value to be transferred, the appropriate amount for the purposes of subsection (1) is the specified percentage of the cash equivalent of the relevant benefits on the valuation day.

(3) Where the relevant order or provision specifies an amount to be transferred, the appropriate amount for the purposes of subsection (1) is the lesser of—

(a) the specified amount, and

(b) the cash equivalent of the relevant benefits on the valuation day.

(4) Where the relevant arrangement is an occupational pension scheme and the transferor is in pensionable service under the scheme on the transfer day, the relevant benefits for the purposes of subsections (2) and (3) are the benefits or future benefits to which he would be entitled under the scheme by virtue of his shareable rights under it had his pensionable service terminated immediately before that day.

(5) Otherwise, the relevant benefits for the purposes of subsections (2) and (3) are the benefits or future benefits to which, immediately before the transfer day, the transferor is entitled under the terms of the relevant arrangement by virtue of his shareable rights under it.

(6) The Secretary of State may by regulations provide for any description of benefit to be disregarded for the purposes of subsection (4) or (5).

(7) For the purposes of this section, the valuation day is such day within the implementation period for the credit under subsection (1)(b) as the person responsible for the relevant arrangement may specify by notice in writing to the transferor and transferee.

(8) In this section—

“ relevant arrangement ” means the arrangement to which the relevant order or provision relates;

“ relevant order or provision ” means the order or provision by virtue of which this section applies;

“ transfer day ” means the day on which the relevant order or provision takes effect;

“ transferor ” means the person to whose rights the relevant order or provision relates;

“ transferee ” means the person for whose benefit the relevant order or provision is made.

Section 30 Cash equivalents.

(1) The Secretary of State may by regulations make provision about the calculation and verification of cash equivalents for the purposes of section 29.

(2) The power conferred by subsection (1) includes power to provide for calculation or verification—

(a) in such manner as may, in the particular case, be approved by a person prescribed by the regulations, or

(b) in accordance with guidance from time to time prepared by a person so prescribed.

Section 31 Reduction of benefit.

(1) Subject to subsection (2), where a person’s shareable rights under a pension arrangement are subject to a pension debit, each benefit or future benefit—

(a) to which he is entitled under the arrangement by virtue of those rights, and

(b) which is a qualifying benefit,

is reduced by the appropriate percentage.

(2) Where a pension debit relates to the shareable rights under an occupational pension scheme of a person who is in pensionable service under the scheme on the transfer day, each benefit or future benefit—

(a) to which the person is entitled under the scheme by virtue of those rights, and

(b) which corresponds to a qualifying benefit,

is reduced by an amount equal to the appropriate percentage of the corresponding qualifying benefit.

(3) A benefit is a qualifying benefit for the purposes of subsections (1) and (2) if the cash equivalent by reference to which the amount of the pension debit is determined includes an amount in respect of it.

(4) The provisions of this section override any provision of a pension arrangement to which they apply to the extent that the provision conflicts with them.

(5) In this section—

“ appropriate percentage ”, in relation to a pension debit, means—

if the relevant order or provision specifies the percentage value to be transferred, that percentage;

if the relevant order or provision specifies an amount to be transferred, the percentage which the appropriate amount for the purposes of subsection (1) of section 29 represents of the amount mentioned in subsection (3)(b) of that section;

“ relevant order or provision ”, in relation to a pension debit, means the pension sharing order or provision on which the debit depends;

“ transfer day ”, in relation to a pension debit, means the day on which the relevant order or provision takes effect.

Section 32 Effect on contracted-out rights.

(1) The Pension Schemes Act 1993 shall be amended as follows.

(2) In section 10 (protected rights), in subsection (1), for “subsections (2) and (3)” there shall be substituted “ the following provisions of this section ” , and at the end there shall be added—

(4) Where, in the case of a scheme which makes such provision as is mentioned in subsection (2) or (3), a member’s rights under the scheme become subject to a pension debit, his protected rights shall exclude the appropriate percentage of the rights which were his protected rights immediately before the day on which the pension debit arose.

(5) For the purposes of subsection (4), the appropriate percentage is—

(a) if the order or provision on which the pension debit depends specifies the percentage value to be transferred, that percentage;

(b) if the order or provision on which the pension debit depends specifies an amount to be transferred, the percentage which the appropriate amount for the purposes of subsection (1) of section 29 of the Welfare Reform and Pensions Act 1999 (lesser of specified amount and cash equivalent of transferor’s benefits) represents of the amount mentioned in subsection (3)(b) of that section (cash equivalent of transferor’s benefits).

(3) After section 15 there shall be inserted—

Reduction of guaranteed minimum in consequence of pension debit.

(15A)

(1) Where—

(a) an earner has a guaranteed minimum in relation to the pension provided by a scheme, and

(b) his right to the pension becomes subject to a pension debit,

his guaranteed minimum in relation to the scheme is, subject to subsection (2), reduced by the appropriate percentage.

(2) Where the earner is in pensionable service under the scheme on the day on which the order or provision on which the pension debit depends takes effect, his guaranteed minimum in relation to the scheme is reduced by an amount equal to the appropriate percentage of the corresponding qualifying benefit.

(3) For the purposes of subsection (2), the corresponding qualifying benefit is the guaranteed minimum taken for the purpose of calculating the cash equivalent by reference to which the amount of the pension debit is determined.

