2011 No. 1246
Pensions

The Pensions Act 2008 (Abolition of Protected Rights) (Consequential Amendments) Order 2011

Made
Laid before Parliament
Coming into force in accordance with article 1(2)
The Secretary of State for Work and Pensions makes the following Order in exercise of powers conferred by section 145(1) and (2) of the Pensions Act 20081.

PART 1General

Citation and commencement1.

(1)

This Order may be cited as the Pensions Act 2008 (Abolition of Protected Rights) (Consequential Amendments) Order 2011.

(2)

This Order comes into force—

(a)

for the purposes of this Part, and Part 2, on 6th April 2012,

(b)

for the purposes of Part 3, on 6th April 2013, and

(c)

for the purposes of Part 4, on 6th April 2015.

PART 2Amendments coming into force on 6th April 2012

Amendment of the Personal Pension Schemes (Disclosure of Information) Regulations 19872.

(1)

The Personal Pension Schemes (Disclosure of Information) Regulations 19872 are amended as follows.

(2)

In regulation 4(6) (basic information about the scheme)3, for “, 11, 12 or 13” substitute “or 11”.

(3)

In regulation 5 (information to be made available to individuals)4—

(a)

in paragraph (3), omit “Whether or not the scheme is or has been an appropriate scheme,” and “who has no protected rights under the scheme”, and

(b)

omit paragraph (4).

(4)

In Schedule 1 (basic information about the scheme)5, omit paragraphs 9, 12 and 13.

(5)

In Schedule 2 (information to be made available to individuals)—

(a)

for paragraph 2(a), substitute—

“(a)

As at a specified date, the value of the member’s accrued rights under the scheme.”,

(b)

omit paragraph 4,

(c)

in paragraph 56, omit from the words “, including where the scheme is an appropriate scheme” to the end,

(d)

for paragraph 8, substitute—

“8 An account of the amount by which the member’s accrued rights have been reduced, and of the arrangements which have been made by the scheme, or are open to the member, to restore the value of his accrued rights under the scheme.”,

(e)

in paragraph 9, after sub-paragraph (2)7 add—

“(3)

A statement that explains that the member’s protected rights will become ordinary scheme rights under pensions legislation from the date that the scheme ceased to be an appropriate scheme, and that where the member is married or has a civil partner, there is no longer a statutory requirement for the scheme to provide a survivor’s pension or annuity.”, and

(f)

omit paragraphs 10 and 11.

Amendment of the Personal Pension Schemes (Transfer Value) Regulations 19873.

(1)

The Personal Pension Schemes (Transfer Value) Regulations 19878 are amended as follows.

(2)

In regulation 1(2) (interpretation)9, omit the definition of “protected rights”.

(3)

In regulation 2 (requirements to be satisfied)10, omit paragraph (1)(b).

Amendment of the Personal and Occupational Pension Schemes (Abatement of Benefit) Regulations 19874.

(1)

The Personal and Occupational Pension Schemes (Abatement of Benefit) Regulations 198711 are amended as follows.

(2)

For regulation 3(1) (guaranteed minimum pension to which earner’s widow, widower, or surviving civil partner is treated as entitled after minimum contributions have been paid) substitute—

“(1)

Where, in relation to any tax week, except a tax week such as is mentioned in paragraph (3), minimum contributions have been paid in respect of an earner, section 46 of the Act shall, in the circumstances specified in paragraph (2), have effect in relation to the earner’s widow, widower or surviving civil partner, as if the widow, widower or surviving civil partner were entitled to a guaranteed minimum pension at a rate equal to one-half of the rate described in regulation 2(2).”.

(3)

For regulation 5(1) (guaranteed minimum pension to which earner’s widow, widower, or surviving civil partner is treated as entitled after minimum payments have been made) substitute—

“(1)

Where, in relation to any tax week, except a tax week such as is mentioned in paragraph (3), minimum payments have been paid in respect of an earner, section 46 of the Act shall, in the circumstances specified in paragraph (2), have effect in relation to the earner’s widow, widower or surviving civil partner, as if the widow, widower or surviving civil partner were entitled to a guaranteed minimum pension at a rate equal to one-half of the rate described in regulation 4(2).”.

Revocation of the Personal Pension Schemes (Compensation) Regulations 19885.

The Personal Pension Schemes (Compensation) Regulations 198812 are revoked.

Amendment of the Occupational Pension Schemes (Preservation of Benefit) Regulations 19916.

