Social Security Act 1986

• Citation: 1986 c. 50
• Sections: 161

Section 9 Guaranteed minimum pensions.

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(8) In section 59 of that Act (increase of official pensions) the following subsection shall be inserted after subsection (5)—

(5A) Nothing in section 37A(13), (14) or (15) above authorises any deduction from an increase in the rate of an official pension under this section.

(9) In section 59A of that Act (modification of effect of section 59(5)) the following subsection shall be inserted after subsection (2)—

(2A) Where in any tax year—

(a) an increase is calculated in accordance with a direction under this section; and

(b) the amount by reference to which the increase is calculated, or any part of it, is increased in that tax year under section 37A above,

the increase calculated in accordance with the direction shall be reduced by the amount of the increase under section 37A above.

Section 30 Housing benefit finance.

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Section 37 Invalid care allowance for women.

(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2) The Social Security Benefit (Dependency) Regulations 1977 shall have effect, and shall be treated as having had effect from 22nd December 1984, as if the following sub-paragraphs were substituted for sub-paragraphs (a) and (b) of paragraph 7 of Schedule 2 (increases of invalid care allowance)—

(a) a spouse who is not engaged in any one or more employments from which the spouse’s weekly earnings exceed that amount; or

(b) some person (not being a child) who—

(i) has the care of a child or children in respect of whom the beneficiary is entitled to child benefit, being a child or children in respect of whom the beneficiary is entitled to an increase of an invalid care allowance or would be so entitled but for the provisions of any regulations for the time being in force under the Act relating to overlapping benefits;

(ii) is not undergoing imprisonment or detention in legal custody;

(iii) is not engaged in any one or more employments (other than employment by the beneficiary in caring for a child or children in respect of whom the beneficiary is entitled to child benefit) from which the person’s weekly earnings exceed that amount;

(iv) is not absent from Great Britain, except for any period during which the person is residing with the beneficiary outside Great Britain and for which the beneficiary is entitled to an invalid care allowance.

Section 39 Industrial injuries and diseases.

Schedule 3 to this Act shall have effect in relation to Chapters IV and V of Part II of the Social Security Act 1975 and associated enactments.

Section 51A Community charge benefits:administration.

(1) Regulations may provide as follows as regards any community charge benefit—

(a) for requiring a claim for a benefit to be made by such person, in such manner and within such time as may be prescribed;

(b) for treating a claim made in such circumstances as may be prescribed as having been made at such date earlier or later than that at which it is made as may be prescribed;

(c) for permitting a claim to be made, or treated as if made, for a period wholly or partly after the date on which it is made;

(d) for permitting an award on a claim to be made for such a period subject to the condition that the claimant satisfies the requirements for entitlement when benefit becomes payable, or any right to a reduction or a consequential reduction becomes available, under the award;

(e) for a review of any award if those requirements are found not to have been satisfied;

(f) for the disallowance on any ground of a person’s claim for a benefit to be treated as a disallowance of any further claim by that person for that benefit until the grounds of the original disallowance have ceased to exist;

(g) for enabling one person to act for another in relation to a claim for a benefit and for enabling such a claim to be made and proceeded with in the name of a person who has died;

(h) for requiring any information or evidence needed for the determination of a claim or of any question arising in connection with a claim to be furnished by such person as may be prescribed in accordance with the regulations;

(i) for the time when and manner in which any benefit (or part) which takes the form of a payment is to be paid, and for the information and evidence to be furnished in connection with the payment;

(j) for the time when the right to make a reduction or consequential reduction may be exercised;

(k) for notice to be given of any change of circumstances affecting the continuance of entitlement to a benefit;

(kk) for the day on which entitlement to a benefit is to begin or end ;

(l) for calculating the amount of a benefit according to a prescribed scale or otherwise adjusting it so as to avoid fractional amounts or facilitate computation;

(m) for suspending (in whole or in part) any payment or right to make a reduction or consequential reduction, where it appears to the authority which allowed a benefit that a question arises whether the conditions for entitlement to the benefit are or were fulfilled or whether the award ought to be revised or whether an appeal ought to be brought against the award;

(n) for withholding in prescribed circumstances any payment or right to make a reduction or consequential reduction, and for subsequently making in prescribed circumstances any withheld payment or restoring in prescribed circumstances any right to make a reduction or consequential reduction;

