51st Report, 2014 (Session 4): Subordinate Legislation

SP Paper 588 (Web Only)

DPLR/S4/14/R51

51st Report, 2014 (Session 4)

Subordinate Legislation

Remit and membership

Remit:

1. The remit of the Delegated Powers and Law Reform Committee is to consider and report on—
(a) any—
(i) subordinate legislation laid before the Parliament or requiring the consent of the Parliament under section 9 of the Public Bodies Act 2011;
(ii) [deleted]
(iii) pension or grants motion as described in Rule 8.11A.1; and, in particular, to determine whether the attention of the Parliament should be drawn to any of the matters mentioned in Rule 10.3.1;
(b) proposed powers to make subordinate legislation in particular Bills or other proposed legislation;
(c) general questions relating to powers to make subordinate legislation;
(d) whether any proposed delegated powers in particular Bills or other legislation should be expressed as a power to make subordinate legislation;
(e) any failure to lay an instrument in accordance with section 28(2), 30(2) or 31 of the 2010 Act; and
(f) proposed changes to the procedure to which subordinate legislation laid before the Parliament is subject.
(g) any Scottish Law Commission Bill as defined in Rule 9.17A.1; and
(h) any draft proposal for a Scottish Law Commission Bill as defined in that Rule.

Membership:

Richard Baker
Nigel Don (Convener)
Mike MacKenzie
Margaret McCulloch
Stuart McMillan (Deputy Convener)
John Scott
Stewart Stevenson

Committee Clerking Team:

Clerk to the Committee
Euan Donald

Assistant Clerk
Elizabeth Anderson

Support Manager
Daren Pratt

Subordinate Legislation

The Committee reports to the Parliament as follows—

1. At its meeting on 25 September 2014, the Committee agreed to draw the attention of the Parliament to the following instrument—

Teachers’ Pension Scheme (Scotland) Regulations 2014 (SSI 2014/217)

2. The Committee’s recommendations in relation to the above instrument are set out below.

POINTS RAISED: INSTRUMENTS SUBJECT TO NEGATIVE PROCEDURE

Teachers’ Pension Scheme (Scotland) Regulations 2014 (SSI 2014/217) (Education and Culture Committee)

3. This instrument introduces a new teachers’ pension scheme which will come into force on 1 April 2015.

4. Parts 1 and 2 of the instrument come into force on 1 December 2014. These deal with the establishment of the scheme and its governance arrangements. The detailed provisions on the operation of the scheme (Parts 3 to 11 and the Schedules) come into force on 1 April 2015.

5. In considering the instrument, the Committee asked the Scottish Government for an explanation of certain matters. The correspondence is reproduced at Annex A.

6. The Scottish Government’s initial response explained the delay in laying the instrument, acknowledged the existence of errors, and indicated that the instrument would be amended prior to the second coming into force date, most likely by February 2015. A further letter from the Scottish Government (reproduced at Annex B) was received on 25 September 2014. That letter indicates that, having considered the matter further, it would now be the Scottish Government’s intention to revoke the Regulations and to lay a new and corrected instrument at the earliest possible convenience. The Scottish Government adds that the timing of the laying of the revocation and the new instrument is not completely within the control of the Scottish Ministers and will require the consent of the Lords Commissioners of Treasury.

7. The Committee accordingly draws the Regulations to the attention of the Parliament on the Committee’s reporting grounds (d), (h), (i) and (j) and on the general ground.

8. Firstly, there has been an unjustifiable delay in the laying of the Regulations before the Parliament, as they were made on 1 August and laid on 7 August (ground (d)).

9. While the delay does not affect the validity of the instrument, it also amounts to a failure to comply with the laying requirement in section 28(2) of the Interpretation and Legislative Reform (Scotland) Act 2010, that the instrument must be laid as soon as practicable after it is made (ground (j)).

10. The period of delay is not satisfactory. It arises due to an apparent failure in the arrangements as between the Scottish Government and the UK Treasury. In relation to two other recent pensions instruments where the same issue arose, the Committee was assured that steps were being taken to try to avoid further omissions. This instrument is the third instrument in which the issue has arisen.

11. Secondly, the drafting of the instrument appears to be defective in that there are 10 errors which the Scottish Government has acknowledged to be errors and which, in the Committee’s view, may impede the intended operation of the instrument or fail to give effect to the policy intention (ground (i)).

12. There are a further 2 provisions the meaning of which could be clearer (ground (h)). The Scottish Government appears to accept that there is a lack of clarity in respect of one of these provisions, and has undertaken to consider the drafting of the other provision further.

