Office of Public Sector Information
PART III continued CHAPTER II continued
(1) The Secretary of State may from time to time, and shall when required by subsection (2), lay before each House of Parliament—
(a) a report by the Government Actuary or the Deputy Government Actuary on the percentages for the time being applying under section 41(1)(a) and (b) and any changes in the factors affecting the cost to occupational pension schemes of providing guaranteed minimum pensions since the preparation of the last report under this paragraph; and
(b) a report by the Secretary of State stating whether he considers that, in view of the report of the Government Actuary or the Deputy Government Actuary, there should be an alteration in either or both of those percentages and, if so, what alteration is in his opinion required.
(2) The Secretary of State shall lay such reports at intervals of not more than five years.
(3) If in a report under subsection (1)(b) the Secretary of State states that he considers that there should be an alteration in either or both of the percentages mentioned in section 41(1)(a) and (b), he shall prepare and lay before each House of Parliament with the report the draft of an order making that alteration; and if the draft is approved by resolution of each House the Secretary of State shall make the order in the form of the draft.
(4) An order under subsection (3) shall have effect from the beginning of such tax year as may be specified in the order, but not a tax year earlier than the second after that in which the order is made.
(5) No alteration of those percentages shall introduce any distinction on grounds of age or sex.
(6) A draft of an order making alterations in either or both of those percentages may contain consequential provisions altering any percentage for the time being specified in paragraph 2(3) of Schedule 4 as that percentage applies in relation to earnings paid or payable on or after the day as from which the order is to have effect.
(1) Subject to the following provisions of this Part, the Secretary of State shall, except in such circumstances as may be prescribed, pay minimum contributions in respect of an employed earner for any period during which the earner—
(a) is over the age of 16 but has not attained pensionable age;
(b) is not a married woman or widow who has made an election which is still operative that her liability in respect of primary Class 1 contributions shall be a liability to contribute at a reduced rate; and
(c) is a member of an appropriate personal pension scheme which is for the time being the earner’s chosen scheme.
(2) Subject to subsection (3), minimum contributions in respect of an earner shall be paid to the trustees or managers of the earner’s chosen scheme.
(3) In such circumstances as may be prescribed minimum contributions shall be paid to a prescribed person.
(4) Where the condition mentioned in subsection (1)(a) or (c) ceases to be satisfied in the case of an earner in respect of whom the Secretary of State is required to pay minimum contributions, the duty of the Secretary of State to pay them shall cease as from a date determined in accordance with regulations.
(5) If the Secretary of State pays an amount by way of minimum contributions which he is not required to pay, he may recover it—
(a) from the person to whom he paid it, or
(b) from any person in respect of whom he paid it.
(6) If the Secretary of State pays in respect of an earner an amount by way of minimum contributions which he is required to pay, but does not pay it to the trustees or managers of the earner’s chosen scheme, he may recover it from the person to whom he paid it or from the earner.
(1) Where an earner and the trustees or managers of an appropriate personal pension scheme have jointly given notice to the Secretary of State, in such manner and form and with such supporting evidence as may be prescribed—
(a) that the earner is, or intends to become, a member of the scheme and wishes minimum contributions in respect of him to be paid to the scheme under section 43;
(b) that the trustees or managers have agreed to accept him as a member of the scheme and to receive such minimum contributions in respect of him,
that scheme is the earner’s chosen scheme for the purposes of section 43 as from a date determined in accordance with regulations and specified in the notice, unless at that date some other appropriate scheme is the earner’s chosen scheme for those purposes.
(2) Either an earner or the trustees or managers of the scheme may cancel a notice under subsection (1) by giving notice to that effect to the Secretary of State at such time and in such manner and form as may be prescribed.
(3) When a notice under subsection (2) is given, the scheme ceases to be the earner’s chosen scheme as from a date determined in accordance with regulations and specified in the notice.
(1) Subject to subsection (2), in relation to any tax week falling within a period for which the Secretary of State is required to pay minimum contributions in respect of an earner, the amount of those contributions shall be an amount equal to the aggregate amount of the reductions in Class 1 contributions which would fall to be made under section 41(1) if any employment of his which is not contracted-out were contracted-out employment.
