Statutory Instruments
SOCIAL SECURITY
Made
7th May 1991
Laid before Parliament
16th May 1991
Coming into force
6th June 1991
The Secretary of State for Social Security, in exercise of powersconferred by sections 13(5) and 168(1) of, and Schedule 20 to, theSocial Security Act 1975(1) and sections 6(5A) and 35(3) of the Social SecurityPensions Act 1975(2) and sections 84(1) and 89(1) of the Social Security Act1986(3) and of all other powers enabling him in that behalf,after agreement by the Social Security Advisory Committee that theproposals to make these Regulations should not be referred to it(4) and after consultation with the Occupational PensionsBoard(5), hereby makes the following Regulations:
1. These Regulations may be cited as the Social Security (EarningsFactor) Amendment Regulations 1991 and shall come into force on 6th June1991.
2. In regulation 4 of the Social Security (Earnings Factor) Regulations1979(6) for the reference“paragraph 7” there shall be substituted the reference“paragraph 5”.
3. For Part I of Schedule 1 to the Social Security (Earnings Factor)Regulations 1979 there is hereby substituted the Part I contained in theSchedule to these Regulations.
4. Regulation 2(3) of the Social Security (Earnings Factor) AmendmentRegulations 1988(7) is hereby revoked.
Signed by authority of the Secretary of State for Social Security.
Nicholas Scott
Minister of State,
Department of Social Security
7th May 1991
Regulation 3
1.—(1) In this Part of this Schedule—
“Class 1 contributions” means primary Class 1 contributions;
“contracted-out contributions” means primary Class 1 contributions paid on earnings in respect ofa person’s contracted-out employment being earnings in excess of thecurrent lower earnings limit or the prescribed equivalent if he is paidotherwise than weekly;
“the standard level” in relation to any year means that year’s lower earnings limit forClass 1 contributions multiplied by 50; and
each paragraph has effect subject to the provisions of all laterparagraphs.
(2) Paragraphs 2, 3 and 4 below shall apply for the purposes specifiedin section 13(2) of the Act(8), and paragraph 5 below for the purposes of section 35 ofthe Social Security Pensions Act1975(9) (earner’s guaranteed minimum).
2.—(1) Subject to sub-paragraph (2) below, a person’s earnings factorderived in respect of the year commencing on 6th April 1987, or anysubsequent year, from—
(a)those of his earnings paid in that year upon which Class 1contributions have been paid or treated as paid in respect of that year,and
(b)earnings with which he has been credited in respect of that year,
shall be equal to the amount of those actual and credited earnings.
(2) Any earnings factor ascertained under sub-paragraph (1) above shallbe rounded down to the nearest whole pound.
3. Where a person’s earnings paid in the year commencing on 6th April1987, or in any subsequent year, are earnings upon which Class 1 contributions have been paid or treated as paid in respect of that year and are, or are tobe, recorded as separate sums in the records of the Department of SocialSecurity, the earnings factor derived from those earnings shall be equalto the aggregate of the amounts ascertained by rounding down each sumseparately to the nearest whole pound.
4. Where Class 1 contributions have been paid or treated as paid inrespect of the year commencing on 6th April 1987, or any subsequentyear, upon a person’s earnings paid in that year and, but for thisparagraph, the ascertainment of any earnings factor of his in respect ofsuch year by the application of paragraphs 2 or 3 above would have theeffect that—
(a)his earnings factor derived from those earnings, or
(b)the aggregate of his earnings factors derived from those earnings,and any earnings credited in respect of the same year, together with anyderived from Class 2 or Class 3 contributions paid or credited in thatyear
would fall short of—
the qualifying earnings factor, by an amount not exceeding £50, or
the standard level, by an amount not exceeding £50, or
one-half of the standard level, by an amount not exceeding £25,
the amount of that earnings factor as so ascertained shall, for thepurpose of section 13(2)(a) of the Act, be increased by the amount ofthe shortfall, and the amount resulting shall be rounded up to thenearest whole pound.
5.—(1) Subject to sub-paragraphs (2) and (3) below, a person’s earningsfactor derived in respect of the year commencing on 6th April 1987, orany subsequent year, from those of his earnings in contracted-outemployment upon which contracted-out contributions have been paid, ortreated as paid, in respect of such year, shall be equal to the amountof those earnings.
(2) Any earnings factor ascertained under sub-paragraph (1) above shallbe rounded down to the nearest whole pound.
