Clause 11: Additional pension: simplified accrual rates as from flat rate introduction year

188.     Subsections (2) and (3) amend section 45 of the SSCBA1992 to provide for the second stage in the calculation of the reformed state second pension, using the flat rate, which is set out in the new Schedule 4B to the SSCBA1992 and described above at paragraph 169.

189.     Subsection (4) amends section 122 of the SSCBA1992 to define "the flat rate introduction year" - the year from which the reformed state second pension calculation will commence. It will be the tax year which is designated as such by the Secretary of State by order.

190.     Subsection (5) introduces Schedule 2 which both inserts new Schedule 4B into the SSCBA1992 and makes provision to uprate (in line with earnings) the flat rate accrual amount introduced by the new Schedule 4B by inserting section 148AA into the SSAA1992 (see paragraph 201 below).

Schedule 2: Additional pension: simplified accrual rates

Part 1 - New Schedule 4B to the SSCBA

191.     Paragraph 1 of this Schedule inserts new Schedule 4B into SSCBA1992 to provide for the new method of calculation of additional state pension.

192.     Paragraph 1 of new Schedule 4B provides that the amount of additional state pension accrued for the years from the flat rate introduction year onwards is to be the aggregate of the appropriate amounts in respect of each year in which the pensioner was in contracted-in employment, calculated in accordance with Part 2 of Schedule 4B (see paragraphs 193-197 below) and the appropriate amounts in respect of each year in which the pensioner was in contracted-out employment, calculated in accordance with Part 3 of the Schedule (see paragraphs 198-204).

193.     Paragraphs 2 to 5 (Part 2) set out the calculation for the amount of additional state pension in respect of years of contracted-in employment.

194.     Paragraph 2 provides that Part 2 applies to a tax year if the contracted-out condition is not satisfied for any tax week in the year.

195.     Paragraph 3 provides that the appropriate amount for the year is to be either the flat rate amount where a person's total earnings factor does not exceed the low earnings threshold or, where there is a surplus earnings factor exceeding the low earnings threshold, the aggregate of the flat rate and earnings related amounts.

196.     Paragraph 4 provides that the 'flat rate amount' of additional state pension will be the 'FRAA' - £72.80 initially and then as uprated annually under new section 148AA of the SSAA1992 (see paragraph 201 below).

197.     Paragraph 5 provides that the 'earnings related amount' is calculated by:

• identifying the surplus earnings between the low earnings threshold and the upper accrual point; then

• multiplying that figure by the relevant amount under the last order under section 148 of the SSAA1992; then

• multiplying that amount by 10%; then

• dividing that amount by 44.

198.     Paragraphs 6 to 10 (Part 3) set out the calculation for the amount of additional state pension in respect of years of contracted-out employment.

199.     Paragraph 6 provides that Part 3 applies to a tax year if the contracted-out condition is satisfied for each tax week in the year.

200.     Paragraph 7 prescribes that the appropriate amount for the year is to be calculated by subtracting Amount B from Amount A.

201.     Paragraph 8 provides that Amount A is the 'flat rate amount' of additional state pension, i.e. the 'FRAA' - as uprated annually under new section 148AA of the SSAA1992, where there is no surplus above the low earnings threshold.

202.     Paragraph 9 provides that where there is a surplus exceeding the low earnings threshold, Amount A is to be calculated by:

• identifying the assumed surplus for the relevant year between the low earnings threshold and the upper accrual point; then

• multiplying that figure by the relevant amount under the last order under section 148 of the SSAA1992; then

• multiplying that amount by 10%; then

• dividing that amount by 44; then

• adding this amount to the flat rate amount for the year (paragraph 8 refers).

203.     Paragraph 10 provides that Amount B is to be calculated by:

• identifying the assumed surplus for the relevant year between the qualifying earnings factor and the upper accrual point; then

• multiplying that figure by the relevant amount under the last order under section 148 of the SSAA1992; then

• multiplying that amount by 20%; then

• dividing that amount by the number of years in the pensioner's working life.

204.     Paragraph 10(2) provides that section 44B of the SSCBA1992 (deemed earnings factors) is to be ignored in applying section 44(6) for the purposes of calculating Amount B. This ensures that a person's actual earnings factors are used in the calculation thereby producing an amount by way of top-up to the benefits provided by their private pension scheme.

