HL Deb 05 July 1978 vol 394 cc1102-5

8.19 p.m.

Lord WELLS-PESTELL rose to move, That the draft Social Security (Maximum Additional Component) Regulations 1978, laid before the House on 6th June, be approved. The noble Lord said: My Lords, these are minor and I think quite non-contentious regulations, the purpose of which is to fill in a little more of the fine detail of the Government's new pension scheme embodied in the Social Security Pensions Act 1975. Although the regulations may look a little complicated, I hope your Lordships will allow me to assure you that they are quite straightforward.

The Regulations prescribe the maximum amount of additional component of retirement pension that is to be payable to a widow or widower under the provisions of Section 9 of the Social Security Pensions Act 1975. That section will enable a widow or widower to increase or "top up" the retirement pension which is payable by virtue of his or her own contributions, by adding to it, within limits, some or all of the retirement pension entitlement derived from his or her late spouse's contributions.

Before I come to the regulations themselves, I think your Lordships may find it helpful if I explain how the provisions of Section 9 of the Pensions Act differ from the provisions contained in the present Social Security scheme. Your Lordships may be aware that at present the Social Security Act 1975 enables a widow who is entitled to a retirement pension by virtue of her late husband's contributions as well as one by virtue of her own contributions, to receive whichever pension is the more favourable to her but she cannot receive both pensions together. The benefit provisions of the Pensions Act which come into force in April of next year include two important and beneficial changes to the current provisions. First, widowers in certain circumstances will be able to qualify for a retirement pension by virtue of their late wife's contributions. This will make it possible for widowers as well as widows to have alternative entitlement to two retirement pensions at the same time, that is one on their own contributions and one on their late wife's contributions. If I may, I will come back to that point in a moment or two.

Secondly, the Pensions Act provides for widows and widowers to have alternative entitlement to these two pensions, to aggregate them up to certain maximum amounts instead of having to choose, as at the moment, the more favourable one. As your Lordships may also know, the Pensions Act provides for retirement pensions to consist of two parts—or to use the proper word, "components". There is a basic component which is equivalent to the present flat-rate retirement pension and an additional component related to the contributor's earnings from April 1978, when the new scheme started. In relation to the aggregation of the basic components, Section 9(2) of the Pensions Act already provides for the maximum to be the standard of basic Category A retirement pension; that is the present flat-rate retirement pension, which will he £19.50 when these Regulations come into operation next April, and the amount will of course go up with each uprating.

In relation to the aggregation of additional—that is earnings related components—Section 9(3) of the Pensions Act provides for a maximum to be prescribed by regulations and that is the purpose of the regulations which I am asking your Lordships to approve. The maximum which the regulations prescribe follows the provisions already made by Parliament for the basic component; namely, the maximum which one person could have earned by his own contributions. The amount of the maximum which will apply in any one case will be the amount appropriate to the time when the surviving spouse first becomes entitled to both pensions. In the case of a pensioner couple this will be when one of them dies, but in the case of a woman who was widowed before she was 60, it will be when she reaches that age.

Perhaps it would be helpful if I were to try to give some kind of example. If we take a person who loses his spouse and becomes entitled to both of the retirement pensions in the 1979–80 tax year, he or she will be able to receive a combined amount of additional component up to a maximum of £1.31 per week. This means that in the case of a couple who had more or less average earnings of, say, £80 a week for the husband and, say, £55 a week for the wife in 1978–79 the survivor would be able to receive a combined additional component of £1.24 per week over the normal basic amount. That is he or she would receive both additional components in full and it would not be affected by the maximum.

It is too early yet to calculate precisely the maximum amount that will apply in 1980–81 because that will depend upon revaluation orders and contribution orders not yet made, but the amount will probably be in the region of £3 a week over and above the normal pension. The maximum will of course be increased at times with the upratings. The maximum I am asking your Lordships to approve is in accordance with the Government's expressed intention as indicated in the original White Paper Better Pensions and in later leaflets explaining the scheme. I do not think any useful purpose would be served by going through the regulations. There are only two of them and I have endeavoured to explain their function in moving the approval of these regulations. I beg to move.

Moved, That the draft Social Security (Maximum Additional Component) Regulations 1978, laid before the House on 6th June, be approved.—(Lord Wells-Pesten.)


My Lords, the House will be grateful to the noble Lord, Lord Wells-Pestell, for explaining a very useful but unhappily complicated set of regulations. The Social Security Pensions Act 1975 has to be read with care and patience in order to achieve a full understanding of what is intended in those regulations. We welcome it from these Benches for, among other reasons, the implementation of the Sex Discrimination Act which ensures that it is mutual in the case of either spouse.

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