Pensions

HC Deb 18 April 1978 vol 948 cc85-6W

Mrs. Chalker

asked the Secretary of State for Social Services if he will outline the pension entitlement for a person employed by a United Kingdom company but assigned to work in a non-European Economic Community country in a contracted-out pension scheme who pays Class I contributions for 52 weeks and Class III contributions thereafter, indicating the effect on the indexation of the guaranteed minimum pension during the payment of his pension.

Mr. Orme

Such a person, provided he continued to pay Class 3 contributions for the period abroad, would maintain his record for the purposes of the State scheme basic pension. Entitlement to the State Scheme additional pension would depend on earnings in those years after 6th April 1978, up to a maximum of 20, when Class 1 national insurance contributions were paid on earnings between the lower earnings limit and the upper earnings limit.

Guaranteed minimum pension (GMP) entitlement would be based on contributions paid in contracted-out employment, again on earnings between the lower and upper earnings limits from 6th April 1978, and again including the first 52 weeks abroad if Class I contributions were paid for those weeks. The accrued GMP rights would be revalued to State pensionable age or death if earlier.

No GMP or State scheme additional pension would accrue for the period during which Class 3 contributions are paid.

After the State scheme additional pension is awarded, it is uprated each year before the GMP is deducted. Thus the additional pension might be lower than it would otherwise have been but for the periods abroad, but the GMP would be similarly affected resulting in a lower deduction.

Moreover, for those who will not reach State pensionable age within the next 20 years, the "20 best years" provision might enable a full additional pension to be payable and subsequently uprated despite the gap caused by the period abroad. The GMP, however, would be lower as a result of the period abroad and a higher balance of additional pension might be payable after deduction of the GMP.