(2) Where—
(a) subsection (1) applies;
(b) the tax year in which the tax week falls ends before such date as may be prescribed; and
(c) the earner was over the age of 30 on the 6th April with which the tax year began,
there shall be added to the amount payable under that subsection an amount equal to 1 per cent. of so much of those earnings as respects which those reductions would fall to be made.
(3) Regulations may make provision—
(a) for earnings to be calculated or estimated in such manner and on such basis as may be prescribed for the purpose of determining whether any, and if so what, minimum contributions are payable in respect of them;
(b) for the adjustment of the amount which would otherwise be payable by way of minimum contributions so as to avoid the payment of trivial or fractional amounts;
(c) for the intervals at which, for the purposes of minimum contributions, payments of earnings are to be treated as made;
(d) for the manner in which an earner’s age is to be verified for the purposes of subsection (2);
(e) for this section to have effect in prescribed cases as if for any reference to a tax week there were substituted a reference to a prescribed period, and for the references to a tax week in section 41(1) to have effect accordingly so far as they apply for the purposes of this section;
(f) as to the manner in which and time at which or period within which minimum contributions are to be made.
(1) Where for any period a person is entitled both—
(a) to a Category A or Category B retirement pension, a widowed mother’s allowance, a widow’s pension or a widower’s invalidity pension under the [1992 c. 4.] Social Security Contributions and Benefits Act 1992; and
(b) to one or more guaranteed minimum pensions,
the weekly rate of the benefit mentioned in paragraph (a) shall for that period be reduced by an amount equal—
(i) to its additional pension, or
(ii) to the weekly rate of the pension mentioned in paragraph (b) (or, if there is more than one such pension, their aggregate weekly rates),
whichever is the less.
(2) Where for any period—
(a) a person is entitled to one or more guaranteed minimum pensions;
(b) he is also entitled to an invalidity pension under section 33 of the [1992 c. 4.] Social Security Contributions and Benefits Act 1992; and
(c) the weekly rate of his invalidity pension includes an additional pension such as is mentioned in section 44(3)(b) of that Act,
for that period section 34 of that Act shall have effect as if the following subsection were substituted for subsection (5)—
“(5) In this section “the relevant amount” means an amount equal to the aggregate of—
(a) the additional pension; and
(b) the weekly rate or aggregate weekly rates of the guaranteed minimum pension or pensions,
reduced by the amount of any reduction in the weekly rate of the invalidity pension made by virtue of section 46(1) of the Pension Schemes Act 1993.”.
(3) Where for any period—
(a) a person is entitled to one or more guaranteed minimum pensions;
(b) he is also entitled to an invalidity pension under section 33 of the [1992 c. 4.] Social Security Contributions and Benefits Act 1992; and
(c) the weekly rate of his invalidity pension does not include an additional pension such as is mentioned in section 44(3)(b) of that Act,
for that period the relevant amount shall be deducted from the appropriate weekly rate of invalidity allowance and he shall be entitled to invalidity allowance only if there is a balance after the deduction and, if there is such a balance, at a weekly rate equal to it.
(4) Where for any period—
(a) a person is entitled to one or more guaranteed minimum pensions;
(b) he is also entitled to a Category A retirement pension under section 44 of the [1992 c. 4.] Social Security Contributions and Benefits Act 1992; and
(c) the weekly rate of his pension includes an additional pension such as is mentioned in section 44(3)(b) of that Act,
for that period section 47 of that Act shall have effect as if the following subsection were substituted for subsection (3)—
“(3) In subsection (2) above “the relevant amount” means an amount equal to the aggregate of—
(a) the additional pension; and
(b) the weekly rate or aggregate weekly rates of the guaranteed minimum pension or pensions,
reduced by the amount of any reduction in the weekly rate of the Category A retirement pension made by virtue of section 46(1) of the Pension Schemes Act 1993.”.
(5) Where for any period—
(a) a person is entitled to one or more guaranteed minimum pensions;
(b) he is also entitled to a Category A retirement pension under section 44 of the [1992 c. 4.] Social Security Contributions and Benefits Act 1992; and
(c) the weekly rate of his Category A retirement pension does not include an additional pension such as is mentioned in subsection (3)(b) of that section,
for that period the relevant amount shall be deducted from the amount that would otherwise be the increase under section 47(1) of that Act and the pensioner shall be entitled to an increase under that section only if there is a balance remaining after that deduction and, if there is such a balance, of an amount equal to it.