205.     Paragraph 11 allows the Secretary of State to make regulations so as to vary any of the calculations described above in circumstances where a person has a combination of contracted-in and contracted-out employment within a tax year or where a contracted-out pension scheme makes arrangements to buy back state scheme rights of their members.

206.     Paragraph 12 defines the terms "assumed surplus", "contracted-out condition", "the FRAA" "the LET", "the QEF", "relevant year", and "the UAP".

207.     Paragraph 13 further defines "the FRAA".

Part 2 - Revaluation of Flat Rate Accrual Amount

208.     Paragraph 2 of this Schedule inserts new section 148AA into the SSAA1992.

209.     Subsection (1) of the new section requires the Secretary of State to review the general level of earnings in the tax year prior to the flat rate introduction year and in subsequent tax years.

210.     Subsection (2) defines "review period".

211.     Subsection (3) requires the Secretary of State to make an order under this section where the general level of earnings has increased over the review period.

212.     Where a revaluation order is made, subsection (4) requires the FRAA to be increased by not less than the percentage by which the general level of earnings increased during the review period.

213.     Subsection (5) sets the initial rate of the FRAA at £72.80 per year, which equates to a weekly amount of £1.40.

214.     Subsection (6) allows the amount of the FRAA as determined by subsections (4) and (5) to be rounded up or down as the Secretary of State considers appropriate.

215.      Subsection (7) allows the Secretary of State not to increase the FRAA where an increase would be inconsiderable.

216.     If the Secretary of State determines that he is not required to make an order under this section, subsection (8) requires the Secretary of State to lay a report before Parliament explaining his decision not to do so.

217.     Subsection (9) allows the Secretary of State to estimate the general level of earnings as he sees fit. In practice this means the Secretary of State will be able to decide which measure or index of earnings growth shall be used for the purposes of earnings uprating.

218.     Subsection (10) defines the terms "the flat rate introduction year" and "the FRAA".

Clause 12: Additional pension: upper accrual point

219.     Subsection (1) amends section 22 of the SSCBA1992 to replace the upper earnings limit which represents the current end point for additional pension accruals with the new "applicable limit". Prior to the flat rate introduction year, the applicable

limit will remain as the upper earnings limit. From the flat rate introduction year, however, the applicable limit will be the new "upper accrual point".

220.     Subsection (2) amends section 44 of the SSCBA1992 in line with the provisions of subsection (1) to replace the upper earnings limit with the upper accrual point as the cap for earnings factors as from the beginning of the flat rate introduction year.

221.     Subsection (3) amends section 122 of the SSCBA1992 to define the "upper accrual point". This will be of an amount equivalent to the upper earnings limit multiplied by 52 for the flat rate introduction year, except that there is power for the Secretary of State by order to specify a different amount should the forecast earnings growth not result in the low earnings threshold and the upper accrual point converging before 2030.

222.     Subsection (4) introduces Part 7 of Schedule 1 which contains consequential amendments relating to the simplified accrual rates.

223.     Subsections (5) to (9) allow the Secretary of State to abolish both the low earnings threshold and the upper accrual point when the two converge, which is expected to happen in around 2030. (This will happen because the low earnings threshold increases at each up-rating in line with average earnings while, in contrast, the upper accrual point upon introduction will remain a fixed amount.) Subsection (5) activates these provisions when the low earnings threshold would otherwise be of an amount not less than the upper accrual point. At this time subsection (6) allows the Secretary of State by order to abolish both limits. Subsections (7) and (8) allow such an order to make any transitional or consequential amendments to primary legislation. Subsection (9) requires that any such abolition order must be approved by affirmative resolution of both Houses of Parliament. The effect of the convergence of the limits would be that, from that point, accruals for the state second pension would consist only of the flat rate accrual for any earnings factors over the qualifying earnings factor for the relevant year.

Schedule 1: Part 7: Additional pension: simplified accrual rates

224.     Paragraph 35 makes consequential amendments to section 176 of the SSCBA1992, so that any order setting the upper accrual point must be approved by affirmative resolution of both Houses of Parliament, and an order designating the flat rate introduction year will not be subject to any parliamentary procedure (like normal commencement orders).

