A Bill to make provision about pension schemes; and for connected purposes.
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Available Versions
| Date | Debate |
|---|---|
| Thursday 11th September 2025 | Committee stage: 8th sitting |
| Thursday 11th September 2025 | Committee stage: 7th sitting |
| Tuesday 9th September 2025 | Committee stage: 6th sitting |
| Tuesday 9th September 2025 | Committee stage: 5th sitting |
| Thursday 4th September 2025 | Committee stage: 4th sitting |
| Thursday 4th September 2025 | Committee stage: 3rd sitting |
| Tuesday 2nd September 2025 | Committee stage: 1st sitting |
| Tuesday 2nd September 2025 | Committee stage: 2nd sitting |
Relevant Documents
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Page 1
Part 1
Defined benefit pensions
Chapter 1
Local government pension schemes
Source Bill 255 EN 2024-25
48. Clause 1 contains provisions relating to the use of asset pool companies in pension schemes for local government workers in England and Wales (currently the Local Government Pension Scheme in England and Wales, LGPS).
49. Subsection (1) allows for scheme regulations for the LGPS to include provision about asset pool companies and the participation of LGPS administering authorities, who are scheme managers for the purpose of the LGPS, in asset pool companies.
50. Subsection (2) sets out what may be included in the regulations made under subsection 1. Regulations may: specify things that administering authorities must do or must not do; allow the Secretary of State, in prescribed circumstances, to require an LGPS administering authority to participate in a particular asset pool or cease to participate in a particular asset pool; specify things that asset pool companies must do or must not do; allow or require the Secretary of State to issue guidance to asset pool companies; allow the Secretary of State to direct an asset pool company to comply with guidance, in the event that the Secretary of State is satisfied that it is failing to do so without good reason, as to the manner in which it exercises its investment functions, and to specify decisions about its investment management activities that it must or must not take.
51. Subsection (3) sets out definitions of terms used for the purposes of subsection (2).
52. Subsection (4) sets out that regulations pertaining to section 1(2)(a) may, among other things: require administering authorities to participate in an asset pool company and for the assets for which they are responsible to be managed by that asset pool company; prohibit administering authorities from participating in more than one asset pool company at any one time (subject to any transitional arrangements that may apply where an administering authority decides to stop participating in one asset pool company and begin participating in another); require administering authorities to take steps to ensure their asset pool company is authorised by the Financial Conduct Authority (FCA).
53. Subsection (5) sets out that regulations pertaining to section 1(2)(c) may include a requirement for asset pool companies to take steps to be authorised by the FCA.
54. Subsection (6) clarifies that, for the purposes of Chapter 1, the activities for which regulations may require an asset pool company to secure FCA authorisation are those of a kind that an asset pool company could carry out and would also require FCA authorisation.
55. Subsection (7) clarifies that, for the purpose of Chapter 1, asset pool companies are defined as companies registered in England and Wales that are established to manage the funds and other assets of its participating administering authorities, and that make and manage investments on behalf of those administering authorities either directly or through one or more collective investment vehicles. This subsection also clarifies that administering authorities participate in an asset pool company either by being a shareholder of the company, or by contracting with the company as a client.
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Source Bill 255 EN 2024-25
56. Clause 2 contains provisions relating to asset management in the LGPS, including setting out the respective roles of administering authorities and asset pool companies in setting and implementing an investment strategy for LGPS funds and assets.
57. Subsection (1) requires scheme regulations made under the Public Service Pensions Act 2013 for the LGPS for England and Wales which make provision about asset pool companies to include provision about the management of LGPS funds and assets.
58. Subsection (2) stipulates that these regulations must require (among other things): that each administering authority sets, publishes and maintains an investment strategy; that the funds and assets for which an administering authority is responsible (apart from where this is money needed for making payments under the scheme) are held by the asset pool company in which that administering authority participates, subject to any transitional arrangements permitted by regulations, and properly managed for the purposes of the asset pool company implementing the investment strategy set by the administering authority; that administering authorities co-operate with strategic authorities (defined for these purposes in subsection (5) as the Greater London Authority, Combined Authorities, Combined County Authorities, and (in areas where there are none of these authorities) prescribed authorities in England, and Corporate Joint Committees in Wales) in order to identify and develop investment opportunities.
59. Subsection (3) relates to the formulation of investment strategies by administering authorities, and specifies that the regulations that may be made under subsection (1) include provision about where administering authorities must or may take advice from when developing their investment strategies, and the matters that must or may be covered by those investment strategies.
