Select Committee on Delegated Powers and Deregulation Thirteenth Report



PART II

CHAPTER II - OCCUPATIONAL AND PERSONAL PENSION SCHEMES

INTRODUCTION

202.  The delegated powers in this part of the Bill serve a number of functions. As with other pensions legislation, for example, Pensions Act 1995, the legal framework is set out in primary legislation but there is provision for matters of detail, which the Department believes are not appropriate to primary legislation, to be set out in regulations.

203.  A number of the provisions remain subject to consultation on their detailed operation, for example, steps that a person may be directed by the Occupational Pensions Regulatory Authority (Opra) in order facilitate the winding up of a pension scheme. Providing for the detail to be set out in regulations allows it to be adjusted in the light of consultation with the pensions industry and others, and to take account of operational experience, without having to take up a substantial amount of parliamentary time to amend primary legislation.

CLAUSE 42 - SELECTION OF TRUSTEES AND DIRECTORS OF CORPORATE TRUSTEES

204.  Clause 42 amends section 16 of the Pensions Act 1995. Taken with clause 43, it ensures that (subject to certain prescribed exemptions) every trust based occupational pension scheme will have at least one third member-nominated trustees or member-nominated directors where the trustee is a company.

205.  In the Department's view, some of the precise detail of the requirements is appropriate for secondary legislation. Putting the detail in secondary legislation provides further opportunity for detailed consultation, and will enable the Department to adjust the requirements in the light of operational experience.

206.  The regulation-making powers in sections 16 to 21 of the Pensions Act, as revised by these clauses, are analogous to the existing regulation-making powers. We anticipate the scope of regulations under the revised clauses will be the same as the existing Occupational Pension Schemes (Member-nominated Trustees and Directors) Regulations 1996 - SI 1216.

207.  Section 16(9)(a) provides a power to prescribe further details of the arrangements trustees are required to make for nominating and selecting member-nominated trustees.

208.  It is intended that regulations under section 16(9)(a) will stipulate that the arrangements for nominating and selecting member-nominated trustees must provide that:

  • all active, deferred and pensioner members are free to stand for selection;
  • all active and pensioner members are free to make nominations; and
  • such deferred members as the trustees determine are free to make nominations.

209.  Subsection 16(9)(b) provides a power to prescribe the details of the nomination and selection process to be used, and to prescribe a time within which trustees must be nominated and selected in accordance with the procedure.

210.  It is intended that regulations under section 16(9)(b) will be used to give trustees the option to adopt nomination and selection procedures that are more flexible than a straightforward "one person one vote" arrangement. For example, these regulations will allow trustees to split the scheme membership into separate constituencies, both for nomination and selection procedures (eg, on a geographical basis, or to create a separate constituency for pensioner members). Trustees will be able to use selection panels to make the final choice if there are more nominations than vacancies, but the majority of the selection panel must be made up of members or member representatives. It is intended that, in the case of section 18A arrangements, the trustees will be given six months from the date the arrangements are approved to ensure the member-nominated trustees are put in place. For other arrangements, it is intended that trustees will be given six months to devise and implement the arrangements and put member-nominated trustees in place.

211.  Section 16(10)(c) provides a power to exempt schemes of a prescribed description from the requirements of section 16. It is intended that regulations under section 16(10)(c) will exempt broadly the same types of schemes as are exempt under current regulations made under section 17(4) of the Pensions Act - the Occupational Pension Schemes (Member-nominated Trustees and Directors) Regulations 1996 - SI 1216.

212.  This will be any scheme:

  • which has less than two members;
  • where the only benefits provided are death benefits;
  • to which section 119 of the Pension Schemes Act 1993 (requirement for independent trustee where employer becomes insolvent etc.) or section 22 (circumstances for application of requirement for an independent trustee) applies;
  • which is an occupational pension scheme that provides relevant benefits, but is neither an approved scheme nor a relevant statutory scheme;
  • which is a relevant self-administered scheme;
  • which is a relevant approved centralised scheme;
  • which is a direct payment, paid-up insured scheme;
  • which is a former old code scheme;
  • which is a section 615(6) scheme;
  • which is made under section 2 of the Parliamentary and other Pensions Act 1987 (power to provide for pensions for Members of the House of Commons etc.); or
  • which has been modified under Schedule 5 to the Coal Industry Act 1994.

