The Social Security (Graduated Retirement Benefit) Regulations 2005

Made: 3rd March 2005

Laid before Parliament: 10th March 2005

Coming into force: 6th April 2005

The Secretary of State for Work and Pensions, in exercise of the powers conferred upon him by sections 62(1)(a) and (c) and 175(3) and (4) of the Social Security Contributions and Benefits Act 1992 , and of all other powers enabling him in that behalf, after agreement by the Social Security Advisory Committee that proposals in respect of regulations 3 and 4, and paragraphs 2, 3, 7, 13, 14 and 18 of Schedule 1 in so far as they apply to regulation 4, should not be referred to it , the remainder of this Instrument containing only regulations made under provisions introduced by section 297 of, and Schedule 11 to, the Pensions Act 2004 and being made before the end of the period of 6 months beginning with the coming into force of those provisions , hereby makes the following Regulations:

Citation, commencement, effect and interpretation

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• (1) These Regulations may be cited as the Social Security (Graduated Retirement Benefit) Regulations 2005 and shall come into force on 6th April 2005.

• (2) Regulation 4 and paragraphs 3(2) and (3) and 13(2) and (3) of Schedule 1 in so far as they apply to that regulation, shall not have effect in relation to incremental periods beginning before 6th April 2005.

• (3) In these Regulations—

• “the 1965 Act” means the National Insurance Act 1965 ;

• “the Administration Act” means the Social Security Administration Act 1992 ;

• “the Benefits Act” means the Social Security Contributions and Benefits Act 1992 and references to Schedule 5 are to Schedule 5 to that Act ;

• “incremental period” shall have the meaning ascribed to it in paragraph 4(6) of Schedule 1.

Amendment of the 1965 Act

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• (1) The 1965 Act shall be amended in accordance with the following paragraphs.

• (2) In section 36 (graduated retirement benefit)—

• (a) for subsection (4), there shall be substituted the following—

(4) Where a person's entitlement to graduated retirement benefit is deferred— (a) Schedule 2 to the Social Security (Graduated Retirement Benefit) (No.2) Regulations 1978 ; and (b) Schedule 1 to the 2005 Regulations, shall have effect and both those Schedules shall be construed and have effect as if they were part of this subsection. (4A) For the purposes of subsection (4), a person's entitlement to graduated retirement benefit is deferred— (a) where he would be entitled to a Category A or Category B retirement pension but for the fact that his entitlement is deferred within the meaning in section 55(3) of the Social Security Contributions and Benefits Act 1992 , if and so long as his entitlement to such a pension is deferred; (b) where he is treated under subsection (7) as receiving a Category A or a Category B retirement pension at a nominal weekly rate, if and so long as he does not become entitled to graduated retirement benefit by reason only of not satisfying the conditions in section 1 of the Social Security Administration Act 1992 (entitlement to benefit dependent on claim), and in relation to graduated retirement benefit, “period of deferment” shall be construed accordingly.

• (b) in subsection (8), after the definition of “the Act”, there shall be inserted the following definition—

“the 2005 Regulations” means the Social Security (Graduated Retirement Benefit) Regulations 2005 ,

• (3) In section 37(1) (special provisions as to graduated retirement benefit for widows and widowers), after the words “Subject to the provisions of this section” there shall be inserted the words “ and to Schedule 1 to the 2005 Regulations ”.

Amendment of Schedule 2 to the Social Security (Graduated Retirement Benefit) (No.2) Regulations 1978 and saving

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• (1) Subject to paragraph (2), in Schedule 2 to the Social Security (Graduated Retirement Benefit) (No.2) Regulations 1978—

• (a) the word “and” at the end of paragraph 1(a) and paragraph 1(b); and

• (b) paragraphs 2 to 4,

shall be omitted.

• (2) Schedule 2 to those Regulations shall have effect as if the amendments made by paragraph (1) had not been made in the case of—

• (a) periods of deferment (as defined by section 36(4A) of the 1965 Act) ending before 6th April 2005; and

• (b) incremental periods beginning before that date.