(3) Where a person’s earnings paid in the year commencing on 6th April1987, or in any subsequent year, are earnings upon which contracted-outcontributions have been paid or treated as paid in respect of that yearand are, or are to be, recorded as separate sums in the records of theDepartment of Social Security, the earnings factor derived from thoseearnings shall be equal to the aggregate of the amounts ascertained byrounding down each sum separately to the nearest whole pound.
(This note is not part of the Regulations)
These Regulations replace in consolidated form the provisions ofPart I of Schedule 1 to the Social Security (Earnings Factor)Regulations 1979 as amended by S.I. 1985/1417, 1987/316 and 411 and byregulation 2(3) of S.I. 1988/429. They also make a consequentialamendment to regulation 4 of those Regulations.
S.I. 1985/1417 and 1987/316 and 411 were revoked by regulation 3 ofS.I. 1988/429. These Regulations revoke regulation 2(3) of thatinstrument.
The provisions in the Schedule are the rules for ascertainingearnings factors derived, in respect of tax years beginning on or after6th April 1987, from earnings on which primary Class 1 contributionshave been paid or treated as paid. They do not apply to earnings factorsfor earlier years.
The report of the Occupational Pensions Board on the draft of theseRegulations which was referred to them, together with a statement by theSecretary of State on that Report, is contained in Command Paper No.1537, published by Her Majesty’s Stationery Office.
1975 c. 14, section 13(5) was amended by the SocialSecurity Act 1979 (c. 18), Schedule 3, paragraph 5, the Social SecurityAct 1986 (c. 50), Schedule 8, paragraph 2, the Social Security Act 1988(c.7), Schedule 2, paragraph 1(1)(a) and (3), and see paragraph 1(1)(b).Schedule 20 is cited because of the meaning ascribed to the word section168(1) applies, by virtue of section 66(2) of the Social SecurityPensions Act 1975 (c. 60), to the exercise of certain powers conferred bythat Act.
1975 c. 60; section 6(5A) was inserted by the SocialSecurity Act 1985 (c. 53), Schedule 5, paragraph 16(b), and section 35(3)was substituted by the Social Security Act 1986, section 9(1).
1986 c. 50; section 84(1) is cited because of themeaning ascribed to the word
See section 61(1)(b) of the Social Security Act 1986.
See section 61(2) of the Social Security Pensions Act1975.
S.I. 1988/429.
Section 13(2) was amended by the Social Security Act1986 (c. 50), Schedule 8, paragraph 2 and Schedule 10, paragraph 72(a),and subsection (2)(c) was inserted by the Social Security Pensions Act1975 (c. 60), Schedule 4, paragraph 38(a) and amended by the SocialSecurity Act 1986, section 18(1).
1975 c. 60; in section 35, subsection (1) was modifiedby S.I. 1987/1099, Schedule 3A, paragraph 2 and by S.I. 1987/1118,regulation 4(4); subsection (2) was amended by the Social Security Act1986, Schedule 8, paragraph 8; subsection (3) was substituted by theSocial Security Act 1986, section 9(1); subsection (4) was amended bythe Social Security Act 1979 (c. 18), Schedule 3, paragraph 13;subsection (5) was modified by the Social Security (MiscellaneousProvisions) Act 1977 (c. 5), section 21, by S.I. 1984/380, regulation44(a) and by S.I. 1987/1118, regulation 4(5), and was amended by theSocial Security Act 1979, Schedule 3, paragraph 18(a) and by the SocialSecurity Act 1988 (c. 7), Schedule 2, paragraph 1(2) and (3); subsection(6) was amended by the Social Security (Miscellaneous Provisions) Act1977, section 3(2); subsections (6A) and (6B) were inserted by theSocial Security Act 1986, section 9(2); subsection (7) was amended bythe Social Security Act 1979, Schedule 3, paragraph 18(b) and by theSocial Security Act 1985 (c. 53), Schedule 3, paragraphs 2 and 7, and wasmodified by S.I. 1984/380, regulation 44(b) and S.I. 1987/1118,regulation 4(6); subsection (8) was amended by the Social Security Act1985, Schedule 3, Part II, paragraph 8, and was modified by S.I.1987/1099, Schedule 3A, paragraph 3 and S.I. 1987/1118, regulation 4(7);subsection (8A) was inserted by the Social Security Act 1985, Schedule3, Part II, paragraph 8.