213.  In addition to these existing exemptions, the Department has already consulted publicly on the question of whether there should be an exemption for insured ear-marked money purchase schemes. The proposal was included in the paper "Member-nominated Trustees and Directors - a consultation document" that was issued on 7th October 1999. Discussions with interested parties are ongoing.

214.  The Department is also considering whether exemptions are appropriate for other schemes, in particular schemes with independent trustees.

CLAUSE 43 - CORPORATE TRUSTEES

215.  Clause 43 amends section 18 of the Pensions Act. Section 18 makes similar provision to section 16, but for schemes with a corporate trustee. Schemes with a corporate trustee will be required to have at least one third member-nominated directors.

216.  Section 18(8) applies where a corporate trustee is trustee for more than one scheme. It provides for the different schemes to be treated as a single scheme for the purpose of devising and implementing arrangements for nominating and selecting member-nominated directors. Section 18(8)(b) provides the power to elect in a prescribed manner that this will not apply, and that the schemes will be treated as separate schemes. It is intended that the prescribed manner will be that the election is made by the trustee according to the normal decision making process for the company.

217.  Section 18(9)(a) provides a power to prescribe further details of the arrangements the trustee company is required to make for nominating and selecting member-nominated directors. It is the equivalent regulation-making power to section 16(9)(a), but for schemes where the trustee is a company. It is intended that regulations under this section will make similar provision.

218.  Section 18(9)(b) provides a power to prescribe the details of the nomination and selection process to be used, and to prescribe a time within which directors must be nominated and selected in accordance with the procedure. It is the equivalent regulation-making power to section 16(9)(b), but for schemes where the trustee is a company. It is intended that regulations under this section will make similar provision.

219.  Section 18(10) provides a power to exempt schemes of a prescribed description from the requirements of section 18. It is the equivalent regulation-making power in section 16(10)(c), but for schemes where the trustee is a company. It is intended to use the power to exempt broadly the same types of scheme as are exempt under current regulations made under section 19(4) of the Pensions Act - the Occupational Pension Schemes (Member-nominated Trustees and Directors) Regulations 1996.

220.  This will be any scheme:

  • which has less than two members;
  • the only benefits provided by which are death benefits;
  • to which section 119 of the Pension Schemes Act 1993 (requirement for independent trustee where employer becomes insolvent etc.) or section 22 (circumstances for application of requirement for an independent trustee) applies;
  • which is an occupational pension scheme which provides relevant benefits, but is neither an approved scheme nor a relevant statutory scheme;
  • which is a relevant self-administered scheme;
  • which is a relevant approved centralised scheme;
  • which is a relevant executive pension scheme in relation to the company;
  • which is a direct payment, paid-up insured scheme;
  • which is a relevant wholly insured scheme;
  • which is a former old code scheme;
  • which is a section 615(6) scheme;
  • which is made under section 2 of the Parliamentary and other Pensions Act 1987 (power to provide for pensions for Members of the House of Commons etc.); or
  • which has been modified under Schedule 5 to the Coal Industry Act 1994.

221.  As with exemptions under section 16(10)(c), the Department is already considering whether there should be an exemption for insured ear-marked money purchase schemes, and whether exemptions are appropriate for other schemes, in particular schemes with independent trustees.

CLAUSE 44 - EMPLOYER'S PROPOSALS FOR SELECTION OF TRUSTEES OR DIRECTORS

222.  Clause 44 introduces section 18A to the Pensions Act in place of sections 17 and 19 which are repealed. It provides for employers to propose bespoke nomination and selection procedures for appointing trustees to the scheme (or directors where the trustee is a company). At least one third of the trustees must be member-nominated trustees, and the proposal will be adopted only if approved under a prescribed consultation procedure.

