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Pensions Bill


Pensions Bill
Part 1 — State pension

8

 

(6)   

In section 39C of the SSCBA (rate of widowed parent’s allowance and

bereavement allowance)—

(a)   

for subsection (2) substitute—

“(1A)   

In its application by virtue of subsection (1) above, section 44(4)

below is to be read as if for the first amount specified in that

5

provision there were substituted a reference to the amount

prescribed for the purposes of this subsection.

(2)   

The weekly amount of a bereavement allowance is an amount

equal to the amount prescribed for the purposes of subsection

(1A) above.”; and

10

(b)   

in subsection (3), for the words “or (as the case may be) section 44 below

by virtue of subsection (1) or (2) above” substitute “by virtue of

subsection (1) above”.

(7)   

Subsections (2)(a) and (b), (3), (5) and (6) have effect in relation to the

designated tax year (see section 5(4)) and subsequent tax years.

15

(8)   

Subsections (2)(c) and (4) have effect in relation to the tax year in which this Act

is passed and subsequent tax years.

(9)   

The Secretary of State must exercise his power to prescribe amounts for the

purposes of the new sections 39(2A) and 39C(1A) (inserted by subsections (5)

and (6)) in such a way as to secure that, at any time before the coming into force

20

of the first provision made under the new section 150A that alters the amount

of the basic pension, the amounts prescribed are equal to the amount of the

basic pension for the time being.

(10)   

In subsection (9)—

“the amount of the basic pension” means the first amount specified in

25

section 44(4) of the SSCBA (weekly rate of Category A retirement

pension);

“the new section 150A” means the section 150A inserted by section 5(1).

7       

Removal of link between lower earnings limit and basic pension

(1)   

Section 5 of the SSCBA (earnings limits and thresholds for Class 1

30

contributions) is amended as follows.

(2)   

In subsection (1) (limits and thresholds to be specified in regulations) for the

words from “in the case of” to the end substitute “in the case of the upper

earnings limit shall be made in accordance with subsection (3) below.”

(3)   

Omit subsection (2) (link between lower earnings limit and weekly rate of basic

35

pension).

(4)   

This section has effect in relation to the tax year following the designated tax

year (see section 5(4)) and subsequent tax years.

8       

Removal of link between lower earnings limit and basic pension: Northern

Ireland

40

(1)   

Section 5 of the Social Security Contributions and Benefits (Northern Ireland)

Act 1992 (c. 7) (earnings limits and thresholds for Class 1 contributions) is

amended as follows.

 
 

Pensions Bill
Part 1 — State pension

9

 

(2)   

In subsection (1) (limits and thresholds to be specified in regulations) for the

words from “in the case of” to the end substitute “in the case of the upper

earnings limit shall be made in accordance with subsection (3) below.”

(3)   

Omit subsection (2) (link between lower earnings limit and weekly rate of basic

pension).

5

(4)   

This section has effect in relation to the tax year following the designated tax

year (see section 5(4)) and subsequent tax years.

Additional pension: deemed earnings factors

9       

Deemed earnings factors for purposes of additional pension

(1)   

After section 44A of the SSCBA insert—

10

“44B    

Deemed earnings factors: 2010-11 onwards

(1)   

This section applies to 2010-11 and subsequent tax years.

(2)   

For the purposes of section 44(6)(za) above, if any of Conditions A to C

in subsections (3) to (5) below is satisfied for a relevant year to which

this section applies, a pensioner is deemed to have an earnings factor

15

for that year which—

(a)   

is derived from so much of his earnings as did not exceed the

applicable limit and on which primary Class 1 contributions

were paid; and

(b)   

is equal to the amount which, when added to any other earnings

20

factors taken into account under that provision, produces an

aggregate of earnings factors equal to the low earnings

threshold.

(3)   

Condition A is that the pensioner would, apart from this section, have

an earnings factor for the year—

25

(a)   

equal to or greater than the qualifying earnings factor (“the

QEF”) for the year, but

(b)   

less than the low earnings threshold for the year.