(4) For the purposes of this section the appropriate percentage is—

(a) if the order or provision on which the pension debit depends specifies the percentage value to be transferred, that percentage;

(b) if the order or provision on which the pension debit depends specifies an amount to be transferred, the percentage which the appropriate amount for the purposes of subsection (1) of section 29 of the Welfare Reform and Pensions Act 1999 (lesser of specified amount and cash equivalent of transferor’s benefits) represents of the amount mentioned in subsection (3)(b) of that section (cash equivalent of transferor’s benefits).

(4) In section 47 (entitlement to guaranteed minimum pensions for the purposes of the relationship with social security benefits), at the end there shall be added—

(6) For the purposes of section 46, a person shall be treated as entitled to any guaranteed minimum pension to which he would have been entitled but for any reduction under section 15A.

(5) In section 181(1), there shall be inserted at the appropriate place—

“ pension debit ” means a debit under section 29(1)(a) of the Welfare Reform and Pensions Act 1999;

Section 33 Time for discharge of liability.

(1) A person subject to liability in respect of a pension credit shall discharge his liability before the end of the implementation period for the credit.

(2) Where the trustees or managers of an occupational pension scheme have not done what is required to discharge their liability in respect of a pension credit before the end of the implementation period for the credit—

(a) they shall, except in such cases as the Secretary of State may prescribe by regulations, notify the Regulatory Authority of that fact within such period as the Secretary of State may so prescribe, and

(b) section 10 of the Pensions Act 1995 (power of the Regulatory Authority to impose civil penalties) shall apply to any trustee or manager who has failed to take all such steps as are reasonable to ensure that liability in respect of the credit was discharged before the end of the implementation period for it.

(3) If trustees or managers to whom subsection (2)(a) applies fail to perform the obligation imposed by that provision, section 10 of the Pensions Act 1995 shall apply to any trustee or manager who has failed to take all reasonable steps to ensure that the obligation was performed.

(4) On the application of the trustees or managers of an occupational pension scheme who are subject to liability in respect of a pension credit, the Regulatory Authority may extend the implementation period for the credit for the purposes of this section if it is satisfied that the application is made in such circumstances as the Secretary of State may prescribe by regulations.

(5) In this section “ the Regulatory Authority ” means the Pensions Regulator .

Section 34 “Implementation period”.

(1) For the purposes of this Chapter, the implementation period for a pension credit is the period of 4 months beginning with the later of—

(a) the day on which the relevant order or provision takes effect, and

(b) the first day on which the person responsible for the pension arrangement to which the relevant order or provision relates is in receipt of—

(i) the relevant ... documents, and

(ii) such information relating to the transferor and transferee as the Secretary of State may prescribe by regulations.

(2) The reference in subsection (1)(b)(i) to the relevant ... documents is to copies of—

(a) the relevant order or provision, and

(b) the order, decree or declarator responsible for the divorce , dissolution or annulment to which it relates,

and, if the pension credit depends on provision falling within subsection (1)(f) of section 28, to documentary evidence that the agreement containing the provision is one to which subsection (3)(a) of that section applies.

(3) Subsection (1) is subject to any provision made by regulations under section 41(2)(a).

(4) The Secretary of State may by regulations—

(a) make provision requiring a person subject to liability in respect of a pension credit to notify the transferor and transferee of the day on which the implementation period for the credit begins;

(b) provide for this section to have effect with modifications where the pension arrangement to which the relevant order or provision relates is being wound up;

(c) provide for this section to have effect with modifications where the pension credit depends on a pension sharing order and the order is the subject of an application for leave to appeal out of time.

(5) In this section—

“ relevant order or provision ”, in relation to a pension credit, means the pension sharing order or provision on which the pension credit depends;

“ transferor ” means the person to whose rights the relevant order or provision relates;

“ transferee ” means the person for whose benefit the relevant order or provision is made.

Section 35 Mode of discharge of liability.

(1) Schedule 5 (which makes provision about how liability in respect of a pension credit may be discharged) shall have effect.

(2) Where the person entitled to a pension credit dies before liability in respect of the credit has been discharged—

(a) Schedule 5 shall cease to have effect in relation to the discharge of liability in respect of the credit, and

(b) liability in respect of the credit shall be discharged in accordance with regulations made by the Secretary of State.

Section 36 Safeguarded rights.

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

Section 37 Requirements relating to pension credit benefit.

After section 101 of the Pension Schemes Act 1993 there shall be inserted—

Requirements relating to pension credit benefit

Pension credit benefit under occupational schemes

Scope of Chapter I.

(101A)

(1) This Chapter applies to any occupational pension scheme whose resources are derived in whole or part from—

(a) payments to which subsection (2) applies made or to be made by one or more employers of earners to whom the scheme applies, or

(b) such other payments by the earner or his employer, or both, as may be prescribed for different categories of scheme.

(2) This subsection applies to payments—

(a) under an actual or contingent legal obligation, or

(b) in the exercise of a power conferred, or the discharge of a duty imposed, on a Minister of the Crown, government department or any other person, being a power or duty which extends to the disbursement or allocation of public money.

Interpretation.

(101B) In this Chapter—

“ scheme ” means an occupational pension scheme to which this Chapter applies;

“ pension credit rights ” means rights to future benefits under a scheme which are attributable (directly or indirectly) to a pension credit;

“ pension credit benefit ”, in relation to a scheme, means the benefits payable under the scheme to or in respect of a person by virtue of rights under the scheme attributable (directly or indirectly) to a pension credit;

“ normal benefit age ”, in relation to a scheme, means the earliest age at which a person who has pension credit rights under the scheme is entitled to receive a pension by virtue of those rights (disregarding any scheme rule making special provision as to early payment of pension on grounds of ill-health or otherwise).