223.  Section 18A(1)(c) provides a power to prescribe that arrangements for nominating and selecting member-nominated trustees under section 18A comply with additional requirements. It is intended that these regulations will stipulate what are acceptable nomination and selection procedures for an employer's proposal under s18A. They will provide for nominations by bodies representing the interests of scheme members - trades unions and pensioner organisations for example. It is intended that they will also provide that the employer will be able to propose the selection process to be used in cases where there are more nominations than vacancies.

224.  Section 18A(1)(d) provides a power to prescribe the statutory consultation procedure to be used to seek member approval for the employer's proposal under this section. It is equivalent to the existing regulation-making power in section 17(1)(b) of the Pensions Act.

225.  We intend that the prescribed consultation procedure will be broadly the same as it is now for arrangements under sections 17 and 19 of the Pensions Act. The current provisions are in Schedule 1 to the Occupational Pension Schemes (Member-nominated Trustees and Directors) Regulations 1996 SI 1216. In line with this, it is intended that all active and pensioner members (and such deferred members as the trustees determine) will have to be consulted, and approval will be deemed if less than 10% object to the proposal. It is also intended that regulations will tighten up the procedure to minimise any scope for abuse, for example by prohibiting the employer from requiring reasons for objections; requiring objections to be sent to the trustees; arranging for results to be declared and possibly requiring secret ballots/returns with independent scrutiny.

226.  Section 18A(1)(e) provides the power to prescribe other conditions that must be satisfied in relation to the employer's proposal under this section. It is equivalent to the existing regulation-making power in section 17(1)(c) of the Pensions Act. It is intended that regulations under this provision will:

  • require the employer to give notice of his intention to seek approval to the trustees within a given timeframe. As with the current regulations under section 17(1)(c), it is intended that the timeframe will normally restrict the employer to one opportunity every six years;
  • permit an employer who withdraws approved arrangements to make a new proposal straight away;
  • require the employer to give notice of approval to the trustees.

227.  Section 18A(2)(c) provides the power to prescribe that arrangements for nominating and selecting member-nominated directors under section 18A comply with additional requirements. It is the same regulation-making power as section 18A(1)(c) but for schemes where the trustee is a company, and regulations will be used in the same way.

228.  Section 18A(2)(d) provides a power to prescribe the statutory consultation procedure to be used to seek member approval for the employer's proposal under this section. It is the equivalent regulation-making power to section 18A(1)(d), but for schemes where the trustee is a company. Regulations will be used in the same way. This is equivalent to the existing regulation-making power in section 19(1)(b) of the Pensions Act.

229.  Section 18A(2)(e) provides the power to prescribe other conditions that must be satisfied in relation to the employer's proposal under this section. It is the equivalent regulation-making power to section 18A(1)(e), but for schemes where the trustee is a company. Regulations will be used in the same way.

230.  Section 18A(4)(a) provides for regulations to make provision for the manner and time within which the arrangements are implemented. It is intended that regulations will give trustee six months from the date of approval to put the arrangements into effect. This is the same time that trustees are given to implement an employer's alternative arrangements under current regulations.

231.  Section 18A(4)(b) provides for regulations to say what will happen where approval of arrangements under this section ceases to have effect. It is intended that regulations will provide that approval of section 18A arrangements will normally cease six years from the date the approval was gained. As now, there will be events (such as a change of sponsoring employer or a bulk transfer of members) that will act as a trigger for the trustees to consider whether the existing arrangements should continue. Likewise, it will also be possible for the employer to withdraw the arrangements. It is intended that regulations under this power will also require trustees to devise and implement arrangements under s16 if further arrangements under s18A are not proposed or approved.

232.  Under section 18A(5), Opra will be given the authority to determine that approval has been gained even though there has been a breach of the requirements on consultation. Section 18A(5)(a) provides that Opra's discretion will be limited by reference to prescribed conditions. The prescribed conditions are subject to further discussions with Opra. The intention is to limit the discretion to cases where the breach is minor, and the granting of approval would not be contrary to the best interests of the members. It is the intention to carry forward the existing provision on immaterial omissions that do not require Opra determination.

