My Lords, this group of amendments is required to ensure that the transfer provisions contained in Schedule 4, which replace provisions under the Pension Schemes Act 1993, continue to operate effectively. The amendments will also ensure that the regulations being adjusted to take account of the new transfer rights that we are creating operate correctly. It may appear that we are taking a range of additional regulation-making powers, but I reassure noble Lords that that is not the case.
Many of these amendments will enable the continued operation of regulations that have been created under existing powers in the Pension Schemes Act 1993 and their adaptation for the new transfer provisions. These regulations were created under a broad power in the Act to modify or disapply the transfer provisions. This power related to salary-related schemes. As this term will no longer be used, that section of the legislation was removed. However, the regulations that flowed from it still need to operate in the broader regime that we are now creating. Rather than replace the broad power, these amendments introduce a number of more specific powers so that it is clearer in the primary legislation what the regulation-making powers are being used for.
I will now briefly set out what each amendment does. Amendment 25 restores an existing power to ensure that the Transfer Values (Disapplication) Regulations continue to have effect by creating a new limb to new Section 93(10) to provide a power to disapply the right to transfer in prescribed circumstances in relation to a prescribed scheme or a member of a prescribed scheme. It is necessary to restore this power to ensure, for example, that the current provisions relating to NEST and transfers continue to have effect. Amendment 33 makes identical provisions for the corresponding Northern Ireland legislation.
Amendment 26 will allow the continued operation of the regulations that give a member more time to make a decision about their transfer if their cash equivalent value has changed—for example, due to a mistake in the original calculation—after they have received their statement of entitlement. From April, members with safeguarded benefits will be required to take “appropriate independent advice” before their transfer out can be processed. This amendment would allow regulations to provide for more time to apply for a transfer if they do not obtain their financial advice within the usual three-month period, should this prove necessary. Amendment 29 will allow regulations to make corresponding time extension provisions for trustees to do what is necessary to give effect to their members’ wishes.
Amendment 27 provides a power to allow the continued operation of the transfer regulations that enable a member to choose whether to proceed with a transfer where the amount of the cash equivalent shown in a statement of entitlement is subsequently increased or reduced.
Amendment 28 makes a consequential amendment to the existing legislation that sets out when a member’s right to a transfer falls away. It puts beyond doubt that the right to a transfer value falls away either after three months or after any extension period granted by the legislation. This amendment has been made in response
to industry concerns that the current situation could place trustees in a conflicting position where they could not action the transfer, as the advice had not been obtained within the relevant period, even though, in theory, the right to transfer still existed.
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Amendments 30 to 32 deal with pension credit members who have acquired pension rights in a scheme following a divorce settlement. Amendment 30 restores in part an existing power by adding a power to the provisions dealing with pension credit members; that is, those who have rights in the scheme as a consequence of a court order made on divorce or dissolution of a civil partnership. The power allows regulations to disapply the right to transfer in relation to persons of prescribed descriptions. An identical power was inserted into the legislation by the Pensions Act 2008 but was inadvertently omitted in the current legislative changes and is now being restored.
Amendments 31 and 32 provide that pension credit members may be granted additional time, in prescribed circumstances, to complete the various steps of the transfer process. This will ensure that pension credit members have time to obtain the “appropriate independent advice” where they wish to transfer safeguarded benefits to a scheme that will provide flexible benefits and receive parity of treatment with members under regulations. Amendments 34 to 39 make identical provisions for the corresponding Northern Ireland legislation.
The amendments will ensure that the transfer process continues to operate smoothly for members and scheme trustees after April, when the new transfer requirements come into force. I hope that I have reassured noble Lords that these are not a whole new set of regulation-making powers, but rather allow existing regulations, suitably adapted, to continue to operate. I beg to move.