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The Occupational Pension Schemes (Charges and Governance) Regulations 2015

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The Occupational Pension Schemes (Charges and Governance) Regulations 2015, Section 2 is up to date with all changes known to be in force on or before 22 November 2024. There are changes that may be brought into force at a future date. Changes that have been made appear in the content and are referenced with annotations. Help about Changes to Legislation

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InterpretationU.K.

This section has no associated Explanatory Memorandum

2.—(1) In these Regulations—

“the 1995 Act” means the Pensions Act 1995;

“the 2008 Act” means the Pensions Act 2008 M1;

[F1“the 2021 Act” means the Pension Schemes Act 2021;]

“the Administration Regulations” means the Occupational Pension Schemes (Scheme Administration) Regulations 1996 M2;

[F2“adviser” is a person described in regulation 11A(3); ]

“annually” means per charges year;

“arrangement” means an allocation of contributions to—

(a)

an investment; or

(b)

more than one investment according to a strategy adopted by the trustees or managers;

“charges” means administration charges M3 other than—

(a)

transaction costs;

(b)

where an order of the court provides for the recovery by the trustees or managers of costs incurred in complying with the order, the amount of those costs;

(c)

charges permitted by regulations made under section 24 or 41 (charges in respect of pension sharing costs) of the Welfare Reform and Pensions Act 1999 M4;

(d)

winding up costs;

(e)

costs solely associated with the provision of death benefits[F3;

(f)

costs solely attributable to holding physical assets;]

(g)

[F4specified performance-based fees;]

“charges year” means a period of 12 months specified for the purposes of the scheme in any scheme document or, if no such year is specified, a period of 12 months commencing on—

(a)

either 1st or 6th April as the trustees or managers may decide; or

(b)

if no such decision is made, 1stApril;

[F1“collective contribution percentage charge” has the meaning given in regulation 5A(3);]

[F1“collective existing rights charge” has the meaning given in regulation 5A(3);]

[F1“collective flat fee charge” has the meaning given in regulation 5A(3);]

[F5“collective investment scheme” has the meaning given in regulation 1(2) (citation, commencement and interpretation) of the Occupational Pension Schemes (Investment) Regulations 2005;]

[F1“collective money purchase benefit” has the meaning given in section 1(1) of the 2021 Act;]

[F1“collective money purchase scheme” has the meaning given in section 1(2) of the 2021 Act;]

[F1“collective single charge structure” has the meaning given in regulation 5A(2);]

[F6“commodity” means any goods of a fungible nature that are capable of being delivered, including metals and their ores and alloys, agricultural products and energy such as electricity, but not including cash or financial instruments (within the meaning of article 3 of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001);]

“contributing member” is a member of a relevant scheme[F7, that is not a collective money purchase scheme,] in relation to whom a contribution is being made to that scheme for the purposes of accruing money purchase benefits [F8(other than collective money purchase benefits)];

“contribution”, in relation to a member, means a payment made by, on behalf of or in respect of that member;

“contribution percentage charge” has the meaning given in regulation 5(3);

“default arrangement” has the meaning given in regulation 3;

“employer” has the meaning given in section 99 of the 2008 Act M5;

“executive pension scheme” means a scheme—

(a)

in relation to which a company is the only employer and the sole trustee; and

(b)

the members of which are either current or former directors of the company and include at least one third of the current directors;

“existing rights charge” has the meaning given in regulation 5(3);

“flat fee charge” has the meaning given in regulation 5(3);

[F9“fund manager” has the meaning given in section 124(1) (interpretation of Part 1) of the 1995 Act;]

[F9“fund of funds” means a collective investment scheme which has a policy of investing in other collective investment schemes;]

“jobholder” has the meaning given in section 99 of the 2008 Act;

[F10“performance fee” means a fee which—

(a)

is calculated by reference to the returns from investments held by the scheme, whether in terms of the capital appreciation of those investments, the income produced by those investments or otherwise; and

(b)

[F11in the case of a relevant scheme that is not a collective money purchase scheme,] is not calculated by reference to the value of the member’s rights under the scheme; [F12or]

(c)

[F13in the case of a relevant scheme that is a collective money purchase scheme, is not calculated by reference to the value of members’ rights under the scheme;]

“physical asset” means an asset whose value depends on its physical form, including—

(a)

land,

(b)

buildings and other structures on land or sea,

(c)

vehicles, ships, aircraft or rolling stock, and

(d)

commodities;]

[F1“qualifying collective money purchase scheme” has the meaning given in regulation 3A;]

“qualifying scheme” has the meaning given in section 99 of the 2008 Act;

[F2“qualifying scheme employer” means an employer in relation to whom a scheme is a qualifying scheme in relation to at least one of its jobholders;]

[F1“qualifying section employer” means an employer in relation to whom a section of a pension scheme, which is a collective money purchase scheme for the purposes of section 1(2)(b) of the 2021 Act, is being used by a qualifying scheme in relation to at least one of its jobholders;]

“relevant small scheme” means a scheme with fewer than 12 members, where—

(a)

all the members are trustees of the scheme and either—

(i)

the provisions of the scheme provide that any decision made by the trustees is made by the unanimous agreement of the trustees who are members of the scheme; or

(ii)

the scheme has a trustee who is independent in relation to the scheme for the purposes of section 23 of the 1995 Act M6 (power to appoint independent trustees), and is registered in the register maintained by the Authority (as defined in that Act) M7 in accordance with regulations made under subsection (4) of that section; or

(b)

all the members are directors of a company which is the sole trustee of the scheme and either—

(i)

the provisions of the scheme provide that any decision made by the company in its capacity as a trustee is made by the unanimous agreement of the directors who are members of the scheme; or

