Reduction in State scheme contributions, payment of rebates and reduction in State scheme benefits
State scheme contributions and rebates
134.—(1) In section 36 of the Pension Schemes Act (scope of Chapter II of Part III), in paragraph (b), after “members of” insert “money purchase contracted-out schemes and members of”.
(2) For section 37(1) of that Act (reduced rates of Class 1 contributions for earners in contracted-out employment), including the sidenote and the preceding heading, substitute—
“Reduced rates of contributions for members of salary related contracted-out schemes
37. Reduced rates of Class 1 contributions.
(1) Where—
(a)the earnings paid to or for the benefit of an earner in any tax week are in respect of an employment which is contracted-out employment at the time of the payment, and
(b)the earners’s service in the employment is service which qualifies him for a pension provided by a salary related contracted-out scheme,
the amount of a Class 1 contribution in respect of so much of the earnings paid in that week as exceeds the current lower earnings limit but not the current upper earnings limit for that week (or the prescribed equivalents if he is paid otherwise than weekly) shall be reduced by the following amount.
(1A) The amount is—
(a)in the case of a primary Class 1 contribution, an amount equal to 1.8 per cent. of that part of those earnings, and
(b)in the case of a secondary Class 1 contribution, an amount equal to 3 per cent. of that part of those earnings.”.
(3) For section 38(1) of the Pension Schemes Act (alteration of rates of contributions under section 37) substitute—
“(1) Whenever the Secretary of State makes an order under section 42 of the Pension Schemes Act 1993 (determination of reduced rates of Class 1 contributions for members of salary related contracted-out schemes), the Department may make a corresponding order for Northern Ireland.”.
(4) After that section insert—
“Reduced rates of contributions, and rebates, for members of money purchase contracted-out schemes
Reduced rates of Class 1 contributions and rebates.
38A.—(1) Subsections (2) and (3) apply where—
(a)the earnings paid to or for the benefit of an earner in any tax week are in respect of an employment which is contracted-out employment at the time of the payment, and
(b)the earner’s service in the employment is service which qualifies him for a pension provided by a money purchase contracted-out scheme.
(2) The amount of a Class 1 contribution in respect of so much of the earnings paid in that week in respect of that employment as exceeds the current lower earnings limit but not the current upper earnings limit for that week (or the prescribed equivalents if he is paid otherwise than weekly) shall be reduced by an amount equal to the appropriate flat-rate percentage of that part of those earnings.
(3) The Department shall, except in prescribed circumstances or in respect of prescribed periods, pay in respect of that earner and that tax week to the trustees or managers of the scheme or, in prescribed circumstances, to a prescribed person, the amount by which—
(a)the appropriate age-related percentage of that part of those earnings,
exceeds
(b)the appropriate flat-rate percentage of that part of those earnings.
(4) Regulations may make provisions—
(a)as to the manner in which and time at which or period within which payments under subsection (3) are to be made,
(b)for the adjustment of the amount which would otherwise be payable under that subsection so as to avoid the payment of trivial or fractional amounts,
(c)for earnings to be calculated or estimated in such manner and on such basis as may be prescribed for the purpose of determining whether any, and if so what, payments under subsection (3) are to be made.
(5) If the Department pays an amount under subsection (3) which it is not required to pay or is not required to pay to the person to whom, or in respect of whom, the Department pays it, the Department may recover it from any person to whom, or in respect of whom, the Department paid it.
(6) Where—
(a)an earner has ceased to be employed in an employment, and
(b)earnings are paid to him or for his benefit within the period of six weeks, or such other period as may be prescribed, from the day on which he so ceased, that employment shall be treated for the purposes of this section as contracted-out employment at the time when the earnings are paid if it was contracted-out employment in relation to the earner when he was last employed in it.
(7) Subsection (3) of section 37 applies for the purposes of this section as it applies for the purposes of that.
Determination and alteration of rates of contributions, and rebates, applicable under section 38A.
38B. Whenever the Secretary of State makes an order under section 42B of the Pension Schemes Act 1993, (determination and alteration of reduced rates of primary and secondary Class 1 contributions for members of money purchase contracted-out schemes), the Department may make a corresponding order for Northern Ireland.”
(5) In Schedule 3 to that Act (priority in bankruptcy, etc), in paragraph 2(3)—
(a)in paragraph (a), for “4.8 per cent.” substitute “the percentage for non-contributing earners”,
(b)in paragraph (b), for “3 per cent.” substitute “the percentage for contributing earners”.
