§ Mr. Dorrellasked the Secretary of State for Social Services what class 1 national insurance contributions are payable by employees reaching pensionable age.
§ Dr. BoysonNo primary — employee's — class 1 contributions are payable or any earnings for a period of510W work after pensionable age —65 for a man, 60 for a woman—on any earnings paid after pensionable age for a period of work before that age—unless the earnings were properly payable before that age.
We have recently discovered that, because of a misinterpretation of section 4(1) of the Social Security Pensions Act 1975, the guidance issued by the Department to employers and local social security offices has been wrong. It incorrectly linked primary class 1 contribution liability for someone reaching pensionable age to the date of payment of earnings, instead of to the period to which the earnings relate. This means that some people reaching pensionable age since 6 April 1978 will have overpaid primary class 1 contributions. Those affected are employees who received some or all of their pay in advance and who got a payment of earnings before pensionable age for a period of work after that age, and any employee who got a late payment of earnings after pensionable age which was properly payable before that age. In both cases, any primary class 1 contributions paid on earnings for a period of work after pensionable age will have been paid in error and may be refunded. It is unfortunate that this mistake was made in the implementation of the 1975 Act, and I regret that it did not come to light sooner.
Although we cannot identify from our records which employees are affected, we have already been in touch with those employers whom we know to pay wages wholly or partly in advance to advise them of the mistake and ask for their help in tracing overpayers. We shall be taking further steps to bring the mistake to the attention of those who may have been adversely affected by it and to make it clear that they are entitled to a refund. We are taking urgent action to correct our guidance to local social security offices and will similarly correct our guidance to employers at the earliest opportunity.