225.     Paragraphs 36 to 39 make consequential amendments to the PSA1993 to cater for the introduction of the upper accrual point. The amendments are all in connection with contracting-out arrangements for defined benefit pension schemes.

226.     Paragraph 36 amends section 12B of that Act to prescribe the upper accrual point from the flat rate introduction year as the limit for calculation of qualifying earnings with regard to the reference scheme.

227.     Paragraph 37 amends section 41 of that Act to prescribe the upper accrual point from the flat rate introduction year as the limit for calculation of qualifying earnings with regard to reduced rates of Class 1 contributions and provide power for the Secretary of State by regulations to specify how the amount of National Insurance contributions is to be calculated on the range of earnings between the lower earnings limit and the new upper accrual point where a person has an unusual earnings pattern.

228.     Paragraph 38 amends section 181(1) of that Act to define "the flat rate introduction year" and the "upper accrual point".

229.     Paragraph 39 amends Schedule 4 to that Act to prescribe the upper accrual point from the flat rate introduction year as the limit for calculation of qualifying earnings with regard to the calculation of reckonable earnings in priority in bankruptcy etc.

Clause 13: Increase in pensionable age for men and women

230.     The rules for determining state pension age are set out in Part 1 of Schedule 4 to PA1995. Subsection (1) of this clause introduces Schedule 3 (see below) which amends both section 126 of, and Schedule 4 to, the PA1995 so as to enact increases in state pension age. Under subsection (3) of clause 28 (Commencement: see page 65 below), the amendments made by Schedule 3 come into force two months after the date of Royal Assent but the first increase in state pension age, from 65 to 66, will be phased in between April 2024 and April 2026.

231.     Subsection (2) introduces Part 8 of Schedule 1, which contains consequential amendments relating to the increases in state pension age (see below): these take effect on 6 April 2024 (subsection (3)) i.e. when the phasing-in of the initial change from 65 to 66 commences.

Schedule 1: Part 8: Increase in pensionable age for men and women

232.     Paragraphs 40 to 43 of this Schedule make consequential amendments to the SSCBA1992. These take effect from April 2024 (see the note to subsection (3) of clause 13).

233.     Paragraph 40 would allow the upper age limit for widow's pension, which is currently 65, to align with rising state pension age. Widow's pension is only payable to women who were widowed before 9 April 2001, and was replaced by bereavement benefit for men and women bereaved after that date.

234.     Paragraphs 41 and 42 relate to, respectively, the minimum age for entitlement to attendance allowance and the upper age limit for claiming disability living allowance (both 65). The amendment would align the present age thresholds with rising state pension age.

235.     Paragraph 43 relates to the qualifying conditions for the Christmas bonus. Where entitlement to the payment is by virtue of entitlement to a war disablement pension, the person is additionally required to have reached the age of 65. The amendment would align the qualifying age with rising state pension age in these cases.

236.     Paragraph 44 of this Schedule, which amends the State Pension Credit Act 2002, aligns the qualifying age for entitlement to the savings credit element (currently 65) with rising state pension age.

Schedule 3: Increase in pensionable age for men and women

237.     This Schedule amends those provisions of the PA1995 which specify the dates on which men and women reach state pension age (referred to in the Act as pensionable age).

238.     Paragraphs 1 and 2 amend section 126 of that Act, which introduces Schedule 4 to that Act, to reflect the extended scope of that Schedule as amended by this Bill.

239.     Paragraphs 3 and 4 amend Schedule 4 to the PA 1995. Paragraph 3 replaces the current heading to the Schedule to reflect the fact that, as amended, the provisions are no longer solely concerned with equalisation of state pension age. Paragraph 4 amends paragraph 1 of that Schedule, which specifies the state pension ages for men and women respectively in a set of 'rules'.

240.     Paragraph 4(2) amends paragraph 1(1), which currently provides that a man attains state pension age when he reaches 65 years. The amendment limits this provision so that it applies only to men who are due to reach that age before 6 April 2024.

241.     Paragraph 4(3) amends paragraph 1(3), which introduces the table setting out the state pension ages for women born after 5 April 1950 but before 6 April 1955, ie. those affected by the phasing-in of the increase in female state pension age from 60 to 65. The amendment is required as additional tables are introduced by these amendments (see also the amendment made by paragraph 4(5)).

