1. The Contributions and Benefits Act is amended as follows.
2. In section 21(5A)(c) (contribution conditions) after “5(2)(b) and (4)(a)” insert “, 5A(3)(a)”.
3. In section 39(1) (rate of widowed mother’s allowance and widow’s pension) for “46(2)” substitute “46”.
4.—(1) Section 39C (rate of widowed parent’s allowance and bereavement allowance) is amended as follows.
(2) In subsection (1)—
(a)for “45” substitute “45AA”;
(b)for “and Schedule 4A” substitute “and Schedules 4A to 4C”;
(c)for “46(2) and (4)” substitute “46”.
(3) In subsections (3) and (4)—
(a)for “45” substitute “45AA”;
(b)for “and Schedule 4A” substitute “and Schedules 4A to 4C”.
5.—(1) After section 45 (additional pension in Category A retirement pension) insert—
(1) For the purposes of calculating additional pension under sections 44 and 45 where, in the case of any relevant year, working families' tax credit is paid in respect of any employed earner, or disabled person’s tax credit is paid to any employed earner, section 44(6)(a)(i) shall have effect as if—
(a)where that person had earnings of not less than the qualifying earnings factor for that year, being earnings upon which primary Class 1 contributions were paid or treated as paid (“qualifying earnings”) in respect of that year, the amount of those qualifying earnings were increased by the aggregate amount (“AG”) of working families' tax credit, or, as the case may be, disabled person’s tax credit paid in respect of that year, and
(b)in any other case, that person had qualifying earnings in respect of that year and the amount of those qualifying earnings were equal to AG plus the qualifying earnings factor for that year.
(2) The reference in subsection (1) to the person in respect of whom working families' tax credit is paid—
(a)where it is paid to one of a couple, is a reference to the prescribed member of the couple, and
(b)in any other case, is a reference to the person to whom it is paid.
(3) A person’s qualifying earnings in respect of any year cannot be treated by virtue of subsection (1) as exceeding the upper earnings limit for that year multiplied by 53.
(4) Subsection (1) does not apply to any woman who has made, or is treated as having made, an election under regulations under section 19(4), which has not been revoked, that her liability in respect of primary Class 1 contributions shall be at a reduced rate.
(5) In this section—
“couple” has the same meaning as in Part 7 (see section 133);
“relevant year” has the same meaning as in section 44.”.
(2) Sub-paragraph (1) together with paragraphs 4(2)(a) and (3)(a), 9(2)(a) and (3)(a) and 11 (which make amendments consequential on sub-paragraph (1)) are referred to in the following provisions of this paragraph as “the relevant provisions”.
(3) Subject to sub-paragraphs (4) and (5), the relevant provisions apply to a person (“the pensioner”) who attains pensionable age after 5th April 1999 and, in relation to such a person—
(a)have effect for 1995–96 and subsequent tax years, and
(b)are deemed so to have had effect (with the necessary modifications) during the period—
(i)beginning with 6th April 2003, and
(ii)ending with the coming into operation of this paragraph.
(4) Where the pensioner is a woman, the relevant provisions have effect in the case of additional pension falling to be calculated under sections 44 and 45 of the Contributions and Benefits Act by virtue of section 39 of that Act (widowed mother’s allowance and widow’s pension), including Category B retirement pension payable under section 48B(4), if her husband—
(a)dies after 5th April 1999, and
(b)has not attained pensionable age on or before that date.
(5) The relevant provisions have effect, where additional pension falls to be calculated under sections 44 and 45 of the Contributions and Benefits Act as applied by section 48A or 48B(2) of that Act (other Category B retirement pension) if—
(a)the pensioner attains pensionable age after 5th April 1999, and
(b)the pensioner’s spouse has not attained pensionable age on or before that date.
6.—(1) Section 46 (modifications of section 45 for calculating the additional pension in certain benefits) is amended as follows.
