The Social Security (Contracting-out and Qualifying Earnings Factor) Regulations 1996

Modification of the application of section 44(5) of the Contributions and Benefits Act

2.—(1) Where, by virtue of subsection (1) of section 48A of the Pension Schemes Act, section 44(6) of the Contributions and Benefits Act has effect for the tax year 1997-98 or any later tax year, in relation to some but not all of the earnings of an earner, the application of section 44(5) of the Contributions and Benefits Act is modified for that year in accordance with this regulation.

(2) In a case where the year is one in which the amount of a Class 1 contribution in respect of the earnings paid to or for the benefit of an earner in a tax week is reduced under sections 41 or 42A of the Pension Schemes Act(1) (reduced rates of Class 1 contributions for earners in contracted-out employment) section 44(5) of the Contributions and Benefits Act is modified so that the qualifying earnings factor for the purposes of section 44(5)(a) of that Act shall be calculated by applying the formula—

where—

• L is the weekly lower earnings limit for the final relevant year; and

• N is the number of tax weeks in which a Class 1 contribution for the earner is reduced in accordance with sections 41 or 42A of the Pension Schemes Act.

(3) In a case where the year is one in which an amount is paid in respect of an earner under section 45(1) of the Pension Schemes Act(2) (minimum contributions towards appropriate personal pension schemes) section 44(5) of the Contributions and Benefits Act is modified so that the qualifying earnings factor for the purposes of section 44(5)(a) of that Act shall be zero.

(1)

Section 41(1) is substituted by section 137(2) of the Pensions Act 1995. Section 42A is inserted by section 137(5) of the Pensions Act 1995.

(2)

Section 45(1) is substituted by section 138(2) of the Pensions Act 1995.