233.  Section 18A(6) provides that nominations for a member nominated trustee or director can be made by an organisation of a prescribed description which represents the interests of members of the scheme. It is intended that regulations will prescribe that recognised Trades Unions and pensioner organisations, for example, may make such nominations. Prescribing who can make nominations in regulations will also allow the flexibility to include other groups which, in the light of experience, it appears should be able to make nominations. For example, where new organisations are formed which represent scheme members.

234.  Section 18A(7) provides the power to disapply section 18A in relation to schemes of a prescribed description. It is intended that regulations will disapply section 18A for the same schemes that are exempt from section 16 and 18 by virtue of regulations made under s16(10)(c) and 18(10).

CLAUSE 45 - NON-COMPLIANCE IN RELATION TO ARRANGEMENTS OR PROPOSALS

235.  Clause 45 amends section 21 of the Pensions Act to reflect the changes to sections 16 to 20.

236.  Section 21(4) provides the power to prescribe time limits for implementing nomination and selection arrangements. It has been slightly amended to reflect the changes made in respect of sections 16 to 20 of the Pensions Act. It is intended that it will be used in much the same way as it is now in the Occupational Pension Schemes (Member-nominated Trustees and Directors) Regulations 1996 SI 1216. Trustees will be given six months to implement arrangements for nominating and selecting MNT/MNDs. For example, if the employer gains approval for s18A arrangements, trustees will have six months from the date of approval to implement the arrangements. If the employer does not propose section 18A arrangements, or fails to gain approval, the trustees will have six months to devise and implement arrangements under section 16.

237.  The date the new provisions come into effect will be determined according to regulations made under clause 79(5).

CLAUSE 46 - INFORMATION TO BE GIVEN TO THE AUTHORITY

238.  Clause 46(2) inserts three new sections into the Pensions Act 1995. They set out the circumstances in which trustees of schemes or persons involved in the administration of the scheme must notify Opra following the insolvency of the employer sponsoring the scheme. Opra will be able to impose sanctions if notifications are not made in accordance with the requirements.

239.  It is important that a trustee is in place following the insolvency of the employer to make sure that decisions are taken about the future of the scheme.

240.  New Section 26A sets out the circumstances when Opra must be notified where the scheme is required to have an independent trustee following the employer's insolvency. The duty falls on the trustees of the scheme, or where there is no trustee, those involved in the administration of the scheme.

241.  New Section 26B sets out the circumstances when Opra must be notified where the scheme is not required to have an independent trustee following the insolvency of the employer. The requirement to notify Opra is limited to those schemes where the employer is the sole trustee. The duty to notify Opra falls on those involved in the administration of the scheme. Subsection 3 provides that Opra need not be notified in certain circumstances and not during any period which may be specified by regulations. It is envisaged that the period is likely to be 3 months, following the insolvency of the employer. This will allow sufficient time for the employer to contact persons involved in the administration of the scheme to let them know whether he is able to continue acting as a trustee. Regulations may also provide for the notification duty to be lifted at other times, not necessarily triggered by the insolvency of the employer, to provide for other situations too where it transpires that it would be inappropriate for the notification duty to be imposed. This is a new requirement which may need adjustment in the light of experience. The Department believes that regulations will enable any changes to be made quickly.

242.  New section 26C makes further provisions which relate to sections 26A and 26B. It sets out those persons who are not involved in the administration of the scheme for the purposes of the requirements in sections 26A and 26B. Regulations made under subsection (2) may provide for further persons to be excluded from the definition, and so from certain of the requirements, should it later be found that it is inappropriate for the requirement to fall on them. It is envisaged that this might include those persons who have very limited contact with the scheme and may not become aware of the insolvency of the employer for some time, for example those who may intermittently carry out administrative duties on behalf of trustees but who are not already excluded. Regulations will enable the requirement to report to Opra to be lifted without the need to change primary legislation. Subsection (3) of new section 26C allows regulations to substitute a different time limit in which Opra must be notified. The time limits are "as soon as reasonably practicable" after it first appears as mentioned in 26A(1) and (2) and 26B(1). The requirement to notify Opra is new. It is not envisaged that this power will be used in the short term. However, if it transpires that "as soon as reasonably practicable" is inappropriate, it can be replaced with a defined time limit in regulations, and changed again if necessary as circumstances dictate.

