Pension Schemes Act 1993

Part VII E+W+S Insolvency of employers

Chapter I E+W+S Independent trustees

F1 119 Requirement for independent trustee where employer becomes insolvent etc. E+W+S

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Textual Amendments

F1 Ss. 119-122 repealed (6.4.1997) by Pensions Act 1995 (c. 26), s. 180(1), Sch. 3 para. 30, Sch. 7 Pt. I; S.I. 1997/664, art. 2(3), Sch. Pt. II

F1 120 Members’ powers to apply to court to enforce duty under s. 119. E+W+S

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Textual Amendments

F1 Ss. 119-122 repealed (6.4.1997) by Pensions Act 1995 (c. 26), s. 180(1), Sch. 3 para. 30, Sch. 7 Pt. I; S.I. 1997/664, art. 2(3), Sch. Pt. II

F1 121 Further provisions as to appointment and powers of independent trustees. E+W+S

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Textual Amendments

F1 Ss. 119-122 repealed (6.4.1997) by Pensions Act 1995 (c. 26), s. 180(1), Sch. 3 para. 30, Sch. 7 Pt. I; S.I. 1997/664, art. 2(3), Sch. Pt. II

F1 122 Duty of insolvency practitioner or official receiver to give information to scheme trustees. E+W+S

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Textual Amendments

F1 Ss. 119-122 repealed (6.4.1997) by Pensions Act 1995 (c. 26), s. 180(1), Sch. 3 para. 30, Sch. 7 Pt. I; S.I. 1997/664, art. 2(3), Sch. Pt. II

Chapter II E+W+S Payment by Secretary of State of unpaid scheme contributions

123 Interpretation of Chapter II. E+W+S

(1) For the purposes of this Chapter, an employer shall be taken to be insolvent if, but only if, in England and Wales—

(a) he has been [F2 made] bankrupt or has made a composition or arrangement with his creditors;

(b) he has died and his estate falls to be administered in accordance with an order under section 421 of the M1 Insolvency Act 1986; F3 ...

(c) where the employer is a company—

(i) a winding-up order F4 ... is made or a resolution for voluntary winding up is passed with respect to it [F5 or the company enters administration],

(ii) a receiver or manager of its undertaking is duly appointed,

(iii) possession is taken, by or on behalf of the holders of any debentures secured by a floating charge, of any property of the company comprised in or subject to the charge, or

(iv) a voluntary arrangement proposed for the purpose of Part I of the M1 Insolvency Act 1986 is approved under that Part; [F6 or]

[F7 (d) subsection (2A) or (2ZA) is satisfied.]

(2) For the purposes of this Chapter, an employer shall be taken to be insolvent if, but only if, in Scotland—

(a) sequestration of his estate is awarded or he executes a trust deed for his creditors or enters into a composition contract;

(b) he has died and a judicial factor appointed under section 11A of the M2 Judicial Factors (Scotland) Act 1889 is required by that section to divide his insolvent estate among his creditors; or

(c) where the employer is a company—

(i) a winding-up order F8 ... is made or a resolution for voluntary winding up is passed with respect to it [F9 or the company enters administration],

(ii) a receiver of its undertaking is duly appointed, or

(iii) a voluntary arrangement proposed for the purpose of Part I of the M1 Insolvency Act 1986 is approved under that Part.

[F10 (2ZA) This subsection is satisfied in the case of an employer if—

(a) the employer is a legal person,

(b) a request has been made for the first opening of collective proceedings—

(i) based on the insolvency of the employer, as provided for under the law of any part of the United Kingdom, and

(ii) involving the partial or total divestment of the employer's assets and the appointment of a liquidator or a person performing a similar task, and

(c) any of the following has decided to open the proceedings—

(i) a court,

(ii) a meeting of creditors, or

(iii) the creditors by a decision procedure.]

[F11 (2A) This subsection is satisfied if—

(a) a request has been made for the first opening of collective proceedings—

(i) based on the insolvency of the employer, as provided for under the laws, regulations and administrative provisions of a member State; and

(ii) involving the partial or total divestment of the employer’s assets and the appointment of a liquidator or a person performing a similar task; and

(b) the competent authority has—

(i) decided to open the proceedings; or

(ii) established that the employer’s undertaking or business has been definitively closed down and the available assets of the employer are insufficient to warrant the opening of the proceedings.

