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Pensions Act 2014

Type Public General Act

Publication 2014-05-14

State In force

Department Statute Law Database

Source legislation.gov.uk

Reform history JSON API

Part 1 — State pension

Introduction

Preserving indefinite status of certain existing assessed income periods

1

(1) This Part creates a benefit called state pension.

(2) A person who reaches pensionable age before 6 April 2016 is not entitled to benefits under this Part (but may be entitled to similar benefits under Part 2 of the Contributions and Benefits Act).

State pension at the full or reduced rate

Penalty notices under sections 40 and 41 of the Pensions Act 2008 etc

2

(1) A person is entitled to a state pension payable at the full rate if—

(a) the person has reached pensionable age, and

(b) the person has 35 or more qualifying years.

(2) A person is entitled to a state pension payable at the reduced rate if—

(a) the person has reached pensionable age, and

(b) the person has at least the minimum number of qualifying years but fewer than 35 qualifying years.

(3) The minimum number of qualifying years for a state pension payable at the reduced rate is to be specified in regulations and may not be more than 10.

(4) In this Part “qualifying year” means a tax year, during a person's working life, in which the person's earnings factor (or the sum of the person's earnings factors) is equal to or greater than the qualifying earnings factor for the year.

(5) For earnings factors, see sections 22 and 23 of the Contributions and Benefits Act.

(6) For transitional cases in which a person may be entitled to a different state pension (instead of a state pension under this section), see sections 4 and 12.

(7) There are provisions elsewhere that affect a person's entitlement to a state pension under this section or the rate at which it is payable.

Full and reduced rates of state pension

3

(1) The full rate of the state pension is the weekly rate for the time being specified in regulations.

(2) The reduced rate of the state pension for a person is the following proportion of the full rate—

$1 35 × the person's number of qualifying years.$

(3) Once the full rate has been specified, the power to make regulations under subsection (1) may not be re-exercised so as to reduce the rate.

State pension at the transitional rate

Entitlement to state pension at transitional rate

4

(1) A person is entitled to a state pension payable at the transitional rate if—

(a) the person has reached pensionable age,

(b) the person has at least the minimum number of qualifying years, and

(2) The minimum number of qualifying years for a state pension payable at the transitional rate is to be specified in regulations and may not be more than 10.

(3) A person entitled to a state pension payable at the transitional rate is not entitled to a state pension under section 2.

(4) In this Part—

“post-commencement qualifying year” means a qualifying year beginning on or after 6 April 2016;

“pre-commencement qualifying year” means—a qualifying year beginning on or after 6 April 1978 and ending before 6 April 2016, ora reckonable year that would have been treated under regulation 13(1) of the Social Security (Widow's Benefit, Retirement Pensions and Other Benefits) (Transitional) Regulations 1979 (S.I. 1979/643) as a qualifying year for the purposes of determining the person's entitlement to an old state pension that is a Category A retirement pension.

(5) A reckonable year mentioned in paragraph (b) of the definition of “pre-commencement qualifying year” counts towards the minimum number of qualifying years required by subsection (1)(b) (even though it does not come within the definition of “qualifying year” for the purposes of this Part).

(6) For earnings factors, see sections 22 and 23 of the Contributions and Benefits Act.

(7) There are provisions elsewhere that affect a person's entitlement to a state pension under this section or the rate at which it is payable.

Transitional rate of state pension

5

(1) The transitional rate of the state pension for a person is a weekly rate equal to—

(a) the sum of the amounts calculated under Schedule 1 for the person's pre-commencement and post-commencement qualifying years capped at the full rate of the state pension on the day on which the person reaches pensionable age, or

(b) if higher, the amount for the person's pre-commencement qualifying years alone.

(2) The transitional rate of the state pension for a person is to be increased from time to time in accordance with the applicable paragraph of Schedule 2.

(3) Section 6 requires the transitional rate of the state pension for a person to be recalculated in certain circumstances.

(4) There are special rules about the transitional rate for certain women: see section 11 (reduced rate elections).

Recalculation and backdating of transitional rate in special cases

6

(1) This section modifies the transitional rate of the state pension for a person if, after the person has reached pensionable age, a determination is made under section 48A(2) of the Pension Schemes Act 1993 (contracting-out: reinstatement in state scheme following payment of contributions equivalent premium).

(2) The person's transitional rate is to be recalculated (taking the determination into account under paragraph 3(8) of Schedule 1).

(3) The recalculated rate has effect as from the day on which the person reached pensionable age (and the other provisions of this Part apply accordingly).

