Pensions Act 2004

• Citation: 2004 c. 35
• Sections: 746

Section 1 The Pensions Regulator

There shall be a body corporate called the Pensions Regulator (in this Act referred to as “ the Regulator ”).

Section 2 Membership of the Regulator

(1) The Regulator is to consist of the following members—

(a) a chairman appointed by the Secretary of State,

(b) the Chief Executive of the Regulator, and

(c) at least five other persons appointed by the Secretary of State after consulting the chairman.

(2) The chairman must not be appointed from the staff of the Regulator or be the chairman of the Board of the Pension Protection Fund (see section 108).

(3) At least two of the members appointed under subsection (1)(c) must be appointed from the staff of the Regulator.

(4) In appointing persons under subsection (1)(c) the Secretary of State must secure that a majority of the members of the Regulator are non-executive members.

(5) No member of the staff of the Board of the Pension Protection Fund is eligible for appointment as a member of the Regulator.

(6) In this Part—

(a) references to executive members of the Regulator are to—

(i) the Chief Executive, and

(ii) the members appointed under subsection (1)(c) from the staff of the Regulator, and

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

Section 3 Further provision about the Regulator

Schedule 1 makes further provision about the Regulator, including provision as to—

the terms of appointment, tenure and remuneration of members,

the appointment of the Chief Executive and other staff,

the proceedings of the Regulator,

its funding and accounts, and

the status and liability of the Regulator, its members and staff.

Section 4 Regulator’s functions

(1) The Regulator has—

(a) the functions transferred to it from the Occupational Pensions Regulatory Authority by virtue of this Act or any provisions in force in Northern Ireland corresponding to this Act, and

(b) any other functions conferred by, or by virtue of, this or any other enactment.

(2) As regards the exercise of the Regulator’s functions—

(a) the non-executive functions listed in subsection (4) of section 8 must, by virtue of subsection (2) of that section, be discharged by the committee established under that section,

(b) the functions mentioned in the following provisions are exercisable only by the Determinations Panel—

(i) section 10(1) (the power in certain circumstances to determine whether to exercise the functions listed in Schedule 2 and to exercise them), and

(ii) section 99(10) (the functions concerning the compulsory review of certain determinations), and

(c) the exercise of other functions of the Regulator may be delegated by the Regulator under paragraph 20 of Schedule 1.

(3) Subsection (2) is subject to any regulations made by the Secretary of State under paragraph 21 of Schedule 1 (power to limit or permit delegation of functions).

Section 5 Regulator’s objectives

(1) The main objectives of the Regulator in exercising its functions are—

(a) to protect the benefits under occupational pension schemes of, or in respect of, members of such schemes,

(b) to protect the benefits under personal pension schemes of, or in respect of, members of such schemes within subsection (2),

(c) to reduce the risk of situations arising which may lead to compensation being payable from the Pension Protection Fund (see Part 2),

(cza) in relation to the exercise of its functions under Part 3 only, to minimise any adverse impact on the sustainable growth of an employer,

(ca) to maximise compliance with the duties under Chapter 1 of Part 1 (and the safeguards in sections 50 and 54) of the Pensions Act 2008, and

(d) to promote, and to improve understanding of, the good administration of work-based pension schemes.

(2) For the purposes of subsection (1)(b) the members of personal pension schemes within this subsection are—

(a) the members who are employees in respect of whom direct payment arrangements exist, and

(b) where the scheme is a stakeholder pension scheme, any other members.

(3) In this section—

“ stakeholder pension scheme ” means a personal pension scheme which is or has been registered under section 2 of the Welfare Reform and Pensions Act 1999 (c. 30) (register of stakeholder schemes);

“ work-based pension scheme ” means—

an occupational pension scheme,

a personal pension scheme where direct payment arrangements exist in respect of one or more members of the scheme who are employees, or

a stakeholder pension scheme.

Section 6 Supplementary powers

The Regulator may do anything (except borrow money) which—

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

(b) is incidental or conducive to their exercise.

Section 7 Transfer of OPRA ’s functions to the Regulator

(1) Subject to the provisions of this Act, the functions of the Occupational Pensions Regulatory Authority (“OPRA”) conferred by or by virtue of—

(a) the Pension Schemes Act 1993 (c. 48),

(b) the Pensions Act 1995 (c. 26), and

(c) the Welfare Reform and Pensions Act 1999,

are hereby transferred to the Regulator.

(2) Accordingly—

(a) in section 181(1) of the Pension Schemes Act 1993 (which defines “the Regulatory Authority” to mean OPRA), for the definition of “the Regulatory Authority” substitute—

“ the Regulatory Authority ” means the Pensions Regulator;

(b) in section 124(1) of the Pensions Act 1995 (which defines “the Authority”, in Part 1 of that Act, to mean OPRA), for the definition of “the Authority” substitute—

“ the Authority ” means the Pensions Regulator,

(c) in section 8(1) of the Welfare Reform and Pensions Act 1999 (c. 30) (which defines “the Authority”, in Part 1 of that Act to mean OPRA), for the definition of “the Authority” substitute—

“ the Authority ” means the Pensions Regulator;

(d) in section 33 of that Act (time for discharge of pension credit liability), in subsection (5) for “the Occupational Pensions Regulatory Authority” substitute “ the Pensions Regulator ” .

Section 8 Non-executive functions

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

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

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

(4) The non-executive functions are—

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

(b) the duty to determine under paragraph 8(4)(b) of Schedule 1, subject to the approval of the Secretary of State, the terms and conditions as to remuneration of any Chief Executive appointed under paragraph 8(4)(a) of that Schedule.

(5) The committee established under this section must prepare a report on the discharge of the non-executive functions for inclusion in the Regulator’s annual report to the Secretary of State under section 11.

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

(7) The committee may establish sub-committees, and the members of any such sub-committee—

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

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

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

(a) any of the non-executive functions;

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

(9) The committee (or any of its sub-committees) may be authorised under paragraph 20(1) of Schedule 1 to exercise further functions of the Regulator.

(10) This section is subject to any regulations made by the Secretary of State under paragraph 21 of Schedule 1 (power to limit or permit delegation of functions).

Section 9 The Determinations Panel

(1) The Regulator must establish and maintain a committee consisting of—

(a) a chairman, and

(b) at least six other persons,

(in this Part referred to as “ the Determinations Panel ”).

(2) The Regulator must appoint as the chairman of the Panel the person nominated in accordance with paragraph 11 of Schedule 1 (nomination by a committee established by the chairman of the Regulator).

(3) The chairman of the Panel must—

(a) decide the number of persons to be appointed as the other members of the Panel, and

(b) nominate a person suitable for each of those appointments.

(4) The Regulator must then appoint as the other members of the Panel the persons nominated by the chairman of the Panel.

(5) The following are ineligible for appointment as members of the Panel—

(a) any member of the Regulator;

(b) any member of the staff of the Regulator;

(c) any member of the Board of the Pension Protection Fund;

(d) any member of the staff of that Board.

(6) The Panel may establish sub-committees consisting of members of the Panel.

(7) Further provision about the Panel is made in Schedule 1, including provision as to the terms of appointment, tenure and remuneration of members and as to its procedure.

Section 10 Functions exercisable by the Determinations Panel

(1) The Determinations Panel is to exercise on behalf of the Regulator—

(a) the power to determine, in the circumstances described in subsection (2), whether to exercise a reserved regulatory function, and

(b) where it so determines to exercise a reserved regulatory function, the power to exercise the function in question.

(2) Those circumstances are—

(a) where the Regulator considers that the exercise of the reserved regulatory function may be appropriate, or

(b) where an application is made under, or by virtue of, any of the provisions listed in subsection (6) for the Regulator to exercise the reserved regulatory function.

(3) Where subsection (1) applies, the powers mentioned in that subsection are not otherwise exercisable by or on behalf of the Regulator.

(4) For the purposes of this Part, a function of the Regulator is a “ reserved regulatory function ” if it is a function listed in Schedule 2.

(5) Regulations may amend Schedule 2 by—

(a) adding any function of the Regulator conferred by, or by virtue of, this or any other enactment,

(b) omitting any such function, or

(c) altering the description of any such function contained in that Schedule.

(6) The provisions referred to in subsection (2)(b) are—

(a) section 20(10) (application to permit payments out of an account that is subject to a restraining order);

(b) section 26(2) (application for order validating action taken in contravention of freezing order);

(c) section 41(7) (application for the issue of a revised contribution notice under section 41(9));

(d) section 50(7) (application for the issue of a revised contribution notice under section 50(9));

(e) section 3(3) of the Pensions Act 1995 (c. 26) (application for revocation of prohibition order);

(ea) section 3A(3) of that Act (application for waiver of prohibition);

(f) section 4(5) of that Act (application for revocation of a suspension order);

(g) section 7(5A) of that Act (application for appointment of a trustee under section 7(3)(a) or (c) of that Act);

(h) section 29(5) of that Act (application for waiver of disqualification);

(ha) section 58(7) of that Act (power of the Regulator in prescribed circumstances to extend or further extend the period referred to in section 58(6) of that Act in relation to a schedule of contributions);

(hb) section 60(7) of that Act (power of the Regulator in prescribed circumstances to extend or further extend the period applicable under section 60(3) of that Act in relation to securing an increase in value);

(i) section 69(1) of that Act (application for order authorising modification or modifying a scheme);

(j) section 71A(2) of that Act (application for modifying a scheme to secure winding up);

(k) section 99(4A) of the Pension Schemes Act 1993 (c. 48) (application for extension under section 99(4) of that Act of a period for compliance);

(l) section 101J(6)(a) of that Act (application for extension under section 101J(2) of that Act of a period for compliance).