(2B) For the purposes of [F12 this section] —

(a) “liquidator or person performing a similar task” includes the official receiver or an administrator, trustee in bankruptcy, judicial factor, supervisor of a voluntary arrangement, or person performing a similar task,

(b) “competent authority” includes—

(i) a court,

(ii) a meeting of creditors,

(iii) a creditors’ committee,

(iv) the creditors by a decision procedure, and

(v) an authority of a member State empowered to open insolvency proceedings, to confirm the opening of such proceedings or to take decisions in the course of such proceedings.

(2C) An application under section 124 may only be made in respect of a worker who worked or habitually worked in Great Britain in that employment to which the application relates.]

(3) In this Chapter—

• [F13 “employer”, “employment”, “worker” and “worker's contract” and other expressions which are defined in the Employment Rights Act 1996 have the same meaning as in that Act (see further subsections (3A) and (3B));]

• “holiday pay” means—

  (a)

  pay in respect of holiday actually taken; or

  (b)

  any accrued holiday pay which under [F14 the worker's contract] would in the ordinary course have become payable to him in respect of the period of a holiday if his employment with the employer had continued until he became entitled to a holiday;

• F15 ...

[F16 (3A) Section 89 of the Pensions Act 2008 (agency workers) applies for the purposes of this Chapter as it applies for the purposes of Part 1 of that Act.

(3B) References in this Chapter to a worker include references to an individual to whom Part 1 of the Pensions Act 2008 applies as if the individual were a worker because of regulations made under section 98 of that Act; and related expressions are to be read accordingly.]

F17 (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) Any reference in this Chapter to the resources of a scheme is a reference to the funds out of which the benefits provided by the scheme are from time to time payable.

Textual Amendments

F2 Word in s. 123(1)(a) substituted (6.4.2016) by The Enterprise and Regulatory Reform Act 2013 (Consequential Amendments) (Bankruptcy) and the Small Business, Enterprise and Employment Act 2015 (Consequential Amendments) Regulations 2016 (S.I. 2016/481), reg. 1, Sch. 1 para. 18

F3 Word in s. 123(1)(b) omitted (26.12.2017) by virtue of The Employment Rights Act 1996 and Pension Schemes Act 1993 (Amendment) Regulations 2017 (S.I. 2017/1205), regs. 1, 3(2)(a)(i)

F4 Words in s. 123(1)(c)(i) omitted (15.9.2003) by virtue of The Enterprise Act 2002 (Insolvency) Order 2003 (S.I. 2003/2096), art. 1(1), Sch. para. 22(a)(i) (with art. 6)

F5 Words in s. 123(1)(c)(i) added (15.9.2003) by The Enterprise Act 2002 (Insolvency) Order 2003 (S.I. 2003/2096), art. 1(1), Sch. para. 22(a)(ii) (with art. 6)

F6 S. 123(1)(d) and preceding word inserted (26.12.2017) by The Employment Rights Act 1996 and Pension Schemes Act 1993 (Amendment) Regulations 2017 (S.I. 2017/1205), regs. 1, 3(2)(a)(ii)

F7 S. 123(1)(d) substituted (31.12.2020) by The Insolvency (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/146), reg. 1(3), Sch. para. 254(2)(a) (with regs. 4, 5); 2020 c. 1, Sch. 5 para. 1(1)

F8 Words in s. 123(2)(c)(i) omitted (15.9.2003) by virtue of The Enterprise Act 2002 (Insolvency) Order 2003 (S.I. 2003/2096), art. 1(1), Sch. para. 22(b)(i) (with art. 6)

F9 Words in s. 123(2)(c)(i) added (15.9.2003) by The Enterprise Act 2002 (Insolvency) Order 2003 (S.I. 2003/2096), art. 1(1), Sch. para. 22(b)(ii) (with art. 6)

F10 S. 123(2ZA) inserted (31.12.2020) by The Insolvency (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/146), reg. 1(3), Sch. para. 254(2)(b) (with regs. 4, 5); 2020 c. 1, Sch. 5 para. 1(1)

