Commentary on Sections and Schedules Public body pension schemes Section 31: Restriction of certain existing public body pension schemes
182.Many public authorities have the power to make pension schemes for their employees and office-holders. These include schemes for employees and office holders of non-departmental public bodies, non-ministerial departments, arms length bodies and similar bodies and offices (public bodies).
183.Section 31 requires the authority responsible for a body listed in Schedule 10 to close the pension schemes of those bodies to future accrual. Where possible, it is intended that pensions for the body’s employees in future will be provided through one of the reformed, unfunded public service pension schemes, the likely default being the civil servants’ pension scheme.
184.In exceptional cases public authorities will be permitted to establish new schemes of their own. For example, where there are special considerations that make it inappropriate for their employees to join one of the major unfunded schemes. In such cases, a new scheme may be set up but must include the core standards of the reformed unfunded schemes as set out by section 30.
185.Subsection (1) provides that the section applies to a pension scheme which relates to members or staff of a body, or the holder of an office, listed in Schedule 10.
186.Subsection (2) places a duty on the public authority which is responsible for such a scheme to close the scheme for future service after a date determined by the authority. The precise date in each case will be a matter for discussion and consultation, but it is anticipated that all schemes covered by this subsection will have closed to future service by 5th April 2018.
187.Subsection (3) sets out that subsection (2) does not apply to defined contributions schemes or injury and compensation schemes. The obligation to secure that no further benefits are accrued beyond the date set will only apply to defined benefits schemes.
188.Subsection (4) allows pension schemes which are required to be closed under subsection (2) to continue to provide benefits by way of exception for certain members who are eligible for transitional protection. Where transitional protection is offered, it is expected to be offered on the same basis and timing as transitional protection in the schemes that are closed to future accruals under section 18. This will mean that the transitional protection is expected to be based upon a starting date of 1st April 2012, rather than any later date, despite the later progress of reform to public body pension schemes. Subsections (6) and (7) of section 18 apply to transitional arrangements in the public body schemes closed to future accruals.
189.Subsection (5) allows for the obligation to prevent future accrual of rights in public body defined benefit schemes, and exceptions to that, to be achieved by amending the existing public body defined benefit schemes.
190.Subsection (6) explicitly sets out that subsection (2) also applies to death in service benefits.
191.Subsection (7) allows the public authorities responsible for existing public body schemes to establish new pension schemes for staff or office-holders where it is not possible for those persons to become members of one of the major schemes established under section 1. Section 30 provides details of the types of scheme that may be established in such cases. It is expected that most of these persons will, in practice, join one of the major schemes. This would provide consistency of treatment to all public service staff and offers the potential for savings on administration.
192.Subsection (8) prevents a public authority which closes a scheme in accordance with subsection (2) from exercising any existing statutory function or other power so as to establish a new defined benefits scheme. Its purpose is to ensure that replacement schemes will only be made using the power in subsection (7).
193.Subsection (9) provides that where an existing public body scheme was established by trust deed, subsections (2) and (4) supersede any conflicting provision of the deed or of the law relating to trusts.
194.Subsection (10) allows the Treasury by order to add public bodies and offices to Schedule 10, and to remove public bodies and offices from Schedule 10 (excluding devolved bodies or offices, as defined by section 37).
195.Subsection (11) provides that a Treasury order under subsection (10) may also make consequential and supplementary provision, including amendments to legislation.
196.Subsection (12) provides that Treasury orders under subsection (10) are subject to the negative procedure (as defined in section 38(3)).
197.Subsection (13) allows subsection (1) to be used to close to future accrual schemes made before or after section 31 comes into force.
198.Subsection (14) indicates that the provisions of Schedule 7, which provides for a “final salary link”, apply for the benefit of members of public body schemes closed under this section.