(7) Regulations may amend subsection (6) by—

(a) adding any provision of this or any other enactment to the list in that subsection, or

(b) omitting or altering the description of any provision mentioned in that list.

(8) The Panel may be authorised under paragraph 20(4) or (6) of Schedule 1 to exercise further functions of the Regulator on behalf of the Regulator.

(9) The Panel may authorise any of its members or any of its sub-committees to exercise on its behalf—

(a) any of the functions of the Regulator which are exercisable by the Panel on behalf of the Regulator, or

(b) any of the functions of the Panel under section 93(3), section 99(11) and paragraph 18(2) of Schedule 1 (procedure).

(10) This section is subject to any regulations made by the Secretary of State under paragraph 21 of Schedule 1 (power to limit or permit delegation of functions).

Section 11 Annual reports to Secretary of State

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

(2) Each report—

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

(b) must include the report prepared under subsection (5) of section 8 by the committee established under that section.

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

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

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

(c) the Regulator’s objectives and targets (including its main objectives as set out in section 5 or in any corresponding provision in force in Northern Ireland) and the steps taken to monitor the extent to which they are being met;

(d) the exercise of the Regulator's functions in relation to public service pension schemes.

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

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

(6) In this section “ financial year ” means—

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

(b) each successive period of 12 months.

Section 12 Provision of information, education and assistance

(1) The Regulator may provide such information, education and assistance as it considers appropriate to those involved in—

(a) the administration of work-based pension schemes, or

(b) advising the trustees or managers in relation to such schemes as to their operation.

(2) To the extent that it is not authorised to do so under subsection (1), the Regulator may also provide such information, education and assistance as it considers appropriate to—

(a) employers in relation to work-based pension schemes,

(b) persons involved in advising such employers as to the operation of such schemes, or

(c) persons upon whom duties are imposed by or by virtue of section 238 (information and advice to employees).

(3) For the purposes of subsection (2), “ employers in relation to work-based pension schemes ” means, in the case of stakeholder pension schemes, the persons upon whom duties are imposed by or by virtue of section 3 of the Welfare Reform and Pensions Act 1999 (c. 30) (duty of employers to facilitate access to stakeholder pension schemes).

(4) In this section—

“ assistance ” does not include financial assistance;

“ stakeholder pension scheme ” and “ work-based pension scheme ” have the same meaning as in section 5 (Regulator’s objectives).

Section 13 Improvement notices

(1) If the Regulator is of the opinion that a person—

(a) is contravening one or more provisions of the pensions legislation, or

(b) has contravened one or more of those provisions in circumstances that make it likely that the contravention will continue or be repeated,

it may issue a notice (an “improvement notice”) to that person directing him to take, or refrain from taking, such steps as are specified in the notice in order to remedy or prevent a recurrence of the contravention.

(2) An improvement notice must—

(a) state that the Regulator is of that opinion and specify the provision or provisions of the pensions legislation in question,

(b) contain a statement of the matters which it is asserted constitute the contravention and of the evidence on which that opinion is based, and

(c) in respect of each step specified in the notice, state the period (being a period of not less than 21 days beginning with the date of the notice) within which it must be complied with.

(3) Directions in an improvement notice—

(a) may be framed to any extent by reference to a code of practice issued by the Regulator under section 90 or 90A , and

(b) may be framed so as to afford the person to whom the notice is issued a choice between different ways of remedying or preventing the recurrence of the contravention.

(4) Directions in an improvement notice may be expressed to be conditional on compliance by a third party with a specified direction, or specified directions, contained in a notice under section 14 (third party notices).

(5) An improvement notice may direct the person to whom it is issued to inform the Regulator, within such period as may be specified in the notice, of how he has complied, or is complying, with the notice.

(6) Where a contravention of a provision of the pensions legislation consists of a failure to take action within a time limit, for the purposes of this section the contravention continues until such time as the action is taken.

(7) In this section “ pensions legislation ” means any enactment contained in or made by virtue of any of the following —

(a) the Pension Schemes Act 1993 (c. 48),

(b) Part 1 of the Pensions Act 1995 (c. 26), other than sections 62 to 66A of that Act (equal treatment),

(c) Part 1 or section 33 of the Welfare Reform and Pensions Act 1999 (c. 30), ...

(d) this Act ...

(e) section 5(4) (pension board: conflicts of interest and representation), 6 (pension board: information), 14 (information about benefits) or 16 (records) of the Public Service Pensions Act 2013 , ...

(f) paragraph 2 of Schedule 18 to the Pensions Act 2014 (c.19) , ...

(g) the Pension Schemes Act 2015 ,

(h) Part 1 of the Pension Schemes Act 2017 ,

(i) Part 1 of the Pension Schemes Act 2021.

(8) If the trustees or managers of an occupational or personal pension scheme fail to comply with an improvement notice issued to them, section 10 of the Pensions Act 1995 (civil penalties) applies to any trustee or manager who has failed to take all reasonable steps to secure compliance.

(9) That section also applies to any other person who, without reasonable excuse, fails to comply with an improvement notice issued to him.

Section 14 Third party notices

(1) Where the Regulator is of the opinion that—

(a) a person—

(i) is contravening one or more provisions of the pensions legislation, or

(ii) has contravened one or more of those provisions in circumstances that make it likely that the contravention will continue or be repeated,

(b) the contravention is or was, wholly or partly, a result of a failure of another person (“ the third party ”) to do any thing, and

(c) that failure is not itself a contravention of the pensions legislation,

the Regulator may issue a notice (a “third party notice”) directing the third party to take, or refrain from taking, such steps as are specified in the notice in order to remedy or prevent a recurrence of his failure.

(2) A third party notice must—

(a) state that the Regulator is of that opinion and specify the provision or provisions of the pensions legislation in question,

(b) contain a statement of—

(i) the matters which it is asserted constitute the contravention of the provision or provisions, and

(ii) the matters which it is asserted constitute the failure by the third party,

and the evidence on which that opinion is based, and

(c) in respect of each step specified in the notice, state the period (being a period of not less than 21 days beginning with the date of the notice) within which it must be complied with.

(3) Directions in a third party notice may be framed so as to afford the third party a choice between different ways of remedying or preventing the recurrence of his failure.

(4) A third party notice may direct the third party to inform the Regulator, within such period as may be specified in the notice, of how he has complied, or is complying, with the notice.

(5) Where a contravention of a provision of the pensions legislation consists of a failure to take action within a time limit, for the purposes of this section the contravention continues until such time as the action is taken.

(6) Section 10 of the Pensions Act 1995 (c. 26) (civil penalties) applies to a person who, without reasonable excuse, fails to comply with a third party notice issued to him.

(7) No duty to which a person is subject is to be regarded as contravened merely because of anything required to be done in compliance with a third party notice.

This is subject to section 311 (protected items).

(8) In this section “ pensions legislation ” has the same meaning as in section 13.

Section 14A Appointment of skilled person to assist public service pension scheme

(1) The Regulator may, if it considers it desirable for the purpose of ensuring compliance with pensions legislation, appoint a person to assist the pension board of a public service pension scheme in the discharge of its functions.

(2) A person appointed under this section may be any person appearing to the Regulator to have the necessary skills.

(3) The pension board of a public service pension scheme must have regard to the advice of a person appointed under this section.

(4) The costs of a person appointed under this section are to be met by the scheme manager of the scheme.

(5) In subsection (1) “ pensions legislation ” has the same meaning as in section 13.

Section 15 Injunctions and interdicts

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

(a) there is a reasonable likelihood that a particular person will do any act which constitutes a misuse or misappropriation of any of the assets of an occupational or personal pension scheme, or

(b) a particular person has done any such act and there is a reasonable likelihood that he will continue or repeat the act in question or do a similar act,

the court may grant an injunction restraining him from doing so or, in Scotland, an interdict prohibiting him from doing so.

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

Section 16 Restitution

(1) If, on the application of the Regulator, the court is satisfied that there has been a misuse or misappropriation of any of the assets of an occupational or personal pension scheme, it may order any person involved to take such steps as the court may direct for restoring the parties to the position in which they were before the misuse or misappropriation occurred.

(2) For this purpose a person is “ involved ” if he appears to the court to have been knowingly concerned in the misuse or misappropriation of the assets.

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

Section 17 Power of the Regulator to recover unpaid contributions

(1) Where any employer contribution payable towards an occupational or personal pension scheme is not paid on or before its due date, the Regulator may, on behalf of the trustees or managers of the scheme, exercise such powers as the trustees or managers have to recover that contribution.

(2) For the purposes of subsection (1), any employer contribution payable towards a personal pension scheme which is not paid on or before its due date is, if not a debt due from the employer to the trustees or managers apart from this subsection, to be treated as if it were such a debt.

