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The AWE Pension Scheme (Transfer of Assets) Regulations 2026

Draft. This instrument was laid in draft and may differ from the one made. Look for the made version under its title.

Draft 2026, ISBN 9780348288186

Original text. legislation.gov.uk does not revise statutory instruments, so later amendments are not shown here. Changes made to it are listed under each provision when known.

Draft Regulations laid before Parliament under sections 119(4) and 131(1) of the Pension Schemes Act 2026 (c. 22), for approval by resolution of each House of Parliament.

PENSIONS

Made ***

Coming into force in accordance with regulation 1(b)

The Secretary of State makes these Regulations in exercise of the powers conferred by sections 116 and 130(2) and (3) of the Pension Schemes Act 2026f1 (“the 2026 Act”).

In accordance with section 119(2) of the 2026 Act, these Regulations are made with the consent of the Treasury.

In accordance with section 119(1)(b) of the 2026 Act, the Secretary of State has consulted the trustee companyf2.

A draft of this instrument has been laid before, and approved by a resolution of, each House of Parliament in accordance with sections 119(4) and 131(1) of the 2026 Act.

Annotations to the whole text

Footnotes

f1

2026 c. 22.

f2

The “trustee company” is defined in section 120 of the 2026 Act.

Contents

  1. 1Citation, commencement and extent
  2. 2Interpretation
  3. 3Directions: trustee company
  4. 4Directions: AWE PLC
  5. 5Directions: general provision
  6. 6Provision for Liabilities
  7. 7Disapplication: legislation
  8. 8Disapplication: other
  9. 9Modifications
  10. 10Exemption from liability
  11. 11Proceedings
  12. Signature
  13. Explanatory note

1Citation, commencement and extent

These Regulations—

(a)

may be cited as the AWE Pension Scheme (Transfer of Assets) Regulations 2026;

(b)

come into force on the day after the day on which they are made;

(c)

extend to England and Wales, Scotland and Northern Ireland.

2Interpretation

In these Regulations—

  • “AWE Trust Deed and Rules” means the Definitive Trust Deed with Rules attached dated 13 October 1993, as amendedf1;

  • “cash” means monies held in custody and any other sterling denominated assets which the trustee company reasonably considers to be cash equivalents, including units or shares in short-term, low-risk liquidity or money market funds that are readily realisable at or near their net asset value;

  • “Crown Guarantee” means the deed of guarantee between the Secretary of State for Defence and AWE Pension Trustees Limited, as Trustee of the AWE Pension Scheme, dated 21 July 2022f2;

  • “financial asset” means any asset of the AWE Pension Schemef3, other than cash or gilts, which is—

    1. (a)

      an equity instrument of another entity (including units, shares or interests in a collective investment vehicle);

    2. (b)

      a contractual right to receive cash or another financial asset from another entity; or

    3. (c)

      a contractual right to exchange financial assets or financial liabilities under conditions that are potentially favourable;

  • “gilt” means a UK government sterling denominated bond issued by or on behalf of the Treasury;

  • “Treasury Solicitor” has the same meaning as in the Treasury Solicitor Act 1876, and all references to the Treasury Solicitor are references to the Treasury Solicitor as a nominee of the Secretary of State.

3Directions: trustee company

(1)

The Secretary of State may give directions to the trustee company from time to time.

(2)

A direction given under paragraph (1) may include instructions to—

(a)

convert a financial asset or a gilt into cash;

(b)

take all reasonable steps to manage any remaining financial assets with a view to converting them to cash;

(c)

transfer cash or gilts to the Treasury Solicitor or other nominee specified in the direction.

(3)

Paragraphs (4), (5), (6) and (7) apply where the trustee company considers, for any reason, that—

(a)

the conversion of a financial asset into cash would materially reduce the value of that asset, or

(b)

it is unable to comply with instructions given under a direction in relation to a particular financial asset due to the terms and conditions upon which that asset is held.

(4)

Where paragraph (3) applies, the trustee company must—

(a)

not carry out the conversion, and

(b)

notify the Secretary of State as soon as reasonably practicable.

(5)

Upon notification under paragraph (4)(b), the Secretary of State may—

(a)

where paragraph (3)(a) applies, require the trustee company to proceed with the conversion by notifying the trustee company (“an instruction to proceed”);

(b)

where paragraph (3)(b) applies, vary the direction or issue a new direction to provide further instructions in relation to that financial asset.

