House of Commons - Explanatory Note
Pensions Bill - continued          House of Commons

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(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 retirement.

Schedule 10 - DEFERRAL OF RETIREMENT PENSIONS AND SHARED ADDITIONAL PENSIONS]

Part 1

•     Amendment of the Social Security Contributions and Benefits Act 1992:

Schedule 5

Para 1

PENSION INCREASE OR LUMP SUM WHERE ENTITLEMENT TO RETIREMENT PENSION IS DEFERRED

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 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 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.

(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 is treated by sub-paragraph (2) as having been 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 subparagraph (1) applies to so much of the pension as consists of that 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).

    1 Where a person's entitlement to a Category A or Category B retirement pension is deferred, the rate of his 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 below, but only if that amount is enough to increase the rate of the pension by at least 1 per cent.

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) 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 least 1 per cent.

2 (1) Subject to paragraph 3 below, a person is entitled to an increment under this paragraph for each complete incremental period in his period of enhancement

    (2) In this Schedule-

    "incremental period" means any period of six days which are treated by regulations as days of increment for the purposes of this Schedule in relation to the person and the pension in question; and

    "the period of enhancement", in relation to that person and that pension, means the period which-

    (a)begins on the same day as the period of deferment in question; and

    (b)ends on the same day as that period or, if earlier, on the day before the 5th anniversary of the beginning of that period.

    (3) Subject to paragraph 3 below, the amount of the increment for any such incremental period shall be 1/7th per cent. of the weekly rate of the Category A or Category B retirement pension to which that person would have been entitled for the period if his entitlement had not been deferred.

    (4) Where an amount is required to be calculated in accordance with the provisions of sub-paragraph (3) above-

    (a) the amount so calculated shall be rounded to the nearest penny, taking any 1/2p as nearest to the next whole penny above; and

    (b) where the amount so calculated would, apart from this sub-paragraph, be a sum less than 1/2p, that amount shall be taken to be zero, notwithstanding any other provision of this Act, the Pensions Act or the Administration Act.

    (5) For the purposes of sub-paragraph (3) above the weekly rate of pension for any period shall be taken-

    (a)to include any increase under section 47(1) above and any increase under paragraph 4, 5, 5A or 6 below, but

    (b)not to include any increase under section 83 or 83A or 85 above or any graduated retirement benefit.

    (6) The reference in sub-paragraph (5) above to any increase under subsection (1) of section 47 above 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.

    (7) Where one or more orders have come into force under section 150 of the Administration Act during the period of enhancement , the rate for any incremental period shall be determined as if the order or orders had come into force before the beginning of the period of enhancement.

    (8) Where a pensioner's rights premium is paid in respect of a person who is, or if his entitlement had not been deferred would be, entitled to a Category A or Category B retirement pension, then, in calculating any increment under this paragraph which falls to be paid to him in respect of such a pension after the date on which the premium is paid there shall be disregarded any guaranteed minimum pension to which the pensioner was entitled in connection with the employment to which the premium relates.

2A (1) This paragraph applies where—

(a) a person's entitlement to a Category A or Category B 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 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 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 entitlement to the Category A or Category B retirement pension had not been deferred.

Para 3

•     The clause inserts additional paragraphs (3A) and (3B) and (3C)

3.—(1) Regulations may provide that sub-paragraphs (1) to (3) of paragraph 2 above shall have effect with such additions, omissions and amendments as are prescribed in relation to a person during whose [1period of enhancement] there has been a change, other than a change made by such an order as is mentioned in sub-paragraph (7) of that paragraph, in the rate of the Category a or category B retirement pension to which he would have been entitled if his entitlement to the pension had commenced on attaining pensionable age.

    (2) Any regulations under this paragraph may make such consequential additions, omissions and amendments in paragraph 8(3) below as the Secretary of State considers are appropriate in consequence of any changes made by virtue of this paragraph in paragraph 2 above.

Insert new paragraphs 3A , 3B, 3C

Para 4

Increase of pension where pensioner's deceased spouse has deferred entitlement

4

    (1) Subject to sub-paragraph (3) below, where-

    (a) a widow or widower (call that person "W") is entitled to a Category A or Category B retirement pension and was married to the other party to the marriage (call that person "S") when S died, and

    (b) S either-

      (i) was entitled to a Category A or Category B retirement pension with an increase under this Schedule, or

      (ii) would have been so entitled if S's period of deferment had ended on the day before S's death,

    the rate of W's pension shall be increased by an amount equal to the increase to which S was or would have been entitled under this Schedule apart from paragraphs 5 to 6.

(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—

(a) S was entitled to a Category A or Category B retirement pension with an increase under this Schedule,

(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.

(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,

(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), 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 death.

    (3) If a married person dies after 5th October 2002, the rate of the retirement pension for that person's widow or widower shall be increased by an amount equivalent to the sum of-

    (a) the increase in the basic pension to which the deceased spouse was entitled; and

    (b) one-half of the increase in the additional pension.

    (4) In any case where-

    (a) there is a period between the death of the former spouse and the date on which the surviving spouse 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 increase to which the surviving spouse is entitled under this paragraph shall be determined as if the order or orders had come into force before the beginning of that period.

    (5) This paragraph does not apply in any case where the deceased spouse died before 6th April 1979 and the widow or widower attained pensionable age before that date.

Para 7

•    The clause inserts additional paragraphs (7A), (7B) and (7C)

Para 8

Married women Married couples

8(1) For the purposes of paragraphs 1 to 3, above in their application to a Category B retirement pension to which a married woman is entitled by virtue of her husband's contributions, a married woman who would have become entitled to such a pension on an earlier day if her husband's entitlement to his Category A retirement pension had not been deferred shall be treated as having (in addition to any other period of enhancement) a period of enhancement which begins on that earlier day and ends on the same day as her husband's period of enhancement.

    (2) The reference in sub-paragraph (1) above to the day on which the woman's husband's period of enhancement ends shall, where the marriage is terminated before that day, be construed as a reference to the day on which the marriage is terminated.

    (3) In the case of the following pensions (where "P" is a married person and "S" is the other party to the marriage), that is-

    (a) a Category B retirement pension to which P is entitled by virtue of the contributions of S, or

    (b) P's Category A retirement pension with an increase under section 51A(2) above

    attributable to the contributions of S,

    the reference in paragraph 2(3) above the references in paragraphs 2(3) and 3B(3) and (4) to the pension to which a person would have been entitled if that person's entitlement had not been deferred shall be construed as a reference to the pension to which P would have been entitled if neither P's nor S's entitlement to a retirement pension had been deferred.

    (4)     Paragraph 4(1)(b) above shall not apply to a Category B retirement pension to which S was or would have been entitled by virtue of W's contributions ("W" and "S" having the same meaning as in paragraph 4(1)); and where the Category A retirement pension to which S was or would have been entitled includes an increase under section 51A(2) above attributable to W's contributions, the increase to which W is entitled under that paragraph shall be calculated as if there had been no increase under that section.

(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 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 paragraph 4(1) 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.

After Schedule 5 insert new Schedule 5A

 
 
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Prepared: 12 February 2004