13. There are a further 17 errors (including patent and other drafting errors) which on balance the Committee considers do not impede delivery of the policy intention, but which fall to be reported under the general ground.

14. Given the number of errors under grounds (h), (i) and the general ground, the Committee considers that the instrument as a whole is not fit for purpose.

15. The Committee notes that the Scottish Government has expressed its gratitude to the Committee for identifying the considerable number of errors in the instrument, and has apologised for the failure to pick up errors in the cross-references resulting from revision of earlier drafts. The Committee also notes the Scottish Government’s intention to revoke the Regulations and to lay a new and corrected instrument at the earliest possible convenience.

16. Whilst the Committee notes the explanation given in the Scottish Government’s response and its commitment to revoke the instrument, it is highly unsatisfactory for the instrument to have been laid before the Parliament in its present form. The Committee’s role is not as a substitute for internal checking by the relevant Scottish Government department. Given that the instrument does not come into force until 1 December 2014 and 1 April 2015, there appears to have been no urgent need to lay the instrument in its present form. Rather it appears that sufficient time would have been available for the instrument to undergo thorough checking and quality control processes before laying.

17. The Committee further notes that a number of instruments concerning public sector pension schemes are proposed to be laid in the coming months, and expects the Scottish Government to ensure that those instruments are subject to the necessary checking and quality control processes prior to being laid.

ANNEX A

Teachers’ Pension Scheme (Scotland) Regulations 2014 (SSI 2014/217)

On 27 August 2014, the Scottish Government was asked:

1. Can the Scottish Government explain the delay of 6 days between the making of the regulations and the date of laying?

2. Regulation 3, meaning of “accrued club transfer earned pension”: is there an error in the definition of “accrued club transfer earned pension”, in that the phrase does not appear to be given a meaning in either regulation 44 or 45 (in contrast with “accrued earned pension” and “accrued additional pension” which are defined in those regulations)?

3. Regulation 3, meaning of “opening balance” in relation to additional pension: has the reference to regulation 56 been inserted in error? Should the reference be to regulation 57 instead?

4. Regulation 18(2)(b) and (c): Does the Scottish Government consider the meaning of the terms “full protection member” and “tapered protection member” in regulation 18 to be clear? We note that the terms are defined in Schedule 3 but only for the purposes of that Schedule. They do not appear to be defined for the purposes of regulation 18.

5. Regulation 18(2)(d): Does the Scottish Government consider the meaning of the phrase “P satisfies the condition in regulation B7 of the 2005 Regulations” to be clear? We note that regulation B7 concerns an election for employment not to be pensionable. It does not appear to impose any condition on P.

6. Regulation 42: This regulation refers to “club transfer accrued earned pension”. Does the Scottish Government agree that the phrase “club transfer accrued earned pension” is not defined in the regulations or in the 2013 Act? What is the intended meaning of this phrase? (We note that the regulations purport to define “accrued club transfer earned pension” although that definition appears to contain errors – see question 2 above).

7. Regulation 55(3)(b): This sub-paragraph contains the term “cash transfer sum”, which does not appear to be defined in the regulations or in the 2013 Act. Is it intended to take its ordinary meaning or should there be a statutory definition?

The same question applies in respect of regulations 66(2), 67(2), 79(1)(b) and (2)(b) and 168(2)(d) and (e).

8. Regulation 69(b): Should the reference to “leaver index adjustment” be a reference instead to “leaver PIA index adjustment”, given that the regulation concerns additional pension?

9. Regulation 70(2)(b)(i): The term “normal minimum pension age” used in this sub-paragraph does not appear to be defined either in the regulations or in the 2013 Act. What is its intended meaning and does it require further definition?

10. Regulation 72: The regulation provides that “commutation amount” means the amount of lump sum exchanged for a pension under regulation 162, 165, 166 or 168. Can the Scottish Government explain why regulation 166 is referred to, when it does not provide for the exchange of pension for a lump sum, but provides instead for calculation of that lump sum? If it is the intention that regulation 166 should be referred to in regulation 72, why are the other provisions of Chapter 3 of Part 8 (e.g. regulations 163 and 167) which provide for calculation of the lump sum not also referred to?

11. Regulation 79(2)(c) and (d): What is the intended meaning of “comparable British service” and “comparable United Kingdom service” in this regulation, and do these terms require further definition?

12. Regulation 84(2)(c): This sub-paragraph refers to the “conversion amount”. That term does not appear to be defined in the regulations or in the 2013 Act. What is the intended meaning of the term, and does it require further definition?

