Pensions Bill

House of Commons

Session 2006 - 07
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Other Bills before Parliament

Pensions Bill

Pensions Bill
Schedule 2 — Additional pension: simplified accrual rates
Part 1 — New Schedule 4B to the SSCBA
33

(a)
in sub-paragraph (5) in paragraph (b) of the definition of “reckonable
earnings”, for “the current upper earnings limit” substitute “the
applicable limit”; and
(b)
after that sub-paragraph insert—
    “(6)
“The applicable limit” means—
5
(a)
in relation to a payment made in a tax week falling
in a tax year before the flat rate introduction year,
the upper earnings limit for the week in question;
(b)
in relation to a payment made in a tax week falling
in the flat rate introduction year or any subsequent
10
tax year, the upper accrual point divided by 52.”
Part 8
Increase in pensionable age for men and women
Social Security Contributions and Benefits Act 1992 (c. 4)
40
In section 38 of the SSCBA (widow’s pension) in subsection (2) (entitlement
15
to continue until age of 65) for “the age of 65” substitute “pensionable age”.
41
In section 64 of the SSCBA (entitlement to attendance allowance) in
subsection (1) (conditions to be satisfied for entitlement to the allowance) for
“is aged 65 or over” substitute “has attained pensionable age”.
42    (1)
Section 75 of the SSCBA (disability living allowance: persons aged 65 or
20
over) is amended as follows.
      (2)
In subsection (1) (no entitlement to the allowance for persons aged 65 or
over) for “the age of 65” substitute “pensionable age”.
      (3)
For the sidenote substitute “Persons who have attained pensionable age”.
43
In section 149 of the SSCBA (supplementary provisions relating to
25
Christmas bonus) in subsection (4) (for purposes of section 148 persons not
to be taken to be entitled to payment of war disablement pension unless they
have attained the age of 65) for “the age of 65” substitute “pensionable age”.
State Pension Credit Act 2002 (c. 16)
44
In section 3 of the State Pension Credit Act 2002 (savings credit) in
30
subsection (1) (first condition for savings credit) in paragraph (a) for “the age
of 65” substitute “pensionable age”.
Schedule 2
Section 11

Additional pension: simplified accrual rates
Part 1
35
New Schedule 4B to the SSCBA
1
After Schedule 4A to the SSCBA (additional pension) insert the following

Pensions Bill
Schedule 2 — Additional pension: simplified accrual rates
Part 1 — New Schedule 4B to the SSCBA
34

Schedule.
“Schedule 4B
Section 45

Additional pension: accrual rates for purposes of section 45(2)(d)
Part 1
Amount for purposes of section 45(2)(d)
5
1     (1)
The amount referred to in section 45(2)(d) is to be calculated as
follows—
(a)
calculate the appropriate amount for each of the relevant
years within section 45(2)(d) to which Part 2 of this
Schedule applies;
10
(b)
calculate the appropriate amount for each of the relevant
years within section 45(2)(d) to which Part 3 of this
Schedule applies; and
(c)
add those amounts together.
      (2)
But if the resulting amount is a negative one, the amount referred
15
to in section 45(2)(d) is nil.
Part 2
Normal rules: employment not contracted-out
Application
2
This Part applies to a relevant year if the contracted-out condition
20
is not satisfied in respect of any tax week in the year.
Appropriate amount for year
3
The appropriate amount for the year for the purposes of
paragraph 1 is either—
(a)
the flat rate amount for the year (if there is a surplus in the
25
pensioner’s earnings factor for the year which does not
exceed the LET), or
(b)
the sum of the flat rate amount and the earnings-related
amount for the year (if there is such a surplus which
exceeds the LET).
30
4
The flat rate amount for the year is calculated by multiplying the
FRAA in accordance with the last order under section 148AA of
the Administration Act to come into force before the end of the
final relevant year.
5
The earnings-related amount for the year is calculated as
35
follows—
(a)
take the part of the surplus for the year which exceeds the
LET but which does not exceed the UAP;
(b)
multiply that amount in accordance with the last order
under section 148 of the Administration Act to come into
40
force before the end of the final relevant year;

Pensions Bill
Schedule 2 — Additional pension: simplified accrual rates
Part 1 — New Schedule 4B to the SSCBA
35

