Pension Schemes Bill

Neil Duncan-Jordan Excerpts

Wednesday 3rd December 2025 Commons Chamber

[Steve Darling]

I wholeheartedly agree with my hon. Friend. I am sure that the Pensions Minister is listening. Politics is all about calling out injustice, and my hon. Friend does a good job of that for his constituents.

[Neil Duncan-Jordan (Poole) (Lab)]

I will speak to a number of amendments tabled in my name. I thank the Pensions Minister for discussing them with me yesterday. I look forward to his comments later in the debate.

I spent a number of years as a regional trade union official with responsibility for the local government pension scheme, and I think it is important that we see pensions as a force for social good. My amendments aim therefore to make our occupational pensions more progressive. We should remember that such funds represent the deferred wages of millions of workers, and directing pension funds toward socially beneficial projects is one way in which the Government can rewire our economic model, so that it delivers for ordinary people.

In my view, workers’ money should be invested in sectors such as green technology and social housing—stable, reliable sectors that build a better future for the very people whose contributions fund them. Whether this is done through an expanded National Wealth Fund, which could direct investment into socially useful projects, or some other mechanism, it would clearly boost much-needed growth and GDP. What could be more progressive than using workers’ pension funds to build the council houses we so desperately need? That would be a tremendous step forward which not only ensured a solid investment for the funds, but provided decent homes at affordable rents. I designed new clause 5 to address this issue, and I hope the Minister will do more to encourage schemes to redirect their investments in that way.

Likewise, amendment 3 recognises that the voluntary approach to disinvestment in fossil fuels has not worked. The LGPS currently invests over £16 billion in fossil fuels, while 85% of all pension schemes lack a credible climate action plan. The environmental crisis is the great challenge facing us all. Workers’ wages should not be fuelling the climate catastrophe. Fundamentally, there is no retirement without our environment, and I hope the Government will emphasise that position to trustees more forcefully. We need a commitment from all LGPS schemes and pools to having a five-year plan to end their relationship with these harmful investments.

The overwhelming majority of the public would also be horrified to learn that their savings were invested in illegal wars abroad, such as the genocide in Gaza. We know that over £12 billion of LGPS funds are invested in companies that support the illegal settlements in some way, or produce arms or fuel for fighter jets used in the war. We must ensure that pension funds are not complicit in war crimes and human rights violation, whether in Gaza or elsewhere in the world.

The Minister will have noticed the strong cross-party support for my amendment 2, and I urge him to give a statement in the strongest possible terms that the LGPS should not be involved in funding breaches of international law in any form. I understand that many of the pools have money in tracker funds that are connected to arms companies, but that needs to be challenged. If that means disinvesting from arms manufacturers implicated in these breaches, so be it.

That brings me to the important matter of worker representation. Having a seat at the table is one way in which we can influence how money is invested. That is why it is important that we ensure trade unions have a voice on all future pension boards and committees, as outlined in my amendment 1. There is currently no requirement for worker representation on the boards of LGPS pools; the Government reducing the number of pools to six gives us an ideal opportunity in law to guarantee proper worker representation. Fundamentally, it is vital that the workers who pay into the funds have a fair voice in decisions on how their money is invested. I hope the Minister will begin talks with local government trade unions to see how we can bring that about.

Last week’s budget announcement on the pre-1997 pension indexation was welcome, and many have already quoted that this afternoon, but only those whose schemes were eligible for indexation and are members of the Pension Protection Fund and financial assistance scheme will see the benefit. Hundreds of thousands of retired workers whose pension funds were taken over by other companies, such as Hewlett Packard in the case of some of my constituents, and are still in operation will not be protected as was intended in the Budget for that other group; and the money they put into their company pensions before 1997 will continue to be frozen. I know the Minister recognises that over this period their pensions have become virtually worthless. That is why the Government must put pressure on trustees of all schemes to pay some of their surplus funds and ensure that their former staff get the pensions they deserve.

The Pension Schemes Bill offers a once-in-a-lifetime opportunity to help the environment and society more generally by the way we invest. The £3 trillion in UK pension funds could be used to address the historical transfer of wealth away from ordinary working people toward the wealthiest individuals and corporations in our society. Given that pensions account for 40% of wealth in this country, change must include consideration of how this vast pool can be used to improve the lives of those whose payslips created it. The call to use our money and make pensions more progressive is therefore overwhelming. I look forward to hearing the Minister set out in the strongest possible terms the commitments the Government are making to bring that about.

--- Later in debate ---

Amendments 2 and 3 and new clause 4 relate to what the LGPS should or should not invest in. As hon. Members will all be aware, the Government’s general position is that investment strategies are set locally by each pension fund. Importantly, that includes decisions on how environmental, social and governance issues are to be taken into account. I encourage LGPS authorities to take such matters incredibly seriously, as my hon. Friend the Member for Truro and Falmouth (Jayne Kirkham) did from her own experience.

[Neil Duncan-Jordan]

I want to press the Minister slightly more on the need for UK pension funds not to invest in companies that could be guilty of war crimes and breaking international law. Would he like to reflect on that?

[Torsten Bell]

Specifically on the question of having regard to international law, I emphasise that compliance extends far beyond the LGPS, and it obviously reaches right across Government. That said, the LGPS, as a public sector scheme, has particularly high expectations on responsible investment, and I have heard the points my hon. Friend has made.

The hon. Members for Torbay (Steve Darling), for Horsham (John Milne) and for Stratford-on-Avon (Manuela Perteghella) broadened this debate beyond the LGPS, not least on questions of climate change and the wider social impact of investments. The Department for Work and Pensions is currently conducting a review of the task force on climate-related financial disclosures requirements, and we have also asked the Pensions Regulator to assess the practicalities of transition plans for pension schemes. As I mentioned in my opening remarks, we will also bring forward legislation to clarify that trustees can take systemic factors into account when making their investment decisions. I hope this provides hon. Members with significant reassurance on those points.

The hon. Members for North West Norfolk and for Torbay returned to the issue, which we discussed extensively in Committee and on Second Reading, on the limited reserve or backstop asset allocation power. As I have repeatedly made it clear to this House, we do not currently anticipate it will need to be used. That is precisely because of the industry’s commitment to the Mansion House accord and wider support from the pension industry for greater investment in private assets.

I welcome the recognition of the importance of the pipeline of projects by the hon. Member for Horsham, and I encourage him to make sure that no Liberal Democrat anywhere opposes construction projects—I have seen the leaflets—be they for energy, roads, housing or anything else.

A crucial point was raised in Committee about the importance of monitoring these commitments, and I can confirm that since then the ABI and Pensions UK have committed that they will work together to track progress. I hope that helps answer some of the questions raised in Committee.

The proposals to add to the matters on which the Government must report are, I believe, unnecessary, as any exercise of the power would be subject to a wide range of safeguards—not only the production of a report about the impacts on savers and growth, but a savers’ interest test.

The hon. Member for Stratford-on-Avon spoke powerfully to her new clause 3, as did the hon. Member for Mid Dorset and North Poole (Vikki Slade). I believe the PPF works hard to make sure that it can deal quickly with payments for people with terminal illness, and the Bill contains other measures that mean it can do that at an earlier point in someone’s prognosis. The SR1 form would already be sufficient for the PPF to provide the certainty that the hon. Member for Stratford-on-Avon is looking for. I have checked with the PPF to ensure that currently within the PPF and the FAS we do not currently have any outstanding requests for such payments where they have been unable to make them, for example for the reasons of not having sufficient evidence. That said, she has spoken powerfully on that point and I will speak to the PPF at my next meeting with the chief executive and the chair to see what more can be done. I thank her for raising those issues.

I also thank the hon. Member for Horsham for bringing us back to the question of advice and guidance. Most of us do need help in preparing for retirement. However, I take a slightly more positive view of the current provision of free guidance through the Money and Pensions Service. I also agree a bit more with the hon. Member for Mid Dunbartonshire (Susan Murray) that the task of Government is to reduce the complexity in our pensions system, rather than just hoping that ever more advice will help savers to navigate it. That is exactly why the parts of the Bill on guided retirement and small pots are so important as we move forward.

I would just like to cover some of the commitments I made in Committee. [Interruption.] I know this is going to be electric for all Members. That is the kind of enthusiasm I hope to see from more Members across the House. I will make a quick update on pensions dashboards, which at least one Member will appreciate. User testing on pensions dashboards has begun. I know that will thrill everybody in this House. [Hon. Members: “Hear, hear.”] That is the attitude we need! [Laughter.] It will ramp up over the course of the next year, with greater volumes and more focus on consumer behaviour. We will be conducting a full evaluation of pensions dashboards over the coming years as the service goes live. That will include the impact of dashboards on engagement with pensions. I commit to update the House on that work in due course.

