Clause 9 (Hansard, 19 May 1986)

§ Mr. Major
I beg to move amendment No. 40, in page 10, line 31 leave out first 'subsection' and insert 'subsections'.

§ Mr. Deputy Speaker
With this we may take Government amendment No. 41.

§ Mr. Major
This amendment relates to the growth of guaranteed minimum pensions when receipt of the pension is postponed beyond the normal retirement age. The amendment ensures that when those increments are calculated they are based on the value of the guaranteed minimum pension as increased annually by the lesser of 3 per cent. or the increase in prices during the period in which it was postponed, and not on its value at pension age. This corresponds with the arrangements for SERPS increments. It has always been the intention that the increments would be worked out in this way, but the amendment puts the matter beyond doubt. It is a wholly beneficent amendment for pensioners.

§ Mr. Newton
I beg to move amendment No. 42, in page 11, line 36, at end insert '() section 26(2);'.

§ Mr. Deputy Speaker
With this we may take Government amendments Nos. 43 to 45.

§ Mr. Newton
This technical amendment ensures that the definition of a guaranteed minimum pension in section 97 26(2) of the Social Security Pensions Act 1975 is widened to cover widowers as a result of the introduction of widowers' guaranteed minimum pensions by clause 9(3).
Perhaps I might also say a brief word about amendments Nos. 43, 44 and 45. The intention of amendment No. 43 is to make it clear that schemes are not required to increase the rate of guaranteed minimum pension under clause 9(7) for periods before pensionable age or date of widowhood. Arrangements already exist for protecting the value of guaranteed minimum pensions before those times.
As guaranteed minimum pension increases will take place from the beginning of a tax year, but the uprating of state pensions will not take place until the first Monday of a tax year, the guaranteed minimum pension increase will, in some years, be a week earlier than the state scheme uprating. This amendment ensures that where this happens the pensioner's SERPS pension is not reduced on account of the guaranteed minimum pension increase until his SERPS entitlement has been uprated. This will prevent his net SERPS pension temporarily going down.
Amendment No. 45 is a minor technical amendment. It simply widens the scope of the cross reference in subsection (7) of new section 37 so that it refers to the whole section rather than to subsection (3). That sounds rather like the ultimate drafting amendment.

§ Mr. Major
I beg to move amendment No. 46, in page 14, line 5, leave out 'increase the rate of pensions under the scheme' and insert 'make an increase in the rate of pensions currently payable to the members of the scheme who have attained pensionable age or to the widows or widowers of members'.

§ Mr. Deputy Speaker
With this we may take Government amendments Nos. 47 and 48.

§ Mr. Major
These technical amendments correct defects in drafting and clarify the arrangements for annual increases of guaranteed minimum pensions, with particular regard to those occupational pension schemes which already provide increases in the rates of their pensions, so that they do not have to provide two separate increases in a year.

§ Mr. Newton
I beg to move amendment No. 49, in page 14, line 15, at end insert— '(8) In section 59 of that Act (increase of official pensions) the following subsection shall be inserted after subsection (5) — (5A) Nothing in section 37A(12) or (13) above authorises any deduction from an increase in the rate of an official pension under this section.". (9) In section 59A of that Act (modification of effect of section 59(5)) the following subsection shall be inserted after subsection (2)— (2A) Where in any tax year—

(a) an increase is calculated in accordance with a direction under this section; and

(b) the amount by reference to which the increase is calculated, or any part of it is increased in that tax year under section 37A above,

the increase calculated in accordance with the direction shall be reduced by the amount of the increase under section 37A above.".'. This is a technical amendment which ensures that special arrangements which currently apply to the inflation proofing of the guaranteed minimum pension element of a public service pension continue to work when public service schemes become responsible for increasing the GMP by up to 3 per cent. under clause 9(7). The amendment ensures that the public service pensioner will continue to receive full inflation proofing of his occupational pension.

§ Mr. Major
I beg to move, amendment No. 50, in page 14, line 15, at end insert— '(14) Where by virtue of subsection (12) or (13) above guaranteed minimum pensions are not required to be increased in pursuance of this section, their amount shall be calculated for any purpose as if they had been so increased.'. The purpose of this amendment is to make it clear that although schemes need not increase the GMPs separately from the remainder of the occupational pension, the GMP's value shall nevertheless be calculated, for all purposes, as if it had been separately increased each year.
The reason for the amendment is to make it clear to contracted out occupational schemes that although they need not increase GMPs in April of each year if they have already provided for an increase in the rate of pension in the preceding year, the pension from then on must always include the GMP element as increased in line with the lesser of the RPI or 3 per cent. This will also be the amount that will be deducted from the pensioner's SERPS pension and the amount that a scheme must secure or buy back from the state scheme if they cease to be contracted out.