13. Regulation 86(1), meaning of “reduced annual rate”: The paragraph provides that “reduced annual rate”, in relation to pensionable earnings, has the meaning given in regulation 87(2). There is no regulation 87(2). Regulation 87 provides for the meaning of “reduced annual rate condition” but not “reduced annual rate” itself. What is the intended meaning of “reduced annual rate”, and does this require further definition?

14. Regulation 119(2)(a): The sub-paragraph refers to the application under regulation 116. Should the reference be to the application under regulation 159?

15. Regulation 125(1)(c): Should the reference to an election under regulation 24 be to an election under regulation 25?

16. Regulation 125(2)(a): The sub-paragraph refers to “P” being incapacitated. Should the reference be to “D” instead of “P”?

17. Regulation 132: The regulation defines “surviving nominated partner” for the purpose of a survivor’s pension. It does not define the phrase for the purpose of a death grant. Other regulations (such as regulation 135) refer to “D’s surviving adult” in the context of the payment of death grant. By virtue of regulation 132(1), for the purpose of death grant, “surviving adult” includes the member’s “surviving nominated partner”. It is unclear to us what that means however, given that “surviving nominated partner” is not defined for the purpose of a death grant. Can the Scottish Government explain the intended meaning of “surviving nominated partner” for the purpose of a death grant, and does the term require further definition?

18. Regulation 134(5)(a): What is the intended meaning of a “full-time vocational training course”?

The same question applies in relation to regulation 146(4)(b).

19. Regulation 142(2): The paragraph specifies the long-term rate of surviving adult pension if regulation 142 applies. If regulation 142 does apply, is the long-term rate in regulation 142(2) to apply instead of the long-term rate specified in regulation 141(2), in circumstances where both regulation 141(1) and regulation 142 apply? If so, should regulation 141(1) be expressed as being subject to regulation 142?

The same question applies in respect of regulations 148(1) and 149 which concern the long-term rate of child pension.

20. Regulation 146(4)(b): The paragraph refers to the annual rate at which a pension would be payable if the pension had begun on 1st April 2014. Given that the regulations come into force on 1st April 2015, could the Scottish Government confirm that the reference to 1st April 2014 is indeed intended.

21. Regulation 147(1)(b)(iii): The sub-paragraph refers to “the number of months for which the surviving adult pension was not payable under sub-paragraph (ii)”. However sub-paragraph (ii) does not appear to provide for the period in which a surviving adult pension is not payable. Is the reference to sub-paragraph (ii) intended, and if so what is the intended meaning?

22. Regulation 149(1): Is this regulation intended to apply if a member (D) has not reached prospective normal pension age, as is the case with regulation 142? If so, why are the words “has not reached prospective normal pension age” not expressly included in regulation 149(1)?

23. Regulation 173(2): The paragraph refers to payment of benefit to “widows”. Is the provision intended also to apply to “widowers” and “civil partners”? If so, why is there no express reference to widowers and civil partners? (contrast regulation 213(6)).

24. Regulation 176(3): The paragraph provides for a charge to arise in respect of someone who serves a notice under section 238A of the Finance Act 2004. Section 238A confers power on the Treasury by order to make provision about the annual allowance charge. The section does not appear to make provision about the service of notices. Is the reference to section 238A in regulation 176(3) correct, and if so, why?

25. Regulation 178(3): The paragraph refers to an amount equal to P’s notional salary. “Notional salary” is defined for the purposes of Chapter 4 of Part 3 (pensionable earnings) of the regulations. It does not appear to be defined for the purposes of the remainder of the regulations. What is the intended meaning of the term as used in regulation 178(3), and does this require further definition?

The same question arises in respect of regulation 181(2)(a).

26. Regulation 179(1): The paragraph refers to the “standard contributions rate” as “a rate determined in accordance with regulations”. It does not specify which regulations it is to be defined in accordance with. Is the intended meaning the rate determined in accordance with scheme regulations under section 1 of the 2013 Act? Why is “in accordance with regulations” in regulation 179(1) sufficiently clear, in the absence of express reference to regulations under section 1 of the 2013 Act?

27. Regulation 186: The regulation provides for the payment of employers’ contributions at a percentage rate of P’s pensionable earnings “determined in accordance with regulations”. It does not specify which regulations it is to be defined in accordance with. Is the intended meaning the rate determined in accordance with scheme regulations under section 1 of the 2013 Act? Again why is “in accordance with regulations” in regulation 186 sufficiently clear, in the absence of express reference to regulations under section 1 of the 2013 Act?

28. Regulation 197(1): The paragraph refers to receipt of an application under regulation 202. Should the reference be to regulation 196 instead?

29. Regulation 197(5): The paragraph refers to “pension credit rights” and “pension credit benefits”. These terms do not appear to be defined in either the regulations or the 2013 Act. What is their intended meaning and does this need further definition?

