Pensions Bill (HL Bill 76)

Recalculation of transitional rate where circumstances change

4 If the woman is married or in a civil partnership on reaching pensionable age
but the marriage or civil partnership comes to an end (because of the death
of her spouse or civil partner or otherwise)—

(a) 5her transitional rate is to be recalculated applying paragraph 3(2),
and

(b) Schedule 2 (up-rating) applies as if the recalculated rate had been the
woman’s transitional rate on the day on which she reached
pensionable age.

5 (1) 10If neither of paragraphs 2 and 3 apply to the woman but she subsequently
comes within paragraph (a) or (b) of paragraph 2(1)—

(a) her transitional rate is to be recalculated applying paragraph 2(2),
and

(b) Schedule 2 (up-rating) applies as if the recalculated rate had been the
15woman’s transitional rate on the day on which she reached
pensionable age.

(2) But the woman’s rate is not to be recalculated under sub-paragraph (1) if it
has already been recalculated under paragraph 4.

6 Nothing in paragraph 4 or 5 affects—

(a) 20the amount of state pension to which a woman is entitled for periods
before that paragraph applies to her, or

(b) the amount of any increase under section 17 in a case where the
period for which the woman’s state pension is deferred has ended
before that paragraph applies to her.

Section 12

25SCHEDULE 7 Reduced rate elections: basic amount of state pension under section 12

1 This Schedule—

(a) sets out the circumstances in which a woman is entitled to a basic
amount for the purpose of section 12, and

(b) 30determines that basic amount.

2 (1) A woman is entitled to a basic amount under this paragraph if she has
reached pensionable age and—

(a) she is married to a person who has reached pensionable age, or

(b) she is in a civil partnership with a person who has reached that age.

(2) 35The basic amount is the amount specified in paragraph 5 of Part 1 of
Schedule 4 to the Contributions and Benefits Act on the day on which the
woman became entitled under this paragraph.

3 (1) A woman is entitled to a basic amount under this paragraph if—

(a) on reaching pensionable age she is not married or in a civil
40partnership but she has been married or in a civil partnership before,
or

(b) on reaching pensionable age she was married or in a civil
partnership and the marriage or civil partnership has come to an end
(because of the death of her spouse or civil partner or otherwise).

(2) The basic amount is the amount of the basic pension specified in
5section 44(4) of the Contributions and Benefits Act on the day on which the
woman became entitled under this paragraph.

4 A woman who is entitled to a basic amount under paragraph 3 is not entitled
to a basic amount under paragraph 2.

Section 13

SCHEDULE 8 10Pension sharing: appropriate weekly rate under section 13

Introduction

1 This Schedule sets out the appropriate weekly rate of a person’s state
pension under section 13.

Appropriate weekly rate for pensioner with old state scheme pension credit

2 (1) 15This paragraph sets out the appropriate weekly rate if the person is entitled
to a state pension under section 13 because of an old state scheme pension
credit.

(2) If the person became entitled to the old state scheme pension credit in or
after the final relevant year, the appropriate weekly rate is a weekly rate
20equal to the person’s notional rate.

(3) If the person became entitled to the old state scheme pension credit before
the final relevant year, the appropriate weekly rate is a weekly rate equal to
the person’s notional rate multiplied by the appropriate revaluation
percentage.

(4) 25For the purposes of sub-paragraphs (2) and (3), a person’s “notional rate” is
the weekly rate of a notional pension under section 13 the cash equivalent of
which would, on the valuation day, have been equal to the amount of the old
state scheme pension credit.

(5) For the purposes of sub-paragraph (4) assume that the notional pension
30becomes payable on the later of—

(a) the day on which the person reaches pensionable age, and

(b) the valuation day.

(6) The “appropriate revaluation percentage” is the percentage specified, in
relation to earnings factors for the tax year in which the person became
35entitled to the old state scheme pension credit, by the last order under
section 148 of the Administration Act to come into force before the end of the
final relevant year.

(7) In this paragraph—

• “final relevant year” means the tax year immediately before that in
  40which the person reaches pensionable age;

Pensions BillPage 42

• “valuation day” means the day on which the person became entitled to
  the old state scheme pension credit.

