Welfare Reform and Pensions Bill - continued        House of Lords
SCHEDULE 12, CONSEQUENTIAL AMENDMENTS - continued
PART II, OTHER CONSEQUENTIAL AMENDMENTS - continued
Bankruptcy (Scotland) Act 1985 (c.66) - continued

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Recovery orders: supplementary.     36F. - (1) The person responsible for a pension arrangement under which the transferee has, at any time, acquired rights by virtue of the transfer of the appropriate amount shall, on the permanent trustee on the debtor's estate making a written request, provide the trustee with such information about the arrangement and the rights under it of the transferor and transferee as the permanent trustee may reasonably require for, or in connection with, the making of an application for a recovery order.
 
      (2) Nothing in-
 
 
    (a) any provision of section 159 of the Pension Schemes Act 1993 or section 91 of the Pensions Act 1995 (which prevent assignation and the making of orders which restrain a person from receiving anything which he is prevented from assigning),
 
    (b) any provision of any enactment (whether passed or made before or after the passing of the Welfare Reform and Pensions Act 1999) corresponding to any of the provisions mentioned in paragraph (a), or
 
    (c) any provision of the arrangement in question corresponding to any of those provisions,
  applies to a court exercising its power to make a recovery order.
 
      (3) Regulations may, for the purposes of the recovery provisions, make provision about the calculation and verification of-
 
 
    (a) any such value as is mentioned in section 36E(4)(b);
 
    (b) any such amounts as are mentioned in section 36E(6)(a) and (b).
      (4) The power conferred by subsection (3) includes power to provide for calculation or verification-
 
 
    (a) in such manner as may, in the particular case, be approved by a prescribed person; or
 
    (b) in accordance with guidance-
 
      (i) from time to time prepared by a prescribed person, and
 
      (ii) approved by the Secretary of State.
      (5) References in the recovery provisions to the person responsible for a pension arrangement are to-
 
 
    (a) the trustees, managers or provider of the arrangement, or
 
    (b) the person having functions in relation to the arrangement corresponding to those of a trustee, manager or provider.
      (6) In this section-
 
 
    "prescribed" means prescribed by regulations;
 
    "the recovery provisions" means this section and sections 34, 35, 36 and 36E of this Act;
 
    "regulations" means regulations made by the Secretary of State.
      (7) Regulations under the recovery provisions may-
 
 
    (a) make different provision for different cases;
 
    (b) contain such incidental, supplemental and transitional provisions as appear to the Secretary of State necessary or expedient.
      (8) Regulations under the recovery provisions shall be made by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament."
 
 
Insolvency Act 1986 (c.45)
     68. The Insolvency Act 1986 is amended as follows.
 
     69. After section 342C there is inserted-
 
"Recovery of excessive contributions in pension-sharing cases.     342D. - (1) For the purposes of sections 339, 341 and 342, a pension-sharing transaction shall be taken-
 
 
    (a) to be a transaction, entered into by the transferor with the transferee, by which the appropriate amount is transferred by the transferor to the transferee; and
 
    (b) to be capable of being a transaction entered into at an undervalue only so far as it is a transfer of so much of the appropriate amount as represents excessive contributions.
      (2) For the purposes of sections 340 to 342, a pension-sharing transaction shall be taken-
 
 
    (a) to be something (namely a transfer of the appropriate amount to the transferee) done by the transferor; and
 
    (b) to be capable of being a preference given to the transferee only so far as it is a transfer of so much of the appropriate amount as represents excessive contributions.
      (3) If on an application under section 339 or 340 any question arises as to whether, or the extent to which, the appropriate amount in the case of a pension-sharing transaction represents excessive contributions, the question shall be determined in accordance with subsections (4) to (8).
 
      (4) The court shall first determine the extent (if any) to which the transferor's rights under the shared arrangement at the time of the transaction appear to have been (whether directly or indirectly) the fruits of contributions ("personal contributions")-
 
 
    (a) which the transferor has at any time made on his own behalf, or
 
    (b) which have at any time been made on the transferor's behalf,
  to the shared arrangement or any other pension arrangement.
 
      (5) Where it appears that those rights were to any extent the fruits of personal contributions, the court shall then determine the extent (if any) to which those rights appear to have been the fruits of personal contributions whose making has unfairly prejudiced the transferor's creditors ("unfair contributions").
 