Following on from other issues raised in Committee, I am pleased to report that following the findings of the curriculum and assessment review, the Government will make financial education compulsory in primary schools in England.

One issue raised in Committee was the Department’s monitoring and evaluation plans for the policy programme set out in the Bill, not least the guided retirement measures. Those comments have been taken on board; an updated impact assessment this week lays out how we intend to approach monitoring impact.

I have endeavoured to do justice to the very wide range of different issues raised during the debate today. I hope hon. Members will support Government amendments that build on policies that will make a real difference to all our constituents in the decades to come.

Question put and agreed to.

New clause 30 accordingly read a Second time, and added to the Bill.

New Clause 31

Indexation of periodic compensation for pre-1997 service: Great Britain

“(1) Schedule 7 to the Pensions Act 2004 (pension compensation provisions) is amended in accordance with subsections (2) and (3).

(2) In paragraph 28—

(a) for sub-paragraph (2) substitute—

“(2) Where a person is entitled to periodic compensation under any of those paragraphs, the person is entitled, on the indexation date, to an increase under this paragraph of—

(a) where sub-paragraph (2A) applies, the aggregate of the amount mentioned in sub-paragraph (2C) and the amount mentioned in sub-paragraph (2E);

(b) where sub-paragraph (2B) applies, the aggregate of the amount mentioned in sub-paragraph (2D) and the amount mentioned in sub-paragraph (2E);

(c) in any other case, the amount mentioned in sub-paragraph (2E).

(2A) This sub-paragraph applies where, immediately before the assessment date—

(a) the admissible rules of the scheme included a requirement for all or any part of so much of the annual rate of a pension in payment under the scheme as is attributable to a person’s pre-1997 service to be increased annually,

(b) that requirement did not apply only in relation to a guaranteed minimum pension provided by the scheme, and

(c) that requirement applied in relation to pre-1997 service in respect of which the compensation is payable.

(2B) This sub-paragraph applies where—

(a) the scheme provided a guaranteed minimum pension that accrued during the GMP indexation period,

(b) that accrual was in relation to GMP indexed service in respect of which the compensation is payable, and

(c) immediately before the assessment date the admissible rules of the scheme—

(i) did not include a requirement of the kind mentioned in sub-paragraph (2A)(a), or

(ii) included such a requirement only in relation to a guaranteed minimum pension provided by the scheme.

(2C) The amount mentioned in this sub-paragraph is—

(a) the appropriate percentage of the amount of the pre-1997 underlying rate immediately before the indexation date, or

(b) where the person first became entitled to the periodic compensation during the period of 12 months ending immediately before that date, 1/12th of that amount for each full month for which the person was so entitled.

(2D) The amount mentioned in this sub-paragraph is—

(a) the appropriate percentage of the amount of the notional pre-1997 underlying rate immediately before the indexation date, or

(b) where the person first became entitled to the periodic compensation during the period of 12 months ending immediately before that date, 1/12th of that amount for each full month for which the person was so entitled.

(2E) The amount mentioned in this sub-paragraph is—

(a) the appropriate percentage of the amount of the post-1997 underlying rate immediately before the indexation date, or

(b) where the person first became entitled to the periodic compensation during the period of 12 months ending immediately before that date, 1/12th of that amount for each full month for which the person was so entitled.

(2F) In any case where it is unclear to the Board whether, immediately before the assessment date, the admissible rules of the scheme included a requirement of the kind mentioned in sub-paragraph (2A)(a), this paragraph has effect as if the scheme included such a requirement.

(2G) In any case where it is unclear to the Board whether, immediately before the assessment date, a requirement of the scheme of a kind mentioned in sub-paragraph (2A)(a) (including such a requirement included by virtue of sub-paragraph (2F)) applied in relation to particular pre-1997 service, this paragraph has effect as if the requirement applied in relation to such service.

(2H) In any case where it is unclear to the Board whether the scheme provided a guaranteed minimum pension that accrued during the GMP indexation period, this paragraph has effect as if the scheme so provided.

(2I) In any case where it is unclear to the Board whether the accrual of a guaranteed minimum pension provided by the scheme (including by virtue of sub-paragraph (2H)) was in relation to particular GMP indexed service, this paragraph has effect as if the accrual was in relation to such service.”

(b) in sub-paragraph (3)—

(i) in the opening words for “sub-paragraph (2)” substitute “sub-paragraphs (2) to (2E)”;

(ii) for both definitions of “underlying rate” substitute—

““notional pre-1997 underlying rate” means, in the case of periodic compensation under paragraph 3 or 22, the aggregate of—

(a) a prescribed percentage of so much of the amount mentioned in sub-paragraph (3)(a) of the paragraph in question as is attributable to pre-1997 service, and

(b) so much of the amount within sub-paragraph (3)(b) of that paragraph as is referable to the amount within paragraph (a) of this definition immediately before the indexation date;

“notional pre-1997 underlying rate” means, in the case of periodic compensation under paragraph 5, 8, 11 or 15, the aggregate of—

(a) a prescribed percentage of so much of the amount mentioned in sub-paragraph (3)(a) of the paragraph in question as is attributable to pre-1997 service,

(b) a prescribed percentage of so much of the amount mentioned in sub-paragraph (3)(aa) of the paragraph in question as is attributable to pre-1997 service, and

(c) so much of the amount within sub-paragraph (3)(b) of that paragraph as is referable to the amounts within paragraphs (a) and (b) of this definition immediately before the indexation date;

“post-1997 underlying rate” means, in the case of periodic compensation under paragraph 3 or 22, the aggregate of—

(a) so much of the amount mentioned in sub-paragraph (3)(a) of the paragraph in question as is attributable to post-1997 service, and

(b) so much of the amount within sub-paragraph (3)(b) of that paragraph as is referable to the amount within paragraph (a) of this definition immediately before the indexation date;

“post-1997 underlying rate” means, in the case of periodic compensation under paragraph 5, 8, 11 or 15, the aggregate of—

(a) so much of the amount mentioned in sub-paragraph (3)(a) of the paragraph in question as is attributable to post-1997 service,

(b) so much of the amount mentioned in sub-paragraph (3)(aa) of the paragraph in question as is attributable to post-1997 service, and

(c) so much of the amount within sub-paragraph (3)(b) of that paragraph as is referable to the amounts within paragraphs (a) and (b) of this definition immediately before the indexation date;

“pre-1997 underlying rate” means, in the case of periodic compensation under paragraph 3 or 22, the aggregate of—

(a) so much of the amount mentioned in sub-paragraph (3)(a) of the paragraph in question as is attributable to pre-1997 service, and

(b) so much of the amount within sub-paragraph (3)(b) of that paragraph as is referable to the amount within paragraph (a) of this definition immediately before the indexation date;

“pre-1997 underlying rate” means, in the case of periodic compensation under paragraph 5, 8, 11 or 15, the aggregate of—

(a) so much of the amount mentioned in sub-paragraph (3)(a) of the paragraph in question as is attributable to pre-1997 service,

(b) so much of the amount mentioned in sub-paragraph (3)(aa) of the paragraph in question as is attributable to pre-1997 service, and

(c) so much of the amount within sub-paragraph (3)(b) of that paragraph as is referable to the amounts within paragraphs (a) and (b) of this definition immediately before the indexation date.”;

(c) in sub-paragraph (5)—

(i) in paragraph (a), for “sub-paragraph (2), each definition of “underlying rate”” substitute “sub-paragraphs (2C) to (2E), each definition of “notional pre-1997 underlying rate”, “post-1997 underlying rate” and “pre-1997 underlying rate””;

(ii) in paragraph (c), for “sub-paragraph (2), the definition of “underlying rate”” substitute “sub-paragraphs (2C) to (2E), the definition of “notional pre-1997 underlying rate”, the definition of “post-1997 underlying rate” and the definition of “pre-1997 underlying rate””;

(d) in sub-paragraph (6), before the definition of “post-1997 service” insert—

““GMP indexation period” means the period beginning with 6 April 1988 and ending with 5 April 1997;

“GMP indexed service” means—

(a) pensionable service which is within paragraph 36(4)(a) and occurs during the GMP indexation period, or

(b) pensionable service which is within paragraph 36(4)(b) and meets such requirements as may be prescribed;

“guaranteed minimum pension” has the same meaning as in the Pension Schemes Act 1993 (see section 8(2) of that Act);”;

(e) in sub-paragraph (7), for “and “pre-1997 service”” substitute “, “pre-1997 service” and “GMP indexed service””.