60. Subsection (4) further clarifies that the matters that must or may be covered by an investment strategy include the approach of the administering authority to responsible investment and to local investments, and a strategic asset allocation or a target range for growth and income.
61. Subsection (5) defines the terms investment strategy, local investments, and strategic authorities for the purposes of this clause.
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Source Bill 255 EN 2024-25
62. This clause modifies the Procurement Act 2023, to ensure that in respect of investment management activities undertaken by LGPS asset pools in England and Wales the vertical arrangements exemptions will be met, by providing that: non-shareholder administering authorities will be considered a "parent undertaking" of the asset pool company for the purposes of paragraph 2(2)(a) of Schedule 2 to the Act; and the "turnover test" in paragraph 2(2) of Schedule 2 to the Act is satisfied as long as 80% of a pool's activity is undertaken for the benefit of any LGPS administering authority, rather than solely their shareholder authorities.
Source Bill 255 EN 2024-25
63. Clause 4 relates to the carrying out of governance reviews of LGPS administering authorities.
64. Subsection (1) provides that scheme regulations for the LGPS for England and Wales may include provision for: governance reviews to be carried out of individual administering authorities on a periodic or ad hoc basis; the Secretary of State to issue guidance relating to the carrying out of governance reviews; how the Secretary of State may respond to a report arising from a governance review.
65. Subsection (2) clarifies terms in subsection (1). A governance review is a review of an administering authority's governance of the scheme and of their performance over a set period. A periodic governance review is required to take place within a period set by scheme regulations, either from the commencement of the provision or from the completion of a previous governance review. An ad hoc governance review is required by scheme regulations to take place at the direction of the Secretary of State, if regulations have conferred the power to give such a direction to the Secretary of State, and in prescribed circumstances.
66. Subsection (3) provides that the period of review for the first governance review of an administering authority may begin prior to the commencement of the regulations providing for governance reviews.
67. Subsection (4) requires that scheme regulations that provide for governance reviews must include provision for governance reviews to be carried out independently of the administering authority under review and of the Secretary of State, but that the administering authority in question must arrange and pay for the review. The scheme regulations must also include provision requiring the person who carries out the review to prepare a report and send a copy to the Secretary of State and the relevant administering authority as soon as possible after the review has taken place, and to publish the report.
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Source Bill 255 EN 2024-25
68. The Public Service Pensions Act 2013 (PSPA 2013) confers powers on the Secretary of State to make regulations about the administration, management and winding-up of any pension funds. Clause 5 amends Schedule 3 of the PSPA 2013 to clarify that, in the case of the LGPS, the Secretary of State's powers also include the power to make regulations about the merger of two or more LGPS pension funds. This includes including compulsory merger.
Source Bill 255 EN 2024-25
69. The powers and duties to make regulations under this Chapter are exercisable as scheme regulations under the Public Service Pensions Act 2013. This clause sets out the amendments to the 2013 Act required to ensure these powers operate effectively. Subsection (2) clarifies that the power to make scheme regulations under the Public Service Pensions Act 2013 is subject to the provisions in this bill, and to ensure that scheme regulations can include any consequential, supplementary, incidental or transitional provision which is necessary as a result of this Bill.
70. Subsection (3) clarifies that the requirement to consult on scheme regulations made under provisions in this Bill, which must be satisfied before the regulations can be made under section 21 of the Public Service Pensions Act 2013, can be satisfied by consultation carried out before or after this bill comes into force.
Source Bill 255 EN 2024-25
71. This clause defines the terms used in this Chapter of the Bill for the purposes of interpreting the provisions.
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Chapter 2
Powers to pay surplus to employer
Source Bill 255 EN 2024-25
72. Clause 8 allows trustees of DB schemes to modify their schemes to provide for payment of surplus to the employer, both where the scheme has an existing power to pay surplus and where it does not. Subsection (1) of Clause 8 inserts a new section 36B in the Pensions Act 1995. Section 36B(1) enables trustees to pass a resolution to modify their scheme in accordance with sections 36B(2) and 36B(3). Section 36B(2) enables trustees to modify the scheme to include a power to make surplus payments to the employer, where no such power currently exists. Where schemes contain a power to make a surplus payment to the employer, but restrictions apply to this power, section 36B(3) enables trustees to remove or relax those restrictions.
