1 After Schedule 4A to the Contributions and Benefits Act (additional pension) insert the following Schedule—N.I.
“SCHEDULE 4BN.I.ADDITIONAL PENSION: ACCRUAL RATES FOR PURPOSES OF SECTION 45(2)(D)
PART 1 N.I.AMOUNT FOR PURPOSES OF SECTION 45(2)(D)
1—(1) The amount referred to in section 45(2)(d) above is to be calculated as follows—
(a)calculate the appropriate amount for each of the relevant years within section 45(2)(d) above to which Part 2 of this Schedule applies;
(b)calculate the appropriate amount for each of the relevant years within section 45(2)(d) above to which Part 3 of this Schedule applies; and
(c)add those amounts together.
(2) But if the resulting amount is a negative one, the amount referred to in section 45(2)(d) above is nil.
PART 2 N.I.NORMAL RULES: EMPLOYMENT NOT CONTRACTED-OUT
ApplicationN.I.
2 This Part applies to a relevant year if the contracted-out condition is not satisfied in respect of any tax week in the year.
Appropriate amount for yearN.I.
3 The appropriate amount for the year for the purposes of paragraph 1 above is either—
(a)the flat rate amount for the year (if there is a surplus in the pensioner's earnings factor for the year which does not exceed the LET), or
(b)the sum of the flat rate amount and the earnings-related amount for the year (if there is such a surplus which exceeds the LET).
4 The flat rate amount for the year is calculated by multiplying the FRAA in accordance with the last order under section 130AA of the Administration Act to come into force before the end of the final relevant year.
5 The earnings-related amount for the year is calculated as follows—
(a)take the part of the surplus for the year which exceeds the LET but which does not exceed the UAP;
(b)multiply that amount in accordance with the last order under section 130 of the Administration Act to come into force before the end of the final relevant year;
(c)multiply the amount found under sub-paragraph (b) above by 10 per cent.;
(d)divide the amount found under sub-paragraph (c) above by 44.
PART 3 N.I.CONTRACTED-OUT EMPLOYMENT
ApplicationN.I.
6 This Part applies to a relevant year if the contracted-out condition is satisfied in respect of each tax week in the year.
Appropriate amount for yearN.I.
7 The appropriate amount for the year for the purposes of paragraph 1 above is calculated as follows—
(a)calculate amounts A and B in accordance with paragraphs 8 to 10 below;
(b)subtract amount B from amount A.
Amount A: assumed surplus not exceeding LETN.I.
8—(1) Amount A is calculated in accordance with this paragraph if there is an assumed surplus in the pensioner's earnings factor for the year which does not exceed the LET.
(2) In such a case, amount A is the flat rate amount for the year.
(3) The flat rate amount for the year is calculated by multiplying the FRAA in accordance with the last order under section 130AA of the Administration Act to come into force before the end of the final relevant year.
Amount A: assumed surplus exceeding LETN.I.
9—(1) Amount A is calculated in accordance with this paragraph if there is an assumed surplus in the pensioner's earnings factor for the year which exceeds the LET.
(2) In such a case, amount A is calculated as follows—
(a)take the part of the assumed surplus for the year which exceeds the LET but which does not exceed the UAP;
(b)multiply that amount in accordance with the last order under section 130 of the Administration Act to come into force before the end of the final relevant year;
(c)multiply the amount found under paragraph (b) above by 10 per cent.;
(d)divide the amount found under paragraph (c) above by 44;
(e)add the amount found under paragraph (d) above to the flat rate amount for the year.
(3) The flat rate amount for the year is calculated by multiplying the FRAA in accordance with the last order under section 130AA of the Administration Act to come into force before the end of the final relevant year.
Amount BN.I.
10—(1) Amount B is calculated as follows—
(a)take the part of the assumed surplus for the year which exceeds the QEF but which does not exceed the UAP;
(b)multiply that amount in accordance with the last order under section 130 of the Administration Act to come into force before the end of the final relevant year;
(c)multiply the amount found under paragraph (b) above by 20 per cent.;
(d)divide the amount found under paragraph (c) above by the number of relevant years in the pensioner's working life.
(2) Section 44B above is to be ignored in applying section 44(6) above for the purposes of this paragraph.
PART 4 N.I.OTHER CASES
11 The Department may make regulations containing provision for finding for a tax year the amount referred to in section 45(2)(d) above—
(a)in cases where the circumstances relating to the pensioner change in the course of the year, and
(b)in such other cases as the Department thinks fit.
PART 5 N.I.INTERPRETATION
12 In this Schedule—
“assumed surplus”, in relation to a pensioner's earnings factor for a year, means the surplus there would be in that factor for the year if section 44A(1) of the Pensions Act (no primary Class 1 contributions deemed to be paid) did not apply in relation to any tax week falling in the year;
“the contracted-out condition”, in relation to a tax week, means the condition that any earnings paid to or for the benefit of the pensioner in that week in respect of employment were in respect of employment qualifying him for a pension provided by a salary related contracted-out scheme (within the meaning of the Pensions Act);
“the FRAA” has the meaning given by paragraph 13 below;
“the LET”, in relation to a tax year, means the low earnings threshold for the year as specified in section 44A above;
“the QEF”, in relation to a tax year, means the qualifying earnings factor for the year;
“relevant year” and “final relevant year” have the same meanings as in section 44 above;
“the UAP” means the upper accrual point.
13—(1) “The FRAA” means the flat rate accrual amount.
(2) That amount is £72.80 for the flat rate introduction year and subsequent tax years (but subject to section 130AA of the Administration Act).”.