(3) In paragraph 29, for sub-paragraph (2) substitute—

“(2) The Board may also determine the percentage that is to be—

(a) the appropriate percentage for the purposes of sub-paragraphs (2C) and (2D) of paragraph 28;

(b) the appropriate percentage for the purposes of sub-paragraph (2E) of that paragraph,

(and where it does so, the definition of “appropriate percentage” in paragraph 28(3) does not apply in relation to the sub-paragraph in question).”

(4) Schedule 5 to the Pensions Act 2008 (pension compensation payable on discharge of pension compensation credit) is amended in accordance with subsections (5) and (6).

(5) In paragraph 17—

(a) for sub-paragraph (2) substitute—

“(2) Subject to sub-paragraph (3), the transferee is entitled, on each indexation date, to an increase of—

(a) where sub-paragraph (2A) applies, the amount mentioned in sub-paragraph (2E);

(b) where sub-paragraph (2B) applies, the amount mentioned in sub-paragraph (2F);

(c) where sub-paragraph (2C) applies, the amount mentioned in sub-paragraph (2G);

(d) where sub-paragraph (2D) applies, the amount mentioned in sub-paragraph (2H).

(2A) This sub-paragraph applies where—

(a) the transferor's PPF compensation is payable in accordance with paragraph 3, 5, 8, 11, 15 or 22 of Schedule 7 to the Pensions Act 2004 (“the relevant Schedule 7 provisions”), and

(b) immediately before the assessment date—

(i) the admissible rules of the scheme in respect of which that compensation is payable included a requirement for all or any part of so much of the annual rate of a pension in payment under the scheme as is attributable to a person’s pre-1997 service to be increased annually,

(ii) that requirement did not apply only in relation to a guaranteed minimum pension provided by the scheme, and

(iii) that requirement applied in relation to pre-1997 service in respect of which that compensation is payable.

(2B) This sub-paragraph applies where—

(a) the transferor's PPF compensation is payable in accordance with the relevant Schedule 7 provisions,

(b) the scheme in respect of which that compensation is payable provided a guaranteed minimum pension that accrued during the GMP indexation period,

(c) that accrual was in relation to GMP indexed service in respect of which that compensation is payable, and

(d) immediately before the assessment date the admissible rules of that scheme—

(i) did not include a requirement of the kind mentioned in sub-paragraph (2A)(b)(i), or

(ii) included such a requirement only in relation to a guaranteed minimum pension provided by the scheme.

(2C) This sub-paragraph applies where—

(a) the transferor's PPF compensation is payable in accordance with the relevant Schedule 7 provisions, and

(b) neither sub-paragraph (2A) nor sub-paragraph (2B) applies.

(2D) This sub-paragraph applies where the transferor's PPF compensation is payable otherwise than in accordance with the relevant Schedule 7 provisions.

(2E) The amount mentioned in this sub-paragraph is the aggregate of the appropriate percentage of the pre-1997 underlying rate and the appropriate percentage of the post-1997 underlying rate.

(2F) The amount mentioned in this sub-paragraph is the aggregate of the appropriate percentage of the notional pre-1997 underlying rate and the appropriate percentage of the post-1997 underlying rate.

(2G) The amount mentioned in this sub-paragraph is the appropriate percentage of the post-1997 underlying rate.

(2H) The amount mentioned in this sub-paragraph is the appropriate percentage of the general underlying rate.”

(b) in sub-paragraph (3), for “(2)” substitute “(2E), (2F), (2G) or (2H) (as the case may be)”;

(c) after sub-paragraph (3) insert—

“(3A) For the purposes of sub-paragraphs (2A) to (2C)—

(a) in any case where it is unclear to the Board whether, immediately before the assessment date, the admissible rules of the scheme included a requirement of the kind mentioned in sub-paragraph (2A)(b)(i), those sub-paragraphs have effect as if the scheme included such a requirement;

(b) in any case where it is unclear to the Board whether, immediately before the assessment date, a requirement of the scheme of a kind mentioned in sub-paragraph (2A)(b)(i) (including such a requirement included by virtue of paragraph (a)) applied in relation to particular pre-1997 service, those sub-paragraphs have effect as if the requirement applied in relation to such service;

(c) in any case where it is unclear to the Board whether the scheme provided a guaranteed minimum pension that accrued during the GMP indexation period, those sub-paragraphs have effect as if the scheme so provided;

(d) in any case where it is unclear to the Board whether the accrual of a guaranteed minimum pension provided by the scheme (including by virtue of paragraph (c)) was in relation to particular GMP indexed service, those sub-paragraphs have effect as if the accrual was in relation to such service.”

(d) in sub-paragraph (4)—

(i) in the opening words, for “sub-paragraph (2)” substitute “sub-paragraphs (2) to (2H)”;

(ii) for the definition of “the underlying rate” substitute—

““the general underlying rate” , as at an indexation date, is the aggregate of—

(a) the general indexed proportion of the aggregate of the initial annual rate of compensation and (in the case of compensation payable under paragraph 6), the revaluation amount,

(b) so much of any actuarial increase under paragraph 16A as relates to the amount in paragraph (a), and

(c) so much of any annual increase to which the transferee is entitled under this paragraph in respect of earlier indexation dates as relates to the amounts in paragraphs (a) and (b);

“the notional pre-1997 underlying rate” , as at an indexation date, is the aggregate of—

(a) the notional pre-1997 indexed proportion of the aggregate of the initial annual rate of compensation and (in the case of compensation payable under paragraph 6), the revaluation amount,

(b) so much of any actuarial increase under paragraph 16A as relates to the amount in paragraph (a), and

(c) so much of any annual increase to which the transferee is entitled under this paragraph in respect of earlier indexation dates as relates to the amounts in paragraphs (a) and (b);

“the post-1997 underlying rate” , as at an indexation date, is the aggregate of—

(a) the post-1997 indexed proportion of the aggregate of the initial annual rate of compensation and (in the case of compensation payable under paragraph 6), the revaluation amount,

(b) so much of any actuarial increase under paragraph 16A as relates to the amount in paragraph (a), and

(c) so much of any annual increase to which the transferee is entitled under this paragraph in respect of earlier indexation dates as relates to the amounts in paragraphs (a) and (b);

“the pre-1997 underlying rate” , as at an indexation date, is the aggregate of—

(a) the pre-1997 indexed proportion of the aggregate of the initial annual rate of compensation and (in the case of compensation payable under paragraph 6), the revaluation amount,

(b) so much of any actuarial increase under paragraph 16A as relates to the amount in paragraph (a), and

(c) so much of any annual increase to which the transferee is entitled under this paragraph in respect of earlier indexation dates as relates to the amounts in paragraphs (a) and (b).”;

(e) omit sub-paragraphs (5) and (6);

(f) before sub-paragraph (7) insert—

“(6A) For the purposes of paragraph (a) of the definition of “the general underlying rate”, “the general indexed proportion” is such proportion as is determined in accordance with regulations made by the Secretary of State.

(6B) For the purposes of paragraph (a) of the definition of “the notional pre-1997 underlying rate”, “the notional pre-1997 indexed proportion” is such proportion of the amount mentioned in sub-paragraph (3)(a) of the paragraph of Schedule 7 to the Pensions Act 2004 under which the transferor’s PPF compensation is payable that is attributable to pre-1997 service as may be prescribed.

(6C) For the purposes of paragraph (a) of the definition of “the post-1997 underlying rate”, “the post-1997 indexed proportion” is the proportion of the amount mentioned in sub-paragraph (3)(a) of the paragraph of that Schedule under which the transferor’s PPF compensation is payable that is attributable to post-1997 service.

(6D) For the purposes of paragraph (a) of the definition of “the pre-1997 underlying rate”, “the pre-1997 indexed proportion” is the proportion of the amount mentioned in sub-paragraph (3)(a) of the paragraph of that Schedule under which the transferor’s PPF compensation is payable that is attributable to pre-1997 service.”;

(g) in sub-paragraph (7), for ““the underlying rate”” substitute ““the general underlying rate”, the definition of “the notional pre-1997 underlying rate”, the definition of “the post-1997 underlying rate” and the definition of “the pre-1997 underlying rate””;

(h) in paragraph (9)—

(i) before the definition of “post-1997 service” insert—

““GMP indexation period” means the period beginning with 6 April 1988 and ending with 5 April 1997;

“guaranteed minimum pension” has the same meaning as in the Pension Schemes Act 1993 (see section 8(2) of that Act);”;

(ii) in the definition of “post-1997 service” for “has” substitute “, “pre-1997 service” and “GMP indexed service” have”;

(iii) after that definition insert—

““the assessment date” , in relation to a pension scheme, has the same meaning as in that Schedule (see paragraph 2 of that Schedule);”.

