Social Security Act 1985

2 The following shall be inserted at the beginning of Part IV of that Act—

“The revaluation percentage

52A Duty of Secretary of State to specify revaluation percentage.

(1) The Secretary of State shall in each revaluation year by order specify a revaluation percentage for each revaluation period.

(2) In this section—

• " revaluation period", in relation to each order under this section, means a period—

  (a)

  which commences—

  (i)

  on the date of the commencement of this section; or

  (ii)

  on an anniversary of the date of the commencement of this section falling before the making of the order ; and

  (b)

  which ends on the day before the first anniversary of the date of the commencement of this section to fall after the making of the order; and

• " revaluation year " means a year beginning on the date of the commencement of this section or on an anniversary of that date.

(3) Subject to subsection (8) below, the revaluation percentage which the Secretary of State is to specify in relation to each revaluation period is the percentage which appears to him, in the light of the information available to him, to be the percentage increase in prices in Great Britain during the period which is the reference period in relation to that revaluation period.

(4) The reference period in the case of the revaluation period to which the first order under this section relates is any period of 12 months—

(a) which ends not earlier than 6 months before the date on which the order is made ; and

(b) for which it appears to the Secretary of State that information is available to him sufficient to enable him to determine the percentage increase in prices in Great Britain satisfactorily.

(5) The reference period in the case of any revaluation period to which a subsequent order relates is to be determined in accordance with subsection (6) or (7) below.

(6) In the case of the revaluation period with the earliest commencement date the reference period is the period which—

(a) begins at the commencement of the reference period mentioned in subsection (4) above ; and

(b) ends on the latest anniversary of the end of that period to fall before the making of the order.

(7) In the case of each of the other revaluation periods the reference period is the period which—

(a) begins on the last anniversary of the commencement of the reference period mentioned in subsection (4) above to fall before the commencement of the revaluation period; and

(b) ends on the last anniversary of the end of that reference period to fall before the making of the order.

(8) If it appears to the Secretary of State that the percentage increase in prices in Great Britain during a reference period is greater than it would have been if they had increased at a rate of 5 per cent, compound per annum, the Secretary of State shall specify as the revaluation percentage in relation to the revaluation period for which that reference period is the reference period a percentage equal to the percentage that would have been the percentage increase during that reference period if they had increased at a rate of 5 per cent, compound per annum.

52B Revaluation and transfer values.

Schedule 1A to this Act shall have effect in relation to the revaluation of pensions and to transfer values.

Extinguishment of liability of scheme for pensions secured by insurance policies or annuity contracts

52C Cases where a scheme's liability is discharged.

(1) The taking out or the transfer of the benefit of a policy of insurance or a number of such policies, or the entry into or the transfer of the benefit of an annuity contract or a number of such contracts, if it takes place after the commencement of this section, only discharges trustees or managers of an occupational pension scheme from their liability, or any part of their liability, to provide—

(a) the requisite benefits ; or

(b) short service benefit or any alternative to short service benefit,

for or in respect of any person in a case where and to the extent that subsection (2) below has effect.

(2) Where at the time an earner's pensionable service terminates or at any later time— (a) the whole or any part—

(i) of the requisite benefits; or

(ii) of the short service benefit or of any alternative to short service benefit, provided for or in respect of him by an occupational pension scheme is appropriately secured ; and

(b) the requirements set out in any one of paragraphs (a), (b) and (c) of subsection (5) below are satisfied,

the trustees or managers of the scheme shall be discharged from their liability so far as what they were liable to provide is so secured.

(3) Where before the commencement of this section—

(a) an earner's pensionable service terminated; and

(b) at the time his pensionable service terminated or at a later time the whole or any part—

(i) of the requisite benefits ; or

(ii) of the short service benefit or of any alternative to short service benefit, provided for or in respect of him by an occupational pension scheme was appropriately secured,

the trustees or managers of the scheme shall be deemed to have been discharged from their liability, so far as what they were liable to provide was so secured, at the time when it was first so secured.