(o) in the case of any benefit (or part) which takes the form of a payment, for payment or distribution to or among persons claiming to be entitled on the death of any person, and for dispensing with strict proof of their title;

(oo) in the case of benefit (or part) which takes the form of a payment, for the circumstances and manner in which payment may be made to one person on behalf or another for any purpose, which may be to discharge, in whole or in part, an obligation of the person entitled to the benefit or any other person;

(p) for making a payment on account of a benefit, or conferring a right to make a reduction or consequential reduction on account, where no claim has been made and it is impracticable for one to be made immediately;

(q) for making a payment on account of a benefit, or conferring a right to make a reduction or consequential reduction on account, where a claim has been made but it is impracticable for the claim or an appeal, reference, review or application relating to it to be determined immediately;

(r) for making a payment on account of a benefit, or conferring a right to make a reduction or consequential reduction on account, where an award has been made but it is impracticable to institute the benefit immediately;

(s) generally as to administration.

(2) Regulations under this section may include provision that prescribed provisions shall apply instead of prescribed provisions of the 1987 Act or the 1988 Act, or that prescribed provisions of the 1987 Act or the 1988 Act shall not apply or shall apply subject to prescribed amendments or adaptations.

(3) References in subsection (2) above to the 1987 Act or the 1988 Act include references to regulations made under the Act concerned.

Section 51B Administration of benefits: general.

(1) Regulations may provide for a claim for one relevant benefit to be treated, either in the alternative or in addition, as a claim for any other relevant benefit that may be prescribed.

(2) Regulations may provide for treating a payment made or right conferred by virtue of regulations under section 51(1)(t) above, or of regulations under section 51A(I)(p) to (r) above, as made or conferred on account of any relevant benefit that is subsequently awarded or paid.

(3) For the purposes of subsections (1) and (2) above relevant benefits are—

(a) any benefit to which section 51 above applies, and

(b) any community charge benefit.

Section 52 Adjudication.

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Section 54 Breach of regulations.

(1) Regulations under any of the benefit Acts may provide for contravention of, or failure to comply with, any provision contained in regulations made under that Act to be an offence under that Act and for the recovery, on summary conviction of any such offence, of penalties not exceeding—

(a) for any one offence, level 3 on the standard scale; or

(b) for an offence of continuing any such contravention or failure after conviction, £40 for each day on which it is so continued.

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Section 56 Legal proceedings.

(1) Any person authorised by the Secretary of State in that behalf may conduct any proceedings under the benefit Acts before a magistrates’ court . . . .

(2) Notwithstanding anything in any Act—

(a) proceedings for an offence under the benefit Acts . . . may be begun at any time within the period of three months from the date on which evidence, sufficient in the opinion of the Secretary of State to justify a prosecution for the offence, comes to his knowledge or within a period of twelve months from the commission of the offence, whichever period last expires; . . .

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(3) For the purposes of subsection (2) above—

(a) a certificate purporting to be signed by or on behalf of the Secretary of State as to the date on which such evidence as is mentioned in paragraph (a) of that subsection came to his knowledge shall be conclusive evidence of that date; . . .

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(5) In the application of this section to Scotland, the following provisions shall have effect in substitution for subsections (1) to (4A) above—

(a) proceedings for an offence under the benefit Acts may, notwithstanding anything in section 136 of the Criminal Procedure (Scotland) Act 1995 , be commenced at any time within the period of three months from the date on which evidence sufficient in the opinion of the Lord Advocate to justify proceedings comes to his knowledge, or within the period of twelve months from the commission of the offence, whichever period last expires;

(b) for the purposes of this subsection—

(i) a certificate purporting to be signed by or on behalf of the Lord Advocate as to the date on which such evidence as is mentioned above came to his knowledge shall be conclusive evidence thereof;

(ii) subsection (3) of section 136 of the said Act of 1995 (date of commencement of proceedings) shall have effect as it has effect for the purposes of that section.

Section 57 Offences by bodies corporate.

(1) Where an offence under any of the benefit Acts which has been committed by a body corporate is proved to have been committed with the consent or connivance of, or to be attributable to any neglect on the part of, a director, manager, secretary or other similar officer of the body corporate, or any person who was purporting to act in any such capacity, he, as well as the body corporate, shall be guilty of that offence and be liable to be proceeded against accordingly.