73. Section 36B(4) provides that new section 36B does not apply to schemes in windup or to other schemes that may be prescribed in regulations. These regulations are subject to the negative parliamentary procedure.
74. Section 251 of the Pensions Act 2004 required schemes to have passed a resolution before 2016 to allow surplus sharing with an employer. Section 36B(5) clarifies that the power at section 36B(3) can be used to remove or relax restrictions imposed by a resolution passed under section 251 or section 36B.
75. Section 36B(6) refers trustees to the conditions placed on surplus payments by section 37 of the Pensions Act 1995. This is to reduce the chance of trustees placing restrictions on their scheme's power under section 36B(2) which could contravene the conditions set out in section 37.
76. Subsection (2) of Clause 8 removes section 251 from the Pensions Act 2004, with the effect that trustees will no longer need to have passed this resolution before 2016 to make a surplus payment to the employer. Any resolutions previously passed under section 251 will not lose their effect under this change (subsection (3)).
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Source Bill 255 EN 2024-25
77. Clause 9 provides for restrictions as to how trustees of trust-based occupational pension schemes can share surplus with employers, replacing some of the existing restrictions provided for in section 37 of the Pensions Act 1995.
78. Subsection (2) of Clause 9 inserts new subsections (2A) to (2D) into section 37 of the Pensions Act 1995. The existing requirements of sections 37(3) and 37(4) will be replaced by these new provisions.
79. New section 37(2A) enables the Secretary of State to set conditions for paying surplus in regulations. These regulations are subject to the affirmative parliamentary procedure on first use and the negative procedure thereafter.
80. New section 37(2B) details four requirements that must be set out in regulations for trustees to be able to make a surplus payment to an employer. These relate to the satisfaction of the scheme actuary that certain conditions are met, the relevant funding basis (or bases) for the actuary's analysis, the provision of a certificate by the scheme actuary before a surplus payment can be made, and the notification of scheme members before a surplus payment can be made.
81. New section 37(2C) covers further requirements that may be set out in regulations. These relate to other conditions that must be met, further detail regarding the certificates given by the actuary, the employer's consent to a payment, and the prohibition of surplus payments from superfunds in all circumstances.
82. In particular, new section 37(2C)(d) specifies that regulations may prevent payments from surplus in superfund schemes either in all circumstances or in the absence of consent from the Pensions Regulator. Regulations might prohibit surplus payments from superfunds, for example, if surplus regulations were to come into force at an earlier stage than superfunds regulations.
83. New section 37(2D) provides that where a scheme is subject to a freezing order (made by the Pensions Regulator, under section 23 of the Pensions Act 2004), a surplus payment cannot be made to an employer. This replaces the provision under existing legislation at section 37(3)(f) of the Pensions Act 1995, which is being repealed under this legislation.
84. Subsection (3) of Clause 9 repeals the existing subsections (3) and (4) of section 37 of the Pensions Act 1995. These sections will be replaced by the new sections detailed above (sections 37(2A) to 37(2D)).
85. Subsection (4) of Clause 9 makes a minor amendment to section 37(6)(a) of the Pensions Act 1995 as a result of the insertion of section 37(2A) and the removal of sections 37(3) and 37(4).
86. Subsection (5) of Clause 9 makes minor amendments to section 37(8) of the Pensions Act 1995 to provide that regulations may disapply or modify section 37 to certain schemes in all circumstances. These regulations remain subject to the negative parliamentary procedure.
87. Subsection (6) of Clause 9 makes a minor amendment to section 76 of the Pensions Act 1995 to ensure the power to disapply and modify that section is consistent with the equivalent power in section 37.
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Part 2
Defined contribution pensions
Chapter 1
Value for money
Source Bill 255 EN 2024-25
88. This clause grants the Secretary of State the power to make regulations setting out the details of the VFM framework and specifying which pension schemes and pensions arrangements fall within scope of VFM.
89. Subsections (2) and (3) contains details about the framework that the VFM regulations are intended to create and the actions regulations will require trustees and managers of the specified schemes and arrangements to undertake. This includes the requirement to produce, collate, publish and share certain data with prescribed persons about the performance of arrangements that the trustees or managers operate, conduct an assessment of this performance and notify the Pensions Regulator of any relevant publications.
90. Subsection (4) requires trustees and managers responsible for undertaking a VFM assessment to assign a VFM rating to each arrangement assessed and inform the regulator of that rating.
