C1C2C3SCHEDULE 1FURTHER PROVISIONS REPLACING SECTION 36(4) OF THE NATIONAL INSURANCE ACT 1965: INCREASES OF GRADUATED RETIREMENT BENEFIT AND LUMP SUMS
Sch. 1 modified (with effect in accordance with art. 1(3)(a), 6 of the amending S.I.) by The Social Security Benefits Up-rating Order 2009 (S.I. 2009/497), arts. 1(2)(d), 12(3)
Sch. 1 sums confirmed (12.4.2010) by The Social Security Benefits Up-rating Order 2010 (S.I. 2010/793), arts. 1(2)(d), 12(3)
PART 1INCREASE AND LUMP SUM WHERE ENTITLEMENT TO RETIREMENT PENSION IS DEFERRED
Scope1
This Part applies only in respect of a person who is deferring entitlement to graduated retirement benefit by virtue of section 36(4A)(a) of the 1965 Act M1.
Increase or lump sum where pensioner's entitlement is deferred2
1
Where a person's entitlement to a Category A or Category B retirement pension is deferred and that person electsF29...—
a
that paragraph 1 of Schedule 5 (increase of pension) is to apply in relation to the period of deferment, paragraph 3 of this Schedule shall also apply in relation to that period;
b
that paragraph 3A of Schedule 5 (lump sum) is to apply in relation to the period of deferment, paragraph 5 of this Schedule shall also apply in relation to that period.
2
The reference to an election in sub-paragraph (1) includes an election a person is treated as having made under paragraph A1(2) of Schedule 5.
Increase where pensioner's entitlement is deferred3
1
This paragraph applies where—
a
entitlement to a Category A or Category B retirement pension is deferred and the period of deferment is less than 12 months; or
b
paragraph 2(1)(a) applies.
2
The rate of the person's graduated retirement benefit shall be increased by an amount equal to the aggregate of the increments to which he is entitled under paragraph 4 but only if that amount is enough to increase the rate of the benefit by at least 1 per cent.
Calculation of increment4
1
A person is entitled to an increment under this paragraph for each complete incremental period in his period of deferment.
2
The amount of the increment for an incremental period shall be ⅕th per cent. of the weekly rate of the graduated retirement benefit to which the person would have been entitled for the period if his entitlement to a Category A or Category B retirement pension had not been deferred.
3
For the purposes of sub-paragraph (2), the weekly rate of graduated retirement benefit shall be taken to include any increase in the weekly rate of that benefit and the amount of the increment in respect of such an increase shall be ⅕th per cent. of its weekly rate for each incremental period in the period of deferment beginning on the day the increase occurred.
4
Amounts under sub-paragraphs (2) and (3) shall be rounded to the nearest penny, taking any ½p as nearest to the next whole penny.
5
Where an amount under sub-paragraph (2) or (3) would, apart from this sub-paragraph, be a sum less than ½p, the amount shall be taken to be zero, notwithstanding any provision of the Benefits Act, the Administration Act or the Pension Schemes Act 1993 M2.
6
In this paragraph, “incremental period” means any period of six days which are treated by the Social Security (Widow's Benefit and Retirement Pensions) Regulations 1979 M3 as days of increment for the purposes of paragraph 2 of Schedule 5 in relation to the person and pension in question.
7
Where one or more orders have come into force under section 150 of the Administration Act during the period of deferment, the rate for any incremental period shall be determined as if the order or orders had come into force before the beginning of the period of deferment.
Lump sum where pensioner's entitlement is deferred5
1
This paragraph applies where paragraph 2(1)(b) applies.
2
The person is entitled to an amount calculated in accordance with paragraph 6 (a “lump sum”).
Calculation of lump sum6
1
The lump sum is the accrued amount for the last accrual period beginning during the period of deferment.
2
In this paragraph—
“accrued amount” means the amount calculated in accordance with sub-paragraph (3);
“accrual period” means any period of seven days beginning with the day of the week on which Category A or Category B retirement pension would have been payable to a person in accordance with regulation 22(3) of, and paragraph 5 of Schedule 6 to, the Social Security (Claims and Payments) Regulations 1987 M4, if his entitlement to a retirement pension had not been deferred, where that day falls within the period of deferment.