(2) Where the affairs of a body corporate are managed by its members, subsection (1) above applies in relation to the acts and defaults of a member in connection with his functions of management as if he were a director of the body corporate.

Section 70 Child benefit in respect of children educated otherwise than at educational establishments.

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(2) Regulations purporting to be made under section 24(1) of that Act and made before the passing of this Act shall be treated as validly made.

Section 76 Amendments relating to forfeiture of benefits.

(1) The Forfeiture Act 1982 shall be amended as follows.

(2) The following subsections shall be inserted after subsection (1) of section 4 (Social Security Commissioner to determine whether forfeiture rule applies to social security benefits)—

(1A) Where a Commissioner determines that the forfeiture rule has precluded a person (in this section referred to as “ the offender ”) who has unlawfully killed another from receiving the whole or part of any such benefit or advantage, the Commissioner may make a decision under this subsection modifying the effect of that rule and may do so whether the unlawful killing occurred before or after the coming into force of this subsection.

(1B) The Commissioner shall not make a decision under subsection (1A) above modifying the effect of the forfeiture rule in any case unless he is satisfied that, having regard to the conduct of the offender and of the deceased and to such other circumstances as appear to the Commissioner to be material, the justice of the case requires the effect of the rule to be so modified in that case.

(1C) Subject to subsection (1D) below, a decision under subsection (1A) above may modify the effect of the forfeiture rule in either or both of the following ways—

(a) so that it applies only in respect of a specified proportion of the benefit or advantage;

(b) so that it applies in respect of the benefit or advantage only for a specified period of time.

(1D) Such a decision may not modify the effect of the forfeiture rule so as to allow any person to receive the whole or any part of a benefit or advantage in respect of any period before the commencement of this subsection.

(1E) If the Commissioner thinks it expedient to do so, he may direct that his decision shall apply to any future claim for a benefit or advantage under a relevant enactment, on which a question such as is mentioned in subsection (1) above arises by reason of the same unlawful killing.

(1F) It is immaterial for the purposes of subsection (1E) above whether the claim is in respect of the same or a different benefit or advantage.

(1G) For the purpose of obtaining a decision whether the forfeiture rule should be modified the Secretary of State may refer to a Commissioner for review any determination of a question such as is mentioned in subsection (1) above that was made before the commencement of subsections (1A) to (1F) above (whether by a Commissioner or not) and shall do so if the offender requests him to refer such a determination.

(1H) Subsections (1A) to (1F) above shall have effect on a reference under subsection (1G) above as if in subsection (1A) the words “it has been determined” were substituted for the words “a Commissioner determines”.

(3) In subsection (2) of that section, after the words “that subsection” there shall be inserted the words “or any decision under subsection (1A) above”.

(4) In section 5 (exclusion of murderers) after the word “Act”, in the second place where it occurs, there shall be inserted the words “or in any decision made under section 4(1A) of this Act”.

Section 77 Refreshments for school pupils.

(1) The words “ and may do so either on the premises or at any place other than the school premises where education is being provided ” shall be inserted—

(a) after “ refreshment ” in subsection (1)(a) of section 22 of the Education Act 1980; and

(b) after “ management ” in subsection (1)(a) of section 53 of the Education (Scotland) Act 1980.

(2) The following subsections shall be substituted for subsections (2) and (3) of each of those sections—

(2) Subject to subsection (3) below, an authority must charge for anything provided by them under subsection (1)(a) above and must charge every pupil the same price for the same quantity of the same item.

(3) In relation to a pupil whose parents are in receipt of income support or who is himself in receipt of it an authority shall so exercise the power conferred by subsection (1)(a) above as to ensure that such provision is made for him in the middle of the day as appears to the authority to be requisite and shall make that provision for him free of charge.

Section 82 Amendments of enactments relating to social security in Northern Ireland.

The enactments relating to social security in Northern Ireland specified in Schedule 9 to this Act shall have effect subject to the amendments there specified.

Section 83 Orders and regulations (general provisions).

(1) Section 61B(1) to (4) of the Social Security Pensions Act 1975 (extent of powers) shall apply to powers conferred by this Act to make regulations or orders as they apply to any power to make regulations or orders conferred by that Act but as if for references to that Act there were substituted references to this Act.