F11 S. 123(2A)-(2C) inserted (26.12.2017) by The Employment Rights Act 1996 and Pension Schemes Act 1993 (Amendment) Regulations 2017 (S.I. 2017/1205), regs. 1, 3(2)(b)

F12 Words in s. 123(2B) substituted (31.12.2020) by The Insolvency (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/146), reg. 1(3), Sch. para. 254(2)(c) (with regs. 4, 5); 2020 c. 1, Sch. 5 para. 1(1)

F13 Words in s. 123(3) substituted (11.9.2014) by Pensions Act 2014 (c. 19), ss. 42(2)(a), 56(1); S.I. 2014/2377, art. 2(1)(a)(i)(2)(e)

F14 Words in s. 123(3) substituted (11.9.2014) by Pensions Act 2014 (c. 19), ss. 42(2)(b), 56(1); S.I. 2014/2377, art. 2(1)(a)(i)(2)(e)

F15 Words in s. 123(3) repealed (22.9.2005) by Pensions Act 2004 (c. 35), s. 322(1), Sch. 12 para. 19(a), Sch. 13; S.I. 2005/2447, art. 2(3)

F16 S. 123(3A)(3B) inserted (11.9.2014) by Pensions Act 2014 (c. 19), ss. 42(2)(c), 56(1); S.I. 2014/2377, art. 2(1)(a)(i)(2)(e)

F17 S. 123(4) repealed (22.9.2005) by Pensions Act 2004 (c. 35), s. 322(1), Sch. 12 para. 19(b), Sch. 13; S.I. 2005/2447, art. 2(3)

Modifications etc. (not altering text)

C1 S. 123 applied (6.4.1997) by Pensions Act 1995 (c. 26), ss. 81(8), 180(1) (with s. 121(5)); S.I. 1997/664, art. 2(3), Sch. Pt. 2

Commencement Information

I1 Ss. 1-187 in force at 7.2.1994 by S.I. 1994/86, art. 2

Marginal Citations

M1 1986 c. 45.

M2 1889 c. 39.

124 Duty of Secretary of State to pay unpaid contributions to schemes. E+W+S

(1) If, on an application made to him in writing by the persons competent to act in respect of an occupational pension scheme or a personal pension scheme, the Secretary of State is satisfied—

(a) that an employer has become insolvent; and

(b) that at the time he did so there remained unpaid relevant contributions falling to be paid by him to the scheme,

then, subject to the provisions of this section and section 125, the Secretary of State shall pay into the resources of the scheme the sum which in his opinion is payable in respect of the unpaid relevant contributions.

(2) In this section and section 125 “relevant contributions” means contributions falling to be paid by an employer to an occupational pension scheme or a personal pension scheme, either on his own account or on behalf of [F18 a worker]; and for the purposes of this section a contribution shall not be treated as falling to be paid on behalf of [F18 a worker] unless a sum equal to that amount has been deducted from the pay of [F19 the worker] by way of a contribution from him.

(3) [F20 Subject to subsection (3A),] the sum payable under this section in respect of unpaid contributions of an employer on his own account to an occupational pension scheme or a personal pension scheme shall be the least of the following amounts—

(a) the balance of relevant contributions remaining unpaid on the date when he became insolvent and payable by the employer on his own account to the scheme in respect of the 12 months immediately preceding that date;

(b) the amount certified by an actuary to be necessary for the purpose of meeting the liability of the scheme on dissolution to pay the benefits provided by the scheme to or in respect of the [F21 workers] of the employer;

(c) an amount equal to 10 per cent. of the total amount of remuneration paid or payable to those [F21 workers] in respect of the 12 months immediately preceding the date on which the employer became insolvent.

[F22 (3A) Where the scheme in question is a money purchase scheme, the sum payable under this section by virtue of subsection (3) shall be the lesser of the amounts mentioned in paragraphs (a) and (c) of that subsection]

(4) For the purposes of subsection (3)(c), “remuneration” includes holiday pay, statutory sick pay, statutory maternity pay under Part V of the M3 Social Security Act 1986 or Part XII of the M4 Social Security Contributions and Benefits Act 1992 [F23 and any payment such as is referred to in section 184(2) of the Employment Rights Act 1996].

