SCHEDULES
SCHEDULE 4Abolition of contracting-out for defined contribution pension schemes
Part 1Amendments having effect as from abolition date
Pension Schemes Act 1993 (c. 48)
1
The Pension Schemes Act 1993 has effect subject to the following amendments.
2
1
Section 7 (issue of contracting-out and appropriate scheme certificates) is amended as follows.
2
For subsection (1) substitute—
1
Regulations shall provide for HMRC to issue certificates stating that the employment of an earner in employed earner's employment is contracted-out employment by reference to an occupational pension scheme.
1A
In this Act such a certificate is referred to as “a contracting-out certificate”.
3
Omit subsections (4) to (6) (provisions relating to appropriate scheme certificates in respect of personal pension schemes).
4
In subsection (7) (no certificate to have effect from a date earlier than its issue) omit “or appropriate scheme certificate”.
5
After that subsection insert—
8
References in this Act to a contracting-out certificate, a contracted-out scheme and to contracting-out in a context relating to a money purchase contracted-out scheme are to be construed in accordance with section 181A.
6
In the sidenote, omit “and appropriate scheme”.
3
1
Section 8 (definitions of certain terms) is amended as follows.
2
In subsection (1) (definition of “contracted-out employment”) for the words from “he is under pensionable age” to the end of paragraph (a) substitute
—
a
he is under pensionable age;
aa
his service in the employment is for the time being service which qualifies him for a pension provided by an occupational pension scheme contracted out by virtue of satisfying section 9(2) (in this Act referred to as “a salary related contracted-out scheme”);
3
After subsection (1) insert—
1A
In addition, in relation to any period before the abolition date, the employment of an earner in employed earner's employment was “contracted-out employment” in relation to him during that period if—
a
he was under pensionable age;
b
his employer made minimum payments in respect of his employment to a money purchase contracted-out scheme, and
c
there was in force a contracting-out certificate issued in accordance with this Chapter (as it then had effect) stating that the employment was contracted-out employment by reference to the scheme.
4
In subsection (2) for “for the purposes of section 42A” substitute “
for the tax year in which the week falls as specified in an order made under section 42B (as it had effect before the abolition date)
”
.
4
1
Section 9 (general requirements for certification of schemes) is amended as follows.
2
In subsection (1) (requirements for occupational pension schemes) omit “or (3)”.
3
Omit subsections (3) and (5) (requirements for money purchase occupational schemes and personal pension schemes).
4
In subsection (6) (meaning of “relevant requirements”)—
a
in paragraph (a) omit “or, as the case may be, appropriate”;
b
in paragraph (b) omit “or, as the case may be, of being an appropriate scheme,”.
5
F1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6
Omit section 12 (determination of basis on which scheme is contracted-out).
7
F2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8
F3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9
F4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10
F5. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11
Omit sections 28 to 29 (ways of giving effect to protected rights etc.).
12
F6. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13
F7. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14
F8. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15
1
Section 34 (cancellation, variation, surrender and refusal of certificates) is amended as follows.
2
For subsection (1) (regulations to provide for cancellation etc. of contracting-out or appropriate scheme certificates) substitute—
1
Regulations shall provide for the cancellation, variation or surrender of a contracting-out certificate, or the issue of a new certificate—
a
on any change of circumstances affecting the treatment of an employment as contracted-out employment; or
b
where the certificate was issued on or after the principal appointed day, if any employer of persons in the description of employment to which the scheme in question relates, or the actuary of the scheme, fails to provide HMRC, at prescribed intervals, with such documents as may be prescribed for the purpose of verifying that the conditions of section 9(2B) are satisfied.
3
In subsection (3) (continued contracting-out of scheme dependent on conditions for contracting-out remaining satisfied)—
a
for paragraphs (a) and (b) substitute “
by or by virtue of any provision of this Part the contracting-out of a scheme in relation to an employment depends on the satisfaction of a particular condition
”
;
b
omit “or, as the case may be, the scheme's continuing to be an appropriate scheme”;
c
omit “or appropriate scheme”.
4
Omit subsection (5) (circumstances in which HMRC can withhold etc. appropriate scheme certificate).
5
In subsection (8) (cancellation etc. of certificates not to have effect from a time earlier than when cancellation etc. made) omit “or appropriate scheme certificate”.
6
After subsection (8) insert—
9
A reference in this section to a contracting-out certificate does not include a reference to a contracting-out certificate issued in respect of a money purchase contracted-out scheme.
16
F9. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17
In section 42A (reduced rates of Class 1 contributions, and rebates) at the end insert—
8
For the purposes of this section “the appropriate age-related percentage” and “the appropriate flat-rate percentage”, in relation to a tax year beginning before the abolition date, are the percentages specified as such for that tax year in an order made under section 42B (as it had effect prior to that date).
