Statutory Instruments
2013 No. 459
Pensions
The Occupational and Stakeholder Pension Schemes (Miscellaneous Amendments) Regulations 2013
Made
28th February 2013
Laid before Parliament
5th March 2013
Coming into force
6th April 2013
The Secretary of State for Work and Pensions makes the following Regulations in exercise of the powers conferred by sections 12C(1), 20(1) and (2), 37(1) and (2), 73(2)(b) and (4)(b), 93(1)(a), 181(1), 182(2) and (3), 183(1) and 185 of the Pension Schemes Act 1993(1), sections 68(2)(e), 120(1), 124(1) and 174(2) of the Pensions Act 1995(2) and sections 1(1)(b) and (5), 2(2), 3(1) and (5), 8(1), 40(1) and 83(4), (6)(a) and (11) of the Welfare Reform and Pensions Act 1999(3).
Secretary of State has consulted with such persons as he considers appropriate in accordance with section 185(1) of the Pension Schemes Act 1993(4), section 120(1) of the Pensions Act 1995 and section 83(11) of the Welfare Reform and Pensions Act 1999.
Citation and commencement
1. These Regulations may be cited as the Occupational and Stakeholder Pension Schemes (Miscellaneous Amendments) Regulations 2013 and shall come into force on 6th April 2013.
Amendment of the Occupational Pension Schemes (Preservation of Benefit) Regulations 1991
2.—(1) The Occupational Pension Schemes (Preservation of Benefit) Regulations 1991(5) are amended as follows.
(2) In regulation 1(3) (interpretation)(6), after the definition of “the 1995 Act” insert—
““European pensions institution” has the meaning given in section 293(8) of the Pensions Act 2004;”(7).
(3) After regulation 11A (further alternative to short service benefit – transfer to an overseas arrangement)(8), insert—
“Further alternative to short service benefit – transfer to a European pensions institution without consent
11B.—(1) For the purposes of section 73(2)(b) and (4)(b) of the Act (prescribed alternatives to short service benefit), a scheme may, instead of providing short service benefit, provide for the transfer of the member’s accrued rights to a European pensions institution without the member’s consent where the conditions in paragraphs (2) and (3) of regulation 12 are satisfied.
(2) For the purposes of paragraph (1) of this regulation, references in paragraphs (2), (3) and (4A) of regulation 12 to “receiving scheme” are to be read as “receiving European pensions institution”.
(3) Where it is proposed that a member’s accrued rights are to be transferred in accordance with this regulation, information about the proposed transfer and details of the value of the rights to be transferred (including rights in respect of death in service benefits and survivors’ benefits) shall be furnished to the member not less than one month before the date on which the proposed transfer is due to take place.”(9).
(4) In regulation 12(2) (transfer of member’s accrued rights without consent), in sub-paragraphs (a) and (b), for “apply to” substitute “relate to persons who are or have been in”.
Amendment of the Occupational Pension Schemes (Contracting-out) Regulations 1996
3. In regulation 42 of the Occupational Pension Schemes (Contracting-out) Regulations 1996 (alteration of rules of contracted-out schemes)(10)—
(a)in paragraph (1), after “paragraph (2)” insert “, (2ZA)”;
(b)in paragraph (2), for “section 9(2B) rights under the scheme” substitute “rights which are to accrue under the scheme in so far as such rights are attributable to an earner’s service in contracted-out employment on or after the date on which the alteration to the rules takes effect (other than rights attributable to the payment of voluntary contributions)”; and
(c)after paragraph (2) insert—
“(2ZA) The rules of a contracted-out salary-related scheme cannot be altered in relation to any section 9(2B) rights under the scheme unless—
(a)following the alteration, the scheme provides benefits for the member and for that member’s widow, widower or surviving civil partner, in respect of the period of pensionable service to which the alteration relates and in which the member’s employment was contracted-out under section 9(2B) of the 1993 Act (requirements for certification of schemes: general) which are at least equal to the benefits that would be provided by a reference scheme (within the meaning of section 12B(2) of the 1993 Act (reference scheme)),
(b)the alteration is one to which section 67 of the 1995 Act (the subsisting rights provisions) does not apply,
(c)the alteration is one which is not a protected modification or a detrimental modification within the meaning given in section 67A of the 1995 Act (the subsisting rights provisions: interpretation), or
(d)if the alteration is a detrimental modification within the meaning of section 67A of the 1995 Act, the actuarial equivalence requirements provided for in sections 67C and 67D of that Act (the actuarial equivalence requirements and further provisions) are met in relation to the proposed modification of those rights.
