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STATUTORY INSTRUMENTS
1998 No. 503
PENSIONS
The Pensions Increase (Review) Order 1998
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Made |
3rd March 1998 |
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Laid before Parliament |
3rd March 1998 |
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Coming into force |
6th April 1998 |
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Whereas by virtue of section 151(1) of the Social Security Administration
Act 1992[1] a direction has been
given[2] under section 150(2) and
section 190(1)(a) of that Act by the Secretary of State for Social
Security that the sums mentioned in section 150(1)(c) of that Act are to
be increased;
Now therefore the Treasury, in exercise of the
powers conferred by section 59(1), (2), (5) and (5ZA) of the Social
Security Pensions Act 1975[3] and
now vested in them[4], and all other
powers enabling them in that behalf, hereby make the following Order:
Citation and commencement
1. This Order may be cited as
the Pensions Increase (Review) Order 1998 and shall come into force on 6th
April 1998.
Interpretation
2. - (1) In
this Order -
"the 1971 Act" means the Pensions (Increase) Act 1971[5];
"the 1974 Act" means the Pensions (Increase) Act 1974[6];
"the 1975 Act" means the Social Security Pensions Act 1975;
"basic rate" and "derivative pension" have the
meanings given by section 17(1) of the 1971 Act[7];
"the existing Orders" means the Pensions Increase (Annual
Review) Order 1972[8], the
Pensions Increase (Annual Review) Order 1973[9],
the Pensions Increase (Annual Review) Order 1974[10],
the Pensions Increase (Annual Review) Order 1975[11],
the Pensions Increase (Annual Review) Order 1976[12],
the Pensions Increase (Annual Review) Order 1977[13],
the Pensions Increase (Annual Review) Order 1978[14],
the Pensions Increase (Review) Order 1979[15],
the Pensions Increase (Review) Order 1980[16],
the Pensions Increase (Review) Order 1981[17],
the Pensions Increase (Review) Order 1982[18],
the Pensions Increase (Review) Order 1983[19],
the Pensions Increase (Review) Order 1984[20],
the Pensions Increase (Review) Order 1985[21],
the Pensions Increase (Review) Order 1986[22],
the Pensions Increase (Review) Order 1987[23],
the Pensions Increase (Review) Order 1988[24],
the Pensions Increase (Review) Order 1989[25],
the Pensions Increase (Review) Order 1990[26],
the Pensions Increase (Review) Order 1991[27],
the Pensions Increase (Review) Order 1992[28],
the Pensions Increase (Review) Order 1993[29],
the Pensions Increase (Review) Order 1994[30],
the Pensions Increase (Review) Order 1995[31],
the Pensions Increase (Review) Order 1996[32]
and the Pensions Increase (Review) Order 1997[33].
"official pension" has the meaning given by section 5(1) of
the 1971 Act;
"pension authority" has the meaning given by section 7(1) of
the 1971 Act;
"qualifying condition" means one of the conditions laid down
in section 3 of the 1971 Act[34];
"relevant injury pension", "substituted pension" and
"widow's pension" have the meanings given by section 17(1) of
the 1971 Act.
(2) For the purposes of this Order the time
when a pension "begins" is that stated in section 8(2) of the
1971 Act[35], and the
"beginning date" shall be construed accordingly.
(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. The annual rate of an
official pension may, if a qualifying condition is satisfied or the
pension is a derivative or substituted pension or a relevant injury
pension, be increased by the pension authority in respect of any period on
or after 6th April 1998 as follows -
(1) a pension beginning before 7th April 1997 may
be increased by 3.6 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;
(2) a pension beginning on or after 7th April 1997
and before 6th April 1998 may be increased by 3.6 per cent multiplied by
A/B where
(a) A is the number of complete months in the period between the
beginning date of the pension and 6th April 1998, and
(b) B is 12.
Increases in certain lump sums
4. In respect of any lump
sum or instalment of a lump sum which became payable before 6th April 1998
but on or after 7th April 1997 there may be paid an increase of 3.6 per
cent of the amount of the lump sum or instalment (as increased by the
amount under section 1 of the 1971 Act or under the existing Orders)
multiplied by A/B where
(a) A is the number of complete months in the period between the
beginning date for the lump sum or, if later, 7th April 1997 and the
date on which it became payable; and
(b) B is 12.
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 6th April 1998;
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,
be reduced by an amount equal to the rate of the guaranteed minimum
pension unless the Treasury[36]
otherwise direct, in accordance with the provisions of section 59A of the
1975 Act.
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.