(6) In paragraph 20, in sub-paragraph (1)(b), for “for the purposes of paragraph 17(2)” substitute “—

(i) of the pre-1997 underlying rate and of the notional pre-1997 underlying rate for the purposes of sub-paragraphs (2E) and (2F) of paragraph 17;

(ii) of the post-1997 underlying rate for the purposes of sub-paragraphs (2E), (2F) and (2G) of that paragraph;

(iii) of the general underlying rate for the purposes of sub-paragraph (2H) of that paragraph.””—(Torsten Bell.)

This new clause makes provision for certain compensation paid by the Pension Protection Fund in respect of a person’s pre-1997 pensionable service under legislation extending to England and Wales and Scotland to be increased annually.

Brought up, read the First and Second time, and added to the Bill.

New Clause 32

Indexation of periodic compensation for pre-1997 service: Northern Ireland

“(1) Schedule 6 to the Pensions (Northern Ireland) Order 2005 (S.I. 2005/255 (N.I. 1)) (pension compensation provisions) is amended in accordance with subsections (2) and (3).

(2) In paragraph 28—

(a) for sub-paragraph (2) substitute—

“(2) Where a person is entitled to periodic compensation under any of those paragraphs, the person is entitled, on the indexation date, to an increase under this paragraph of—

(a) where sub-paragraph (2A) applies, the aggregate of the amount mentioned in sub-paragraph (2C) and the amount mentioned in sub-paragraph (2E);

(b) where sub-paragraph (2B) applies, the aggregate of the amount mentioned in sub-paragraph (2D) and the amount mentioned in sub-paragraph (2E);

(c) in any other case, the amount mentioned in sub-paragraph (2E).

(2A) This sub-paragraph applies where, immediately before the assessment date—

(a) the admissible rules of the scheme included a requirement for all or any part of so much of the annual rate of a pension in payment under the scheme as is attributable to a person’s pre-1997 service to be increased annually,

(b) that requirement did not apply only in relation to a guaranteed minimum pension provided by the scheme, and

(c) that requirement applied in relation to pre-1997 service in respect of which the compensation is payable.

(2B) This sub-paragraph applies where—

(a) the scheme provided a guaranteed minimum pension that accrued during the GMP indexation period,

(b) that accrual was in relation to GMP indexed service in respect of which the compensation is payable, and

(c) immediately before the assessment date the admissible rules of the scheme—

(i) did not include a requirement of the kind mentioned in sub-paragraph (2A)(a), or

(ii) included such a requirement only in relation to a guaranteed minimum pension provided by the scheme.

(2C) The amount mentioned in this sub-paragraph is—

(a) the appropriate percentage of the amount of the pre-1997 underlying rate immediately before the indexation date, or

(b) where the person first became entitled to the periodic compensation during the period of 12 months ending immediately before that date, 1/12th of that amount for each full month for which the person was so entitled.

(2D) The amount mentioned in this sub-paragraph is—

(a) the appropriate percentage of the amount of the notional pre-1997 underlying rate immediately before the indexation date, or

(b) where the person first became entitled to the periodic compensation during the period of 12 months ending immediately before that date, 1/12th of that amount for each full month for which the person was so entitled.

(2E) The amount mentioned in this sub-paragraph is—

(a) the appropriate percentage of the amount of the post-1997 underlying rate immediately before the indexation date, or

(b) where the person first became entitled to the periodic compensation during the period of 12 months ending immediately before that date, 1/12th of that amount for each full month for which the person was so entitled.

(2F) In any case where it is unclear to the Board whether, immediately before the assessment date, the admissible rules of the scheme included a requirement of the kind mentioned in sub-paragraph (2A)(a), this paragraph has effect as if the scheme included such a requirement.

(2G) In any case where it is unclear to the Board whether, immediately before the assessment date, a requirement of the scheme of a kind mentioned in sub-paragraph (2A)(a) (including such a requirement included by virtue of sub-paragraph (2F)) applied in relation to particular pre-1997 service, this paragraph has effect as if the requirement applied in relation to such service.

(2H) In any case where it is unclear to the Board whether the scheme provided a guaranteed minimum pension that accrued during the GMP indexation period, this paragraph has effect as if the scheme so provided.

(2I) In any case where it is unclear to the Board whether the accrual of a guaranteed minimum pension provided by the scheme (including by virtue of sub-paragraph (2H)) was in relation to particular GMP indexed service, this paragraph has effect as if the accrual was in relation to such service.”

(b) in sub-paragraph (3)—

(i) in the opening words for “sub-paragraph (2)” substitute “sub-paragraphs (2) to (2E)”;

(ii) for both definitions of “underlying rate” substitute—

““notional pre-1997 underlying rate” means, in the case of periodic compensation under paragraph 3 or 22, the aggregate of—

(a) a prescribed percentage of so much of the amount mentioned in sub-paragraph (3)(a) of the paragraph in question as is attributable to pre-1997 service, and

(b) so much of the amount within sub-paragraph (3)(b) of that paragraph as is referable to the amount within paragraph (a) of this definition immediately before the indexation date;

“notional pre-1997 underlying rate” means, in the case of periodic compensation under paragraph 5, 8, 11 or 15, the aggregate of—

(a) a prescribed percentage of so much of the amount mentioned in sub-paragraph (3)(a) of the paragraph in question as is attributable to pre-1997 service,

(b) a prescribed percentage of so much of the amount mentioned in sub-paragraph (3)(aa) of the paragraph in question as is attributable to pre-1997 service, and

(c) so much of the amount within sub-paragraph (3)(b) of that paragraph as is referable to the amounts within paragraphs (a) and (b) of this definition immediately before the indexation date;

“post-1997 underlying rate” means, in the case of periodic compensation under paragraph 3 or 22, the aggregate of—

(a) so much of the amount mentioned in sub-paragraph (3)(a) of the paragraph in question as is attributable to post-1997 service, and

(b) so much of the amount within sub-paragraph (3)(b) of that paragraph as is referable to the amount within paragraph (a) of this definition immediately before the indexation date;

“post-1997 underlying rate” means, in the case of periodic compensation under paragraph 5, 8, 11 or 15, the aggregate of—

(a) so much of the amount mentioned in sub-paragraph (3)(a) of the paragraph in question as is attributable to post-1997 service,

(b) so much of the amount mentioned in sub-paragraph (3)(aa) of the paragraph in question as is attributable to post-1997 service, and

(c) so much of the amount within sub-paragraph (3)(b) of that paragraph as is referable to the amounts within paragraphs (a) and (b) of this definition immediately before the indexation date;

“pre-1997 underlying rate” means, in the case of periodic compensation under paragraph 3 or 22, the aggregate of—

(a) so much of the amount mentioned in sub-paragraph (3)(a) of the paragraph in question as is attributable to pre-1997 service, and

(b) so much of the amount within sub-paragraph (3)(b) of that paragraph as is referable to the amount within paragraph (a) of this definition immediately before the indexation date;

“pre-1997 underlying rate” means, in the case of periodic compensation under paragraph 5, 8, 11 or 15, the aggregate of—

(a) so much of the amount mentioned in sub-paragraph (3)(a) of the paragraph in question as is attributable to pre-1997 service,

(b) so much of the amount mentioned in sub-paragraph (3)(aa) of the paragraph in question as is attributable to pre-1997 service, and

(c) so much of the amount within sub-paragraph (3)(b) of that paragraph as is referable to the amounts within paragraphs (a) and (b) of this definition immediately before the indexation date.”;

(c) in sub-paragraph (5)—

(i) in paragraph (a), for “sub-paragraph (2), each definition of “underlying rate”” substitute “sub-paragraphs (2C) to (2E), each definition of “notional pre-1997 underlying rate”, “post-1997 underlying rate” and “pre-1997 underlying rate””;

(ii) in paragraph (c), for “sub-paragraph (2), the definition of “underlying rate”” substitute “sub-paragraphs (2C) to (2E), the definition of “notional pre-1997 underlying rate”, the definition of “post-1997 underlying rate” and the definition of “pre-1997 underlying rate””;

(d) in sub-paragraph (6), before the definition of “post-1997 service” insert—

““GMP indexation period” means the period beginning with 6 April 1988 and ending with 5 April 1997;

“GMP indexed service” means—

(a) pensionable service which is within paragraph 36(4)(a) and occurs during the GMP indexation period, or

(b) pensionable service which is within paragraph 36(4)(b) and meets such requirements as may be prescribed;

“guaranteed minimum pension” has the same meaning as in the Pension Schemes Act (see section 4(2) of that Act);”;

(e) in sub-paragraph (7), for “and “pre-1997 service”” substitute “, “pre-1997 service” and “GMP indexed service””.