(2ZB) (a) This paragraph applies in the case of alterations falling within paragraph (2ZA)(c) or (d), but not falling within (2ZA)(a) or (b).
(b)Subject to sub-paragraph (c), the altered scheme must provide for a pension to be paid to the member’s widow, widower or surviving civil partner in respect of the period in which the member’s employment was contracted-out under section 9(2B) of the 1993 Act (“relevant survivor’s post-1997 pension”) which is at least as generous, either as regards the amount of the pension or as regards the circumstances in which it will be paid, as it would have been before the alteration.
(c)In relation to a member who is an active member of the scheme immediately before the alteration takes effect, the requirement in sub-paragraph (b) shall be deemed to be satisfied if the relevant survivor’s post-1997 pension which the scheme would provide in respect of the member if the member left pensionable service immediately after the alteration is at least as generous as the relevant survivor’s post-1997 pension which the scheme would have provided in respect of the member had the member left service immediately before the alteration.
(d)In sub-pararaph (c), “active member” means a person who is in pensionable service under the scheme.”(11).
Amendment of the Contracting-out (Transfer and Transfer Payment) Regulations 1996
4.—(1) The Contracting-out (Transfer and Transfer Payment) Regulations 1996(12) are amended as follows.
(2) In regulation 1(2) (interpretation), for the definition of ““connected employer transfer” and “connected employer transfer payment”” substitute—
““connected employer transfer” and “connected employer transfer payment” mean respectively a transfer of guaranteed minimum pensions from a salary-related contracted-out scheme to a salary-related contracted-out scheme and a transfer payment in respect of section 9(2B) rights from a salary-related contracted-out scheme to a salary-related contracted-out scheme where either—
the transferring scheme and the receiving scheme relate to persons who are or have been in employment with the same employer; or
the transferring scheme and receiving scheme relate to persons who are or have been in employment with different employers, and the earner or person concerned is one of a group of persons in respect of whom transfers or transfer payments are being made from the transferring scheme to the receiving scheme and either—
the transfer or transfer payment is a consequence of a financial transaction between the employers, or
each of the employers is one of a group of companies consisting of a holding company and one or more subsidiaries within the meaning of section 1159(1) of the Companies Act 2006 (meaning of “subsidiary” etc),
and, in this definition, “salary-related contracted-out scheme” includes a scheme which was formerly a salary-related contracted-out scheme;(13).”(13).
(3) In regulations 4 (connected employers transfers of guaranteed minimum pensions), 7(2)(b) (transfers of liability in respect of section 9(2B) rights: general) and 9 (connected employer transfer payments) omit “to a salary-related contracted-out scheme”.
Amendment of the Occupational Pension Schemes (Winding Up) Regulations 1996
5. In regulation 6(4) of the Occupational Pension Schemes (Winding Up) Regulations 1996 (arrangement for discharge of liabilities under section 74)(14), after “regulation” insert “11B or”.
Amendment of the Occupational Pension Schemes (Transfer Values) Regulations 1996
6. In regulation 2(b) (pre-1986 leavers) of the Occupational Pension Schemes (Transfer Values) Regulations 1996(15) for “the rate of inflation as measured by the retail price index” substitute “a rate that, in the opinion of the Secretary of State, maintains the value of pensions or other benefits by reference to the rise in the general level of prices in Great Britain”.
Amendment of the Pension Sharing (Pension Credit Benefit) Regulations 2000
7. For regulation 32 (increase of relevant pension) of the Pension Sharing (Pension Credit Benefit) Regulations 2000(16) substitute—
“Increase of relevant pension
32.—(1) Subject to regulations 33 and 34, a relevant pension shall be increased each year by either the appropriate percentage, or, where the rules of an occupational pension scheme require the relevant pension to be increased at intervals of not more than 12 months, the relevant percentage.