Schedule 1

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Schedule 1 to these Regulations (which makes further provision replacing section 36(4) of the 1965 Act) shall have effect.

Modification of Schedule 1 in transitional cases

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Schedule 1 shall be modified by Schedule 2 in relation to transitional cases and in this regulation, a “transitional case” means a case where a person's entitlement to graduated retirement benefit is deferred and the period of deferment begins before 6th April 2005 and continues on or after that day.

SCHEDULE 1 — FURTHER PROVISIONS REPLACING SECTION 36(4) OF THE NATIONAL INSURANCE ACT 1965: INCREASES OF GRADUATED RETIREMENT BENEFIT AND LUMP SUMS

PART 1 — INCREASE AND LUMP SUM WHERE ENTITLEMENT TO RETIREMENT PENSION IS DEFERRED

Scope

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This Part applies only in respect of a person who is deferring entitlement to graduated retirement benefit by virtue of section 36(4A)(a) of the 1965 Act .

Increase or lump sum where pensioner's entitlement is deferred

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• (1) Where a person's entitlement to a Category A or Category B retirement pension is deferred and that person elects...—

• (a) that paragraph 1 of Schedule 5 (increase of pension) is to apply in relation to the period of deferment, paragraph 3 of this Schedule shall also apply in relation to that period;

• (b) that paragraph 3A of Schedule 5 (lump sum) is to apply in relation to the period of deferment, paragraph 5 of this Schedule shall also apply in relation to that period.

• (2) The reference to an election in sub-paragraph (1) includes an election a person is treated as having made under paragraph A1(2) of Schedule 5.

Increase where pensioner's entitlement is deferred

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• (1) This paragraph applies where—

• (a) entitlement to a Category A or Category B retirement pension is deferred and the period of deferment is less than 12 months; or

• (b) paragraph 2(1)(a) applies.

• (2) The rate of the person's graduated retirement benefit shall be increased by an amount equal to the aggregate of the increments to which he is entitled under paragraph 4 but only if that amount is enough to increase the rate of the benefit by at least 1 per cent.

Calculation of increment

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• (1) A person is entitled to an increment under this paragraph for each complete incremental period in his period of deferment.

• (2) The amount of the increment for an incremental period shall be ⅕th per cent. of the weekly rate of the graduated retirement benefit to which the person would have been entitled for the period if his entitlement to a Category A or Category B retirement pension had not been deferred.

• (3) For the purposes of sub-paragraph (2), the weekly rate of graduated retirement benefit shall be taken to include any increase in the weekly rate of that benefit and the amount of the increment in respect of such an increase shall be ⅕th per cent. of its weekly rate for each incremental period in the period of deferment beginning on the day the increase occurred.

• (4) Amounts under sub-paragraphs (2) and (3) shall be rounded to the nearest penny, taking any ½p as nearest to the next whole penny.

• (5) Where an amount under sub-paragraph (2) or (3) would, apart from this sub-paragraph, be a sum less than ½p, the amount shall be taken to be zero, notwithstanding any provision of the Benefits Act, the Administration Act or the Pension Schemes Act 1993 .

• (6) In this paragraph, “incremental period” means any period of six days which are treated by the Social Security (Widow's Benefit and Retirement Pensions) Regulations 1979 as days of increment for the purposes of paragraph 2 of Schedule 5 in relation to the person and pension in question.

• (7) Where one or more orders have come into force under section 150 of the Administration Act during the period of deferment, the rate for any incremental period shall be determined as if the order or orders had come into force before the beginning of the period of deferment.

Lump sum where pensioner's entitlement is deferred

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• (1) This paragraph applies where paragraph 2(1)(b) applies.

• (2) The person is entitled to an amount calculated in accordance with paragraph 6 (a “lump sum”).

Calculation of lump sum

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• (1) The lump sum is the accrued amount for the last accrual period beginning during the period of deferment.

