Pensions Act 2004

Commentary on Sections

Part 2 – the Board of the Pension Protection Fund

Chapter 3 – Pension Protection

Section 163: Adjustments to be made where the Board assumes responsibility for a scheme

617.This section sets out what adjustments the Board has to make in relation to compensation amounts payable once it assumes responsibility for a scheme.

618.Where the Board has assumed responsibility for a scheme it must pay compensation in accordance with the pension compensation provisions. Where during the period beginning with the assessment date and ending with the receipt by the trustees or managers of the transfer notice, any benefits were paid (excluding money purchase benefits), these benefits will go towards discharging the liability to pay pension compensation.

619.If during this period a person became entitled to a benefit as a result of the death of a scheme member before the assessment period started, then regulations may be made under subsection (3). These may provide that in prescribed circumstances all or part of the benefit may be treated as having become payable before the assessment date. Where they are treated as payable before the assessment date they will not be treated as discharging the Board’s liability to pay pension compensation.

620.Subsection (4) provides that the Board must take steps to recover any amounts paid during the period in excess of entitlement to pension compensation together with interest. Where less than that entitlement had been paid the Board must pay the shortfall (plus interest). Subsection (4) does not apply to money purchase benefits or any other amounts prescribed in regulations. The Board will not be required to recover any amount which it considers trivial or to recover any amount from a person in such circumstances as may be prescribed in regulations