Pensions Act 2004

Pensions Act 2004

2004 CHAPTER 35

Commentary on Sections

Part 5 – Occupational and Personal Pension Schemes: Miscellaneous Provisions

Activities of occupational pension schemes

Section 255: Activities of occupational pension schemes

930. This section implements article 7 of the EU Directive on the activities and supervision institutions for occupational retirement provision (Directive 2003/41/EC).

931. Subsection (1) places a requirement on the trustees of an occupational pension scheme based in the UK requiring them to limit its activities to those relating to providing retirement benefits. Such an occupational pension scheme must not, for example, also provide mortgages.

932. Subsection (2) provides a power to make regulations exempting certain schemes from this limitation. This is in line with the option given in article 5 of the Directive to enable Member States to exempt schemes with less than 100 members, or certain statutory schemes, from provisions such as subsection (1).

933. Subsection (3) enables the Regulator to impose a civil penalty, under section 10 of the Pensions Act 1995 (civil penalties), on trustees or managers who have failed to take all reasonable steps to ensure that the scheme’s activities are exclusively related to retirement-benefit provision.

934. Subsections (4) and (5) respectively define retirement-benefit activities and retirement benefits in line with the Directive. Schemes may provide benefits related to reaching retirement and may also provide benefits which supplement such benefits such as those relating to death, disability, termination of employment, sickness or poverty.