26.—(1) For the purposes of earnings-related contributions, there shall be excluded from the calculation of a person’s earnings in respect of any employed earner’s employment any payment, or any part of a payment—
(a)which is made by trustees before 6th April 1990;
(b)the amount of which is or may be dependent upon the exercise by the trustees of a discretion or the performance by them of a duty arising under the trust;
(c)not being a sickness payment which by virtue of section 4(1) of the Act (payments treated as remuneration and earnings) is treated as remuneration derived from an employed earner’s employment,
and in respect of which either paragraph (2) or (3) is satisfied.
(2) This paragraph is satisfied if the trust, under which the payment is made, was created before 6th April 1985.
(3) This paragraph is satisfied if—
(a)the trust, under which the payment is made, was created on or after 6th April 1985;
(b)that trust took effect immediately on the termination of a trust created before 6th April 1985;
(c)the person to whom the payment is made either—
(i)was a beneficiary under the earlier trust, or
(ii)would have been such a beneficiary if, while the earlier trust was subsisting, he had held the employment in respect of which the payment is made; and
(d)there were or are payments under the earlier trust which in the case of payments made on or after 6th October 1987, are payments made in circumstances to which sub-paragraphs (a), (b) and (c) apply.