House of Commons portcullis
House of Commons
Session 2003 - 04
Internet Publications
Other Bills before Parliament

Pensions Bill


Pensions Bill
Schedule 10 — Deferral of retirement pensions and shared additional pensions
Part 1 — Principal amendments of Social Security Contributions and Benefits Act 1992

218

 

Supply of housing benefit and council tax benefit information

3     (1)  

Section 122D of the Social Security Administration Act 1992 (c. 5) (supply of

information by authorities administering housing benefit or council tax

benefit) is amended as follows.

      (2)  

In subsection (1) for “or employment or training” substitute “employment or

5

training, private pensions policy or retirement planning”.

      (3)  

After subsection (2) insert—

“(2A)   

Information supplied under subsection (2) may be used for any

purpose relating to private pensions policy or retirement planning.”

      (4)  

After subsection (5) insert—

10

“(6)   

In this section—

   

“private pensions policy” means policy relating to occupational

pension schemes or personal pension schemes (within the

meaning given by section 1 of the Pension Schemes Act 1993);

   

“retirement planning” means promoting financial planning for

15

retirement.”

Schedule 10

Section 221

 

Deferral of retirement pensions and shared additional pensions

Part 1

Principal amendments of Social Security Contributions and Benefits Act 1992

20

1          

In this Part of this Schedule “the principal Act” means the Social Security

Contributions and Benefits Act 1992.

2          

Schedule 5 to the principal Act (increase of pension where entitlement is

deferred) is amended as follows.

3          

For the heading, substitute “PENSION INCREASE OR LUMP SUM WHERE

25

ENTITLEMENT TO RETIREMENT PENSION IS DEFERRED”.

4          

Before paragraph 1 insert—

“Choice between increase of pension and lump sum where pensioner’s entitlement

is deferred

A1    (1)  

Where a person’s entitlement to a Category A or Category B

30

retirement pension is deferred and the period of deferment is at

least 12 months, the person shall, on claiming his pension or

within a prescribed period after claiming it, elect in the prescribed

manner either—

(a)   

that paragraph 1 (entitlement to increase of pension) is to

35

apply in relation to the period of deferment, or

(b)   

that paragraph 3A (entitlement to lump sum) is to apply in

relation to the period of deferment.

 

 

Pensions Bill
Schedule 10 — Deferral of retirement pensions and shared additional pensions
Part 1 — Principal amendments of Social Security Contributions and Benefits Act 1992

219

 

      (2)  

If no election under sub-paragraph (1) is made within the period

prescribed under that sub-paragraph, the person is to be treated as

having made an election under sub-paragraph (1)(b).

      (3)  

Regulations may enable a person who has made an election under

sub-paragraph (1) (including one that the person is treated by sub-

5

paragraph (2) as having made) to change the election in prescribed

circumstances and within a prescribed time.

      (4)  

Where the Category A or Category B retirement pension includes

any increase under paragraphs 5 to 6, no election under sub-

paragraph (1) applies to so much of the pension as consists of that

10

increase (an entitlement to an increase of pension in respect of

such an increase after a period of deferment being conferred either

by paragraphs 1 and 2 or by paragraph 2A).”

5          

For paragraph 1 (increase of pension where pensioner’s entitlement is

deferred) substitute—

15

“1    (1)  

 This paragraph applies where a person’s entitlement to a

Category A or Category B retirement pension is deferred and one

of the following conditions is met—

(a)   

the period of deferment is less than 12 months, or

(b)   

the person has made an election under paragraph A1(1)(a)

20

in relation to the period of deferment.

      (2)  

The rate of the person’s Category A or Category B retirement

pension shall be increased by an amount equal to the aggregate of

the increments to which he is entitled under paragraph 2, but only

if that amount is enough to increase the rate of the pension by at

25

least 1 per cent.”

6     (1)  

In paragraph 2 (calculation of increment), in sub-paragraph (5)(b), for “83

or” substitute “83A or”.

      (2)  

In relation to any incremental period (within the meaning of Schedule 5 to

the principal Act) beginning before 6th April 2010, the reference in

30

paragraph 2(5)(b) of that Schedule to section 83A of that Act is to be read as

a reference to section 83 or 84 of that Act.

7          

After paragraph 2 insert—

“2A   (1)  

This paragraph applies where—

(a)   

a person’s entitlement to a Category A or Category B

35

retirement pension is deferred,

(b)   

the pension includes an increase under paragraphs 5 to 6,

and

(c)   

the person has made (or is treated as having made) an

election under paragraph A1(1)(b) in relation to the period

40

of deferment.