(3) In paragraph 29, for sub-paragraph (2) substitute—

“(2) The Board may also determine the percentage that is to be—

(a) the appropriate percentage for the purposes of sub-paragraphs (2C) and (2D) of paragraph 28;

(b) the appropriate percentage for the purposes of sub-paragraph (2E) of that paragraph,

(and where it does so, the definition of “appropriate percentage” in paragraph 28(3) does not apply in relation to the sub-paragraph in question).”

(4) Schedule 4 to the Pensions (No.2) Act (Northern Ireland) 2008 (pension compensation payable on discharge of pension compensation credit) is amended in accordance with subsections (5) and (6).

(5) In paragraph 17—

(a) for sub-paragraph (2) substitute—

“(2) Subject to sub-paragraph (3), the transferee is entitled, on each indexation date, to an increase of—

(a) where sub-paragraph (2A) applies, the amount mentioned in sub-paragraph (2E);

(b) where sub-paragraph (2B) applies, the amount mentioned in sub-paragraph (2F);

(c) where sub-paragraph (2C) applies, the amount mentioned in sub-paragraph (2G);

(d) where sub-paragraph (2D) applies, the amount mentioned in sub-paragraph (2H).

(2A) This sub-paragraph applies where—

(a) the transferor's PPF compensation is payable in accordance with paragraph 3, 5, 8, 11, 15 or 22 of Schedule 6 to the 2005 Order (“the relevant Schedule 6 provisions”), and

(b) immediately before the assessment date —

(i) the admissible rules of the scheme in respect of which that compensation is payable included a requirement for all or any part of so much of the annual rate of a pension in payment under the scheme as is attributable to a person’s pre-1997 service to be increased annually,

(ii) that requirement did not apply only in relation to a guaranteed minimum pension provided by the scheme, and

(iii) that requirement applied in relation to pre-1997 service in respect of which that compensation is payable.

(2B) This sub-paragraph applies where—

(a) the transferor's PPF compensation is payable in accordance with the relevant Schedule 6 provisions,

(b) the scheme in respect of which that compensation is payable provided a guaranteed minimum pension that accrued during the GMP indexation period,

(c) that accrual was in relation to GMP indexed service in respect of which that compensation is payable, and

(d) immediately before the assessment date the admissible rules of that scheme—

(i) did not include a requirement of the kind mentioned in sub-paragraph (2A)(b)(i), or

(ii) included such a requirement only in relation to a guaranteed minimum pension provided by the scheme.

(2C) This sub-paragraph applies where—

(a) the transferor's PPF compensation is payable in accordance with the relevant Schedule 6 provisions, and

(b) neither sub-paragraph (2A) nor sub-paragraph (2B) applies.

(2D) This sub-paragraph applies where the transferor's PPF compensation is payable otherwise than in accordance with the relevant Schedule 6 provisions.

(2E) The amount mentioned in this sub-paragraph is the aggregate of the appropriate percentage of the pre-1997 underlying rate and the appropriate percentage of the post-1997 underlying rate.

(2F) The amount mentioned in this sub-paragraph is the aggregate of the appropriate percentage of the notional pre-1997 underlying rate and the appropriate percentage of the post-1997 underlying rate.

(2G) The amount mentioned in this sub-paragraph is the appropriate percentage of the post-1997 underlying rate.

(2H) The amount mentioned in this sub-paragraph is the appropriate percentage of the general underlying rate.”

(b) in sub-paragraph (3), for “(2)” substitute “(2E), (2F), (2G) or (2H) (as the case may be)”;

(c) after sub-paragraph (3) insert—

“(3A) For the purposes of sub-paragraphs (2A) to (2C)—

(a) in any case where it is unclear to the Board whether, immediately before the assessment date, the admissible rules of the scheme included a requirement of the kind mentioned in sub- paragraph (2A)(b)(i), those sub-paragraphs have effect as if the scheme included such a requirement;

(b) in any case where it is unclear to the Board whether, immediately before the assessment date, a requirement of the scheme of a kind mentioned in sub-paragraph (2A)(b)(i) (including such a requirement included by virtue of paragraph (a)) applied in relation to particular pre-1997 service, those sub-paragraphs have effect as if the requirement applied in relation to such service;

(c) in any case where it is unclear to the Board whether the scheme provided a guaranteed minimum pension that accrued during the GMP indexation period, those sub-paragraphs have effect as if the scheme so provided;

(d) in any case where it is unclear to the Board whether the accrual of a guaranteed minimum pension provided by the scheme (including by virtue of paragraph (c)) was in relation to particular GMP indexed service, those sub-paragraphs have effect as if the accrual was in relation to such service.”

(d) in sub-paragraph (4)—

(i) in the opening words, for “sub-paragraph (2)” substitute “sub-paragraphs (2) to (2H)”;

(ii) for the definition of “the underlying rate” substitute—

““the general underlying rate” , as at an indexation date, is the aggregate of—

(a) the general indexed proportion of the aggregate of the initial annual rate of compensation and (in the case of compensation payable under paragraph 6), the revaluation amount,

(b) so much of any actuarial increase under paragraph 16A as relates to the amount in paragraph (a), and

(c) so much of any annual increase to which the transferee is entitled under this paragraph in respect of earlier indexation dates as relates to the amounts in paragraphs (a) and (b);

“the notional pre-1997 underlying rate” , as at an indexation date, is the aggregate of—

(a) the notional pre-1997 indexed proportion of the aggregate of the initial annual rate of compensation and (in the case of compensation payable under paragraph 6), the revaluation amount,

(b) so much of any actuarial increase under paragraph 16A as relates to the amount in paragraph (a), and

(c) so much of any annual increase to which the transferee is entitled under this paragraph in respect of earlier indexation dates as relates to the amounts in paragraphs (a) and (b);

“the post-1997 underlying rate” , as at an indexation date, is the aggregate of—

(a) the post-1997 indexed proportion of the aggregate of the initial annual rate of compensation and (in the case of compensation payable under paragraph 6), the revaluation amount,

(b) so much of any actuarial increase under paragraph 16A as relates to the amount in paragraph (a), and

(c) so much of any annual increase to which the transferee is entitled under this paragraph in respect of earlier indexation dates as relates to the amounts in paragraphs (a) and (b);

“the pre-1997 underlying rate” , as at an indexation date, is the aggregate of—

(a) the pre-1997 indexed proportion of the aggregate of the initial annual rate of compensation and (in the case of compensation payable under paragraph 6), the revaluation amount,

(b) so much of any actuarial increase under paragraph 16A as relates to the amount in paragraph (a), and

(c) so much of any annual increase to which the transferee is entitled under this paragraph in respect of earlier indexation dates as relates to the amounts in paragraphs (a) and (b).”;

(e) omit sub-paragraphs (5) and (6);

(f) before sub-paragraph (7) insert—

“(6A) For the purposes of paragraph (a) of the definition of “the general underlying rate”, “the general indexed proportion” is such proportion as is determined in accordance with regulations made by the Department.

(6B) For the purposes of paragraph (a) of the definition of “the notional pre-1997 underlying rate”, “the notional pre-1997 indexed proportion” is such proportion of the amount mentioned in sub-paragraph (3)(a) of the paragraph of Schedule 6 to the 2005 Order under which the transferor’s PPF compensation is payable that is attributable to pre-1997 service as may be prescribed.

(6C) For the purposes of paragraph (a) of the definition of “the post-1997 underlying rate”, “the post-1997 indexed proportion” is the proportion of the amount mentioned in sub-paragraph (3)(a) of the paragraph of that Schedule under which the transferor’s PPF compensation is payable that is attributable to post-1997 service.