91. Subsection (5) provides for regulations to be made specifying how the VFM data metrics, assessments and ratings are to be calculated and the time frames by which they should be done.
92. Subsection (6) requires those responsible for complying with VFM regulations to take account of any guidance issued by the Secretary of State.
93. Subsection (7) requires the Secretary of State to consult with necessary persons before making VFM regulations or issuing guidance.
94. Subsection (8) defines those deemed responsible trustees or managers for VFM in the clauses.
95. Subsections (9), (10) and (11) specify that VFM regulations are subject to the affirmative parliamentary procedure, apart from regulations made relating to metric data under paragraph (2)(c) which are subject to the negative parliamentary procedure after the first use.
96. Subsection (12) provides a definition for "relevant pension scheme" within this Chapter.
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Source Bill 255 EN 2024-25
97. This clause provides for regulations to mandate public disclosure of VFM data metrics. It enables regulations to set out the information trustees and managers will be required to publish or share. This will create consistent, transparent and comparable VFM data across those schemes and arrangements covered by the regulations.
98. Subsection (1) lists examples of the categories of information to be disclosed.
99. Subsection (2) allows regulations to specify the timeframes for, and the form in which, the VFM metric data is to be published and shared. It requires trustees or managers to inform the Pensions Regulator that the information has been published and where it has been published. Paragraph (2) (d) provides for an electronic data base to be made available for the publication of data.
100. Subsection (3) allows regulations to require the Pensions Regulator to determine the form in which the metric data must be disclosed and either publish or share, with the Secretary of State and responsible trustees and managers, full details of the form they have specified.
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Source Bill 255 EN 2024-25
101. This clause grants the Secretary of State the power to make regulations setting out the requirements on trustees or managers when undertaking a VFM assessment, the data metrics to be used, the comparisons to be made, the VFM ratings that are available to be assigned and the criteria for assigning a particular rating.
102. Paragraphs (1) (b) to (e) provide for regulations to set out the specific process required to undertake a VFM assessment, the schemes which the trustees or managers should select to compare their scheme or arrangement metrics against, and the factors which must be considered when selecting comparators. Additionally, paragraph 12(1)(a)(ii) provides that regulations may require trustees and managers to compare the performance of their scheme or arrangement against benchmarks, to be set either by the Secretary of State or by the Pensions Regulator.
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Source Bill 255 EN 2024-25
103. This clause makes provision for regulations to require the development, issuing and reporting of member satisfaction surveys and the inclusion of these as part of the VFM data metrics.
104. Subsection (2) provides definitions for key terms included in this clause.
Source Bill 255 EN 2024-25
105. This clause requires trustees to assign VFM ratings and defines the rating structure and the conditions for when each rating should be assigned.
106. Subsection (1) provides that VFM ratings are to be of three types: a ",fully delivering" rating, a "not delivering" rating and an "intermediate" rating (which VFM regulations may subdivide into further categories). If an arrangement scores a not delivering or intermediate rating then certain consequences will follow. These consequences are set out in the case of a not delivering rating in clause 16, and in the case of an intermediate rating, will be set out in VFM regulations, pursuant to clause 15.
107. Subsections (2) to (5) make provision for regulations to specify gradation within the ratings, how these are to be referred to and the conditions for assigning these.
108. Subsections (6) and (7) define an "action plan", the preparation of which is intended to be a consequence of either a "not delivering" rating or some types of ",intermediate" rating. Subsection (8) provides that regulations may make further provision about the meaning of action plan.
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Source Bill 255 EN 2024-25
109. Subsection (2) provides details of the various actions that regulations could define as consequences under an intermediate rating. These include preparation of a plan to be shared with the Pensions Regulator concerning how the scheme or arrangement will improve performance with regards to providing value for money, inform employers making active contributions into the scheme or arrangement of its VFM rating and the actions it will take to improve, and close the scheme or arrangement to new employers until relevant value is demonstrated.
110. Subsection (3) provides for regulations to determine what is to be included in the plan at subsection (2) and other functions required of the Pensions Regulator when schemes are assigned an intermediate rating.
111. Subsection (4) provides definitions for key terms included in this clause.
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Source Bill 255 EN 2024-25
112. This clause sets out consequences for arrangements rated as ",not delivering" under the VFM regime, meaning that the arrangement has been assessed as not providing value for money.
