Social Security Act 1973

54 Rate of minimum personal pension.

(1) For an occupational pension scheme to be recognised in relation to an earner's employment, it must comply with the requirements of this section as respects the rate of minimum personal pension.

(2) Subject to the following subsections, minimum personal pension must be at an annual rate equal to the following percentage of the earner's reckonable earnings from an employment to which the scheme applies—

(a) for a man—

(i) if the pension is subject to increases complying with section 57 of this Act	1.00 per cent. 1.
(ii) if not	1.25 per cent.

(b) for a woman—

(i) if the pension is so subject	0.70 per cent.
(ii) if not	0.90 per cent.

(3) In this Part of this Act, references to an earner's reckonable earnings from any employment are to his earnings from that employment so far as comprised in any payment of earnings made to him or for his benefit (at a time when the employment was recognised pensionable employment) where the payment either—

(a) gave rise to liability under Part I of this Act for a primary Class 1 contribution ; or

(b) was made in such circumstances that regulations require it to be treated (for the purposes of this subsection only) as giving rise to such liability.

(4) If regulations so permit, but subject to subsection (5) below and to any prescribed conditions, the rate of minimum personal pension may be calculated—

(a) by reference to contributions paid from time to time by the earner, or by the employer in respect of him, and the earner's age at the time when contributions were paid; or

(b) as a prescribed fraction or percentage of—

(i) the annual rate of the earner's reckonable earnings in any prescribed period of 12 months before termination of service, or

(ii) his average annual reckonable earnings in any prescribed period before termination of service,

the fraction or percentage being determined by reference to the period (expressed as a number of years or of months, or a combination of years and months) of the earner's service in recognised pensionable employment and varying (to any extent required by the regulations) by reference to the duration of any period of such service.

(5) Regulations shall enable the rate of minimum personal pension to be calculated in accordance with paragraph (a) of subsection (4) above only if the scheme so provides that—

(a) the contributions of the earner and those of the employer together, or those of the employer alone, amount to, or to the equivalent of, at least 5 per cent, of the earner's reckonable earnings ; and

(b) the contributions of the employer alone amount to, or to the equivalent of, at least 2-5 per cent, of those earnings.

(6) Regulations—

(a) may enable the basis of calculating the rate of minimum personal pension to be varied (subject to any prescribed conditions) where the rules of the scheme require an earner who is a man and is married when he attains pensionable age to surrender part of his minimum personal pension in order to provide minimum death benefit for his widow or other dependants;

(b) so far as made for the purposes of subsection (4) above, may prescribe different bases of calculation according to whether minimum personal pension is or is not subject to increases complying with section 57 of this Act.

(7) Where minimum personal pension is subject to increases complying with section 57 of this Act, but does not come into payment at its full rate until after pensionable age, the scheme must make such provision as is necessary to secure that its full rate when it comes into payment is not less than what would have been the increased rate if it had come into payment at its full rate at that age.

(8) Without prejudice to subsection (7) above, the scheme must provide, in the case of minimum personal pension not coming into payment at its full rate until after pensionable age (where the earner remains in the relevant employment after attaining that age, or consents in writing to postponement), for the pension to be adjusted so as to take into account any period between pensionable age and the time when the pension comes into payment at its full rate ; and—

(a) this provision must be made in such a way as to satisfy the Occupational Pensions Board as to its adequacy; and

(b) recognition of the scheme may be made subject to prescribed conditions as to the adjustment of benefit in such cases.