Basic principle as to pension credit benefit.

(101C)

(1) Normal benefit age under a scheme must be between 60 and 65.

(2) A scheme must not provide for payment of pension credit benefit in the form of a lump sum at any time before normal benefit age, except in such circumstances as may be prescribed.

Form of pension credit benefit and its alternatives.

(101D)

(1) Subject to subsection (2) and section 101E, a person’s pension credit benefit under a scheme must be—

(a) payable directly out of the resources of the scheme, or

(b) assured to him by such means as may be prescribed.

(2) Subject to subsections (3) and (4), a scheme may, instead of providing a person’s pension credit benefit, provide—

(a) for his pension credit rights under the scheme to be transferred to another occupational pension scheme or a personal pension scheme with a view to acquiring rights for him under the rules of the scheme, or

(b) for such alternatives to pension credit benefit as may be prescribed.

(3) The option conferred by subsection (2)(a) is additional to any obligation imposed by Chapter II of this Part.

(4) The alternatives specified in subsection (2)(a) and (b) may only be by way of complete or partial substitute for pension credit benefit—

(a) if the person entitled to the benefit consents, or

(b) in such other cases as may be prescribed.

Discharge of liability where pension credit or alternative benefits secured by insurance policies or annuity contracts.

(101E)

(1) A transaction to which section 19 applies discharges the trustees or managers of a scheme from their liability to provide pension credit benefit or any alternative to pension credit benefit for or in respect of a member of the scheme if and to the extent that—

(a) it results in pension credit benefit, or any alternative to pension credit benefit, for or in respect of the member being appropriately secured (within the meaning of that section),

(b) the transaction is entered into with the consent of the member or, if the member has died, of the member’s widow or widower, and

(c) such requirements as may be prescribed are met.

(2) Regulations may provide that subsection (1)(b) shall not apply in prescribed circumstances.

Transfer values

Power to give transfer notice.

(101F)

(1) An eligible member of a qualifying scheme may by notice in writing require the trustees or managers of the scheme to use an amount equal to the cash equivalent of his pension credit benefit for such one or more of the authorised purposes as he may specify in the notice.

(2) In the case of a member of an occupational pension scheme, the authorised purposes are—

(a) to acquire rights allowed under the rules of an occupational pension scheme, or personal pension scheme, which is an eligible scheme,

(b) to purchase from one or more insurance companies such as are mentioned in section 19(4)(a), chosen by the member and willing to accept payment on account of the member from the trustees or managers, one or more annuities which satisfy the prescribed requirements, and

(c) in such circumstances as may be prescribed, to subscribe to other pension arrangements which satisfy prescribed requirements.

(3) In the case of a member of a personal pension scheme, the authorised purposes are—

(a) to acquire rights allowed under the rules of an occupational pension scheme, or personal pension scheme, which is an eligible scheme, and

(b) in such circumstances as may be prescribed, to subscribe to other pension arrangements which satisfy prescribed requirements.

(4) The cash equivalent for the purposes of subsection (1) shall—

(a) in the case of a salary related occupational pension scheme, be taken to be the amount shown in the relevant statement under section 101H, and

(b) in any other case, be determined by reference to the date the notice under that subsection is given.

(5) The requirements which may be prescribed under subsection (2) or (3) include, in particular, requirements of the Inland Revenue.

(6) In subsections (2) and (3), references to an eligible scheme are to a scheme—

(a) the trustees or managers of which are able and willing to accept payment in respect of the member’s pension credit rights, and

(b) which satisfies the prescribed requirements.

(7) In this Chapter, “ transfer notice ” means a notice under subsection (1).

Restrictions on power to give transfer notice.

(101G)

(1) In the case of a salary related occupational pension scheme, the power to give a transfer notice may only be exercised if—

(a) the member has been provided with a statement under section 101H, and

(b) not more than 3 months have passed since the date by reference to which the amount shown in the statement is determined.

(2) The power to give a transfer notice may not be exercised in the case of an occupational pension scheme if—

(a) there is less than a year to go until the member reaches normal benefit age, or

(b) the pension to which the member is entitled by virtue of his pension credit rights, or benefit in lieu of that pension, or any part of it has become payable.

(3) Where an eligible member of a qualifying scheme—

(a) is entitled to make an application under section 95 to the trustees or managers of the scheme, or

(b) would be entitled to do so, but for the fact that he has not received a statement under section 93A in respect of which the guarantee date is sufficiently recent,

he may not, if the scheme so provides, exercise the power to give them a transfer notice unless he also makes an application to them under section 95.

(4) The power to give a transfer notice may not be exercised if a previous transfer notice given by the member to the trustees or managers of the scheme is outstanding.

Salary related schemes: statements of entitlement.

(101H)

(1) The trustees or managers of a qualifying scheme which is a salary related occupational pension scheme shall, on the application of an eligible member, provide him with a written statement of the amount of the cash equivalent of his pension credit benefit under the scheme.

(2) For the purposes of subsection (1), the amount of the cash equivalent shall be determined by reference to a date falling within—

(a) the prescribed period beginning with the date of the application, and

(b) the prescribed period ending with the date on which the statement under that subsection is provided to the applicant.

(3) Regulations may make provision in relation to applications under subsection (1) and may, in particular, restrict the making of successive applications.

(4) If trustees or managers to whom subsection (1) applies fail to perform an obligation under that subsection, section 10 of the Pensions Act 1995 (power of the Regulatory Authority to impose civil penalties) shall apply to any trustee or manager who has failed to take all such steps as are reasonable to secure that the obligation was performed.