(3) In this section—

“ due date ”—

in relation to employer contributions payable towards an occupational pension scheme in accordance with a schedule of contributions under section 227, has the same meaning as in section 228,

in relation to employer contributions payable in accordance with a payment schedule under section 87 of the Pensions Act 1995 (c. 26) (schedules of payments to money purchase schemes), has the meaning given by subsection (2)(c) of that section, ...

in relation to employer contributions payable towards a personal pension scheme, has the same meaning as in section 111A of the Pension Schemes Act 1993 (c. 48) (monitoring of employer payments to personal pension schemes); and

in relation to employer contributions payable under a public service pension scheme, the date on which the contributions are due under the scheme;

“ employer contribution ”—

in relation to an occupational pension scheme other than a public service pension scheme , means any contribution payable by or on behalf of the employer towards the scheme in accordance with a schedule of contributions under section 227 of this Act or a payment schedule under section 87 of the Pensions Act 1995 (c. 26) (schedules of payments to money purchase schemes) whether—

on the employer’s own account (but in respect of one or more employees), or

on behalf of an employee out of deductions from the employee’s earnings, ...

in relation to a personal pension scheme, means any contribution payable towards the scheme under direct payment arrangements and

in relation to a public service pension scheme, means any contributions payable under the scheme by the employer.

Section 18 Pension liberation: interpretation

(1) In this section and sections 19 to 21—

(a) “ pension scheme ” means an occupational pension scheme or a personal pension scheme,

(b) “ deposit-taker ” has the meaning given by subsections (8A) and (8B) of section 49 of the Pensions Act 1995, except that, for the purposes of this definition, subsection (8A)(c) of that section has effect with the omission of the words from “or” to the end,

(c) references to money liberated from a pension scheme are to be read in accordance with subsection (2),

(d) “ liberated member ”, in relation to money liberated from a pension scheme, means the member of the pension scheme who is referred to in subsection (2)(a), and

(e) “ restraining order ” means a restraining order under section 20.

(2) Money is to be taken to have been liberated from a pension scheme if—

(a) the money directly or indirectly represents an amount that, in respect of accrued rights or an entitlement of a member of a pension scheme, has been transferred out of the scheme in pursuance of—

(i) a relevant statutory provision, or

(ii) a provision of the scheme rules , other than a relevant statutory provision,

(b) the trustees or managers of the scheme transferred the amount out of the scheme on the basis that a third party (“the liberator”) would secure that the amount was used in an authorised way,

(c) the amount has not been used in an authorised way, and

(d) the liberator has not secured, and is not likely to secure, that the amount will be used in an authorised way.

(3) The following are “ relevant statutory provisions ” for the purposes of subsection (2)—

(a) section 94 of the Pension Schemes Act 1993 (right to cash equivalent under Chapter 1 of Part 4ZA of that Act);

(b) section 101AB(1)(a) of that Act (right to cash transfer sum under Chapter 2 of Part 4ZA of that Act);

(c) section 101F(1) of that Act (right to cash equivalent of pension credit benefit).

(4) In subsection (2) “ authorised way ” means—

(a) where the amount concerned is transferred out of the scheme in pursuance of a provision mentioned in subsection (3)(a), a way specified in ... section 95 of the Pension Schemes Act 1993;

(b) where that amount is transferred out in pursuance of the provision mentioned in subsection (3)(b), a way specified in section 101AE(2) of that Act;

(c) where that amount is transferred out in pursuance of the provision mentioned in subsection (3)(c), a way specified in subsection (2) or, as the case may be, subsection (3) of section 101F of that Act;

(d) where that amount is transferred out in pursuance of a provision of the kind mentioned in subsection (2)(a)(ii), a way that is authorised by the scheme rules for amounts transferred out in pursuance of that provision.

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

Section 19 Pension liberation: court’s power to order restitution

(1) This section applies where money has been liberated from a pension scheme.

(2) In this section “ recoverable property ” means (subject to subsection (3))—

(a) the money or any of it, or

(b) property (of any kind and wherever situated) that, directly or indirectly, represents any of the money.

(3) Where a person acquires the beneficial interest in recoverable property in good faith, for value and without notice that the property is, or (as the case may be) represents, money liberated from a pension scheme—

(a) the property ceases to be recoverable property, and

(b) no property that subsequently represents it is recoverable property.

(4) The court, on the application of the Regulator, may make such order as the court thinks just and convenient for the purpose of securing that recoverable property, or money representing its value or proceeds of its sale, is transferred—

(a) towards a pension scheme,

(b) towards an annuity or insurance policy, or

(c) to the liberated member.

(5) An order under subsection (4) may (in particular) direct a person who holds recoverable property, or has any degree of control over recoverable property, to take steps for the purpose mentioned in that subsection.

(6) Where the court makes an order under paragraph (a) of subsection (4), it may by order direct the trustees or managers of the scheme referred to in that paragraph—

(a) to take steps for the purpose mentioned in that subsection;

(b) to apply the property or money transferred, in such manner as the court may direct, for the purpose of providing benefits under that scheme to or in respect of the liberated member.

(7) Regulations may modify any of the provisions of the Pension Schemes Act 1993 (c. 48) as it applies in relation to cases where an order is made under subsection (6).

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

(9) The generality of the jurisdiction conferred by section 16 is not to be taken to be prejudiced by this section.

(10) The generality of the jurisdiction conferred by this section is not to be taken to be prejudiced by section 21.

Section 20 Pension liberation: restraining orders

(1) The Regulator may make a restraining order in relation to an account with a deposit-taker if—

(a) it is satisfied that the account contains money which has been liberated from a pension scheme,

(b) it is satisfied that the account is held by or on behalf of—

(i) the liberator, or

(ii) a person who has to, or in practice is likely to, ensure that the account is operated in accordance with the liberator’s directions, and

(c) the order is made pending consideration being given to the making of one or more repatriation orders in relation to the account under section 21.

(2) A restraining order is an order directing that no credit or debit of any amount may be made to the account concerned (“ the restrained account ”) during the period for which the order has effect.

(3) A restraining order must—

(a) specify the name of the deposit-taker in respect of which it is made,

(b) identify the account in respect of which it is made, and

(c) contain such other information as may be prescribed.

(4) A restraining order—

(a) takes effect when the deposit-taker concerned is notified by the Regulator of the making of the order, and

(b) (subject to subsection (7)) ceases to have effect through expiry of time at the end of the six months beginning with the day when it is made.

(5) The Regulator may, at a time when a restraining order has effect, make an order extending (or further extending) the restraining order.

(6) An order under subsection (5) (an “ extension order ”) takes effect—

(a) when the deposit-taker concerned is notified by the Regulator of the making of the order, but

(b) only if notification under paragraph (a) occurs at a time when the restraining order concerned has effect.

(7) Where an extension order takes effect—

(a) the restraining order concerned does not cease to have effect through expiry of time until the end of the six months beginning with the time when it would have ceased to have effect through expiry of time had it not been extended, but

(b) for so long as the extension order has effect, no further extension order can take effect before that time in relation to the restraining order.

(8) A restraining order does not prevent the crediting to the restrained account of an amount representing interest payable by the deposit-taker on any amount which is, or has been, in the account.

(9) Where a restraining order has effect, the deposit-taker must return to the payer any money credited to the restrained account in breach of the order.

(10) Where a restraining order has effect, the Regulator may, on an application made by or with the consent of the person by whom the restrained account is held, by order permit a payment specified in the order to be made out of the account if the Regulator is satisfied—

(a) that the payment will be made for the purpose of enabling—

(i) any individual to meet his reasonable living expenses, or

(ii) any person to carry on a trade, business, profession or occupation,

(b) that the beneficial interest in the money out of which the payment will be made belongs—

(i) to the individual, or person, concerned, or

(ii) to a person who consents to the making of the payment, and

(c) that the money out of which the payment will be made is not money liberated from a pension scheme.

(11) Section 10 of the Pensions Act 1995 (c. 26) (civil penalties) applies to a deposit-taker who, without reasonable excuse, fails to comply with any obligation imposed by a restraining order or by this section.

Section 21 Pension liberation: repatriation orders

(1) Subsections (2) and (3) apply where—

(a) a restraining order has effect, and

(b) the Regulator is satisfied that the restrained account contains an amount of money liberated from a pension scheme.

(2) The Regulator may by order—

(a) direct the deposit-taker concerned to pay from the account a sum not exceeding that amount—

(i) towards a pension scheme,

(ii) towards an annuity or insurance policy, or

(iii) to the liberated member, and

(b) where it makes an order under paragraph (a)(i), direct the trustees or managers of the scheme to apply the sum, in such manner as the Regulator may direct, for the purpose of providing benefits under the scheme to or in respect of the liberated member.

(3) If it appears to the Regulator, on taking an overall view of transactions taking place before the restraining order was made, that there are two or more individuals each of whom is a person who is or may be the liberated member in relation to some of the money, the Regulator may determine the sums to be paid from the restrained account under subsection (2) on any basis that appears to the Regulator to be just and reasonable.

(4) Regulations may modify any of the provisions of the Pension Schemes Act 1993 (c. 48) as it applies in relation to cases where an order is made under subsection (2)(b).

