56 Commencement

(1) This Act comes into force on such day or days as the Secretary of State may by
order appoint, subject as follows.

(2) The following come into force on the day on which this Act is passed—

(a) 5section 29;

(b) section 51;

(c) this Part.

(3) The following come into force at the end of the period of 2 months beginning
with the day on which this Act is passed—

(a) 10Part

3

;

(b) sections 34 and 35;

(c) section 41;

(d) 15sections 47 and 48;

(e) paragraph 30(2) of Schedule 13.

(4) Part 1 comes into force on 6 April 2016, so far as not brought into force earlier
by an order under subsection (1).

(5) The Secretary of State may by order—

(a) 20amend subsection (4) so as to replace the reference to 6 April 2016 with
a later date, and

(b) make corresponding amendments in Part 1 or any enactment amended
by it.

(6) Section 52 comes into force on such day or days as the Treasury may by order
25appoint.

(7) An order under subsection (1) or (6) may appoint different days for different
purposes.

(8) The Secretary of State may by order make transitional, transitory or saving
provision in connection with the coming into force of any provision of this Act.

57 30Short title

This Act may be cited as the Pensions Act 2014.

SCHEDULES

Section 5

SCHEDULE 1 Transitional rate of state pension: calculating the amount

Part 1 5Introduction

1 (1) This Schedule sets out how to calculate the amounts used to work out the
transitional rate of a person’s state pension.

(2) Part 2 of the Schedule sets out how to calculate the amount for a person’s
pre-commencement qualifying years.

(3) 10Part 3 of the Schedule sets out how to calculate the amount for a person’s
post-commencement qualifying years (if any).

Part 2 Amount for pre-commencement qualifying years

How to calculate the amount for pre-commencement qualifying years

2 15A person’s amount for pre-commencement qualifying years is calculated as
follows.

Step 1 - calculate the person’s pension under the old system

Calculate the weekly rate based on the old state pension and graduated
retirement benefit (see paragraph 3 for more about this).

20Step 2 - calculate a pension based on the new system

Calculate the weekly rate based on the new state pension (see paragraph 4
for more about this).

Step 3 - take whichever rate is higher (the foundation amount)

Take whichever of the rates found under Steps 1 and 2 is higher.

25Step 4 - revalue to date when the person reached pensionable age

Revalue the amount of that rate in accordance with paragraph 6.

Step 1: calculation of the person’s pension under the old system

3 (1) For the purposes of Step 1 of the calculation in paragraph 2, the weekly rate
based on the old state pension and graduated retirement benefit is—

(a) the rate of any Category A retirement pension and graduated
5retirement benefit to which the person would have been entitled if
the person had reached pensionable age on 6 April 2016, or

(b) the rate of any graduated retirement benefit to which the person
would have been entitled under section 36(7) of the National
Insurance Act 1965 (persons not entitled to retirement pension) if the
10person had reached pensionable age on that date.

(2) The following rules apply for the purposes of calculating that rate.

(3) Calculate the rate that would have had effect on 6 April 2016 (but see sub-
paragraph (6)).

(4) Ignore—

(a) 15the amendments made by paragraphs 53 and 55 of Schedule 12
(which limit Category A retirement pensions and graduated
retirement benefit to people who reach pensionable age before 6
April 2016);

(b) any requirement to make a claim;

(c) 20any provision suspending payment of, or disqualifying a person
from receiving, any amount;

(d) section 45B of the Contributions and Benefits Act (reduction of
additional pension because of pension sharing);

(e) section 37 of the National Insurance Act 1965 (graduated retirement
25benefit for widows etc).

(5) Read the reference in section 45(4)(b) of the Contributions and Benefits Act
(additional pension) to a person’s working life as a reference to the period—

(a) beginning with the tax year in which the person reached 16, and

(b) ending with the tax year before the one in which the person actually
30reached pensionable age.

(6) If an order under section 150 or 150A of the Administration Act (up-rating)
is made before 6 April 2016 and it provides for an increase to come into force
after that date, it is to be treated for the purposes of calculating the rate under
this paragraph as having already come into force.

(7) 35Where regulations under section 22(5ZA) of the Contributions and Benefits
Act have the effect that a person is credited, on or after 6 April 2016, with
earnings or contributions for a tax year starting before that date, the earnings
or contributions are to be treated for the purposes of calculating the rate
under this paragraph as having been credited before 6 April 2016.

