2015 No. 671

Pensions

The Pensions Increase (Review) Order 2015

Made12th March 2015

Laid before Parliament13th March 2015

Coming into force6th April 2015

The Secretary of State for Work and Pensions has, by virtue of section 151 of the Social Security Administration Act 19921, given a direction2 that the sums mentioned in section 150(1)(c) of that Act are to be increased by a specified percentage.

The Treasury make the following Order in exercise of the powers conferred by section 59(1), (2), (5) and (5ZA) of the Social Security Pensions Act 19753, and now vested in them4:

Citation and commencement1

This Order may be cited as the Pensions Increase (Review) Order 2015 and comes into force on 6th April 2015.

Interpretation2

1

In this Order, “the Act” means the Social Security Pensions Act 1975.

2

In this Order, any reference to a pension is a reference to a pension which began before 6th April 20155.

Pension increases: annual rate and lump sums3

1

This article applies to an official pension if—

a

a qualifying condition is satisfied; or

b

the pension is—

i

a derivative pension,

ii

a substituted pension, or

iii

a relevant injury pension.

2

In relation to any period on or after 6th April 2015, the pension authority may increase the annual rate6 of the pension—

a

for a pension which began before 7th April 2014, by 1.2 per cent;

b

for a pension which began on or after 7th April 2014, by 1.2 per cent multiplied by—

\frac{A}{12}

where A is the number of complete months in the period between the beginning date of the pension and 6th April 2015.

3

In relation to a lump sum which is payable on or after 7th April 2014 but before 6th April 2015, the pension authority may increase the lump sum by 1.2 per cent multiplied by—

\frac{A}{12}

where A is the number of complete months in the period between the beginning date for the lump sum (or, if later, 7th April 2014) and the date on which it became payable.

Reductions in respect of guaranteed minimum pensions4

1

Where—

a

a person is entitled to a guaranteed minimum pension increase on 6th April 2015, and

b

entitlement to that guaranteed minimum pension arises from an employment from which (either directly, or indirectly by virtue of the payment of a transfer credit) entitlement to the official pension also arises,

the amount by reference to which any increase is calculated for the purposes of article 3(2) must be reduced by an amount equal to the rate of the guaranteed minimum pension unless the Treasury otherwise direct in accordance with the provisions of section 59A of the Act7.

2

Where on the death of a deceased spouse or civil partner a person becomes entitled to a guaranteed minimum pension in relation to a surviving spouse’s pension or a surviving civil partner’s pension, the amount by reference to which any increase is calculated for the purposes of article 3(2) must be reduced in accordance with section 59(5ZA) of the Act.

David EvennettAlun CairnsTwo of the Lords Commissioners of Her Majesty’s Treasury12th March 2015

EXPLANATORY NOTE

(This note is not part of the Order)

Under section 59 of the Social Security Pensions Act 1975 (c.60), the Treasury have to provide by Order for the increase in the rates of public service pensions. The Pensions (Increase) Act 1971 (c.56) defines certain terms and sets out when the pension “begins” (the day after the last day of service in respect of which the pension is payable) and how the increase applies to lump sums.

The increase is the percentage by which the Secretary of State for Work and Pensions has, by a direction under section 151(1) of the Social Security Administration Act 1992 (c.5), increased the additional pension entitlements accruing to employees in respect of earnings after 5th April 1978.

For pensions which began before 7th April 2014 the increase is 1.2 per cent. For pensions which began on or after 7th April 2014 the increases (following the calculation set out in article 3(2)) are as follows—

Table 1

Pensions Beginning	Pensions Increase
7th April 2014 to 21st April 2014	1.2%
22nd April 2014 to 21st May 2014	1.1%
22nd May 2014 to 21st June 2014	1.0%
22nd June 2014 to 21st July 2014	0.9%
22nd July 2014 to 21st August 2014	0.8%
22nd August 2014 to 21st September 2014	0.7%
22nd September 2014 to 21st October 2014	0.6%
22nd October 2014 to 21st November 2014	0.5%
22nd November 2014 to 21st December 2014	0.4%
22nd December 2014 to 21st January 2015	0.3%
22nd January 2015 to 21st February 2015	0.2%
22nd February 2015 to 21st March 2015	0.1%

Article 3(3) of the Order provides for increases on certain deferred lump sums which became payable on or after 7th April 2014 and before 6th April 2015.

The Order also makes provision for the amount by reference to which any increase in the rate of an official pension is to be calculated to be reduced by the amount equal to the rate of the guaranteed minimum pension entitlement deriving from the employment which gives rise to the official pension.

An impact assessment has not been produced for this instrument as no significant impact on the cost of business or the voluntary sector is foreseen.