Pensions Bill

House of Lords

Session 2006 - 07
Internet Publications
Other Bills before Parliament

Pensions Bill

Pensions Bill
Part 1 — State pension
1

A
Bill
[AS AMENDED IN COMMITTEE]
To
Make provision about pensions and other benefits payable to persons in
connection with bereavement or by reference to pensionable age; to make
provision about the establishment and functions of the Personal Accounts
Delivery Authority; and for connected purposes.
Be it enacted by the Queen’s most Excellent Majesty, by and with the advice and
consent of the Lords Spiritual and Temporal, and Commons, in this present
Parliament assembled, and by the authority of the same, as follows:—
Part 1
State pension
Entitlement to Category A and B retirement pensions
1
Category A and B retirement pensions: single contribution condition
(1)
Schedule 3 to the SSCBA (contribution conditions) is amended as follows.
5
(2)
In paragraph 5 (contribution conditions for, among other things, Category A or
B retirement pension) in sub-paragraph (1), after “retirement pension” insert
“(other than one in relation to which paragraph 5A applies)”.
(3)
After paragraph 5 insert—
“5A   (1)
This paragraph applies to—
10
(a)
a Category A retirement pension in a case where the
contributor concerned attains pensionable age on or after 6th
April 2010,
(b)
a Category B retirement pension payable by virtue of section
48A above in a case where the contributor concerned attains
15
pensionable age on or after that date,

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Pensions Bill
Part 1 — State pension
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(c)
a Category B retirement pension payable by virtue of section
48B above in a case where the contributor concerned dies on
or after that date without having attained pensionable age
before that date.
      (2)
The contribution condition for a Category A or Category B
5
retirement pension in relation to which this paragraph applies is
that—
(a)
the contributor concerned must, in respect of each of not less
than 30 years of his working life, have paid or been credited
with contributions of a relevant class or been credited (in the
10
case of 1987-88 or any subsequent year) with earnings; and
(b)
in the case of each of those years, the earnings factor derived
as mentioned in sub-paragraph (3) below must be not less
than the qualifying earnings factor for that year.
      (3)
For the purposes of paragraph (b) of sub-paragraph (2) above, the
15
earnings factor—
(a)
in the case of 1987-88 or any subsequent year, is that which is
derived from—
(i)
so much of the contributor’s earnings as did not
exceed the upper earnings limit and upon which such
20
of the contributions mentioned in paragraph (a) of
that sub-paragraph as are primary Class 1
contributions were paid or treated as paid or earnings
credited; and
(ii)
any Class 2 or Class 3 contributions for the year; or
25
(b)
in the case of any earlier year, is that which is derived from
the contributions mentioned in paragraph (a) of that sub-
paragraph.
      (4)
Regulations may modify sub-paragraphs (2) and (3) above for the
purposes of their application in a case where—
30
(a)
the contributor concerned has paid, or been credited with,
contributions, or
(b)
contributions have been deemed to be, or treated as, paid by
or credited to him,

under the National Insurance Act 1946 or the National Insurance Act
35
1965.”
(4)
Part 1 of Schedule 1 contains consequential amendments.
2
Category B retirement pension: removal of restriction on entitlement
(1)
Section 48A of the SSCBA (Category B retirement pension for married person
or civil partner) is amended as follows.
40
(2)
In each of subsections (2)(a) and (2B)(a) (whose effect is to require the other
spouse or other civil partner to have claimed a Category A retirement pension)
omit “and become entitled to a Category A retirement pension”.
(3)
Omit subsection (5) (restriction on when Category B retirement pension for
married person or civil partner is payable).
45
(4)
Part 2 of Schedule 1 contains consequential amendments.