(8) 40A determination under section 48A(2) of the Pension Schemes Act 1993
(contracting-out: reinstatement in state scheme following payment of
contributions equivalent premium) made on or after 6 April 2016 is to be
treated for the purposes of calculating the rate under this paragraph as
having been made before 6 April 2016.

Step 2: calculation of a pension based on the new system

4 (1) For the purposes of Step 2 of the calculation in paragraph 2, the weekly rate
based on the new state pension is as follows.

(2) If the person has 35 or more pre-commencement qualifying years, the rate is
5equal to—

(a) the full rate of the state pension on 6 April 2016, less

(b) any amount to reflect contracting out under the old system (see
paragraph 5).

(3) If the person has fewer than 35 pre-commencement qualifying years, the rate
10is equal to—

(a) the appropriate proportion of the full rate of the state pension on 6
April 2016, less

(b) any amount to reflect contracting out under the old system (see
paragraph 5).

(4) 15The “appropriate proportion”, in relation to a person, is—

5 (1) In paragraph 4(2) and (3) references to an “amount to reflect contracting out
under the old system” are to an amount equal to any difference between—

(a) the amount of any additional pension included in the Category A
20retirement pension calculated for the purposes of Step 1 of the
calculation in paragraph 2, and

(b) the amount of any additional pension that would have been included
if—

(i) sections 46 and 48A of the Pension Schemes Act 1993 were
25ignored, and

(ii) for the purposes of calculating the amounts referred to in
section 45(2)(c) and (d) of the Contributions and Benefits Act
any earnings paid to or for the benefit of the person in respect
of contracted-out employment were treated as if they were
30not in respect of contracted-out employment.

(2) “Contracted-out employment” means employment qualifying a person for a
pension provided by a salary related contracted-out scheme, a money
purchase contracted-out scheme or an appropriate personal pension scheme
(and expressions used in this definition have the same meaning as in the
35Pension Schemes Act 1993).

Step 4: revaluation

6 (1) This paragraph determines how the amount mentioned in Step 4 of the
calculation in paragraph 2 is to be revalued for the purposes of that Step.

(2) If the amount is equal to or less than the full rate of the state pension on 6
40April 2016, the amount is to be revalued in accordance with increases in the
full rate of the state pension (see sub-paragraph (4)).

(3) If the amount is greater than the full rate of the state pension on 6 April
2016—

(a) so much of the amount as is equal to the full rate of the state pension
on 6 April 2016 is to be revalued in accordance with increases in the
full rate of the state pension (see sub-paragraph (4)), and

(b) so much of the amount as exceeds the full rate of the state pension on
5that date is to be revalued in accordance with increases in the general
level of prices (see sub-paragraph (5)).

(4) For the purposes of sub-paragraphs (2) and (3)(a), an amount is revalued in
accordance with increases in the full rate of the state pension by increasing
it by the same percentage as any increase in the full rate of the state pension
10in the period—

(a) beginning with 6 April 2016, and

(b) ending with the day on which the person reached pensionable age.

(5) For the purposes of sub-paragraph (3)(b), an amount is revalued in
accordance with increases in the general level of prices by adding—

(a) 15the amount, and

(b) the amount multiplied by the revaluing percentage specified in the
last order under section 148AC(3) of the Administration Act to come
into force before the person reached pensionable age.

Part 3 20Amount for post-commencement qualifying years

7 (1) A person’s amount for post-commencement qualifying years (if any) is
calculated as follows.

(2) If the person has 35 or more post-commencement qualifying years, the
amount is equal to the full rate of the state pension on the day on which the
25person reached pensionable age.

(3) If the person has fewer than 35 post-commencement qualifying years, the
amount is equal to the following proportion of the full rate of the state
pension on the day on which the person reached pensionable age—

Section 5

30SCHEDULE 2 Transitional rate of state pension: up-rating

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

2 In this Schedule a reference to the transitional rate of a person’s state pension
35is to the rate—

(a) taking into account any reduction under section 14, but

(b) ignoring any increase under section 17.

3 (1) The transitional rate of a person’s state pension is to be increased under this
paragraph if it is equal to or less than the full rate.

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

4 (1) The transitional rate of a person’s state pension is to be increased under this
5paragraph if it exceeds the full rate.

(2) If at any time the full rate of the state pension is increased, the person’s
transitional rate is increased (at that time) by the same amount as the amount
by which the full rate is increased.