(5) Any sum payable under this section in respect of unpaid contributions on behalf of [F18 a worker] shall not exceed the amount deducted from the pay of [F19 the worker] in respect of [F24 the worker's] contributions to the scheme during the 12 months immediately preceding the date on which the employer became insolvent.

[F25 (6) In this section “on his own account”, in relation to an employer, means on his own account but to fund benefits for, or in respect of, one or more [F21 workers].]

Textual Amendments

F18 Words in s. 124 substituted (11.9.2014) by Pensions Act 2014 (c. 19), ss. 42(3)(a), 56(1); S.I. 2014/2377, art. 2(1)(a)(i)(2)(e)

F19 Words in s. 124 substituted (11.9.2014) by Pensions Act 2014 (c. 19), ss. 42(3)(b), 56(1); S.I. 2014/2377, art. 2(1)(a)(i)(2)(e)

F20 Words in s. 124(3) inserted (2.10.1995) by Pensions Act 1995 (c. 26), ss. 90, 180(1) (with s. 121(5)); S.I. 1995/2548, art. 2

F21 Word in s. 124 substituted (11.9.2014) by Pensions Act 2014 (c. 19), ss. 42(3)(d), 56(1); S.I. 2014/2377, art. 2(1)(a)(i)(2)(e)

F22 S. 124(3A) inserted (2.10.1995) by Pensions Act 1995 (c. 26), ss. 90, 180(1) (with s. 121(5)); S.I. 1995/2548, art. 2

F23 Words in s. 124(4) substituted (22.8.1996) by Employment Rights Act 1996 (c. 18), s. 243, Sch. 1 para. 61(3) (with ss. 191-201)

F24 Words in s. 124 substituted (11.9.2014) by Pensions Act 2014 (c. 19), ss. 42(3)(c), 56(1); S.I. 2014/2377, art. 2(1)(a)(i)(2)(e)

F25 S. 124(6) inserted (22.9.2005) by Pensions Act 2004 (c. 35), s. 322(1), Sch. 12 para. 20; S.I. 2005/2447, art. 2(3)(a)

Commencement Information

I1 Ss. 1-187 in force at 7.2.1994 by S.I. 1994/86, art. 2

Marginal Citations

M3 1986 c. 50.

M4 1992 c. 4.

125 Certification of amounts payable under s. 124 by insolvency officers. E+W+S

(1) This section applies where one of the officers mentioned in subsection (2) (“the relevant officer”) has been or is required to be appointed in connection with an employer’s insolvency.

(2) The officers referred to in subsection (1) are—

(a) a trustee in bankruptcy;

(b) a liquidator;

(c) an administrator;

(d) a receiver or manager; or

(e) a trustee under a composition or arrangement between the employer and his creditors or under a trust deed for his creditors executed by the employer;

and in this subsection “trustee”, in relation to a composition or arrangement, includes the supervisor of a voluntary arrangement proposed for the purposes of and approved under Part I or VIII of the M5 Insolvency Act 1986.

(3) Subject to subsection (5), where this section applies the Secretary of State shall not make any payment under section 124 in respect of unpaid relevant contributions until he has received a statement from the relevant officer of the amount of relevant contributions which appear to have been unpaid on the date on which the employer became insolvent and to remain unpaid; and the relevant officer shall on request by the Secretary of State provide him as soon as reasonably practicable with such a statement.

(4) Subject to subsection (5), an amount shall be taken to be payable, paid or deducted as mentioned in subsection (3)(a) or (c) or (5) of section 124 only if it is so certified by the relevant officer.

(5) If the Secretary of State is satisfied—

(a) that he does not require a statement under subsection (3) in order to determine the amount of relevant contributions that was unpaid on the date on which the employer became insolvent and remains unpaid, or

(b) that he does not require a certificate under subsection (4) in order to determine the amounts payable, paid or deducted as mentioned in subsection (3)(a) or (c) or (5) of section 124,

he may make a payment under that section in respect of the contributions in question without having received such a statement or, as the case may be, such a certificate.

Commencement Information

I1 Ss. 1-187 in force at 7.2.1994 by S.I. 1994/86, art. 2

Marginal Citations

M5 1986 c. 45.