(5) Section 10 of the Pensions Act 1995 (c. 26) (civil penalties) applies to a deposit-taker who, without reasonable excuse, fails to comply with a direction given to him under subsection (2)(a).

(6) If the trustees or managers of a pension scheme fail to comply with a direction given to them under subsection (2)(b), that section applies to any trustee or manager who has failed to take all reasonable steps to secure compliance.

(7) In this section “ restrained account ” has the meaning given by section 20.

Section 22 Powers to wind up occupational pension schemes

In section 11 of the Pensions Act 1995 (powers to wind up occupational pension schemes)—

(a) omit subsection (3),

(b) before subsection (4) insert—

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

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

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

(3B) In subsection (3A)—

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

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

(c) at the end of subsection (4) insert— “ This subsection is subject to sections 28, 135 and 219 of the Pensions Act 2004 (winding up order made when freezing order has effect in relation to scheme, during assessment period under Part 2 of that Act etc ). ” , and

(d) after subsection (6) insert—

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

Section 23 Freezing orders

(1) This section applies to an occupational pension scheme which is not a money purchase scheme.

(2) The Regulator may make a freezing order in relation to such a scheme if and only if—

(a) the order is made pending consideration being given to the making of an order in relation to the scheme under section 11(1)(c) of the Pensions Act 1995 (c. 26) (power to wind up schemes where necessary to protect the generality of members), and

(b) the Regulator is satisfied that—

(i) there is, or is likely to be if the order is not made, an immediate risk to the interests of members under the scheme or the assets of the scheme, and

(ii) it is necessary to make the freezing order to protect the interests of the generality of the members of the scheme.

But no freezing order may be made in relation to a scheme during an assessment period (within the meaning of section 132) in relation to the scheme (see section 135(11)).

(3) A freezing order is an order directing that during the period for which it has effect—

(a) no benefits are to accrue under the scheme rules to, or in respect of, members of the scheme, and

(b) winding up of the scheme may not begin.

(4) A freezing order may also contain one or more of the following directions which have effect during the period for which the order has effect—

(a) a direction that no new members, or no specified classes of new member, are to be admitted to the scheme;

(b) a direction that—

(i) no further contributions or payments, or

(ii) no further specified contributions or payments,

are to be paid towards the scheme by or on behalf of the employer, any members or any specified members of the scheme;

(c) a direction that any amount or any specified amount which—

(i) corresponds to any contribution which would be due to be paid towards the scheme on behalf of a member but for a direction under paragraph (b), and

(ii) has been deducted from a payment of any earnings in respect of an employment,

is to be repaid to the member in question by the employer;

(d) a direction that no benefits, or no specified benefits, are to be paid to or in respect of any members or any specified members under the scheme rules;

(e) a direction that payments of all benefits or specified benefits under the scheme rules to or in respect of all the members or specified members may only be made from the scheme if they are reduced in a specified manner or by a specified amount;

(f) a direction that—

(i) no transfers or no specified transfers of, or no transfer payments or no specified transfer payments in respect of, any member’s rights under the scheme rules are to be made from the scheme, or

(ii) no other steps or no specified other steps are to be taken to discharge any liability of the scheme to or in respect of a member of the scheme in respect of pensions or other benefits;

(g) a direction that no statements of entitlement are to be provided to members of the scheme under section 93A of the Pension Schemes Act 1993 (c. 48) ( benefits other than money purchase : right to statement of entitlement);

(h) a direction that—

(i) no refunds of, or no specified refunds of, or in respect of, contributions paid by or in respect of a member towards the scheme are to be made from the scheme, or

(ii) refunds or specified refunds of, or in respect of, contributions paid by or in respect of a member towards the scheme may only be made from the scheme if they are determined in a specified manner and satisfy such other conditions as may be specified.

(5) In subsection (4)(b)—

(a) the references to contributions do not include contributions due to be paid before the order takes effect, and

(b) the references to payments towards a scheme include payments in respect of pension credits where the person entitled to the credit is a member of the scheme.

(6) A freezing order may not contain a direction under subsection (4)(d) or (e) which reduces the benefits payable to or in respect of a member, for the period during which the order has effect, below the level to which the trustees or managers of the scheme would have power to reduce them if a winding up of the scheme had begun at the time when the freezing order took effect.

(7) A direction under subsection (4)(f) may, in particular, provide that transfers or specified transfers of, or transfer payments or specified transfer payments in respect of, any member’s rights under the scheme rules may not be made from the scheme unless the amounts paid out from the scheme in respect of the transfers or transfer payments are determined in a specified manner and the transfer or transfer payments satisfy such other conditions as may be specified.

(8) A freezing order may also require the trustees or managers of the scheme to obtain an actuarial valuation within a specified period.

(9) A freezing order containing such a requirement must specify—

(a) the date by reference to which the assets and liabilities are to be valued,

(b) the assets and liabilities which are to be taken into account,

(c) the manner in which the valuation must be prepared,

(d) the information and statements which it must contain, and

(e) any other requirements that the valuation must satisfy.

(10) For the purposes of subsection (8)—

“ an actuarial valuation ” means a written valuation of the scheme’s assets and liabilities prepared and signed by the actuary;

“ the actuary ” means—

the actuary appointed under section 47(1)(b) of the Pensions Act 1995 (c. 26) (professional advisers) in relation to the scheme, or

if no such actuary has been appointed—

a person with prescribed qualifications or experience, or

a person approved by the Secretary of State.

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

Section 24 Consequences of freezing order

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

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

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

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

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

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

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

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

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

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

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

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

“ pension sharing order or provision ” means an order or provision falling within section 28(1) of the Welfare Reform and Pensions Act 1999 (c. 30) (activation of pension sharing);

“ pension earmarking order ” means—

an order under section 23 of the Matrimonial Causes Act 1973 (c. 18) (financial provision orders in connection with divorce etc) so far as it includes provision made by virtue of section 25B or 25C of that Act (powers to include provision about pensions),

an order under Part 1 (financial provision in connection with dissolution, nullity or separation) of Schedule 5 to the Civil Partnership Act 2004 (c. 33) (financial relief in the High Court or a county court etc. ) so far as it includes provision made by virtue of paragraphs 25 and 26 of Part 6 of that Schedule (powers to include provisions about pensions),

an order under section 12A(2) or (3) of the Family Law (Scotland) Act 1985 (c. 37) (powers in relation to pension lump sums when making a capital sum order), ...

an order under Article 25 of the Matrimonial Causes (Northern Ireland) Order 1978 ( S.I. 1978/1045 (N.I.15)) so far as it includes provision made by virtue of Article 27B or 27C of that Order (Northern Ireland powers corresponding to those mentioned in paragraph (a)) , or

an order under Part 1 (financial provision in connection with dissolution, nullity or separation) of Schedule 15 to the Civil Partnership Act 2004 (financial relief in the High Court or a county court etc. : Northern Ireland) so far as it includes provision made by virtue of paragraphs 20 and 21 of Part 5 of that Schedule (powers to include provisions about pensions)

(7) Regulations may modify any provisions of—

(a) Chapter 1 of Part 4ZA of the Pension Schemes Act 1993 (transfer rights: general), or

(b) Chapter 2 of that Part (early leavers: cash transfer sums and contribution refunds),

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

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

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

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

Section 25 Period of effect etc of freezing order

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

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

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

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

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

Section 26 Validation of action in contravention of freezing order

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

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

(a) the trustees or managers of the scheme;

(b) any person directly affected by the action.

Section 27 Effect of determination to wind up scheme on freezing order

(1) This section applies where—

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

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

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

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

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

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

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

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

Section 28 Effect of winding up order on freezing order

(1) This section applies where—

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

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

(2) In such a case—

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

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

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

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

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

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

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

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

Section 29 Effect of assessment period under Part 2 on freezing order

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

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

(1) This section applies where—

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

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

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

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

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

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

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

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

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

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

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

(6) Subsection (7) applies if—

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

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

(c) the contribution is not paid within that period.

(7) In such a case—

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

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

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

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

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

Section 31 Notification of trustees, managers, employers and members

(1) This section applies where—

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

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

(c) an order is made under section 28 directing specified steps to be taken following the winding up of a scheme, or

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

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

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

(b) the employer in relation to the scheme,

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

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

(a) all the members of the scheme, or

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

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

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

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

Section 32 Sections 23 to 31: supplementary

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

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

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

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

Section 33 Prohibition orders

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

Prohibition orders

(3)

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

(a) a particular trust scheme,

(b) a particular description of trust schemes, or

(c) trust schemes in general,

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

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

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

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

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

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

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

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

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

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

Section 34 Suspension orders

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

(a) after subsection (1)(a) insert—

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

(b) in subsection (2)—

(i) in paragraph (a) after “paragraph (a)” insert “ or (aa) ” ,

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

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

(c) after subsection (5) insert—

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

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

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

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

Section 35 Appointments of trustees by the Regulator

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

(a) omit subsection (4), and

(b) after subsection (5) insert—

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

(a) the trustees of the scheme,

(b) the employer, or

(c) any member of the scheme,

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

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

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

(a) by the employer,

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

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

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

Section 36 Independent trustees

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

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

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

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

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

(c) after subsection (2) insert—

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

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

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

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

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

(a) the Authority,

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

(c) the trustees of the scheme.