18
Omit section 42B (determination and alteration of rates of contributions, and rebates, applicable under section 42A).
19
In section 43 (payment of minimum contributions to personal pension schemes) at the end insert—
7
In this section “the earner's chosen scheme” means the scheme which was immediately before the abolition date the earner's chosen scheme in accordance with section 44 (as it had effect prior to that date).
20
Omit section 44 (earner's chosen scheme).
21
In section 45 (amount of minimum contributions) at the end insert—
4
For the purposes of this section “the appropriate age-related percentage”, in relation to a tax year beginning before the abolition date, is the percentage (or percentages) specified as such for that tax year in an order made under section 45A (as it had effect prior to that date).
22
Omit section 45A (determination and alteration of rates of minimum contributions under section 45).
23
1
Section 48A (additional pension and other benefits) is amended as follows.
2
In subsection (1)
(effect of reductions and payments for contracted-out schemes on earnings factors) in paragraph (a) for “or 42A” substitute “
or, in the case of a week falling before the abolition date, under section 42A (as it then had effect)
”
.
3
In paragraph (b) of that subsection, for “an amount is paid under section 45(1)” substitute “
in the case of a week falling before the abolition date, an amount is paid under section 45(1)
(as it then had effect)
”
.
24
F10. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
25
F11. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
26
In section 55 (payment of state scheme premiums on termination of certified status) in subsection (2) (prescribed person to pay contributions equivalent premium) in paragraph (a) omit “(other than a money purchase contracted-out scheme)”.
27
F12. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
28
In section 87 (general protection principle) in subsection (1)
(when subsection applies) in paragraph (a)(i), for “which is not a money purchase contracted-out scheme” substitute “
that satisfies the requirements of section 9(2)
”
.
29
In section 96 (further provisions concerning exercise of option to take cash equivalent under section 95) in subsection (2) (circumstances in which option must be exercised in relation to balance of cash equivalent after deducting amount sufficient to meet certain liabilities of trustees etc.) in paragraph (a)(ii) omit “which is not an appropriate scheme”.
30
F13. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
31
In section 163 (exemption of certain schemes from rule against perpetuities) in subsection (2) (schemes to which the exemption applies) omit paragraph (c) (appropriate schemes).
32
F14. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
33
F15. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
34
1
Section 181 (general interpretation) is amended as follows.
2
In subsection (1)—
a
at the appropriate places insert—
“abolition date” means the day appointed for the commencement of section 15(1) of the Pensions Act 2007;
“HMRC” means the Commissioners for Her Majesty's Revenue and Customs;
b
for the definition of “appropriate scheme certificate” and references to an appropriate scheme, substitute—
“appropriate scheme” and “appropriate scheme certificate” are to be construed in accordance with section 181A;
c
in the definition of “contracting-out certificate” and references to contracted-out scheme and to contracting-out, at the end insert “and section 181A”;
d
for the definition of “money purchase contracted-out scheme” substitute—
“money purchase contracted-out scheme” is to be construed in accordance with section 181A;
3
In subsection (4) (regulations may prescribe the persons who are to be regarded as members or prospective members of an occupational scheme etc.) omit “, 44”.
35
After section 181 insert—
181AInterpretation of references to money purchase contracted-out schemes or appropriate schemes after abolition date
1
This section applies for the interpretation of this Act on and after the abolition date.
2
An occupational pension scheme was a money purchase contracted-out scheme at a time before the abolition date if, at that time, the scheme was contracted-out by virtue of satisfying section 9(3) (as it then had effect).
3
A money purchase contracted-out scheme was, at a time before the abolition date, a contracted-out scheme in relation to an earner's employment if it was, at that time, specified in a contracting-out certificate in relation to that employment; and references to the contracting-out of a scheme are, in relation to a money purchase contracted-out scheme, references to its inclusion in such a certificate.
4
Any reference to a contracting-out certificate is, in relation to a money purchase contracted-out scheme, a reference to a certificate issued by virtue of section 7, as it had effect before the abolition date, in relation to the employment of an earner in employed earner's employment which was contracted-out by reference to that scheme.
5
Any certificate so issued that was, at a time before the abolition date, in force in respect of an employed earner's employment is to be taken as conclusive that the employment was, at that time, contracted-out employment.
6
A personal pension scheme was an appropriate scheme at a time before the abolition date if, at that time, there was in force a certificate issued under section 7(1)(b) (as it then had effect) stating that the scheme was an appropriate scheme; and “appropriate scheme certificate” means such a certificate.
7
Any appropriate scheme certificate in force in relation to a scheme at any time before the abolition date is to be taken as conclusive that the scheme was, at that time, an appropriate scheme.