(6D) For the purposes of paragraph (a) of the definition of “the pre-1997 underlying rate”, “the pre-1997 indexed proportion” is the proportion of the amount mentioned in sub-paragraph (3)(a) of the paragraph of that Schedule under which the transferor’s PPF compensation is payable that is attributable to pre-1997 service.”;

(g) in sub-paragraph (7), for ““the underlying rate”” substitute ““the general underlying rate”, the definition of “the notional pre-1997 underlying rate”, the definition of “the post-1997 underlying rate” and the definition of “the pre-1997 underlying rate””;

(h) for sub-paragraph 9 substitute—

“(9) In this paragraph—

“GMP indexation period” means the period beginning with 6 April 1988 and ending with 5 April 1997;

“guaranteed minimum pension” has the same meaning as in the Pension Schemes Act (see section 4(2) of that Act);

“post-1997 service” , “pre-1997 service” and “GMP indexed service” have the same meaning as in paragraph 28 of Schedule 6 to the 2005 Order (annual increase in periodic compensation);

“the assessment date” , in relation to a pension scheme, has the same meaning as in that Schedule (see paragraph 2 of that Schedule).”

(6) In paragraph 20, in sub-paragraph (1)(b), for “for the purposes of paragraph 17(2)” substitute “—

(i) of the pre-1997 underlying rate and of the notional pre-1997 underlying rate for the purposes of sub-paragraphs (2E) and (2F) of paragraph 17;

(ii) of the post-1997 underlying rate for the purposes of sub-paragraphs (2E), (2F) and (2G) of that paragraph;

(iii) of the general underlying rate for the purposes of sub-paragraph (2H) of that paragraph.””—(Torsten Bell.)

This new clause makes provision for certain compensation paid by the Pension Protection Fund in respect of a person’s pre-1997 pensionable service under legislation extending to Northern Ireland to be increased annually.

Brought up, read the First and Second time, and added to the Bill.

New Clause 33

Financial Assistance Scheme: indexation of payments for pre-1997 service

“(1) The Financial Assistance Scheme Regulations 2005 (S.I. 2005/1986) are amended as follows.

(2) In paragraph 7(1)(b) of Schedule 2 (determination of annual and initial payments), after “(b)(i)” insert “, (ia) and (ib)”.

(3) Paragraph 9 of that Schedule is amended in accordance with subsections (4) to (6).

(4) In sub-paragraph (2)—

(a) in paragraph (a) of the definition of “underlying rate”, after sub-paragraph (i) insert—

“(ia) where sub-paragraph (2A) applies, the product of X multiplied by so much of the expected pension as is attributable to pre-1997 service;

(ib) where sub-paragraph (2B) applies, the product of X multiplied by the relevant percentage of so much of the expected pension as is attributable to pre-1997 service;”;

(b) in paragraph (b) of the definition of “underlying rate”—

(i) omit the “and” at the end of sub-paragraph (i);

(ii) after that sub-paragraph insert—

“(ia) where sub-paragraph (2A) applies, so much of the expected pension as is, proportionally, attributable to pre-1997 service;

(ib) where sub-paragraph (2B) applies, the relevant percentage of so much of the expected pension as is, proportionally, attributable to pre-1997 service; and”;

(c) after the definition of “post-1997 service” insert—

““pre-1997 service” means—

(a) pensionable service (whether actual or notional) which occurs before 6th April 1997; or

(b) where the annual payment is payable to, or in respect of, a qualifying member who is, or was, a pension credit member of the scheme, pension credit rights deriving from rights attributable to service (whether actual or notional) which occurred before 6th April 1997;

“relevant percentage” means such percentage as may be determined by the Secretary of State;”.

(5) After sub-paragraph (2) insert—

“(2A) This sub-paragraph applies where, immediately before the qualifying pension scheme began to wind up—

(a) the scheme rules included a requirement for all or any part of so much of the annual rate of a pension in payment under the scheme as is attributable to a person’s pre-1997 service to be increased annually,

(b) that requirement did not apply only in relation to a guaranteed minimum pension provided by the scheme, and

(c) that requirement applied in relation to pre-1997 service in respect of which the annual payment is payable.

(2B) This sub-paragraph applies where—

(a) the qualifying pension scheme provided a guaranteed minimum pension that accrued during the GMP indexation period,

(b) that accrual was in relation to GMP indexed service in respect of which the annual payment is payable, and

(c) immediately before the scheme began to wind up the scheme rules—

(i) did not include a requirement of the kind mentioned in sub-paragraph (2A)(a), or

(ii) included such a requirement only in relation to a guaranteed minimum pension provided by the scheme.

(2C) For the purposes of sub-paragraphs (2A) and (2B)—

(a) in any case where it is unclear to the scheme manager whether, immediately before the scheme began to wind up, the scheme rules included a requirement of the kind mentioned in sub-paragraph (2A)(a), those sub-paragraphs have effect as if the scheme included such a requirement;

(b) in any case where it is unclear to the scheme manager whether, immediately before the scheme began to wind up, a requirement of the scheme of a kind mentioned in sub-paragraph (2A)(a) (including such a requirement included by virtue of paragraph (a)) applied in relation to particular pre-1997 service, those sub-paragraphs have effect as if the requirement applied in relation to such service;

(c) in any case where it is unclear to the scheme manager whether the scheme provided a guaranteed minimum pension that accrued during the GMP indexation period, those sub-paragraphs have effect as if the scheme so provided;

(d) in any case where it is unclear to the scheme manager whether the accrual of a guaranteed minimum pension provided by the scheme (including by virtue of paragraph (c)) was in relation to particular GMP indexed service, those sub-paragraphs have effect as if the accrual was in relation to such service.

(2D) In sub-paragraphs (2B) and (2C)—

“GMP indexation period” means the period beginning with 6 April 1988 and ending with 5 April 1997;

“GMP indexed service” means—

(a) pensionable service (whether actual or notional) which occurs during the GMP indexation period; or

(b) where the annual payment is payable to, or in respect of, a qualifying member who is, or was, a pension credit member of the scheme, pension credit rights deriving from rights attributable to service (whether actual or notional) which occurred during the GMP indexation period.”

(6) In sub-paragraph (3)—

(a) after “attributable to” insert “pre-1997 service or”;

(b) for “that amount” substitute “the amount in question”.

(7) In paragraph 7(1)(b) of Schedule 2A (determination of ill health and interim ill health payments), after “(b)(i)” insert “, (ia) and (ib)”.

(8) Paragraph 9 of that Schedule is amended in accordance with subsections (9) to (11).

(9) In sub-paragraph (2)—

(a) after the definition of “E” insert—

““EA” means so much of the expected pension as is attributable to pre-1997 service;

“EB” means the relevant percentage of so much of the expected pension as is attributable to pre-1997 service;”;

(b) after the definition of “post-1997 service” insert—

““pre-1997 service” means—

(a) pensionable service (whether actual or notional) which occurs before 6th April 1997; or

(b) where the ill health payment is payable to, or in respect of, a qualifying member who is, or was, a pension credit member of the scheme, pension credit rights deriving from rights attributable to service (whether actual or notional) which occurred before 6th April 1997;

“relevant percentage” means such percentage as may be determined by the Secretary of State;”;

(c) in paragraph (a) of the definition of “underlying rate”, after sub-paragraph (i) insert—

“(ia) where sub-paragraph (2A) applies, the product of X multiplied by (C x EA);

(ib) where sub-paragraph (2B) applies, the product of X multiplied by (C x EB);”;

(d) in paragraph (b) of the definition of “underlying rate”—

(i) omit the “and” at the end of sub-paragraph (i);

(ii) after that sub-paragraph insert—

“(ia) where sub-paragraph (2A) applies, so much of the amount “A” for the purposes of paragraph 2 as is, proportionately, attributable to pre-1997 service;

(ib) where sub-paragraph (2B) applies, the relevant percentage of so much of the amount “A” for the purposes of paragraph 2 as is, proportionately, attributable to pre-1997 service; and”;

(10) After sub-paragraph (2) insert—

“(2A) This sub-paragraph applies where immediately before the qualifying pension scheme began to wind up—

(a) the scheme rules included a requirement for all or any part of so much of the annual rate of a pension in payment under the scheme as is attributable to a person’s pre-1997 service to be increased annually,

(b) that requirement did not apply only in relation to a guaranteed minimum pension provided by the scheme, and

(c) that requirement applied in relation to pre-1997 service in respect of which the ill health payment is payable.

