Pension Schemes Act 1993

Reduced rates of state scheme Class 1 contributions

41 Reduced rates of Class 1 contributions for earners in contracted-out employment

(1) Where 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, 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—

(a) in the case of a primary Class 1 contribution, by 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, by an amount equal to 3 per cent. of that part of those earnings.

(2) 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 6 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 subsection (1) 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.

(3) This section shall not affect the amount of any primary Class 1 contribution which is payable at a reduced rate by virtue of regulations under section 19(4) of the [1992 c. 4.] Social Security Contributions and Benefits Act 1992 (reduced rates for married women and widows).

42 Review and alteration of rates of contributions applicable under s. 41

(1) The Secretary of State may from time to time, and shall when required by subsection (2), lay before each House of Parliament—

(a) a report by the Government Actuary or the Deputy Government Actuary on the percentages for the time being applying under section 41(1)(a) and (b) and any changes in the factors affecting the cost to occupational pension schemes of providing guaranteed minimum pensions since the preparation of the last report under this paragraph; and

(b) a report by the Secretary of State stating whether he considers that, in view of the report of the Government Actuary or the Deputy Government Actuary, there should be an alteration in either or both of those percentages and, if so, what alteration is in his opinion required.

(2) The Secretary of State shall lay such reports at intervals of not more than five years.

(3) If in a report under subsection (1)(b) the Secretary of State states that he considers that there should be an alteration in either or both of the percentages mentioned in section 41(1)(a) and (b), he shall prepare and lay before each House of Parliament with the report the draft of an order making that alteration; and if the draft is approved by resolution of each House the Secretary of State shall make the order in the form of the draft.

(4) An order under subsection (3) shall have effect from the beginning of such tax year as may be specified in the order, but not a tax year earlier than the second after that in which the order is made.

(5) No alteration of those percentages shall introduce any distinction on grounds of age or sex.

(6) A draft of an order making alterations in either or both of those percentages may contain consequential provisions altering any percentage for the time being specified in paragraph 2(3) of Schedule 4 as that percentage applies in relation to earnings paid or payable on or after the day as from which the order is to have effect.