      (2)  

The rate of the person’s Category A or Category B retirement

pension shall be increased by an amount equal to the aggregate of

the increments to which he is entitled under sub-paragraph (3).

      (3)  

For each complete incremental period in the person’s period of

45

deferment, the amount of the increment shall be 1/5th per cent. of

the weekly rate of the increase to which the person would have

been entitled under paragraphs 5 to 6 for the period if his

 

 

Pensions Bill
Schedule 10 — Deferral of retirement pensions and shared additional pensions
Part 1 — Principal amendments of Social Security Contributions and Benefits Act 1992

220

 

entitlement to the Category A or Category B retirement pension

had not been deferred.”

8     (1)  

After paragraph 3 insert—

“Lump sum where pensioner’s entitlement is deferred

3A    (1)  

This paragraph applies where—

5

(a)   

a person’s entitlement to a Category A or Category B

retirement pension is deferred, and

(b)   

the person has made (or is treated as having made) an

election under paragraph A1(1)(b) in relation to the period

of deferment.

10

      (2)  

The person is entitled to an amount calculated in accordance with

paragraph 3B (a “lump sum”).

Calculation of lump sum

3B    (1)  

The lump sum is the accrued amount for the last accrual period

beginning during the period of deferment.

15

      (2)  

In this paragraph—

‘accrued amount’ means the amount calculated in

accordance with sub-paragraph (3);

‘accrual period’ means any period of seven days beginning

with a prescribed day of the week, where that day falls

20

within the period of deferment.

      (3)  

The accrued amount for an accrual period for a person is—equation: plus[lparen[char[A]],rparen[cross[rparen[char[P]],sqrt[lparen[plus[num[1.00000000,

"1"],over[char[R],num[100.00000000,"100"]]]],num[52.00000000,"52"]]]]]

           

where—

A is the accrued amount for the previous accrual period (or,

in the case of the first accrual period beginning during the

25

period of deferment, zero);

P is the amount of the Category A or Category B retirement

pension to which the person would have been entitled for

the accrual period if his entitlement had not been

deferred;

30

R is the percentage rate prescribed for the purposes of this

sub-paragraph.

      (4)  

For the purposes of the calculation of the lump sum, the amount

of Category A or Category B retirement pension to which the

person would have been entitled for an accrual period—

35

(a)   

includes any increase under section 47(1) and any increase

under paragraph 4 of this Schedule, but

(b)   

does not include—

(i)   

any increase under section 83A or 85 or paragraphs

5 to 6 of this Schedule,

40

(ii)   

any graduated retirement benefit, or

(iii)   

in prescribed circumstances, such other amount of

Category A or Category B retirement pension as

may be prescribed.

 

 

Pensions Bill
Schedule 10 — Deferral of retirement pensions and shared additional pensions
Part 1 — Principal amendments of Social Security Contributions and Benefits Act 1992

221

 

      (5)  

The reference in sub-paragraph (4)(a) to any increase under

subsection (1) of section 47 shall be taken as a reference to any

increase that would take place under that subsection if subsection

(2) of that section and section 46(5) of the Pensions Act were

disregarded.”

5

      (2)  

In relation to any accrual period (within the meaning of Schedule 5 to the

principal Act as amended by this paragraph) ending before 6th April 2010

the reference in paragraph 3B(4)(b) of that Schedule to section 83A of that

Act is to be read as a reference to section 83 or 84 of that Act.

9          

After paragraph 3B (inserted by paragraph 8 of this Schedule) insert—

10

“Choice between increase of pension and lump sum where pensioner’s deceased

spouse has deferred entitlement

3C    (1)  

Subject to paragraph 8, this paragraph applies where—

(a)   

a widow or widower (“W”) is entitled to a Category A or

Category B retirement pension,

15

(b)   

W was married to the other party to the marriage (“S”)

when S died,

(c)   

S’s entitlement to a Category A or Category B retirement

pension was deferred when S died, and

(d)   

S’s entitlement had been deferred throughout the period of

20

12 months ending with the day before S’s death.

(2)        

W shall within the prescribed period elect in the prescribed

manner either—

(a)   

that paragraph 4 (entitlement to increase of pension) is to

apply in relation to S’s period of deferment, or

25

(b)   

that paragraph 7A (entitlement to lump sum) is to apply in

relation to S’s period of deferment.