243.  Clause 46(3) expands the power in section 118(2) of the Pensions Act 1995 to allow regulations to exempt certain schemes from this new requirement to notify Opra following insolvency. It is intended that this will include schemes where there are no accrued rights, such as those schemes which provide death benefits only and schemes where the trustee is the only member.

244.  Subsection (4) of clause 46 further amends s.118, to insert power for regulations to vary the persons on whom the requirements to notify Opra in sections 26A and 26B fall. The requirements to notify Opra are new and it may in future become clear that there are others who would be as well placed, if not better placed, to notify Opra. It is only right that the requirements to notify Opra should also fall on them. The Department believes that regulations will provide the flexibility to ensure that the provisions operate in the most efficient way without the need to amend primary legislation.

245.  Clause 46(5) expands the power in s.178(b) of the Pension Schemes Act 1993 so that regulations may treat persons as trustees for the purposes of the new sections 26A to 26C of the Pensions Act 1995. This will allow regulations to provide, for instance, for situations where, in the future, existing powers may be used to extend the independent trustee provisions to personal pension schemes. It also takes the opportunity to correct an error in section 178, by removing the reference to sections 22 to 26 from section 178(a) into 178(b).

CLAUSE 47 - MODIFICATION OF SCHEME TO SECURE WINDING-UP

246.  Clause 47 inserts a new section 71A into the Pensions Act 1995 to extend Opra's existing powers to modify scheme rules. The extension of this power will be limited to what Opra considers is needed to enable the winding-up process to continue, or be completed, and only where Opra have been asked to do so by the scheme trustees or managers. Subsection (3) enables regulations to provide that applications to Opra to modify scheme rules may be made other than in writing. This will allow regulations to include different methods of communications for example, it might in the future, be appropriate to allow oral requests. Subsection (4) provides that regulations will set out the detail which should be included in an application for scheme rules to be modified. It is important that Opra has comprehensive information about the application. It is intended that regulations will require information about the reasons for the application, and copies of all the relevant documentation. The exact information required by Opra may vary from scheme to scheme and depend on the modification which is being sought. Regulations will also allow for people who have an interest in the scheme, such as members and beneficiaries to be told of any proposed changes and be allowed time to make representations to Opra. It may also be appropriate, in certain circumstances, for others such as the Insolvency Practitioner to also be told of the application to Opra. Subsection (4) also allows regulations to set out the manner of applications and the manner in which Opra should deal with applications. For instance, regulations might require that applications for modifications should be endorsed by all the trustees of the scheme, and that Opra should consider any representations made to them about the application.

247.  Subsection (7) allows regulations to specify the circumstances in which Opra will not be able to modify particular scheme rules or where the power to modify should apply differently eg be extended or limited. For instance, it is envisaged that regulations might limit Opra's power where the provisions in scheme rules have already been amended by a Court. These provisions are new and it is important that there should be flexibility to alter them quickly in the light of experience. No two schemes are exactly the same and what might be appropriate for one scheme may not be for another. Regulations will enable adjustments to be made quickly so that the advantages of Opra being able to modify scheme rules to speed up the winding up process are not lost.

CLAUSE 48 - REPORTS ABOUT WINDING-UP

248.  Clause 48 introduces a number of new requirements. It inserts a new section 72A into the Pensions Act 1995 which requires trustees or managers of schemes which are winding-up to make regular reports to Opra. It provides for a definition of when winding-up starts for the purposes of these and other provisions of Part I of the Pensions Act 1995 and it introduces a requirement for a record to be kept of any decision to wind-up a scheme (or to postpone its winding up).