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(4) A statutory instrument—

(a) which contains (whether alone or with other provisions) orders or regulations under this Act, other than orders under section 88 below, and

(b) which is not subject to any requirement that a draft of the instrument be laid before and approved by a resolution of each House of Parliament,

shall be subject to annulment in pursuance of a resolution of either House of Parliment.

(5) An order under section . . . 85 below shall not be made without the consent of the Treasury.

(6) A power conferred by this Act to make any regulations or order, where the power is not expressed to be exercisable with the consent of the Treasury, shall if the Treasury so direct be exercisable only in conjunction with them.

Section 84 General interpretation.

(1) In this Act, unless the context otherwise requires,—

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“ the benefit Acts ” means—

(a) the Social Security Act 1973;

(b) the Social Security Acts 1975 to 1991 ;

(c) the Industrial Injuries and Diseases (Old Cases) Act 1975;

(d) the Child Benefit Act 1975;

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(b) . . .—

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“ Housing Revenue Account rebate ”, in relation to a local authority in England and Wales, means a rent rebate for a tenant of a Housing Revenue Account dwelling of that authority;

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“ modifications ” includes additions, omissions and amendments, and related expressions shall be construed accordingly;

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“ prescribed ” means specified in or determined in accordance with regulations;

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“ regulations ” means regulations made by the Secretary of State under this Act;

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(4) In this Act—

(a) references to the United Kingdom include references to the territorial waters of the United Kingdom; and

(b) references to Great Britain include references to the territorial waters of the United Kingdom adjacent to Great Britain.

Section 85 Financial provision.

(1) There shall be paid out of money provided by Parliament—

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(d) any sums falling to be paid by the Secretary of State under or by virtue of this Act by way of travelling expenses;

(e) any other expenses of the Secretary of State attributable to this Act;

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(g) any increase attributable to this Act in the sums payable out of money provided by Parliament under any other Act.

(2) Any increase attributable to this Act in the sums to be charged on and paid out of the Consolidated Fund under any other Act shall be charged on and paid out of that Fund.

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(5) Subject to subsections (6) . . . below, so far as it relates to payments out of money provided by Parliament, any sum recovered by the Secretary of State under or by virtue of this Act shall be paid into the Consolidated Fund.

(6) So far as any such sum relates to a payment out of the National Insurance Fund, it shall be paid into that Fund.

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(13) In this section “ Act ” includes an Act of the Parliament of Northern Ireland.

Section 86 Minor and consequential amendments and repeals.

(1) The enactments mentioned in Schedule 10 to this Act shall have effect with the amendments there specified.

(2) The enactments mentioned in Schedule 11 to this Act (which include enactments already obsolete or unnecessary) are repealed to the extent specified in the third column of that Schedule.

Section 87 Extent.

(1) The following provisions of this Act extend to Northern Ireland—

(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) section 61 above;

(c) section 66 above, so far as relating to paragraph 3(6) of Schedule 6;

(d) section 81 above;

(e) sections 83 to 86 above;

(f) this section;

(g) sections 88 to 90 below.

(2) Section 82 above (with Schedule 9) extends to Northern Ireland only.

(3) Sections 25 and 30(6) and (10) above do not extend to Scotland.

(4) Where any enactment repealed or amended by this Act extends to any part of the United Kingdom, the repeal or amendment extends to that part.

(5) Except as provided by this section, this Act extends to England and Wales and Scotland, but not to Northern Ireland.

Section 88 Commencement.

(1) Subject to the following provisions of this section, the provisions of this Act shall come into force on such day as the Secretary of State may by order made by statutory instrument appoint, and different days may be appointed in pursuance of this section for different provisions or different purposes of the same provision.

(2) In relation to section 52 above (including Schedule 5) and section 82 above (including Schedule 9) for the reference to the Secretary of State in subsection (1) above there shall be substituted a reference to the Lord Chancellor and the Secretary of State, acting jointly.

(3) Without prejudice to the generality of subsection (1) above, different days may be appointed under that subsection for the purposes of Part III of this Act in relation to different descriptions of persons, and those descriptions of persons may be determined by any criteria that appear to the Secretary of State to be appropriate.

