2018 No. 271

Social Security

The Social Security Revaluation of Earnings Factors Order 2018

Made

Laid before Parliament

Coming into force

In accordance with section 148(2) of the Social Security Administration Act 19921, the Secretary of State for Work and Pensions has reviewed the general level of earnings obtaining in Great Britain.

The Secretary of State has concluded, having regard to earlier orders made under section 1482 of that Act, that earnings factors3 for the relevant tax years have not, during the period taken into account for that review, maintained their value in relation to the general level of earnings.

Accordingly the Secretary of State makes this Order in exercise of the powers conferred by sections 148(3) and (4) and 189(1), (4) and (5) of the Social Security Administration Act 19924.

Citation and commencement1

This Order may be cited as the Social Security Revaluation of Earnings Factors Order 2018 and shall come into force on 6th April 2018.

Revaluation of earnings factors2

The earnings factors for the tax years specified in the Schedule to this Order in so far as they are relevant–

a

to the calculation of–

i

the additional pension in the rate of any long-term benefit; or

ii

any guaranteed minimum pension5; or

b

to any other calculation required under Part 3 of the Pension Schemes Act 19936 (including that Part as modified by or under any other enactment),

are directed to be increased by the percentage of their amount shown opposite those tax years in that Schedule.

Rounding of fractional amounts3

Where any earnings factor relevant to the calculation specified in article 2(a)(i), as increased in accordance with this Order, would not but for this article be expressed as a whole number of pounds, it shall be so expressed by rounding down any fraction of a pound less than one half and rounding up any other fraction of a pound.

Signed by authority of the Secretary of State for Work and Pensions

Guy OppermanParliamentary Under Secretary of StateDepartment for Work and Pensions

SCHEDULEPercentage increase of earnings factor for specified tax years

Article 2

Tax year

Percentage increase

1978-1979

820.9

1979-1980

712.8

1980-1981

579.1

1981-1982

468.7

1982-1983

416.6

1983-1984

379.6

1984-1985

344.1

1985-1986

316.6

1986-1987

282.6

1987-1988

256.2

1988-1989

227.7

1989-1990

195.7

1990-1991

175.6

1991-1992

150.3

1992-1993

135.1

1993-1994

123.9

1994-1995

117.1

1995-1996

108.0

1996-1997

102.3

1997-1998

92.7

1998-1999

84.2

1999-2000

76.8

2000-2001

66.3

2001-2002

59.9

2002-2003

53.3

2003-2004

48.0

2004-2005

42.6

2005-2006

37.0

2006-2007

32.5

2007-2008

27.2

2008-2009

22.1

2009-2010

18.4

2010-2011

17.0

2011-2012

14.4

2012-2013

12.4

2013-2014

10.4

2014-2015

9.4

2015-2016

7.8

2016-2017

5.7

2017-2018

3.0

EXPLANATORY NOTE

(This note is not part of the Order)

This Order is made following a review under section 148 (revaluation of earnings factors) of the Social Security Administration Act 1992 (c. 5).

This Order applies to earnings factors relevant to the calculation of additional pension in any long term benefit or of any guaranteed minimum pension or to any other calculation required under Part 3 of the Pension Schemes Act 1993 (c. 48) (“the 1993 Act”). Article 2 provides that, for those purposes, earnings factors for the tax years specified in the Schedule to this Order are to be increased by the percentage of their amount specified in that Schedule; the effect is that the earnings factors for those years are revalued at 2017-2018 earnings levels.

Accruals of additional state pension ended with the introduction of new state pension on 6th April 2016. Revaluation of earnings factors is still required for inherited additional state pension in certain circumstances (see sections 48B and 51 of the Social Security Contributions and Benefits Act 1992 (c. 4) (“the Contributions and Benefits Act”)).

The percentages specified in this Order for the tax years from and including 2000-2001 are used in the revaluation of old state scheme pension debits and credits (awarded under section 49(1) of the Welfare Reform and Pensions Act 1999 (c. 30)) in accordance with sections 13 and 14 of, and paragraph 2(6) of each of Schedules 8 and 10 to, the Pensions Act 2014 (c. 19). The percentage specified for 2015-2016 is used to increase flat rate accrual amounts of additional state pension in accordance with paragraphs 4(2), 8(4) and 9(4) of Schedule 4B to the Contributions and Benefits Act.

Accruals of guaranteed minimum pensions ended on 6th April 1997 by virtue of section 14(8) of the 1993 Act. Revaluation of earnings factors is still required for guaranteed minimum pensions which are not yet in payment.

Article 3 of this Order provides for rounding fractional amounts for earnings factors relevant to the calculation of the additional pension in the rate of any long-term benefit. By virtue of section 23(2) of the Contributions and Benefits Act, rounding is not required for the purpose of the calculation of any guaranteed minimum pension.

A full impact assessment has not been produced for this instrument as no new impact on the private, voluntary or public sector is foreseen.