Pensions Act (Northern Ireland) 2008

Section 9.

SCHEDULE 2 ADDITIONAL PENSION: SIMPLIFIED ACCRUAL RATES

PART 1 NEW SCHEDULE 4B TO THE CONTRIBUTIONS AND BENEFITS ACT

1.  After Schedule 4A to the Contributions and Benefits Act (additional pension) insert the following Schedule—

“SCHEDULE 4B ADDITIONAL PENSION: ACCRUAL RATES FOR PURPOSES OF SECTION 45(2)(D)

PART 1 AMOUNT FOR PURPOSES OF SECTION 45(2)(D)

1.— (1) The amount referred to in section 45(2)(d) above is to be calculated as follows—

(a) calculate the appropriate amount for each of the relevant years within section 45(2)(d) above to which Part 2 of this Schedule applies;

(b) calculate the appropriate amount for each of the relevant years within section 45(2)(d) above to which Part 3 of this Schedule applies; and

(c) add those amounts together.

(2) But if the resulting amount is a negative one, the amount referred to in section 45(2)(d) above is nil.

PART 2 NORMAL RULES: EMPLOYMENT NOT CONTRACTED-OUT

Application

2.   This Part applies to a relevant year if the contracted-out condition is not satisfied in respect of any tax week in the year.

Appropriate amount for year

3.   The appropriate amount for the year for the purposes of paragraph 1 above is either—

(a) the flat rate amount for the year (if there is a surplus in the pensioner’s earnings factor for the year which does not exceed the LET), or

(b) the sum of the flat rate amount and the earnings-related amount for the year (if there is such a surplus which exceeds the LET).

4.   The flat rate amount for the year is calculated by multiplying the FRAA in accordance with the last order under section 130AA of the Administration Act to come into force before the end of the final relevant year.

5.   The earnings-related amount for the year is calculated as follows—

(a) take the part of the surplus for the year which exceeds the LET but which does not exceed the UAP;

(b) multiply that amount in accordance with the last order under section 130 of the Administration Act to come into force before the end of the final relevant year;

(c) multiply the amount found under sub-paragraph (b) above by 10 per cent.;

(d) divide the amount found under sub-paragraph (c) above by 44.

PART 3 CONTRACTED-OUT EMPLOYMENT

Application

6.   This Part applies to a relevant year if the contracted-out condition is satisfied in respect of each tax week in the year.

Appropriate amount for year

7.   The appropriate amount for the year for the purposes of paragraph 1 above is calculated as follows—

(a) calculate amounts A and B in accordance with paragraphs 8 to 10 below;

(b) subtract amount B from amount A.

Amount A: assumed surplus not exceeding LET

8.— (1) Amount A is calculated in accordance with this paragraph if there is an assumed surplus in the pensioner’s earnings factor for the year which does not exceed the LET.

(2) In such a case, amount A is the flat rate amount for the year.

(3) The flat rate amount for the year is calculated by multiplying the FRAA in accordance with the last order under section 130AA of the Administration Act to come into force before the end of the final relevant year.

Amount A: assumed surplus exceeding LET

9.— (1) Amount A is calculated in accordance with this paragraph if there is an assumed surplus in the pensioner’s earnings factor for the year which exceeds the LET.

(2) In such a case, amount A is calculated as follows—

(a) take the part of the assumed surplus for the year which exceeds the LET but which does not exceed the UAP;

(b) multiply that amount in accordance with the last order under section 130 of the Administration Act to come into force before the end of the final relevant year;

(c) multiply the amount found under paragraph (b) above by 10 per cent.;

(d) divide the amount found under paragraph (c) above by 44;

(e) add the amount found under paragraph (d) above to the flat rate amount for the year.

(3) The flat rate amount for the year is calculated by multiplying the FRAA in accordance with the last order under section 130AA of the Administration Act to come into force before the end of the final relevant year.

Amount B

10.— (1) Amount B is calculated as follows—

(a) take the part of the assumed surplus for the year which exceeds the QEF but which does not exceed the UAP;

(b) multiply that amount in accordance with the last order under section 130 of the Administration Act to come into force before the end of the final relevant year;

(c) multiply the amount found under paragraph (b) above by 20 per cent.;

(d) divide the amount found under paragraph (c) above by the number of relevant years in the pensioner’s working life.

