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

Closed schemes

Section 153: Closed schemes

520. This section applies to cases where a scheme rescue is not possible and, although the scheme has sufficient assets to meet the protected liabilities, the high level of the scheme’s liabilities mean that it cannot secure a buy-out quote for the scheme’s pension liabilities from one or more insurance companies.

521. Subsection (1) states that this section applies to an eligible scheme where section 151(2) or (3) applies (that is where a scheme rescue is not possible but the scheme has sufficient assets to meet the protected liabilities).

522. Subsection (2) states that, if a scheme’s trustees or managers cannot obtain a full buy-out quotation for the scheme liabilities, they must within the authorised period (within the meaning of section 151(6), apply to the Board for authority to continue as a closed scheme. Subsection (3) states that in order for scheme trustees or managers to decide whether they should apply to the Board under subsection (2) to continue as a closed scheme they must first take all reasonable steps to obtain a full buy-out quotation in respect of the scheme.

523. Subsection (4) states that the application mentioned in subsection (2) must be in the form required by regulations and must contain the information required by regulations. It must also be accompanied by evidence in the form required by regulations showing that the scheme trustees or managers have taken all reasonable steps to obtain a quotation. Subsection (5) provides that, where the Board receives an application under subsection (2) and is satisfied that the scheme trustees or managers have taken all reasonable steps to obtain a full buy out quotation but have been unable to do so, they must authorise the scheme to continue as a “closed scheme”.

524. Subsection (6) states that where the Board makes a determination on an application it must issue a determination notice to the trustees or managers of a scheme and the Regulator.

525. Subsection (8) states that, if the scheme trustees or managers do not comply with subsection (2) or (3), section 10 of the Pensions Act 1995 (civil penalties) applies.