Social Security Pensions Act 1975 (c. 60)

Part III E+W+S Contracting-Out

Modifications etc. (not altering text)

C1 Parts of Pt. III are modified, on transfers from contracted-out schemes, by reg. 3 of, and Sch. 3 to S.I. 1985/1323.

Requirements for contracting-out E+W+S

35 Earner’s guaranteed minimum. E+W+S

(1) An earner has a guaranteed minimum in relation to the pension provided by a scheme in accordance with section 33 above if, in any tax week in a relevant year, earnings have been paid to or for the benefit of the earner in respect of contracted-out employment by reference to the scheme, being earnings in excess of the current lower earnings limit or the prescribed equivalent if he is paid otherwise than weekly.

(2) Where an earner has a guaranteed minimum as aforesaid, that minimum shall, subject to subsection (6) below, be the weekly equivalent of an amount equal to the appropriate percentage of the total of his earnings factors for the relevant years so far as derived from [F1 earnings such as are mentioned in subsection (1) above apon which primary Class 1 contributions have been paid or treated as paid].

[F2 (2ZA) In determining the guaranteed minimum in a case where—

(a) earnings such as are mentioned in subsection (1) above have been paid to a married woman or widow who is liable to pay primary Class 1 contributions at a reduced rate by virtue of [F3 section 19(4) of the Contributions and Benefits Act], and

(b) the tax week in which those earnings are paid falls in the tax year 1991-92 or any subsequent tax year,

the married woman or widow shall be treated for the purposes of this section as having such earnings factors derived from those earnings as she would have had if primary Class 1 contributions had been payable, and paid, upon them otherwise than at a reduced rate.]

[F4 (2A) Where the amount of a person’s earnings for any period is relevant for any purpose of subsection (1) or (2) above and the Secretary of State is satisfied that records of those earnings have not been maintained or retained or are otherwise unobtainable, he may for that purpose—

(a) compute, in such manner as he thinks fit, an amount which shall be regarded as the amount of those earnings; or

(b) take their amount to be such sum as he may specify in the particular case.]

[F5 (3) In subsection (2) above— “the appropriate percentage” means—

(a) in respect of the earner’s earnings factors for any tax year not later than the tax year 1987-1988—

(i) if the earner was not more than 20 years under pensionable age on 6th April 1978, 1¼ per cent,;

(ii) in any other case

per cent.;

(b) in respect of the earner’s earnings for the tax year 1988-89 and for subsequent tax years—

(i) if the earner was not more than 20 years under pensionable age on 6th April 1978, 1 per cent.;

(ii) in any other case

per cent.;

where N is the number of years in the earner’s working life (assuming that he will attain pensionable age) which fall after 5th April 1978; and—

• “derived” means derived in accordance with the rules to be embodied in regulations.]

(4) For the purposes of subsection (2) above the weekly equivalent of the amount there mentioned shall be calculated by dividing that amount by 52 . . . F6 .

(5) For the purposes of subsection (2) above the earner’s earnings factor for any relevant year (so far as derived as mentioned in that subsection) shall, subject to subsection (7) below, be taken to be that factor as increased by [F7 the same percentage as that described for the increase of earnings factors by][F8 the last order under [F9 section 148 of the Administration Act] to come into force] before the end of the final relevant year.

(6) Where in accordance with section 33(3) above the commencement of an earner’s guaranteed minimum pension is postponed for any period and there are at least [F10 seven] complete weeks in that period, his guaranteed minimum in relation to the scheme shall, for each complete week in that period, be increased by [F10 1/7th] per cent.—

(a) of the amount of that minimum apart from this subsection; or

(b) if for that week (or a period which includes that week) a pension is paid to him under the scheme at a weekly rate less than that minimum, of the difference between that pension and that minimum.

In this subsection “week” means any period of seven consecutive days.

[F11 (6A) Where an earner’s guaranteed minimum pension is increased under subsection (6) above, the increase of that part of it which is attributable to earnings factors for the tax year 1987-88 and earlier tax years shall be calculated separately from the increase of the rest.

(6B) Where one or more orders have come into force under section 37A below during the period for which the commencement of a guaranteed minimum pension is postponed, the amount of the pension for any week in that period shall be determined as if the order or orders had come into force before the beginning of the period.]

(7) The scheme may provide that the earnings factors of an earner whose service in contracted-out employment by reference to the scheme is terminated before [F12 the final relevant year shall be determined for the purposes of subsection (2) above by reference to the last order under [F13 section 148 of the Administration Act] to come into force before the end of the tax year in which the service in question is terminated and without reference to the last such order to come into force before the end of the final relevant year]; but in that event the scheme shall provide for the weekly equivalent mentioned in that subsection to be increased by at least—

(a) 5 per cent. compound for each relevant year after that year; or

(b) the amount by which an earnings factor for that year equal to that weekly equivalent would be increased by [F14 the last order under the said section 21 to come into force] before the end of the final relevant year,

whichever makes the lesser increase (so however that this subsection is not to be taken as preventing the scheme from providing increases above those alternative minima).

(8) Subsection (7) above applies [F15 , except in such cases or classes of case as may be prescribed,] only so as to permit the same such provision to be made for all members of the scheme.

