C1Part III Contracting-Out
State scheme premiums
45 Premium where guaranteed minimum pension excluded from full revaluation.
C2C3C41
Where an earner’s service in contracted-out employment by reference to an occupational pension scheme F1which is not a money purchase contracted-out scheme is terminated before he attains F2pensionable age and the weekly rate of the guaranteed minimum pensions to which he has accrued rights under the scheme will fall to be determined in accordance with provisions included in the scheme by virtue of section 35(7) above, then, unless either—
a
a state scheme premium is payable in respect of him under section 42 or 44 above, or
b
those provisions conform with such additional requirements as may be prescribed,
F3the prescribed person shall in respect of the earner pay a state scheme premium (which may be referred to as a “limited revaluation premium”).
2
Such a premium shall be paid to the Secretary of State within the prescribed period; and its amount shall be the difference, as certified by the Secretary of State, between the cost of providing the guaranteed minimum pensions in accordance with the provisions included in the scheme by virtue of the said section 35(7) and what would have been the cost of providing them if no such provision had been included.
C5C63
Where a state scheme premium is payable in respect of an earner under this section, and the case is one in which his service in contracted-out employment is terminated in consequence of the relevant scheme ceasing to be contracted-out, the costs referred to in subsection (2) above shall, F4 . . . F5be calculated as follows—
F6C7a
any earnings factor shall be taken to be that factor as increased by the last order under F7section 148 of the Administration Actto come into force before the five tax years ending with the tax year in which the scheme ceases to be contracted-out; and
b
any relevant earnings factor derived from F8earnings upon which primary Class 1 contributions have been paid or treated as paid in respect of any year (hereafter in this subsection referred to as “the relevant contributions year”) shall be treated as increased by 12 per cent. compound for each of those five tax years, other than any of those years which constitutes or begins before the relevant contributions yearF9but this subsection shall not apply in any case where its application would result in the amount of the premium being greater than it would have been apart from this subsection.
4
In calculating the costs referred to in subsection (2) above the Secretary of State shall apply whichever of the prescribed actuarial tables (as in force at the time when the earner’s service in contracted-out employment is terminated) is applicable in accordance with the regulations prescribing the tables; and—
a
the tables shall be so framed as to embody the assumption that the increase of weekly equivalent required by section 35(7) is 5 per cent. compound for each relevant year after that in which the earner’s service is terminated; and
b
that assumption shall prevail over any different provision made by the scheme.
5
In certifying any amount under subsection (2) above the Secretary of State may make such adjustments as he thinks necessary for avoiding fractional amounts.
6
References in this section to the termination of an earner’s employment do not include references to its termination by his death; and, subject to regulations made under paragraph 1 of Schedule 2 to this Act, an employment which is terminated by the death of the employer shall be treated for the purposes of this section as terminated immediately before the death.
Parts of Pt. III are modified, on transfers from contracted-out schemes, by reg. 3 of, and Sch. 3 to S.I. 1985/1323.