Appropriate weekly rate for pensioner with new state scheme pension credit

3 (1) This paragraph sets out the appropriate weekly rate if the person is entitled
5to a state pension under section 13 because of a new state scheme pension
credit.

(2) If the person was over pensionable age when he or she became entitled to the
new state scheme pension credit, the appropriate weekly rate is a weekly
rate equal to the amount of the credit.

(3) 10If the person was under pensionable age when he or she became entitled to
the new state scheme pension credit, the appropriate weekly rate is a weekly
rate equal to the amount of the credit multiplied by the appropriate
revaluation percentage.

(4) The “appropriate revaluation percentage” is the percentage specified, in
15relation to the tax year in which the person became entitled to the new state
scheme pension credit, by the last order under section 148AD of the
Administration Act to come into force before the person reached
pensionable age.

Supplementary

4 (1) 20Regulations may make provision about the calculation and verification of
notional rates under paragraph 2.

(2) The regulations may, in particular, provide—

(a) for calculation or verification in such manner as may be approved by
or on behalf of the Government Actuary, or

(b) 25for things done under the regulations to be required to be done in
accordance with guidance from time to time prepared by a person
specified in the regulations.

Section 13

SCHEDULE 9 Pension sharing: up-rating state pension under section 13

30Introduction

1 This Schedule sets out how to up-rate the rate of a person’s state pension
under section 13.

2 In this Schedule a reference to the rate of a person’s state pension is to the
rate—

(a) 35ignoring any reduction under section 7(4) (in the case of a state
pension under section 7),

(b) taking into account any reduction under section 14 (in the case of a
state pension under section 4), and

(c) ignoring any increase under section 17.

3 (1) In this Schedule “the total amount of any state pension that has priority”, in
relation to a person’s state pension under section 13, means the sum of—

(a) the rate of any state pension to which the person is entitled under
section 2, 4 or 12,

(b) 5the rate of any state pension to which the person is entitled under
section 7, and

(c) the rate of any earlier state pension to which the person is entitled
under section 13 (see sub-paragraph (2)).

(2) Where a person is entitled to two or more state pensions under section 13
10because he or she has become entitled to two or more state scheme pension
credits, a pension arising because of an earlier credit is an “earlier” state
pension for the purposes of sub-paragraph (1)(c).

Rate of section 13 pension, when added to any priority pension, is less than the full rate

4 (1) The rate of the person’s state pension under section 13 is to be increased
15under this paragraph if, when added to the total amount of any state pension
that has priority, it is equal to or less than the full rate of the state pension.

(2) If at any time the full rate is increased, the rate of the person’s state pension
under section 13 is increased (at that time) by the same percentage as the
increase in the full rate.

20Rate of section 13 pension, when added to any priority pension, straddles the full rate

5 (1) The rate of the person’s state pension under section 13 is to be increased
under this paragraph if—

(a) the total amount of any state pension that has priority is less than the
full rate of the state pension, but

(b) 25the rate of the state pension under section 13, when added to the total
amount of any state pension that has priority, exceeds the full rate.

(2) If at any time the full rate of the state pension is increased, the rate of the
person’s state pension under section 13 is increased (at that time) by an
amount equal to the appropriate percentage of the shortfall immediately
30before that time.

(3) If at any time an order under section 151A of the Administration Act comes
into force, the rate of the person’s state pension under section 13 is increased
(at that time) by an amount equal to the appropriate percentage of the excess
immediately before the order comes into force.

(4) 35In this paragraph—

• “the appropriate percentage”—

  (a)

  in sub-paragraph (2), means the percentage by which the full
  rate is increased;

  (b)

  in sub-paragraph (3), means the percentage specified in the
  40order;

• “the excess” means the amount by which the rate of the state pension
  under section 13, when added to the total amount of any state
  pension that has priority, exceeds the full rate;

• “the shortfall” means the amount by which the total amount of any
  45state pension that has priority is less than the full rate.