(3)        

If no election under sub-paragraph (2) is made within the period

prescribed under that sub-paragraph, W is to be treated as having

made an election under sub-paragraph (2)(b).

30

(4)        

Regulations may enable a person who has made an election under

sub-paragraph (2) (including one that the person is treated by sub-

paragraph (3) as having made) to change the election in prescribed

circumstances and within a prescribed time.

(5)        

The making of an election under sub-paragraph (2)(b) does not

35

affect the application of paragraphs 5 to 6 (which relate to an

increase in pension where the pensioner’s deceased spouse had

deferred an entitlement to a guaranteed minimum pension).”

10    (1)  

Paragraph 4 (increase of pension where pensioner’s deceased spouse has

deferred entitlement) is amended as follows.

40

      (2)  

For sub-paragraph (1) substitute—

“(1)   

Subject to paragraph 8, this paragraph applies where a widow or

widower (“W”) is entitled to a Category A or Category B retirement

pension and was married to the other party to the marriage (“S”)

when S died and one of the following conditions is met—

45

(a)   

S was entitled to a Category A or Category B retirement

pension with an increase under this Schedule,

 

 

Pensions Bill
Schedule 10 — Deferral of retirement pensions and shared additional pensions
Part 1 — Principal amendments of Social Security Contributions and Benefits Act 1992

222

 

(b)   

W is a widow or widower to whom paragraph 3C applies and

has made an election under paragraph 3C(2)(a), or

(c)   

paragraph 3C would apply to W but for the fact that the

condition in sub-paragraph (1)(d) of that paragraph is not

met.

5

(1A)   

Subject to sub-paragraph (3), the rate of W’s pension shall be

increased—

(a)   

in a case falling within sub-paragraph (1)(a), by an amount

equal to the increase to which S was entitled under this

Schedule, apart from paragraphs 5 to 6,

10

(b)   

in a case falling within sub-paragraph (1)(b), by an amount

equal to the increase to which S would have been entitled

under this Schedule, apart from paragraphs 5 to 6, if the

period of deferment had ended immediately before S’s death

and S had then made an election under paragraph A1(1)(a),

15

or

(c)   

in a case falling within sub-paragraph (1)(c), by an amount

equal to the increase to which S would have been entitled

under this Schedule, apart from paragraphs 5 to 6, if the

period of deferment had ended immediately before S’s

20

death.”

11    (1)  

After paragraph 7 insert—

“Entitlement to lump sum where pensioner’s deceased spouse has deferred

entitlement

7A    (1)  

This paragraph applies where a person to whom paragraph 3C

25

applies (“W”) has made (or is treated as having made) an election

under paragraph 3C(2)(b).

      (2)  

W is entitled to an amount calculated in accordance with

paragraph 7B (a “widowed person’s lump sum”).

Calculation of widowed person’s lump sum

30

7B    (1)  

The widowed person’s lump sum is the accrued amount for the

last accrual period beginning during the period which—

(a)   

began at the beginning of S’s period of deferment, and

(b)   

ended on the day before S’s death.

      (2)  

In this paragraph—

35

‘S’ means the other party to the marriage;

‘accrued amount’ means the amount calculated in

accordance with sub-paragraph (3);

‘accrual period’ means any period of seven days beginning

with a prescribed day of the week, where that day falls

40

within S’s period of deferment.

      (3)  

The accrued amount for an accrual period for W is—equation: plus[lparen[char[A]],rparen[cross[rparen[char[P]],sqrt[lparen[plus[num[1.00000000,

"1"],over[char[R],num[100.00000000,"100"]]]],num[52.00000000,"52"]]]]]

           

where—

 

 

Pensions Bill
Schedule 10 — Deferral of retirement pensions and shared additional pensions
Part 1 — Principal amendments of Social Security Contributions and Benefits Act 1992

223

 

A is the accrued amount for the previous accrual period (or,

in the case of the first accrual period beginning during the

period mentioned in sub-paragraph (1), zero);

P is—

(a)   

the basic pension, and

5

(b)   

half of the additional pension,

to which S would have been entitled for the accrual

period if his entitlement had not been deferred during the

period mentioned in sub-paragraph (1);

R is the percentage rate prescribed for the purposes of this

10

sub-paragraph.