242.     Paragraph 4(4) substitutes paragraph 1(4), which currently provides that a woman born after 5 April 1955 has a state pension age of 65, to make provision for women corresponding to that for men made by the amendment at paragraph 4(2) above.

243.     Paragraph 4(6) adds paragraphs 1(5) to (10), which provide how and when state pension age is to be increased from 65 to 68.

244.     Paragraph 1(5) introduces the table detailing how the first of the changes (from age 65 to 66) is to be phased in. These arrangements will apply to those who are due to reach age 65 in the period 6 April 2024 to 5 April 2025. The phasing arrangements mirror the approach used to phase in the increase in state pension age for women where each increase of one year is phased in over two years. Dates of birth are grouped in one-month periods, with a common state pension age date (the 6th of the month) applying to everyone within that group. State pension age then advances by approximately one month in two months - that is, those born between 6 April 1959 and 5 May 1959 will reach state pension age on 6 May 2024; those born in the following month (6 May 1959 to 5 June 1959) will reach state pension age on 6 July 2024 and so on.

245.     Paragraph 1(6) provides that state pension age will be 66 for those born in the period 6 April 1960 to 5 April 1968.

246.     Paragraph 1(7) sets out how the change in state pension age from 66 to 67 is to be phased in for those born in the period 6 April 1968 to 5 April 1969.

247.     Paragraph 1(8) provides that state pension age will be 67 for those born in the period 6 April 1969 to 5 April 1977.

248.     Paragraph 1(9) sets out how the change in state pension age from 67 to 68 is to be phased in for those born in the period 6 April 1977 to 5 April 1978.

249.     Paragraph 1(10) provides that state pension age will be 68 for those born on or after 6 April 1978.

Part 2: Occupational and personal pension schemes

Clause 14: Conversion of guaranteed minimum pensions

250.     Section 13(1) of the PSA1993 requires a contracted-out scheme to make provision to pay a pension to a member from pensionable age of an amount no less than his guaranteed minimum, as specified under sections 14 to 16. Section 17(1) contains a requirement for the payment of a guaranteed minimum pension to a widow, widower, or surviving civil partner.

251.     Subsection (1) of clause 14 allows a scheme to omit provision for a guaranteed minimum pension, as required under section 13(1), where certain conditions are satisfied.

252.     Subsection (2) similarly allows a scheme to omit provision for a survivor's guaranteed minimum pension under section 17(1), where the specified conditions are met.

253.     Subsection (3) sets out the conditions which a scheme must meet in order to be relieved of the liability to pay guaranteed minimum pensions (as well as the rules applying to transfers, scheme amendments and enforcement). This is achieved by the insertion of a number of new sections into the PSA1993. The inserted sections provide as follows:

• Section 24A sets out definitions of terms used in sections 24B to 24G.

• Section 24B specifies the conditions which a converting scheme must satisfy: actuarial equivalence of the value of members' conversion benefits with those they possessed pre-conversion; no reduction of pensions in payment; conversion benefits not to include money purchase benefits; survivors' benefits to be provided (see section 24D), and specified procedural requirements to be met (see section 24E).

• Section 24C provides a power for regulations to be made concerning how actuarial equivalence is to be determined.

• Section 24D sets out the detailed requirement for the scheme to provide conversion benefits which include provision for pension to be paid to a widow, widower or surviving civil partner following the death of the member.

• Section 24E sets out requirements in relation to obtaining the agreement of the scheme's sponsoring employer, and providing information to members and survivors and to the Commissioners for HMRC about the proposed guaranteed minimum pension conversion.

• Section 24F provides a power for regulations to be made concerning conditions for transfers of pension rights out of a guaranteed minimum pension-converted scheme, including the particular requirement that survivor benefits be continued in the scheme to which the rights are transferred. Subsection (4) allows the trustees of a scheme which is not guaranteed minimum pension-converted to undertake guaranteed minimum pension conversion on an individual basis for the purpose of transferring a member's rights out of the scheme, providing the member consents.

• Section 24G provides powers for trustees to amend schemes to facilitate guaranteed minimum pension conversion. Subsection (4) makes it clear that trustees may adjust rights and liabilities under a scheme which is being wound up in order to undertake guaranteed minimum pension conversion.