3
The accrued amount for an accrual period for a person is—
4
For the purposes of sub-paragraph (3), any change in the Bank of England base rate is to be treated as taking effect—
a
at the beginning of the accrual period immediately following the accrual period during which the change took effect; or
b
if regulations under paragraph 3B(4) of Schedule 5 so provide, at such other time as may be prescribed in those Regulations.
5
Regulation 3 of the Social Security (Deferral of Retirement Pensions) Regulations 2005 M5 shall have effect for the purposes of this paragraph in like manner to graduated retirement benefit as it does to retirement pension in the calculation of the lump sum under paragraph 3B of Schedule 5.
Increase or lump sum where pensioner's deceased spouse F1or civil partner has deferred entitlement7
1
This paragraph applies where—
a
a F2widow, widower or surviving civil partner (“W”) is entitled to a Category A or Category B retirement pension;
b
c
S's entitlement to a Category A or Category B retirement pension was deferred when S died; and
d
S's entitlement had been deferred throughout the period of 12 months ending with the day before S's death.
2
Where W elects—
a
that paragraph 4 of Schedule 5 (increase of pension) is to apply in relation to the period of deferment, paragraph 8 of this Schedule shall also apply in relation to that period;
b
that paragraph 7A of Schedule 5 (lump sum) is to apply in relation to the period of deferment, paragraph 9 of this Schedule shall also apply in relation to that period.
3
The reference to an election in sub-paragraph (2) includes an election W is treated as having made under paragraph 3C(3) of Schedule 5.
Increase where pensioner's deceased spouse F5or civil partner has deferred entitlement8
1
This paragraph applies where a F6widow, widower or surviving civil partner is entitled to a Category A or Category B retirement pension, was married to F7or in a civil partnership with the other party to the marriage F8or civil partnership when S died and one of the following conditions is met—
a
S was entitled to graduated retirement benefit with an increase under this Schedule;
b
paragraph 7(2)(a) applies; or
c
paragraph 7 would apply to W but for the fact that the condition in sub-paragraph (1)(d) of that paragraph is not met.
2
The increase in the weekly rate of W's graduated retirement benefit shall, in a case to which sub-paragraph (1) applies, be determined in accordance with section 37 of the 1965 Act M6 as continued in force by virtue of regulations made under Schedule 3 to the Social Security (Consequential Provisions) Act 1975 M7 or under Schedule 3 to the Social Security (Consequential Provisions) Act 1992 M8.
Entitlement to lump sum where pensioner's deceased spouse F9or civil partner has deferred entitlement9
1
This paragraph applies where paragraph 7(2)(b) applies.
2
W is entitled to an amount calculated in accordance with paragraph 10 (a “widowed person's F10or surviving civil partner's lump sum“).
Calculation of widowed person's F11or surviving civil partner's lump sum10
1
The widowed person's F12or surviving civil partner's lump sum is the accrued amount for the last accrual period beginning during the period which—
a
began at the beginning of S's period of deferment; and
b
ended on the day before S's death.
2
In this paragraph—
“S” means the other party to the marriage F13or civil partnership;
“accrued amount” means the amount calculated in accordance with sub-paragraph (3);
“accrual period” means any period of seven days beginning with the day of the week on which Category A or Category B retirement pension would have been payable to S in accordance with regulation 22(3) of, and paragraph 5 of Schedule 6 to, the Social Security (Claims and Payments) Regulations 1987 M9, if his entitlement to a retirement pension had not been deferred, where that day falls within S's period of deferment.
3
The accrued amount for an accrual period for W is—
4
For the purposes of sub-paragraph (3), any change in the Bank of England base rate is to be treated as taking effect—
a
at the beginning of the accrual period immediately following the accrual period during which the change took effect; or
b
if regulations under paragraph 7B(4) of Schedule 5 so provide, at such other time as may be prescribed.
5
Regulation 3 of the Social Security (Deferral of Retirement Pensions) Regulations 2005 M10 shall have effect for the purposes of this paragraph in like manner to graduated retirement benefit as it does to retirement pension in the calculation of the lump sum under paragraph 7B of Schedule 5.
6
In any case where—
a
there is a period between the death of S and the date on which W becomes entitled to a Category A or Category B retirement pension; and
b
one or more orders have come into force under section 150 of the Administration Act during that period,
the amount of the lump sum shall be increased in accordance with that order or those orders.
