Pensions Bill (HL Bill 91)

(2) The inherited deferral amount is equal to the amount by which the weekly
rate of the old state pension for the pensioner would have been increased
under paragraph 4 of Schedule 5 to the Contributions and Benefits Act on
the day on which the pensioner became entitled to the inherited deferral
5amount.

(3) For the purposes of calculating the amount of that increase, paragraph 4(1A)
of Schedule 5 to the Contributions and Benefits Act has effect as if after the
words “apart from” (in each place) there were inserted “this paragraph and”.

Dead spouse or civil partner’s entitlement to old state pension deferred at time of death

3 (1) 10A 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’s entitlement to an old state pension was
deferred when he or she died, and

(b) the pensioner would, on reaching pensionable age or on the death of
15the spouse or civil partner, have been entitled to an old state pension
if in the relevant provisions of the Contributions and Benefits Act: (i)
the 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.

(2) 20The inherited deferral amount is equal to the amount by which the weekly
rate of the old state pension for the pensioner would have been increased
under paragraph 4 of Schedule 5 to the Contributions and Benefits Act on
the day on which the pensioner became entitled to the inherited deferral
amount.

(3) 25For the purposes of calculating the amount of that increase—

(a) a pensioner who is not entitled to a choice under section 8 is to be
treated as having met the condition in paragraph 4(1)(c) of
Schedule 5 to the Contributions and Benefits Act,

(b) a pensioner who has chosen under section 8 to be paid a state
30pension under section 9 is to be treated as having met the condition
in paragraph 4(1)(b) of Schedule 5 to the Contributions and Benefits
Act, and

(c) paragraph 4(1A) of Schedule 5 to the Contributions and Benefits Act
has effect as if after the words “apart from” (in each place) there were
35inserted “this paragraph and”.

(4) In this paragraph “deferred” has the meaning given by section 55(3) of the
Contributions and Benefits Act.

“The relevant provisions” of the Contributions and Benefits Act

4 For the purposes of this Schedule “the relevant provisions” of the
40Contributions and Benefits Act are those mentioned in section 8(9)(b).

Supplementary

5 When determining entitlement to, or calculating, an inherited deferral
amount under this Schedule based on entitlement to an old state pension
ignore—

(a) 45any 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 11

SCHEDULE 6 Reduced rate elections: effect on rate of section 4 pension

5Introduction

1 This Schedule modifies the rules about the transitional rate of the state
pension for a woman if a reduced rate election was in force in respect of her
at the beginning of the relevant 35-year period (and expressions used in this
paragraph have the same meaning as in section 11).

10Increased transitional rate for woman married to person over pensionable age etc

2 (1) This paragraph applies to the woman if on reaching pensionable age—

(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) The transitional rate of the state pension for the woman is—

(a) 15the rate determined for her under section 5, or

(b) if higher, a weekly rate equal to the modified amount for her pre-
commencement qualifying years alone.

(3) The modified amount for the woman’s pre-commencement qualifying years
alone is the amount that would be calculated under Schedule 1 for her pre-
20commencement qualifying years alone if the basic pension in any
Category A retirement pension calculated for her for the purposes of
paragraph 3 of that Schedule were equal to the basic Category B amount.

(4) “The basic Category B amount” is the amount specified in paragraph 5 of
Part 1 of Schedule 4 to the Contributions and Benefits Act on 6 April 2016.

(5) 25To find out what happens if the marriage or civil partnership comes to an
end, see paragraph 4.

Increased transitional rate for widows or divorcees etc

3 (1) This paragraph applies to the woman if on reaching pensionable age she is
not married or in a civil partnership but she has been married or in a civil
30partnership before.

(2) The transitional rate of the state pension for the woman is—

(a) the rate determined for her under section 5, or

(b) if higher, a weekly rate equal to the modified amount for her pre-
commencement qualifying years alone.

(3) 35The modified amount for the woman’s pre-commencement qualifying years
alone is the amount that would be calculated under Schedule 1 for her pre-
commencement qualifying years alone if the basic pension in any
Category A retirement pension calculated for her for the purposes of
paragraph 3 of that Schedule were equal to the full amount of the basic
40pension.

(4) “The full amount of the basic pension” is the amount of the basic pension
specified in section 44(4) of the Contributions and Benefits Act on 6 April
2016.

Recalculation of transitional rate where circumstances change

4 5If 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) her transitional rate is to be recalculated applying paragraph 3(2),
and

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

(a) 15her 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
woman’s transitional rate on the day on which she reached
pensionable age.

(2) 20But 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) the amount of state pension to which a woman is entitled for periods
before that paragraph applies to her, or

(b) 25the 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

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

1 30This Schedule—

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

(b) determines that basic amount.

2 (1) A woman is entitled to a basic amount under this paragraph if she has
35reached 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) The 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
40woman 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
partnership but she has been married or in a civil partnership before,
or

(b) on reaching pensionable age she was married or in a civil
5partnership 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
section 44(4) of the Contributions and Benefits Act on the day on which the
woman became entitled under this paragraph.

4 10A 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 Pension sharing: appropriate weekly rate under section 13

Introduction

1 15This 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) This 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
20credit.

(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
equal to the person’s notional rate.

(3) If the person became entitled to the old state scheme pension credit before
25the 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) For 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
30which 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
becomes payable on the later of—

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

(b) 35the 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
entitled 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
40final relevant year.

(7) In this paragraph—

Pensions BillPage 44

• “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 entitled to
  the old state scheme pension credit.

5Appropriate 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
to 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
10new state scheme pension credit, the appropriate weekly rate is a weekly
rate equal to the amount of the credit.

(3) If 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
15revaluation percentage.

(4) The “appropriate revaluation percentage” is the percentage specified, in
relation 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
20pensionable 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) 25for 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 13

30SCHEDULE 9 Pension sharing: up-rating state pension under section 13

Introduction

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

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

(a) ignoring 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
40state 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”;