CHILD SUPPORT, PENSIONS AND SOCIAL SECURITY
Memorandum by the Department of Social
1. This memorandum identifies provisions for
delegated legislation in the Child Support, Pensions and Social
Security Bill. The memorandum:
- explains the purpose of the delegated powers
it is proposed to take;
- describes why matters are to be left to delegated
- explains the procedure selected for each power
and why it has been chosen.
THE CHILD SUPPORT, PENSIONS AND SOCIAL SECURITY BILL
2. The Child Support Pensions and Social Security
Bill contains a range of measures relating to child support, social
security benefits, pensions and National Insurance Contributions.
3. The main elements in the Bill are:
- reform of the child support system;
- reform of the State Earnings Related Pension
Scheme by way of the State Second Pension;
- measures to withdraw or reduce benefit entitlement
where an offender has breached the terms of a community sentence.
4. The plans for the reform of child support
are set out in the White Paper "A new contract for welfare:
children's rights and parents' responsibilities." (Cm 4349),
published on 1st July 1999.
5. The proposals in the Bill will reform the
current child support system. The new system is intended to deliver
maintenance more quickly and effectively. In particular, it changes
the way that child support liability is worked out and enforced.
6. Provisions in the Bill will replace the existing
complex formula with a simpler system of percentage rates based
on the non-resident parent's net income. Where parents seek to
delay the process new penalties will be available to ensure compliance.
Powers will also be taken to ensure maintenance assessment cannot
be unnecessarily delayed by disputing paternity.
STATE SECOND PENSION
7. The Bill includes provisions intended to ensure
that people with a lifetime (ie 49 years) of employment or caring
behind them can retire on a pension sufficient to lift them above
means-tested benefits. And to provide similar help to certain
disabled people who have been in the labour market but who may
have broken work records. At the same time, the intention is to
ensure that those who have opted out of the state scheme are not
given an incentive to opt back in.
8. There will be two stages to State Second Pension.
9. The first stage will be earnings-related and
is intended to bring about an improvement in Additional Pension
for lower paid earners. Those earning between the annual Lower
Earnings Limit (LEL) and £9,500 a year will be treated for
State Second Pension purposes as if they had earned £9,500,
regardless of their actual earnings.
10. Carers of a sick or disabled person, or of
a child under 6, and certain long-term disabled people with broken
work records will also be treated as if they had earnings of £9,500
in a qualifying year.
11. Once stakeholder pension schemes have become
established as low-cost, flexible, funded second pensions, the
second stage of State Second Pension will be introduced. This
will be a flat-rate scheme, paid at the rate for those earning
£9,500 a year. Those on moderate and higher earnings will
then be encouraged to join a funded pension scheme, but this will
not be compulsory. Low earners carers and long-term disabled people
with broken work records will continue to benefit as under Stage
12. The proposals in the Bill are intended to
ensure that the benefit system reinforces the need for offenders
to meet their obligations to the state to comply with community
13. This will be achieved through powers in the
Bill to allow regulations to withdraw, or reduce, benefit entitlement
from those failing to comply with designated community sentences.
Where benefit is withdrawn rather than reduced, the Bill provides
for hardship payments to be made in specified circumstances.
14. The measure will, in the first instance,
apply to people aged 18 - 59 who are receiving Income Support,
Jobseeker's Allowance or a Training Allowance. It will initially
be piloted in 3 or 4 areas in England and Wales to test the links
between Social Security offices and the Probation Service and
to assess the behavioural impact on offenders.
Modification of earnings factors
15. Proposals in the Bill provide for the situation
in which people who have earnings in a single tax year both from
contracted-out employment and from contracted-in employment have
that taken into account in the calculation of their additional
pension under SERPS.
16. The proposals in the Bill will provide for
the 50% reduction in inherited SERPS to come into effect in respect
of deaths occurring on or after 6 October 2002 and allow for the
regulations to postpone the change to an even later date. Proposals
are also intended to clarify the eligibility criteria for the
Inherited SERPS Scheme and provide for the regulations to make
further specific provision relating to the manner in which decisions
under the scheme may be taken.