(4)   

Condition B is that the pensioner—

(a)   

would, apart from this section and section 44C below, have an

30

earnings factor for the year less than the QEF for the year, but

(b)   

is entitled to an aggregate amount of earnings factor credits for

that year under section 44C below equal to the difference

between the QEF for the year and the earnings factor mentioned

in paragraph (a) above.

35

(5)   

Condition C is that the pensioner is entitled to 52 earnings factor credits

for that year under section 44C below.

(6)   

This section has effect in relation to the flat rate introduction year and

any subsequent tax year as if—

(a)   

subsection (2)(b) referred to an aggregate of earnings factors

40

greater than the QEF, but less than the low earnings threshold,

for the year (rather than to one equal to that threshold); and

(b)   

Condition A in subsection (3) (and the reference to it in

subsection (2)) were omitted.

 
 

Pensions Bill
Part 1 — State pension

10

 

(7)   

In this section—

(a)   

“the applicable limit” has the same meaning as in section 44

above;

(b)   

“the low earnings threshold” means the low earnings threshold

for the year concerned as specified in section 44A above; and

5

(c)   

in subsections (3) and (4), any reference to the pensioner’s

earnings factor for a relevant year is to be construed in

accordance with section 44(6)(za) above.

44C     

Earnings factor credits

(1)   

This section applies, for the purposes of Conditions B and C in section

10

44B(4) and (5) above, to 2010-11 and subsequent tax years.

(2)   

In respect of each week—

(a)   

which falls in a relevant year to which this section applies, and

(b)   

in respect of which a pensioner is eligible for earnings factor

enhancement,

15

   

the pensioner is entitled to an earnings factor credit equal to 1/52 of the

QEF for that year.

   

This is subject to subsection (5) below.

(3)   

A pensioner is eligible for earnings factor enhancement in respect of a

week if one or more of the following apply—

20

(a)   

he was a relevant carer in respect of that week for the purposes

of section 23A above (see section 23A(3));

(b)   

carer’s allowance was payable to him for any part of that week,

or would have been so payable but for the fact that under

regulations the amount payable to him was reduced to nil

25

because of his receipt of other benefits;

(c)   

severe disablement allowance was payable to him for any part

of that week;

(d)   

long-term incapacity benefit was payable to him for any part of

that week or would have been so payable but for the fact that—

30

(i)   

he did not satisfy the contribution conditions in

paragraph 2 of Schedule 3, or

(ii)   

under regulations the amount payable to him was

reduced to nil because of his receipt of other benefits or

of payments from an occupational pension scheme or

35

personal pension scheme;

(e)   

he satisfies such other conditions as may be prescribed.

(4)   

In subsection (3)(d)(ii) above “occupational pension scheme” and

“personal pension scheme” have the meanings given by subsection (6)

of section 30DD above for the purposes of subsection (5) of that section.

40

(5)   

For the purposes of Condition B in section 44B(4) above a person is not

entitled to an aggregate amount of earnings factor credits in respect of

a year that is greater than the difference referred to in that Condition.

(6)   

For the purposes of this section a week that falls partly in one tax year

and partly in another is to be treated as falling in the year in which it

45

begins and not in the following year.

(7)   

In section 44B above and this section—

 
 

Pensions Bill
Part 1 — State pension

11

 

(a)   

“the QEF” means the qualifying earnings factor, and

(b)   

any reference to a person being entitled to an earnings factor

credit of a particular amount (or to an aggregate amount of

earnings factor credits) for a year is a reference to the person

being treated as having for that year an earnings factor (within

5

the meaning of section 44(6)(za) above) of the amount in

question by virtue of subsection (2) above.”

(2)   

Part 6 of Schedule 1 contains consequential and related amendments.

Additional pension: simplification of accrual rates

10      

Additional pension: removal of accrual band from 2010-11

10

(1)   

Schedule 4A to the SSCBA (additional pension) is amended as follows.

