Pensions Act 2007

Part 1 — State pension

Entitlement to Category A and B retirement pensions

Category A and B retirement pensions: single contribution condition

1

• (1) Schedule 3 to the SSCBA (contribution conditions) is amended as follows.

• (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— (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 pensionable age on or after that date; (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 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 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 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 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 (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— (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 1965.

• (4) Part 1 of Schedule 1 contains consequential amendments.

Category B retirement pension: removal of restriction on entitlement

2

• (1) Section 48A of the SSCBA (Category B retirement pension for married person or civil partner) is amended as follows.

• (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).

• (4) Part 2 of Schedule 1 contains consequential amendments.

• (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.

Credits for basic state pension

Contributions credits for relevant parents and carers

3

• (1) After section 23 of the SSCBA insert—

(23A) (1) This section applies to the following benefits— (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; (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 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 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, (b) is a foster parent for any part of that week, or (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 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. (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. (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) 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 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. (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 to that Act (contribution conditions for 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. ”

• (3) Part 3 of Schedule 1 contains consequential amendments.

Abolition of adult dependency increases

Category A and C retirement pensions: abolition of adult dependency increases

4

• (1) The following provisions of the SSCBA are to cease to have effect on 6th April 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).

• (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 spouses and civil partners with effect from 6th April 2010) is omitted.

• (3) Part 4 of Schedule 1 contains consequential amendments.

• (4) The amendments made by that Part of that Schedule have effect as from 6th April 2010.

• (5) Nothing in—

• (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.

• (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

• (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;

• (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 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

Up-rating of basic pension etc. and standard minimum guarantee by reference to earnings

5

• (1) After section 150 of the Administration Act insert—

(150A) (1) The Secretary of State shall in each tax year review the following 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; (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. (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 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. (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 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 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 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 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); - “the specified amounts in the case of Category B, C or D retirement pensions” means— 1. the amount specified in paragraph 5 of Part 1 of Schedule 4 to the Contributions and Benefits Act, and 2. the amounts specified in paragraphs 6 and 7 of Part 3 of that Schedule; - “the specified amounts in the case of industrial death benefit” means— 1. the amounts specified in paragraph 10 of Part 5 of that Schedule (apart from the amount of the initial rate), and 2. 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 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 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 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.

• (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.

Preservation of link with prices in case of other benefits

6

• (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 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—

(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)—

• (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— “ 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—

(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.

• (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 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

• (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.

• (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 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 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).

Removal of link between lower earnings limit and basic pension

7

• (1) Section 5 of the SSCBA (earnings limits and thresholds for Class 1 contributions) is amended as follows.

• (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

(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;

.