Transitional entitlement based on contributions of others

Survivor’s pension based on inheritance of additional old state pension

7

(1) A person is entitled to a state pension under this section if—

(a) the person has reached pensionable age,

(b) the person's spouse died while they were married or the person's civil partner died while they were civil partners of each other, and

(2) A state pension under this section is payable at a weekly rate equal to the inherited amount.

(3) The rate of the state pension for a person under this section is to be increased from time to time in accordance with the applicable paragraph of Schedule 4.

(4) Regulations may provide that if at any time the sum of the relevant state pensions for a person exceeds an amount provided for by regulations, the rate of any state pension payable to the person under this section is to be reduced by the amount of the excess.

(5) The “sum of the relevant state pensions” for a person is the sum of—

(a) the rate of any state pension payable to the person under this section (ignoring any reduction under subsection (4)), and

(b) the rate of any state pension payable to the person under section 2, 4 or 12.

(6) In subsections (4) and (5) a reference to the rate of a person's state pension is to the rate—

(a) taking into account any reduction under section 14 (in the case of a state pension under section 4), but

(b) ignoring any increase under section 17.

(7) There are provisions elsewhere that affect a person's entitlement to a state pension under this section or the rate at which it is payable.

Choice of lump sum or survivor’s pension under section 9 in certain cases

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(1) A person is entitled to a choice under this section if—

(a) the person has reached pensionable age,

(b) the person's spouse died while they were married or the person's civil partner died while they were civil partners of each other,

(c) the spouse or civil partner's entitlement to an old state pension was deferred at the time of death and throughout the period of 12 months ending with the day before the death,

(d) either: (i) the person was under pensionable age when the spouse or civil partner died and did not marry or form a civil partnership after the death and before reaching pensionable age, or (ii) the person was over pensionable age when the spouse or civil partner died, and

(e) the person would, on reaching pensionable age or on the death of the spouse or civil partner, have been entitled to an old state pension if in the relevant provisions of the Contributions and Benefits Act: (i) the words “before 6 April 2016” were omitted, and (ii) any reference to a bereavement allowance included a reference to bereavement support payment under section 30 of this Act.

(2) The person may choose—

(a) to be paid a lump sum under this section, or

(b) to be paid a state pension under section 9.

(3) Regulations are to set out the manner in which, and the period within which, that choice is to be made.

(4) A person who chooses to be paid a lump sum under this section, or who fails to choose within that period, is entitled to a “widowed person's or surviving civil partner's lump sum” calculated under paragraph 7B of Schedule 5 to the Contributions and Benefits Act.

(5) In that paragraph as it applies for the purposes of this section—

(a) read the references to “W” as references to the person,

(b) read sub-paragraph (5) as if it required increases under paragraph 4 of the Schedule to be excluded, and

(c) read the reference in sub-paragraph (7)(a) to the date on which W becomes entitled to a Category A or Category B retirement pension as a reference to the date on which the person becomes entitled to make a choice under this section.

(6) There are provisions elsewhere that affect a person's entitlement to a lump sum under this section.

(7) Regulations may allow a person, in specified circumstances—

(a) to alter his or her choice under this section;

(b) to make a late choice.

(8) Regulations under subsection (7) may, for the purpose of avoiding the duplication of payment—

(a) enable recovery of an amount paid to the person, or

(b) reduce the amount of a lump sum to be paid to the person.

(9) For the purposes of this section—

(a) “deferred” has the meaning given by section 55(3) of the Contributions and Benefits Act,

(b) “the relevant provisions” of the Contributions and Benefits Act are—

section 44(1)(a);

section 48(1);

section 48A(1) and (3);

section 48B(1), (1A), (4) and (4A);

section 48BB(1) and (3), and

(c) in determining whether a person would have been entitled to an old state pension as mentioned in subsection (1)(e) ignore any requirement to make a claim.

Survivor’s pension based on inheritance of deferred old state pension

9

(1) A person is entitled to a state pension under this section if—

(a) the person has reached pensionable age,

(b) the person's spouse died while they were married or the person's civil partner died while they were civil partners of each other,

(c) either: (i) the person was under pensionable age when the spouse or civil partner died and did not marry or form a civil partnership after the death and before reaching pensionable age, or (ii) the person was over pensionable age when the spouse or civil partner died,

(d) the person is entitled to an inherited deferral amount under Schedule 5, and

(e) in the case of a person entitled to a choice under section 8, the person has chosen to be paid a state pension under this section.

(2) A state pension under this section is payable at a weekly rate equal to the inherited deferral amount.

(3) But if at any time an order under section 151A of the Administration Act comes into force, the rate of the person's state pension under this section is increased (at that time) by the percentage specified in the order.