• Section 24H provides powers for the Pensions Regulator in respect of enforcing the conditions for guaranteed minimum pension conversion, and extends the power under section 10 of the PA1995 (civil penalties) to trustees undertaking a guaranteed minimum pension conversion.

254.     Subsection (5) inserts provisions into section 47 of the PSA1993 in order to make clear that a person who has had his guaranteed minimum pension converted shall continue to be treated as entitled to that guaranteed minimum pension for the purpose of calculating entitlement to additional state pension (the 'contracted out deduction').

Clause 15: Abolition of contracting out for defined contribution pension schemes

255.     Subsection (1) provides that contracting-out certificates for money purchase occupational pension schemes and appropriate scheme certificates (i.e. contracting-out certificates for personal pension schemes) will be cancelled from the date that this subsection is brought into force ("the abolition date").

256.     Subsection (3) introduces Schedule 4. Part 1 of the Schedule contains amendments, mostly to the PSA1993, which will take effect on the abolition date. Part 2 of the Schedule contains amendments which can be brought into force at a later date. The purpose of bringing the amendments in Part 2 of the Schedule into force at a later date is to ensure that the existing statutory mechanisms for HMRC to deal with administrative matters concerning the contracted-out rebate and certification of schemes etc. can remain in place until any matters outstanding at the date of abolition of COMPs and APPs have been dealt with before the relevant legislation is repealed.

257.     Subsection (4) introduces Part 3 of Schedule 4 which contains saving provisions. As with Part 2, the purpose of Part 3 is to ensure that any administrative matters relating to a scheme's contracted-out status prior to the date of abolition can be completed after that date.

258.     Subsection (5) provides for the consequential amendments and the saving provisions contained in Parts 1 and 3 of Schedule 4 to have effect from the abolition date.

259.     Subsection (6) provides a regulation-making power to allow for consequential etc. provision to be made if required as a result of the abolition of contracting-out for money purchase schemes and personal pension schemes.

260.     Subsection (7) provides that the power contained in subsection (6) can be used to amend, repeal or revoke any Act or subordinate legislation provided it was passed or made before the end of the Session in which the Bill is passed.

261.     Subsection (8) allows for any regulations made under the power in subsection (6) to be subject to the negative resolution procedure.

262.     But subsection (9) provides that any use of the power in subsection (6) to vary primary legislation is subject to affirmative resolution.

Schedule 4: Abolition of contracting-out for defined contribution pension schemes

Part 1

263.     The amendments in this part of the Schedule will take effect from the date on which COMP and APP contracting-out certificates are cancelled by virtue of clause 15(1) of the Bill ("the abolition date").

Amendments to Pension Schemes Act 1993

264.     Paragraph 2 amends section 7 (issue of contracting-out and appropriate scheme certificates). As a result of the amendment of subsection (1), HMRC can no longer issue certificates stating that personal pension schemes are appropriate schemes. In addition, when read with the amendments to section 9, the effect is that HMRC can no longer issue a contracting-out certificate in respect of a money purchase occupational pension scheme. Subsections (4) to (6) are omitted to reflect the fact that appropriate scheme certificates can no longer be issued.

265.     Paragraph 3 amends the definition of "contracted-out employment" in section 8(1) to reflect the fact that from the abolition date a money purchase occupational pension scheme can no longer be contracted-out in relation to an earner's employment. Paragraph 3(3) inserts a new subsection (1A) into section 8. New subsection (1A) includes an amended definition of contracted-out employment by reference to a money purchase scheme. This definition now only relates to periods of "contracted-out employment" before the abolition date. This historical definition is required because, although after the abolition date it will no longer be possible for an earner to be in contracted-out employment by reference to a COMP, such periods will continue to be relevant for the calculation of a person's additional pension. The definition will also be needed during the period immediately after the abolition date for dealing with matters relating to periods before that date which are still outstanding at the date of abolition e.g. contracted-out rebates.

266.     Paragraph 3(4) amends section 8(2) to reflect the fact that section 42A is being repealed.

267.     Paragraph 4 contains amendments to section 9 (requirements for certification of schemes). Section 9(3), which deals with requirements for a money purchase scheme to be contracted-out, is omitted. Section 9(5), which deals with the requirements for a personal pension scheme to be contracted out, is also omitted. Consequential amendments are made to section 9(6) (which deals with relevant requirements for contracted-out and appropriate schemes).