(3) If at any time an order under section 151A of the Administration Act comes
10into force, the person’s transitional rate is increased (at that time) by an
amount equal to the appropriate percentage of the excess.

(4) In sub-paragraph (3)—

• “the appropriate percentage” means the percentage specified in the
  order, and

• 15“the excess” means the amount by which the transitional rate exceeded
  the full rate immediately before the order came into force.

Section 7

SCHEDULE 3 Survivor’s pension under section 7: inherited amount

Introduction

1 20This Schedule—

(a) sets out the circumstances in which a person (the “pensioner”) is
entitled to an inherited amount for the purpose of section 7, and

(b) determines that amount.

Dead spouse or civil partner in old state pension system etc

2 (1) 25A pensioner whose spouse or civil partner has died is entitled to an inherited
amount under this paragraph if—

(a) the marriage took place or the civil partnership was formed before 6
April 2016,

(b) the spouse or civil partner died before 6 April 2016,

(c) 30the pensioner was under pensionable age when the spouse or civil
partner died, and

(d) the pensioner would, on reaching pensionable age, have been
entitled to a Category B retirement pension under section 48B(4)
or (4A) or 48BB of the Contributions and Benefits Act if the words
35“before 6 April 2016” were omitted.

(2) The inherited amount is equal to the weekly rate at which that Category B
retirement pension would have been payable on the day on which the
pensioner reached pensionable age if any element of the rate attributable to
the basic pension were ignored.

3 (1) 40A pensioner whose spouse or civil partner has died is entitled to an inherited
amount under this paragraph if—

(a) the marriage took place or the civil partnership was formed before 6
April 2016,

(b) the spouse or civil partner reached pensionable age before 6 April
2016 but died on or after that date,

(c) 5the pensioner was under pensionable age when the spouse or civil
partner died, and

(d) the pensioner would, on reaching pensionable age, have been
entitled to a Category B retirement pension under section 48BB of the
Contributions and Benefits Act if in subsection (3) of that section: (i)
10the words “before 6 April 2016” were omitted, and (ii) the reference
to a bereavement allowance were a reference to bereavement
support payment under section 30 of this Act.

(2) The inherited amount is equal to the weekly rate at which that Category B
retirement pension would have been payable on the day on which the
15pensioner reached pensionable age if section 48BB(8) and (9) of the
Contributions and Benefits Act were ignored.

4 (1) A pensioner whose spouse or civil partner has died is entitled to an inherited
amount under this paragraph if—

(a) the marriage took place or the civil partnership was formed before 6
20April 2016,

(b) the spouse or civil partner reached pensionable age before 6 April
2016 but died on or after that date,

(c) the pensioner was over pensionable age when the spouse or civil
partner died, and

(d) 25the pensioner would, when the spouse or civil partner died, have
been entitled to a Category B retirement pension under section
48B(1) or (1A) of the Contributions and Benefits Act if the words
“before 6 April 2016” were omitted.

(2) The inherited amount is equal to the weekly rate at which that Category B
30retirement pension would have been payable on the day on which the
spouse or civil partner died if any element of the rate attributable to the basic
pension were ignored.

Dead spouse or civil partner in new state pension system

5 (1) A pensioner whose spouse or civil partner has died is entitled to an inherited
35amount under this paragraph if—

(a) the marriage took place or the civil partnership was formed before 6
April 2016,

(b) the pensioner was over pensionable age when the spouse or civil
partner died,

(c) 40the spouse or civil partner was, immediately before his or her death,
entitled to a state pension payable at the transitional rate, and

(d) that transitional rate exceeded the full rate of the state pension.

(2) The inherited amount is half of the amount by which the transitional rate of
the state pension for the spouse or civil partner exceeded the full rate of the
45state pension immediately before the death.

6 (1) A pensioner whose spouse or civil partner has died is entitled to an inherited
amount under this paragraph if—

(a) the marriage took place or the civil partnership was formed before 6
April 2016,

(b) the pensioner was under pensionable age when the spouse or civil
partner died,

(c) 5the spouse or civil partner was, immediately before his or her death,
entitled to a state pension payable at the transitional rate,

(d) that transitional rate exceeded the full rate of the state pension, and

(e) the pensioner did not marry or form a civil partnership after the
death and before reaching pensionable age.

(2) 10The inherited amount is half of the amount by which the transitional rate of
the state pension for the spouse or civil partner would have exceeded the full
rate of the state pension if he or she had been alive on the day on which the
pensioner reached pensionable age.