(4) A person may be entitled to more than one state pension under this section.

(5) There are provisions elsewhere that affect a person's entitlement to a state pension under this section or the rate at which it is payable.

Inheritance of graduated retirement benefit

10

(1) Regulations may make provision corresponding or similar to any provision of sections 7 to 9 and Schedules 3 to 5 for the purpose of conferring benefits on a person whose dead spouse or civil partner paid graduated contributions as an insured person.

(2) The regulations may—

(a) include provision corresponding or similar to any provision that may be made by regulations under section 7 or 8;

(b) amend or otherwise modify this Act or any other enactment (whenever passed or made).

(3) In this section “graduated contributions” and “insured person” have the meanings given by section 36(8) of the National Insurance Act 1965.

Transition: women who have had a reduced rate election

Reduced rate elections: effect on section 4 pensions

11

(1) Section 4(1)(b) (minimum number of qualifying years for state pension at the transitional rate) does not apply to a woman if a reduced rate election was in force in respect of her at the beginning of the relevant 35-year period.

(2) Schedule 6 modifies the rules about the transitional rate of the state pension for a woman if a reduced rate election was in force in respect of her at the beginning of the relevant 35-year period.

(3) In this section—

“reduced rate election” means an election made, or treated as having been made, under regulations under section 19(4) of the Contributions and Benefits Act;

“relevant 35-year period” means the 35-year period ending with the tax year before the one in which the woman reached pensionable age.

Reduced rate elections: pension for women with no section 4 pension

12

(1) A woman is entitled to a state pension under this section if—

(a) she has reached pensionable age,

(b) a reduced rate election was in force in respect of her at the beginning of the relevant 35-year period,

(d) she is entitled to a basic amount under Schedule 7.

(2) A state pension under this section is payable at a weekly rate equal to the basic amount.

(3) But if at any time the full rate of the state pension is increased, the rate of the woman's state pension under this section is increased (at that time) by the same percentage as the increase in the full rate.

(4) In subsection (3) the reference to the rate of the woman's state pension is to the rate ignoring any increase under section 17.

(5) A woman is not entitled to a state pension under this section and section 2 at the same time: she is only entitled to the one with the higher rate.

(6) There are provisions elsewhere that affect a woman's entitlement to a state pension under this section or the rate at which it is payable.

(7) In this section—

“reduced rate election” means an election made, or treated as having been made, under regulations under section 19(4) of the Contributions and Benefits Act;

“relevant 35-year period” means the 35-year period ending with the tax year before the one in which the woman reached pensionable age.

Transition: pension sharing on divorce etc

Shared state pension on divorce etc

13

(1) A person is entitled to a state pension under this section if—

(a) the person has reached pensionable age, and

(b) the person is entitled to a state scheme pension credit.

(2) A state pension under this section is payable at the appropriate weekly rate set out in Schedule 8.

(3) The rate of the state pension for a person under this section is to be increased from time to time in accordance with the applicable paragraph of Schedule 9.

(4) A person may be entitled to more than one state pension under this section.

(5) There are provisions elsewhere that affect a person's entitlement to a state pension under this section or the rate at which it is payable.

(6) In this Part—

“state scheme pension credit” means—a new state scheme pension credit, oran old state scheme pension credit;

“new state scheme pension credit” means a credit under section 49A(2)(b) of the Welfare Reform and Pensions Act 1999;

“old state scheme pension credit” means a credit under section 49(1)(b) of that Act.

Pension sharing: reduction in the sharer’s section 4 pension

14

(1) The rate of a person's state pension under section 4 is reduced under this section if the person is subject to a state scheme pension debit.

(2) The amount by which the rate is reduced is the amount of the appropriate weekly reduction set out in Schedule 10.

(3) A person's state pension may be reduced more than once under this section.

(4) In this Part—

“state scheme pension debit” means—a new state scheme pension debit, oran old state scheme pension debit;

“new state scheme pension debit” means a debit under section 49A(2)(a) of the Welfare Reform and Pensions Act 1999;

“old state scheme pension debit” means a debit under section 49(1)(a) of that Act.

Pension sharing: amendments

15

Schedule 11 contains amendments to do with pension sharing.

Postponing or suspending state pension

Pensioner’s option to suspend state pension

16

(1) A person who has become entitled to a state pension under this Part may opt to suspend his or her entitlement in accordance with regulations.

(2) A person is not entitled to any state pension under this Part for the period for which the person has opted to suspend his or her entitlement.

(3) For other effects of a person exercising the option, see section 17.

(4) A person may not opt to suspend his or her entitlement to a state pension under this Part on more than one occasion.

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