Commentary on Sections Summary Schedule 5: The Board of the Pension Protection Fund
340.Part 1 of Schedule 5 deals with the membership of the Board.
341.The ordinary Board members who are non-executive members are the members who are not also members of the Board’s staff. The ordinary members who are executive members are members who are also members of the Board’s staff (see section 108(7)(membership of the Board))
342.Paragraph 1 provides that the chairman of the Board is to be appointed by the Secretary of State. Paragraph 2 provides that the first five appointments of ordinary members (all members other than the Chairman and the Chief Executive) will also be made by the Secretary of State, while subsequent appointments will be made by the Board in accordance with any procedure that may be set out in regulations. There must always be at least five ordinary members and should there be less at any time the Secretary of State must appoint the additional members required.
343.Paragraph 3 provides that the terms and conditions of appointment of the Chairman and the ordinary members will be decided by the Secretary of State where he has appointed him. The terms and conditions of a Chairman appointed by the Board will be decided by it. Paragraph 3 further states that the terms and conditions of non-executive Board members will be set by the Chairman with the approval of the Secretary of State, while the Chief Executive will set the terms and conditions of the executive members of the Board.
344.The terms and conditions of ordinary members who are non-executive members will be decided by the Chairman with the approval of the Secretary of State. The Chief Executive will decide the terms and conditions of the ordinary members who are executive members of the Board.
345.The terms and conditions of appointment underParagraphs 4, 5 and 6 will govern how long members stay in office, their leave, how they resign etc. However a person will cease to be a member of the Board if:
	in the case of the chairman he ceases to hold this position or if he becomes a member of staff of the Board;
	in the case of any other non-executive member he becomes a member of the staff of the Board;
	in the case of an ordinary executive member he ceases to be a member of the staff of the Board;
	in the case of the Chief Executive he ceases to be employed as such.
346.Paragraphs 7-9 deal with remuneration. The Secretary of State determines the remuneration of the non-executive members of the Board. The Board can pay (as determined by the Secretary of State) this remuneration and can make provision for its payment. This includes allowances, gratuities or pensions.
347.The table below summarises the appointment procedures for the Board and its staff.
348.Part 2 of this Schedule sets out the detailed provisions on the staff of the Board.
349.Paragraph 11 sets out that the staff of the Board consists of the Chief Executive, the other employees of the Board and any additional staff made available by the Secretary of State. Additional staff could include, for example, those on secondment from the Department for Work and Pensions.
350.The first Chief Executive will be appointed by the Secretary of State, who will also set the terms and conditions and remuneration. Subsequent appointments of the Chief Executive will be made by the Board who will also set the terms and conditions of these appointments. The Secretary of State must approve them. However, a committee established to exercise the non-executive functions under section 112(non-executive functions) will make recommendations on remuneration for the Chief Executive.
351.Other employees will be appointed by the Board with the Secretary of State’s approval. The Chief Executive will determine the terms and conditions although in the case of an employee who is also to be an executive member or prescribed descriptions of employees the terms and conditions relating to remuneration will be determined on the Board’s behalf by the committee established to exercise the non-executive functions (and with the Secretary of State’s approval in the case of executive members).
352.Any additional staff made available to the Board will be on such terms as to payment as the Secretary of State may determine.
353.Part 3 of Schedule 5 covers proceedings and delegation.
354.Paragraph 15 enables the Board to establish a committee for any purpose. Any committee established by the Board may further establish sub-committees. The members of such committees or sub-committees (other than the committee or sub-committee mentioned in section 112) can include people who are not members of the Board or members of the committee.
355.The Board will be responsible for setting procedures (and quorum) for itself, it committees and sub-committees.
356.Paragraph 17 enables the Board to delegate any of its functions other than the non-executive functions described in section 112.
357.Paragraph 18 gives the Board the power to outsource some of its functions. These are listed in sub-paragraph (2).
358.Part 4 of the Schedule covers the accounting requirements and authorises the Board to pay certain expenses.
359.Paragraph 22 requires the Board to keep accounts and accounting records following any accounting directions given by the Secretary of State (with approval of Treasury). The Board must prepare an annual statement of accounts, which will include an actuarial valuation of the assets and liabilities of the Pension Compensation Fund. This actuarial valuation must be prepared by the a person appointed by the Board who meets the requirements specified in sub-paragraph (4)(a). A copy of the annual accounts must be sent to the Secretary of State and the Comptroller and Auditor General. In turn, the Comptroller and Auditor General must examine, certify and report on the accounts, and lay both the accounts and his report before both Houses of Parliament.
360.Paragraph 23 enables the Board to pay certain expenses, such as travel allowances. This includes the power to pay fees to persons providing professional advice.
361.Part 5 deals with the status and liability of the Board.
362.By virtue of paragraph 24 the Board is to be regarded as independent from the Crown. Therefore, the property of the Board is not property of the Crown (and the Crown will not be liable to meet any of the liabilities of the Board).
363.Paragraph 25 provides that Board vacancies, or any problems arising out of appointments of members of the Board, committees, sub-committees or the Chief Executive will not affect the validity of any proceedings of the Board.
364.Paragraphs 26 and 27 amend the appropriate legislation to disqualify members of the Board from membership of the House of Commons or Northern Ireland Assembly.
365.Paragraph 28 amends the Superannuation Act 1972 so that the Chairman and the staff of the Board will be eligible for a government-backed pension for which the Board must pay the Minister for the Civil Service such sums as he may direct. This is a common provision for public bodies – for example the Regulator also has a similar provision, as did its predecessor Opra.
366.Paragraph 29 sets out that no member of any Board, committee, sub-committee or staff is to be liable for damages for anything done or omitted in the discharge of the functions of the Board. Members of the committee which exercises the non-executive functions (section 112) will also not be liable for damages when exercising their functions. This does not apply if the action or omission was in bad faith and does not prevent the Board being required to pay compensation on a direction of the PPF Ombudsman or in respect of an act or omission on the grounds that it was unlawful as a result of the Human Rights Act 1998.