Calculation of cash equivalents.

(101I) Cash equivalents for the purposes of this Chapter shall be calculated and verified in the prescribed manner.

Time for compliance with transfer notice.

(101J)

(1) Trustees or managers of a qualifying scheme who receive a transfer notice shall comply with the notice—

(a) in the case of an occupational pension scheme, within 6 months of the valuation date or, if earlier, by the date on which the member to whom the notice relates reaches normal benefit age, and

(b) in the case of a personal pension scheme, within 6 months of the date on which they receive the notice.

(2) The Regulatory Authority may, in prescribed circumstances, extend the period for complying with the notice.

(3) If the Regulatory Authority are satisfied—

(a) that there has been a relevant change of circumstances since they granted an extension under subsection (2), or

(b) that they granted an extension under that subsection in ignorance of a material fact or on the basis of a mistake as to a material fact,

they may revoke or reduce the extension.

(4) Where the trustees or managers of an occupational pension scheme have failed to comply with a transfer notice before the end of the period for compliance—

(a) they shall, except in prescribed cases, notify the Regulatory Authority of that fact within the prescribed period, and

(b) section 10 of the Pensions Act 1995 (power of the Regulatory Authority to impose civil penalties) shall apply to any trustee or manager who has failed to take all such steps as are reasonable to ensure that the notice was complied with before the end of the period for compliance.

(5) If trustees or managers to whom subsection (4)(a) applies fail to perform the obligation imposed by that provision, section 10 of the Pensions Act 1995 shall apply to any trustee or manager who has failed to take all such steps as are reasonable to ensure that the obligation was performed.

(6) Regulations may—

(a) make provision in relation to applications under subsection (2), and

(b) provide that subsection (4) shall not apply in prescribed circumstances.

(7) In this section, “ valuation date ”, in relation to a transfer notice given to the trustees or managers of an occupational pension scheme, means—

(a) in the case of a salary related scheme, the date by reference to which the amount shown in the relevant statement under section 101H is determined, and

(b) in the case of any other scheme, the date the notice is given.

Withdrawal of transfer notice.

(101K)

(1) Subject to subsections (2) and (3), a person who has given a transfer notice may withdraw it by giving the trustees or managers to whom it was given notice in writing that he no longer requires them to comply with it.

(2) A transfer notice may not be withdrawn if the trustees or managers have already entered into an agreement with a third party to use the whole or part of the amount they are required to use in accordance with the notice.

(3) If the giving of a transfer notice depended on the making of an application under section 95, the notice may only be withdrawn if the application is also withdrawn.

Variation of the amount required to be used.

(101L)

(1) Regulations may make provision for the amount required to be used under section 101F(1) to be increased or reduced in prescribed circumstances.

(2) Without prejudice to the generality of subsection (1), the circumstances which may be prescribed include—

(a) failure by the trustees or managers of a qualifying scheme to comply with a notice under section 101F(1) within 6 months of the date by reference to which the amount of the cash equivalent falls to be determined, and

(b) the state of funding of a qualifying scheme.

(3) Regulations under subsection (1) may have the effect of extinguishing an obligation under section 101F(1).

Effect of transfer on trustees’ duties.

(101M) Compliance with a transfer notice shall have effect to discharge the trustees or managers of a qualifying scheme from any obligation to provide the pension credit benefit of the eligible member who gave the notice.

Matters to be disregarded in calculations.

(101N) In making any calculation for the purposes of this Chapter—

(a) any charge or lien on, and

(b) any set-off against,

the whole or part of a pension shall be disregarded.

Service of notices.

(101O) A notice under section 101F(1) or 101K(1) shall be taken to have been given if it is delivered to the trustees or managers personally or sent by post in a registered letter or by recorded delivery service.

Interpretation of Chapter II.

(101P)

(1) In this Chapter—

“ eligible member ”, in relation to a qualifying scheme, means a member who has pension credit rights under the scheme;

“ normal benefit age ”, in relation to an eligible member of a qualifying scheme, means the earliest age at which the member is entitled to receive a pension by virtue of his pension credit rights under the scheme (disregarding any scheme rule making special provision as to early payment of pension on grounds of ill-health or otherwise);

“ pension credit benefit ”, in relation to an eligible member of a qualifying scheme, means the benefits payable under the scheme to or in respect of the member by virtue of rights under the scheme attributable (directly or indirectly) to a pension credit;

“ pension credit rights ”, in relation to a qualifying scheme, means rights to future benefits under the scheme which are attributable (directly or indirectly) to a pension credit;

“ qualifying scheme ” means a funded occupational pension scheme and a personal pension scheme;

“ transfer notice ” has the meaning given by section 101F(7).

(2) For the purposes of this Chapter, an occupational pension scheme is salary related if—

(a) it is not a money purchase scheme, and

(b) it does not fall within a prescribed class.

(3) In this Chapter, references to the relevant statement under section 101H, in relation to a transfer notice given to the trustees or managers of a salary related occupational pension scheme, are to the statement under that section on which the giving of the notice depended.

(4) For the purposes of this section, an occupational pension scheme is funded if it meets its liabilities out of a fund accumulated for the purpose during the life of the scheme.

Power to modify Chapter II in relation to hybrid schemes.

(101Q) Regulations may apply this Chapter with prescribed modifications to occupational pension schemes—

(a) which are not money purchase schemes, but

(b) where some of the benefits that may be provided are money purchase benefits.

Section 38 Treatment in winding up.