The same question applies in respect of regulations 199(2), 205(2) and 207(2).

30. Regulation 199(1)(c): The sub-paragraph refers to a sending scheme which is a “money purchase arrangement”. That term does not appear to be defined in either the regulations or the 2013 Act. Should the phrase take its ordinary meaning, or is there an intended statutory definition?

The same question applies in respect of regulation 207(1)(c), and paragraph 16 of Schedule 3.

31. Schedule 1, paragraph 2(1)(b): The sub-paragraph refers to requirements placed on an employer under regulation 189. Should the reference be to regulation 186?

32. Schedule 1, paragraph 2(4)(d): The sub-paragraph refers to a requirement to make a report or return, give information or produce a document under regulation 191. Should the reference be to regulation 209?

33. Schedule 2, paragraph 19(3)(a)(ii): The sub-paragraph refers to the day on which an ill health pension ceases to be payable under regulation 112. Should the reference be to regulation 111 instead of 112?

34. Schedule 2, paragraph 19(3)(b)(i): The sub-paragraph refers to the amount of accrued additional pension calculated under regulation 45 or 46. Should the reference be to “regulation 44 or 45”, rather than to “regulation 45 or 46”?

35. Schedule 3, paragraph 33(2)(b): Should the reference to regulation E28 of the 2005 Regulations be to regulation E29 of the 2005 Regulations? (as is the case in paragraph 38(2)(b) of Schedule 3).

36. Schedule 3, paragraph 34(c): Should the reference be to any enhancement S is entitled to under regulation 142, instead of under regulation 139? Regulation 142 makes provision about enhancement, while regulation 139 appears to provide for entitlement.

The same question applies in respect of paragraph 35(2)(a) of Schedule 3.

37. If the Scottish Government agrees that there are errors in the instrument, would it propose urgently to bring forward an amending instrument?

The Scottish Government responded as follows:

We are most grateful to the Committee for the careful attention which has been taken in scrutinising these Regulations and which has identified a considerable number of errors in the instrument. The instrument is the first needed towards putting in place from 1st April 2015 an entirely new pension scheme for teachers in Scotland. The need for such a pension scheme is set down in the Public Service Pensions Act 2013, which is prescriptive as to the general nature of new public service pension schemes. The Act provides for the Scottish Ministers to be responsible for making regulations setting up new schemes for teachers, local government workers, health service workers, fire and rescue workers and members of the police force in Scotland. All such schemes have to be in place for 1st April 2015. Whilst the new statutory framework effectively continues the executive devolution arrangements which have been in place in the public service pensions field since 1999, overall pensions policy remains reserved to the UK Government and Parliament.

The exercise of putting in place new public service schemes is a huge one and, whilst administrative responsibility as regards the schemes for England and Wales is spread throughout the different responsible Whitehall departments, all administrative responsibility in Scotland lies with the Scottish Public Pensions Agency. Although Scottish Ministers have some latitude as to exact scheme terms, the exercise of creating new schemes basically involves taking scheme instruments for England and Wales and converting them appropriately for Scotland. Available resource means that the amount of checking which can be done as to the correctness of the texts is limited and the texts for England and Wales basically have to be taken on trust. Quite a number of the errors identified below appear equally in the Teachers’ Pension Scheme Regulations 2014 (S.I. 2014/512). Other errors involve a failure to pick up on points where final text in that instrument differs from what appeared in an earlier draft (on which the consultation draft of the Scottish Regulations was based). There has obviously been a failure to pick up all consequential renumbering of cross-references, for which we apologise. A difficult task was in this case made even more difficult due to the retirement in the middle of the process of the highly experienced SPPA official who had had lead responsibility on teachers’ pensions matters for some years.

Our answers to the Committee’s questions follow—

1. Full details of which Commissioners had signed and the date of signing were received from Treasury after 5pm on 5th August. Registration and laying were effected as soon as possible after that.

2. This definition does contain an error and should instead have been framed by reference to material within regulation 192.

3. This reference should be to regulation 57.

4. We think that the current text of the Regulations would be read so as to produce the intended meaning, but that it would be clearer to amend so as to cross-refer to the Schedule 3 definitions in regulation 3.

5. Again, we consider that the present text would be read so as to produce the intended meaning but that it would be clearer to amend it appropriately.

6. The reference in this regulation contains a typographical error and should have been a reference to “accrued club transfer earned pension”.

