Pensions Act 2004

Pensions Act 2004

2004 CHAPTER 35

Commentary on Sections

Part 2 – the Board of the Pension Protection Fund

Chapter 3 – Pension Protection

Cessation of involvement with a scheme

Section 150: Consequences of the Board ceasing to be involved with a scheme

503. This section sets out the consequences to the scheme where the Board ceases to be involved with it. It ensures that no member loses out as a result of the restrictions on contributions, accruals and transfers that apply during the assessment period.

504. Subsection (1) sets out that where the assessment period comes to an end the scheme must top up benefits which fell due to the level that would have been payable under scheme rules in respect of the entire assessment period in the absence of section 138. Subsection (2) states that where the winding up of the scheme began before the end of the assessment period the amount payable under subsection (1) in respect of benefits which fell due will take account of any reduction required by section 73 to 73B of the Pensions Act 1995 (as substituted by section 270 (winding up) of this Act) which govern the benefits payable during the winding up period.

505. Subsection (3) applies where an assessment period comes to an end and the scheme is required to wind up. Where because of section 138(6) the benefits paid during that period exceeded the amount which would otherwise have been payable during winding-up, the trustees or managers must take steps to recover the excess amount paid.

506. Subsection (5) allows regulations to deal with cases where an assessment period ends and a person was in employment during the period but did not accrue benefits due to section 133(5)(no benefits accrue during an assessment period). Regulations will prescribe that in certain circumstances benefits will accrue under the scheme rules.

507. Subsection (6) sets out that regulations mentioned in subsection (5) may provide that:

a)

benefits may not accrue unless contributions are paid towards the scheme during a prescribed time frame;

b)

employee contributions may be paid by the member in respect of the assessment period;

c)

contributions mentioned in subsections (6)(a) and (6)(b) must be accepted in respect of the assessment period;

d)

section 31 of the Welfare Reform and Pensions Act 1999 (reduction of benefit where a person’s shareable rights are subject to a pension debit) is to apply with modifications in cases where benefits accrue by virtue of this section.

508. Subsection (7) defines the meaning of “contributions” in relation to an eligible scheme.