(2) A relevant pension shall not be increased under paragraph (1) if, under the rules of the occupational pension scheme, it is for the time being increased, and since the relevant date has always been increased, at intervals of not more than 12 months by at least—
(a)the percentage increase in the retail prices index for the reference period, being a period determined, in relation to each periodic increase, under the rules of the scheme; or
(b)if lower, the default percentage for that period.
(3) In paragraph (2), “the relevant date” means—
(a)1st January 2011 or, if later, the date on which the relevant pension became a pension in payment; or
(b)if the relevant pension was transferred to the occupational pension scheme from another occupational pension scheme as a pension in payment after 1st January 2011, the date of the transfer.
(4) If the relevant pension was transferred to the occupational pension scheme as mentioned in paragraph (3)(b), paragraph (2) does not apply to the relevant pension unless, immediately before the transfer, paragraph (2) (read with this paragraph if relevant) applied to the relevant pension by reference to the scheme from which it was transferred.
(5) In this regulation the default percentage for a period is the percentage for that period which corresponds to—
(a)5 per cent. per annum in a case where—
(i)the relevant pension is in payment before 6th April 2005; or
(ii)the relevant pension is not in payment before 6th April 2005 but the entitlement to the relevant pension credit arose before that day;
(b)2.5 per cent. per annum in a case where the entitlement to the relevant pension credit arises on or after 6th April 2005.
(6) This regulation does not apply to a relevant pension provided to give effect to eligible pension credit rights of a member under a qualifying occupational pension scheme which—
(a)is a cash balance benefit; and
(b)first comes into payment on or after 6th April 2013.
(7) In this regulation—
“appropriate percentage” means—
in a case where entitlement to the relevant pension credit arose before 6th April 2005, the higher revaluation percentage; and
in a case where entitlement to the relevant pension credit arose on or after 6th April 2005, the lower revaluation percentage,
for the latest revaluation period specified in the order under paragraph 2 of Schedule 3 to the 1993 Act (revaluation of accrued pension benefits) which is in force at the time of the increase (expressions used in this definition having the same meaning as in that paragraph);
“cash balance benefit” has the same meaning as in section 51ZB of the 1995 Act;
“consumer prices index” means—
the general index of consumer prices (for all items) published by the Statistics Board; or
where that index is not published for a month, any substituted index or figures published by the Board;
“relevant percentage” means—
the percentage increase in the consumer prices index for the reference period, being a period determined, in relation to each periodic increase, under the rules of the scheme; or
if lower, the default percentage for that period;
“retail prices index” means—
the general index of retail prices (for all items) published by the Statistics Board; or
where that index is not published for a month, any substituted index or figures published by the Board.”.
Amendment of the Stakeholder Pension Schemes Regulations 2000
8.—(1) The Stakeholder Pension Schemes Regulations 2000(17) are amended as follows.
(2) The following provisions are revoked—
(a)the definition of “the Income and Corporation Taxes Act” in regulation 1(3) (citation, commencement and interpretation);
(b)regulation 14(5)(h) (charges etc. – permitted reductions in members’ rights);
(c)regulation 22 (exemptions from employer access and consultation requirements);
(d)regulation 23 (definition of relevant employees);
(e)paragraph 2(k) of Schedule 3 (information for members).
(3) For regulation 2(2) and (3) (manner of establishment) substitute—
“(2) The manager of the scheme must be a person who is mentioned in section 154(1)(b) of the Finance Act 2004 (persons by whom registered pension scheme may be established).”.
(4) In regulation 14(5) (charges etc. – permitted reductions in members’ rights)
(a)at the end of sub-paragraph (f) add “and”;
(b)at the end of sub-paragraph (g) omit “, and”.
