Pensions Act 2004 Explanatory Notes

Pensions Act 2004

2004 CHAPTER 35

Commentary on Sections

Part 1 – the Pensions Regulator

Powers in relation to winding-up of occupational pension schemes

Section 23: Freezing orders

95. This section applies to occupational pensions schemes which are not money purchase schemes. Subsection (2) gives the Regulator the power to make a ‘freezing order’ where the Regulator is satisfied that it is necessary to protect the interests of the generality of members of the scheme and there is, or is likely to be if the order is not made, an immediate risk to the interests of members or the assets of the scheme.

96. The order will direct that, during the period it has effect, no benefits are to accrue to, or in respect of, members and that no winding up of the scheme may begin other than by an order of the Regulator (see subsection (3)).

97. An order may also contain other directions that have effect during the period of the order e.g. no new members, or specified class of member are to be admitted to the scheme; no further contributions or payments or specified contributions or payments are to be paid into the scheme by, or on behalf of, the employer, any members or any specified members; no transfers, or no specified transfers of any member’s rights under the scheme rules are to be made from the scheme.

98. A freezing order may not contain any direction which reduces the benefits payable to, or in respect of, a member during the period of the order to below the level to which the trustees or scheme managers would have the power to reduce them if winding up of the scheme had begun at the time the order took effect.

99. Subsection (8) provides that an order may require the trustees or managers to obtain an actuarial valuation.