Pensions Act 2004

Pensions Act 2004

2004 CHAPTER 35

Commentary on Sections

Part 5 – Occupational and Personal Pension Schemes: Miscellaneous Provisions

Pension disputes

Section 273: Resolution of disputes

1085. This section replaces section 50 of the Pensions Act 1995 with a new section 50 and sections 50A and 50B, and sets out revised requirements relating to the dispute resolution arrangements for occupational pension schemes.

New section 50 of Pensions Act 1995 – Requirement for dispute resolution arrangements

1086. Subsection (1) provides that trustees or managers of an occupational pension scheme must ensure that dispute resolution arrangements are made and implemented. Subsection (2) provides that dispute resolution arrangements are such arrangements as are required under this section for resolving pension disputes.

1087. Subsection (3) defines a pension dispute as being a dispute about matters relating to the scheme between the trustees or managers of the scheme on the one hand and one or more persons “with an interest in the scheme” on the other. Certain disputes are exempted under subsection (9).

1088. Subsection (4) requires the dispute resolution arrangements to provide a procedure for any party to a dispute who is a person “with an interest in the scheme” to be able to apply to the trustees or managers of the scheme to make a decision on the matters of the dispute.

1089. Subsection (5) provides that where a dispute is referred to the trustees or managers for a decision, they must make a decision within a reasonable period of receiving the application and notify the applicant of the decision within a reasonable period. Under section 90 the Regulator is required to issue a code of practice on what constitutes a “reasonable period”.

1090. Subsection (6) requires that the dispute resolution arrangements must comply with the requirements set out in new section 50B.

1091. Subsection (7) provides that the dispute resolution arrangements must have effect on existing schemes on or after the commencement date of this section in relation to applications made on or after that date.

1092. Subsection (8) exempts from the application of this section schemes where every member of the scheme is a trustee and schemes with no more than one member, and provides a power for further exemptions to be set out in regulations. Subsection (9) sets out the types of dispute to which the dispute resolution arrangements do not apply and provides a power for further exemptions to be set out in regulations.

1093. Subsection (10) provides for section 10 of the Pensions Act 1995 (civil penalties) to apply to trustees or managers who do not take reasonable steps to make or implement dispute resolution arrangements under section 50.

New section 50A – Meaning of “person with an interest in the scheme”

1094. Subsection (1) sets out the meaning of “a person with an interest” in the scheme for the purposes of section 50. It reflects the definitions currently set out in the Occupational Pension Schemes (Internal Dispute Resolution Procedures) Regulations 1996 (SI 1996/1270).

1095. Subsection (2) sets out the meaning of “non-dependant beneficiary” for the purposes of subsection (1)(c).

1096. Subsection (3) sets out the meaning of “prospective member” for the purposes of subsection (1)(d).

New section 50B – The dispute resolution procedure

1097. This new section sets out the matters which must be included in the dispute resolution procedure.

1098. Under subsection (2) the procedure must provide for the representation of a person in order for an application for the resolution of a dispute to be made or continued where (i) that person dies, (ii) that person is a minor or a person otherwise incapable of acting, or (iii) in any other case, that person nominates a representative.

1099. Subsection (3) provides that the dispute resolution procedure may include provision about the time limits for making an application for the resolution of a dispute but further provides that the procedure must (in the case of a person with an interest in a scheme as mentioned in section 50A(1)(e) or 50A(1)(f)) require a six-month time limit for making the application.

1100. Subsection (4) requires the dispute resolution arrangements to set out details about how the application is to be made; what information should be included in the application; and the way in which decisions are to be reached and given.

1101. Subsection (5) provides for the dispute resolution procedure to cease if, after the application is made, the dispute becomes one in respect of which proceedings have been commenced in any court or tribunal or the Pensions Ombudsman has commenced an investigation as a result of a complaint made or a dispute referred to him.