Chwilio Deddfwriaeth

Pensions Act 2007

Provisions of new Section 44B – Deemed earnings factors from 2010-2011 onwards

169.Subsection (1) ensures that deemed earnings factors can only be accrued under the new provisions for tax years from 2010-11 onwards. This means that the new provisions only apply to those who have not yet reached state pension age at that time (a person cannot continue to build up entitlement to state second pension once they have reached state pension age).

170.Subsection (2) provides that an individual who satisfies any of the new conditions A, B or C set out at subsections (3), (4) and (5) would be deemed to be earning at the low earnings threshold.

171.Subsection (3) introduces Condition A which is satisfied if an individual has earnings at or above the qualifying earnings factor (52 times the lower earnings limit) but less than the low earnings threshold.

172.Subsection (4) introduces Condition B which is satisfied if an individual has earnings at less than the qualifying earnings factor but has some of the new earnings factor credits (see section 44C – paragraphs 177-183 refer) which may be added to their earnings to bring them up to the qualifying earnings factor.

173.Subsection (5) introduces Condition C which is satisfied if an individual has 52 earnings factor credits by virtue of section 44C. This would equate to the qualifying earnings factor – see paragraph 178 below.

174.Subsection (6) ensures that from the first year in which the flat rate of accrual is introduced for the additional pension (“flat rate introduction year”), the effect of the new section 44B will simply be to provide deemed earnings factors above the qualifying earnings factor but below the low earnings threshold, as that will be sufficient to enable them to accrue state second pension at the new weekly flat rate (£1.40, subject to up-rating). Condition A will not operate at that stage, since the persons to whom it applies will already have actual earnings over the qualifying earnings factor.

175.Subsection (7)(a) defines the “applicable limit”, which is the upper earnings limit from 2010-11 until the flat rate introduction year. At that point, the “applicable limit” becomes the upper accrual point (see section 12(1)(b) and (2)(b)).

176.Subsection (7)(b) defines the low earnings threshold by reference to the definition in section 44A of the SSCBA1992.

177.Subsection (7)(c) makes it clear that the earnings factors described in Conditions A and B are derived from primary Class 1 employed earnings below the applicable limit.

Yn ôl i’r brig

Options/Help