Priority pension alone is equal to or higher than the full rate

6 (1) The rate of the person’s state pension under section 13 is to be increased
under this paragraph if the total amount of any state pension that has
priority is equal to or higher than the full rate of the state pension.

(2) 5If at any time an order under section 151A of the Administration Act comes
into force, the rate of the person’s state pension under section 13 is increased
(at that time) by the percentage specified in the order.

Section 14

SCHEDULE 10 Pension sharing: appropriate weekly reduction under section 14

10Introduction

1 This Schedule sets out the appropriate weekly reduction in the rate of a
person’s state pension for the purposes of section 14.

Appropriate weekly reduction for person subject to old state scheme pension debit

2 (1) This paragraph sets out the appropriate weekly reduction if the person is
15subject to an old state scheme pension debit.

(2) If the person became subject to the old state scheme pension debit in or after
the final relevant year, the appropriate weekly reduction is an amount equal
to the person’s notional rate.

(3) If the person became subject to the old state scheme pension debit before the
20final relevant year, the appropriate weekly reduction is an amount equal to
the person’s notional rate multiplied by the appropriate revaluation
percentage.

(4) For the purposes of sub-paragraphs (2) and (3), a person’s “notional rate” is
the weekly rate of a notional pension under section 4 the cash equivalent of
25which would, on the valuation day, have been equal to the amount of the old
state scheme pension debit.

(5) For the purposes of sub-paragraph (4) assume that the notional pension
becomes payable on the later of—

(a) the day on which the person reaches pensionable age, and

(b) 30the valuation day.

(6) The “appropriate revaluation percentage” is the percentage specified, in
relation to earnings factors for the tax year in which the person became
subject to the old state scheme pension debit, by the last order under section
148 of the Administration Act to come into force before the end of the final
35relevant year.

(7) In this paragraph—

• “final relevant year” means the tax year immediately before that in
  which the person reaches pensionable age;

• “valuation day” means the day on which the person became subject to
  40the old state scheme pension debit.

Appropriate weekly reduction for person subject to new state scheme pension debit

3 (1) This paragraph sets out the appropriate weekly reduction if the person is
subject to a new state scheme pension debit.

(2) If the person was over pensionable age when he or she became subject to the
5new state scheme pension debit, the appropriate weekly reduction is an
amount equal to the amount of the debit.

(3) If the person was under pensionable age when he or she became subject to
the new state scheme pension debit, the appropriate weekly reduction is an
amount equal to the amount of the debit multiplied by the appropriate
10revaluation percentage.

(4) The “appropriate revaluation percentage” is the percentage specified, in
relation to the tax year in which the person became subject to the new state
scheme pension debit, by the last order under section 148AD of the
Administration Act to come into force before the person reached
15pensionable age.

Supplementary

4 (1) Regulations may make provision about the calculation and verification of
notional rates under paragraph 2.

(2) The regulations may, in particular, provide—

(a) 20for calculation or verification in such manner as may be approved by
or on behalf of the Government Actuary, or

(b) for things done under the regulations to be required to be done in
accordance with guidance from time to time prepared by a person
specified in the regulations.

Section 15

25SCHEDULE 11 Pension sharing: amendments

Family Law (Scotland) Act 1985 (c. 37)Family Law (Scotland) Act 1985 (c. 37)

1 In section 27 of the Family Law (Scotland) Act 1985 (interpretation), in
subsection (1), in the definition of “relevant state scheme rights”—

(a) 30before paragraph (a) insert—

• “( za)

  shareable new state scheme rights, within the
  meaning given by section 47(3) of the Welfare
  Reform and Pensions Act 1999 or
  corresponding Northern Ireland legislation;”

(b) 35in paragraph (b) after “55A” insert “or 55AA”.

Social Security Contributions and Benefits Act 1992 (c. 4)Social Security Contributions and Benefits Act 1992 (c. 4)

2 The Contributions and Benefits Act is amended as follows.

3 In section 21 (contribution conditions), in subsection (1), after “section 55A”
insert “or 55AA”.

4 In section 43 (persons entitled to more than one retirement pension), in
subsection (6), after “section 55A” insert “or 55AA”.