(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2) In the case of an occupational pension scheme which is not a scheme to which this section applies, rights attributable (directly or indirectly) to a pension credit are to be accorded in a winding up the same treatment—

(a) if they have come into payment, as the rights of a pensioner member, and

(b) if they have not come into payment, as the rights of a deferred member.

(2A) This section applies to an occupational pension scheme other than—

(a) a money purchase scheme, or

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

(3) Subsection (2) overrides the provisions of a scheme to the extent that it conflicts with them, and the scheme has effect with such modifications as may be required in consequence.

(4) In subsection (2)—

(a) “ deferred member ” and “ pensioner member ” have the same meanings as in Part I of the Pensions Act 1995,

(b) “ pension credit ” includes a credit under Northern Ireland legislation corresponding to section 29(1)(b), and

(c) references to rights attributable to a pension credit having come into payment are to the person to whom the rights belong having become entitled by virtue of the rights to the present payment of pension or other benefits.

Section 39 Public service pension schemes.

(1) The Pensions (Increase) Act 1971 shall be amended as follows.

(2) In section 3 (qualifying conditions), after subsection (2) there shall be inserted—

(2A) A pension attributable to the pensioner having become entitled to a pension credit shall not be increased unless the pensioner has attained the age of fifty-five years.

(3) In section 8, in subsection (1) (definition of “pension”), in paragraph (a), the words from “(either” to “person)” shall be omitted.

(4) In that section, in subsection (2) (when pension deemed for purposes of the Act to begin), after “pension”, in the first place, there shall be inserted “ which is not attributable to a pension credit ” , and after that subsection there shall be inserted—

(2A) A pension which is attributable to a pension credit shall be deemed for purposes of this Act to begin on the day on which the order or provision on which the credit depends takes effect.

(5) In section 17(1) (interpretation)—

(a) for the definitions of “derivative pension” and “principal pension” there shall be substituted—

“ derivative pension ” means a pension which—

(a) is not payable in respect of the pensioner’s own services, and

(b) is not attributable to the pensioner having become entitled to a pension credit;

(b) after the definition of “pension” there shall be inserted—

“ pension credit ” means a credit under section 29(1)(b) of the Welfare Reform and Pensions Act 1999 or under corresponding Northern Ireland legislation;

“ principal pension ” means a pension which—

(a) is payable in respect of the pensioner’s own services, or

(b) is attributable to the pensioner having become entitled to a pension credit;

(c) for the definition of “widow’s pension” there shall be substituted—

“ widow’s pension ” means a pension payable—

(a) in respect of the services of the pensioner’s deceased husband, or

(b) by virtue of the pensioner’s deceased husband having become entitled to a pension credit.

Section 40 Other pension schemes.

(1) The Secretary of State may by regulations make provision for a pension to which subsection (2) applies to be increased, as a minimum, by reference to relevant percentage increases , so far as not exceeding the maximum percentage per annum.

(2) Subject to subsection (2A), this subsection applies to—

(a) a pension provided to give effect to eligible pension credit rights of a member under a qualifying occupational pension scheme, ...

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

(2A) Subsection (2) does not apply to pensions which—

(a) are money purchase benefits, and

(b) become pensions in payment on or after the commencement day.

(2AA) In subsection (1) “ relevant percentage increases ” means percentage increases estimated by the Secretary of State from time to time for the purposes of paragraph 2(3)(a) of Schedule 3 to the Pension Schemes Act 1993 for revaluation periods of 12 months.

(2B) For the purposes of subsection (1) the “ maximum percentage ” means—

(a) 5% in a case where—

(i) the pension is in payment before the commencement day, or

(ii) the pension is not in payment before the commencement day but the entitlement to the relevant pension credit arose before that day, and

(b) 2.5% in a case where the entitlement to the relevant pension credit arises on or after the commencement day.

(3) In this section—

“ commencement day ” means the day appointed for the coming into force of section 280 of the Pensions Act 2004 (amendments to section 40);

“ eligible ”, in relation to pension credit rights, means of a description prescribed by regulations made by the Secretary of State;

“ money purchase benefit ” has the meaning given by section 181(1) of the Pension Schemes Act 1993;

“ pension credit rights ”, in relation to an occupational pension scheme, means rights to future benefits under the scheme which are attributable (directly or indirectly) to a credit under section 29(1)(b) or under corresponding Northern Ireland legislation;

“ qualifying occupational pension scheme ” means an occupational pension scheme which is not a public service pension scheme;

“ relevant pension credit ” means the pension credit to which the eligible pension credit rights ... are (directly or indirectly) attributable;

“ safeguarded rights ” has the meaning given in section 68A of the Pension Schemes Act 1993.

Section 41 Charges in respect of pension sharing costs.

(1) The Secretary of State may by regulations make provision for the purpose of enabling the person responsible for a pension arrangement involved in pension sharing to recover from the parties to pension sharing prescribed charges in respect of prescribed descriptions of pension sharing activity.

(2) Regulations under subsection (1) may include—

(a) provision for the start of the implementation period for a pension credit to be postponed in prescribed circumstances;

(b) provision, in relation to payments in respect of charges recoverable under the regulations, for reimbursement as between the parties to pension sharing;

(c) provision, in relation to the recovery of charges by deduction from a pension credit, for the modification of Schedule 5;

(d) provision for the recovery in prescribed circumstances of such additional amounts as may be determined in accordance with the regulations.