(2C) The events are—

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

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

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

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

(2D) For the purposes of subsection (2B) “ the responsible person ” means—

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

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

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

(a) the Authority,

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

(c) the trustees of the scheme.

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

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

Power to appoint independent trustees

(23)

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

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

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

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

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

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

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

(i) the employer,

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

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

(c) he satisfies any prescribed requirements;

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

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

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

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

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

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

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

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

(a) for subsection (4)(a) substitute—

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

(b) after subsection (5) insert—

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

(c) for subsection (6) substitute—

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

(a) by the employer,

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

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

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

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

Section 37 Disqualification

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

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

Section 38 Contribution notices where avoidance of employer debt

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

(a) a money purchase scheme, or

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

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

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

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

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

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

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

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

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

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

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

(i) the extent to which, in all the circumstances of the case, it was reasonable for the person to act, or fail to act, in the way that the person did, and

(ii) such other matters as the Regulator considers relevant, including (where relevant) the matters falling within subsection (7).

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

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

(a) the Regulator is of the opinion that the material detriment test , the employer insolvency test or the employer resources test is met in relation to the act or failure (see sections 38A, 38C and 38E) or that the main purpose or one of the main purposes of the act or failure was—

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

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

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

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

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

(c) it is either—

(i) an act which occurred during the period of six years ending with the giving of a warning notice in respect of the contribution notice in question, or

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

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

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

(b) “ the relevant period ” means the period which—

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

(ii) ends with the giving of a warning notice in respect of the contribution notice in question.

(7) The matters within this subsection are—

(a) the degree of involvement of the person in the act or failure to act which falls within subsection (5),

(b) the relationship which the person has or has had with the employer (including, where the employer is a company within the meaning of subsection (11) of section 435 of the Insolvency Act 1986 (c. 45), whether the person has or has had control of the employer within the meaning of subsection (10) of that section),

(c) any connection or involvement which the person has or has had with the scheme,

(d) if the act or failure to act was a notifiable event for the purposes of section 69 (duty to notify the Regulator of certain events), any failure by the person to comply with any obligation imposed on the person by subsection (1) of that section to give the Regulator notice of the event,

(e) all the purposes of the act or failure to act (including whether a purpose of the act or failure was to prevent or limit loss of employment),

(ea) the value of any benefits which directly or indirectly the person receives, or is entitled to receive, from the employer or under the scheme;

(eb) the likelihood of relevant creditors being paid and the extent to which they are likely to be paid;

(ec) the effect of the act or failure to act on the value of the assets or liabilities of the scheme or any relevant transferee scheme,

(f) the financial circumstances of the person, and

(g) such other matters as may be prescribed.

(7A) In subsection (7)(eb) “ relevant creditors ” means—

(a) creditors of the employer, and

(b) creditors of any other person who has incurred a liability or other obligation (including one that is contingent or otherwise might fall due) to make a payment, or transfer an asset, to the scheme.

(7B) In subsection (7)(ec) “relevant transferee scheme” and the reference to the assets or liabilities of any relevant transferee scheme have the same meaning as in section 38A.

(8) For the purposes of this section references to a debt due under section 75 of the Pensions Act 1995 (c. 26) include a contingent debt under that section.

(9) Accordingly, in the case of such a contingent debt, the reference in subsection (5)(a)(ii) to preventing a debt becoming due is to be read as including a reference to preventing the occurrence of any of the events specified in section 75(4C)(a) or (b) of that Act upon which the debt is contingent.

(10) For the purposes of this section—

(a) section 249 of the Insolvency Act 1986 (connected persons) applies as it applies for the purposes of any provision of the first Group of Parts of that Act,

(b) section 435 of that Act (associated persons) applies as it applies for the purposes of that Act, and

(c) section 229 of the Bankruptcy (Scotland) Act 2016 (associated persons) applies as it applies for the purposes of that Act.

(11) For the purposes of this section “ insolvency practitioner ”, in relation to a person, means—

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

(b) an insolvency practitioner within the meaning of section 121(9)(b) (persons of a prescribed description).

(12) Subsection (13) applies if the Regulator is of the opinion that—

(a) a person was a party to a series of acts or failures to act,

(b) each of the acts or failures in the series falls within subsection (5)(b) and (c), and

(c) the material detriment test , the employer insolvency test or the employer resources test is met in relation to the series, or the main purpose or one of the main purposes of the series was as mentioned in subsection (5)(a)(i) or (ii).

(13) The series of acts or failures to act is to be regarded as an act or failure to act falling within subsection (5) (and, accordingly, the reference in subsection (6)(b)(i) to the act or failure to act falling with subsection (5) is to the first of the acts or failures to act in the series).

(14) In this section “ a warning notice ” means a notice given as mentioned in section 96(2)(a).

Section 38A Section 38 contribution notice: meaning of “material detriment test”

(1) For the purposes of section 38 the material detriment test is met in relation to an act or failure if the Regulator is of the opinion that the act or failure has detrimentally affected in a material way the likelihood of accrued scheme benefits being received (whether the benefits are to be received as benefits under the scheme or otherwise).

(2) In this section any reference to accrued scheme benefits being received is a reference to benefits the rights to which have accrued by the relevant time being received by, or in respect of, the persons who were members of the scheme before that time.

(3) In this section “ the relevant time ” means—

(a) in the case of an act, the time of the act, or

(b) in the case of a failure—

(i) the time when the failure occurred, or

(ii) where the failure continued for a period of time, the time which the Regulator determines and which falls within that period;

and, in the case of acts or failures to act forming part of a series, any reference in this subsection to an act or failure is a reference to the last of the acts or failures in that series.

(4) In deciding for the purposes of section 38 whether the material detriment test is met in relation to an act or failure, the Regulator must have regard to such matters as it considers relevant, including (where relevant)—

(a) the value of the assets or liabilities of the scheme or of any relevant transferee scheme,

(b) the effect of the act or failure on the value of those assets or liabilities,

(c) the scheme obligations of any person,

(d) the effect of the act or failure on any of those obligations (including whether the act or failure causes the country or territory in which any of those obligations would fall to be enforced to be different),

(e) the extent to which any person is likely to be able to discharge any scheme obligation in any circumstances (including in the event of insolvency or bankruptcy),

(f) the extent to which the act or failure has affected, or might affect, the extent to which any person is likely to be able to do as mentioned in paragraph (e), and

(g) such other matters as may be prescribed.

(5) In subsection (4) “ scheme obligation ” means a liability or other obligation (including one that is contingent or otherwise might fall due) to make a payment, or transfer an asset, to—

(a) the scheme, or

(b) any relevant transferee scheme in respect of any persons who were members of the scheme before the relevant time.

(6) In this section—

(a) “ relevant transferee scheme ” means any work-based pension scheme to which any accrued rights to benefits under the scheme are transferred;

(b) any reference to the assets or liabilities of any relevant transferee scheme is a reference to those assets or liabilities so far as relating to persons who were members of the scheme before the relevant time.

(7) For the purposes of subsection (6)(a) the reference to the transfer of accrued rights of members of a pension scheme to another pension scheme includes a reference to the extinguishing of those accrued rights in consequence of the obligation to make a payment, or transfer an asset, to that other scheme.

(8) In this section—

(a) “ work-based pension scheme ” has the meaning given by section 5(3);

(b) any reference to rights which have accrued is to be read in accordance with section 67A(6) and (7) of the Pensions Act 1995 (reading any reference in those subsections to a subsisting right as a reference to a right which has accrued).

(9) In deciding for the purposes of this section whether an act or failure has detrimentally affected in a material way the likelihood of accrued scheme benefits being received, the following provisions of this Act are to be disregarded—

(a) Chapter 3 of Part 2 (the Board of the Pension Protection Fund: pension protection), and

(b) section 286 (the financial assistance scheme for members of certain pension schemes).

(10) Regulations may amend any provision of subsections (4) to (8).

Section 38B Section 38 contribution notice issued by reference to material detriment test: defence

(1) This section applies where—

(a) a warning notice is given to any person (“P”) in respect of a contribution notice under section 38, and

(b) the contribution notice under consideration would be issued wholly or partly by reference to the Regulator's opinion that the material detriment test is met in relation to an act or deliberate failure to act to which P was a party.

(2) If the Regulator is satisfied that P has shown that—

(a) conditions A and C are met, and

(b) where applicable, condition B is met,

the Regulator must not issue the contribution notice by reference to its being of the opinion mentioned in subsection (1)(b).

(3) Condition A is that, before becoming a party to the act or failure, P gave due consideration to the extent to which the act or failure might detrimentally affect in a material way the likelihood of accrued scheme benefits being received.

(4) Condition B is that, in any case where as a result of that consideration P considered that the act or failure might have such an effect, P took all reasonable steps to eliminate or minimise the potential detrimental effects that the act or failure might have on the likelihood of accrued scheme benefits being received.

(5) Condition C is that, having regard to all relevant circumstances prevailing at the relevant time, it was reasonable for P to conclude that the act or failure would not detrimentally affect in a material way the likelihood of accrued scheme benefits being received.