• (2) In this paragraph—

• “accrued amount” means the amount calculated in accordance with sub-paragraph (3);

• “accrual period” means any period of seven days beginning with the day of the week on which Category A or Category B retirement pension would have been payable to a person in accordance with regulation 22(3) of, and paragraph 5 of Schedule 6 to, the Social Security (Claims and Payments) Regulations 1987 or in accordance with regulation 22C(3) or (4) of those Regulations, if his entitlement to a retirement pension had not been deferred, where that day falls within the period of deferment.

• (3) The accrued amount for an accrual period for a person is—

• (4) For the purposes of sub-paragraph (3), any change in the Bank of England base rate is to be treated as taking effect—

• (a) at the beginning of the accrual period immediately following the accrual period during which the change took effect; or

• (b) if regulations under paragraph 3B(4) of Schedule 5 so provide, at such other time as may be prescribed in those Regulations.

• (5) Regulation 3 of the Social Security (Deferral of Retirement Pensions) Regulations 2005 shall have effect for the purposes of this paragraph in like manner to graduated retirement benefit as it does to retirement pension in the calculation of the lump sum under paragraph 3B of Schedule 5.

Increase or lump sum where pensioner's deceased spouse or civil partner has deferred entitlement

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• (1) This paragraph applies where—

• (a) a widow, widower or surviving civil partner (“W”) is entitled to a Category A or Category B retirement pension;

• (b) W was married to or in a civil partnership with the other party to the marriage or civil partnership (“S”) when S died;

• (c) S's entitlement to a Category A or Category B retirement pension was deferred when S died; and

• (d) S's entitlement had been deferred throughout the period of 12 months ending with the day before S's death.

• (2) Where W elects—

• (a) that paragraph 4 of Schedule 5 (increase of pension) is to apply in relation to the period of deferment, paragraph 8 of this Schedule shall also apply in relation to that period;

• (b) that paragraph 7A of Schedule 5 (lump sum) is to apply in relation to the period of deferment, paragraph 9 of this Schedule shall also apply in relation to that period.

• (3) The reference to an election in sub-paragraph (2) includes an election W is treated as having made under paragraph 3C(3) of Schedule 5.

Increase where pensioner's deceased spouse or civil partner has deferred entitlement

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• (1) This paragraph applies where a widow, widower or surviving civil partner is entitled to a Category A or Category B retirement pension, was married to or in a civil partnership with the other party to the marriage or civil partnership when S died and one of the following conditions is met—

• (a) S was entitled to graduated retirement benefit with an increase under this Schedule;

• (b) paragraph 7(2)(a) applies; or

• (c) paragraph 7 would apply to W but for the fact that the condition in sub-paragraph (1)(d) of that paragraph is not met.

• (2) The increase in the weekly rate of W's graduated retirement benefit shall, in a case to which sub-paragraph (1) applies, be determined in accordance with section 37 of the 1965 Act as continued in force by virtue of regulations made under Schedule 3 to the Social Security (Consequential Provisions) Act 1975 or under Schedule 3 to the Social Security (Consequential Provisions) Act 1992 .

Entitlement to lump sum where pensioner's deceased spouse or civil partner has deferred entitlement

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• (1) This paragraph applies where paragraph 7(2)(b) applies.

• (2) W is entitled to an amount calculated in accordance with paragraph 10 (a “widowed person's or surviving civil partner's lump sum“).

Calculation of widowed person's lump sum

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• (1) The widowed person's or surviving civil partner's lump sum is the accrued amount for the last accrual period beginning during the period which—

• (a) began at the beginning of S's period of deferment; and

• (b) ended on the day before S's death.

• (2) In this paragraph—

• “S” means the other party to the marriage or civil partnership;

• “accrued amount” means the amount calculated in accordance with sub-paragraph (3);

• “accrual period” means any period of seven days beginning with the day of the week on which Category A or Category B retirement pension would have been payable to S in accordance with regulation 22(3) of, and paragraph 5 of Schedule 6 to, the Social Security (Claims and Payments) Regulations 1987 or in accordance with regulation 22C(3) or (4) of those Regulations, if his entitlement to a retirement pension had not been deferred, where that day falls within S's period of deferment.