5 (1) Section 55A (shared additional pension) is amended as follows.

(2) For subsection (1) substitute—

“(1) 5A person is entitled to a shared additional pension under this section
if—

(a) the person attained pensionable age before 6 April 2016, and

(b) the person is entitled to an old state scheme pension credit.”

(3) In subsections (2) and (3), after “shared additional pension” insert “under
10this section”.

(4) In subsections (3), (4), (5) and (7) before “state scheme pension credit” (in
each place) insert “old”.

(5) At the end of the heading insert “because of an old state scheme pension
credit”.

6 15After section 55A insert—

“55AA Shared additional pension because of a new state scheme pension
credit

(1) A person is entitled to a shared additional pension under this section
if—

(a) 20the person reached pensionable age before 6 April 2016, and

(b) the person is entitled to a new state scheme pension credit.

(2) A person’s entitlement to a shared additional pension under this
section continues throughout his or her life.

(3) The weekly rate of a shared additional pension under this section is
25equal to the amount of the new state scheme pension credit.

(4) In this section “new state scheme pension credit” means a credit
under section 49A(2)(b) of the Welfare Reform and Pensions Act
1999.”

7 (1) Section 55B (reduction of additional pension in Category A retirement
30pension: pension sharing) is amended as follows.

(2) In subsection (1)(a), for “a” substitute “an old”.

(3) In subsection (5), for “55A above” substitute “55A or 55AA (as the case may
be)”.

(4) In subsection (8), in the definition of “state scheme pension debit”, before
35“state” insert “old”.

Social Security Administration Act 1992 (c. 5)Social Security Administration Act 1992 (c. 5)

8 In the Administration Act, after section 148AC (inserted by Schedule 12 to

this Act) insert—

“148AD Revaluation of new state scheme pension debits and credits

(1) The Secretary of State must, in each tax year, review the general level
of prices in Great Britain and any changes which have taken place.

(2) 5The Secretary of State must make an order under this section if on a
review it appears to the Secretary of State that, having regard to
earlier orders under this section, relevant debits or credits have not,
during the review period, maintained their value in relation to the
general level of prices.

(3) 10An order under this section is an order directing that, for the
purposes of paragraph 3 of each of Schedules 8 and 10 to the
Pensions Act 2014, the amount of the relevant debits or credits are to
be increased by such percentage of their amount, apart from earlier
orders under this section, as the Secretary of State thinks necessary to
15make up the fall in their value during the review period together
with other falls in their value which had been made up by earlier
orders under this section.

(4) This section does not require the Secretary of State to direct an
increase if it appears to the Secretary of State that the increase would
20be inconsiderable.

(5) If on a review the Secretary of State determines that no order under
this section is required, the Secretary of State must lay before
Parliament a report explaining the reasons for arriving at that
determination.

(6) 25For the purposes of any review under this section the Secretary of
State may estimate the general level of prices in such manner as the
Secretary of State thinks fit.

(7) In this section “relevant debits or credits” means—

(a) a debit under section 49A(2)(a) of the Welfare Reform and
30Pensions Act 1999 to which a person became subject before
the tax year to which the review relates, or

(b) a credit under section 49A(2)(b) of the Welfare Reform and
Pensions Act 1999 to which a person became entitled before
the tax year to which the review relates.”

35Welfare Reform and Pensions Act 1999 (c. 30)1999 (c. 30)

9 The Welfare Reform and Pensions Act 1999 is amended as follows.

10 (1) Section 47 (shareable state scheme rights) is amended as follows.

(2) After subsection (1) insert—

“(1A) For the purposes of this Chapter, a person’s shareable state scheme
40rights are—

(a) the person’s shareable old state scheme rights;

(b) the person’s shareable new state scheme rights.”

(3) In subsection (2)—

(a) after “shareable” insert “old”;

(b) in paragraph (b), after “55A” insert “or 55AA”.

(4) After subsection (2) insert—

“(3) For the purposes of this Chapter, a person’s shareable new state
scheme rights are the person’s entitlement, or prospective
5entitlement, to the excess amount in a state pension under section 4
of the Pensions Act 2014.