(6) Where for any period—
(a) a person is entitled to one or more guaranteed minimum pensions;
(b) he is also entitled—
(i) to an invalidity pension under section 33 of the [1992 c. 4.] Social Security Contributions and Benefits Act 1992;
(ii) to a Category A retirement pension under section 44 of that Act; or
(iii) to a Category B retirement pension under section 49 of that Act; and
(c) the weekly rate of the pension includes an additional pension such as is mentioned in section 44(3)(b) of that Act,
for that period paragraph 3 of Schedule 7 to that Act shall have effect as if the following sub-paragraph were substituted for sub-paragraph (3)—
“(3) In this paragraph “the relevant amount” means an amount equal to the aggregate of—
(a) the additional pension; and
(b) the weekly rate or aggregate weekly rates of the guaranteed minimum pension or pensions,
reduced by the amount of any reduction in the weekly rate of the pension made by virtue of section 46(1) of the Pension Schemes Act 1993.”.
(7) Where for any period—
(a) a person is entitled to one or more guaranteed minimum pensions;
(b) he is also entitled to any of the pensions under the [1992 c. 4.] Social Security Contributions and Benefits Act 1992 mentioned in subsection (6)(b); and
(c) the weekly rate of the pension does not include an additional pension such as is mentioned in section 44(3)(b) of that Act,
for that period the relevant amount shall be deducted from the amount that would otherwise be the increase under paragraph 3 of Schedule 7 to that Act and the beneficiary shall be entitled to an increase only if there is a balance after that deduction and, if there is such a balance, only to an amount equal to it.
(8) In this section “the relevant amount” means an amount equal to the weekly rate or aggregate weekly rates of the guaranteed minimum pension or pensions—
(a) in the case of subsection (3), reduced by the amount of any reduction in the weekly rate of the invalidity pension made by virtue of subsection (1); and
(b) in the case of subsection (5), reduced by the amount of any reduction in the weekly rate of the Category A retirement pension made by virtue of subsection (1);
and references in this section to the weekly rate of a guaranteed minimum pension are references to that rate without any increase under section 15(1).
(9) Where subsection (3) applies, section 34(7) of the [1992 c. 4.] Social Security Contributions and Benefits Act 1992 shall have effect as if for the words “subsection (4) above” there were substituted the words “section 46(3) of the Pension Schemes Act 1993”.
(1) The reference in section 46(1) to a person entitled to a guaranteed minimum pension shall be construed as including a reference to a person so entitled by virtue of being the widower of an earner in any case where he is entitled to a widower’s invalidity pension, but where he is entitled to any other benefit that reference shall be so construed only if—
(a) at the time of the earner’s death she and her husband had both attained pensionable age; or
(b) he is also entitled to a Category A retirement pension by virtue of section 41(7) of the [1992 c. 4.] Social Security Contributions and Benefits Act 1992.
(2) For the purposes of section 46 a person shall be treated as entitled to any guaranteed minimum pension to which he would have been entitled—
(a) if its commencement had not been postponed, as mentioned in section 13(4); or
(b) if there had not been made a transfer payment or transfer under regulations made by virtue of section 20 as a result of which—
(i) he is no longer entitled to guaranteed minimum pensions under the scheme by which the transfer payment or transfer was made, and
(ii) he has not become entitled to guaranteed minimum pensions under the scheme to which the transfer payment or transfer was made.
(3) Where—
(a) guaranteed minimum pensions provided for a member or the member’s widow or widower under a contracted-out scheme have been wholly or partly secured as mentioned in subsection (3) of section 19; and
(b) either—
(i) the transaction wholly or partly securing them was carried out before 1st January 1986 and discharged the trustees or managers of the scheme as mentioned in subsection (1) of that section; or
(ii) it was carried out on or after that date without any of the requirements specified in subsection (5)(a) to (c) of that section being satisfied in relation to it and the scheme has been wound up; and
(c) any company with which any relevant policy of insurance or annuity contract was taken out or entered into is unable to meet the liabilities under policies issued or securities given by it; and
(d) the combined proceeds of—
(i) any relevant policies and annuity contracts, and
(ii) any cash sums paid or alternative arrangements made under the [1975 c. 75.] Policyholders Protection Act 1975,
are inadequate to provide the whole of the amount secured,
the member and the member’s widow or widower shall be treated for the purposes of section 46 as only entitled to such part (if any) of the member’s or, as the case may be, the member’s widow’s or widower’s guaranteed minimum pension as is provided by the proceeds mentioned in paragraph (d).