Pensions Act 1995 (c. 26)
36
F16. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Welfare Reform and Pensions Act 1999 (c. 30)
37
In section 1 of the Welfare Reform and Pensions Act 1999 (meaning of “stakeholder pension scheme”)—
a
in subsection (1) in paragraph (a), for “(10)” substitute “
(9)
”
;
b
omit subsection (10) (stakeholder pension scheme must be contracted-out).
38
In section 2 of that Act (registration of stakeholder pension schemes) in subsection (2)
(when Authority to register schemes) in paragraph (b)(i), for “to (10)” substitute “
to (9)
”
.
39
Omit section 7 of that Act (reduced rates of contributions for money purchase contracted-out schemes and appropriate personal pension schemes etc.: power to specify different percentages).
40
F17. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pensions Act 2004 (c. 35)
41
In section 257 of the Pensions Act 2004 (conditions for pension protection on transfer of employment) omit subsection (7) (minimum payments made under contracted-out money purchase scheme to be disregarded).
Part 2Further amendments
Social Security Contributions and Benefits Act 1992 (c. 4)
I142
I51
Section 4C of the SSCBA (power to make provision in consequence of provision made by or by virtue of section 4B(2) etc.) is amended as follows.
I62
In subsection (2) (purposes for which regulations may be made) omit paragraph (d) (purposes relating to minimum payments).
3
In subsection (5) (matters in respect of which regulations may have retrospective effect)—
a
in paragraph (b) (amount of rebate under section 41(1D) or 42A(2C) of the Pension Schemes Act 1993 (c. 48)) omit “or 42A(2C)”;
I6b
omit paragraphs (g) and (h) (liability to make, and amount of, minimum payments);
c
omit paragraphs (i) and (j) (liability to make, and amount of, payments under section 42A(3) of that Act or minimum contributions).
43
In section 8 of the SSCBA (calculation of primary Class 1 contributions) in subsection (3)
(provisions to which calculation is subject) in paragraph (c), for “sections 41 and 42A” substitute “
section 41
”
.
44
In section 9 of the SSCBA (calculation of secondary Class 1 contributions) in subsection (3)
(provisions to which calculation is subject) in paragraph (c), for “sections 41 and 42A” substitute “
section 41
”
.
45
1
In Schedule 1 to the SSCBA (supplementary provisions relating to contributions of Classes 1, 1A, 1B, 2 and 3) paragraph 1 (Class 1 contributions where earner is in more than one employment) is amended as follows.
2
In sub-paragraph (3) (determination of amount of primary Class 1 contributions where aggregate earnings include earnings from contracted-out employment)—
a
omit paragraphs (a) and (b);
b
in paragraph (c), for sub-paragraphs (i) and (ii) substitute “
to such part of the aggregated earnings attributable to COSRS service as exceeds the current primary threshold and does not exceed the current upper earnings limit
”
;
c
in paragraph (d), for “part or parts attributable to COMPS or COSRS service” substitute “
part attributable to COSRS service
”
.
3
In sub-paragraph (6) (determination of amount of secondary Class 1 contributions where aggregate earnings include earnings from contracted-out employment) omit paragraphs (a) and (b).
4
In sub-paragraph (9) (interpretation) omit the definition of “COMPS service”.
Pension Schemes Act 1993 (c. 48)
I2I746
The Pension Schemes Act 1993 has effect subject to the following amendments.
I847
In section 8 (meaning of, among other things, “minimum payment”) omit subsection (3) (regulations may make provision about manner in which minimum payments to be made etc.).
48
In section 20 (transfer of accrued rights) in subsection (3) (regulations may provide for certain provisions to have effect subject to modifications) omit “and 43 to 45”.
I949
Omit section 31 (investment and resources of scheme).
50
In section 40 (scope of Chapter 2 of Part 3) omit paragraph (b) (which relates to contributions to be paid by HMRC in respect of members of money purchase contracted-out schemes or of appropriate personal pension schemes).
51
Omit section 42A (reduced rates of contributions, and rebates, for members of money purchase contracted-out schemes etc.).
52
Omit section 43 (payment of minimum contributions to personal pension schemes).
53
Omit section 45 (amount of minimum contributions).
I1054
Omit section 45B (money purchase and personal pension schemes: verification of ages).
55
F18. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
56
In section 164 (Crown employment) in subsection (2) (employees of Crown to be treated as employed earners for certain purposes) F19omit paragraph (b).
57
1
Section 177 (general financial arrangements) is amended as follows.
2
In subsection (2) (amounts to be paid out of the National Insurance Fund)—
a
in paragraph (za) (payments by HMRC under various provisions) omit “or section 42A(2C) or (3)”;
b
omit paragraph (a) (minimum contributions paid by HMRC under section 43).
3
In subsection (7) (amounts to be paid into National Insurance Fund) in paragraph (a), omit “, 42A(2D) or (5) or 43(5) or (6)”.