In regulation 9(6) (bought out benefits) of the Occupational Pensions Schemes (Preservation of Benefit) Regulations 199113—

(a)

for “sub-paragraphs (a) to (d)” substitute “sub-paragraphs (b), (c) and (d)”, and

(b)

omit sub-paragraph (a).

Revocation of the Occupational Pension Schemes (Discharge of Protected Rights on Winding Up) Regulations 19967.

The Occupational Pension Schemes (Discharge of Protected Rights on Winding Up) Regulations 199614 are revoked.

Amendment of the Occupational Pension Schemes (Contracting-Out) Regulations 19968.

(1)

The Occupational Pension Schemes (Contracting-Out) Regulations 199615 are amended as follows.

(2)

In regulation 1(2) (interpretation)16, in the definition of “section 9(2B) rights”, in sub-paragraph (b)(ii) insert at the end “, where that transfer payment was made before the abolition date”.

(3)

In regulation 3(1)(c) (notices by employers of intended election), omit “the protected rights,”.

(4)

In regulation 10(1)(b) (special provision with regard to elections for the issue, variation or surrender of certificates where the employment remains contracted-out) omit “or to protected rights, as the case may be,”.

(5)

In regulation 16 (requirement to confirm relevant requirements are satisfied)17, omit paragraph (1)(d).

(6)

In regulation 37 (circumstances in which the age-related payments are not to be paid)—

(a)

after paragraph (1) insert—

“(1A)

Subject to paragraph (2), where the earner is no longer a member of the scheme which before the abolition date was a money purchase contracted-out scheme, an age-related payment shall be paid—

(a)

to the trustees or managers of the scheme, if the earner has become a member of another scheme, and the scheme is able to transfer the payment to that other scheme,

(b)

to the trustees or managers of another scheme of which the earner is a member, if known to HMRC, or

(c)

in all other circumstances, to the earner.”,

(b)

in paragraph (2), after “(ways of giving effect to protected rights)”, insert “as it had effect prior to the abolition date,”, and

(c)

in paragraph (7), after “insurance policies)”, insert “as it had effect prior to the abolition date”.

(7)

In regulation 43(1) (termination of periods of contracted-out employment), in each of sub-paragraphs (c), (d) and (e), for the words from “, section 9(2B)” to “protected”, substitute “or section 9(2B)”.

(8)

In regulation 44(7) (notifications to the Commissioners of the Inland Revenue), for the words from “, any entitlement arising in respect of section 9(2B) rights” to the end, substitute “and any entitlement arising in respect of section 9(2B) rights.”.

(9)

In regulation 45 (approval of arrangements for schemes ceasing to be contracted-out)18—

(a)

in paragraph (2), omit “or section 32A of that Act (discharge of protected rights on winding-up)”,

(b)

in paragraph (3), for “paragraphs (a) or (b) as the case may be”, substitute “paragraph (a)”, and omit sub-paragraph (b), and

(c)

omit paragraph (4).

(10)

In regulation 46 (supervision of schemes that have ceased to contract out)—

(a)

in paragraph (1), omit “or (b)” and for “paragraphs (2), (3) and (4)” substitute “paragraphs (2) and (4)”,

(b)

omit paragraph (3), and

(c)

in paragraph (4), omit “protected rights,”.

(11)

In regulation 50(a) (member to be informed of the option to restore state scheme rights), omit “or under section 32A of the 1993 Act (discharge of protected liabilities on winding up: insurance policies)”.

(12)

In regulation 63(2)(aa) (provision of information about guaranteed minimum pensions)19, omit “or protected rights”.

(13)

In regulation 68 (additional modifications relating to transfers and increases of earnings factors by 12 per cent)—

(a)

in paragraph (1), after “section 28(2)(b) of the 1993 Act” insert “as they had effect prior to the abolition date”, and

(b)

in paragraph (3), after “1993 Act” insert “as they had effect prior to the abolition date”.

Amendment of the Contracting-Out (Transfer and Transfer Payments) Regulations 19969.

(1)

The Contracting-Out (Transfer and Transfer Payments) Regulations 199620 are amended as follows.

(2)

In regulation 1(2) (interpretation)—

(a)

omit the definition of “protected rights”, and

(b)

in the definition of “section 9(2B) rights”21 in sub-paragraph (b)(ii) at the end insert “where that transfer payment was made before the abolition date”.

(3)

In regulation 13A (modifications of section 12C of the 1993 Act where transfer payments are made to salary-related contracted-out schemes)22, in sub-paragraph (b) at the end, insert “, where that transfer payment was made before the abolition date”.

Revocation of part of the Personal and Occupational Pension Schemes (Protected Rights) Regulations 199610.