(4) A policy or annuity is relevant for the purposes of subsection (3) if taking it out or entering into it constituted the transaction to which section 19 applies.
(5) For the purposes of section 46 a person shall be treated as entitled to any guaranteed minimum pension to which he would have been entitled—
(a) if a lump sum had not been paid instead of that pension under provisions included in a scheme by virtue of section 21(1); or
(b) if that pension had not been forfeited under provisions included in a scheme by virtue of section 21(2).
(1) Subject to subsection (3), this subsection applies where for any period—
(a) minimum payments have been made in respect of an earner to an occupational pension scheme which is a money purchase contracted-out scheme in relation to the earner’s employment, or
(b) minimum contributions have been paid in respect of an earner under section 43.
(2) Where subsection (1) applies then, for the purposes of section 46—
(a) the earner shall be treated, as from the date on which he reaches pensionable age, as entitled to a guaranteed minimum pension at a prescribed weekly rate arising from that period in that employment;
(b) in prescribed circumstances if the earner dies after reaching pensionable age any widow or widower of the earner shall be treated as entitled to a guaranteed minimum pension at a rate equal to one-half of the rate prescribed under paragraph (a); and
(c) in prescribed circumstances if the earner dies before reaching pensionable age any widow or widower of the earner shall be treated as entitled to a guaranteed minimum pension at a prescribed weekly rate arising from that period;
and where subsection (1)(b) applies paragraphs (a) to (c) of this subsection apply also for the purposes of sections 34(4) and 47(2) of the [1992 c. 4.] Social Security Contributions and Benefits Act 1992 and paragraph 3(2) of Schedule 7 to that Act, but with the omission from paragraph (a) of the words “in that employment”.
(3) Where the earner is a married woman or widow, subsection (1) shall not have effect by virtue of paragraph (a) of that subsection in relation to any period during which there is operative an election that her liability in respect of primary Class 1 contributions shall be a liability to contribute at a reduced rate.
(4) The power to prescribe a rate conferred by subsection (2)(a) includes power to prescribe a nil rate.
The Secretary of State may make regulations modifying sections 41, 42, 46(1), 47(2) and (5) and 48 in such manner as he thinks proper, in their application to women who are or have been married.
(1) In the case of an occupational pension scheme or a personal pension scheme which is or has been certified as a contracted-out or, as the case may be, an appropriate scheme, the Board may, for the event of, or in connection with, its ceasing to be such a scheme, approve any arrangements made or to be made in relation to the scheme, or for its purposes, for the preservation or transfer—
(a) in the case of an occupational pension scheme other than a money purchase contracted-out scheme—
(i) of earners' accrued rights to guaranteed minimum pensions under the scheme;
(ii) of the liability for the payment of guaranteed minimum pensions under the scheme in respect of persons who have then become entitled to receive them;
(b) in the case of a money purchase contracted-out scheme or a personal pension scheme, of protected rights under the scheme.
(2) If the scheme ceases to be a contracted-out scheme or an appropriate scheme (whether by being wound up or otherwise) and the Board either—
(a) have withdrawn their approval of previously approved arrangements relating to it; or
(b) have declined to approve arrangements relating to it,
the Board may issue a certificate to that effect.
(3) A certificate issued under subsection (2)(a) or (b) shall be cancelled by the Board if they subsequently approve the arrangements.
(4) Regulations may provide that where the Board have approved arrangements under subsection (1) in respect of an occupational pension scheme (other than a money purchase scheme) any provision of this Part (other than sections 18, 19, 26 to 33 and 43 to 45) or Chapter III of Part IV or Chapter II of Part V shall have effect subject to such modifications as may be specified in the regulations.
(5) Any such regulations shall have effect in relation to arrangements whenever approved, unless they provide that they are only to have effect in relation to arrangements approved after they come into force.