(2B) This sub-paragraph applies where—

(a) the qualifying pension scheme provided a guaranteed minimum pension that accrued during the GMP indexation period,

(b) that accrual was in relation to GMP indexed service in respect of which the ill health payment is payable, and

(c) immediately before the scheme began to wind up the scheme rules—

(i) did not include a requirement of the kind mentioned in sub-paragraph (2A)(a), or

(ii) included such a requirement only in relation to a guaranteed minimum pension provided by the scheme

(2C) For the purposes of sub-paragraphs (2A) and (2B)—

(a) in any case where it is unclear to the scheme manager whether, immediately before the scheme began to wind up, the scheme rules included a requirement of the kind mentioned in sub-paragraph (2A)(a), those sub-paragraphs have effect as if the scheme included such a requirement;

(b) in any case where it is unclear to the scheme manager whether, immediately before the scheme began to wind up, a requirement of the scheme of a kind mentioned in sub-paragraph (2A)(a) (including such a requirement included by virtue of paragraph (a)) applied in relation to particular pre-1997 service, those sub-paragraphs have effect as if the requirement applied in relation to such service;

(c) in any case where it is unclear to the scheme manager whether the scheme provided a guaranteed minimum pension that accrued during the GMP indexation period, those sub-paragraphs have effect as if the scheme so provided;

(d) in any case where it is unclear to the scheme manager whether the accrual of a guaranteed minimum pension provided by the scheme (including by virtue of paragraph (c)) was in relation to particular GMP indexed service, those sub-paragraphs have effect as if the accrual was in relation to such service.

(2D) In sub-paragraphs (2A) to (2C)—

“GMP indexation period” means the period beginning with 6 April 1988 and ending with 5 April 1997;

“GMP indexed service” means—

(a) pensionable service (whether actual or notional) which occurs during the GMP indexation period; or

(b) where the ill health payment is payable to, or in respect of, a qualifying member who is, or was, a pension credit member of the scheme, pension credit rights deriving from rights attributable to service (whether actual or notional) which occurred during the GMP indexation period;

“guaranteed minimum pension” has the meaning given in section 8(2) of the 1993 Act.”

(11) In sub-paragraph (3)—

(a) after “attributable to” insert “pre-1997 service or”;

(b) for “that amount” substitute “the amount in question”.

(12) In paragraph 6 of Schedule 3 (determination of certain annual payments)—

(a) in sub-paragraph (2)—

(i) in the definition of “underlying rate”, after paragraph (a) insert—

“(aa) where sub-paragraph (2A) applies, the product of X multiplied by—

(i) where the beneficiary is a qualifying member or a survivor or surviving dependant of a qualifying member who died on or after the calculation date—

(aa) where the qualifying member is not a qualifying member to whom regulation 17D applied, so much of the revalued notional pension as is attributable to pre-1997 service; or

(bb) where the qualifying member is a qualifying member to whom regulation 17D applied, so much of the sum of R-A as is attributable to pre-1997 service; and

(ii) where the beneficiary is a survivor or surviving dependant in respect of whom a survivor notional pension has been determined, so much of the survivor notional pension as is attributable to the qualifying member’s pre-1997 service;

(ab) where sub-paragraph (2B) applies, the product of X multiplied by—

(i) where the beneficiary is a qualifying member or a survivor or surviving dependant of a qualifying member who died on or after the calculation date—

(aa) where the qualifying member is not a qualifying member to whom regulation 17D applied, the relevant percentage of so much of the revalued notional pension as is attributable to pre-1997 service; or

(bb) where the qualifying member is a qualifying member to whom regulation 17D applied, the relevant percentage of so much of the sum of R-A as is attributable to pre-1997 service; and

(ii) where the beneficiary is a survivor or surviving dependant in respect of whom a survivor notional pension has been determined, the relevant percentage of so much of the survivor notional pension as is attributable to the qualifying member’s pre-1997 service;”;

(iii) after the definition of “post-1997 service” insert—

““pre-1997 service” means—

(a) pensionable service (either actual or notional) which occurred before 6th April 1997; or

(b) where the pension was payable to, or in respect of, a qualifying member who is, or was, a pension credit member of the scheme, pension credit rights deriving from rights attributable to service (whether actual or notional) which occurred before 6th April 1997;

“relevant percentage” means such percentage as may be determined by the Secretary of State;”;

(b) after sub-paragraph (2) insert—

“(2A) This sub-paragraph applies where immediately before the qualifying pension scheme began to wind up—

(a) the scheme rules included a requirement for all or any part of so much of the annual rate of a pension in payment under the scheme as is attributable to a person’s pre-1997 service to be increased annually,

(b) that requirement did not apply only in relation to a guaranteed minimum pension provided by the scheme, and

(c) that requirement applied in relation to pre-1997 service in respect of which the annual payment is payable.

(2B) This sub-paragraph applies where—

(a) the qualifying pension scheme provided a guaranteed minimum pension that accrued during the GMP indexation period,

(b) that accrual was in relation to GMP indexed service in respect of which the annual payment is payable, and

(c) immediately before the scheme began to wind up the scheme rules—

(i) did not include a requirement of the kind mentioned in sub-paragraph (2A)(a), or

(ii) included such a requirement only in relation to a guaranteed minimum pension provided by the scheme.

(2C) For the purposes of sub-paragraphs (2A) and (2B)—

(a) in any case where it is unclear to the scheme manager whether, immediately before the scheme began to wind up, the scheme rules included a requirement of the kind mentioned in sub-paragraph (2A)(a), those sub-paragraphs have effect as if the scheme included such a requirement;

(b) in any case where it is unclear to the scheme manager whether, immediately before the scheme began to wind up, a requirement of the scheme of a kind mentioned in sub-paragraph (2A)(a) (including such a requirement included by virtue of paragraph (a)) applied in relation to particular pre-1997 service, those sub-paragraphs have effect as if the requirement applied in relation to such service;

(c) in any case where it is unclear to the scheme manager whether the scheme provided a guaranteed minimum pension that accrued during the GMP indexation period those sub-paragraphs have effect as if the scheme so provided;

(d) in any case where it is unclear to the scheme manager whether the accrual of a guaranteed minimum pension provided by the scheme (including by virtue of paragraph (c)) was in relation to particular GMP indexed service, those sub-paragraphs have effect as if the accrual was in relation to such service.

(2D) In sub-paragraphs (2A) to (2C)—

“GMP indexation period” means the period beginning with 6 April 1988 and ending with 5 April 1997;

“GMP indexed service” means—

(a) pensionable service (whether actual or notional) which occurs during the GMP indexation period; or

(b) where the pension was payable to, or in respect of, a qualifying member who is, or was, a pension credit member of the scheme, pension credit rights deriving from rights attributable to service (whether actual or notional) which occurred during the GMP indexation period;

“guaranteed minimum pension” has the meaning given in section 8(2) of the 1993 Act.”;

(c) in sub-paragraph (3), after “attributable to” insert “pre-1997 service and”.

(13) In paragraph 6 of Schedule 5 (determination of certain ill health payments)—

(a) in sub-paragraph (2)—

(i) in the definition of “underlying rate”, after paragraph (a) insert—

“(aa) where sub-paragraph (2A) applies, the product of X multiplied by (C x VA);

(ab) where sub-paragraph (2B) applies, the product of X multiplied by (C x VB);”;

(ii) after the definition of “post-1997 service” insert—

““pre-1997 service” means—

(a) pensionable service (either actual or notional) which occurred before 6th April 1997; or

(b) where the pension was payable to, or in respect of, a qualifying member who is, or was, a pension credit member of the scheme, pension credit rights deriving from rights attributable to service (whether actual or notional) which occurred before 6th April 1997;

“relevant percentage” means such percentage as may be determined by the Secretary of State;”;

(iii) after the definition of “V” insert—

““VA” means—

(a) where the beneficiary is a qualifying member or a survivor or surviving dependant of a qualifying member who died on or after the calculation date—

(i) where the qualifying member is not a qualifying member to whom regulation 17D applied, so much of the revalued notional pension as is attributable to pre-1997 service; or

(ii) where the qualifying member is a qualifying member to whom regulation 17D applied, so much of the sum of R-A as is attributable to pre-1997 service; and

(b) where the beneficiary is a survivor or surviving dependant in respect of whom a survivor notional pension has been determined, so much of the survivor notional pension as is attributable to the qualifying member’s pre-1997 service;

“VB” means—

(a) where the beneficiary is a qualifying member or a survivor or surviving dependant of a qualifying member who died on or after the calculation date—

(i) where the qualifying member is not a qualifying member to whom regulation 17D applied, the relevant percentage of so much of the revalued notional pension as is attributable to pre-1997 service; or

(ii) where the qualifying member is a qualifying member to whom regulation 17D applied, the relevant percentage of so much of the sum of R-A as is attributable to pre-1997 service; and

(b) where the beneficiary is a survivor or surviving dependant in respect of whom a survivor notional pension has been determined, the relevant percentage of so much of the survivor notional pension as is attributable to the qualifying member’s pre-1997 service;”;

(b) after sub-paragraph (2) insert—

“(2A) This sub-paragraph applies where immediately before the qualifying pension scheme began to wind up—

(a) the scheme rules included a requirement for all or any part of so much of the annual rate of a pension in payment under the scheme as is attributable to a person’s pre-1997 service to be increased annually,

(b) that requirement did not apply only in relation to a guaranteed minimum pension provided by the scheme, and

(c) that requirement applied in relation to pre-1997 service in respect of which the ill health payment is payable.