[F16 (8A) An occupational pension scheme which—

(a) at any time before the coming into operation of the first regulations made under subsection (8) above did not satisfy that subsection; but

(b) would have satisfied it if those regulations had been in operation at that time.]

(9) In this section “relevant year” means any tax year in the earner’s working life (not being earlier than the first tax year for which lower and upper earnings limits are specified under section 1 above) and “final relevant year” means the last tax year which is a relevant year in relation to the earner.

Textual Amendments

F1 Words substituted (with effect from 6.4.1987) by Social Security Act 1986 (c. 50), Sch. 8, para. 8

F2 S. 35(2ZA) inserted (prosp.) by Social Security Act 1990 (c. 27), Sch. 4, para. 7(2)

F3 Words substituted (with effect from 1.7.1992) by Social Security (Consequential Provisions) Act 1992 (c. 6), Sch. 2 para. 27(1)

F4 S. 35(2A) inserted (with effect from 1.10.1989) by Social Security Act 1989 (c. 24), Sch. 6, para. 5

F5 S. 35(3) substituted (with effect from 6.4.1988) by Social Security Act 1986 (c. 50), s. 9(1)

F6 Words repealed by Social Security Act 1979 (c. 18), Sch. 3 para. 13

F7 Words inserted (with effect from 6.4.1979) by Social Security Act 1988 (c. 7), Sch. 2, para. 1(2) and (3)

F8 Words substituted by Social Security Act 1979 (c. 18), Sch. 3 para. 18(a)

F9 Words substituted (with effect from 1.7.1992) by Social Security (Consequential Provisions) Act 1992 (c. 6), Sch. 2, para. 27(2)

F10 Figure substituted by Social Security (Miscellaneous Provisions) Act 1977 (c. 5), s. 3(2)

F11 S. 35(6A)(6B) inserted (with effect from 6.4.1988) by Social Security Act 1986 (c. 50), s. 9(2)

F12 Words substituted by Social Security Act 1985 (c. 53), Sch. 3, paras. 2 and 7 with effect from 6.4.1979, subject to para 2(2) Social Security Act 1985.

F13 Words substituted (with effect from 1.7.1992) by Social Security (Consequential Provisions) Act 1992 (c. 60), Sch. 2, para. 27(2)

F14 Words substituted by Social Security Act 1979 (c. 18), Sch. 3 para. 18(b)

F15 Words inserted by Social Security Act 1985 (c. 53), Sch. 3, Pt. II, para 8

F16 S. 35(8A) inserted by Social Security Act 1985 (c. 53), Sch. 3, Pt. II, para 8

Modifications etc. (not altering text)

C2 S. 35(1) modified, where guaranteed minimum pension rights have been transferred from schemes which are or were contracted-out salary schemes, by S.I. 1985/1323, Sch. 3, para. 3, with effect from 23.9.1985, and where such rights have been transferred from appropriate policies, by S.I. 1985/1323, Sch. 3A, para. 2. with effect from 27.7.1987

C3 S. 35(1) modified, for payments transferring protected rights to schemes which are or were salary related contracted-out schemes, by reg. 4(4) of S.I. 1987/1118 with effect from 27.7.1987 for personal pension schemes and 6.4.1988 otherwise

C4 S. 35(5) modified, for certain schemes ceasing to be contracted-out, by Social Security (Miscellaneous Provisions) Act 1977 (c. 5), s. 21

C5 S. 35(5) modified, for certain transfers of guaranteed minimum pension rights, by S.I. 1984/380, reg. 44(a)

C6 S. 35(5) modified, for payments transferring protected rights to schemes which are or were salary related contracted-out schemes where minimum contributions have been paid, by reg. 4(5) of S.I. 1987/1118 with effect from 27.7.1987 for personal pension schemes and 6.4.1988 otherwise

C7 S. 35(6) amended (8.4.1991) by S.I. 1991/503, arts. 4(4), 5

C8 S. 35(6): power to amend conferred (1.7.1992) by Social Security Administration Act 1992 (c. 5), ss. 150(1)(e)(i), 192(4).

C9 S. 35(6) amended (12.4.1993) by S.I. 1993/349 art. 5(2)

C10 S. 35(7) modified, for certain transfers of guaranteed minimum pension rights, by S.I. 1984/380, reg. 44(b)

C11 S. 35(7) modified, for payments transferring protected pension rights to schemes which are or were salary related contracted-out schemes, by reg. 4(6) of S.I. 1987/1118 with effect from 27.7.1987 for personal pension schemes and 6.4.1988 otherwise

C12 On 1.7.1992, the said s. 21 was repealed and re-enacted in s. 148 of the Social Security Administration Act 1992 (c. 5)

C13 S. 35(8) modified, where guaranteed minimum pension rights have been transferred from schemes which are or were contracted-out salary related schemes, by S.I. 1985/1323, Sch. 3, para. 4, with effect from 23.9.1985, and, where such rights have been transferred from appropriate policies, by S.I. 1985/1323, Sch. 3A, para. 3, with effect from 27.7.1987

C14 S. 35(8) modified, for payments transferring protected rights to schemes which are or were salary related contracted-out schemes, by reg. 4(7) of S.I. 1987/1118 with effect from 27.7.1987 for personal pension schemes and 6.4.1988 otherwise