(6) In paragraph 2(5) of that Schedule—
(a)before the definition of “employer” insert—
““appropriate flat-rate percentage” means the appropriate flat rate percentage for the purposes of section 38A(2);” and
(b)after that definition insert—
““the percentage for contributing earners”
in relation to a salary related contracted-out scheme, 3 per cent, and
in relation to a money purchase contracted-out scheme, the percentage which is the appropriate flat-rate percentage for secondary Class 1 contributions,
“the percentage for non-contributing earners” means—
in relation to a salary related contracted-out scheme, 4.8 per cent, and
in relation to a money purchase contracted-out scheme, a percentage equal to the sum of the appropriate flat-rate percentages for primary and secondary Class 1 contributions;”.
Minimum contributions towards appropriate personal pension schemes
135.—(1) Section 41 of the Pension Schemes Act (minimum contribution to personal pension schemes) is amended as setout in paragraphs (2) to (4).
(2) For subsection (1) substitute—
“(1) In relation to any tax week falling within a period for which the Department is required to pay minimum contributions in respect of an earner, the amount of those contributions shall be an amount equal to the appropriate age-related percentage of so much of the earnings paid in that week (other than earnings in respect of contracted-out employment) as exceeds the current lower earnings limit but not the current upper earnings limit for that week (or the prescribed equivalents if he is paid otherwise than weekly).”.
(3) (Subsection (2) is omitted.
(4) In subsection (3)(e), the words following “prescribed period” are omitted.
(5) After that section insert—
“Alteration of rates of minimum contributions under section 41.
41A. Whenever the Secretary of State makes an order under section 45A of the Pension Schemes Act 1993 (determination and alteration of rates of contributions to personal pension schemes) the Department may make a corresponding order for Northern Ireland.”.
Money purchase and personal pension schemes: verification of ages.
136. After section 41A of the Pension Schemes Act (inserted by Article 135) insert—
“Money purchase and personal pension schemes: verification of ages
41B.—(1) Regulations may make provision for the manner in which an earner’s age is to be verified in determining the appropriate age-related percentages for the purposes of section 38A and 41(1).
(2) Information held by the Department as to the age of any individual may, whether or not it was obtained in pursuance of regulations under subsection (1), be disclosed by the Department—
(a)to the trustees or managers of a money purchase contracted-out scheme or an appropriate personal pension scheme, and
(b)to such other persons as may be prescribed,
in connection with the making of payments under section 38A(3) or the payment of minimum contributions.”.
Reduction in benefits for members of certified schemes
137.—(1) After section 44 of the Pension Schemes Act insert—
“Effect of reduced contributions and rebates on social security benefits
Additional pension and other benefits.
44A.—(1) In relation to any tax week there—
(a)the amount of a Class 1 contribution in respect of the earnings paid to or for the benefit of an earner in that week is reduced under section 37 or 38A, or
(b)an amount is paid under section 41(1) in respect of the earnings paid to or for the benefit of an earner,
section 44(6) of the Social Security Contributions and Benefits (Northern Ireland) Act 1992 (earnings factors for additional pension) shall have effect, except in prescribed circumstances, as if no primary Class 1 contributions had been paid or treated as paid upon those earnings for that week and section 45A of that Act did not apply (where it would, apart from this subsection, apply).
(2) Where the whole or part of a contributions equivalent premium has been paid or treated as paid in respect of the earner, the Department may make a determination reducing or eliminating the application of subsection (1).
(3) Subsection (1) is subject to regulations under paragraph 5(3A) to (3E) of Schedule 1.
(4) Regulations may, so far as is required for the purpose of providing entitlement to additional pension (such as is mentioned in section 44(3)(b) of the Social Security Contributions and Benefits (Northern Ireland) Act 1992) but to the extent only that amount of additional pension is attributable to provision made by regulations under section 45(5) of that Act, disapply subsection (1).
(5) In relation to earners where, by virtue of subsection (1), section 44(6) of Social Security Contributions and Benefits (Northern Ireland) Act 1992 has effect, in any tax year, as mentioned in that subsection in relation to some but not all of their earnings, regulations may modify the application of section 44(5) of that Act.”.
(2) In section 44 of the Pension Schemes Act (effect of membership of money purchase contracted-out scheme or appropriate scheme on payment of social security benefits), in subsection (2), paragraph (b) is omitted and, in paragraph (c), “if the earner dies before reaching pensionable age” is omitted.
(3) Section 44 of that Act shall cease to have effect in relation to minimum payments made, or minimum contributions paid, on or after the principal appointed day.