(2B) This sub-paragraph applies where—

(a) the qualifying pension scheme provided a guaranteed minimum pension that accrued during the GMP indexation period,

(b) that accrual was in relation to GMP indexed service in respect of which the ill health payment is payable, and

(c) immediately before the scheme began to wind up the scheme rules—

(i) did not include a requirement of the kind mentioned in sub-paragraph (2A)(a), or

(ii) included such a requirement only in relation to a guaranteed minimum pension provided by the scheme.

(2C) For the purposes of sub-paragraphs (2A) and (2B)—

(a) in any case where it is unclear to the scheme manager whether, immediately before the scheme began to wind up, the scheme rules included a requirement of the kind mentioned in sub-paragraph (2A)(a), those sub-paragraphs have effect as if the scheme included such a requirement;

(b) in any case where it is unclear to the scheme manager whether, immediately before the scheme began to wind up, a requirement of the scheme of a kind mentioned in sub-paragraph (2A)(a) (including such a requirement included by virtue of paragraph (a)) applied in relation to particular pre-1997 service, those sub-paragraphs have effect as if the requirement applied in relation to such service;

(c) in any case where it is unclear to the scheme manager whether the scheme provided a guaranteed minimum pension that accrued during the GMP indexation period, those sub-paragraphs have effect as if the scheme so provided;

(d) in any case where it is unclear to the scheme manager whether the accrual of a guaranteed minimum pension provided by the scheme (including by virtue of paragraph (c)) was in relation to particular GMP indexed service, those sub-paragraphs have effect as if the accrual was in relation to such service.

(2D) In sub-paragraphs (2A) to (2C)—

“GMP indexation period” means the period beginning with 6 April 1988 and ending with 5 April 1997;

“GMP indexed service” means—

(a) pensionable service (whether actual or notional) which occurs during the GMP indexation period; or

(b) where the pension was payable to, or in respect of, a qualifying member who is, or was, a pension credit member of the scheme, pension credit rights deriving from rights attributable to service (whether actual or notional) which occurred during the GMP indexation period;

“guaranteed minimum pension” has the meaning given in section 8(2) of the 1993 Act.”;

(c) in sub-paragraph (3), after “attributable to” insert “pre-1997 service and”.”—(Torsten Bell.)

This new clause makes provision for certain assistance paid under the Financial Assistance Scheme Regulations 2005 in respect of a person’s pre-1997 pensionable service to be increased annually.

Brought up, read the First and Second time, and added to the Bill.

New Clause 34

Exemption from public procurement rules

“(1) After paragraph 2 of Schedule 2 to the Procurement Act 2023 (general vertical arrangements exemption from public procurement rules) insert—

2A “(1) A contract between a local government pension scheme manager and an asset pool company providing for the company—

(a) to manage the funds and other assets for which the scheme manager is responsible,

(b) to make and manage investments on behalf of the scheme manager, and

(c) if the contract so provides, to carry out other investment management activities for or on behalf of the scheme manager,

if each of the conditions set out in sub-paragraph (2) is met.

(2) The conditions are—

(a) that more than 80% of the activities of the company are investment management activities carried out for or on behalf of local government pension scheme managers;

(b) that no person exercises a decisive influence on the activities of the company (either directly or indirectly) other than—

(i) the participating scheme managers in the company, acting in their capacity as local government pension scheme managers, and

(ii) where the only shareholder in the company is another company (see section 1(9)(a) of the Pension Schemes Act 2025), that other company;

(c) that the company does not carry out any activities that are contrary to the interests of—

(i) the participating scheme managers in the company, in their capacity as local government pension scheme managers, or

(ii) where the only shareholder in the company is another company, that other company.

(3) The contracts covered by this paragraph include a contract where the local government pension scheme manager concerned is already a participating scheme manager in the company (as well as one where the scheme manager concerned will become a participating scheme manager in the company as a result of entering into it).

(4) An appropriate authority may by regulations make provision about how a calculation as to the percentage of activities carried out by an asset pool company is to be made for the purposes of sub-paragraph (2)(a).

(5) For the purposes of sub-paragraph (2)(b), a person does not exercise a decisive influence on the activities of the asset pool company only by reason of—

(a) being a director, officer or manager of the company, acting in that capacity, or

(b) where the only shareholder in the company is another company, being a director, officer or manager of that other company.

(6) In this paragraph—

“asset pool company” has the meaning given by section 1(7)(a) of the Pension Schemes Act 2025;

“investment management activities” means activities involved in or connected with the management of funds or other assets for which a scheme manager is responsible (including making and managing investments on behalf of the scheme manager);

“local government pension scheme manager” means a person who is, by virtue of section 4(5) of the Public Service Pensions Act 2013, a scheme manager for a pension scheme for local government workers in England and Wales;

“participating scheme manager” , in relation to an asset pool company, means a local government pension scheme manager who participates in the company within the meaning of section 1(9)(b) of the Pension Schemes Act 2025.””—(Torsten Bell.)

This new clause amends the Procurement Act 2023 to create a new category of exempted contract covering certain investment management contracts between a local government scheme manager and the asset pool company. This is intended to replace Clause 4 in the current print of the Bill.

Brought up, read the First and Second time, and added to the Bill.

New Clause 35

Funding of the Board of the Pension Protection Fund

“(1) The Pensions Act 2004 is amended in accordance with subsections (2) to (5).

(2) Omit section 116 (power of Secretary of State to pay grants to Board of Pension Protection Fund).

(3) Omit section 117 (power of Secretary of State to impose administration levy on pension schemes).

(4) In section 173 (Pension Protection Fund), in subsection (3), before paragraph (a) insert—

“(za) any sums required to meet expenditure of the Board that is attributable to the operation or administration of the Pension Protection Fund,”

(5) In section 188 (fraud compensation fund), in subsection (3), before paragraph (a) insert—

“(za) any sums required to meet expenditure of the Board that is attributable to the operation or administration of the Fraud Compensation Fund,”

(6) No amount is payable to the Secretary of State by virtue of section 117 of the Pensions Act 2004 (administration levy) in respect of the financial years beginning with 1 April 2023 and 1 April 2024.

(7) In the Pensions Act 2008, in Schedule 10 (interest on late payment of levies), omit paragraph 3 (which makes an amendment about interest for late payment of the administration levy that has not been brought into force).”—(Torsten Bell.)

This new clause (which is intended to be added after clause 112) enables administrative expenses of the Board of the Pension Protection Fund to be paid out of the Pension Protection Fund and the Fraud Compensation Fund, and removes the existing administration levy mechanism; it also clarifies that no administration levy is payable for 2023/24 or 2024/25.

Brought up, read the First and Second time, and added to the Bill.

New Clause 3

Terminal illness: means of demonstrating eligibility

“(1) The Secretary of State must by regulations make provision about how a person may demonstrate that they are terminally ill for purposes relating to compensation or assistance from the Pension Protection Fund or Financial Assistance Scheme.

(2) In making regulations under this section, the Secretary of State must seek to minimise the administrative burden placed upon the person with a terminal illness.

(3) Regulations under this section must provide that, where the Department of Work and Pensions (“the Department”) holds a valid SR1 form in respect of a person seeking to demonstrate that they are terminally ill for purposes relating to compensation or assistance from the Pension Protection Fund or Financial Assistance Scheme, the Department must share that form with the Pension Protection Fund or the Financial Assistance Scheme.

(4) Regulations under this section must require the Pension Protection Fund and the Financial Assistance Scheme to make the appropriate payment or payments within a specified time of receipt of a valid application.”—(Manuela Perteghella.)

This new clause would require the Secretary of State to provide, by regulations, for the use of a valid SR1 form to make it easier for a person to demonstrate that they are terminally ill for purposes related to compensation from the PPF or FAS.

Brought up, and read the First time.

Question put, That the clause be read a Second time.