(5) In regulation 24 (payroll deduction of contributions)(18)—
(a)in paragraph (1) omit “make or”;
(b)in paragraph (2)—
(i)in each place where it occurs, for “make, vary or cease” substitute “vary”;
(ii)in sub-paragraph (b) omit “make or”;
(c)in paragraph (2)(c)(i) and paragraph (2B)(d)(i) omit “if that further request is made within 6 months of the employee requesting that the deductions cease”;
(d)in paragraph (2)(c)(ii) and paragraph (2B)(d)(ii) after the words “the employee may”, in each place where they occur, insert “be able to”;
(e)in paragraph (3)—
(i)at the end of sub-paragraph (a)(ii) omit “and”;
(ii)omit sub-paragraph (b);
(f)omit paragraph (4);
(g)after paragraph (5) insert—
“(5A) Where an employer has withdrawn their designation of a stakeholder pension scheme that has been designated by him for the purposes of section 3(2)(19) of the Act for reasons beyond their control, the employer must immediately cease deducting contributions from the employee’s remuneration and notify the employee in writing as soon as is practicable that designation of that scheme has been withdrawn and deduction of contributions has ceased.
(5B) Where an employer—
(a)is notified that a stakeholder pension scheme that has been designated by the employer for the purposes of section 3(2) of the Act has commenced winding up; or
(b)withdraws designation of a stakeholder pension scheme that has been designated by the employer for the purposes of section 3(2) of the Act for reasons beyond the employer’s control,
the employer need not comply with the requirement in section 3(5) of the Act.”(20);
(h)in paragraph (6) for the words “(2), (2B) and (3)” substitute “(2) and (2B); and
(i)in paragraph (7) omit the words “and in regulation 25”.
Amendment of the Occupational Pension Schemes (Modification of Schemes) Regulations 2006
9. In regulation 3(e)(ii) of the Occupational Pension Schemes (Modification of Schemes) Regulations 2006(21)—
(a)after “regulation” insert “11B or”; and
(b)for “transfer of member’s accrued rights without consent” substitute “transfer of member’s accrued rights to an occupational or personal pension scheme or a European pensions institution without consent”.
Revocations
10. The following provisions are revoked—
(a)regulation 2 (amendment of regulation 2) of the Stakeholder Pension Schemes (Amendment) Regulations 2001(22);
(b)regulations 14 (amendment of regulation 22) and 15 (amendment of regulation 23) of the Stakeholder Pension Schemes (Amendment) (No. 2) Regulations 2001(23);
(c)regulation 15 (indexation: changes to maximum percentage) of the Personal and Occupational Pension Schemes (Indexation and Disclosure of Information) (Miscellaneous Amendments) Regulations(24).
Signed by authority of the Secretary of State for Work and Pensions
Steve Webb
Minister of State
Department for Work and Pensions
28th February 2013
EXPLANATORY NOTE
(This note is not part of the Regulations)
These Regulations amend the Occupational Pension Schemes (Preservation of Benefit) Regulations 1991 (S.I. 1991/167) (“the Preservation of Benefit Regulations”), the Occupational Pension Schemes (Contracting-out) Regulations 1996 (S.I. 1996/1172) (“the Contracting-out Regulations”) and the Contracting-out (Transfer and Transfer Payment) Regulations 1996 (S.I. 1996/1462) (“the Transfer Regulations”), and the Stakeholder Pension Schemes Regulations 2000 (S.I. 2000/1403) (“the Stakeholder Regulations”). They also revoke spent provisions of the Stakeholder Regulations, the Stakeholder Pension Schemes (Amendment) Regulations 2001(S.I. 2001/104) and the Stakeholder Pension Schemes (Amendment) (No. 2) Regulations 2001 (S.I. 2001/934), and make consequential provisions to other regulations. These Regulations come into force on 6th April 2013.
Regulation 2 amends the Preservation of Benefit Regulations to provide for a new alternative to the provision of a short service benefit under section 73(2) of the Pension Schemes Act 1993 (c. 48), that is, the transfer of a member’s accrued rights to a European pensions institution, without the member’s consent, in accordance with the conditions set out in regulation 12 of those Regulations. Regulation 2 also amends the conditions in regulation 12(2) that apply to transfers of a member’s rights without their consent, to allow for a transferring scheme and a receiving scheme to relate to both persons who are currently employed, or who have been employed in the past, by the same employer.
