Pensions Act 2004

Commentary on Sections

Part 1 – the Pensions Regulator

Powers in relation to winding-up of occupational pension schemes

Section 30: Power to give a direction where freezing order ceases to have effect

113.This section gives the Regulator power to make directions when a freezing order ends and no winding up order (under section 11 of the Pensions Act 1995 (power to wind up schemes)) has been made. The Regulator may make an order that benefits stated in the order are to accrue under the scheme to, or in respect of, specified members of the scheme for the period when the freezing order was in effect or for part of that period. The Regulator may provide that specified conditions are to be met before benefits can accrue. These conditions can include: a requirement that specified benefits do not accrue to or in respect of specified members unless a contribution is made by or on behalf of the member; or that a specified amount of contributions be paid by or on behalf of the employer; or a requirement that such contributions are to be accepted for part or all of the period during which the freezing order was effective.

114.Subsection (4) specifies that where a freezing order contained a direction under section 23(4)(d) or (e) and any amount of any benefit under the scheme rules was not paid as a result of the direction, then the direction does not affect any entitlement to that benefit. Any benefit to which a member, or a person in respect of a member, remains entitled at the end of the freezing period, is an amount which falls due to the member, or person, at the end of the period.

115.Subsection (5) provides that failure to comply with an order under this section will invoke a penalty under section 10 of the Pensions Act 1995 (civil penalties) on a trustee or manager of the scheme who has failed to take all reasonable steps to comply.

116.Subsection (7) provides that section 10 of the Pensions Act 1995 (civil penalties) will apply where an order has been made under this section which requires a contribution of a specified amount must be paid by, or on behalf of, the employer within a specified period. The civil penalty will apply if the employer has failed to comply and does not have a reasonable excuse. Where the amount remains unpaid at the end of a specified period, it will be treated as a debt due from the employer to the trustees or managers of the scheme. Notice of the failure to pay must be given to the Regulator by the trustees or managers, except in circumstances prescribed in regulations. Section 10 of the Pensions Act 1995 (civil penalties) will apply to any failure to give notice where the trustees or managers have not taken all reasonable steps.