The Explanatory Notes to the Pensions Act 2004 were published yesterday as promised on the HMSO website (in html format). A printed copy (ISBN 0105635049) is available for £16.50 from TSO bookshop or tel 0870 600 5522 or e-mail: customer.services@tso.co.uk). No further guidance on interpretation of the Act is expected to be published by the DWP.
Also posted on the HMSO site yesterday was a new SI (SI 2005/277) which modifies Part 2 of the Pensions Act in respect of "partially guaranteed schemes": ie schemes eligible for the Pension Protection Fund (PPF) for which a "relevant public authority" has given a guarantee in relation to some part of the scheme, the members or the benefits payable; or in some other way ensured that the assets are sufficient to secure part of the liabilities.
These Regulations are made under s.307(3) of the Act. The modifications operate so that the Board of the PPF only takes into account the assets and liabilities of the unsecured part of a partially guaranteed scheme and can only assume responsibility for that part.
There has been no prior consultation or published draft of these Regs. Under s.317 of the Act, as these Regulations are made before the expiry of the period of six months beginning with the coming into force of the provisions of the Act by virtue of which they are made, the requirement of the Secretary of State to consult such persons as he considers appropriate does not apply.
In other developments, the DWP has informed members of the Joint Working Group (which includes most of the major industry bodies) of current Government thinking on Member-Nominated Trustees and Directors (MNTs and MNDs). The new provisions in ss. 241 - 243 of the Act (removing the 'employer opt-out') will come into force on 6 April 2006. However, where an existing opt-out is in force on that date, the arrangements will be permitted to continue until their approval expires in accordance with the existing law, subject to an overall cut-off date which will probably be set at 31 October 2007.
No decisions about how or when the move to 50% have been made yet. Independent trustees will be disregarded for the purpose of calculating the 50% threshold, and further thought will be given to the impact of the MNT requirements on schemes where the sole trustee is independent of both employer and employees. The Government does not propose to legislate on the question of whether a chairman should have a casting vote in the event of a stalemate, preferring to leave it to scheme rules.
Finally, the Actuarial Profession has issued an amended version of GN19: Retirement Benefit Schemes - Winding-up and Scheme Asset Deficiency [PDF] to its members. Version 4.5 of GN19 came into effect yesterday (ie 15 February 2005). A tracking copy is available showing the changes from Version 4.4.
This Guidance Note sets out the way in which the actuary should determine the assets available to each priority liability class when an occupational pension scheme subject to the MFR requirements winds-up and how any debt due from an employer should be determined. The Government has laid regulations (SI 2005/72) whose main purpose is to require that more debt on the employer calculations are performed on a full buy-out basis. GN19: Retirement benefit schemes - winding up and scheme asset deficiency is therefore being amended so that it reflects this change. Further changes are expected to GN19 in the near future to reflect the revisions to ss 73 and 75 of the Pensions Act 1995 made by s.272 of the 2004 Act and consequential regulations that will be laid before Parliament.