(6) P is to be regarded as giving the consideration mentioned in condition A only if P has made the enquiries, and done the other acts, that a reasonably diligent person would have made or done in the circumstances.

(7) For the purposes of condition C—

(a) “ the relevant time ” means the time at which the act occurred or the failure to act first occurred;

(b) the reference to the circumstances mentioned in that condition is a reference to those circumstances of which P was aware, or ought reasonably to have been aware, at that time (including acts or failures to act which have occurred before that time and P's expectation at that time of other acts or failures to act occurring).

(8) In the case of acts or failures to act forming part of a series, P is to be regarded as having shown the matters mentioned in subsection (2) if P shows in the case of each of the acts or failures in the series that—

(a) conditions A and C are met, and (where applicable) condition B is met, in relation to the act or failure, or

(b) the act or failure was one of a number of acts or failures (a “group” of acts or failures) selected by P in relation to which the following matters are shown.

(9) The matters to be shown are that—

(a) before becoming a party to the first of the acts or failures in the group, condition A is met in relation to the effect of the acts or failures in the group taken together,

(b) condition B is (where applicable) met in relation to that effect, and

(c) condition C is then met in relation to each of the acts or failures in the group (determined at the time at which each act or failure concerned occurred or first occurred).

(10) If at any time P considers that condition C will not be met in relation to any particular act or failure in the group—

(a) the previous acts or failures in the group are to be regarded as a separate group for the purposes of subsection (8), and

(b) P may then select another group consisting of the particular act or failure concerned, and any subsequent act or failure, in relation to which P shows the matters mentioned in subsection (9).

Nothing in paragraph (b) is to be read as preventing P from showing the matters mentioned in subsection (8)(a).

(11) If—

(a) P is unable to show in the case of each of the acts or failures in the series that the matters set out in subsection (8)(a) or (b) are met, but

(b) does show in the case of some of them that those matters are met,

the acts or failures within paragraph (b) are not to count for the purposes of section 38A as acts or failures to act in the series.

(12) In this section—

(a) “ a warning notice ” means a notice given as mentioned in section 96(2)(a);

(b) a reference to a party to an act or failure to act includes a reference to a person who knowingly assists in the act or failure;

(c) any reference to the accrued scheme benefits being received has the same meaning as in section 38A;

and subsection (9) of section 38A applies for the purposes of conditions A to C as it applies for the purposes of that section.

(13) Regulations may amend this section.

Section 38C Section 38 contribution notice: meaning of “employer insolvency test”

(1) For the purposes of section 38 the employer insolvency test is met in relation to an act or failure to act if the Regulator is of the opinion that—

(a) immediately after the relevant time, the value of the assets of the scheme was less than the amount of the liabilities of the scheme, and

(b) if a debt under section 75(4) of the Pensions Act 1995 (deficiencies in scheme assets: employer insolvency etc) had fallen due from the employer to the scheme immediately after the relevant time, the act or failure would have materially reduced the amount of the debt likely to be recovered by the scheme.

(2) For the purposes of subsection (1)—

(a) the value of the assets of the scheme immediately after the relevant time is the value which the Regulator estimates to be their value,

(b) the amount of the liabilities of the scheme immediately after the relevant time is the amount which the Regulator estimates to be the amount of those liabilities, and

(c) the amount of the debt is the amount which the Regulator estimates to be the amount of the debt under section 75(4) of the Pensions Act 1995 that would have fallen due immediately after the relevant time.

(3) When estimating the value and the amounts referred to in subsection (2), the Regulator must take into account how assets and liabilities, and their value or amount, are determined and calculated for the purposes of section 75(4) of the Pensions Act 1995.

(4) When estimating—

(a) the value of the assets of the scheme immediately after the relevant time, and

(b) the amount of the debt under section 75(4) of the Pensions Act 1995 falling due immediately after the relevant time,

the Regulator must disregard the amount of any debt due immediately after the relevant time from the employer under section 75 of the Pensions Act 1995.

(5) In this section “ the relevant time ” means—

(a) in the case of an act, the time of the act, or

(b) in the case of a failure to act—

(i) the time when the failure occurred, or

(ii) where the failure continued for a period of time, the time which the Regulator determines and which falls within that period;

and, in the case of acts or failures to act forming part of a series, any reference in this subsection to an act or failure to act is a reference to the last of the acts or failures in that series.

Section 38D Section 38 contribution notice issued by reference to employer insolvency test: defence

(1) This section applies where—

(a) a warning notice is given to any person (“P”) in respect of a contribution notice under section 38, and

(b) the contribution notice under consideration would be issued wholly or partly by reference to the Regulator's opinion that the employer insolvency test is met in relation to an act or deliberate failure to act to which P was a party.

(2) If the Regulator is satisfied that P has shown that—

(a) conditions A and C are met, and

(b) where applicable, condition B is met,

the Regulator must not issue the contribution notice by reference to its being of the opinion mentioned in subsection (1)(b).

(3) If the Regulator is satisfied that P or another person has shown that condition D is met, the Regulator must not issue the contribution notice by reference to its being of the opinion mentioned in subsection (1)(b).

(4) Condition A is that, before becoming a party to the act or failure, P gave due consideration to the extent to which, if a debt under section 75(4) of the Pensions Act 1995 were to fall due from the employer to the scheme—

(a) immediately after the act or failure, or

(b) where the failure might continue for a period of time, at any time within that period,

the act or failure might materially reduce the amount of the debt likely to be recovered by the scheme.

(5) Condition B is that, in any case where as a result of that consideration P considered that the act or failure might have such an effect, P took all reasonable steps to eliminate or minimise the potential for the act or failure to have such an effect.

(6) Condition C is that, having regard to all relevant circumstances prevailing at the time of the act or at the time when the failure to act first occurred, it was reasonable for P to conclude that, if a debt under section 75(4) of the Pensions Act 1995 were to fall due from the employer to the scheme—

(a) immediately after the act or failure, or

(b) where the failure might continue for a period of time, at any time within that period,

the act or failure would not materially reduce the amount of the debt likely to be recovered by the scheme.

(7) Condition D is that, immediately after the relevant time, the value of the assets of the scheme equalled or was more than the amount at that time of the liabilities of the scheme.

(8) P is to be regarded as giving the consideration mentioned in condition A only if P has made the enquiries, and done the other acts, that a reasonably diligent person would have made or done in the circumstances.

(9) For the purposes of condition C the reference to the circumstances mentioned in that condition is a reference to those circumstances of which P was aware, or ought reasonably to have been aware, at the time of the act or the time when the failure to act first occurred (including acts or failures to act which have occurred before that time and P's expectation at that time of other acts or failures to act occurring).

(10) For the purposes of conditions A, C and D the amount of any debt due at the time in question from the employer under section 75 of the Pensions Act 1995 is to be disregarded.

(11) In the case of acts or failures to act forming part of a series, P is to be regarded as having shown the matters mentioned in subsection (2) if P shows in the case of each of the acts or failures in the series that—

(a) conditions A and C are met, and (where applicable) condition B is met, in relation to the act or failure, or

(b) the act or failure was one of a number of acts or failures (a “group” of acts or failures) selected by P in relation to which the following matters are shown.

(12) The matters to be shown are that—

(a) before becoming a party to the first of the acts or failures in the group, condition A is met in relation to the effect of the acts or failures in the group taken together,

(b) condition B is (where applicable) met in relation to that effect, and

(c) condition C is then met in relation to each of the acts or failures in the group (determined at the time at which each act or failure concerned occurred or first occurred).

(13) If at any time P considers that condition C will not be met in relation to any particular act or failure in the group—

(a) the previous acts or failures in the group are to be regarded as a separate group for the purposes of subsection (11), and

(b) P may then select another group consisting of the particular act or failure concerned, and any subsequent act or failure, in relation to which P shows the matters mentioned in subsection (12).

Nothing in paragraph (b) is to be read as preventing P from showing the matters mentioned in subsection (11)(a).

(14) If—

(a) P is unable to show in the case of each of the acts or failures in the series that the matters set out in subsection (11)(a) or (b) are met, but

(b) does show in the case of some of them that those matters are met,

the acts or failures within paragraph (b) are not to count for the purposes of section 38C as acts or failures to act in the series.

(15) In this section—

(a) “ the relevant time ” has the meaning given by section 38C;

(b) “ a warning notice ” means a notice given as mentioned in section 96(2)(a);

(c) a reference to a party to an act or failure to act includes a reference to a person who knowingly assists in the act or failure.

Section 38E Section 38 contribution notice: meaning of “employer resources test”

(1) For the purposes of section 38 the employer resources test is met in relation to an act or failure to act if the Regulator is of the opinion that—

(a) the act or failure reduced the value of the resources of the employer, and

(b) that reduction was a material reduction relative to the estimated section 75 debt in relation to the scheme.

(2) For the purposes of this section—

(a) what constitutes the resources of the employer is to be determined in accordance with regulations;

(b) the value of the resources of the employer is to be determined, calculated and verified in a prescribed manner.

(3) In this section the “ estimated section 75 debt ” means the amount which the Regulator estimates to be the amount of the debt which would become due from the employer to the trustees or managers of the scheme under section 75 of the Pensions Act 1995 (deficiencies in the scheme assets) if—

(a) section 75(2) applied, and

(b) the time designated by the trustees or managers of the scheme for the purposes of section 75(2) were the relevant time.