(c)
multiply the amount found under paragraph (b) by 10%;
(d)
divide the amount found under paragraph (c) by 44.
Part 3
contracted-out employment
Application
5
6
This Part applies to a relevant year if the contracted-out condition
is satisfied in respect of each tax week in the year.
Appropriate amount for year
7
The appropriate amount for the year for the purposes of
paragraph 1 is calculated as follows—
10
(a)
calculate amounts A and B in accordance with paragraphs
8 to 10;
(b)
subtract amount B from amount A.
Amount A: assumed surplus not exceeding LET
8     (1)
Amount A is calculated in accordance with this paragraph if there
15
is an assumed surplus in the pensioner’s earnings factor for the
year which does not exceed the LET.
      (2)
In such a case, amount A is the flat rate amount for the year.
      (3)
The flat rate amount for the year is calculated by multiplying the
FRAA in accordance with the last order under section 148AA of
20
the Administration Act to come into force before the end of the
final relevant year.
Amount A: assumed surplus exceeding LET
9     (1)
Amount A is calculated in accordance with this paragraph if there
is an assumed surplus in the pensioner’s earnings factor for the
25
year which exceeds the LET.
      (2)
In such a case, amount A is calculated as follows—
(a)
take the part of the assumed surplus for the year which
exceeds the LET but which does not exceed the UAP;
(b)
multiply that amount in accordance with the last order
30
under section 148 of the Administration Act to come into
force before the end of the final relevant year;
(c)
multiply the amount found under paragraph (b) by 10%;
(d)
divide the amount found under paragraph (c) by 44;
(e)
add the amount found under paragraph (d) to the flat rate
35
amount for the year.
      (3)
The flat rate amount for the year is calculated by multiplying the
FRAA in accordance with the last order under section 148AA of
the Administration Act to come into force before the end of the
final relevant year.
40

Pensions Bill
Schedule 2 — Additional pension: simplified accrual rates
Part 1 — New Schedule 4B to the SSCBA
36

Amount B
10    (1)
Amount B is calculated as follows—
(a)
take the part of the assumed surplus for the year which
exceeds the QEF but which does not exceed the UAP;
(b)
multiply that amount in accordance with the last order
5
under section 148 of the Administration Act to come into
force before the end of the final relevant year;
(c)
multiply the amount found under paragraph (b) by 20%;
(d)
divide the amount found under paragraph (c) by the
number of relevant years in the pensioner’s working life.
10
      (2)
Section 44B is to be ignored in applying section 44(6) for the
purposes of this paragraph.
Part 4
Other cases
11
The Secretary of State may make regulations containing provision
15
for finding for a tax year the amount referred to in section
45(2)(d)—
(a)
in cases where the circumstances relating to the pensioner
change in the course of the year, and
(b)
in such other cases as the Secretary of State thinks fit.
20
Part 5
Interpretation
12
In this Schedule—
“assumed surplus”, in relation to a pensioner’s earnings
factor for a year, means the surplus there would be in that
25
factor for the year if section 48A(1) of the Pension Schemes
Act 1993 (c. 48) (no primary Class 1 contributions deemed
to be paid) did not apply in relation to any tax week falling
in the year;
“the contracted-out condition”, in relation to a tax week,
30
means the condition that any earnings paid to or for the
benefit of the pensioner in that week in respect of
employment were in respect of employment qualifying
him for a pension provided by a salary related contracted-
out scheme (within the meaning of the Pension Schemes
35
Act 1993);
“the FRAA” has the meaning given by paragraph 13;
“the LET”, in relation to a tax year, means the low earnings
threshold for the year as specified in section 44A above;
“the QEF”, in relation to a tax year, means the qualifying
40
earnings factor for the year;
“relevant year” and “final relevant year” have the same
meanings as in section 44 above;
“the UAP” means the upper accrual point.
13    (1)
“The FRAA” means the flat rate accrual amount.
45

Pensions Bill
Schedule 2 — Additional pension: simplified accrual rates
Part 2 — Revaluation of flat rate accrual amount
37