      (4)  

For the purposes of the calculation of the widowed person’s lump

sum, the amount of Category A or Category B retirement pension

to which S would have been entitled for an accrual period—

(a)   

includes any increase under section 47(1) and any increase

15

under paragraph 4 of this Schedule, but

(b)   

does not include—

(i)   

any increase under section 83A or 85 or paragraphs

5 to 6 of this Schedule,

(ii)   

any graduated retirement benefit, or

20

(iii)   

in prescribed circumstances, such other amount of

Category A or Category B retirement pension as

may be prescribed.

      (5)  

The reference in sub-paragraph (4)(a) to any increase under

subsection (1) of section 47 shall be taken as a reference to any

25

increase that would take place under that subsection if subsection

(2) of that section and section 46(5) of the Pensions Act were

disregarded.

      (6)  

In any case where—

(a)   

there is a period between the death of S and the date on

30

which W becomes entitled to a Category A or Category B

retirement pension, and

(b)   

one or more orders have come into force under section 150

of the Administration Act during that period,

           

the amount of the lump sum shall be increased in accordance with

35

that order or those orders.”

      (2)  

In relation to any accrual period (within the meaning of Schedule 5 to the

principal Act) ending before 6th April 2010 the reference in paragraph

7B(4)(b) of that Schedule to section 83A of that Act is to be read as a reference

to section 83 or 84 of that Act.

40

12         

After paragraph 7B (inserted by paragraph 11 of this Schedule) insert—

“Supplementary

7C    (1)  

Any lump sum calculated under paragraph 3B or 7B must be

rounded to the nearest penny, taking any 1/2p as nearest to the

next whole penny above.

45

      (2)  

In prescribing a percentage rate for the purposes of paragraphs 3B

and 7B, the Secretary of State must have regard to—

(a)   

the national economic situation, and

 

 

Pensions Bill
Schedule 10 — Deferral of retirement pensions and shared additional pensions
Part 1 — Principal amendments of Social Security Contributions and Benefits Act 1992

224

 

(b)   

any other matters which he considers relevant.”

13         

For the heading immediately preceding paragraph 8 substitute “Married

couples”.

14         

In paragraph 8 (married couples)—

(a)   

in sub-paragraph (3) for “the reference in paragraph 2(3) above”

5

substitute “the references in paragraphs 2(3) and 3B(3) and (4)”,

(b)   

for sub-paragraph (4) substitute—

“(4)       

The conditions in paragraph 3C(1)(c) and 4(1)(a) are not

satisfied by a Category B retirement pension to which S

was or would have been entitled by virtue of W’s

10

contributions.

(5)        

Where the Category A retirement pension to which S was

or would have been entitled includes an increase under

section 51A(2) attributable to W’s contributions, the

increase or lump sum to which W is entitled under

15

paragraph 4(1A) or 7A(2) is to be calculated as if there had

been no increase under that section.

(6)        

In sub-paragraphs (4) and (5), “W” and “S” have the same

meaning as in paragraph 3C, 4 or 7A, as the case requires.”

15         

After Schedule 5 to the principal Act insert—

20

“Schedule 5A

Pension increase or lump sum where entitlement to shared

additional pension is deferred

Choice between pension increase and lump sum where entitlement to shared

additional pension is deferred

25

1     (1)  

Where a person’s entitlement to a shared additional pension is

deferred and the period of deferment is at least 12 months, the

person shall, on claiming his pension or within a prescribed

period after claiming it, elect in the prescribed manner either—

(a)   

that paragraph 2 (entitlement to increase of pension) is to

30

apply in relation to the period of deferment, or

(b)   

that paragraph 4 (entitlement to lump sum) is to apply in

relation to the period of deferment.

      (2)  

If no election under sub-paragraph (1) is made within the period

prescribed under that sub-paragraph, the person is to be treated as

35

having made an election under sub-paragraph (1)(b).

      (3)  

Regulations may enable a person who has made an election under

sub-paragraph (1) (including one that the person is treated by sub-

paragraph (2) as having made) to change the election in prescribed

circumstances and within a prescribed time.

40

Increase of pension where entitlement deferred

2     (1)  

This paragraph applies where a person’s entitlement to a shared

additional pension is deferred and either—

(a)   

the period of deferment is less than 12 months, or

 

 

 
previous section contents continue
 
House of Commons home page Houses of Parliament home page House of Lords home page search page enquiries

© Parliamentary copyright 2004
Revised 12 February 2004