Graham Allen
Jim Dowd
Two of the Lords Commissioners of Her Majesty's Treasury
3rd March 1998
EXPLANATORY NOTE
(This note is not part of the Order)
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.
The increase is the percentage (or in some circumstances a fraction of the
percentage) by which the Secretary of State for Social Security 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 7th April 1997 the increase is 3.6 per
cent. For pensions which began on or after 7th April 1997 the increases
are as follows -
| Pensions Beginning |
Percentage Increase |
| 7th April 1997 to 21st April 1997 |
3.6% |
| 22nd April 1997 to 21st May 1997 |
3.3% |
| 22nd May 1997 to 21st June 1997 |
3.0% |
| 22nd June 1997 to 21st July 1997 |
2.7% |
| 22nd July 1997 to 21st August 1997 |
2.4% |
| 22nd August 1997 to 21st September 1997 |
2.1% |
| 22nd September 1997 to 21st October 1997 |
1.8% |
| 22nd October 1997 to 21st November 1997 |
1.5% |
| 22nd November 1997 to 21st December 1997 |
1.2% |
| 22nd December 1997 to 21st January 1998 |
0.9% |
| 22nd January 1998 to 21st February 1998 |
0.6% |
| 22nd February 1998 to 21st March 1998 |
0.3% |
Deferred lump sums beginning on or before 21st March 1998 and which become
payable after 6th April 1998 receive the same percentage increase as
pensions which began on the same date. Article 4 of the Order provides for
increases on certain deferred lump sums which became payable on or after
7th April 1997 and before 6th April 1998.
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 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. This applies section 59(5) to a widow's or widower's
pension.
Notes:
[1] 1992 c.5.back
[2] The direction is contained in S.I. 1998/470.back
[3] 1975 c.60; section 59(1) was amended by section
1(7) of the Pensions (Miscellaneous Provisions) Act 1990 (c.7) and by the
Social Security (Consequential Provisions) Act 1992 (c.6) Schedule 2,
paragraph 34. Section 59(5) was amended by section 11 of the Social
Security Act 1979 (c.18) and the Social Security Act 1985 (c.53), Schedule
5, paragraph 33. Section 59 was also amended by the Social Security Act
1979, sections 11 and 21(4) and Schedule 3, paragraph 20, section 9(8) of
the Social Security Act 1986 and section 5 of the Pensions (Miscellaneous
Provisions) Act 1990, which inserted sub-section (5ZA). Section 59 is
modified by section 59A, which was inserted by section 11(4) of the Social
Security Act 1979 and amended by section 9(9) of the Social Security Act
1986, and further amended by Section 190, Schedule 8, paragraph 9(2) of
the Pension Schemes Act 1993.back
[4] S.I. 1981/1670.back
[5] 1971 c.56.back
[6] 1974 c.9.back
[7] Section 17(1) was amended by sections 1(3) and 3(3)
of the 1974 Act and by sections 1(6) and 7(3) of the Pensions
(Miscellaneous Provisions) Act 1990, and Section 190, Schedule 8,
paragraph 5 of the Pension Schemes Act 1993.back
[8] S.I. 1972/1298.back
[9] S.I. 1973/1370.back
[10] S.I. 1974/1373.back
[11] S.I. 1975/1384.back
[12] S.I. 1976/1356.back
[13] S.I. 1977/1387.back
[14] S.I. 1978/1211.back
[15] S.I. 1979/1047.back
[16] S.I. 1980/1302.back
[17] S.I. 1981/1217.back
[18] S.I. 1982/1178.back
[19] S.I. 1983/1264.back
[20] S.I. 1984/1307.back
[21] S.I. 1985/1575.back
[22] S.I. 1986/1116.back
[23] S.I. 1987/130.back
[24] S.I. 1988/217.back
[25] S.I. 1989/477.back
[26] S.I. 1990/483.back
[27] S.I. 1991/684.back
[28] S.I. 1992/198.back
[29] S.I. 1993/779.back
[30] S.I. 1994/776.back
[31] S.I. 1995/708.back
[32] S.I. 1996/800.back
[33] S.I. 1997/634.back
[34] Section 3 was amended by section 3(3) of the 1974
Act, section 1 of the Pensions (Miscellaneous Provisions) Act 1990, by the
Pensions Increase (Reduction of Qualifying Age) Order 1972 (S.I.
1972/1299) and by section 171 of the Pensions Act 1995 (c.26).back
[35] Section 8(2) was amended by section 1(5) of the
Pensions (Miscellaneous Provisions) Act 1990.back
[36] See S.I. 1981/1670, articles 2(1)(c) and
3(5).back
ISBN 0 11 065644 X
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