(2) In subsection (2) for “, 48B(2) or 48BB(5)” substitute “or 48B(2)”.
(3) After subsection (4) add—
“(5) For the purpose of determining the additional pension falling to be calculated under section 45 above by virtue of prescribed provisions of this Act, that section has effect subject to the following modifications—
(a)the omission in subsection (2) of the words “but before 6th April 2020”, and
(b)the omission of subsection (2A).
(6) Regulations under subsection (5) may prescribe a provision in relation to—
(a)all cases, or
(b)cases of a prescribed description.”.
7. In section 48A(4) (Category B retirement pension for married person)—
(a)for “and 4B” substitute “to 4C”;
(b)for “46(2)” substitute “46”.
8. In section 48B(2) (Category B retirement pension for widows and widowers)—
(a)for “and 4B” substitute “to 4C”;
(b)for “46(2)” substitute “46”.
9.—(1) Section 48BB (Category B retirement pension: entitlement by reference to benefits under section 39A or 39B) is amended as follows.
(2) In subsection (5)—
(a)for “45” substitute “45AA”;
(b)after “45AA” (inserted by paragraph (a)) insert “and 45B”;
(c)for “and 4B” substitute “to 4C”;
(d)for “46(3)” substitute “46”.
(3) In subsection (6)—
(a)for “45” substitute “45AA”;
(b)after “45AA” (inserted by paragraph (a)) insert “and 45B”.
10. In section 48C(4) (Category B retirement pension: general) for “and 4B” substitute “to 4C”.
11. In section 51(2) and (3) (Category B retirement pension for widowers) for “45” substitute “45AA”.
12.—(1) Schedule 4B (additional pension: accrual rates for purposes of section 45(2)(d)) is amended as follows.
(2) In paragraph 2 (application of Part 2 of Schedule)—
(a)after “if” insert
“—
(a)”;
(b)after paragraph (a) (created by virtue of paragraph (a) above) insert
“and
(b)there is a surplus in the pensioner’s earnings factor for the year.”.
(3) In paragraph 3 (appropriate amount for year)—
(a)in paragraph (a), for the words from “there is” to “which” substitute “the pensioner’s earnings factor for the year”;
(b)in paragraph (b), for “there is such a surplus which” substitute “that earnings factor”.
(4) In paragraph 5(a) for “surplus” substitute “earnings factor”.
(5) In paragraph 6 (application of Part 3 of Schedule)—
(a)after “if” insert
“—
(a)”;
(b)after paragraph (a) (created by virtue of paragraph (a) above) insert
“and
(b)there would be a surplus in the pensioner’s earnings factor for the year if section 44A of the Pensions Act did not apply in relation to any tax week falling in the year.”.
(6) In paragraph 8(1) (calculation of amount A: assumed surplus not exceeding LET), for the words from “there” to “which” substitute “the pensioner’s assumed earnings factor for the year”; and, accordingly, in the heading before paragraph 8 for “surplus” substitute “earnings factor”.
(7) In paragraph 9 (calculation of amount A: assumed surplus exceeding LET)—
(a)in sub-paragraph (1), for the words from “there” to “which” substitute “the pensioner’s assumed earnings factor for the year”;
(b)in sub-paragraph (2)(a), for “assumed surplus” substitute “assumed earnings factor”,
and, accordingly, in the heading before paragraph 9 for “surplus” substitute “earnings factor”.
(8) In paragraph 10(1)(a) (amount B), for “assumed surplus” substitute “pensioner’s assumed earnings factor”.
(9) In paragraph 12 (interpretation)—
(a)omit the definition of “assumed surplus”;
(b)before the definition of “the QEF” insert—
““the pensioner’s assumed earnings factor”, in relation to a year, means the earnings factor that the pensioner would have for the year if section 44A(1) of the Pensions Act did not apply in relation to any tax week falling in the year;”.
13. In Schedule 7 (industrial injuries benefits) in paragraph 3(3) after “section 42” insert “or 42A”.