268.     Paragraph 5 amends section 10 (protected rights). Section 10(3)(a) is amended to reflect the fact that the definition of "minimum contributions" is to be repealed.

269.     Paragraph 6 omits section 12 (determination of basis on which scheme is contracted-out) to reflect the fact that it will no longer be necessary for certificates to state whether a scheme is contracted-out by virtue of subsection (2) or (3) of section 9, since it will only be possible for schemes to contract out by virtue of section 9(2) (contracting-out requirements for salary related occupational schemes).

270.     Paragraph 7 replaces the cross-heading before section 26 with "Requirements for schemes with members with protected rights".

271.     Paragraph 8 inserts a new section 25A into the Act. New section 25A applies to money purchase occupational pension schemes which ceased to be contracted-out as a result of clause 15(1) of the Bill, as well as to personal pension schemes which cease to be appropriate schemes as a result of the same provision. For as long as people have protected rights under such schemes, or are entitled to any benefit giving effect to such rights, new section 25A(3) requires such schemes to continue to comply with sections 26 to 32 (which such schemes would currently be required to comply with in order to be contracted-out) and prescribed requirements (i.e. the requirements which are currently imposed in relation to COMPs and APPs under section 9(3)).

272.     Paragraph 9 amends section 33 (tax requirements to prevail over certification requirements), and its sidenote, to include references to new section 25A.

273.     Paragraph 10 amends section 33A (appropriate schemes: blowing the whistle) so that it applies to personal pension schemes which cease to be contracted-out as a result of clause 15(1) of the Bill.

274.     Paragraph 11 amends section 34 (cancellation, variation, surrender and refusal of certificates) so that after the abolition date this section will only apply to schemes contracted-out by virtue of satisfying section 9(2).

275.     Paragraph 12 amends section 38 (alteration of the rules of appropriate schemes) so that, rather than applying to appropriate schemes, it applies to personal pension schemes that were appropriate schemes. The prohibition on rule changes continues to apply for as long as there are people who have protected rights under the personal pension scheme or who are entitled to any benefit giving effect to such rights under the scheme.

276.     Paragraph 13 amends section 42A by providing a new subsection (8) setting out a definition of "appropriate flat-rate percentage" and "appropriate age-related percentage" in view of the fact that the sections including definitions of these terms (sections 42B and 45A) are to be repealed. Section 42A provides for the calculation of reduced rates of national insurance contributions, and rebates, for earners in COMPs. The section is retained during the period immediately after the abolition date

so that HMRC can continue to deal with any matters in connection with reduced rates of national insurance contributions, and rebates, which are outstanding at the date of abolition.

277.     Paragraph 14 omits section 42B. Section 42B provides for the Secretary of State to make a report and then an order specifying the "appropriate flat-rate percentage" and the "appropriate age-related percentage". These percentages are used to determine national insurance rebates for COMPs, and there will therefore be no need for the Secretary of State to make further orders after the abolition date.

278.     Paragraph 15 amends section 43 by providing a new subsection (7) defining "the earner's chosen scheme". This is necessary because the current definition is contained in section 44, which is to be repealed. Section 43 deals with the payment of contracted-out rebates (minimum contributions) to appropriate personal pension schemes. The section is retained for the period immediately after the abolition date so that HMRC can continue to deal with any minimum contributions relating to the period before the abolition date which are outstanding as at the date of abolition.

279.     Paragraph 16 omits section 44. Section 44 provides a mechanism for an earner to choose that contracted-out rebates (minimum contributions) must be made by HMRC to the earner's chosen APP. After abolition of APPs this section will no longer be required.

280.     Paragraph 17 amends section 45 by inserting a new subsection (4), defining "appropriate age-related percentage" for the purpose of the section. The new subsection is required in view of the fact that the definition is currently included in section 45A which is to be repealed. Section 45 sets out how contracted-out rebates to APPs (minimum contributions) are to be calculated. Section 45 is retained for the period immediately after abolition so that HMRC can continue to deal with any minimum contributions relating to the period before the abolition date which are outstanding as at the date of abolition.