(3) For the purposes of regulations under subsection (1), the question of how much of a charge recoverable under the regulations is attributable to a party to pension sharing is to be determined as follows—

(a) where the relevant order or provision includes provision about the apportionment of charges under this section, there is attributable to the party so much of the charge as is apportioned to him by that provision;

(b) where the relevant order or provision does not include such provision, the charge is attributable to the transferor.

(4) For the purposes of subsection (1), a pension arrangement is involved in pension sharing if section 29 applies by virtue of an order or provision which relates to the arrangement.

(5) In that subsection, the reference to pension sharing activity is to activity attributable (directly or indirectly) to the involvement in pension sharing.

(6) In subsection (3)—

(a) the reference to the relevant order or provision is to the order or provision which gives rise to the pension sharing, and

(b) the reference to the transferor is to the person to whose rights that order or provision relates.

(7) In this section “ prescribed ” means prescribed in regulations under subsection (1).

Section 42 Extension of scheme-making powers.

(1) Power under an Act to establish a pension scheme shall include power to make provision for the provision, by reference to pension credits which derive from rights under—

(a) the scheme, or

(b) a scheme in relation to which the scheme is specified as an alternative for the purposes of paragraph 2 of Schedule 5,

of benefits to or in respect of those entitled to the credits.

(2) Subsection (1) is without prejudice to any other power.

(3) Subsection (1) shall apply in relation to Acts whenever passed.

(4) No obligation to consult shall apply in relation to the making, in exercise of a power under an Act to establish a pension scheme, of provision of a kind authorised by subsection (1).

(5) Any provision of, or under, an Act which makes benefits under a pension scheme established under an Act a charge on, or payable out of—

(a) the Consolidated Fund,

(b) the Scottish Consolidated Fund, or

(c) the Consolidated Fund of Northern Ireland,

shall be treated as including any benefits under the scheme which are attributable (directly or indirectly) to a pension credit which derives from rights to benefits charged on, or payable out of, that fund.

(6) In this section—

“ pension credit ” includes a credit under Northern Ireland legislation corresponding to section 29(1)(b);

“ pension scheme ” means a scheme or arrangement providing benefits, in the form of pensions or otherwise, payable on termination of service, or on death or retirement, to or in respect of persons to whom the scheme or arrangement applies.

Section 43 Power to extend judicial pension schemes.

(1) The appropriate minister may by regulations amend the Sheriffs’ Pensions (Scotland) Act 1961, the Judicial Pensions Act 1981 or the Judicial Pensions and Retirement Act 1993 for the purpose of—

(a) extending a pension scheme under the Act to include the provision, by reference to pension credits which derive from rights under—

(i) the scheme, or

(ii) a scheme in relation to which the scheme is specified as an alternative for the purposes of paragraph 2 of Schedule 5,

of benefits to or in respect of those entitled to the credits, or

(b) restricting the power of the appropriate minister to accept payments into a pension scheme under the Act, where the payments represent the cash equivalent of rights under another pension scheme which are attributable (directly or indirectly) to a pension credit.

(2) Regulations under subsection (1)—

(a) may make benefits provided by virtue of paragraph (a) of that subsection a charge on, and payable out of, the Consolidated Fund;

(b) may confer power to make subordinate legislation, including subordinate legislation which provides for calculation of the value of rights in accordance with guidance from time to time prepared by a person specified in the subordinate legislation.

(3) The appropriate minister for the purposes of subsection (1) is—

(a) in relation to a pension scheme whose ordinary members are limited to those who hold judicial office whose jurisdiction is exercised exclusively in relation to Scotland, the Secretary of State, and

(b) in relation to any other pension scheme, the Lord Chancellor.

(4) In this section—

“ pension credit ” includes a credit under Northern Ireland legislation corresponding to section 29(1)(b);

“ pension scheme ” means a scheme or arrangement providing benefits, in the form of pensions or otherwise, payable on termination of service, or on death or retirement, to or in respect of persons to whom the scheme or arrangement applies.

Section 44 Disapplication of restrictions on alienation.

(1) Nothing in any of the following provisions (restrictions on alienation of pension rights) applies in relation to any order or provision falling within section 28(1)—

(a) section 356 of the Armed Forces Act 2006 and section 159(4) and (4A) of the Pension Schemes Act 1993,

(b) section 91 of the Pensions Act 1995,

(c) any provision of any enactment (whether passed or made before or after this Act is passed) corresponding to any of the enactments mentioned in paragraphs (a) and (b), and

(d) any provision of a pension arrangement corresponding to any of those enactments.

(2) In this section, “ enactment ” includes an enactment comprised in subordinate legislation (within the meaning of the Interpretation Act 1978).

Section 45 Information.

(1) The Secretary of State may by regulations require the person responsible for a pension arrangement involved in pension sharing to supply to such persons as he may specify in the regulations such information relating to anything which follows from the application of section 29 as he may so specify.

(2) Section 168 of the Pension Schemes Act 1993 (breach of regulations) shall apply as if this section were contained in that Act (otherwise than in Chapter II of Part VII).

(3) For the purposes of this section, a pension arrangement is involved in pension sharing if section 29 applies by virtue of an order or provision which relates to the arrangement.

Section 46 Interpretation of Chapter I.