7. A definition of this phrase should have been included in regulation 3 (as per regulation 3 of S.I. 2014/512).

8. This reference should have been to “leaver PIA index adjustment”.

9. A definition of this phrase should have appeared in regulation 3 (as per regulation 3 of S.I. 2014/512).

10. The reference to regulation 166 is not thought to cause any harm, but we consider that it would be better deleted.

11. We would intend to delete sub-paragraphs (c) and (d) by way of amending regulations.

12. This reference should have been a reference to the “commutation amount”.

13. In the definition of “reduced annual rate”, the words “has the meaning given in regulation 87(2)” should have been replaced by the words “means the annual rate of P’s pensionable earnings following the reduction referred to in regulation 87”.

14. The phrase used is “receipt of the application under regulation 116” and we consider that the existing text would be read to produce the intended meaning, although we agree that it would be clearer if the link made was to regulation 159.

15. The reference should be to regulation 25.

16. “D” should have been used rather than “P”.

17. In terms of regulation 3, “surviving nominated partner” is defined as having (throughout the Regulations) the meaning given in regulation 132. The phrase will therefore attract that meaning where used in regulation 131(1)(c).

18. In the absence of any definition, the phrase would take its ordinary meaning. We will, however, consider whether there would be advantage in adding an appropriate definition.

19. Where a set of circumstances falls within two different regulations providing for rates of benefit, it seems clear that a person would be entitled to be paid in terms of the regulation which provides the higher rate. We will, however, give further consideration to whether the insertion of specific cross-references between the relevant regulations would produce greater clarity.

20. We can confirm that the reference to 1st April 2014 is intended and correct.

21. It is accepted that the wording used here is not ideal to convey the policy intention. In a case where a surviving adult pension becomes payable on D’s death but the surviving adult then dies after (say) 2 months, the short-term rate of child pension is to be payable for 4 months (being the 3 months referred to in regulation 147(1)(b)(iii) and a further 1 month (being the period short of 3 months for which the surviving adult pension was not payable)).

22. The words quoted should have been included in regulation 149(1).

23. Paragraph (2) was included within regulation 173 in error.

24. The reference to “238A” should have been a reference to “237B”.

25. The definition of “notional salary” in regulation 32 should have been applied throughout the Regulations.

26. As indicated in the policy note which accompanied this instrument, the instrument is the first to be made in relation to a new scheme for Scottish teachers under the 2013 Act. The scheme will take effect from 1st April 2015 and further instruments will require to be made before then to complete the statutory framework. As also indicated in the policy note, the rates for employee and employer contributions have yet to be determined and will be set by a future instrument. In these circumstances, the quoted phrase in regulation 179(1) (and the similar phrase in regulation 186) is just a marker which will be removed by amendment in due course.

27. Reference is made to the answer to question 26 above.

28. The reference should be to regulation 196.

29. Pension credit matters are dealt with in Part 7 of the Regulations and there is a definition of “pension credit” (and of certain related terms) in regulation 3. In the circumstances, we do not think that there is any substantial doubt as to the meaning of the terms identified in the question.

30. This phrase should just take its ordinary meaning.

31. The reference should be to regulation 186.

32. The reference should be to regulation 209.

33. The reference should be to regulation 111.

34. Regulations 44 and 45 should have been referred to.

35. Both references should be to regulation E28.

36. The references should be to regulation 142.

37. We can confirm that any errors identified in the foregoing will be corrected by an amending instrument prior to the 1st April 2015 commencement date referred to in regulation 1(2)(b). That amending instrument is likely to be laid in February 2015 and will deal also with further transitional arrangements, scheme valuations and contribution rates.

ANNEX B

Teachers’ Pension Scheme (Scotland) Regulations 2014 (SSI 2014/217)

Letter from Minister for Parliamentary Business, dated 25 September 2014:

I am grateful for your note regarding the above instrument and have considered that the issues identified, mean that it would be appropriate to bring forward a fresh version of the instrument.

It would be our intention to lay a new order by revoking the instrument and replacing it with a new and corrected version at the earliest possible convenience.

The timing of the laying of the new order is not completely within the control of Scottish Ministers. The new version, and the accompanying revocation order, will require the consent of the Lords Commissioners of Treasury. I have asked my officials to explore how quickly this can be progressed, and to ensure that your officials are kept informed of progress.

I am aware that this puts the Committee in the position of having to scrutinise an instrument that will be revoked and replaced in the near future.

I apologise for any inconvenience this may cause to the Committee.


Any links to external websites in this report were working correctly at the time of publication. However, the Scottish Parliament cannot accept responsibility for content on external websites.

Produced and published in Scotland on behalf of the Scottish Parliamentary Corporate Body, The Scottish Parliament, Edinburgh, EH99 1SP by APS Group Scotland, 21 Tennant Street, Edinburgh EH6 5NA

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