In the Personal and Occupational Pensions Schemes (Protected Rights) Regulations 199623, the following regulations are revoked—

(a)

regulation 1(2), in so far as it relates to regulations 3, 9 and 16(2),

(b)

regulation 3 (options under section 10(2) and (3) of the 1993 Act for schemes to designate which rights are protected rights),

(c)

regulation 9 (suspension and forfeiture of payments giving effect to protected rights), and

(d)

regulation 16(2) (personal pension schemes – notifications to Commissioners of Inland Revenue).

Amendment of the Occupational Pension Schemes (Disclosure of Information) Regulations 199611.

(1)

The Occupational Pension Schemes (Disclosure of Information) Regulations 199624 are amended as follows.

(2)

In regulation 1(2) (interpretation)25—

(a)

omit the definition of “mixed benefit contracted-out scheme”, and

(b)

in the definition of “protected rights” insert at the end “as it had effect immediately prior to the abolition date”.

(3)

In regulation 5 (information to be made available to individuals)26, omit sub-paragraph (5A).

(4)

In Schedule 1 (basic information about the scheme)27, omit paragraphs 12A and 14.

(5)

In Schedule 2 (information to be made available to individuals)28—

(a)

in paragraph 6—

(i)

for sub-paragraph (a) substitute—

“(a)

The value of the member’s accrued rights under the scheme at the same or another specified date.”, and

(ii)

in sub-paragraph (b) omit “(i) or (ii) or both”,

(b)

omit paragraph 6A,

(c)

in paragraph 8, after sub-paragraph (2)29 add—

“(3)

A statement that explains that the member’s protected rights will become ordinary scheme rights under pensions legislation from the date the scheme ceased to be a money purchase contracted-out scheme, and that where the member is married or has a civil partner, there is no longer a statutory requirement for the scheme to provide a survivor’s pension or annuity.”,

(d)

omit paragraph 9, and

(e)

for paragraph 10, substitute—

“10 An account of the amount by which the member’s accrued rights have been reduced, and of the action taken by the trustees, or which is open to the member to take, in order, so far as may be possible, to restore the value of his accrued rights under the scheme.”

Amendment of the Occupational Pension Schemes (Indexation) Regulations 199612.

In regulation 1(2) (interpretation)30 of the Occupational Pension Schemes (Indexation) Regulations 1996—

(a)

at the appropriate place insert the following definitions—
““abolition date” means the day appointed for the commencement of section 15(1) of the Pensions Act 200731;”
““protected rights” has the meaning given in section 10 of the Pension Schemes Act 199332, as it had effect immediately prior to the abolition date;”

(b)

in the definition of “section 9(2B) rights”, in sub-paragraph (b)(ii), at the end add “where that transfer payment was made before the abolition date”.

Amendment of the Occupational Pension Schemes (Scheme Administration) Regulations 199613.

In regulation 12 (requirements for trustees to keep books and records) of the Occupational Pension Schemes (Scheme Administration) Regulations 199633, omit paragraph (1)(b)(vii).

Amendment of the Occupational Pension Schemes (Transfer Values) Regulations 199614.

(1)

The Occupational Pension Schemes (Transfer Values) Regulations 199634 are amended as follows.

(2)

In regulation 1(2) (interpretation), omit the definition of “post-97 protected rights”.

(3)

In regulation 12 (requirements to be met by receiving schemes, annuities and arrangements)—

(a)

after paragraph (1)(b), add “and”, and

(b)

omit paragraph (1)(c), and the word “and” immediately following it.

(4)

In Schedule 1A (reductions in initial cash equivalents)35, omit paragraph 9.

Revocation of the Occupational Pension Schemes (Mixed Benefit Contracted-out Schemes) Regulations 199615.

The Occupational Pension Schemes (Mixed Benefit Contracted-out Schemes) Regulations 199636 are revoked.

Amendment of the Occupational Pension Schemes (Winding-up) Regulations 199616.

In the Occupational Pension Schemes (Winding-up) Regulations 199637, omit regulation 9 (relationship of these regulations and requirements under section 32A of the Pension Schemes Act 1993).

Amendment of the Personal Pension Schemes (Appropriate Schemes) Regulations 199717.

(1)

The Personal Pension Schemes (Appropriate Schemes) Regulations 199738 are amended as follows.