PART 2INCREASE OR LUMP SUM WHERE PERSON IS TREATED AS RECEIVING RETIREMENT PENSION AT A NOMINAL WEEKLY RATE
Scope11
This Part applies only in respect of a person who is deferring entitlement to graduated retirement benefit by virtue of section 36(4A)(b) of the 1965 Act M11.
Choice between increase and lump sum12
1
Where the period of deferment is at least 12 months, a person shall, on becoming entitled to graduated retirement benefit, elect that—
a
paragraph 13; or
b
paragraph 15,
is to apply in respect of that period.
F302
The election referred to in sub-paragraph (1) shall be made—
a
on the date on which he claims graduated retirement benefit; or
b
within the period after claiming graduated retirement benefit prescribed in paragraph 20B,
and in the manner prescribed in paragraph 20C.
3
If no election under sub-paragraph (1) is made within the period referred to in sub-paragraph (2)(b), the person is to be treated as having made an election under sub-paragraph (1)(b).
4
A person who has made an election under sub-paragraph (1) (including one that the person is treated by sub-paragraph (3) as having made) may change the election in the circumstancesF31, manner and within the period prescribed, in paragraph 20D .
Increase13
1
This paragraph applies where—
a
the period of deferment is less than 12 months; or
b
the person has made an election under paragraph 12(1)(a) in respect of the period of deferment.
2
The rate of the person's graduated retirement benefit shall be increased by an amount equal to the aggregate of the increments to which he is entitled under paragraph 14 but only if that amount is enough to increase the rate of the benefit by at least one per cent.
Calculation of increment14
1
A person is entitled to an increment under this paragraph for each complete incremental period in the period of deferment.
2
The amount of the increment for an incremental period shall be ⅕th per cent. of the weekly rate of the graduated retirement benefit to which the person would have been entitled for the period if his entitlement to graduated retirement benefit had not been deferred.
3
For the purposes of sub-paragraph (2), the weekly rate of graduated retirement benefit shall be taken to include any increase in the weekly rate of that benefit and the amount of the increment in respect of such an increase shall be ⅕th per cent. of its weekly rate for each incremental period in the period of deferment beginning on the day the increase occurred.
4
Amounts under sub-paragraphs (2) and (3) shall be rounded to the nearest penny, taking any ½p as nearest to the next whole penny.
5
Where an amount under sub-paragraph (2) or (3) would, apart from this sub-paragraph, be a sum less than ½p, the amount shall be taken to be zero, notwithstanding any provision of the Benefits Act, the Administration Act or the Pension Schemes Act 1993 M12.
6
Where one or more orders have come into force under section 150 of the Administration Act during the period of deferment, the rate for any incremental period shall be determined as if the order or orders had come into force before the beginning of the period of deferment.
Lump sum15
1
This paragraph applies where paragraph 12(1)(b) applies.
2
The person is entitled to an amount calculated in accordance with paragraph 16 (a “lump sum”).
Calculation of lump sum16
1
The lump sum is the accrued amount for the last accrual period beginning during the period of deferment.
2
In this paragraph—
“accrued amount” means the amount calculated in accordance with sub-paragraph (3);
“accrual period” means any period of seven days beginning with the day of the week on which Category A or Category B retirement pension would have been payable to a person in accordance with regulation 22(3) of, and paragraph 5 of Schedule 6 to, the Social Security (Claims and Payments) Regulations 1987 M13, if he had been entitled to it, where that day falls within the period of deferment.
3
The accrued amount for an accrual period for a person is—
4
For the purposes of sub-paragraph (3), any change in the Bank of England base rate is to be treated as taking effect—
a
at the beginning of the accrual period immediately following the accrual period during which the change took effect; or
b
if regulations under paragraph 3B(4) of Schedule 5 so provide, at such other time as may be prescribed in those Regulations.
5
Regulation 3 of the Social Security (Deferral of Retirement Pensions) Regulations 2005 M14 shall have effect for the purposes of this paragraph in like manner to graduated retirement benefit as it does to retirement pension in the calculation of the lump sum under paragraph 3B of Schedule 5.
Choice between increase and lump sum where person's deceased spouse F14or civil partner has deferred entitlement to graduated retirement benefit17
1
This paragraph applies where—
a
a F15widow, widower or surviving civil partner (“W”) is entitled to a Category A or Category B retirement pension;
b
c
S's entitlement to graduated retirement benefit was deferred when S died; and
d
S's entitlement had been deferred throughout the period of 12 months ending with the day before S's death.