(6)

Where the trustee company has made a notification under paragraph (4)(b) to the Secretary of State, the trustee company must disregard the instructions given under that part of the direction that relates to the financial asset to which paragraph (3) applies unless the Secretary of State issues an instruction to proceed, varies the direction or issues a new direction to provide further instructions.

(7)

For the purposes of paragraph (3), the reference to the conversion of an asset materially reducing its value includes—

(a)

the conversion incurring a material charge, tax, penalty or market value adjustment;

(b)

the conversion incurring a material charge, tax or penalty under any agreement ancillary to or connected with the asset, or causing the termination of any such agreement.

(8)

The trustee company must comply with a direction given by the Secretary of State, subject to paragraphs (3), (4) and (6).

4Directions: AWE PLC

(1)

The Secretary of State may give directions to AWE PLC from time to time.

(2)

A direction given under paragraph (1) may include instructions to—

(a)

receive funds intended to settle obligations arising under regulation 6;

(b)

transfer such funds to the trustee company.

(3)

AWE PLC must comply with a direction issued by the Secretary of State under this regulation.

5Directions: general provision

(1)

A direction, notification or instruction to proceed under regulation 3 or 4 must be made in writing.

(2)

A direction given under regulation 3 or 4 may be varied or revoked by a further direction given by the Secretary of State.

(3)

A direction or instruction to proceed under regulation 3 or 4 must provide the trustee company or AWE PLC (as the case may be) with a reasonable period to comply with its obligations under that direction or instruction to proceed.

6Provision for Liabilities

(1)

This regulation applies where a direction is given by the Secretary of State under regulation 3 which contains an instruction to convert a financial asset or gilt to cash or to transfer a gilt to the Treasury Solicitor or specified nominee.

(2)

The Secretary of State must secure that the trustee company is able to meet any relevant liability it has or may have as such liabilities arise.

(3)

Arrangements to secure the liabilities under paragraph (2)—

(a)

may include arrangements for financial provision agreed with the trustee company and AWE PLC from time to time;

(b)

must come into effect by no later than the day on which the first such direction is given;

(c)

must continue until all qualifying accrued rightsf1 have been transferred to a new public scheme by regulations under section 112(2) of the 2026 Actf2.

(4)

For the purposes of this regulation, a relevant liability—

(a)

includes any liability that could lawfully be paid by or on behalf of the trustee company from the trust assets or by AWE PLC under the AWE Trust Deed and Rules;

(b)

includes any liability arising or incurred before provision under this regulation comes into effect.

(5)

This regulation does not affect the Crown Guarantee (but see regulation 11).

7Disapplication: legislation

(1)

This regulation applies where a direction containing an instruction under regulation 3(2) is given by the Secretary of State.

(2)

The following provisions and any secondary legislation made under them do not apply in respect of the AWE Pension Scheme from the date on which the first such direction is given—

(a)

Pensions Act 1995f1—

(i)

sections 11(6) (powers to wind up schemes);

(ii)

section 35 (investment principles);

(iii)

section 36 (choosing investments);

(iv)

sections 41A to 41C (climate change);

(v)

sections 73 to 76 (winding up);

(b)

Pensions Act 2004f2—

(i)

section 32 (sections 23 to 31: supplementary);

(ii)

section 38 (contribution notices where avoidance of employer debt);

(iii)

sections 43 and 43A (financial support directions);

(iv)

section 52 (restoration orders where transactions at an undervalue);

(v)

section 69 (duty to notify the Regulator of certain events);

(vi)

Part 2 (the Board of the Pension Protection Fund);

(vii)

Part 3 (scheme funding);

(c)

paragraph (4) of regulation 7B of the Occupational Pension Schemes (Transfer Values) Regulations 1996f3.

8Disapplication: other

(1)

This regulation applies where a direction containing an instruction under regulation 3(2) is given by the Secretary of State.

(2)

No act or omission of the trustee company, AWE PLC or another person done in good faith in connection with a direction under these Regulations is a breach of any rule of law, including any trust law or fiduciary duties.

(3)

For the purposes of paragraph (2), any rule of law includes—

(a)

the duty to act with prudence;

(b)

the duty to invest scheme assets in the best financial interests of scheme beneficiaries;

(c)

the duty to promote the purposes of the trust;

(d)

the duty to act in accordance with the provisions of the AWE Trust Deed and Rules.