Regulation 3 amends regulation 42 of the Contracting-out Regulations, to provide a new set of requirements that apply to the amendment of scheme rules in relation to accrued contracted-out rights (section 9(2B) rights). Regulation 42(2) is amended so that the conditions in that regulation now only apply to the alteration of rules in relation to contracted-out rights that are to accrue in the future under the contracted-out scheme. New regulation 42(2ZA) and (2ZB) set out new restrictions on the amendment of rules in relation to accrued contracted-out rights. Amendments to such rights are not allowed unless the benefits provided to members and survivors are at least as good as those provided by a reference scheme, unless section 67 of the Pensions Act 1995 (c. 26) does not apply or, if section 67 does apply, the alterations are neither detrimental nor protected modifications. Lastly, if an alteration is a detrimental modification, the actuarial equivalence test must be applied. In both the cases where the alteration is within the scope of section 67, regulation 42(2ZB) requires that the level of survivors’ benefits cannot be reduced.
Regulation 4 makes amendments to the Transfer Regulations to allow connected employer transfers to take place where the transferring scheme and receiving scheme relate to both persons who are currently employed, or who have been employed in the past, by the same employer, and where either scheme is a contracted-out or a former contracted-out scheme.
Regulations 5 and 10 make consequential amendments to regulations to insert references to new regulation 11B of the Preservation of Benefit Regulations (as inserted by regulation 2 of this instrument) alongside references to regulation 12 of those Regulations where appropriate.
Regulation 6 changes the reference to the Retail Prices Index (“RPI”) to a reference to a rise in the general level of prices. Chapter 4 of the Pension Schemes Act 1993 (c. 48) gives most members of occupational pension schemes rights to transfer preserved benefits – or a cash equivalent thereof – to another scheme, if that scheme is willing to accept the transfer. Exceptions to this right are found in Regulation 2 of the Occupational Pension Schemes (Transfer Values) Regulations 1996 (S.I. 1996/1847). One such exception applies to members who left schemes before 1st January 1986 if the scheme fully revalues the preserved rights by the RPI.
Regulation 7 replaces the existing regulation 32 of the Pension Sharing (Pension Credit Benefit) Regulations 2000 (S.I. 2000/1054). Paragraphs (2) to (4) of new regulation 32 will permit schemes which have paid RPI-based increases to continue to do so without tracking the consumer prices index (“CPI”) levels as well.
The definition of “appropriate percentage” at paragraph (7) will make it clear which of the two figures in the revaluation order should be used in which circumstances. The higher percentage is appropriate where the pension was shared prior to 6th April 2005 and the lower percentage for pensions shared after that date. The definition of “relevant percentage” replaces a reference to the Retail Prices Index with a reference to the Consumer Prices Index, reflecting how the requirement is prescribed for main scheme benefits in section 51 of the Pensions Act 1995.
Regulation 8 amends and revokes provisions in the Stakeholder Regulations:
paragraph (2) revokes provisions which have no longer have any effect;
paragraph (3) makes amendments consequential to changes made by tax legislation; and
paragraph (4) amends regulation 14 as a consequence of the revocation made in paragraph (3).
The amendments in paragraph (5) are consequential, incidental and supplementary to the amendments to section 3 of the Welfare Reform and Pensions Act 1999 (c. 30) (“the 1999 Act”) made by section 87 of the Pensions Act 2008 (c. 30) (“the 2008 Act”), and to the supplementary provision made by the Pensions Act 2008 (Commencement No. 14 and Supplementary Provisions) Order 2012 (S.I. 2012/2480), which removed the requirement for employers to designate a stakeholder pension scheme, deduct contributions from employees’ remuneration and pay them to the scheme, except where an employee had, before 1st October 2012, requested deductions to be made and has not withdrawn that request. Paragraph (5)(a) to (f) and (h) amends regulation 24 of the Stakeholder Regulations to reflect the amendments made to section 3 of the 1999 Act, paragraph (5)(g) inserts paragraphs (5A) and (5B) into regulation 24 and removes the duty to deduct contributions where the employer’s designated scheme commences winding up or the employer withdraws designation of a scheme for reasons beyond the employer’s control. Paragraph (5)(i) omits references to regulation 25 of the Stakeholder Regulations which lapsed when the statutory power under which it was made was repealed by section 87 of the 2008 Act.