(4) If an order under subsection (1) above brings paragraph 8 of Schedule 3 to this Act into force on the same day as section 36 above, the former shall be deemed to have come into force immediately before the latter.

(5) The following provisions of this Act—

section 30(4), (8), (9) and (10);

section 37;

section 38(4);

section 45;

section 61;

sections 63 and 64;

section 70;

section 71(4) and (5);

section 72;

section 74;

section 76;

section 81;

section 83 to 85;

section 86(1) so far as relating to paragraphs 2, 22, 23(3), 26(1) and (2), 27, 30(b), (c) and (d)(ii), 82, 86, 94(a), 98, 99, 106 and 107 of Schedule 10;

section 86(2) so far as relating—

(a) to section 37(3) of the Social Security Act 1975 and the reference to paragraph (b) of that subsection in section 22(2) of the Social Security (Miscellaneous Provisions) Act 1977;

(b) to section 141(2) of the Social Security Act 1975;

(c) to section 52D(2) and (3) of the Social Security Pensions Act 1975 and paragraph 12 of Schedule 1A to that Act;

(d) to section 10 of the Social Security Act 1980; and

(e) to section 29 of the Social Security and Housing Benefits Act 1982;

section 87;

this section; and

sections 89 and 90;

shall come into force on the day this Act is passed.

Section 89 Transitional.

(1) Regulations may make such transitional and consequential provision (including provision modifying any enactment contained in this or any other Act) or saving as the Secretary of State considers necessary or expedient in preparation for or in connection with the coming into force of any provision of this Act or the operation of any enactment which is repealed or amended by a provision of this Act during any period when the repeal or amendment is not wholly in force.

(1A) Without prejudice to any other powers conferred on him, the Secretary of State—

(a) may, for the purpose of making provision with respect to persons falling within subsection (IB) below, modify or revoke any regulations made under this section if he considers it necessary or expedient to do so in consequence of, or otherwise in connection with, provisions of Acts, schemes, arrangements or other instruments coming into force after the passing of this Act; and

(b) may, for the purpose of consolidation, revoke and re-enact, with any modifications which he considers necessary or desirable, any regulations under this section.

(1B) The persons referred to in subsection (IA)(a) above are any persons—

(a) to whom regulations under subsection (1) above apply; or

(b) to whom regulations made under Part 11 of this Act relating to income support applied at any time before the passing of the Social Security Act 1989.

(2) The reference to regulations in subsection (1) above includes a reference—

(a) to regulations made by the Lord Chancellor; and

(b) to regulations made by the Lord Chancellor and the Secretary of State, acting jointly.

Section 90 Citation.

(1) This Act may be cited as the Social Security Act 1986.

(2) This Act, except section 77 above, may be cited together with the Social Security Acts 1975 to 1985 as the Social Security Acts 1975 to 1986.

Section 1

In this Schedule—

“ member ” means a member of a scheme;

“ rules ” means the rules of a scheme; and

“ scheme ” means a personal pension scheme.

Section 2

The Secretary of State may prescribe descriptions of persons by whom or bodies by which a scheme may be established and, if he does so, a scheme may only be established by a person or body of a prescribed description.

Section 3

A scheme must comply with such requirements as may be prescribed as regards the investment of its resources and with any direction of the Occupational Pensions Board that—

(a) no part, or no more than a specified proportion, of the scheme’s resources shall be invested in investments of a specified class or description;

(b) there shall be realised, before the end of a specified period, the whole or a specified proportion of investments of a specified class or description forming part of the scheme’s resources when the direction is given.

Section 4

A scheme must comply with such requirements as may be prescribed as regards the part—

(a) of any payment or payments that are made to the scheme by or on behalf of a member;

(b) of any income or capital gain arising from the investment of payments such as are mentioned in sub-paragraph (a) above; or

(c) of the value of rights under the scheme,

that may be used—

(i) to defray the administrative expenses of the scheme;

(ii) to pay commission; or

(iii) in any other way which does not result in the provision of benefits for or in respect of members.

Section 5

(1) Subject to sub-paragraph (2) below, all minimum contributions which are paid to a scheme in respect of one of its members must be applied so as to provide money purchase benefits for or in respect of that member, except so far as they are used—

(a) to defray the administrative expenses of the scheme; or

(b) to pay commission.