(2)

In regulation 12 (circumstances in which minimum contributions are not to be paid)39—

(a)

after paragraph (1) insert—

“(1A)

Subject to paragraph (2), where the earner is no longer a member of the earner’s chosen scheme, minimum contributions in respect of that earner shall be paid—

(a)

to the trustees or managers of the earner’s chosen scheme, if the earner has become a member of another scheme, and the earner’s chosen scheme is able to transfer the payment to that other scheme,

(b)

to the trustees or managers of another scheme of which the earner is a member, if known to HMRC, or

(c)

in all other circumstances, to the earner.”,

(b)

in paragraph (2), after “(ways of giving effect to protected rights)”, insert “as it had effect prior to the abolition date”,

(c)

in paragraph (3), at the end add “, except where the earner is no longer a member of that scheme, in which case the minimum contributions shall instead be paid to the earner”, and

(d)

in paragraph (4), at the end add “, except where the earner is no longer a member of that scheme, in which case the additional amount of minimum contributions shall instead be paid to the earner”.

Amendment of the Occupational Pension Schemes (Contracting-out) (Amount Required for Restoring State Scheme Rights and Miscellaneous Amendment) Regulations 199818.

In regulation 1(2) (interpretation) of the Occupational Pension Schemes (Contracting-out) (Amount Required for Restoring State Scheme Rights and Miscellaneous Amendment) Regulations 199840, in the definition of “relevant employment” for the words “, rights to a guaranteed minimum pension or protected rights”, substitute “or rights to a guaranteed minimum pension”.

Amendment of the Pension Sharing (Pension Credit Benefit) Regulations 200019.

In regulation 1(2) (interpretation) of the Pension Sharing (Pension Credit Benefit) Regulations 200041, omit the definition of “contracted-out rights”.

Amendment of the Stakeholder Pension Scheme Regulations 200020.

(1)

The Stakeholder Pension Scheme Regulations 200042 are amended as follows.

(2)

In regulation 3 (requirements applying to all stakeholder pension schemes as regards instruments establishing such schemes), omit paragraph (7).

(3)

In regulation 13(4) (expenses, commission etc. – principles)43, omit sub-paragraph (a).

Amendment of the Occupational and Personal Pension Schemes (Pension Liberation) Regulations 200521.

For regulation 2(3) (modification of references to “transfer” in the 1993 Act) of the Occupational and Personal Pension Schemes (Pension Liberation) Regulations 200544 substitute—

“(3)

The “relevant provisions” referred to in paragraph (2) are section 71 (basic principle as to short service benefit) and any regulations made under that section.”

Amendment of the Pension Protection Fund (General and Miscellaneous Amendments) Regulations 200622.

(1)

The Pension Protection Fund (General and Miscellaneous Amendments) Regulations 200645 are amended as follows.

(2)

In regulation 1(2) (interpretation), omit the definition of “appropriate personal pension scheme”.

(3)

In regulation 7 (manner of discharge of liabilities in respect of money purchase benefits)—

(a)

in paragraph (1)—

(i)

omit “(or in the case of protected rights, given effect to)”, and

(ii)

for sub-paragraph (a) substitute—

“(a)

a transfer payment to a personal pension scheme or an occupational pension scheme;”, and

(b)

omit paragraphs (2) and (3).

(4)

For regulation 8(5) (further provision for discharge of liabilities in respect of money purchase benefits), substitute—

“(5)

Where the money purchase beneficiary dies before the Board discharges those liabilities in relation to that beneficiary, the Board shall discharge those liabilities—

(a)

where there is a widow, widower or surviving civil partner, under the rules of the scheme within the limits specified in regulation 7(1); or

(b)

where there is no widow, widower or surviving civil partner, in accordance with paragraph 15 of Schedule 29 to the 2004 Act (uncrystallised funds lump sum death benefit).”

Amendment of the Occupational Pension Schemes (Modification of Schemes) Regulations 200623.

(1)

The Occupational Pension Schemes (Modification of Schemes) Regulations 200646 are amended as follows.

(2)

In regulation 1(3) (interpretation), omit the definition of “protected rights”.

(3)

In regulation 3 (non-application of the subsisting rights provisions), omit paragraph (d).

Amendments to the Equality Act 2010 (Age Exceptions for Pension Schemes) Order 201024.

In article 2(4) (interpretation) of the Equality Act 2010 (Age Exceptions for Pension Schemes) Order 201047—

(a)

at the appropriate place, insert—
““abolition date” means the day appointed for the commencement of section 15(1) of the Pensions Act 200748;”

(b)

for the definition of “contracted-out rights” substitute—

““Contracted-out rights” are such rights under, or derived from, an occupational pension scheme as fall within the following categories—

(a)

entitlement to payment of, or accrued rights to, guaranteed minimum pensions; or

(b)

section 9(2B) rights;”,

(c)

in the definition of “protected rights”, at the end insert “as it had effect immediately prior to the abolition date”, and

(d)

in the definition of “section 9(2B) rights” at the end insert “where the transfer took place before the abolition date”.