249.  Subsection (1)(b) of the new section 72A allows regulations to phase in the reporting requirement by specifying which winding up situations the requirements to provide reports apply to. It is intended that the regulations will provide that section 72A(1) applies to schemes which began winding up before a certain date. More than one date will be specified for this purpose, and the regulations providing for the various dates will be triggered at different times, to produce the phasing-in effect. The Department believes this specific level of detail is more appropriate for regulations than for the face of the Bill.

250.  Subsection (2) of the new section 72A allows regulations to prescribe when the first report to Opra must be made. This may differ according to how long the scheme has been winding up. Phasing in will be as follows. Schemes which started winding-up before January 1990 will have to report in April 2002, those which started before January 1993 by April 2003, before January 1996 by April 2004, before January 1999 by April 2005 and before January 2003 by April 2006. After that it is intended that schemes will have to make their first report to Opra following their 3rd anniversary of winding-up. Regulations will enable the trigger for the first report and the time in which it must be submitted to Opra, to be varied in the future should it be appropriate to do so. The aim of the measures is to speed up the winding up of schemes and it may be for example that in the future a 3 year period for the first report will be too long (because the average period for winding up has become shorter). Regulations will provide the flexibility for reports to be required sooner in that case.

251.  Subsection (7) of the new section 72A will allow regulations to set out the detail of the information to be included in the report, and the way in which the report must be made. The information will depend on whether the report is the first report or a follow-up report. Regulations are likely to require that the first report must contain information about when the winding-up began, the action taken to date, and a plan/ timetable of further action which needs to be taken. Subsequent reports are likely to have to contain information about progress against that plan and details of any further action which needs to be carried out. Regulations will enable the detail of the information needed to be varied in the light of experience. Subsection (8) of the new section 72A allows regulations to remove the requirement for making a report in certain circumstances. It is intended that regulations will exempt schemes where Opra has used its powers to wind up a scheme, including directing the timing of the process, under section 11 of the Pensions Act 1995. Regulations will also set out the time limit in which applications seeking an extension to the period in which follow up reports must be made, and the manner of such applications. This period will need to be sufficient for Opra to consider the application before the requirement for the report is triggered. It is likely to be in the region of two months. Regulations will also be able to change the timing for follow up reports, so that, if circumstances change, reports may be required at longer or shorter intervals. Similarly, regulations will be able to change the maximum time by which Opra can extend the timing for follow up reports. It is intended that such regulations would go in tandem with those made under subsection (2). If the trigger period for the first report is reduced or increased, it might also be appropriate for regulations to reduce or increase the period in which follow up reports should be made, and the period for extensions of the reporting period.

252.  Clause 48(2) inserts a definition of when winding-up begins into section 124 of the Pensions Act 1995. This will ensure that there is a common definition of the beginning of winding-up for all the requirements under part 1 of the Pensions Act 1995. It is intended that regulations under the inserted section 124(3) will disapply the definition in certain cases, e.g. for the application of sections 73 and 74 of the Pensions Act 1995 where the appropriate regulations already have a definition of winding-up specifically for those requirements. There may be additional provisions where the definition of the beginning of winding up in section 124(1) would not be appropriate and regulations will provide the flexibility to disapply that definition when necessary to avoid complications.

253.  Clause 48(3) inserts a new section 49A requiring trustees and managers to keep records of the start of the winding-up of an occupational pension scheme or of decisions to defer winding up. Section 49A(1) allows regulations to remove the requirement on trustees or managers for records to be kept. It is intended that regulations will exempt schemes where Opra has used its powers under section 11 of the Pensions Act 1995 to wind a scheme up and has set a timescale for winding up. Under new section 49A(2)(b) regulations may place requirements to keep a written record of decisions to wind up on those who are able to decide to wind a scheme up under scheme rules, as well as or instead of on the trustees or managers. Under section 49A(3) regulations will be able to prescribe the form of the record and the level of detail which must be included in it. It is intended that the regulations will include detail of how the decision is to be recorded, for example, the names of those who made the decision and the date on which the decision was made as well as the order in which the information must be presented. This is important to ensure that there is no confusion at a later date.

CLAUSE 49 - DIRECTIONS FOR FACILITATING WINDING-UP

254.  Clause 49 inserts a new section 72B which allows Opra to direct that specific information be supplied or action be taken where a scheme is winding-up.

