The Pensions Increase (Review) Order 2013
Citation and commencement
1.
This Order may be cited as the Pensions Increase (Review) Order 2013 and comes into force on 8th April 2013.
Interpretation
2.
(1)
In this Order—
“the 1975 Act” means the Social Security Pensions Act 1975;
“the existing Orders” means the Orders listed in the Schedule;
“pension authority” has the meaning given by section 7(1) of the 1971 Act;
(2)
(3)
Where, for the purposes of this Order, it is necessary to calculate the number of complete months in any period an incomplete month shall be treated as a complete month if it consists of at least 16 days.
Pension increases
3.
(1)
The pension authority may, if any of the conditions in paragraph (2) are fulfilled, increase the annual rate of an official pension in respect of any period on or after 8th April 2013 as follows—
(a)
a pension beginning before 9th April 2012 may be increased by 2.2 per cent of the basic rate (as increased by the amount of any increase under section 1 of the 1971 Act or the existing Orders);
(b)
a pension beginning on or after 9th April 2012 and before 8th April 2013 may be increased by 2.2 per cent multiplied by
where
A is the number of complete months in the period between the beginning date of the pension and 8th April 2013.
(2)
Those conditions are—
(a)
a qualifying condition is satisfied;
(b)
the official pension is—
(i)
a derivative pension;
(ii)
a substituted pension; or
(iii)
a relevant injury pension.
Increases in certain lump sums
4.
(1)
This article applies to any lump sum or instalment of a lump sum which became payable on or after 9th April 2012 but before 8th April 2013.
(2)
The pension authority may increase a lump sum or instalment of a lump sum to which this article applies by 2.2 per cent of the amount of the lump sum or instalment (as increased by the amount of any increase under section 1 of the 1971 Act or the existing Orders) multiplied by
where
A is the number of complete months in the period between the beginning date for the lump sum or, if later, 9th April 2012 and the date on which it became payable.
Reductions in respect of guaranteed minimum pensions
5.
The amount by reference to which any increase in the rate of an official pension provided for by this Order is to be calculated shall, in the case of a person—
(a)
who is entitled to a guaranteed minimum pension on 8th April 2013; and
(b)
whose entitlement to that guaranteed minimum pension arises from an employment from which (either directly or by virtue of the payment of a transfer credit) entitlement to the official pension also arises,
6.
The amount by reference to which any increase in the rate of a widow’s or widower’s pension provided for by this Order is to be calculated shall, where the pensioner becomes entitled on the death of the deceased spouse to a guaranteed minimum pension, be reduced in accordance with section 59(5ZA) of the 1975 Act.
SCHEDULEExisting Orders
Under section 59 of the Social Security Pensions Act 1975 as amended, and as modified by section 59A of that Act, the Treasury (in whom the functions conferred by those provisions are now vested) are required to provide by order for the increase in the rates of public service pensions. Under section 59(7) of the 1975 Act, section 59 of that Act has effect as if it were contained in the Pensions (Increase) Act 1971. Section 9(2)(c) of the 1971 Act provides that references to the “rate” of pension shall have effect as references also to the amount of a lump sum benefit. The increase is the percentage (or in some circumstances a fraction of the percentage) by which the Secretary of State for Work and Pensions has, by direction given under the provisions of section 151(1) of the Social Security Administration Act 1992, increased the sums referred to in section 150(1)(c) of that Act. These are the sums which are the additional pensions in long term benefits, namely the additional pension entitlements accruing to employees in respect of earnings after 5th April 1978.
For pensions which began before 9th April 2012 the increase is 2.2 per cent. For pensions which began on or after 9th April 2012 the increases are as follows—
Pensions Beginning | Pensions Increase |
|---|---|
9th April 2012 to 23rd April 2012 | 2.20% |
24th April 2012 to 23rd May 2012 | 2.02% |
24th May 2012 to 23rd June 2012 | 1.83% |
24th June 2012 to 23rd July 2012 | 1.65% |
24th July 2012 to 23rd August 2012 | 1.47% |
24th August 2012 to 23rd September 2012 | 1.28% |
24th September 2012 to 23rd October 2012 | 1.10% |
24th October 2012 to 23rd November 2012 | 0.92% |
24th November 2012 to 23rd December 2012 | 0.73% |
24th December 2012 to 23rd January 2013 | 0.55% |
24th January 2013 to 23rd February 2013 | 0.37% |
24th February 2013 to 23rd March 2013 | 0.18% |
Article 4 of the Order provides for increases on certain deferred lump sums which became payable on or after 9th April 2012 and before 8th April 2013.
The Order also makes provision for the amount by reference to which any increase in the rate of an official pension is to be calculated to be reduced by the amount equal to the rate of the guaranteed minimum pension entitlement deriving from the employment which gives rise to the official pension. This is required by section 59(5) of the Social Security Pensions Act 1975. However by virtue of section 59A of that Act and the Transfer of Functions (Minister for the Civil Service and Treasury) Order 1981 (S.I. 1981/1670) the Treasury are empowered to direct that in respect of specified cases or classes of case either no such reduction be made or the reduction shall be less than the rate of the guaranteed minimum pension. Section 59(5ZA) was inserted into section 59 by section 5 of the Pensions (Miscellaneous Provisions) Act 1990 (c.7). This applies section 59(5) to a widow’s or widower’s pension.
An impact assessment has not been produced for this instrument as no impact on the private or voluntary sectors is foreseen.