Select Committee on Delegated Powers and Deregulation Seventeenth Report


Part VI - General

CLAUSE 78 - REGULATIONS AND ORDERS

428. Clause 78 does not, as such, contain any substantive powers to make delegated legislation, but contains general, technical provisions about the powers in the Bill to make regulations and orders. These are standard social security and pensions provisions. For example, similar provisions are contained in section 36 of the Jobseekers Act 1995 and section 174 of the Pensions Act 1995.

429. Subsection (2) provides for regulations to be subject to the negative resolution procedure.

430. Subsections (3) to (5) follow other social security legislation in enabling regulations to make different provision within the classes to which the specific regulation-making power relates, and may make incidental or transitional provisions.

431. Subsections (8) and (9) give the Treasury a joint role in making regulations under the pension sharing provisions in Part IV of the Bill, if the Treasury so direct.

CLAUSE 79 - CONSEQUENTIAL AMENDMENTS

432. This clause gives effect to Schedule 12 which makes consequential amendments in connection with Parts III and IV of the Bill. Subsection (2) provides regulation-making powers to enable the Secretary of State to amend or revoke any instrument made under an Act as he thinks necessary or expedient as a consequence of the coming into force of any provisions specified in subsection (4). It is particularly important for powers to be provided to modify existing statutory requirements as it is intended that pensions sharing should be capable of extension to virtually all pension rights and such is the complexity of pensions law, and so wide is the range of pension arrangements and the type of benefits provided that it would be probably be impossible to identify every amendment needed on the face of the Bill.

433. Subsection (3) provides a power to enable the Secretary of State to make by regulations the kind of provision that can be included in a commencement order.

434. So, for example, the Secretary of State will be able to make regulations commencing Parts III and IV of the Bill. Such matters are frequently left to delegated legislation and, in the case of pension sharing, such flexibility is important as it is planned to link commencement of pension sharing with the commencement of Part II of the Family Law Act 1996.

CLAUSE 80 - TRANSITIONAL PROVISIONS

435. Clause 80(1) gives the power to make any necessary transitional arrangements for the provisions in Parts I and II the Bill. Similar provisions relating to Part V of the Bill are included at subsection (10). Again this is a standard social security provision. (For example, see section 40 of the Jobseekers Act 1995.)

436. These are standard formulations used elsewhere in Social Security legislation. For example, the powers in subsection (10) will be used to provide protection for current recipients of Severe Disablement Allowance. Regulations will allow them to keep their benefit entitlement, even though the benefit will no longer be available to new claimants.

CLAUSE 83 - COMMENCEMENT ETC

437. This clause contains a power to bring separate provisions of the Bill into force by Commencement orders. Again this is a standard provision (see, for example, section 41 of the Jobseekers Act 1995 and section 180 of the Pensions Act 1995), and is not subject to any Parliamentary procedure.

SCHEDULE 11 - CONTRIBUTIONS AND PENSIONS ADMINISTRATION

438. With one exception, Schedule 11 does not create any new delegated powers. It does, however, in paragraphs 2, 3, 6, 10 and 11, transfer responsibility for exercising existing delegated powers from the Secretary of State to the Board of Inland Revenue, or to the Treasury. This follows the pattern of transferring contributions functions set out in paragraph 8 of the memorandum provided by the Department of Social Security for the Social Security Contributions (Transfer of Functions, etc.) Bill (published in the First Report of the Committee for the 1998-99 session (HL Paper 7)).

439. The one exception is paragraph 18 (and its Northern Ireland equivalent, paragraph 21). This provision amends section 170(5) of the Pension Schemes Act 1993, as amended by section 16 of the Social Security Contributions (Transfer of Functions, etc.) Act 1999. This section contains regulation-making powers which concern the procedures to be adopted in relation to the decision making and appeals process principally for contracting-out of the State Earnings Related Pension Scheme. The intention is that Inland Revenue will follow the procedures envisaged by Chapter II of the Social Security Act 1998. section 170(5) contains powers which permit regulations to be made regarding, among other things, decisions under Part III of the Pension Schemes Act.

440. However, unlike the powers in Chapter II of the Social Security Act 1998, section 170(5) does not contain a regulation-making power to cover first instance decisions (for example, a decision on an application from an employer for a contracting-out certificate). Paragraph 18 corrects this inconsistency by extending the power in section 170(5) to include first instance decisions. The Department considers it appropriate for first instance decisions to be covered in regulations in the same way as are other decisions (such as revision of decisions or supersession of earlier decisions) relating to matters concerning contracting out.