281.     Paragraph 18 omits section 45A. Section 45A provides for the Secretary of State to make a report and then an order specifying the "appropriate age-related percentage" for the purposes of calculating minimum contributions under section 45. After the abolition of APPs there will be no need for the Secretary of State to make further orders.

282.     Paragraph 19 amends section 48A. That section deals with the reduction of an earner's additional pension in respect of any tax week in which a contracted-out rebate was paid as a result of the earner's membership of a contracted-out occupational pension scheme or an APP. In section 48A(1)(a), the reference to section 42A is amended to reflect the fact that from the abolition date no further contracted-out rebates in respect of COMPs will be made (although rebates resulting from pre-abolition periods of membership of a COMP will continue to affect a person's entitlement to additional pension). Similarly, in section 48A(1)(b), the reference to section 45(1) is amended, to reflect the fact that from the abolition date no further national insurance rebates in respect of APPs will be made (although rebates resulting from pre-abolition periods of membership of an APP will continue to affect a person's entitlement to additional pension).

283.     Paragraph 20 amends section 50. That section gives power to HMRC to approve arrangements for schemes which cease to be certified as contracted-out or APPs or to issue a certificate of non-approval. The effect of the amendments is that HMRC's powers under section 50 extend to schemes which cease to be COMPs or APPs as a result of clause 15(1) of the Bill. Paragraph 20 also makes various consequential amendments to section 50 to reflect the fact that there will be no money purchase contracted-out schemes after the abolition date.

284.     Paragraph 21 amends section 52. Section 52 provides for the continued supervision by HMRC of occupational pension schemes which used to be contracted-out and personal pension schemes which used to be APPs. The effect of the amendments is that the supervision requirements also apply to schemes which cease to be COMPs and APPs as a result of clause 15(1) of the Bill.

285.     Paragraph 22 amends section 55, which deals with contributions equivalent premiums. The amendment reflects the fact that after the abolition date COMPs will cease to exist, and therefore the existing provision that the section applies to contracted-out occupational pension schemes other than COMPs becomes superfluous.

286.     Paragraph 23 amends section 68A (safeguarded rights). The reference to section 9(3) in section 68A(5) is replaced by a reference to a "money purchase contracted-out scheme" in view of the fact that section 9(3) is to be omitted. The references in this subsection to rights under, or derived from, a COMP or APP are retained because safeguarded rights which arose pre-abolition and which are attributable to COMP or APP service will continue to include COMP or APP rights.

287.     Paragraph 24 amends section 87 (the general protection principle). The amendment re-states the present position that the section only applies to occupational pension schemes contracted-out by virtue of satisfying section 9(2) but without doing so by referring to COMPs, which will not exist after the abolition date.

288.     Paragraph 25 amends section 96, which deals with cash equivalents. The amendment reflects the fact that appropriate schemes will cease to exist from the abolition date. The effect of the amendment is that, where a transfer is made to a personal pension scheme which is unable or unwilling to accept a transfer payment for guaranteed minimum pensions or protected rights, the member will have a right to the balance of the cash equivalent after deduction of liabilities for guaranteed minimum pensions and/or protected rights.

289.     Paragraph 26 amends section 156 so as to allow HMRC to give information to a former APP for the purposes of Part III.

290.     Paragraph 27 amends section 163 (exemption of certain schemes from rule against perpetuities) so as to remove a reference to APPs that becomes redundant after the abolition.

291.     Paragraph 28 amends section 164 (Crown employment) by removing references to provisions of the Act which are to be repealed.

292.     Paragraph 29 amends section 177 (general financial arrangements) by removing references to provisions of the Act which are to be repealed.

293.     Paragraph 30 amends section 181(1) (general interpretation) by providing various new and amended definitions. Section 181(4) (regulations) is amended to reflect the fact that section 44 is to be repealed.

294.     Paragraph 31 inserts a new section 181A which deals with the interpretation of references to money purchase contracted-out schemes or appropriate schemes after the abolition date. The definitions apply in respect of periods before the abolition date, and mirror the existing definitions of the same expressions in the Act. These historical definitions are required because, although COMPs and APPS will cease to exist from the abolition date, the definitions used in this section will continue to be relevant for the calculation of a person's additional pension, and, during the period immediately after the abolition date, for dealing with matters relating to periods before abolition which are still outstanding at the date of abolition (for example contracted-out rebates).