(2)   

In Part 2 (surplus earnings factor) in paragraph 2 (calculation of amount where

there is a surplus in pensioner’s earnings factor)—

(a)   

in sub-paragraph (4), after “2009” insert “where the tax year concerned

falls before 2010-11”;

15

(b)   

after sub-paragraph (4) insert—

   “(4A)  

The appropriate table for persons attaining pensionable age

on or after 6th April 2009 where the tax year concerned is

2010-11 or a subsequent tax year is as follows—

TABLE 2A

20

 

Amount of surplus

Percentage

 
 

Band 1

Not exceeding LET

40

 
 

Band 2

Exceeding LET but not

10”;

 
  

exceeding AUEL

  

(c)   

in sub-paragraph (6) (interpretation) after paragraph (c) insert—

25

“(d)   

“AUEL” means the amount equal to the upper

earnings limit for the tax year concerned multiplied

by 52.”

(3)   

In Part 3 (contracted-out employment) in paragraph 5 (calculation of amount

A)—

30

(a)   

in sub-paragraph (4), after “2009” insert “where the tax year concerned

falls before 2010-11”;

(b)   

after sub-paragraph (4) insert—

   “(4A)  

The appropriate table for persons attaining pensionable age

on or after 6th April 2009 where the tax year concerned is

35

2010-11 or a subsequent tax year is as follows—

 
 

Pensions Bill
Part 1 — State pension

12

 

TABLE 4A

 

Amount of surplus

Percentage

 
 

Band 1

Not exceeding LET

40

 
 

Band 2

Exceeding LET but not

10”.

 
  

exceeding AUEL

  

5

(4)   

In paragraph 7 (calculation of amount B second case)—

(a)   

in sub-paragraph (4), after “2009” insert “where the tax year concerned

falls before 2010-11”;

(b)   

after sub-paragraph (4) insert—

   “(4A)  

The appropriate table for persons attaining pensionable age

10

on or after 6th April 2009 where the tax year concerned is

2010-11 or a subsequent tax year is as follows—

TABLE 6A

 

Amount of surplus

Percentage

 
 

Band 1

Not exceeding LET

40

 

15

 

Band 2

Exceeding LET but not

10”.

 
  

exceeding AUEL

  

(5)   

In paragraph 8, in sub-paragraph (4) (interpretation) after paragraph (c)

insert—

“(d)   

“AUEL” means the amount equal to the upper earnings limit

20

for the tax year concerned multiplied by 52.”

(6)   

For the heading for that Schedule substitute “Additional pension: accrual

rates for purposes of section 45(2)(c)”.

11      

Additional pension: simplified accrual rates as from flat rate introduction

year

25

(1)   

Section 45 of the SSCBA (the additional pension in a Category A retirement

pension) is amended as follows.

(2)   

In subsection (2) (calculation of the weekly rate of additional pension) after

paragraph (c) insert “; and

(d)   

in relation to the flat rate introduction year and subsequent tax

30

years, the weekly equivalent of the amount calculated in

accordance with Schedule 4B to this Act.”

(3)   

In subsection (3A) (tax years for which weekly rate is calculated by reference to

Schedule 4A) at the end of paragraph (b) insert “before the flat rate

introduction year”.

35

(4)   

In section 122 of the SSCBA (interpretation of Parts 1 to 6) in subsection (1) at

 
 

Pensions Bill
Part 1 — State pension

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the appropriate place insert—

“the flat rate introduction year” means such tax year as may be

designated as such by order;”.

(5)   

In Schedule 2 to this Act—

(a)   

Part 1 inserts a new Schedule 4B into the SSCBA;

5

(b)   

Part 2 makes provision for up-rating the flat rate accrual amount

introduced by the new Schedule 4B; and

(c)   

Part 3 contains consequential and related amendments.

