An Act to make provision relating to pensions and financial planning for retirement and provision relating to entitlement to bereavement payments, and for connected purposes.
[18th November 2004]
Be it enacted by the Queen’s most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:—
There shall be a body corporate called the Pensions Regulator (in this Act referred to as “the Regulator”).
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
(a)
references to non-executive members of the Regulator are to members who are not executive members.
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.
General provisions about functions
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).
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), 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—
(a)
an occupational pension scheme,
(b)
a personal pension scheme where direct payment arrangements exist in respect of one or more members of the scheme who are employees, or
(c)
a stakeholder pension scheme.
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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.
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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;”, and
(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”.
Non-executive functions
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).
The Determinations Panel
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.
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);
(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);
(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).
Annual report
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.
(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.
Provision of information, education and assistance
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).
New powers in respect of occupational and personal pension schemes
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, 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—
(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), or
(d)
this Act.
(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.
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.
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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.
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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.
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”—
(a)
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,
(b)
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, and
(c)
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);
“employer contribution”—
(a)
in relation to an occupational 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—
(i)
on the employer’s own account (but in respect of one or more employees), or
(ii)
on behalf of an employee out of deductions from the employee’s earnings, and
(b)
in relation to a personal pension scheme, means any contribution payable towards the scheme under direct payment arrangements.
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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 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 applicable 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(1)(a), (aa) or (b) of the Pension Schemes Act 1993 (c. 48) (right to cash equivalent under Chapter 4 of Part 4 of that Act);
(b)
section 101AB(1)(a) of that Act (right to cash transfer sum under Chapter 5 of Part 4 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 subsection (2) or, as the case may be, subsection (3) of 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 applicable rules for amounts transferred out in pursuance of that provision.
(5)
In this section “the applicable rules” has the same meaning as, in the case of the pension scheme concerned, that expression has in section 94 of the Pension Schemes Act 1993.
