This Order is made consequent upon a review under section 21 [as amended by section 10 of the Social Security Act 1979 and section 3(3) of the Social Security Act 1980] of the Social Security Pensions Act 1975 (“the Pensions Act”), which provides for the revaluation of earnings factors so that they maintain their value in relation to the general level of earnings obtaining in Great Britain.

The Order directs that the earnings factors relevant to calculating the additional component in the rate of any long-term benefit for the tax years specified in the Schedule to the Order are to be increased by the percentage of their amount specified in that Schedule. The Order also provides for the rounding of fractional amounts.

Sections 34, 35 and 37 of the Pensions Act [as amended by section 22(7) of the Social Security (Miscellaneous Provisions) Act 1977 (c. 5) and section 21(4) of and Schedule 3 to the Social Security Act 1979] apply the increases prescribed by this Order to the calculation of certain pension rates for contracted-out occupational pension schemes. For this purpose the increases are applied in the calculation of earners' average annual salaries by sections 34(5)(b) and 37(2)(b) and in the assessment of earners' earnings factors by section 35(5).