(4) When calculating the estimated section 75 debt under subsection (3), the amount of any debt due at the relevant time from the employer under section 75 of the Pensions Act 1995 is to be disregarded.

(5) In this section “ the relevant time ” means—

(a) in a case where the act or failure to act forms part of a series of acts or failures to act, the time immediately before the first of the acts occurred or the first of the failures to act first occurred;

(b) in any other case, the time immediately before the act occurred or the failure to act first occurred.

Section 38F Section 38 contribution notice issued by reference to employer resources test: defence

(1) This section applies where—

(a) a warning notice is given to any person (“P”) in respect of a contribution notice under section 38, and

(b) the contribution notice under consideration would be issued wholly or partly by reference to the Regulator's opinion that the employer resources test is met in relation to an act or deliberate failure to act to which P was a party.

(2) If the Regulator is satisfied that P has shown that—

(a) conditions A and C are met, and

(b) where applicable, condition B is met,

the Regulator must not issue the contribution notice by reference to its being of the opinion mentioned in subsection (1)(b).

(3) Condition A is that, before becoming a party to the act or failure, P gave due consideration to the extent to which the act or failure might reduce the value of the resources of the employer relative to the estimated section 75 debt in relation to the scheme.

(4) Condition B is that, in any case where as a result of that consideration P considered that the act or failure might have such an effect, P took all reasonable steps to eliminate or minimise the potential for the act or failure to have such an effect.

(5) Condition C is that, having regard to all relevant circumstances prevailing at the time of the act or at the time when the failure to act first occurred, it was reasonable for P to conclude that the act or failure would not bring about a reduction in the value of the resources of the employer that would be a material reduction relative to the estimated section 75 debt in relation to the scheme.

(6) P is to be regarded as giving the consideration mentioned in condition A only if P has made the enquiries, and done the other acts, that a reasonably diligent person would have made or done in the circumstances.

(7) For the purposes of condition C the reference to the circumstances mentioned in that condition is a reference to those circumstances of which P was aware, or ought reasonably to have been aware, at the time of the act or the time when the failure to act first occurred (including acts or failures to act which have occurred before that time and P's expectation at that time of other acts or failures to act occurring).

(8) For the purposes of conditions A and C—

(a) the “ estimated section 75 debt ” means the amount which is a reasonable estimate of the amount of the debt which would become due from the employer to the trustees or managers of the scheme under section 75 of the Pensions Act 1995 (deficiencies in the scheme assets) if—

(i) section 75(2) applied, and

(ii) the time designated by the trustees or managers of the scheme for the purposes of section 75(2) were the time immediately before the act occurred or the failure to act first occurred;

(b) the amount of any debt due at the time in question from the employer under section 75 of the Pensions Act 1995 is to be disregarded.

(9) In the case of acts or failures to act forming part of a series, P is to be regarded as having shown the matters mentioned in subsection (2) if P shows in the case of each of the acts or failures in the series that—

(a) conditions A and C are met, and (where applicable) condition B is met, in relation to the act or failure, or

(b) the act or failure was one of a number of acts or failures (a “group” of acts or failures) selected by P in relation to which the following matters are shown.

(10) The matters to be shown are that—

(a) before becoming a party to the first of the acts or failures in the group, condition A is met in relation to the effect of the acts or failures in the group taken together,

(b) condition B is (where applicable) met in relation to that effect, and

(c) condition C is then met in relation to each of the acts or failures in the group (determined at the time at which each act or failure concerned occurred or first occurred).

(11) If at any time P considers that condition C will not be met in relation to any particular act or failure in the group—

(a) the previous acts or failures in the group are to be regarded as a separate group for the purposes of subsection (9), and

(b) P may then select another group consisting of the particular act or failure concerned, and any subsequent act or failure, in relation to which P shows the matters mentioned in subsection (10).

Nothing in paragraph (b) is to be read as preventing P from showing the matters mentioned in subsection (9)(a).

(12) If—

(a) P is unable to show in the case of each of the acts or failures in the series that the matters set out in subsection (9)(a) or (b) are met, but

(b) does show in the case of some of them that those matters are met,

the acts or failures within paragraph (b) are not to count for the purposes of section 38E as acts or failures to act in the series.

(13) In this section—

(a) section 38E(2) (the resources of the employer and their value) has effect for the purpose of this section as it has effect for the purposes of section 38E;

(b) “ a warning notice ” means a notice given as mentioned in section 96(2)(a);

(c) a reference to a party to an act or failure to act includes a reference to a person who knowingly assists in the act or failure.

Section 39 The sum specified in a section 38 contribution notice

(1) The sum specified by the Regulator in a contribution notice under section 38 may be either the whole or a specified part of the shortfall sum in relation to the scheme.

(2) Subject to subsection (3), the shortfall sum in relation to a scheme is—

(a) in a case where, at the relevant time, a debt was due from the employer to the trustees or managers of the scheme under section 75 of the Pensions Act 1995 (c. 26) (“ the 1995 Act ”) (deficiencies in the scheme assets), the amount which the Regulator estimates to be the amount of that debt at that time, and

(b) in a case where, at the relevant time, no such debt was due, the amount which the Regulator estimates to be the amount of the debt under section 75 of the 1995 Act which would become due if—

(i) subsection (2) of that section applied, and

(ii) the time designated by the trustees or managers of the scheme for the purposes of that subsection were the relevant time.

(3) Where the Regulator is satisfied that the act or failure to act falling within section 38(5) resulted—

(a) in a case falling within paragraph (a) of subsection (2), in the amount of the debt which became due under section 75 of the 1995 Act being less than it would otherwise have been, or

(b) in a case falling within paragraph (b) of subsection (2), in the amount of any such debt calculated for the purposes of that paragraph being less than it would otherwise have been,

the Regulator may increase the amounts calculated under subsection (2)(a) or (b) by such amount as the Regulator considers appropriate.

(4) For the purposes of this section “ the relevant time ” means the end of the scheme year which ended most recently before the day on which the Regulator gives a determination notice under section 96(2)(d) in respect of an intended contribution notice under section 38.

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

(5) For the purposes of this section—

(a) references to a debt due under section 75 of the 1995 Act include a contingent debt under that section, and

(b) references to the amount of such a debt include the amount of such a contingent debt.

Section 39A Section 38 contribution notice: transfer of members of the scheme

(1) This section applies where—

(a) the Regulator is of the opinion that in relation to a scheme (“ the initial scheme ”) in relation to which section 38 applies—

(i) an act or failure to act falling within subsection (5) of that section has occurred (or first occurred) at any time, and

(ii) the other conditions in that section for issuing a contribution notice are met in relation to the initial scheme (or, but for any transfer falling within paragraph (b), would be met), and

(b) the accrued rights of at least two persons who were members of the initial scheme are transferred at that or any subsequent time to one or more work-based pension schemes (whether by virtue of the act or otherwise).

(2) The Regulator may issue a contribution notice under section 38 in relation to any transferee scheme (and, accordingly, any reference in section 40 or 41 to the scheme is to the transferee scheme).

(3) In the case of any contribution notice issued by virtue of subsection (2) to any transferee scheme which is not within subsection (5)(a) or (b), section 39 has effect as if any reference in that section to the scheme were a reference to whichever of—

(a) the initial scheme, and

(b) the transferee scheme,

the Regulator determines to be more appropriate in the circumstances.

(4) In any case where section 39 has effect in relation to the transferee scheme by virtue of subsection (3), any reference in that section to a debt under section 75 of the 1995 Act is a reference to so much of that debt as, in the Regulator's opinion, is attributable to those members of the transferee scheme who were members of the initial scheme.

(5) In the case of any contribution notice issued by virtue of subsection (2) to any transferee scheme which is—

(a) a scheme to which section 75 of the 1995 Act does not apply, or

(b) a scheme to which that section does apply in a case where the liabilities of the scheme that would be taken into account for the purposes of that section do not relate to the members of the initial scheme,

the sum specified by the Regulator in the notice is determined in accordance with regulations (and not in accordance with section 39).

(6) The Regulator may also issue a direction to the trustees or managers of any transferee scheme requiring them to take specified steps to secure that the sum payable under the notice is applied for the benefit of the members of the transferee scheme who were members of the initial scheme.

(7) If the trustees or managers fail to comply with a direction issued to them under subsection (6), section 10 of the 1995 Act (civil penalties) applies to any trustee or manager who has failed to take all reasonable steps to secure compliance.

Section 39B Section 39A: supplemental

(1) In section 39A a “ transferee scheme ”, in relation to any time, means any work-based pension scheme—

(a) to which the accrued rights of at least two persons who were members of the initial scheme have been transferred, and

(b) of which any of those persons are members at that time.

(2) For the purposes of section 39A(1) and subsection (1) above it does not matter whether any rights are transferred to a work-based pension scheme directly from the initial scheme or following one or more other transfers to other work-based pension schemes.

(3) For the purposes of section 39A and this section references to the transfer of accrued rights of members of a pension scheme to another pension scheme include references to the extinguishing of those accrued rights in consequence of the obligation to make a payment, or transfer an asset, to that other scheme.