(2) If regulations are made under paragraph 4 above, minimum contributions may be used in any way which the regulations permit, but not in any way not so permitted except to provide money purchase benefits for or in respect of the member.

Section 6

A scheme must satisfy such other requirements as may be prescribed.

Section 7

(1) Unless the rules make provision such as is mentioned in sub-paragraph (2) below, the protected rights of a member are his rights to money purchase benefits under the scheme.

(2) Rules may provide that a member’s protected rights are his rights under the scheme which derive from any payment of minimum contributions to the scheme, together with any rights of his to money purchase benefits which derive from protected rights under another personal pension scheme or protected rights (within the meaning of the Social Security Pensions Act 1975) under an occupational pension scheme which have been the subject of a transfer payment and such other rights as may be prescribed.

(3) Where rules make such provision as is mentioned in sub-paragraph (2) above, they shall also make provision for the identification of the protected rights.

(4) The value of protected rights . . . ;

(a) shall in the case of any such protected rights as are mentioned in sub-paragraph (2) above be calculated in a manner no less favourable than that in which the value of any other rights of the member to money purchase benefits under the scheme are calculated;

(b) subject to that, shall be calculated and verified in such manner as may be prescribed.

(5) The power to make regulations conferred by sub-paragraph (4) above includes power to provide that protected rights . . . are to be calculated and verified in such manner as may be approved in particular cases—

(a) by prescribed persons; or

(b) by persons with prescribed professional qualifications or experience; or

(c) by persons approved by the Secretary of State,

and power to provide that they shall be calculated and verified in accordance with guidance prepared by a prescribed body.

Section 8

The rules shall provide for effect to be given to the protected rights of a member—

(a) in any case where sub-paragraph (2) of paragraph 9 below so requires, by the purchase of such an annuity as is mentiioned in that sub-paragraph, and

(b) in any other case, in such of the ways permitted by that paragraph as the rules specify,

and they shall not provide for any part of a member’s protected rights to be discharged otherwise than in accordance with that paragraph.

(4) The value of protected rights such as are mentioned in sub-paragraph (2) above—

(a) shall be calculated in a manner no less favourable than that in which the value of any other rights of the member to money purchase benefits under the scheme are calculated;

(b) subject to that, shall be calculated and verified in such manner as may be prescribed.

(5) The power to make regulations conferred by sub-paragraph (4) above included power to provide that protected rights such as are mentioned in sub-paragraph (2) above are to be calculated and verified in such manner as may be approved in particular cases—

(a) by prescribed persons; or

(b) by persons with prescribed professional qualifications or experience; or

(c) by persons approved by the Secretary of State,

and power to provide that they shall be calculated and verified in accordance with guidance prepared by a prescribed body.

Section 8

Rules must provide for effect to be given in a manner permitted by paragraph 9 below to the protected rights of every member and must not provide for any part of any member’s protected rights to be discharged in any other way.

Section 9

(1) Effect may be given to protected rights—

(a) by the provision by the scheme of a pension which—

(i) complies with the requirements of sub-paragraph (7) below; and

(ii) satisfies such conditions as may be prescribed; or

(b) in such circumstances and subject to such conditions as may be prescribed, by the making of a transfer payment—

(i) to another personal pension scheme; or

(ii) to an occupational pension scheme,

where the scheme to which the payment is made satisfies such requirements as may be prescribed.

(2) Subject to sub-paragraphs (4) and (6) below if—

(a) the rules of the scheme do not provide for a pension; or

(b) the member so elects,

then, except to the extent that effect is given to protected rights in accordance with sub-paragraph (3) below, effect shall be given to those rights by the purchase by the scheme of an annuity which—

(i) complies with the requirements of sub-paragraphs (7) and (8) below; and

(ii) satisfies such conditions as may be prescribed.

(2) If—

(a) the rules of the scheme do not provide for a pension;or

(b) the member so elects,

effect may be given to protected rights by the purchase by the scheme of an annuity which—

(i) complies with the requirementrs of sub=paragraph (7) and (8) below; and

(ii) satisfies such conditions as may be prescribed.