7 (1) A pensioner whose spouse or civil partner has died is entitled to an inherited
15amount under this paragraph if—

(a) the marriage took place or the civil partnership was formed before 6
April 2016,

(b) the pensioner was over pensionable age when the spouse or civil
partner died,

(c) 20the spouse or civil partner was under pensionable age when he or
she died but would have been entitled to a state pension payable at
the transitional rate if he or she had reached pensionable age on the
day of the death, and

(d) that transitional rate would have exceeded the full rate of the state
25pension.

(2) The inherited amount is half of the amount by which the transitional rate of
the state pension for the spouse or civil partner would have exceeded the full
rate of the state pension if he or she had reached pensionable age on the day
of the death.

8 (1) 30A pensioner whose spouse or civil partner has died is entitled to an inherited
amount under this paragraph if—

(a) the marriage took place or the civil partnership was formed before 6
April 2016,

(b) the pensioner was under pensionable age when the spouse or civil
35partner died,

(c) the spouse or civil partner died on or after 6 April 2016,

(d) the spouse or civil partner was under pensionable age when he or
she died,

(e) the spouse or civil partner would have been entitled to a state
40pension payable at the transitional rate if he or she had reached
pensionable age on the same day as the pensioner,

(f) that transitional rate would have exceeded the full rate of the state
pension, and

(g) the pensioner did not marry or form a civil partnership after the
45death and before reaching pensionable age.

(2) The inherited amount is half of the amount by which the transitional rate of
the state pension for the spouse or civil partner would have exceeded the full
rate of the state pension if he or she had reached pensionable age on the same
day as the pensioner.

Supplementary

9 When determining entitlement to, or calculating, an inherited amount under
this Schedule based on entitlement to an old state pension or a state pension
under this Part of this Act ignore—

(a) 5any requirement to make a claim for that pension;

(b) any provision suspending payment of, or disqualifying a person
from receiving, any amount of that pension.

Section 7

SCHEDULE 4 Survivor’s pension under section 7: up-rating

10Introduction

1 This Schedule sets out how to up-rate the rate of a person’s state pension
under section 7.

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

(a) 15ignoring 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 20In this Schedule a reference to “the amount of any state pension that has
priority” means the rate of any state pension to which the person is entitled
under section 2, 4 or 12.

Rate of section 7 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 7 is to be increased
25under this paragraph if, when added to the 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 7 is increased (at that time) by the same percentage as the
increase in the full rate.

30Rate of section 7 pension, when added to any priority pension, straddles the full rate

5 (1) The rate of the person’s state pension under section 7 is to be increased
under this paragraph if—

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

(b) 35the rate of the state pension under section 7, when added to the
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 7 is increased (at that time) by an
amount equal to the appropriate percentage of the shortfall immediately
40before 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 7 is increased
(at that time) by an amount equal to the appropriate percentage of the excess
immediately before the order comes into force.

(4) 5In 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
  10order;

• “the excess” means the amount by which the rate of the state pension
  under section 7, when added to the amount of any state pension that
  has priority, exceeds the full rate;

• “the shortfall” means the amount by which the amount of any state
  15pension 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 7 is to be increased
under this paragraph if the amount of any state pension that has priority is
equal to or higher than the full rate of the state pension.

(2) 20If 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 7 is increased
(at that time) by the percentage specified in the order.

Section 9

SCHEDULE 5 Survivor’s pension under section 9: inherited deferral amount

25Introduction

1 This Schedule—

(a) sets out the circumstances in which a person (the “pensioner”) is
entitled to an inherited deferral amount for the purpose of section 9,
and

(b) 30determines that amount.

Dead spouse or civil partner entitled to old state pension with deferral increase

2 (1) A pensioner whose spouse or civil partner has died is entitled to an inherited
deferral amount under this paragraph if—

(a) the spouse or civil partner was entitled to an old state pension with
35an increase under paragraph 1 or 2A of Schedule 5 to the
Contributions and Benefits Act, and

(b) the pensioner would, on reaching pensionable age or on the death of
the spouse or civil partner, have been entitled to an old state pension
if in the relevant provisions of the Contributions and Benefits Act: (i)
40the words “before 6 April 2016” were omitted, and (ii) any reference
to a bereavement allowance included a reference to bereavement
support payment under section 30 of this Act.