Sharing of State Scheme Rights
17. The proposals in the Bill are intended to
correct an oversight during the passage of the Welfare Reform
and Pensions Bill 1999. Without the sub-delegation power provided
by this amendment detailed tables would have to be included in
regulations to enable state scheme rights to be valued. Each time
the Government Actuary decided that the methods and assumptions
underlying the tables needed to be changed, then the tables would
have to be revised and amendments to the regulations would need
to be laid before Parliament.
Disclosure of State Pension information
18. The Bill contains measures that are intended
to permit state pension information to be passed to employers
and pension scheme providers for the purpose of providing statements
of private and state pension rights unless individuals have indicated
that they do not want such information disclosed ("opt-out"
Occupational and Personal Pensions
19. The Bill includes a number of provisions
designed to reform the regulation of occupational and personal
20. The Bill provides for:
- increased member involvement in schemes;
- further protection of members' pensions rights;
- changes to the existing regulation-making powers
to enable future regulations to require money purchase schemes
to provide members with an illustration of the likely future value
of their pensions;
- measures aimed at speeding up the winding up
of occupational pension schemes; and
- measures to provide further clarification, simplification
and flexibility for those operating schemes.
21. The provisions in the Bill are intended to
give members of defined contribution occupational pension schemes
the option of using the non-protected rights element of their
accumulated pension fund accrued from April 1997 to buy an investment-based
annuity instead of an index-linked annuity. The clause also provides
for a power to prescribe the conditions which investment-based
annuity products must satisfy.
War Pensions Appeals
22. The measures in the Bill on war pensions
include provisions to extend appeal rights available to war pensioners
and to amend the time limits for appeals.
23. Proposals in the Bill will strengthen, clarify
and align the powers used by benefit fraud investigators, thereby
placing their activities on a clearer and more robust legal footing.
Housing Benefit: new decision making and appeals
24. The Bill includes measures to introduce new
arrangements for decision making and appeals in Housing Benefit
and Council Tax Benefit which will align with the current arrangements
for other social security benefits.
Housing Benefit: discretionary housing payments
25. The Bill includes a measure which will enable
the Secretary of State to introduce to a system of "discretionary
housing payments" which will enable local authorities to
make payments to people are entitled to housing benefit or council
tax benefit, but who appear to require some further financial
assistance in order to meet their housing costs.
Housing Benefit: Overpayment Recoveries
26. Proposals in the Bill are intended to remove
the discretion of Local Authorities to recover overpayments of
Housing Benefit resulting from tenant fraud from a landlord (other
than in cases of collusion) where the landlord has reported the
National Insurance Contributions
27. The Bill includes measures to align the treatment
of benefits in kind for employers' National Insurance Contributions
with their treatment for Income Tax purposes by extending the
Class 1A charge. The measures will follow the shape of the existing
charge on car and fuel benefits.
28. Where a third party provides an employee
with a benefit attracting a Class 1A NICs liability, and the provision
of the benefit has not been arranged or facilitated by the employer,
the Class 1A NICs liability is to be moved to the third party
29. The following measures do not have regulation
making powers in the Bill:
|Earnings Factors ||(Clauses 36 and 37)
|Investigation powers ||(Clause 66)
|Child Benefit disregards ||(Clause 71)
|Social Security Advisory Committee||(Clause 72)
30. The Bill contains 269 powers to make delegated
legislation. A list of these is attached as an annex to this memorandum.
31. The Department has followed the precedent
in current legislation relating to social security and pensions
matters (for example the Child Support Act 1991, the Contributions
and Benefits Act 1992, the Pensions Act 1995, the Jobseekers Act
1995 and the Welfare Reform and Pensions Act 1999) by setting
out the overall legislative framework on the face of the Bill
and providing for regulations to set out the matters of detail.
This provides flexibility for the Department to amend the detailed
rules more easily in the light of the operational experience or
other developments, without having to take up a substantial amount
of parliamentary time to amend primary legislation.
32. There are a number of measures in the Bill
which are subject to affirmative resolution by both Houses of
Parliament. These have been highlighted in the annex to this memorandum.
The reason for using the affirmative procedure is described in
the main text.
33. All of the other regulations made under the
powers in, or introduced by, this Bill will follow the negative
resolution procedure as the Department considers that none of
the considerations set out in paragraph 78 of the Second Report
of the Joint Committee on Delegated Powers ("The Brook Report")