(ii)

one of the directors of the company is independent in relation to the scheme for the purposes of section 23 of the 1995 Act and is registered in the register maintained by the Authority (as defined in that Act) in accordance with regulations made under subsection (4) of that section;

[F2“service provider” means a person who provides an administration service directly to the trustees or managers of a [F14relevant] scheme;]

“single charge structure” has the meaning given in regulation 5(2);

[F15“specified performance-based fees” means fees, profit-sharing arrangements, or any part of fees or profit-sharing arrangements, which are—

(a)

payable by or on behalf of the trustees or managers of a pension scheme to a fund manager in relation to investments (“the managed investments”) managed by the fund manager, either directly or as part of a collective investment scheme, for the purposes of the scheme;

(b)

calculated only by reference to investment performance, whether in terms of the capital appreciation of the managed investments, the income produced by the managed investments or otherwise;

(c)

only payable when—

(i)

investment performance exceeds a pre-agreed rate, which may be fixed or variable; or

(ii)

the value of the managed investments exceeds a pre-agreed amount;

(d)

calculated over a pre-agreed period of time; and

(e)

subject to pre-agreed terms designed to mitigate the effects of short-term fluctuations in the investment performance or value of the managed investments;]

[F2“specified scheme” means a relevant scheme[F16, that is not a collective money purchase scheme for the purposes of section 1(2)(b) of the 2021 Act,] in which at least one qualifying scheme employer participates;]

[F1“specified section” means a relevant scheme that is a collective money purchase scheme for the purposes of section 1(2)(b) of the 2021 Act in which at least one qualifying section employer participates;]

“transaction costs” means the costs incurred as a result of the buying, selling, lending or borrowing of investments;

“winding up costs” means the costs of winding up the pension scheme including (but not limited to) the cost of —

(a)

legal advice;

(b)

tracing, consulting and communicating with members;

(c)

advice on exiting investments;

(d)

selection of an alternative scheme or investments;

“worker” has the meaning given in section 99 of the 2008 Act;

“writing” includes electronic communication and ‘electronic communication’ has the meaning given in section 15(1) of the Electronic Communications Act 2000 M8.

[F17(1A) For the purposes of the definition of “charges”, the costs solely attributable to holding a physical asset include—

(a)the costs of managing and maintaining the asset;

(b)fees for valuing the asset;

(c)the cost of insuring the asset;

(d)ground rent, charges, rates, taxes and utilities bills incurred in relation to the asset.]

[F18(1B) When determining whether or not fees or profit-sharing arrangements, or any part of fees or profit-sharing arrangements, are specified performance-based fees for the purposes of these regulations—

(a)a rate, amount, period of time or term is pre-agreed if—

(i)it has been agreed between the trustees or managers and the fund manager to whom the fees are payable, before the trustees or managers make the investments to which the fees relate; or

(ii)where the trustees or managers have invested in a fund of funds, it is set out in the investment policy of the fund of funds to which the trustees or managers agreed when they invested in the fund of funds; and

(b)regard must be had to any guidance issued by the Secretary of State by virtue of paragraph 1(2)(b) of Schedule 18 to the Pensions Act 2014 (power to restrict charges).]

(2) For the purposes of paragraph 1(5) of Schedule 18 to the Pensions Act 2014, “relevant scheme” means—

(a)an occupational pension scheme under which all the benefits which may be provided are money purchase benefits [F19other than collective money purchase benefits]; F20...

(b)where some but not all the benefits which may be provided under an occupational pension scheme are money purchase benefits, [F21other than collective money purchase benefits,] that scheme in so far as it relates to those benefits, other than a scheme with only one member, an executive pension scheme or a relevant small schemeF22...[F23; or]

[F24(c)a collective money purchase scheme,]

[F25(2A) Where a pension scheme is divided into sections, each section that is a collective money purchase scheme for the purposes of Part 1 of the 2021 Act (see section 1(2)(b)) is to be treated for the purposes of these Regulations as a separate scheme.]

(3) Where, in these Regulations, the circumstances require one or more of the calculations listed in paragraph (4) to be made in relation to a period of less than a charges year, that calculation shall be done on a pro rata basis.

[F26(3A) Where, in these Regulations, a collective flat fee charge is to be calculated and these Regulations have applied to a member of a qualifying collective money purchase scheme for a period of less than a charges year, the charge associated with that member for the purposes of calculating the collective flat fee charge (see regulation 6A(4)(a)) must be calculated on a pro rata basis.]

(4) The calculations referred to in paragraph (3) are—

(a)a charge under a single charge structure;

(b)a flat fee charge;

(c)an existing rights chargeF27...

[F28;

(d)a charge under a collective single charge structure;

(e)a collective existing rights charge.]

F29(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F30(5A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F31(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

Marginal Citations

M3“Administration charge” is defined in paragraph 1(5) of Schedule 18 to the Pensions Act 2014 (c. 19).

M4Section 24 was amended by the Family Law Act 1996 (c. 27), section 66 and Schedule 8, paragraph 43A (subject to savings as to which see section 66(2) and Schedule 9, paragraph 5 of that Act) and the Civil Partnership Act 2004 (c. 33), section 261(1) and (4), Schedule 27, paragraph 158(1) to (2) and Schedule 30.

M5There are amendments to section 99 which are not relevant to these Regulations.

M6Section 23 was substituted by the 2004 Act, section 36(3).

M7See section 124(1) of the 1995 Act, substituted by the 2004 Act, section 7(2)(b).

M82000 c. 7. Section 15(1) was amended by the Communications Act 2003 (c. 21), section 406(1) and Schedule 17, paragraph 158.

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