(6) It is hereby declared that an approval of arrangements relating to an occupational pension scheme which is not a money purchase contracted-out scheme may be withdrawn at any time, notwithstanding that the scheme has been wound up.
(7) For the purposes of this Chapter an earner’s accrued rights or, as the case may be, a person’s guaranteed minimum pension rights or protected rights are subject to approved arrangements if—
(a) the Board have approved arrangements under subsection (1) (either before or after the scheme ceased to be certified as contracted-out or, as the case may be, as an appropriate scheme) which operate as respects him and the rights in question, and
(b) they have not since withdrawn their approval of those arrangements.
(1) This section applies where—
(a) an earner’s guaranteed minimum pension rights or accrued rights to guaranteed minimum pensions under a scheme are subject to approved arrangements, and
(b) one or more of the five tax years ending with the tax year in which the scheme ceases to be contracted-out is a relevant year in relation to the earner.
(2) Where this section applies then, except in such circumstances as may be prescribed, section 16(1) shall have effect, subject to the following provisions, that is to say—
(a) any earnings factor shall be taken to be that factor as increased by the last order under section 21 of the [1975 c. 60.] Social Security Pensions Act 1975 or section 148 of the [1992 c. 5.] Social Security Administration Act 1992 to come into force before those five tax years; and
(b) any relevant earnings factors derived from contributions or earnings in respect of any year (“the relevant contributions year”) shall be treated as increased by 12 per cent. compound for each of those five tax years, other than any of those years which—
(i) constitutes or begins before the relevant contributions year, or
(ii) begins after the final relevant year in relation to the earner.
(3) Subsection (2) shall not apply in any case where its application would result in the amount of the guaranteed minimum being greater than it would have been apart from that subsection.
(4) Regulations may provide that subsections (1) to (3) shall have effect with prescribed modifications in relation to a scheme which, immediately before it ceased to be contracted-out, contained provisions authorised by section 16(2).
(5) In this section “relevant year” and “final relevant year” have the same meanings as in section 16.
(1) Section 53 shall apply for the purpose of making provision for securing the continued supervision of occupational pension schemes as respects which subsection (2) applies and section 54 shall apply for the purpose of making corresponding provision in relation to personal pension schemes as respects which subsection (3) applies.
(2) This subsection applies as respects any occupational pension scheme, other than a public service pension scheme, where—
(a) the scheme has ceased to be a contracted-out scheme otherwise than by being wound up; and
(b) there has not been a payment of a premium under section 55(1) in respect—
(i) of each person entitled to receive, or having accrued rights to, guaranteed minimum pensions under the scheme; or
(ii) of each person who has protected rights under it or is entitled to any benefit giving effect to protected rights under it.
(3) This subsection applies as respects any personal pension scheme where—
(a) the scheme has ceased to be an appropriate scheme otherwise than by being wound up; and
(b) there has not been a payment of a premium under section 55(1) in respect of each person who has protected rights under it or is entitled to any benefit giving effect to protected rights under it.
(4) Section 53 shall continue to apply so long as there is any such person as is mentioned in paragraph (b)(i) or (ii) of subsection (2), (but, where by virtue of section 19 a scheme has ceased to be liable to provide guaranteed minimum pensions for a member and the member’s widow or widower, the duties imposed on the Board by section 53 shall cease to subsist in relation to those pensions), and section 54 shall continue to apply so long as there is any such person as is mentioned in paragraph (b) of subsection (3).
(5) For the purposes of subsections (2) and (4) a person in respect of whom a premium is not payable by virtue of regulation 18(2A) of the [S.I. 1984/380.] Occupational Pension Schemes (Contracting-out) Regulations 1984 shall not be treated as such a person as is mentioned in paragraph (b)(ii) of subsection (2).
(6) For the purposes of subsections (3) and (4) a person in respect of whom a premium is not payable by virtue of regulation 3 of the [S.I. 1987/1111.] Personal Pension Schemes (Personal Pension Protected Rights Premiums) Regulations 1987 shall not be treated as such a person as is mentioned in paragraph (b) of subsection (3).