Pensions Bill
Part 1 — State pension
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(5)
The amendments made by this section and that Part of that Schedule have
effect as from 6th April 2010.
(6)
Section 48A(2) and (2B), as amended by this section, applies whether the
person mentioned in section 48A(1) or (2A) attained pensionable age before 6th
April 2010 or on or after that date.
5
Credits for basic state pension
3
Contributions credits for relevant parents and carers
(1)
After section 23 of the SSCBA insert—
“23A
Contributions credits for relevant parents and carers
(1)
This section applies to the following benefits—
10
(a)
a Category A retirement pension in a case where the contributor
concerned attains pensionable age on or after 6th April 2010,
(b)
a Category B retirement pension payable by virtue of section
48A below in a case where the contributor concerned attains
pensionable age on or after that date,
15
(c)
a Category B retirement pension payable by virtue of section
48B below in a case where the contributor concerned dies on or
after that date without having attained pensionable age before
that date,
(d)
a widowed parent’s allowance payable in a case where the
20
contributor concerned dies on or after that date,
(e)
a bereavement allowance payable in a case where the
contributor concerned dies on or after that date.
(2)
The contributor concerned in the case of a benefit to which this section
applies shall be credited with a Class 3 contribution for each week
25
falling after 6th April 2010 in respect of which the contributor was a
relevant carer.
(3)
A person is a relevant carer in respect of a week if the person—
(a)
is awarded child benefit for any part of that week in respect of
a child under the age of 12,
30
(b)
is a foster parent for any part of that week,
(c)
is engaged in caring, within the meaning given by regulations,
in that week.
(4)
Regulations may make provision for a person’s entitlement to be
credited with Class 3 contributions by virtue of falling within
35
subsection (3)(b) or (c) above to be conditional on the person—
(a)
applying to be so credited in accordance with the prescribed
requirements, and
(b)
complying with the prescribed requirements as to the provision
of information to the Secretary of State.
40
(5)
The contributor concerned in the case of a benefit to which this section
applies shall be credited with 52 Class 3 contributions for each tax year
ending before 6th April 2010 in which the contributor was precluded
from regular employment by responsibilities at home within the
meaning of regulations under paragraph 5(7) of Schedule 3.
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Pensions Bill
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(6)
But the maximum number of tax years for which a person can be
credited with contributions under subsection (5) above is—
(a)
in the case of a benefit mentioned in subsection (1)(a) to (c)
above, 22;
(b)
in the case of a benefit mentioned in subsection (1)(d) or (e)
5
above, half the requisite number of years of the person’s
working life.
(7)
The table in paragraph 5(5) of Schedule 3 (requisite number of years of
a working life of given duration) applies for the purposes of subsection
(6)(b) above as it applies for the purposes of the second condition set
10
out in paragraph 5(3) of that Schedule.
(8)
For the purpose of determining entitlement to a benefit to which this
section applies, 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 begins and not
in the following year.
15
(9)
In this section—
“the contributor concerned” has the meaning given in section
21(5)(a) above;
“foster parent” has the meaning given by regulations.”
(2)
In paragraph 5 of Part 1 of Schedule 3 of that Act (contribution conditions for
20
entitlement to, among other things, widowed parent’s allowance, bereavement
allowance and Category A or B retirement pension) at the end of sub-
paragraph (7) (home responsibilities protection) insert—

“But nothing in this sub-paragraph applies in relation to any benefit
to which section 23A above applies.”
25
(3)
Part 3 of Schedule 1 contains consequential amendments.
Abolition of adult dependency increases
4
Category A and C retirement pensions: abolition of adult dependency
increases
(1)
The following provisions of the SSCBA are to cease to have effect on 6th April
30
2010—
(a)
section 83 (pension increase: wife),
(b)
section 84 (pension increase: husband), and
(c)
section 85 (pension increase: person with care of children or qualifying
young persons).
35
(2)
Paragraph 2 of Part 2 of Schedule 4 to the Pensions Act 1995 (c. 26) (which
replaces sections 83 and 84 of the SSCBA with a new section 83A equalising
pension increases for dependent wives and husbands with effect from 6th
April 2010) is omitted.
(3)
Part 4 of Schedule 1 contains consequential amendments.
40
(4)
The amendments made by that Part of that Schedule have effect as from 6th
April 2010.
(5)
Nothing in—

Pensions Bill
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(a)
the repeals in subsection (1),
(b)
the amendments in Part 4 of Schedule 1, or
(c)
the repeals in Part 2 of Schedule 7,