58
1
Section 181 (interpretation) is amended as follows.
2
In subsection (1), omit the definition of “minimum contributions”.
3
In subsection (4) (regulations may prescribe the persons who are to be regarded as members or prospective members of an occupational scheme etc.) omit “, 43”.
I359
I111
Schedule 2 (certification regulations) is amended as follows.
2
In Part 1 (occupational pension schemes) in paragraph 4 (regulations may modify certain provisions of Part 3 in cases where person employed in two or more employments) in sub-paragraph (1), for “and 66 to 68” substitute “
, 67 and 68
”
.
I123
4
In paragraph 6 (schemes covering different employers) in sub-paragraph (1)
(regulations may modify certain provisions in cases where earner under different employers qualifies for benefits of same occupational pension scheme) for “and 66 to 68” substitute “
, 67 and 68
”
.
I460
1
Paragraph 2 of Schedule 4 (priority in bankruptcy etc.: employer's contributions to occupational pension scheme) is amended as follows.
2
Omit sub-paragraphs (2) and (3) (sums owed on account of employer's minimum payments to a money purchase contracted-out scheme).
3
In sub-paragraph (3A) (definition of “the appropriate amount”)—
a
in the opening words, omit “or (3)”;
b
in paragraph (a), omit “or (2) (as the case may be)”.
4
In sub-paragraph (5) (interpretation)—
a
omit the definition of “appropriate flat-rate percentage”;
F21b
in the definition of “the percentage for contributing earners”—
i
omit the words “(a) in relation to a salary related contracted-out scheme,”;
ii
omit paragraph (b) and the preceding “and”;
c
in the definition of “the percentage for non-contributing earners”—
i
omit the words “(a) in relation to a salary related contracted-out scheme,”;
ii
omit paragraph (b) and the preceding “and”.
Part 3Savings
Issue and cancellation etc. of certificates for periods before the abolition date
61
Nothing in the relevant amendments and repeals affects the continued operation of any regulations in force under section 7(1) and (7) of the PSA 1993 (issue of certificates) immediately before the abolition date in relation to the issue of a certificate having effect for a period before F226 April 2012.
62
1
Nothing in the relevant amendments and repeals affects the continued operation of section 34 of the PSA 1993 (cancellation, variation, surrender and refusal of certificates), or any regulations in force under it immediately before F236 April 2012, for the purposes of a retrospective act.
2
In sub-paragraph (1) “a retrospective act” means the cancellation, variation, surrender or refusal of a certificate, or the issue of an amended certificate, where—
a
the certificate was in force for a period beginning before F246 April 2012 (or, in the case of a refusal of a certificate, would have related to such a period if it had been issued), and
b
the cancellation, variation, surrender, refusal or issue—
i
is made after F256 April 2012, but
ii
has effect from a date before that date.
3
An amended certificate issued by virtue of this paragraph must provide for it to cease to have effect as from F266 April 2012.
4
In this paragraph and paragraph 61 “a certificate” means an appropriate scheme certificate or a contracting-out certificate in respect of a money purchase contracted-out scheme, and each of those terms has the meaning given by section 181(1) of the PSA 1993.
63
Nothing in the relevant amendments and repeals affects the continued operation of section 164(2) of the PSA 1993 (persons employed by or under the Crown to be treated as employed earners for the purposes of certain provisions) in relation to the provisions of that Act saved by paragraphs 61 and 62.
64
Nothing in the relevant amendments and repeals affects the continued operation of section 177(3)(b)(ii) of the PSA 1993 (administrative expenses of the Secretary of State, other than those arising out of certain provisions, to be paid out of the National Insurance Fund into the Consolidated Fund) in relation to the estimated administrative expenses of the Secretary of State in carrying into effect the provisions of that Act saved by paragraphs 61 and 62.
Determination of question whether scheme was appropriate scheme
65
Nothing in the relevant amendments and repeals affects the continued operation of any regulations in force under section 7(6) of the PSA 1993 (issue of certificates) immediately before F276 April 2012.
Preservation of earner's chosen scheme
66
1
Nothing in the relevant amendments and repeals—
a
prevents the giving of a preceding tax year notice, or
b
otherwise affects the operation of section 44 of the PSA 1993 in relation to such a notice.
2
Interpretation etc.
67
1
In this Part of this Schedule—
F29...
“the PSA 1993” means the Pension Schemes Act 1993 (c. 48);
“the relevant amendments and repeals” means—
- a
the amendments and repeals made by Part 1 of this Schedule, and
- b
the consequential repeals and revocations in Part 6 of Schedule 7.
- a
2
Nothing in this Part of this Schedule is to be read as affecting the generality of section 16 of the Interpretation Act 1978 (c. 30) (general savings).