255.  Subsection (2) of the new section 72B sets out the grounds on which Opra may give directions. These include the failure to take reasonable action or unreasonable delay in taking action. Subsection (2)(c) also includes circumstances where winding-up is being obstructed by the failure to provide information. In addition to provision of information to trustees or managers or those involved in the administration of the scheme, regulations will be able to prescribe other persons such as the scheme actuary, a failure to provide information to whom would constitute grounds on which Opra may give directions. This will provide flexibility for circumstances where a third party cannot provide information to the trustees or managers without information first being provided to him. Winding up of a pension scheme can be quite complicated and may require the involvement of a number of different people. These provisions are new and regulations will provide the flexibility, in the future, to include more people who are involved in the winding up process, whose role may not yet be fully recognised, within the description of prescribed persons.

256.  Subsection (2)(e) allows regulations to set out additional circumstances where, if the provision of information or taking of steps would be likely to accelerate or facilitate the winding up, that would constitute grounds on which Opra could issue a direction. This will provide flexibility, if in the light of experience, the grounds on which Opra can give directions are not sufficiently comprehensive. It is envisaged that this would be used to provide for situations where information or action is needed, but where there is not necessarily any delay or unreasonableness involved, in contrast with the grounds in subsection (2)(a) to (d). Although the grounds in (e) are broad, there is protection against that in that the provision will operate only in prescribed circumstances. Those circumstances may be, for instance, where, although the trustees are taking reasonable steps, the taking of additional steps by them would be likely to facilitate or accelerate the winding up. This may tie in with provisions under subsection (4).

257.  Subsection (3) allows regulations to set out circumstances in which Opra can give a direction even though reports about winding-up have not become due (under section 72A). These are likely to include the situation where the trustees or managers have specifically asked Opra to direct action. This power to specify the circumstances in regulations will provide flexibility to remove the restriction on Opra's powers to direct where in the future it becomes appropriate to do so. Provision might, for instance, need to be made in regulations for cases where schemes could complete the winding up process quite quickly, perhaps before the need to provide reports to Opra is triggered, but are unable to do so because of the persistent failure by a person to provide information to trustees or to take action.

258.  Subsection (4) allows regulations to limit the power to give directions on the grounds in subsection 2(e) to cases where there has been an application from the trustees or managers of the scheme. It is intended that regulations will limit the circumstances to where, for instance, reports have not been made to Opra about the winding up of the scheme (as required by clause 48).

259.  Subsection (5)(c) allows regulations to enable Opra to direct persons other than trustees, managers or those involved in the administration of the scheme. It is important that Opra should be able to direct those who are failing to provide information or take action promptly if their failure to do so delays the winding up process. Subsection 6(c) allows regulations to specify who information should be provided to, this is likely to include Opra. This is very similar to the regulation-making power in subsection (2)(c)(iii) and it is envisaged that regulations will similarly provide the flexibility, in the future, to include more people who are involved in the winding up process, whose role may not yet be fully recognised, within the description of prescribed persons.

260.  Subsection (8)(a) allows regulations to impose restrictions on the steps that a person may be required to take by Opra. Subsection (8)(b) allows regulations to set out when and how (any) applications must be made for an extension. It is intended that regulations will require applications for an extension to the time limit imposed by Opra to be submitted to Opra in sufficient time for Opra to consider the application before the period for complying expires. That period is likely to vary depending on the original period for compliance and will be subject to consultation. It is also envisaged that the regulations will set out the way in which the applications for an extension of the period for compliance must be made, for example, in writing, and the information to be included. Setting out the detail in regulations will allow flexibility to amend the requirements should that be appropriate in the future.

261.  Subsection (10) is identical to the provision in subsection (2) of the new section 26C. It is envisaged that regulations under this subsection may prescribe the same persons as regulations made under section 26(C)(2).


 
previous page contents next page

House of Lords home page Parliament home page House of Commons home page search page enquiries index

© Parliamentary copyright 2000