PART 3Amendments coming into force on 6th April 2013

Amendment of the Occupational Pension Schemes (Contracting-Out) Regulations 199625.

In regulation 44 (notification to the Commissioners of the Inland Revenue) of the Occupational Pension Schemes (Contracting-Out) Regulations 1996, omit paragraphs (5) and (6).

Revocation of part of the Personal and Occupational Pension Schemes (Protected Rights) Regulations 199626.

In the Personal and Occupational Pension Schemes (Protected Rights) Regulations 1996, the following regulations are revoked—

(a)

regulation 1(2) (interpretation), in so far as it relates to regulation 16(1), and

(b)

regulation 16(1) (personal pension schemes – notifications to Commissioners of Inland Revenue).

Amendment of the Personal Pension Schemes (Disclosure of Information) Regulations 198727.

In Schedule 2 of the Personal Pension Schemes (Disclosure of Information) Regulations 1987 (information to be made available to individuals), omit paragraph 9(3)49.

Amendment of the Occupational Pension Schemes (Disclosure of Information) Regulations 199628.

In the Occupational Pension Schemes (Disclosure of Information) Regulations 1996—

(a)

in regulation 1(2)(interpretation), omit the definition of “protected rights”, and

(b)

in Schedule 2 (information to be made available to individuals), omit paragraph 8(3)50.

PART 4Amendments coming into force on 6th April 2015

Amendments to the Occupational Pension Schemes (Contracting-Out) Regulations 199629.

In regulation 37 (circumstances in which the age-related payments are not to be paid) of the Occupational Pension Schemes (Contracting-Out) Regulations 1996, omit paragraph (1A)51, and paragraphs (2) to (7)52.

Amendment of the Personal Pension Schemes (Appropriate Schemes) Regulations 199730.

In regulation 12 (circumstances in which minimum contributions are not to be paid) of the Personal Pension Schemes (Appropriate Schemes) Regulations 1997, omit paragraph (1A)53, and paragraphs (2) to (9)54.

Signed by authority of the Secretary of State for Work and Pensions.

Steve Webb
Minister of State
Department for Work and Pensions
EXPLANATORY NOTE
(This note is not part of the Order)

This Order is made under section 145 of the Pensions Act 2008 (c.30), which provides for amendments to be made in consequence of section 106 of that Act. Section 106 abolishes the protected rights of members of pension schemes contracted-out on a defined contributions basis, from the contracted-out abolition date (the date for the coming into force of section 15(1) of the Pensions Act 2007 (c.22)).

This Order makes consequential amendments to subordinate legislation and provides for transitional provisions for the 3 years following abolition. The majority of amendments come into force on 6th April 2012.

References to, and provisions which relate to, protected rights are either omitted, or where appropriate, replaced with references to protected rights as they existed prior to the abolition date.

Articles 2 and 11 provide for changes to the disclosure of information requirements schemes must comply with in relation to their contracting-out status. Schemes are required to provide a one-off statement to members of former contracted-out defined contribution schemes explaining the effect of the abolition of protected rights on the status of their accrued rights in the scheme within 4 months of the abolition date, unless they have already provided such information in the 12 months preceding the abolition date. This requirement is omitted from 6th April 2013 by articles 27 and 28.

Article 4 amends the Personal and Occupational Pension Schemes (Abatement of Benefit) Regulations 1987 (S.I. 1987/1113) to provide that, from the abolition date, a contracted-out deduction (from a survivor’s additional pension entitlement) of 50% is to be applied to a survivor of a member of a former defined contribution contracted-out scheme in all cases.

Articles 8 and 17 amend the Occupational Pension Schemes (Contracting-out) Regulations 1996 and the Personal Pension Schemes (Appropriate Schemes) Regulations 1997 respectively, and provide for the payment of age-related payments, and minimum contributions to be made to another scheme, or the individual, rather than the former contracted-out scheme, where the earner is no longer a member of that scheme. These provisions are then omitted from 6th April 2015 by articles 29 and 30, when changes to primary legislation provide that all such payments should be made to an individual.

This legislation reduces the costs of administrative burdens on the private sector and civil society organisations. An assessment of the impact has been made; a copy is available in the libraries of both Houses of Parliament, and is annexed to the Explanatory Memorandum which is available alongside the instrument on www.legislation.gov.uk.