12      

Additional pension: upper accrual point

(1)   

In section 22 of the SSCBA (earnings factors)—

10

(a)   

in subsection (2A) (person’s earnings factors to be treated as derived

only from so much of his earnings as did not exceed the upper earnings

limit etc.) for “the upper earnings limit” substitute “the applicable

limit”; and

(b)   

after that subsection insert—

15

“(2B)   

“The applicable limit” means—

(a)   

in relation to a tax year before the flat rate introduction

year, the upper earnings limit;

(b)   

in relation to the flat rate introduction year or any

subsequent tax year, the upper accrual point.”

20

(2)   

In section 44 of the SSCBA (Category A retirement pension)—

(a)   

in subsection (6) (meaning of references to earnings factors) in

paragraph (za) for “the upper earnings limit” substitute “the applicable

limit”;

(b)   

in subsection (7), at the end insert—

25

“(c)   

“the applicable limit” means—

(i)   

in relation to a tax year before the flat rate

introduction year, the upper earnings limit;

(ii)   

in relation to the flat rate introduction year or

any subsequent tax year, the upper accrual

30

point.”

(3)   

In section 122 of the SSCBA (interpretation of Parts 1 to 6)—

(a)   

in subsection (1), at the appropriate place insert—

““the upper accrual point” is to be construed in accordance

with subsections (7) and (8) below;”;

35

(b)   

after subsection (6) insert—

“(7)   

“The upper accrual point” is the amount that is equal to the

amount of the upper earnings limit for the flat rate introduction

year multiplied by 52.

   

This is subject to subsection (8) below.

40

(8)   

The Secretary of State may, by order made before the beginning

of that year, direct that the upper accrual point is to be such

other amount (whether greater or lesser than that mentioned in

subsection (7) above) as is specified in the order.”

(4)   

Part 7 of Schedule 1 contains consequential amendments.

45

 
 

Pensions Bill
Part 2 — Occupational and personal pension schemes

14

 

(5)   

Subsection (6) applies if it appears to the Secretary of State that (apart from that

subsection) he would be required to make an order under section 148A of the

Administration Act (revaluation of low earnings threshold) by virtue of which

the low earnings threshold for the following tax year would be an amount not

less than the upper accrual point.

5

(6)   

In that event the Secretary of State—

(a)   

is not required to make such an order under section 148A of the

Administration Act, and

(b)   

instead must make an order abolishing the low earnings threshold and

the upper accrual point as from the beginning of the following tax year.

10

(7)   

An order under subsection (6) may make—

(a)   

such consequential, incidental or supplemental provision, and

(b)   

such transitional, transitory or saving provision,

   

as the Secretary of State thinks necessary or expedient in connection with, or in

consequence of, the abolition of the low earnings threshold and the upper

15

accrual point.

(8)   

An order under subsection (6) may in particular amend, repeal or revoke any

provision of any Act or subordinate legislation (whenever passed or made).

(9)   

No order may be made under subsection (6) unless a draft of the order has been

laid before and approved by a resolution of each House of Parliament.

20

(10)   

In this section—

“the low earnings threshold” has the meaning given by section 44A(5) of

the SSCBA;

“the upper accrual point” has the meaning given by section 122(7) and (8)

of that Act.

25

Increase in state pension age

13      

Increase in pensionable age for men and women

(1)   

Schedule 3 amends section 126 of, and Part 1 of Schedule 4 to, the Pensions Act

1995 (c. 26) for the purpose of increasing the pensionable age for men and

women progressively over a period of 22 years beginning with 6th April 2024.

30

(2)   

Part 8 of Schedule 1 contains consequential amendments.

(3)   

The amendments made by that Part of that Schedule have effect as from 6th

April 2024.

Part 2

Occupational and personal pension schemes

35

Contracting-out

14      

Conversion of guaranteed minimum pensions

(1)   

After section 13(1) of the Pension Schemes Act 1993 (c. 48) (contracted-out

 
 

 
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