(3) Effect may be given to protected rights by the provision of a lump sum if—

(a) the lump sum is payable on a date which is either the date on which the member attains pensionable age or such later date as has been agreed by him; and

(b) the annual rate of a pension under sub-paragraph (1) above or an annuity under sub-paragraph (2) above giving effect to the protected rights and commencing on the date on which the lump sum is payable would not exceed the prescribed amount; and

(c) the circumstances are such as may be prescribed; and

(d) the amount of the lump sum is calculated in a manner satisfactory to the Occupational Pensions Board by reference to the amount of the pension or annuity.

(4) If the member has died without effect being given to protected rights under sub-paragraph (1), (2) or (3) above, effect may be given to them in such manner as may be prescribed.

(5) No transaction is to be taken to give effect to protected rights unless it falls within this paragraph.

(6) Effect need not be given to protected rights if they have been extinguished by the payment of a personal pension protected rights premium.

(7) A pension or annuity complies with this sub-paragraph if—

(a) it commences—

(i) on the date on which the member attains pensionable age; or

(ii) on such later date as has been agreed by him,

and continues until the date of his death;

(b) in a case where the member dies while it is payable to him and is survived by a widow or widower—

(i) it is payable to the widow or widower in prescribed circumstances and for the prescribed period at an annual rate which at any given time is one-half of the rate at which it would have been payable to the member if the member had been living at that time; or

(ii) where that annual rate would not exceed a prescribed amount and the circumstances are such as may be prescribed, a lump sum calculated in a manner satisfactory to the Occupational Pensions Board is provided in lieu of it.

(7A) As respects the period of 5 years beginning with the commencement of the pension or annuity referred to in sub-paragraph (7) above, that sub-paragraph shall have effect in relation to that pension or annuity as if the words “at least” were inserted immediately before the words “one-half” in paragraph (b)(i).

(8) An annuity complies with the requirements of this sub-paragraph if it is provided by an insurance company which—

(a) satisfies prescribed conditions;

(b) complies with such conditions as may be prescribed as to the calculation of annuities provided by it and as to the description of persons by or for whom they may be purchased; and

(c) subject to sub-paragraph (9) below, has been chosen by the member.

(9) A member is only to be taken to have chosen an insurance company if he gives notice of his choice to the trustees or managers of the scheme within the prescribed period and in such manner and form as may be prescribed, and with any such supporting evidence as may be prescribed; and, if he does not do so, the trustees or managers may themselves choose the insurance company instead.

Section 10

The Occupational Pensions Board must be satisfied that a scheme complies with any such requirements as may be prescribed for meeting the whole or a prescribed part of any liability in respect of protected rights under the scheme which the scheme is unable to meet from its own resources—

(a) by reason of the commission by any person of a criminal offence;

(b) in such other circumstances as may be prescribed.

Section 11

Rules must not allow, except in such circumstances as may be prescribed, the suspension or forfeiture of a member’s protected rights or of payments giving effect to them.

Section 12

Nothing in this Schedule shall be taken to prejudice any requirements with which a scheme must comply if it is to qualify for tax-exemption or tax-approval.

Section 1

The Social Security Pensions Act 1975 shall be amended as follows.

Section 2

In subsection (1) of section 26 (contracting-out of full contributions and benefits) after the word “provides” there shall be inserted the words “or falls to be treated as providing”.

Section 3

In section 29 (contracted-out rates of benefit) the following subsections shall be inserted after subsection (2)—

(2A) Subject to subsection (2B) below, where for any period minimum payments have been made in respect of an earner to an occupational pension scheme which, in relation to the earner’s employment, is a money purchase contracted-out scheme, then, for the purposes of this section and sections 16(2B), 28(7A) and 59(1A) of the principal Act—

(a) the earner shall be treated, as from the date on which he reaches pensionable age, as if he were entitled to a guaranteed minimum pension at a prescribed weekly rate arising from that period in that employment; and

(b) in prescribed circumstances, in relation to any widow or widower of the earner—

(i) if the earner died after reaching pensionable age, any widow or widower of the earner shall be treated as entitled to a guaranteed minimum pension at a rate equal to one-half of the rate prescribed under paragraph (a) above; and

(ii) if the earner died before reaching pensionable age, any widow or widower of the earner shall be treated as entitled to a guaranteed minimum pension at a prescribed weekly rate arising from that period.

(2B) Where the earner is a married woman or widow, subsection (2A) above shall not have effect in relation to any period during which an election that her liability in respect of primary Class 1 contributions shall be a liability to contribute at a reduced rate is operative.