      (6) If it appears to the court that the extent to which those rights were the fruits of unfair contributions is such that the transfer of the appropriate amount could have been made out of rights under the shared arrangement which were not the fruits of unfair contributions, then the appropriate amount does not represent excessive contributions.
 
      (7) If it appears to the court that the transfer could not have been wholly so made, then the appropriate amount represents excessive contributions to the extent to which it appears to the court that the transfer could not have been so made.
 
      (8) In making the determination mentioned in subsection (5) the court shall consider in particular-
 
 
    (a) whether any of the personal contributions were made for the purpose of putting assets beyond the reach of the transferor's creditors or any of them, and
 
    (b) whether the total amount of any personal contributions represented, at the time the pension-sharing transaction was made, by rights under pension arrangements is an amount which is excessive in view of the transferor's circumstances when those contributions were made.
      (9) In this section and sections 342E and 342F-
 
 
    "appropriate amount", in relation to a pension-sharing transaction, means the appropriate amount in relation to that transaction for the purposes of section 26(1) of the Welfare Reform and Pensions Act 1999 (creation of pension credits and debits);
 
    "pension-sharing transaction" means an order or provision falling within section 25(1) of the Welfare Reform and Pensions Act 1999 (orders and agreements which activate pension-sharing);
 
    "shared arrangement", in relation to a pension-sharing transaction, means the pension arrangement to which the transaction relates;
 
    "transferee", in relation to a pension-sharing transaction, means the person for whose benefit the transaction is made;
 
    "transferor", in relation to a pension-sharing transaction, means the person to whose rights the transaction relates.
Orders under section 339 or 340 in respect of pension-sharing transactions.     342E. - (1) This section and section 342F apply if the court is making an order under section 339 or 340 in a case where-
 
 
    (a) the transaction or preference is, or is any part of, a pension-sharing transaction, and
 
    (b) the transferee has rights under a pension arrangement ("the destination arrangement", which may be the shared arrangement or any other pension arrangement) that are derived, directly or indirectly, from the pension-sharing transaction.
      (2) Without prejudice to the generality of section 339(2) or 340(2), or of section 342, the order may include provision-
 
 
    (a) requiring the person responsible for the destination arrangement to pay an amount to the transferor's trustee in bankruptcy,
 
    (b) adjusting the liabilities of the destination arrangement in respect of the transferee,
 
    (c) adjusting any liabilities of the destination arrangement in respect of any other person that derive, directly or indirectly, from rights of the transferee under the destination arrangement,
 
    (d) for the recovery by the person responsible for the destination arrangement (whether by deduction from any amount which that person is ordered to pay or otherwise) of costs incurred by that person in complying in the transferor's case with any requirement under section 342F(1) or in giving effect to the order,
 
    (e) for the recovery, from the transferor's trustee in bankruptcy, by the person responsible for a pension arrangement, of costs incurred by that person in complying in the transferor's case with any requirement under section 342F(2) or (3).
      (3) In subsection (2), references to adjusting the liabilities of the destination arrangement in respect of a person include (in particular) reducing the amount of any benefit or future benefit to which that person is entitled under the arrangement.
 
      (4) The maximum amount which the person responsible for the destination arrangement may be required to pay by the order is the lesser of-
 
 
    (a) so much of the appropriate amount as, in accordance with section 342D, represents excessive contributions, and
 
    (b) the value of the transferee's rights under the destination arrangement so far as they are derived, directly or indirectly, from the pension-sharing transaction.
      (5) If the order requires the person responsible for the destination arrangement to pay an amount ("the restoration amount") to the transferor's trustee in bankruptcy it must provide for the liabilities of the arrangement to be correspondingly reduced.
 
      (6) For the purposes of subsection (5), liabilities are correspondingly reduced if the difference between-
 
 
    (a) the amount of the liabilities immediately before the reduction, and
 
    (b) the amount of the liabilities immediately after the reduction,
  is equal to the restoration amount.
 
      (7) The order-
 
 
    (a) shall be binding on the person responsible for the destination arrangement, and
 
    (b) overrides provisions of the destination arrangement to the extent that they conflict with the provisions of the order.
 
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