113. Subsection (1) provides details of the various actions that trustees or managers of arrangements rated ",not delivering" must undertake. These include: prepare and provide an action plan to the Regulator, inform participating employers of the VFM rating and the actions the trustees consider appropriate for the employer to consider, close the scheme or arrangement to new employers and take other steps prescribed in regulations as consequences of a "not delivering" rating.
114. Subsections (2), (3) and (4) provide for the Pensions Regulator to initiate a "transfer solution" process, which will permit it to require trustees and members to transfer the accrued rights and benefits to another scheme or arrangement.
115. Subsection (5) provides for regulations to allow the Pension Regulator (where it deems appropriate after an application from trustees) not to close the scheme / arrangement to new members.
116. Subsection (6) provides definitions of "employer" and "participating employer" in the context of the VFM clauses.
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Source Bill 255 EN 2024-25
117. This clause grants the Secretary of State the power to make regulations in relation to compliance with the VFM requirements as set out in regulations.
118. Subsection (2) defines what is meant by value for money provisions within this clause.
119. Subsection (3) provides for The Pensions Regulator to issue compliance and penalty notices to trustees and managers and third parties in breach of their VFM obligations.
120. Subsection (3)(d) provides for The Pensions Regulator to refer to the First-tier Tribunal or Upper Tribunal in respect of this issue of a penalty notice or the amount of a penalty.
121. Subsection (3)(e) provides for other functions to be required of The Pensions Regulator to ensure compliance with VFM obligations.
122. Subsections (4) and (5) provide for regulations to be made determining the amount of a penalty and specify the maximum amount of a penalty that can be imposed. This is £10,000 in the case where the recipient is an individual, and £100,000 in any other case.
123. Subsection (6) enables the Pensions Regulator to withdraw a penalty notice if it considers it appropriate to do so.
124. Subsection (7) and (8) provides for regulations to be made allowing the Pension Regulator to challenge an incorrect VFM rating and provide a direction notice to determine the trustees next course of action, and their reasoning for that determination.
125. Subsections (10) to (12) make amendments to the Pensions Act 1995 and the Pensions Act 2004 in relation to the appointment of trustees, powers to wind up schemes and issuing improvement notices.
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Source Bill 255 EN 2024-25
126. This clause sets out how the Chapter applies to pension schemes managed by or on behalf of the Crown and persons employed by or under the Crown.
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Source Bill 255 EN 2024-25
127. This sets out how wording used within the VFM clauses is to be interpreted.
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Chapter 2
Consolidation of small dormant pension pots
Power to make small pots regulations
Source Bill 255 EN 2024-25
128. This clause creates an overarching power for the Secretary of State to make regulations to implement the small dormant pension pots measure and defines the pension pots that will be eligible for automatic consolidation under the measure.
129. Subsection (1) enables the Secretary of State to make regulations to ensure that small dormant pension pots are held by consolidator pension schemes. The word ",held" acknowledges that, under the consolidation process an eligible pot may be transferred from an automatic-enrolment scheme to a consolidator, but it may also remain with the automatic-enrolment scheme if that scheme is also a consolidator. Subsection (1)(b) explains that small dormant pots must also be held in a consolidator arrangement under the consolidator scheme.
130. Subsection (2) defines a small dormant pension pot by value. A pension pot that is valued at £1,000 or less (but not nil) will be in scope for automatic consolidation.
131. Subsection (3) outlines two conditions to be met for a pension pot to be considered a dormant pot. The first confirms that the length of time that a pension pot has not had contributions paid into it may be set at a period of at least 12 months. The second condition is that the individual for whom the pot is held has made no active investment decision in respect of the pension pot, other than such decisions as may be prescribed.
132. Subsection (4) explains that, for pension pots created before this clause 20 comes into force, regulations can set the required period of dormancy to begin any time after this clause comes into force. As an example, if the period were to begin the day after this clause comes into force, any pension pot in existence at this time would first meet the dormancy requirement in subsection (3) (a) twelve (or more) months after this date; any lack of activity in respect of the pot before the clause comes into force would not be counted.
133. Subsection (5) confirms that small pots regulations will be made under the affirmative procedure the first time they are made, and then subsequently will be made under the negative procedure. This is unless such regulations are made relating to clauses 21(1), 22(1), 24(1) or they amend or repeal provisions contained in an Act, in which case the affirmative procedure will always be used.