      (2)
That amount is £72.80 for the flat rate introduction year and
subsequent tax years (but subject to section 148AA of the
Administration Act).”
Part 2
Revaluation of flat rate accrual amount
5
2
After section 148A of the Administration Act insert—
“148AA
Revaluation of flat rate accrual amount
(1)
The Secretary of State must in the tax year preceding the flat rate
introduction year and in each subsequent tax year review the general
level of earnings obtaining in Great Britain and any changes in that
10
level which have taken place during the review period.
(2)
In this section “the review period” means—
(a)
in the case of the first review under this section, the period
beginning with 1st October 2004 and ending with 30th
September in the tax year preceding the flat rate introduction
15
year; and
(b)
in the case of each subsequent review under this section, the
period since—
(i)
the end of the last period taken into account in a
review under this section, or
20
(ii)
such other date (whether earlier or later) as the
Secretary of State may determine.
(3)
If on such a review it appears to the Secretary of State that the general
level of earnings has increased during the review period, he must
make an order under this section.
25
(4)
An order under this section is an order directing that for the
purposes of Schedule 4B to the Contributions and Benefits Act—
(a)
there is to be a new FRAA for the tax years after the tax year
in which the review takes place, and
(b)
the amount of that FRAA is to be the amount specified in
30
subsection (5) below, increased by not less than the
percentage by which the general level of earnings increased
during the review period.
(5)
The amount referred to in subsection (4)(b) is—
(a)
in the case of the first review under this section, £72.80, and
35
(b)
in the case of each subsequent review, the FRAA for the year
in which the review takes place.
(6)
The Secretary of State may, for the purposes of any provision of
subsections (4) and (5), adjust any amount by rounding it up or down
to such extent as he thinks appropriate.
40
(7)
This section does not require the Secretary of State to direct any
increase where it appears to him that the increase would be
inconsiderable.
(8)
If on any review under this section the Secretary of State determines
that he is not required to make an order under this section, he must
45

Pensions Bill
Schedule 3 — Increase in pensionable age for men and women
38

instead lay before each House of Parliament a report explaining his
reasons for arriving at that determination.
(9)
For the purposes of any review under this section the Secretary of
State may estimate the general level of earnings in such manner as he
thinks fit.
5
(10)
In this section—
“the flat rate introduction year” has the meaning given by
section 122 of the Contributions and Benefits Act
(interpretation of Parts 1 to 6 etc.);
“the FRAA” means the flat rate accrual amount (see paragraph
10
13 of Schedule 4B to the Contributions and Benefits Act
(additional pension: simplified accrual rates for purposes of
section 45(2)(d))).”
Schedule 3
Section 13

Increase in pensionable age for men and women
15
1
In the sidenote to section 126 of the Pensions Act 1995 (c. 26), at the end insert
“and increase in pensionable age”.
2
In section 126 of that Act (equalisation of pensionable age) in paragraph (a),
at the end insert “and to increase the pensionable age for men and women
progressively over a period of 22 years beginning with 6th April 2024”.
20
3
For the heading for Schedule 4 to that Act substitute “Equalisation of and
increase in pensionable age for men and women”.
4     (1)
Paragraph 1 of Part 1 of Schedule 4 to that Act (pensionable ages for men and
women) is amended as follows.
      (2)
In sub-paragraph (1), after “man” insert “born before 6th April 1959”.
25
      (3)
In sub-paragraph (3), for “the following table” substitute “table 1”.
      (4)
For sub-paragraph (4) substitute—
    “(4)
A woman born after 5th April 1955 but before 6th April 1959
attains pensionable age when she attains the age of 65.”
      (5)
For the heading for the table substitute “TABLE 1”.
30
      (6)
After the table insert—
    “(5)
A person born on any day in a period mentioned in column 1 of
table 2 attains pensionable age at the commencement of the day
shown against that period in column 2.

Pensions Bill
Schedule 3 — Increase in pensionable age for men and women
39

TABLE 2

(1)
(2)

Period within which birthday falls
Day pensionable age

attained

6th April 1959 to 5th May 1959
6th May 2024

5

6th May 1959 to 5th June 1959
6th July 2024

6th June 1959 to 5th July 1959
6th September 2024

6th July 1959 to 5th August
6th November 2024

1959

6th August 1959 to 5th
6th January 2025

10

September 1959

6th September 1959 to 5th
6th March 2025

October 1959

6th October 1959 to 5th
6th May 2025

November 1959

15

6th November 1959 to 5th
6th July 2025

December 1959

6th December 1959 to 5th
6th September 2025

January 1960

6th January 1960 to 5th
6th November 2025

20

February 1960

6th February 1960 to 5th March
6th January 2026

1960

6th March 1960 to 5th April
6th March 2026

1960

25
      (6)
A person born after 5th April 1960 but before 6th April 1968 attains
pensionable age when the person attains the age of 66.
      (7)
A person born on any day in a period mentioned in column 1 of
table 3 attains pensionable age at the commencement of the day
shown against that period in column 2.
30
TABLE 3

(1)
(2)

Period within which birthday falls
Day pensionable age

attained

6th April 1968 to 5th May 1968
6th May 2034

35