126 Complaint to industrial tribunal. E+W+S

(1) Any persons who are competent to act in respect of an occupational pension scheme or a personal pension scheme and who have applied for a payment to be made under section 124 into the resources of the scheme may present a complaint to an industrial tribunal that—

(a) the Secretary of State has failed to make any such payment; or

(b) any such payment made by him is less than the amount which should have been paid.

(2) Such a complaint must be presented within the period of three months beginning with the date on which the decision of the Secretary of State on that application was communicated to the persons presenting it or, if that is not reasonably practicable, within such further period as is reasonable.

(3) Where an industrial tribunal finds that the Secretary of State ought to make a payment under section 124, it shall make a declaration to that effect and shall also declare the amount of any such payment which it finds that the Secretary of State ought to make.

Commencement Information

I1 Ss. 1-187 in force at 7.2.1994 by S.I. 1994/86, art. 2

127 Transfer to Secretary of State of rights and remedies. E+W+S

(1) Where in pursuance of section 124 the Secretary of State makes any payment into the resources of an occupational pension scheme or a personal pension scheme in respect of any contributions to the scheme, any rights and remedies in respect of those contributions belonging to the persons competent to act in respect of the scheme shall, on the making of the payment, become rights and remedies of the Secretary of State.

(2) Where the Secretary of State makes any such payment as is mentioned in subsection (1) and the sum (or any part of the sum) falling to be paid by the employer on account of the contributions in respect of which the payment is made constitutes—

(a) a preferential debt within the meaning of the M6 Insolvency Act 1986 for the purposes of any provision of that Act (including any such provision as applied by an order made under that Act) or any provision of [F26 the Companies Acts (as defined in section 2(1) of the Companies Act 2006)]; or

(b) a preferred debt within the meaning of the Bankruptcy (Scotland) Act [F27 2016] for the purposes of any provision of that Act (including any such provision as applied by section 11A of the M7 Judicial Factors (Scotland) Act 1889),

then, without prejudice to the generality of subsection (1), there shall be included among the rights and remedies which become rights and remedies of the Secretary of State in accordance with that subsection any right arising under any such provision by reason of the status of that sum (or that part of it) as a preferential or preferred debt.

(3) In computing for the purposes of any provision referred to in subsection (2)(a) or (b) the aggregate amount payable in priority to other creditors of the employer in respect of—

(a) any claim of the Secretary of State to be so paid by virtue of subsection (2); and

(b) any claim by the persons competent to act in respect of the scheme,

any claim falling within paragraph (a) shall be treated as if it were a claim of those persons; but the Secretary of State shall be entitled, as against those persons, to be so paid in respect of any such claim of his (up to the full amount of the claim) before any payment is made to them in respect of any claim falling within paragraph (b).

Textual Amendments

F26 Words in s. 127(2)(a) substituted (1.10.2009) by The Companies Act 2006 (Consequential Amendments, Transitional Provisions and Savings) Order 2009 (S.I. 2009/1941), art. 1(2), Sch. 1 para. 144(2) (with art. 10)

F27 Word in s. 127(2)(b) substituted (30.11.2016) by The Bankruptcy (Scotland) Act 2016 (Consequential Provisions and Modifications) Order 2016 (S.I. 2016/1034), art. 1, Sch. 1 para. 11(3)

Commencement Information

I1 Ss. 1-187 in force at 7.2.1994 by S.I. 1994/86, art. 2

Marginal Citations

M6 1986 c. 45.

M7 1889 c. 39.

Chapter III E+W+S Priority in bankruptcy

128 Priority in bankruptcy etc. E+W+S

Schedule 4 shall have effect for the purposes of paragraph 8 of Schedule 6 to the M8 Insolvency Act 1986 and paragraph [F28 1 of schedule 3 to the Bankruptcy (Scotland) Act 2016] (by virtue of which sums to which Schedule 4 to this Act applies are preferential or, as the case may be, preferred debts in cases of insolvency).

Textual Amendments

F28 Words in s. 128 substituted (30.11.2016) by The Bankruptcy (Scotland) Act 2016 (Consequential Provisions and Modifications) Order 2016 (S.I. 2016/1034), art. 1, Sch. 1 para. 11(4)

Commencement Information

I1 Ss. 1-187 in force at 7.2.1994 by S.I. 1994/86, art. 2

Marginal Citations

M8 1986 c. 45.