Transfers
Source Bill 255 EN 2024-25
134. This clause outlines how a small pots data platform will act as an intermediary between the ceding pension schemes and consolidator pension schemes to enable the transfer of small dormant pots. It also establishes that the person who will be responsible for making determinations will be specified in regulations.
135. Subsection (1) sets out that small pots regulations must require a designated person to create a main suggestion (the "default proposal") and at least one other option ("alternative proposals") for what to do with each small dormant pot held by ceding schemes. That person must also then inform the pension schemes that holds the pots about these proposals. This requirement is subject to subsection (3).
136. Subsection (2) defines the term "proposal". This means a proposal that a small dormant pot should be transferred to a specific consolidator scheme. If this scheme has more than one potential arrangement under it, the proposal must also specify which particular arrangement within the scheme the pot should be placed into.
137. Subsection (3) refers to the situation in which a small dormant pot that contains money or assets that have ( or derive from money or assets that have) already been through the consolidation process is held by a consolidator scheme. If this consolidator scheme is also an automatic-enrolment scheme, to prevent pots that have already been consolidated from going through the process again, consolidation proposals are not required to be made in respect of these pots. The concept described in subsection (3) (b) is explained further in the explanatory notes for clause 27 (7) below.
138. Subsection (4) provides that the person responsible for the proposals and notifications in subsection (1) may be a body corporate established under the small pots regulations.
139. Subsection (5) states that the person responsible for the determinations and notifications in subsection (1) is known as "the small pots data platform operator".
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140. This clause sets out the duties on ceding schemes in relation to transfer notices, which are communications that inform individuals of the consolidation proposals in relation to their small dormant pots. It should be noted that the default proposal will not always involve a transfer to a different scheme; if the pot is already held by an automatic-enrolment scheme that is also a consolidator, the default proposal may be that it remains in the same scheme, either in its current arrangement or a different authorised one.
141. Subsection (1) confirms that regulations must place a requirement on trustees and managers of pension schemes to prepare transfer notices for each of their small dormant pots. These notices must then be sent to the member for whom the relevant pot is held.
142. Subsection (2) states that small pots regulations must require transfer notices to comply with the provisions in subsections (3) to (5).
143. Subsection (3)(a) states that the transfer notice must include the default proposal made by the small pots data platform operator in clause 21(1); subsection 3(b) states that the transfer notice must also include the alternative proposal(s). Subsection (3)(c) explains that the transfer notice must state that if the member does not respond to the transfer notice, the default proposal will be implemented.
144. Subsection (3)(d) explains that the transfer notice must invite members to respond to the transfer notice if they are not content with the default proposal, and specify in their response either that they want to choose one of the alternative proposals, or that they wish to opt out of the process.
145. Subsection (4) explains that where the consolidator schemes or arrangements listed in the transfer notice require their members to be a party to a contract with the trustees or managers of the scheme, the terms of this contract must be communicated in the transfer notice. This is to alert the individual to the new contract to which they will be subject if the transfer goes ahead.
146. Subsection (5) explains that certain information, as prescribed by regulations, will be required to be included in transfer notices. This information will relate to the pension pot, the auto-enrolment scheme, and the relevant consolidator schemes and arrangements.
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147. This clause sets out the conditions under which a small dormant pension pot will be exempt from automatic consolidation.
148. Subsection (1) explains that a pot will be exempt from consolidation if conditions to be prescribed in regulations are met, and the trustees or managers of the relevant pension scheme determine that it would be in the member's best interests not to transfer their pot. Fir example, if a pot holds a protected pension age (PPA), other legacy benefit, or is held in a scheme that provides for a particular religious or other belief, and there are no consolidator schemes or arrangements that would be complaint with this protection or belief, the trustees or managers may determine that it would not be in a member's best interests to transfer their pot out of this scheme.
149. Subsection (2) enables the trustees or managers of a pension scheme to determine, for example, that consolidation would not be in the best interests of a class of individuals who hold a particular religious or other belief. To simplify trustee or manager decision-making, if they were required to decide whether consolidation is in the best interests of a particular individual, they may determine it is not, based only on their membership of that class.
150. Subsection (3) confirms that regulations may include further provision for how a determination on whether a transfer would be in a member's best interests is to be made.
Source Bill 255 EN 2024-25
151. This clause sets out the duties on ceding schemes regarding implementing the proposals in the transfer notice and communicating with their members. It should be noted that the default proposal for consolidation of a small dormant pot will not always involve a transfer. It may be that a pot is currently held by an auto-enrolment scheme which is also a consolidator scheme, in which case the small pots data platform operator may propose for the pot to remain in its current scheme or remain in its current scheme but be held in a different authorised arrangement.
