The Social Security Revaluation of Earnings Factors Order 1991

Explanatory Note

(This note is not part of the Order)

This Order is made consequent upon a review under section 21 of the Social Security Pensions Act 1975 (c. 60) (“the Pensions Act”).

The Order directs that the earnings factors relevant to the calculation of the additional pension in the rate of any long-term benefit or of any guranteed minimum pension or to any other calculation required under Part III of the Pensions Act 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 percentage for the tax year 1990-91 is 10.1 per cent. and those for earlier tax years have been increased so that the earnings factors for those years are revalued at 1990-91 earnings levels.

The Order also provides for the rounding of fractional amounts for earnings factors relevant to the claculation of the additional pension in the rate of any long-term benefit. Rounding for the purpose of calculation of any guaranteed minimum pension is not required since 6 April 1979 by virtue of the amendments to section 13 of the Social Security Act 1975 (c. 14) and section 35(5) of the Pensions Act effected by Part I of Schedule 2 to the Social Security Act 1988 (c. 7).

For the purpose of certain occupational pension schemes which are contracted-out under Part III of the Pensions Act, the increases made by this Order are applied, by sections 35(5) and 41C(4A) of that Act, to the earnings factor used in calculating an earner’s guaranteed minimum pension and by sections 44(6)(a) and 45(3)(a) of that Act for the purpose of determining the amount of any state scheme premium.