(4) In section 39A and this section—

(a) “ the 1995 Act ” means the Pensions Act 1995;

(b) “ work-based pension scheme ” has the meaning given by section 5(3);

(c) any reference to rights which have accrued is to be read in accordance with section 67A(6) and (7) of the 1995 Act (reading any reference in those subsections to a subsisting right as a reference to a right which has accrued).

(5) Section 39A applies even if the initial scheme—

(a) is wound up as a result of any transfer falling within subsection (1)(b) of that section, or

(b) otherwise ceases to exist at the time of the transfer or at any subsequent time.

(6) Accordingly, in any such case, in subsection (1) of that section—

(a) the reference to a scheme to which section 38 applies is a reference to a scheme which was such a scheme before the transfer;

(b) the reference to any conditions in section 38 being met is a reference to any conditions in that section that, but for the transfer, would have been met in relation to the scheme.

(7) Nothing in section 39A or this section is to be read as preventing the Regulator from issuing a contribution notice in relation to the initial scheme.

(8) Regulations may make provision applying, with or without modifications, any provision made by or under section 39A or this section in relation to any scheme or other arrangement in any case where the accrued rights of persons who were members of the initial scheme are transferred or extinguished directly or indirectly in consequence of or otherwise in connection with—

(a) the making of any payment at any time to or for the benefit of the scheme or other arrangement,

(b) the transfer of any asset at any time to or for the benefit of the scheme or other arrangement,

(c) the discharge (wholly or partly) at any time of any liability incurred by or on behalf of the scheme or other arrangement, or

(d) the incurring at any time of any obligation to do any act falling within paragraph (a) to (c).

(9) Any reference in subsection (8)(a) to (d) to the doing of an act of any description at any time in relation to the scheme or other arrangement includes a reference to the doing of an act of that description at any previous time in relation to any other scheme or other arrangement.

(10) Regulations under subsection (8) may—

(a) make provision having effect in relation to any case where rights are transferred or extinguished on or after the date on which the Secretary of State publishes a statement of the intention to make the regulations; and

(b) without prejudice to section 315(5), make consequential provision applying with modifications any provision of this Act which relates to contribution notices under section 38.

Section 40 Content and effect of a section 38 contribution notice

(1) This section applies where a contribution notice is issued to a person under section 38.

(2) The contribution notice must—

(a) contain a statement of the matters which it is asserted constitute the act or failure to act which falls within subsection (5) of section 38,

(b) specify the sum which the person is stated to be under a liability to pay, and

(c) identify any other persons to whom contribution notices have been or are issued as a result of the act or failure to act in question and the sums specified in each of those notices.

(2A) Without prejudice to subsections (3) and (7), the contribution notice must also specify a date for the purposes of sections 42A(2) and 42B(2) (sanctions for failure to comply with a contribution notice).

(3) Where the contribution notice states that the person is under a liability to pay the sum specified in the notice to the trustees or managers of the scheme, the sum is to be treated as a debt due from the person to the trustees or managers of the scheme.

(4) In such a case, the Regulator may, on behalf of the trustees or managers of the scheme, exercise such powers as the trustees or managers have to recover the debt.

(5) But during any assessment period (within the meaning of section 132) in relation to the scheme, the rights and powers of the trustees or managers of the scheme in relation to any debt due to them by virtue of a contribution notice are exercisable by the Board of the Pension Protection Fund to the exclusion of the trustees or managers and the Regulator.

(6) Where, by virtue of subsection (5), any amount is paid to the Board in respect of a debt due by virtue of a contribution notice, the Board must pay the amount to the trustees or managers of the scheme.

(7) Where the contribution notice states that the person is under a liability to pay the sum specified in the notice to the Board, the sum is to be treated as a debt due from the person to the Board.

(8) Where the contribution notice so specifies, the person to whom the notice is issued (“P”) is to be treated as jointly and severally liable for the debt with any persons specified in the notice who are persons to whom corresponding contribution notices are issued.

(9) For the purposes of subsection (8), a corresponding contribution notice is a notice which—

(a) is issued as a result of the same act or failure to act falling within subsection (5) of section 38 as the act or failure as a result of which P’s contribution notice is issued,

(b) specifies the same sum as is specified in P’s contribution notice,

(ba) specifies the same date for the purposes of sections 42A(2) and 42B(2) as is specified in P's contribution notice, and

(c) specifies that the person to whom the contribution notice is issued is jointly and severally liable with P, or with P and other persons, for the debt in respect of that sum.

(10) A debt due by virtue of a contribution notice is not to be taken into account for the purposes of section 75(2) and (4) of the Pensions Act 1995 (c. 26) (deficiencies in the scheme assets) when ascertaining the amount or value of the assets or liabilities of a scheme.

Section 41 Section 38 contribution notice: relationship with employer debt

(1) This section applies where a contribution notice is issued to a person (“P”) under section 38 and condition A or B is met.

(2) Condition A is met if, at the time at which the contribution notice is issued, there is a debt due under section 75 of the Pensions Act 1995 (“ the 1995 Act ”) (deficiencies in the scheme assets) from the employer—

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

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

(3) Condition B is met if, after the contribution notice is issued but before the whole of the debt due by virtue of the notice is recovered, a debt becomes due from the employer to the trustees or managers of the scheme under section 75 of the 1995 Act.

(4) The Regulator may issue a direction to the trustees or managers of the scheme not to take any or any further steps to recover the debt due to them under section 75 of the 1995 Act pending the recovery of all or a specified part of the debt due to them by virtue of the contribution notice.

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

(6) Any sums paid—

(a) to the trustees or managers of the scheme in respect of any debt due to them by virtue of the contribution notice, or

(b) to the Board in respect of any debt due to it by virtue of the contribution notice,

are to be treated as reducing the amount of the debt due to the trustees or managers or, as the case may be, to the Board under section 75 of the 1995 Act.

(7) Where a sum is paid to the trustees or managers of the scheme or, as the case may be, to the Board in respect of the debt due under section 75 of the 1995 Act, P may make an application under this subsection to the Regulator for a reduction in the amount of the sum specified in P’s contribution notice.

(8) An application under subsection (7) must be made as soon as reasonably practicable after the sum is paid to the trustees or managers or, as the case may be, to the Board in respect of the debt due under section 75 of the 1995 Act.

(8A) An application under subsection (7) may not be made after—

(a) the date specified under section 40(2A) for the purposes of sections 42A(2) and 42B(2) (sanctions for failure to comply with a contribution notice), or

(b) if a different date has effect instead of that date (see subsections (10A) and (11B)), that different date.

(9) Where such an application is made to the Regulator, the Regulator may, if it is of the opinion that it is appropriate to do so—

(a) reduce the amount of the sum specified in P’s contribution notice by an amount which it considers reasonable, and

(b) issue a revised contribution notice specifying the revised sum.

(10) For the purposes of subsection (9), the Regulator must have regard to such matters as the Regulator considers relevant including, where relevant, the following matters—

(a) the amount paid in respect of the debt due under section 75 of the 1995 Act since the contribution notice was issued,

(b) any amounts paid in respect of the debt due by virtue of that contribution notice,

(c) whether contribution notices have been issued to other persons as a result of the same act or failure to act falling within subsection (5) of section 38 as the act or failure as a result of which P’s contribution notice was issued,

(d) where such contribution notices have been issued, the sums specified in each of those notices and any amounts paid in respect of the debt due by virtue of those notices,

(e) whether P’s contribution notice specifies that P is jointly and severally liable for the debt with other persons, and

(f) such other matters as may be prescribed.

(10A) Where an application under subsection (7) is made to the Regulator, the Regulator may, if it is of the opinion that it is appropriate to do so—

(a) change the date that has effect for the purposes of sections 42A(2) and 42B(2) (whether specified in the contribution notice or an earlier revised contribution notice), and

(b) specify the revised date in the revised contribution notice issued under subsection (9)(b) or, if the Regulator does not issue a revised contribution notice under subsection (9)(b), issue a revised contribution notice specifying the revised date.

(11) Where—

(a) P’s contribution notice specifies that P is jointly and severally liable for the debt with other persons, and

(b) a revised contribution notice is issued to P under subsection (9) specifying a revised sum,

the Regulator must also issue revised contribution notices to those other persons specifying the revised sum and their joint and several liability with P for the debt in respect of that sum.

(11A) Subsection (11B) applies where—

(a) P's contribution notice specifies that P is jointly and severally liable for the debt with other persons, and

(b) the Regulator issues a revised contribution notice to P under subsection (9)(b) or (10A)(b) specifying a revised date for the purposes of sections 42A(2) and 42B(2).

(11B) Where this subsection applies, the Regulator must—

(a) change the date that has effect for the purposes of sections 42A(2) and 42B(2) in the case of the contribution notices or revised contribution notices issued in respect of the debt to those other persons, and

(b) specify the revised date in the revised contribution notices issued to those other persons under subsection (11) or, if the Regulator does not issue revised contribution notices under subsection (11), issue revised contribution notices to those other persons specifying the revised date.

(12) For the purposes of this section—

(a) references to a debt due under section 75 of the 1995 Act include a contingent debt under that section, and

(b) references to the amount of such a debt include the amount of such a contingent debt.