Section 81: Consolidation of additional pension
Sections 81 to 83 and Schedules 2 and 3 change the method of calculating earnings-related components of the Additional State Pensions for people who reach State Pension age after 5 April 2020. In addition to their basic State Pension, pensioners can have accrued rights under three earnings-related state schemes:
the Graduated Retirement Benefit scheme – from 1961 to 1975;
State Earnings Related Pension Scheme – from 1978 to 2002;
State Second Pension – accrued from 2002.
State Second Pension was reformed by the Pensions Act (Northern Ireland) 2008. From the Flat Rate Introduction Year, State Second Pension will start to accrue on a flat-rate basis – the earnings-related element will be gradually phased out and will cease to accrue from around 2030.
Section 81 amends section 45 of the Social Security Contributions and Benefits (Northern Ireland) Act 1992 to provide the mechanism by which Additional Pension in respect of years before the Flat Rate Introduction Year will be calculated for people reaching State Pension age after 5 April 2020. Subsection (4) provides that their weekly rate of Additional Pension will be the consolidated value of their Graduated Retirement Benefit, State Earnings Related Pension and State Second Pension accruals, “the consolidated amount”, plus any flat rate accruals built up after the Flat Rate Introduction Year.
Subsection (5) introduces Schedule 2. This inserts new Schedule 4C into the Social Security Contributions and Benefits (Northern Ireland) Act 1992 which sets out how the consolidated amount is to be calculated.
Subsection (6) provides for the Graduated Retirement Benefit element of the consolidated pension to be omitted when carrying out the calculation to offset Additional Pension from incapacity age addition entitlement. This arises where a person was getting an age addition of incapacity benefit before they reach pension age.
Subsection (7) restricts the calculation of Graduated Retirement Benefit under existing rules to those who reach state pension age before 6 April 2020.