(1) In this Chapter—

“ implementation period ”, in relation to a pension credit, has the meaning given by section 34;

“ occupational pension scheme ” has the meaning given by section 1 of the Pension Schemes Act 1993;

“ pension arrangement ” means—

an occupational pension scheme,

a personal pension scheme,

a retirement annuity contract,

an annuity or insurance policy purchased, or transferred, for the purpose of giving effect to rights under an occupational pension scheme or a personal pension scheme, and

an annuity purchased, or entered into, for the purpose of discharging liability in respect of a credit under section 29(1)(b) or under corresponding Northern Ireland legislation;

“ pension credit ” means a credit under section 29(1)(b);

“ pension debit ” means a debit under section 29(1)(a);

“ pensionable service ”, in relation to a member of an occupational pension scheme, means service in any description or category of employment to which the scheme relates which qualifies the member (on the assumption that it continues for the appropriate period) for pension or other benefits under the scheme;

“ personal pension scheme ” has the meaning given by section 1 of the Pension Schemes Act 1993;

“ retirement annuity contract ” means a contract or scheme approved under Chapter III of Part XIV of the Income and Corporation Taxes Act 1988;

“ shareable rights ” has the meaning given by section 27(2);

“ trustees or managers ”, in relation to an occupational pension scheme or a personal pension scheme means—

in the case of a scheme established under a trust, the trustees of the scheme, and

in any other case, the managers of the scheme.

(2) In this Chapter, references to the person responsible for a pension arrangement are—

(a) in the case of an occupational pension scheme or a personal pension scheme, to the trustees or managers of the scheme,

(b) in the case of a retirement annuity contract or an annuity falling within paragraph (d) or (e) of the definition of “pension arrangement” in subsection (1), to the provider of the annuity, and

(c) in the case of an insurance policy falling within paragraph (d) of the definition of that expression, to the insurer.

(3) In determining what is “ pensionable service ” for the purposes of this Chapter—

(a) service notionally attributable for any purpose of the scheme is to be disregarded, and

(b) no account is to be taken of any rules of the scheme by which a period of service can be treated for any purpose as being longer or shorter than it actually is.

Section 47 Shareable state scheme rights.

(1) Pension sharing is available under this Chapter in relation to a person’s shareable state scheme rights.

(1A) For the purposes of this Chapter, a person's shareable state scheme rights are—

(a) the person's shareable old state scheme rights;

(b) the person's shareable new state scheme rights.

(2) For the purposes of this Chapter, a person’s shareable old state scheme rights are—

(a) his entitlement, or prospective entitlement, to a Category A retirement pension by virtue of section 44(3)(b) of the Contributions and Benefits Act ( ... additional pension), and

(b) his entitlement, or prospective entitlement, to a pension under section 55A or 55AA of that Act (shared additional pension).

(3) For the purposes of this Chapter, a person's shareable new state scheme rights are the person's entitlement, or prospective entitlement, to the excess amount in a state pension under section 4 of the Pensions Act 2014.

(4) “ The excess amount ”, in relation to a state pension under section 4 of the Pensions Act 2014, means any amount by which the rate of the pension exceeds the full rate of the state pension (see section 3 of that Act).

(5) In determining the rate of a state pension under section 4 of the Pensions Act 2014 for the purposes of this Chapter, ignore Schedule 6 to that Act (reduced rate elections: effect on rate of section 4 pension).

Section 48 Activation of benefit sharing.

(1) Section 49 or 49A applies where any of the following has taken effect in relation to a person's shareable state scheme rights —

(a) a pension sharing order under the Matrimonial Causes Act 1973,

(aa) a pension sharing order under Schedule 5 to the Civil Partnership Act 2004,

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

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

(d) an order under Part III of the Matrimonial and Family Proceedings Act 1984 (financial relief in England and Wales in relation to overseas divorce etc.) corresponding to such an order as is mentioned in paragraph (a),

(da) an order under Schedule 7 to the 2004 Act (financial relief in England and Wales after overseas dissolution etc. of a civil partnership) corresponding to such an order as is mentioned in paragraph (aa),

(e) a pension sharing order under the Family Law (Scotland) Act 1985,

(f) provision which corresponds to the provision which may be made by such an order and which—

(i) is contained in a qualifying agreement between the parties to a marriage or between persons who are civil partners of each other ,

(ii) is in such form as the Secretary of State may prescribe by regulations, and

(iii) takes effect on the grant, in relation to the marriage, of decree of divorce under the Divorce (Scotland) Act 1976 or of declarator of nullity or (as the case may be) on the grant, in relation to the civil partnership, of decree of dissolution or of declarator of nullity ,

(g) an order under Part IV of the Matrimonial and Family Proceedings Act 1984 (financial relief in Scotland in relation to overseas divorce etc.) or under Schedule 11 to the 2004 Act (financial provision in Scotland after overseas proceedings) corresponding to such an order as is mentioned in paragraph (e),

(h) a pension sharing order under the Matrimonial Causes (Northern Ireland) Order 1978 ( S.I. 1978/1045 (N.I. 15)),

(i) an order under Part IV of the Matrimonial and Family Proceedings (Northern Ireland) Order 1989 (financial relief in Northern Ireland in relation to overseas divorce etc.) corresponding to such an order as is mentioned in paragraph (h).

(j) a pension sharing order under Schedule 15 to the 2004 Act, and

(k) an order under Schedule 17 to the 2004 Act (financial relief in Northern Ireland after overseas dissolution etc. of a civil partnership) corresponding to such an order as is mentioned in paragraph (j).

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

(3) For the purposes of subsection (1)(f), a qualifying agreement is one which—

(a) has been entered into in such circumstances as the Secretary of State may prescribe by regulations, and

(b) is registered in the Books of Council and Session.

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

(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6) For the purposes of this section, an order or provision falling within subsection (1)(e), (f) or (g) shall be deemed never to have taken effect if the Secretary of State does not receive before the end of the period of 2 months beginning with the relevant date—

(a) copies of the relevant ... documents, and

(b) such information relating to the transferor and transferee as the Secretary of State may prescribe by regulations under section 34(1)(b)(ii).

