Pensions Bill

House of Lords

Session 2006 - 07
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Other Bills before Parliament

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)
Subsections (2) and (3) have effect in relation to the tax year following the
designated tax year (see section 5(4)) and subsequent tax years.
(5)
In section 176(1) of the SSCBA (instruments subject to affirmative procedure),
before paragraph (a) insert—
40
“(za)
regulations under section 5 specifying the lower earnings limit
for the tax year following the designated tax year (see section
5(4) of the Pensions Act 2007) or any subsequent tax year;”.

Pensions Bill
Part 1 — State pension
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8
Removal of link between lower earnings limit and basic pension: Northern
Ireland
(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.
5
(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).
10
(4)
Subsections (2) and (3) have effect in relation to the tax year following the
designated tax year (see section 5(4)) and subsequent tax years.
(5)
In section 172 of the Social Security Contributions and Benefits (Northern
Ireland) Act 1992 (Assembly, etc. control of regulations and orders)—
(a)
in subsection (9) for “(11), (11A) and” substitute “(11) to”; and
15
(b)
after subsection (11) insert—
“(11ZA)
A statutory instrument containing (whether alone or with other
provisions) regulations under section 5 specifying the lower
earnings limit for—
(a)
the tax year following the designated tax year (see
20
section 5(4) of the Pensions Act 2007), or
(b)
any subsequent tax year,

shall not be made unless a draft of the instrument has been laid
before and approved by resolution of each House of
Parliament.”
25
Additional pension: deemed earnings factors
9
Deemed earnings factors for purposes of additional pension
(1)
After section 44A of the SSCBA insert—
“44B
Deemed earnings factors: 2010-11 onwards
(1)
This section applies to 2010-11 and subsequent tax years.
30
(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
for that year which—
(a)
is derived from so much of his earnings as did not exceed the
35
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
factors taken into account under that provision, produces an
aggregate of earnings factors equal to the low earnings
40
threshold.
(3)
Condition A is that the pensioner would, apart from this section, have
an earnings factor for the year—

Pensions Bill
Part 1 — State pension
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(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
5
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.
10
(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
15
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.
(7)
In this section—
20
(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
(c)
in subsections (3) and (4), any reference to the pensioner’s
25
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
44B(4) and (5) above, to 2010-11 and subsequent tax years.
30
(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,

the pensioner is entitled to an earnings factor credit equal to 1/52 of the
35
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—
(a)
he was a relevant carer in respect of that week for the purposes
40
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
because of his receipt of other benefits;
45
(c)
severe disablement allowance was payable to him for any part
of that week;

Pensions Bill
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(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—
(i)
he did not satisfy the contribution conditions in
paragraph 2 of Schedule 3, or
(ii)
under regulations the amount payable to him was
5
reduced to nil because of his receipt of other benefits or
of payments from an occupational pension scheme or
personal pension scheme;
(e)
he satisfies such other conditions as may be prescribed.
(4)
In subsection (3)(d)(ii) above “occupational pension scheme” and
10
“personal pension scheme” have the meanings given by subsection (6)
of section 30DD above for the purposes of subsection (5) of that section.
(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.
15
(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
begins and not in the following year.
(7)
In section 44B above and this section—
(a)
“the QEF” means the qualifying earnings factor, and
20
(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
the meaning of section 44(6)(za) above) of the amount in
25
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
(1)
Schedule 4A to the SSCBA (additional pension) is amended as follows.
30
(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”;
(b)
after sub-paragraph (4) insert—
35
   “(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

Amount of surplus
Percentage

40

Band 1
Not exceeding LET
40

Pensions Bill
Part 1 — State pension
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Amount of surplus
Percentage

Band 2
Exceeding LET but not
10”;

exceeding AUEL

(c)
in sub-paragraph (6) (interpretation) after paragraph (c) insert—
“(d)
“AUEL” means the amount equal to the upper
5
earnings limit for the tax year concerned multiplied
by 52.”
(3)
In Part 3 (contracted-out employment) in paragraph 5 (calculation of amount
A)—
(a)
in sub-paragraph (4), after “2009” insert “where the tax year concerned
10
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
2010-11 or a subsequent tax year is as follows—
15
TABLE 4A

Amount of surplus
Percentage

Band 1
Not exceeding LET
40

Band 2
Exceeding LET but not
10”.

exceeding AUEL

20
(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
25
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

30

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
35
for the tax year concerned multiplied by 52.”

Pensions Bill
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(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
(1)
Section 45 of the SSCBA (the additional pension in a Category A retirement
5
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
years, the weekly equivalent of the amount calculated in
10
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”.
(4)
In section 122 of the SSCBA (interpretation of Parts 1 to 6) in subsection (1) at
15
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;
20
(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)—
25
(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—
30
“(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.”
35
(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—
40
“(c)
“the applicable limit” means—
(i)
in relation to a tax year before the flat rate
introduction year, the upper earnings limit;

Pensions Bill
Part 1 — State pension
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(ii)
in relation to the flat rate introduction year or
any subsequent tax year, the upper accrual
point.”
(3)
In section 122 of the SSCBA (interpretation of Parts 1 to 6)—
(a)
in subsection (1), at the appropriate place insert—
5
““the upper accrual point” is to be construed in accordance
with subsections (7) and (8) below;”;
(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
10
year multiplied by 52.

This is subject to subsection (8) below.
(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
15
subsection (7) above) as is specified in the order.”
(4)
Part 7 of Schedule 1 contains consequential amendments.
(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
20
the low earnings threshold for the following tax year would be an amount not
less than the upper accrual point.
(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
25
(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.
(7)
An order under subsection (6) may make—
(a)
such consequential, incidental or supplemental provision, and
(b)
such transitional, transitory or saving provision,
30

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
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).
35
(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.
(10)
In this section—
“the low earnings threshold” has the meaning given by section 44A(5) of
the SSCBA;
40
“the upper accrual point” has the meaning given by section 122(7) and (8)
of that Act.