(1) The Board shall be under a duty to satisfy themselves as to—
(a) the matters in respect of which they are required to be satisfied for contracting-out purposes under sections 23(1) and 24(1) or, as the case may be, under section 30(1); and
(b) the soundness and adequacy of any investments held for the purposes of the scheme (so far as relevant to the considerations of section 24(1)).
(2) Where the scheme was contracted-out subject to such conditions as are referred to in section 25(1) and (2) those conditions shall continue to be binding, notwithstanding that there is no contracting-out certificate in force.
(3) Subsection (1) does not apply in the case of any scheme as to which the Board have issued a certificate under subsection (2) of section 50 which has not been cancelled under subsection (3) of that section.
(4) If it appears to the Board that there has been, or is likely to be, a breach of any rule of the scheme relating to the matters dealt with in sections 9(2) and 13 to 25 or, as the case may be, sections 9(3) and 26 to 32, the Board may take such steps as they think expedient with a view to remedying or preventing the breach.
(5) For that purpose they may themselves take any proceedings for enforcement of the rules which would be open to a person—
(a) as an actual or prospective beneficiary under the scheme, or
(b) as one of its trustees or managers, or
(c) as being otherwise concerned with the scheme or its benefits,
and may assume the conduct of proceedings for enforcement brought by any such person.
(1) The Board shall be under a duty to satisfy themselves as to the matters in respect of which they are required to be satisfied under section 30(1) for the purposes of determining whether a personal pension scheme should be or continue to be an appropriate scheme.
(2) Subsection (1) does not apply in the case of any scheme as to which the Board have issued a certificate under subsection (2) of section 50 which has not been cancelled under subsection (3) of that section.
(3) If it appears to the Board that there has been, or is likely to be, a breach of any rule of the scheme relating to the matters dealt with in sections 9(5) and 26 to 32, the Board may take such steps as they think expedient with a view to remedying or preventing the breach, and section 53(5) applies for that purpose as it applies for the purpose there mentioned.
(1) If a scheme ceases to be a contracted-out scheme or an appropriate scheme (whether by being wound up or otherwise) a state scheme premium shall be payable—
(a) in respect of each earner whose accrued rights to guaranteed minimum pensions or protected rights under the scheme are not subject to approved arrangements and have not been disposed of so as to discharge the trustees or managers of the scheme under section 19 or 99;
(b) in the case of an occupational pension scheme other than a money purchase contracted-out scheme, in respect of each person who has then become entitled to receive a guaranteed minimum pension under the scheme and whose guaranteed minimum pension rights are not subject to approved arrangements; and
(c) in the case of a money purchase contracted-out scheme or a personal pension scheme, in respect of each person who has become entitled to receive a pension under the scheme giving effect to protected rights which are not subject to approved arrangements.
(2) Where—
(a) an earner’s service in employment which is contracted-out by reference to an occupational pension scheme which is not a money purchase contracted-out scheme is terminated before he attains the scheme’s normal pension age or (if earlier) the end of the tax year preceding that in which he attains pensionable age; and
(b) he has served for less than two years in employment which is contracted-out by reference to the scheme,
then if—
(i) the earner’s service is terminated otherwise than by his death or by the scheme’s ceasing to be contracted-out and his period of service is not one in respect of which the scheme conforms to the appropriate extent with the preservation requirements; or
(ii) the earner’s service is terminated by his death and he dies leaving a widow,
the prescribed person may elect to pay a premium under this subsection.
(3) The Secretary of State may by regulations provide that, in such cases and subject to such conditions as may be prescribed, if—
(a) an earner in employment to which an occupational pension scheme which is not a money purchase contracted-out scheme applies has ceased (whether before or after the commencement of this subsection) to be in that employment before attaining normal pension age;
(b) there has been a transfer from that scheme to another scheme of his accrued rights other than his accrued rights to guaranteed minimum pensions;
(c) the scheme to which his accrued rights are transferred is neither a contracted-out scheme nor one which was formerly contracted-out and in respect of which the Board have duties under section 53 at the time of the transfer;
(d) no premium under subsection (1)(a) is payable in respect of the earner; and
(e) the circumstances in which by virtue of paragraphs (a) and (b) of subsection (2) a premium is payable under that subsection do not exist,
a state scheme premium may be paid under this subsection.
Pension Schemes Act 1993