2
W shall elect either that—
a
paragraph 18; or
b
paragraph 19,
is to apply in respect of S's period of deferment.
F323
The election referred to in sub-paragraph (2) shall be made within the period prescribed in paragraph 20B and in the manner prescribed in paragraph 20C.
4
If no election under sub-paragraph (2) is made within the period referred to in sub-paragraph F33(3), the person is to be treated as having made an election under sub-paragraph (2)(b).
F345
A person who has made an election under sub-paragraph (2) (including one that the person is treated by sub-paragraph (4) as having made) may change the election in the circumstances, manner and within the period prescribed in paragraph 20D.
Increase where person's deceased spouse F18or civil partner has deferred entitlement to graduated retirement benefit18
1
This paragraph applies where a F19widow, widower or surviving civil partner is entitled to graduated retirement benefit, was married to F20or in a civil partnership with the other party to the marriage F21or civil partnership when S died and one of the following conditions is met—
a
S was entitled to graduated retirement benefit with an increase under this Schedule;
b
W is a widow or widower to whom paragraph 17 applies and has made an election under paragraph 17(2)(a); or
c
paragraph 17 would apply to W but for the fact that the condition in sub-paragraph (1)(d) of that paragraph is not met.
2
The increase in the weekly rate of W's graduated retirement benefit shall, in a case to which sub-paragraph (1) applies, be determined in accordance with section 37 of the 1965 Act as continued in force by virtue of regulations made under Schedule 3 to the Social Security (Consequential Provisions) Act 1975 M15 or under Schedule 3 to the Social Security (Consequential Provisions) Act 1992 M16.
Entitlement to lump sum where person's deceased spouse F22or civil partner has deferred entitlement to graduated retirement benefit19
1
This paragraph applies where paragraph 17(2)(b) applies.
2
W is entitled to an amount calculated in accordance with paragraph 20 (a “widowed person's F23or surviving civil partner's lump sum“).
Calculation of widowed person's F24or surviving civil partner's lump sum20
1
The widowed person's F25or surviving civil partner's lump sum is the accrued amount for last accrual period beginning during the period which—
a
began at the beginning of S's period of deferment; and
b
ended on the day before S's death.
2
In this paragraph—
“S” means the other party to the marriage F26or civil partnership;
“accrued amount” means the amount calculated in accordance with sub-paragraph (3);
“accrual period” means any period of seven days beginning with the day of the week on which Category A or Category B retirement pension would have been payable to S in accordance with regulation 22(3) of, and paragraph 5 of Schedule 6 to, the Social Security (Claims and Payments) Regulations 1987, if he had been entitled to it, where that day falls within S's period of deferment.
3
The accrued amount for an accrual period for W is—
4
For the purposes of sub-paragraph (3), any change in the Bank of England base rate is to be treated as taking effect—
a
at the beginning of the accrual period immediately following the accrual period during which the change took effect; or
b
if regulations under paragraph 7B(4) of Schedule 5 so provide, at such other time as may be prescribed.
5
Regulation 3 of the Social Security (Deferral of Retirement Pensions) Regulations 2005 M17 shall have effect for the purposes of this paragraph in like manner to graduated retirement benefit as it does to retirement pension in the calculation of the lump sum under paragraph 7B of Schedule 5.
6
In any case where—
a
there is a period between the death of S and the date on which W becomes entitled to graduated retirement benefit; and
b
one or more orders have come into force under section 150 of the Administration Act during that period,
the amount of the lump sum shall be increased in accordance with that order or those orders.
F28PART 2AELECTIONS UNDER PART 2
Scope and interpretation20A
1
This Part applies in respect of elections which a person makes or is treated as having made under Part 2.
2
In this Part, “elector” means the person who may make an election under paragraph 12(1) or 17(2).
Timing of election20B
1
The period for making an election under paragraph 12(1) is, subject to sub-paragraph (4), three months starting on the date shown on the notice issued by the Secretary of State following the claim for graduated retirement benefit, confirming that the elector is required to make that election.
2
The period for making an election under paragraph 17(2) is, subject to sub-paragraph (4), three months starting on the date shown on the notice issued by the Secretary of State following W's claim for a Category A or Category B retirement pension or, if later, the date of S's death, confirming that the elector is required to make that election.
