The Pensions Act 2004 (c. 35) is an
Act of the
Parliament of the United Kingdom
The Parliament of the United Kingdom of Great Britain and Northern Ireland is the supreme legislative body of the United Kingdom, and may also legislate for the Crown Dependencies and the British Overseas Territories. It meets at the Palace ...
to improve the running of pension schemes.
Background
In the years following the introduction of the
Pensions Act 1995, it was widely perceived that it was failing to offer the protection to pension scheme members that had been anticipated. The Occupational Pensions Regulatory Authority was perceived as being reactive, didactic and uncommercial. The
minimum funding requirement had not prevented some pension schemes winding up with insufficient assets to secure their liabilities, amid considerable publicity. There was strong political pressure to establish a guarantee fund similar to the American
Pension Benefit Guaranty Corporation
The Pension Benefit Guaranty Corporation (PBGC) is a United States federally chartered corporation created by the Employee Retirement Income Security Act of 1974 (ERISA) to encourage the continuation and maintenance of voluntary private defined ...
. Much of the regulation was perceived to be unnecessarily restrictive. The Pensions Act 2004 was written to try to fix these deficiences. The Act introduced two new regulatory institutions: the
Pensions Regulator, with the powers to require sponsoring companies to make contributions to ensure that scheme funding objectives are met; and the
Pension Protection Fund, which would inherit the pension liabilities of a pension scheme in the event that a sponsoring company becomes insolvent.
In assessing the consequences of the Act, there is evidence that corporate dividend and investment sensitivities to pension contributions were more pronounced in and after 2005, indicating that the regulations imposed by the Act had a significant effect on corporate expenditures.
Overview
The main features of the Act include:
* The abolition of the Occupational Pensions Regulatory Authority and its replacement by
the Pensions Regulator
The Pensions Regulator (TPR) is a non-departmental public body
In the United Kingdom, non-departmental public body (NDPB) is a classification applied by the Cabinet Office, Treasury, the Scottish Government, and the Northern Ireland Executive ...
, with wider powers to intervene of its own volition;
* New powers for the Pensions Regulator to intervene where employers, directors and majority shareholders were perceived to be avoiding their responsibilities to pension schemes and where employers were insufficiently resourced to support the pension scheme;
* New notification requirements;
* The establishment of the
Pension Protection Fund to provide benefits for pension scheme members where a pension scheme had gone into winding-up with insufficient resources to fund scheme benefits and no employer to make good the underfunding;
* The abolition of the minimum funding requirement and its replacement with scheme-specific funding requirements;
* Modification of the protections for existing pension scheme benefits and of the requirements for pension schemes to have member nominated trustees.
Contents
*Part 1, The
Pensions Regulator, ss 1–106
*Part 2, The Board of the
Pension Protection Fund, ss 107–220
*Part 3, Scheme Funding ss 221–233
*Part 4, Financial Planning for Retirement, ss 234–238
*Part 5, Occupational and Personal Pension Schemes: Miscellaneous Provisions, ss 239–285
*Part 6, Financial Assistance Scheme for Members of Certain Pension Schemes, s 286
*Part 7, Cross-border Activities within European Union, ss 287–295
*Part 8, State Pensions, s 296–299
*Part 9, Miscellaneous and Supplementary, ss 300–325
;Schedules
*Schedule 1, The Pensions Regulator
*Schedule 2, The reserved regulatory functions
*Schedule 3, Restricted information held by the Regulator: certain permitted disclosures to facilitate exercise of functions
*Schedule 4, The Pensions Regulator Tribunal
*Schedule 5, The Board of the Pension Protection Fund
*Schedule 6, Transfer of property, rights and liabilities to the Board
*Schedule 7, Pension compensation provisions
*Schedule 8, Restricted information held by the Board: certain permitted disclosures to facilitate exercise of functions
*Schedule 9, Reviewable matters
*Schedule 10, Use and supply of information: private pensions policy and retirement planning
*Schedule 11, Deferral of retirement pensions and shared additional pensions
*Schedule 12, Minor and consequential amendments
*Schedule 13, Repeals and revocations
See also
*
UK labour law
United Kingdom labour law regulates the relations between workers, employers and trade unions. People at work in the UK have a minimum set of employment rights, from Acts of Parliament, Regulations, common law and equity (legal concept), equity. ...
*
Pensions in the United Kingdom
Pensions in the United Kingdom, whereby United Kingdom tax payers have some of their wages deducted to save for retirement, can be categorised into three major divisions – state, occupational and personal pensions.
The state pension is based o ...
*
Pensions Act 1995
Notes
External links
Association of Member-Directed Pension Schemes (AMPS)- The principal body for discussing changes involved in the area of pension planning.
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{{UK legislation
Pensions in the United Kingdom
United Kingdom Acts of Parliament 2004