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4.—(1) The percentage rate of employers’ contributions is determined in accordance with this paragraph.
(2) The percentage rate for the initial contribution period is 14.1%.
(3) The percentage rate for subsequent contribution periods shall be determined in accordance with sub-paragraphs (4) to (8).
(4) For the purposes of this regulation the element appropriate for cost sharing in relation to any contribution period is that part of the difference between the net contribution rate for that period and the net contribution rate for the previous period determined by the Secretary of State in relation to each contribution period, and in making such a determination the Secretary of State shall secure that—
(a)changes in demographic assumptions and differences between assumptions made in the previous actuarial review under regulation 128 about the values of any items and the actual values of those items are included in the element appropriate for cost sharing, and
(b)any reduction in the net contribution rate arising from the fact that the normal pension age for —
(i)a 2007 or later entrant, or
(ii)a person with mixed service, (except in circumstances described in regulation 48 (3)(a) to (c))
is 65, is not included in the element appropriate for cost sharing.
(5) In relation to any contribution period the Secretary of State shall also calculate separately the part of the difference between the net contribution rate for that period and the net contribution rate for the previous period which is not appropriate for cost sharing (“the unshared element”) and the Secretary of State shall then—
(a)determine the part of the unshared element which is appropriate for the employer contribution cap, and
(b)calculate separately the part of the unshared element which is not appropriate for the employer contribution cap.
(6) In sub-paragraphs (7) and (8)—
X is the element appropriate for cost sharing determined pursuant to sub-paragraph (4),
Y is the part of the unshared element which is appropriate for the employer contribution cap, determined pursuant to sub-paragraph (5)(a), and
Z is the part of the unshared element which is not appropriate for the employer contribution cap, calculated in accordance with sub-paragraph (5)(b),
and X, Y and Z may be positive or negative depending on whether there is an increase or a decrease.
(7) In the formula in sub-paragraph (8) A is the lesser of B and C+Y+1/2X where—
(a)B is—
(i)for the contribution period immediately after the initial contribution period, 14, and
(ii)for each subsequent contribution period, the value which B had for the previous contribution period together with the value of Z which applied in determining the percentage rate for the previous contribution period, and
(b)C is—
(i)for the contribution period immediately after the initial contribution period, 14.1,
(ii)for the next contribution period, the amount which would have been the percentage rate for the previous contribution period if it had been calculated as 14.1+Y+1/2X+Z, and
(iii)for each subsequent contribution period, the amount which would have been the percentage rate for the previous contribution period if it had been calculated as D+Y+1/2X+Z, where D is the amount which would have been the percentage rate for the contribution period before the previous contribution period calculated in accordance with this sub-paragraph..
(8) The percentage rate for each contribution period is A+Z.
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