The State Pension Revaluation for Transitional Pensions (No. 2) Order 2020

Statutory Instruments

2020 No. 1392

Social Security

The State Pension Revaluation for Transitional Pensions (No. 2) Order 2020

Made

1st December 2020

Laid before Parliament

3rd December 2020

Coming into force in accordance with article 1(2)

The Secretary of State for Work and Pensions has carried out a review in accordance with section 148AC(1) of the Social Security Administration Act 1992(1) and it appeared to the Secretary of State that the general level of prices in Great Britain has increased during the review period(2).

Accordingly the Secretary of State makes the following Order in exercise of the powers conferred by sections 148AC(3) and 189(1) and (4) of the Social Security Administration Act 1992(3).

Citation and commencement

1.—(1) This Order may be cited as the State Pension Revaluation for Transitional Pensions (No. 2) Order 2020.

(2) This Order comes into force on—

(a) 24th December 2020 for the purpose of making an award on a claim for a state pension under regulation 15(1) of the Social Security (Claims and Payments) Regulations 1987 (advance notice of retirement and claim for and award of pension)(4) to a person who reaches pensionable age(5) on or after 13th April 2021; and

(b) 12th April 2021 for all other purposes.

(3) In this article “a state pension” means a state pension under Part 1 of the Pensions Act 2014(6).

Increase in the general level of prices

2.  For the purposes of section 148AC(3) and (4) of the Social Security Administration Act 1992 (revaluation for transitional pensions under Pensions Act 2014), the increase in the general level of prices during the review period is 8.8 per cent.

Signed by authority of the Secretary of State for Work and Pensions

Guy Opperman

Parliamentary Under Secretary of State

Department for Work and Pensions

1st December 2020

EXPLANATORY NOTE

(This note is not part of the Order)

This Order is made following a review under section 148AC(1) of the Social Security Administration Act 1992 (c. 5) (“the Administration Act”) (revaluation for transitional pensions under Pensions Act 2014 (c.19)).

The Pensions Act 2014 created a new state pension for persons reaching pensionable age on or after 6th April 2016 (see Part 1 of that Act). Pensionable age has the meaning given by the rules in paragraph 1 of Schedule 4 to the Pensions Act 1995 (c. 26). The part of a person’s new state pension based on their pre-April 2016 contribution record that exceeds the full rate of the new state pension as at 6th April 2016 is commonly referred to as a “protected payment”. Paragraph 6(5) of Schedule 1 to the Pensions Act 2014 provides for the revaluing of protected payments by increasing these payments by the “revaluing percentage” specified in the last order under section 148AC(3) of the Administration Act to come into force before the person reached pensionable age.

Under section 148AC(4) of the Administration Act the revaluing percentage is the percentage of the increase in the general level of prices since 6th April 2016 (the review period specified by section 148AC(2)).

Article 2 of this Order specifies the revaluing percentage as 8.8 per cent.

Article 1(2) ensures that the revaluation of protected payments will apply to persons reaching pensionable age on or after 13th April 2021, including those who make an advance claim for a state pension under regulation 15(1) of the Social Security (Claims and Payments) Regulations 1987 (S.I. 1987/1968).

A full impact assessment has not been produced for this instrument as no, or no significant, impact on the private, voluntary or public sector is foreseen.

(1)

1992 c. 5; section 148AC was inserted by paragraph 17 of Schedule 12 to the Pensions Act 2014 (c. 19).

(2)

For the meaning of “review period” see section 148AC(2) of the Social Security Administration Act 1992 (c. 5).

(3)

Section 189 was amended by paragraph 109 of Schedule 7, and Schedule 8, to the Social Security Act 1998 (c. 14), paragraph 57(1) and (2) of Schedule 3 to the Social Security Contributions (Transfer of Functions, etc.) Act 1999 (c. 2), Schedule 6 to the Tax Credits Act 2002 (c. 21) and S.I. 2013/252. There are other amendments to section 189 but none is relevant to this Order.

(4)

S.I. 1987/1968; regulation 15(1) was amended by S.I. 2005/1551 and 2015/1985.

(5)

For the meaning of “pensionable age” see section 191 of the Social Security Administration Act 1992, which refers to paragraph 1 of Schedule 4 to the Pensions Act 1995 (c. 26).

(6)

2014 c. 19.