SCHEDULE 12 - CONSEQUENTIAL AMENDMENTS

441. The delegated powers in the consequential amendments below are consistent with the approach in both the Pension Schemes Act 1993 and the Pensions Act 1995 and the Department believes that it is right to continue to deal with these matters in secondary legislation.

442. Paragraph 9(3) amends section 10 of the Family Law (Scotland) Act 1985 by substituting a new subsection (8). The new subsection (8) takes account of pension sharing by updating the existing provisions in the 1985 Act concerning the calculation and verification of benefits, the provision of information and the recovery of administrative expenses for providing information in relation to pension "earmarking" in Scotland.

443. The regulations described in section 10(8)(a) confer power on the Secretary of State to make provision about calculation and verification for the purposes of the 1985 Act of benefits under a pension arrangement or relevant state scheme rights. As is presently the case, these regulations will determine the basis upon which any pension benefits that form part of the matrimonial property (ie the pension benefits that are referable to the period of the marriage) will be valued. It is envisaged that the valuation will continue to be made on the basis of a cash equivalent transfer. It is also intended that the regulations will prescribe the method of determining what pension benefits should be considered as part of the matrimonial property. Unlike the position previously the regulations will also make provision for the way in which state scheme rights that form part of matrimonial property should be valued. By virtue of subsection (8A), the regulations may include provision for calculation or verification in accordance with guidance issued from time to time prepared by a prescribed person and provision by reference to regulations under clauses 26 or 45(4) of the Bill. These regulations are concerned with the valuation of matrimonial property for the purposes of divorce proceedings in Scotland. They will accordingly be made by the Scottish Ministers and will go before the Scottish Parliament.

444. Under regulations described in section 10(8)(b) the Secretary of State has power to make provision by regulations about the calculation and verification in relation to the valuation for the purposes of this Act of shareable rights under a pension scheme or shareable state scheme rights. The pension benefits that are available for sharing will be the parties current pension benefits. The regulations under section 10(8)(b) will set out the basis upon which these benefits should be valued. As with the regulations under section 10(8)(a), it is intended that shareable pension benefits and shareable state scheme rights should be valued on a cash equivalent transfer basis. These regulations relate to the pension sharing provisions in the Bill and will therefore be made by the Secretary of State and will go before the Westminster Parliament

445. Under regulations described in section 10(8)(c) the Secretary of State has power to impose on the person responsible for a pension arrangement or, in the case of state scheme rights on the Secretary of State, requirements with respect to the supply of information for the purposes of the act and for the recovery of administrative expenses of providing such information from either party. It is intended that the regulations will make provision for the information that pension arrangements and the Secretary of State require to provide to enable:-

  1. valuations under the section 10(8)(a) regulations of the pension benefits and state scheme rights that form part of the matrimonial property; and
  2. valuations under the section 10(8)(b) regulations of the shareable pension benefits and shareable state scheme rights.

446. The regulations described in section 10(8)(c) place obligations on pension trustees and therefore relate to matters that are within the reserved competence of the Westminster Parliament. As with the section 10(8)(b) regulations, they will be made by the Secretary of State and will go before the Westminster Parliament.

447. Paragraph 31 amends section 83 of the Pension Schemes Act 1993 which contains provisions for revaluing the benefits of early leavers from occupational schemes from the date on which pensionable service ends until the scheme's normal pension age (NPA). The new subsection (1A) excludes benefits payable by virtue of pension credit rights, except, in the case of salary-related occupational pension schemes, to the extent that the benefits are payable by virtue of rights which involve the member being credited with added years of pensionable service. The regulation-making power in the new section 83(4) inserted by paragraph 31(4) provides the flexibility to exclude a salary-related scheme that does not fall within a prescribed class. For example, it is intended to exclude a public service pension scheme which is made under the section 7 of the Superannuation Act 1972 since such a scheme provides full price indexation of deferred pensions from the date of termination of pensionable service until the scheme's normal pension age.

448. Paragraph 52(4) substitutes a new section 67(5) of the Pensions Act 1995. The regulation-making power at the new (5)(b) is carried forward from the existing section 67(5) which provides an exemption from the restriction on the power to modify schemes where that power is exercised in a prescribed manner. The prescribed manner is defined in Regulation 6 of the Occupational Pension Schemes (Modification of Schemes) regulations 1996 (S.I. No 1996/2517) as, in the case of an occupational pension scheme which is not a trust scheme, the exercise of the power by the managers of the scheme with the member's consent.


 
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