Since September 2006 we have been tracking the gentle demise of money purchase contracting-out, now picking up speed (see most recent Aries article) as we near abolition date next April. In the latter article we referred to two draft SIs: these have now been approved by Parliament to come into force on or immediately before 6 April 2012*.

* with the exception of SI 2011/1730 Reg 9, which comes into force on 6 April 2015.

The Pensions Act 2007 (Abolition of Contracting-out for Defined Contribution Pension Schemes) (Consequential Amendments) (No. 2) Regulations 2011 (SI 2011/1724) were originally laid before Parliament in May 2011 as a draft SI for approval by both Houses.

These Regs are made under s.15 PA 2007, which abolishes contracting-out of the state additional pension for pension schemes on a defined contribution basis. It provides that contracting-out certificates in relation to money purchase contracted-out schemes and appropriate schemes cease to have effect from the abolition date, confirmed by SI 2011/1267 as 6 April 2012.

The Regs make consequential amendments to primary legislation as a consequence of the abolition of contracting-out for defined contribution pension schemes. References to, and provisions which relate to, schemes which are contracted-out on a defined contribution basis are either omitted or, where appropriate, replaced with references to schemes which were contracted-out on that basis.

The Pensions Act 2008 (Abolition of Protected Rights) (Consequential Amendments) (No.2) Order 2011 (SI 2011/1730) were also originally laid before Parliament in May 2011 as a draft SI for approval by both Houses

This Order is made under s.145 PA 2008, which provides for amendments to be made in consequence of s.106 of that Act. S.106 abolishes the protected rights of members of pension schemes contracted-out on a defined contributions basis, from the contracting-out abolition date (6.4.2012).

This Order makes consequential amendments to primary legislation and provides for transitional provisions for the 3 years following abolition. References to, and provisions which relate to, protected rights are either omitted, or where appropriate, replaced with references to protected rights as they existed prior to the abolition date.

Article 5 makes a large number of such amendments to the Pension Schemes Act 1993. Articles 5(8) and (9) provide that HMRC can set a minimum level below which they will not pay an age-related payment or minimum contributions to an individual, where it would cost more to administer than the payment is worth.

Articles 7 and 8 make comparatively few amendments to PA 1995 and PA 2007 respectively. Article 8 repeals and amends certain amending provisions of PA 2007 before their commencement.

Article 9 amends PA 1993 with effect from 6 April 2015. Article 9(4) and (5) provide for payments of age-related payments or minimum contributions to be made to individuals in all cases, rather than the trustees or managers of the scheme, and substitutes the provisions inserted by article 5(8) and (9) of this instrument (see above) to provide for the minimum level below which such payments are not made to apply in all cases.

Other primary legislation to which minor amendments are made are

• The Bankruptcy (Scotland) Act 1985
• The Insolvency Act 1986
• The Judicial Pensions and Retirement Act 1993