(4) “The excess amount”, in relation to a state pension under section 4 of
the Pensions Act 2014, means any amount by which the rate of the
pension exceeds the full rate of the state pension (see section 3 of that
10Act).

(5) In determining the rate of a state pension under section 4 of the
Pensions Act 2014 for the purposes of this Chapter, ignore
Schedule 6 to that Act (reduced rate elections: effect on rate of section
4 pension).”

11 15In section 48 (activation of benefit sharing), in subsection (1), for the words
from the beginning to “shareable state scheme rights” substitute “Section 49
or 49A applies where any of the following has taken effect in relation to a
person’s shareable state scheme rights”.

12 (1) Section 49 (creation of state scheme pension debits and credits) is amended
20as follows.

(2) For subsection (1) substitute—

“(A1) This section applies if—

(a) the transferor is in the old state pension system, or

(b) the transferor is in the new state pension system but the
25transfer day was before 6 April 2016.

(1) Where this section applies because of a relevant order or provision—

(a) the transferor is subject, for the purposes of the relevant state
pension legislation, to a debit of the appropriate amount, and

(b) the transferee is entitled, for the purposes of the relevant state
30pension legislation, to a credit of that amount.”

(3) In subsection (2), after “shareable” insert “old”.

(4) In subsection (3)(b), for “relevant” substitute “shareable old”.

(5) After subsection (5) insert—

“(5A) The fact that a person who reaches pensionable age on or after 6
35April 2016 is not entitled to a pension of the kind mentioned in
section 47(2)(a) or (b) does not affect the calculation under this
section of the appropriate amount by reference to the transferor’s
prospective entitlement, immediately before the transfer day, to a
pension of that kind.”

(6) 40In subsection (6), at the appropriate place insert—

• ““the relevant state pension legislation”—

  (a)

  in relation to a transferor or transferee in the old state
  pension system, means Part 2 of the Contributions
  and Benefits Act, and

  Pensions BillPage 49

  (b)

  in relation to a transferor or transferee in the new state
  pension system, means Part 1 of the Pensions Act
  2014.”

(7) At the end of the heading insert “: transferor in old state pension system or
5pension sharing activated before 6 April 2016”.

13 After section 49 insert—

“49A Creation of debits and credits: transferor in new state pension system
and sharing activated on or after 6 April 2016

(1) This section applies if—

(a) 10the transferor is in the new state pension system, and

(b) the transfer day is 6 April 2016 or any later date.

(2) Where this section applies because of a relevant order or provision—

(a) the transferor is subject, for the purposes of section 14 of the
Pensions Act 2014, to a debit of the shared weekly amount,
15and

(b) the transferee is entitled, for the purposes of the relevant state
pension legislation, to a credit of the shared weekly amount.

(3) The shared weekly amount is the specified percentage of the excess
amount of the transferor’s state pension under section 4 of the
20Pensions Act 2014 as at the transfer day.

(4) For the purposes of calculating the shared weekly amount—

(a) a transferor who is under pensionable age on the transfer day
is to be treated as having reached pensionable age and to
have become entitled to the state pension under section 4 of
25the Pensions Act 2014 on the transfer day;

(b) a transferor who has reached pensionable age on the transfer
day but who has not yet become entitled to the state pension
under section 4 of the Pensions Act 2014 is to be treated as
having become entitled to the pension on that day.

(5) 30In this section—

• “the excess amount” has the meaning given by section 47(4);

• “relevant order or provision” means the order or provision by
  virtue of which this section applies (see section 48);

• “the relevant state pension legislation”—

  (a)

  35in relation to a transferee in the old state pension
  system, means Part 2 of the Contributions and
  Benefits Act, and

  (b)

  in relation to a transferee in the new state pension
  system, means Part 1 of the Pensions Act 2014;

• 40“specified percentage” means the percentage specified in the
  relevant order or provision for the purposes of subsection (3);

• “transfer day” means the day on which the relevant order or
  provision takes effect;

• “transferor” means the person to whose rights the relevant
  45order or provision relates;

• “transferee” means the person for whose benefit the relevant
  order or provision is made.”