(4) In this section " appropriately secured" means secured by an appropriate policy of insurance or an appropriate annuity contract, or by more than one such policy or contract; and a policy of insurance or annuity contract is appropriate for the purposes of this section if—

(a) the insurance company with which it is, or was, taken out or entered into is, or was, at the relevant time, authorised under section 3 or 4 of the [1982 c. 50.] Insurance Companies Act 1982 or any similar previous enactment to carry on ordinary long-term insurance business ; and

(b) it may not be assigned or surrendered except on conditions which satisfy such requirements as may be prescribed ; and

(c) it contains, or is endorsed with, terms whose effect is that the amount secured by it may not be commuted except on conditions which satisfy such requirements as may be prescribed ; and

(d) it satisfies such other requirements as may be prescribed.

(5) The requirements referred to in subsection (2)(b) above are—

(a) that the arrangement for securing the amount by means of the policy or contract was made—

(i) at the written request of the earner or his widow; or

(ii) with his or her consent given in writing in a prescribed form ;

(b) that—

(i) the case is one such as is mentioned in paragraph 13(5) of Schedule 1A to this Act; and

(ii) the policy or contract only secures guaranteed minimum pensions;

(c) that—

(i) the case is not one such as is mentioned in paragraph 13(5) of Schedule 1A to this Act; and

(ii) such conditions as may be prescribed are satisfied.

(6) In subsection (4)(a) above, " the relevant time" means the time when the policy of insurance was taken out or the annuity contract was entered into or, as the case may be, when the benefit of the policy or contract was transferred.

(7) In this section—

• " insurance company " and " ordinary long-term insurance business " have the meanings assigned to them by the [1982 c. 50.] Insurance Companies Act 1982 ; and

• " pensionable service " and " short service benefit " are to be construed in accordance with Schedule 16 to the [1973 c. 38.] Social Security Act 1973.

52D Guaranteed minimum pensions under contracted-out schemes-supplementary.

(1) Where—

(a) guaranteed minimum pensions provided for a member or his widow under a contracted-out scheme have been wholly or partly secured as mentioned in section 52C above by a policy or a number of policies of insurance taken out with one or more companies or by an annuity contract or a number of annuity contracts entered into with one or more companies, or by both a policy or a number of policies and an annuity contract or a number of annuity contracts; and

(b) subsection (2) or (3) below applies ; and

(c) any such company is unable to meet the liabilities under policies issued or securities given by it; and

(d) the combined proceeds of any policy or policies taken out as mentioned in section 52C above and of any annuity contract or annuity contracts entered into as there mentioned and of any cash sums paid or alternative arrangements made under the [1975 c. 75.] Policyholders Protection Act 1975 are inadequate to provide the whole of the amount secured, the member and his widow shall be treated for the purposes of section 29(1) above as entitled to any part of his or her guaranteed minimum pension which is provided by the proceeds mentioned in paragraph (d) above.

(2) This subsection applies where section 52C(3) above has effect.

(3) This subsection applies where—

(a) section 52C(3) above does not have effect and none of the requirements specified in section 52C(5)(o) to (c) above is satisfied ; and

(b) the scheme has been wound up.

(4) Where a scheme has ceased by virtue of section 52C above to be liable to provide guaranteed minimum pensions for a member and his widow, the duties imposed on the Occupational Pensions Board by sections 40(2), 41 and 49 above shall cease to subsist in relation to those pensions.

(5) Any question whether a cash sum paid or an alternative arrangement made under the Policyholders Protection Act 1975 provides the whole or any part of the guaranteed minimum pension to which an earner or his widow was entitled under a contracted-out scheme is to be determined for the purposes of this Act by the Secretary of State.

(6) The Secretary of State may make any determination required by subsection (5) above on such basis as he considers appropriate.”.