Regulation 10 revokes provisions in the Stakeholder Pension Schemes (Amendment) Regulations 2001 (2001/104), the Stakeholder Pension Schemes (Amendment) (No. 2) Regulations 2001 (2001/934) and the Personal and Occupational Pension Schemes (Indexation and Disclosure of Information) (Miscellaneous Amendments) Regulations (S.I. 2005/704).
An assessment of the impact of this instrument has been made. A copy of each of the impact assessments for regulations 2 to 5 and 9, and for regulations 6 and 7 respectively, is available in the libraries of both Houses of Parliament and alongside this instrument on www.legislation.gov.uk. An assessment of the impact of regulation 8 was made when the changes to the stakeholder designation requirement were made by section 87 of the 2008 Act. A copy of that assessment is available on www.legislation.gov.uk/uksi/2012/2480/resources.
1993 c. 48. Section 12C was inserted by section 136(5) of the Pensions Act 1995 (c. 26). Section 20(1) was amended by section 56 of, and paragraph 2(1) of Schedule 5 to, the Child Support, Pensions and Social Security Act 2000 (c. 19). Section 37 was substituted by section 151 of, and paragraph 39 of Schedule 5, to the Pensions Act 1995, and amended by S.I. 2005/2050, article 2(1) and paragraph 12 of Schedule 1, and by S.I. 2011/1730, article 5(1) and (5)(b). Section 93(1)(a) was substituted by section 152(2) of the Pensions Act 1995 (c. 26). Section 181(1) is cited for the meaning it gives to “prescribed” and “regulations”. Section 183(1) was amended by paragraph 79 of Schedule 5, paragraph 15(a) of Schedule 6 and Schedule 7 to the Pensions Act 1995.
1995 c. 26. Section 124(1) is cited for the meaning it gives to “prescribed” and “regulations”.
1999 c. 30. Section 1(5) was amended by section 285(3) of the Pensions Act 2004 (c. 35), section 2(2) was amended by paragraph 38 of Schedule 4 to the Pensions Act 2007 (c. 22), section 3 was amended by section 87 of the Pensions Act 2008 (c. 30), section 8(1) is cited for the meaning it gives to “prescribed” and section 40(1) was amended by section 280(1) and (2) of the Pensions Act 2004 and section 19(9) and (10) of the Pensions Act 2011 (c. 19).
Section 185(1) was amended by paragraph 46 of Schedule 3, paragraph 80(a), (d) and (f) of Schedule 5 and Schedule 7 to the Pensions Act 1995.
Regulation 1(3) was substituted by S.I. 1996/2131, regulation 2(2).
2004 c.35. The definition of European pensions institution was amended by S.I. 2007/3014, regulation 4(g).
Regulation 11A was inserted by S.I. 1996/2131, regulation 2(6).
Regulation 12(2) was substituted by S.I. 1992/1531, regulation 35, and amended by S.I. 1996/2131, regulation 2(7)(c). Regulation 12(3) was substituted by S.I. 2011/672, regulation 3(1) and (2)(a). Regulation 12(4A) was inserted by S.I. 1993/1822, regulation 2(a) and amended by S.I. 1999/2543, regulation 2(b) and S.I. 2011/672, regulation 3(2)(c).
S.I. 1996/1172. Regulation 42 was amended by S.I. 1997/786, regulation 3 and Schedule 1 paragraph 4(8) and S.I. 2011/1245, regulation 1(2)(a).
Section 9(2B) of the 1993 Act was inserted by section 136(3) of the Pensions Act 1995, and amended by paragraph 35(2) of Schedule 1 to the Social Security Contributions (Transfer of Functions, etc) Act 1999 (c. 2). Section 12B of the 1993 Act was inserted by section 136(5) of the Pensions Act 1995. Section 67 of the 1995 Act was substituted by, and sections 67A to 67I of the 1995 Act were inserted by, section 262 of the Pensions Act 2004.
Companies Act 2006 (c.46).
S.I. 2000/1054. Regulation 32 was amended by S.I. 2005/704.
Regulation 24 was amended by S.I. 2001/934.
Section 3(2) was omitted by section 87(5) of the Pensions Act 2008 (c. 30).
Section 3(5) was amended by section 87 of the Pensions Act 2008 (c. 30).