• (3) The accrued amount for an accrual period for W is—

• (4) For the purposes of sub-paragraph (3), any change in the Bank of England base rate is to be treated as taking effect—

• (a) at the beginning of the accrual period immediately following the accrual period during which the change took effect; or

• (b) if regulations under paragraph 7B(4) of Schedule 5 so provide, at such other time as may be prescribed.

• (5) Regulation 3 of the Social Security (Deferral of Retirement Pensions) Regulations 2005 shall have effect for the purposes of this paragraph in like manner to graduated retirement benefit as it does to retirement pension in the calculation of the lump sum under paragraph 7B of Schedule 5.

• (6) In any case where—

• (a) there is a period between the death of S and the date on which W becomes entitled to a Category A or Category B retirement pension; and

• (b) one or more orders have come into force under section 150 of the Administration Act during that period,

the amount of the lump sum shall be increased in accordance with that order or those orders.

PART 2 — INCREASE OR LUMP SUM WHERE PERSON IS TREATED AS RECEIVING RETIREMENT PENSION AT A NOMINAL WEEKLY RATE

Scope

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This Part applies only in respect of a person who is deferring entitlement to graduated retirement benefit by virtue of section 36(4A)(b) of the 1965 Act .

Choice between increase and lump sum

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• (1) Where the period of deferment is at least 12 months, a person shall, on becoming entitled to graduated retirement benefit, elect that—

• (a) paragraph 13; or

• (b) paragraph 15,

is to apply in respect of that period.

• (2) The election referred to in sub-paragraph (1) shall be made—

• (a) on the date on which he claims graduated retirement benefit; or

• (b) within the period after claiming graduated retirement benefit prescribed in paragraph 20B,

and in the manner prescribed in paragraph 20C.

• (3) If no election under sub-paragraph (1) is made within the period referred to in sub-paragraph (2)(b), the person is to be treated as having made an election under sub-paragraph (1)(b).

• (4) A person who has made an election under sub-paragraph (1) (including one that the person is treated by sub-paragraph (3) as having made) may change the election in the circumstances, manner and within the period prescribed, in paragraph 20D .

Increase

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• (1) This paragraph applies where—

• (a) the period of deferment is less than 12 months; or

• (b) the person has made an election under paragraph 12(1)(a) in respect of the period of deferment.

• (2) The rate of the person's graduated retirement benefit shall be increased by an amount equal to the aggregate of the increments to which he is entitled under paragraph 14 but only if that amount is enough to increase the rate of the benefit by at least one per cent.

Calculation of increment

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• (1) A person is entitled to an increment under this paragraph for each complete incremental period in the period of deferment.

• (2) The amount of the increment for an incremental period shall be ⅕th per cent. of the weekly rate of the graduated retirement benefit to which the person would have been entitled for the period if his entitlement to graduated retirement benefit had not been deferred.

• (3) For the purposes of sub-paragraph (2), the weekly rate of graduated retirement benefit shall be taken to include any increase in the weekly rate of that benefit and the amount of the increment in respect of such an increase shall be ⅕th per cent. of its weekly rate for each incremental period in the period of deferment beginning on the day the increase occurred.

• (4) Amounts under sub-paragraphs (2) and (3) shall be rounded to the nearest penny, taking any ½p as nearest to the next whole penny.

• (5) Where an amount under sub-paragraph (2) or (3) would, apart from this sub-paragraph, be a sum less than ½p, the amount shall be taken to be zero, notwithstanding any provision of the Benefits Act, the Administration Act or the Pension Schemes Act 1993 .

• (6) Where one or more orders have come into force under section 150 of the Administration Act during the period of deferment, the rate for any incremental period shall be determined as if the order or orders had come into force before the beginning of the period of deferment.

Lump sum

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• (1) This paragraph applies where paragraph 12(1)(b) applies.

• (2) The person is entitled to an amount calculated in accordance with paragraph 16 (a “lump sum”).