152. Subsection (1) confirms that the regulations must include a duty on the trustees or managers of ceding schemes to implement the proposals contained in their transfer notices in accordance with the provisions in this clause.
153. Subsection (2) confirms that subsection (1) will not apply if the trustees or managers of the scheme have received a response to the transfer notice from the member confirming that they wish to opt out of the automatic consolidation process.
154. Subsection (3) outlines that the regulations must ensure that if the trustees or managers have not received a response to the transfer notice, and the default proposal involves the transfer of the pot, then the trustees or managers will be required to transfer the pot to the proposed scheme.
155. Subsection (4) outlines that the regulations must ensure that if the member responds to the transfer notice and selects an alternative proposal involving the transfer of the pot to a consolidator scheme, the pot must be transferred to that scheme.
156. Subsection (5) outlines that the regulations must ensure that if the trustees or managers of the scheme do not receive a response to the transfer notice, and the default proposal involves the pot being held in a specific arrangement under a consolidator, the pot is to be held in that arrangement.
157. Subsection (6) outlines that the regulations must ensure that if the member responds to the transfer notice and selects an alternative proposal involving the pot being held by a specific arrangement in a consolidator scheme, the pot is to be held in that arrangement.
158. Subsection (7) explains that the trustees or managers of a scheme may transfer a dormant small pot, or change the arrangement under which it is held, even if this breach a term if the scheme, with any such breach to be disregarded for all purposes. This confirms that trustees or managers will not be penalised for doing this.
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159. This clause outlines the consequences for the individual in relation to the transfer of a small dormant pot, both between different pension schemes and different arrangements, under small pots regulations.
160. Subsection (1) explains that subsections (2) and (3) cover the consequences of transferring a pot to a different scheme.
161. Subsection (2) confirms that the individual will become a member of the receiving pension scheme and will acquire the right and become subject to the obligations, associated with membership of that scheme.
162. Subsection (3) explains that, if being a member of the receiving scheme requires the members to be party to a contract with the trustees or managers, a contract is deemed to have been entered into on transfer of the pot to the receiving scheme. The terms of this contract are those that were communicated in the transfer notice.
163. Subsection (4) explains that subsections (5) and (6) covers the consequences of transferring a pot to a different arrangement. This change of arrangement could be because of the pot being transferred to a different pension scheme, but it also could be that the pot is to remain in the same pension scheme but moved to a different arrangement.
164. Subsection (5) confirms that the individual will become a member of the receiving arrangement, and will acquire the rights, and become subject to the obligations, associated with membership of that arrangement.
165. Subsection (6) explains that, if being a member of the receiving arrangement requires the members to be party to a contract with the trustees or managers, a contract is deemed to have been entered into on transfer of the pot to the receiving arrangement. The terms
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Authorisation
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Supplementary
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Interpretation etc
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Amendments of other Acts
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Chapter 3
Scale and asset allocation
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Chapter 4
FCA-regulated pension schemes: contractual override
Part 7A
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Chapter 5
Default pension benefit solutions
Page 56
Page 57
Page 58
Page 59
Page 60
Page 61
Page 62
Page 63
Part 3
Superfunds
Chapter 1
Introductory
Page 64
Page 65
Chapter 2
Authorisation of superfunds
Page 66
Page 67
Chapter 3
Approval of superfund transfers
Page 68
Page 69
Chapter 4
Ongoing requirements of operating superfunds
Governance and organisation
Page 70
Page 71
Funding and investment
Page 72
Page 73
Page 74
Page 75
Approval and certification of key personnel
Page 76
Page 77
Page 78
Information and reporting
Page 79
Page 80
Chapter 5
Events of concern
Page 81
Page 82
Page 83
Page 84
provision
Page 85
Page 86
Page 87
Chapter 6
General provision and interpretation
to superfund schemes
Page 88
Page 89
Page 90
Page 91
Part 4
Miscellaneous
Page 92
Page 93
Page 94
Page 95
Page 96
Page 97
Part 5
General
Page 98
Page 99
Page 100
Amendments of Pensions Act 2004
Page 101
Page 102
Page 103
Page 104
Part 8
Functions under the Pension Schemes Act 2025
No amendments available.