3
Where more than one notice has been issued by the Secretary of State in accordance with sub-paragraph (1) or (2), the periods prescribed in those sub-paragraphs shall only commence from the date shown on the latest such notice.
4
The periods specified in sub-paragraphs (1) and (2) may be extended by the Secretary of State if he considers it reasonable to do so in any particular case.
5
Nothing in this paragraph shall prevent the making of an election on or after claiming graduated retirement benefit or, as the case may be, Category A or Category B retirement pension, but before the issue of the notice referred to in sub-paragraph (1) or (2).
Manner of making election20C
An election under paragraph 12(1) or 17(2) may be made—
a
in writing to an office specified by the Secretary of State for accepting such elections; or
b
except where the Secretary of State directs in any particular case that the election must be made in accordance with sub-paragraph (a), by telephone call to the telephone number specified by the Secretary of State.
Change of election20D
1
Subject to sub-paragraphs (2) and (6), this paragraph applies in the case of an election which—
a
has been made under paragraph 12(1) or 17(2); or
b
has been treated as made under paragraph 12(3) or 17(4).
2
This paragraph does not apply in the case of an election which is—
a
made, or treated as made, by an elector who has subsequently died; or
b
treated as having been made by virtue of F35regulation 30(5E) or (5G) of the Social Security (Claims and Payments) Regulations 1987.
3
An election specified in sub-paragraph (1) may be changed by way of application made no later than the last day of the period specified in sub-paragraph (4).
4
The period specified for the purposes of sub-paragraph (3) is, subject to sub-paragraph (5), three months after the date shown on the written notification issued by the Secretary of State to the elector, confirming the election which the elector has made or is treated as having made.
5
The period specified in sub-paragraph (4) may be extended by the Secretary of State if he considers it reasonable to do so in any particular case.
6
An election specified in sub-paragraph (1) may not be changed where—
a
there has been a previous change of election under this paragraph in respect of the same period of deferment;
b
the application is to change the election to one under paragraph 12(1)(a) or 17(2)(a) and any amount paid to him by way of, or on account of, a lump sum pursuant to paragraph 15 or 19, has not been repaid in full to the Secretary of State within the period specified in sub-paragraph (4) or, as the case may be, (5); or
c
the application is to change the election to one under paragraph 12(1)(b) or 17(2)(b) and the amount actually paid by way of an increase of graduated retirement benefit, or actually paid on account of such an increase, would exceed the amount to which the elector would be entitled by way of a lump sum.
7
For the purposes of sub-paragraph (6)(b), repayment in full of the amount paid by way of, or on account of, a lump sum shall only be treated as having occurred if repaid to the Secretary of State in the currency in which that amount was originally paid.
8
Where the application is to change the election to one under paragraph 12(1)(b) or 17(2)(b) and sub-paragraph (6)(c) does not apply, any amount paid by way of an increase of graduated retirement benefit, or on account of such an increase, in respect of the period of deferment for which the election was originally made, shall be treated as having been paid on account of the lump sum to which the elector is entitled under paragraph 15 or 19.
9
An application under sub-paragraph (3) to change an election may be made—
a
in writing to an office specified by the Secretary of State for accepting such applications; or
b
except where the Secretary of State directs in any particular case that the application must be made in accordance with paragraph (a), by telephone call to the telephone number specified by the Secretary of State.
F27Transitional provision relating to widower’s entitlement to increase of graduated retirement benefit or lump sum20ZA
In the case of a widower who attains pensionable age before 6th April 2010, paragraphs 17 to 19 shall not apply unless he was over pensionable age when his wife died.
Transitional provision relating to civil partner’s entitlement to increase of graduated retirement benefit or lump sum20ZB
In the case of a civil partner who attains pensionable age before 6th April 2010, paragraphs 17 to 19 shall not apply unless he or she was over pensionable age when his or her civil partner died.
PART 3SUPPLEMENTARY
Supplementary21
Any lump sum calculated under paragraph 6, 10, 16 or 20 must be rounded to the nearest penny, taking any ½p as nearest to the next whole penny above.
Sch. 1 modified (7.4.2008) by The Social Security Benefits Up-rating Order 2008 (S.I. 2008/632), arts. 1(2)(d), 12(3)