(2) Section 44B above is to be ignored in applying section 44(6) above for the purposes of this paragraph.

PART 4 OTHER CASES

11.   The Department may make regulations containing provision for finding for a tax year the amount referred to in section 45(2)(d) above—

(a) in cases where the circumstances relating to the pensioner change in the course of the year, and

(b) in such other cases as the Department thinks fit.

PART 5 INTERPRETATION

12.   In this Schedule—

“assumed surplus”, in relation to a pensioner’s earnings factor for a year, means the surplus there would be in that factor for the year if section 44A(1) of the Pensions Act (no primary Class 1 contributions deemed to be paid) did not apply in relation to any tax week falling in the year;

“the contracted-out condition”, in relation to a tax week, means the condition that any earnings paid to or for the benefit of the pensioner in that week in respect of employment were in respect of employment qualifying him for a pension provided by a salary related contracted-out scheme (within the meaning of the Pensions Act);

“the FRAA” has the meaning given by paragraph 13 below;

“the LET”, in relation to a tax year, means the low earnings threshold for the year as specified in section 44A above;

“the QEF”, in relation to a tax year, means the qualifying earnings factor for the year;

“relevant year” and “final relevant year” have the same meanings as in section 44 above;

“the UAP” means the upper accrual point.

13.— (1) “The FRAA” means the flat rate accrual amount.

(2) That amount is £72.80 for the flat rate introduction year and subsequent tax years (but subject to section 130AA of the Administration Act).”.

PART 2 REVALUATION OF FLAT RATE ACCRUAL AMOUNT

2.  After section 130A of the Administration Act insert—

“130AA.    Revaluation of flat rate accrual amount

Whenever the Secretary of State makes an order under section 148AA of the Great Britain Administration Act (revaluation of flat rate accrual amount), the Department may make a corresponding order for Northern Ireland.”.

PART 3 CONSEQUENTIAL AND RELATED AMENDMENTS

The Social Security Contributions and Benefits (Northern Ireland) Act 1992 (c. 7)

3.  In section 39 of the Contributions and Benefits Act (rate of widowed mother’s allowance and widow’s pension) omit—

(a) “and Schedule 4A to this Act” wherever occurring; and

(b) subsection (3).

4.—(1) Section 39C of the Contributions and Benefits Act (rate of widowed parent’s allowance and bereavement allowance) is amended as follows.

(2) In subsection (1) after “section 46(2)” insert “and (4)”.

(3) In subsection (3) in each of paragraphs (a) and (b) for “sections” substitute “provisions”.

5.—(1) Section 44 of the Contributions and Benefits Act (Category A retirement pension) is amended as follows.

(2) In subsection (5A) for “Schedule 4A” substitute “Schedules 4A and 4B”.

(3) In subsection (6) for “Schedule 4A” substitute “Schedule 4A or 4B”.

6.  In section 46 of the Contributions and Benefits Act (modification of section 45 for calculating the additional pension in certain benefits) after subsection (3) add—

“(4) For the purpose of determining the additional pension falling to be calculated under section 45 above by virtue of section 39C(1) above in a case where the deceased spouse or civil partner died under pensionable age, section 45 above has effect subject to the following additional modifications—

(a) the omission of subsection (2)(d), and

(b) the omission in subsection (3A)(b) of the words “before the flat rate introduction year”.”.

7.  In section 48A of the Contributions and Benefits Act (rate of Category B retirement pension for married person or civil partner) in subsection (4) for “Schedule 4A” substitute “Schedules 4A and 4B”.

8.  In section 48B of the Contributions and Benefits Act (Category B retirement pension for surviving spouse or civil partner) in subsection (2) for “Schedule 4A” substitute “Schedules 4A and 4B”.

9.  In section 48BB of the Contributions and Benefits Act (Category B retirement pension: entitlement by reference to benefits under section 39A or 39B) in subsection (5)—

(a) for “Schedule 4A” substitute “Schedules 4A and 4B”; and

(b) for the words from “subject” to the end substitute “subject to section 46(3) above and to the following provisions of this section and the modification in section 48C(4) below.”.

10.  In section 48C of the Contributions and Benefits Act (Category B retirement pension: general) in subsection (4) for “Schedule 4A” substitute “Schedules 4A and 4B”.

11.  In Schedule 4A to the Contributions and Benefits Act (additional pension) in paragraph 1(2) omit “39(1),”.