(7) The relevant date for the purposes of subsection (6) is—

(a) in the case of an order or provision falling within subsection (1)(e) or (f), the date of the extract of the decree or declarator responsible for the divorce , dissolution or annulment to which the order or provision relates, and

(b) in the case of an order falling within subsection (1)(g), the date of disposal of the application under section 28 of the Matrimonial and Family Proceedings Act 1984 or, where the order is under Schedule 11 to the 2004 Act, the date of disposal of the application under paragraph 2 of that Schedule .

(8) The reference in subsection (6)(a) to the relevant ... documents is—

(a) in the case of an order falling within subsection (1)(e) or (g), to copies of the order and the order, decree or declarator responsible for the divorce , dissolution or annulment to which it relates, and

(b) in the case of provision falling within subsection (1)(f), to—

(i) copies of the provision and the order, decree or declarator responsible for the divorce , dissolution or annulment to which it relates, and

(ii) documentary evidence that the agreement containing the provision is one to which subsection (3)(a) applies.

(9) The Court of Session or the sheriff may, on the application of any person having an interest, make an order—

(a) extending the period of 2 months referred to in subsection (6), and

(b) if that period has already expired, providing that, if the Secretary of State receives the documents and information concerned before the end of the period specified in the order, subsection (6) is to be treated as never having applied.

Section 49 Creation of state scheme pension debits and credits.

(A1) This section applies if—

(a) the transferor is in the old state pension system, or

(b) the transferor is in the new state pension system but the transfer day was before 6 April 2016.

(1) Where this section applies because of a relevant order or provision—

(a) the transferor is subject, for the purposes of the relevant state pension legislation, to a debit of the appropriate amount, and

(b) the transferee is entitled, for the purposes of the relevant state pension legislation, to a credit of that amount.

(2) Where the relevant order or provision specifies a percentage value to be transferred, the appropriate amount for the purposes of subsection (1) is the specified percentage of the cash equivalent on the transfer day of the transferor’s shareable old state scheme rights immediately before that day.

(3) Where the relevant order or provision specifies an amount to be transferred, the appropriate amount for the purposes of subsection (1) is the lesser of—

(a) the specified amount, and

(b) the cash equivalent on the transfer day of the transferor’s shareable old state scheme rights immediately before that day.

(4) The Secretary of State may by regulations make provision about the calculation and verification of cash equivalents for the purposes of this section.

(4A) The power conferred by subsection (4) above includes power to provide—

(a) for calculation or verification in such manner as may be approved by or on behalf of the Government Actuary, and

(b) for things done under the regulations to be required to be done in accordance with guidance from time to time prepared by a person prescribed by the regulations.

(5) In determining prospective entitlement to a Category A retirement pension for the purposes of this section, only tax years before that in which the transfer day falls shall be taken into account.

(5A) The fact that a person who reaches pensionable age on or after 6 April 2016 is not entitled to a pension of the kind mentioned in section 47(2)(a) or (b) does not affect the calculation under this section of the appropriate amount by reference to the transferor's prospective entitlement, immediately before the transfer day, to a pension of that kind.

(6) In this section—

“ relevant order or provision ” means the order or provision by virtue of which this section applies;

“the relevant state pension legislation”—

in relation to a transferor or transferee in the old state pension system, means Part 2 of the Contributions and Benefits Act, and

in relation to a transferor or transferee in the new state pension system, means Part 1 of the Pensions Act 2014.

“ transfer day ” means the day on which the relevant order or provision takes effect;

“ transferor ” means the person to whose rights the relevant order or provision relates;

“ transferee ” means the person for whose benefit the relevant order or provision is made.

Section 49A Creation of debits and credits: transferor in new state pension system and sharing activated on or after 6 April 2016

(1) This section applies if—

(a) the transferor is in the new state pension system, and

(b) the transfer day is 6 April 2016 or any later date.

(2) Where this section applies because of a relevant order or provision—

(a) the transferor is subject, for the purposes of section 14 of the Pensions Act 2014, to a debit of the shared weekly amount, and

(b) the transferee is entitled, for the purposes of the relevant state pension legislation, to a credit of the shared weekly amount.

(3) The shared weekly amount is the specified percentage of the excess amount of the transferor's state pension under section 4 of the Pensions Act 2014 as at the transfer day.

(4) For the purposes of calculating the shared weekly amount—

(a) a transferor who is under pensionable age on the transfer day is to be treated as having reached pensionable age and to have become entitled to the state pension under section 4 of the Pensions Act 2014 on the transfer day;

(b) a transferor who has reached pensionable age on the transfer day but who has not yet become entitled to the state pension under section 4 of the Pensions Act 2014 is to be treated as having become entitled to the pension on that day.

(5) In this section—

“ the excess amount ” has the meaning given by section 47(4);

“ relevant order or provision ” means the order or provision by virtue of which this section applies (see section 48);

“the relevant state pension legislation”—

in relation to a transferee in the old state pension system, means Part 2 of the Contributions and Benefits Act, and

in relation to a transferee in the new state pension system, means Part 1 of the Pensions Act 2014;

“ specified percentage ” means the percentage specified in the relevant order or provision for the purposes of subsection (3);

“ transfer day ” means the day on which the relevant order or provision takes effect;

“ transferor ” means the person to whose rights the relevant order or provision relates;

“ transferee ” means the person for whose benefit the relevant order or provision is made.