applies in relation to a qualifying person at any time falling on or after 6th April
2010 but before the appropriate date.
5
(6)
In subsection (5) a “qualifying person” means a person who—
(a)
has, before 6th April 2010, made a claim for a relevant increase in
accordance with section 1 of the Administration Act; and
(b)
immediately before that date is either—
(i)
entitled to the increase claimed, or
10
(ii)
a beneficiary to whom section 92 of the SSCBA (continuation of
awards where fluctuating earnings) applies in respect of that
increase.
(7)
In subsection (5) “the appropriate date” means the earlier (or earliest) of—
(a)
6th April 2020;
15
(b)
the date when the qualifying person ceases to be either entitled to the
relevant increase or a beneficiary to whom section 92 of the SSCBA
applies in respect of it;
(c)
where the relevant increase is payable to the qualifying person under
section 83 of that Act, the date on which his wife attains pensionable
20
age.
(8)
In this section “relevant increase” means an increase in a Category A or
Category C retirement pension under section 83, 84 or 85 of the SSCBA.
Up-rating of basic state pension and other benefits
5
Up-rating of basic pension etc. and standard minimum guarantee by
25
reference to earnings
(1)
After section 150 of the Administration Act insert—
“150A
Annual up-rating of basic pension etc. and standard minimum
guarantee
(1)
The Secretary of State shall in each tax year review the following
30
amounts in order to determine whether they have retained their value
in relation to the general level of earnings obtaining in Great Britain—
(a)
the amount of the basic pension;
(b)
the specified amounts in the case of Category B, C or D
retirement pensions;
35
(c)
the specified amounts in the case of industrial death benefit;
and
(d)
the amounts of the standard minimum guarantee for the time
being prescribed under section 2(4) and (5)(a) and (b) of the
State Pension Credit Act 2002.
40
(2)
Where it appears to the Secretary of State that the general level of
earnings is greater at the end of the period under review than it was at
the beginning of that period, he shall lay before Parliament the draft of
an order which increases each of the amounts referred to in subsection
(1) above by a percentage not less than the percentage by which the
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Pensions Bill
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general level of earnings is greater at the end of the period than it was
at the beginning.
(3)
Subsection (2) above does not require the Secretary of State to provide
for an increase in any case if it appears to him that the amount of the
increase would be inconsiderable.
5
(4)
The Secretary of State may, in providing for an increase in pursuance of
subsection (2) above, adjust the amount of the increase so as to round
the sum in question up or down to such extent as he thinks appropriate.
(5)
The Secretary of State shall lay with a draft order under this section a
copy of a report by the Government Actuary or the Deputy
10
Government Actuary giving that Actuary’s opinion on the likely effect
on the National Insurance Fund of any parts of the order relating to
sums payable out of that Fund.
(6)
If a draft order laid before Parliament under this section is approved by
a resolution of each House, the Secretary of State shall make the order
15
in the form of the draft.
(7)
An order under this section shall be framed so as to bring the increase
in question into force in the week beginning with the first Monday in
the tax year following that in which the order is made.
(8)
For the purposes of any review under subsection (1) above the
20
Secretary of State shall estimate the general level of earnings in such
manner as he thinks fit.
(9)
If a draft order under this section is combined with a draft up-rating
order under section 150 above, the report required by virtue of
subsection (5) above may be combined with that required by virtue of
25
section 150(8) above.
(10)
In this section—
“the amount of the basic pension” means the first amount
specified in section 44(4) of the Contributions and Benefits Act
(weekly rate of Category A retirement pension);
30
“the specified amounts in the case of Category B, C or D retirement
pensions” means—
(a)
the amount specified in paragraph 5 of Part 1 of
Schedule 4 to the Contributions and Benefits Act, and
(b)
the amounts specified in paragraphs 6 and 7 of Part 3 of
35
that Schedule;
“the specified amounts in the case of industrial death benefit”
means—
(a)
the amounts specified in paragraph 10 of Part 5 of that
Schedule (apart from the amount of the initial rate), and
40
(b)
the amount specified in paragraph 11 of that Part of that
Schedule.”
(2)
Part 5 of Schedule 1 contains consequential and related amendments.
(3)
The section 150A inserted by subsection (1) and the amendments made by Part
5 of Schedule 1, so far as relating to the amounts referred to in section
45
150A(1)(a) to (c), have effect in relation to the designated tax year and
subsequent tax years (with the result that the first review to be carried out

Pensions Bill
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under section 150A(1) in relation to those amounts is to be carried out in the
designated tax year).
(4)
“The designated tax year” means such tax year as the Secretary of State may
designate by an order made before 1st April 2011.
(5)
The Secretary of State must exercise his power under subsection (4) in such a
5
way as to secure that the tax year immediately following the designated tax
year is one that begins before the relevant dissolution date.
(6)
“The relevant dissolution date” means the latest date on which, having regard
to the maximum period for which a Parliament may exist, the Parliament in
existence at the time of exercise of the power could be dissolved.
10
(7)
The new section 150A inserted by subsection (1) and the amendments made by
Part 5 of Schedule 1, so far as relating to the amounts mentioned in section
150A(1)(d), have effect in relation to the tax year in which this Act is passed and
subsequent tax years.
6
Preservation of link with prices in case of other benefits
15
(1)
Section 150 of the Administration Act (up-rating by reference to prices) is
amended as follows.
(2)
In subsection (1) (annual reviews)—
(a)
in paragraph (a), for sub-paragraphs (i) and (ii) substitute—
“(i)
Schedule 4 (excluding the provisions of Parts
20
1, 3 and 5 of the Schedule that specify amounts
mentioned in section 150A(1) below); and
(ii)
section 44(4) so far as relating to the lower rate
of short-term incapacity benefit;”;
(b)
before paragraph (b) insert—
25
“(ab)
specified in regulations under section 39(2A) or section
39C(1A) of that Act;”; and
(c)
in paragraph (l), at the end insert “(other than those prescribing the
amounts mentioned in section 150A(1)(d) below)”.
(3)
In subsection (3) (sums to which requirement to up-rate applies)—
30
(a)
in paragraph (a), for “1 to 6” substitute “1 to 5” and at the end insert
“(excluding the provisions of Parts 1 and 5 of the Schedule that specify
amounts mentioned in section 150A(1) below)”; and
(b)
in paragraph (b), before “(b), (c),” insert “(ab),”.
(4)
In subsection (7) (sums that may be up-rated) at the end insert—
35

“The reference to regulations under the State Pension Credit Act 2002
does not include those prescribing the amounts mentioned in section
150A(1)(d) below.”
(5)
In section 39 of the SSCBA (rate of widowed mother’s allowance and widow’s
pension) after subsection (2) insert—
40
“(2A)
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 provision there
were substituted a reference to the amount prescribed for the purposes
of this subsection.”