9Modifications

(1)

This regulation applies where a direction containing an instruction under regulation 3(2) is given by the Secretary of State.

(2)

In the Pensions Act 1995—

(a)

in considering whether to make an order under section 3f1 in relation to the AWE Pension Scheme, the Authorityf2 may take into account whether acts or omissions of a person were in connection with a direction under these Regulation;

(b)

no act or omission done in good faith in connection with a direction under these Regulations shall be grounds to issue a penalty under section 10f3;

(c)

for the purposes of section 11(1), the Authority may not take into account an act or omission in connection with a direction under these Regulations;

(d)

where the trustee company acts in connection with a direction, this does not constitute a delegation of its discretion to make a decision about investments for the purposes of section 34(2)f4.

(3)

In the Finance Act 2004f5 a paymentf6 by the trustee company in compliance with such a direction is not an unauthorised employer payment or treated as an unauthorised employer payment for the purposes of section 160(4).

(4)

In Part 1 of the Pensions Act 2004, an act or omission done in good faith in connection with a direction under these Regulations—

(a)

is not a contravention of one or more provisions of the pensions legislation for the purposes of sections 13f7 and 14;

(b)

is not an act which constitutes a misuse or misappropriation of any of the assets of the AWE Pension Scheme for the purposes of sections 15 or 16;

(c)

does not give rise to an immediate risk to the interests of members under the scheme or the assets of the scheme for the purposes of section 23f8;

(d)

is not a course of conduct giving rise to the offence for the purposes of sections 58Af9 and 58Bf10;

(e)

does not give rise to a penalty under section 88Af11.

10Exemption from liability

(1)

This regulation applies where a direction is given by the Secretary of State under regulation 3 or 4.

(2)

Neither the trustee company nor AWE PLC is responsible, chargeable or liable in relation to any act or omission in connection with a direction under these Regulations, except where liability arises due to the wilful default of the trustee company or AWE PLC.

11Proceedings

(1)

Where a direction from the Secretary of State has been given under regulation 3, proceedings specified in paragraph (2) may only be brought, or continued if already commenced, with the permission of the Secretary of State.

(2)

The proceedings referred to in paragraph (1) are—

(a)

proceedings to wind up the AWE Pension Scheme;

(b)

a demand for payment under the Crown Guarantee.

(3)

For the purposes of this regulation, proceedings to wind up the AWE Pension Scheme include any proceedings under section 11f1 of the Pensions Act 1995.

Signature

Dated

Defence Minister

Ministry of Defence

We consent

Lords Commissioner of the Treasury

HM Treasury

Explanatory note

(This note is not part of the Regulations)

Chapter 3 (AWE Pension Scheme) of the Pension Schemes Act 2026 (“the 2026 Act”) establishes a legislative framework to create a new public pension scheme for members of the AWE Pension Scheme, and to transfer the assets of the pension scheme to government. These Regulations are made under section 116 of the 2026 Act and enable the Secretary of State to issue directions that will require the transfer of pension scheme assets to central government.

Regulation 3 makes provision for the Secretary of State to issue binding directions to the trustee company for the purposes of realising and transferring pension scheme assets.  It also makes provision for the procedure to be followed where the trustee company wishes to raise certain concerns about the directions with the Secretary of State.

Regulation 4 makes provision for the Secretary of State to issue binding directions to AWE PLC.

Regulation 5 makes general provisions in relation to directions and other notices issued under regulations 3 and 4.

Regulation 6 provides that the Secretary of State is under a duty to ensure that the trustee company can meet all relevant liabilities once the sale of the scheme assets commences.

Regulation 7 ensures that various statutory provisions will no longer apply to the AWE Pension Scheme once the realisation of assets begins.

Regulation 8 ensures that acts or omissions in connection with a direction will not breach any rule of law, including common law fiduciary duties.

Regulation 9 modifies various statutory provisions in relation to acts or omissions in connection with a direction under these Regulations.

Regulation 10 exempts the trustee company and AWE PLC from liability in relation to any act or omission in connection with a direction.

Regulation 11 provides that certain proceedings cannot be brought without the consent of the Secretary of State.

A full impact assessment has not been produced for this instrument as no, or no significant impact on the private, voluntary or public sector is foreseen.