Part 1

State pension

Up-rating of basic state pension and other benefits

Up-rating of basic pension etc. and standard minimum guarantee by reference to earnings
5
1
After section 150 of the Administration Act insert—

Annual up-rating of basic pension etc. and standard minimum guarantee
150A
1
The Secretary of State shall in each tax year review the following amounts in order to determine whether they have retained their value in relation to the general level of earnings obtaining in Great Britain—
a
the amount of the basic pension;
b
the specified amounts in the case of Category B, C or D retirement pensions;
c
the specified amounts in the case of industrial death benefit; and
d
the amounts of the standard minimum guarantee for the time being prescribed under section 2(4) and (5)(a) and (b) of the State Pension Credit Act 2002.
2
Where it appears to the Secretary of State that the general level of earnings is greater at the end of the period under review than it was at the beginning of that period, he shall lay before Parliament the draft of an order which increases each of the amounts referred to in subsection (1) above by a percentage not less than the percentage by which the general level of earnings is greater at the end of the period than it was at the beginning.
3
Subsection (2) above does not require the Secretary of State to provide for an increase in any case if it appears to him that the amount of the increase would be inconsiderable.
4
The Secretary of State may, in providing for an increase in pursuance of subsection (2) above, adjust the amount of the increase so as to round the sum in question up or down to such extent as he thinks appropriate.
5
The Secretary of State shall lay with a draft order under this section a copy of a report by the Government Actuary or the Deputy Government Actuary giving that Actuary’s opinion on the likely effect on the National Insurance Fund of any parts of the order relating to sums payable out of that Fund.
6
If a draft order laid before Parliament under this section is approved by a resolution of each House, the Secretary of State shall make the order in the form of the draft.
7
An order under this section shall be framed so as to bring the increase in question into force in the week beginning with the first Monday in the tax year following that in which the order is made.
8
For the purposes of any review under subsection (1) above the Secretary of State shall estimate the general level of earnings in such manner as he thinks fit.
9
If a draft order under this section is combined with a draft up-rating order under section 150 above, the report required by virtue of subsection (5) above may be combined with that required by virtue of section 150(8) above.
10
In this section—
- “the amount of the basic pension” means the first amount specified in section 44(4) of the Contributions and Benefits Act (weekly rate of Category A retirement pension);
- “the specified amounts in the case of Category B, C or D retirement pensions” means—
  1. the amount specified in paragraph 5 of Part 1 of Schedule 4 to the Contributions and Benefits Act, and
  2. the amounts specified in paragraphs 6 and 7 of Part 3 of that Schedule;
- “the specified amounts in the case of industrial death benefit” means—
  1. the amounts specified in paragraph 10 of Part 5 of that Schedule (apart from the amount of the initial rate), and
  2. the amount specified in paragraph 11 of that Part of that Schedule.
2
Part 5 of Schedule 1 contains consequential and related amendments.
3
The section 150A inserted by subsection (1) and the amendments made by Part 5 of Schedule 1, so far as relating to the amounts referred to in section 150A(1)(a) to (c), have effect in relation to the designated tax year and subsequent tax years (with the result that the first review to be carried out under section 150A(1) in relation to those amounts is to be carried out in the designated tax year).
4
“The designated tax year” means such tax year as the Secretary of State may designate by an order made before 1st April 2011.
5
The Secretary of State must exercise his power under subsection (4) in such a way as to secure that the tax year immediately following the designated tax year is one that begins before the relevant dissolution date.
6
“The relevant dissolution date” means the latest date on which, having regard to the maximum period for which a Parliament may exist, the Parliament in existence at the time of exercise of the power could be dissolved.
7
The new section 150A inserted by subsection (1) and the amendments made by Part 5 of Schedule 1, so far as relating to the amounts mentioned in section 150A(1)(d), have effect in relation to the tax year in which this Act is passed and subsequent tax years.