(2C) The power to prescribe a rate conferred by subsection (2A)(a) above includes power to prescribe a nil rate.

Section 4

In section 30 (contracted-out employment)—

(a) in subsection (1)(a), after the word “scheme” there shall be inserted the words “or his employer makes minimum payments in respect of the earner’s employment to a money purchase contracted-out scheme”;

(b) the following subsections shall be inserted after subsection (1)—

(1A) The minimum payment in respect of an earner for any tax week shall be the rebate percentage of so much of the earnings paid to or for the benefit of the earner as exceeds the lower earnings limit for the tax week but does not exceed the upper earnings limit for it; and in this subsection “ rebate percentage ” means the percentage arrived at by adding—

(a) the percentage by which for the time being under section 27(2) above the contracted-out percentage of primary Class 1 contributions is less than the normal percentage; and

(b) the percentage by which for the time being under that subsection the contracted-out percentage of secondary Class 1 contributions is less than the normal percentage.

(1B) The references to the upper and lower earnings limits in subsection (1A) above are references, in the case of an earner who is paid otherwise than weekly, to their prescribed equivalents under section 4(2) and (6) of the principal Act.

(1C) Regulations may make provision—

(a) for the manner in which, and time at which or period within which, minimum payments are to be made;

(b) for the recovery by employers of amounts in respect of the whole or part of minimum payments by deduction from earnings;

(c) for calculating the amounts payable according to a scale prepared from time to time by the Secretary of State or otherwise adjusting them so as to avoid fractional amounts or otherwise facilitate computation;

(d) for requiring that the liability in respect of a payment made in a tax week, in so far as the liability depends on any conditions as to a person’s age on retirement, shall be determined as at the beginning of the week or as at the end of it;

(e) for securing that liability is not avoided or reduced by a person following in the payment of earnings any practice which is abnormal for the employment in respect of which the earnings are paid;

(f) without prejudice to sub-paragraph (e) above, for enabling the Secretary of State, where he is satisfied as to the existence of any practice in respect of the payment of earnings whereby the incidence of minimum payments is avoided or reduced by means of irregular or unequal payments of earnings, to give directions for securing that minimum payments are payable as if that practice were not followed;

(g) for the intervals at which, for the purposes of minimum payments, payments of earnings are to be treated as made; and

(h) for this section to have effect, in prescribed cases, as if for any reference to a tax week there were substituted a reference to a prescribed period.

Section 5

In section 32 (contracted-out schemes)—

(a) in subsection (2), the words “ or it satisfies subsection (2A) below. ” shall be inserted after paragraph (b) (but not as part of it);

(b) the following subsections shall be inserted after that subsection—

(2A) An occupational pension scheme satisfies this subsection only if—

(a) the requirements imposed by or by virtue of Schedule 1 to the Social Security Act 1986, modified under subsection (2B) below, are satisfied in its case;

(b) it complies with section 40(1) below; and

(c) the rules of the scheme applying to protected rights are framed so as to comply with the requirements of any regulations prescribing the form and content of rules of contracted-out schemes and with such other requirements as to form and content (not inconsistent with regulations) as may be imposed by the Occupational Pensions Board as a condition of contracting-out, either generally or in relation to a particular scheme.

(2B) The modifications of Schedule 1 are—

(a) that for the references to a personal pension scheme there shall be substituted references to an occupational pension scheme;

(b) that for the references in paragraph 5 to minimum contributions there shall be substituted references to minimum payments and any payments by the Secretary of State under section 7 of the Social Security Act 1986;

(c) that for paragraph 7(2) there shall be substituted—

(2) The rules of the scheme may provide that a member’s protected rights are his rights under the scheme which derive from the payment of minimum payments (within the meaning of the Social Security Pensions Act 1975) together with any payments by the Secretary of State to the scheme under section 7 of this Act in respect of the member and any rights of the member to money purchase benefits which derive from protected rights (within the meaning of the Social Security Pensions Act 1975) under another occupational pension scheme or protected rights under a personal pension scheme which have been the subject of a transfer payment and such other rights as may be prescribed.;

(d) that in paragraph 9—

(i) for the reference to an occupational pension scheme there shall be substituted a reference to a personal pension scheme; and

(ii) for the reference to a personal pension protected rights premium there shall be substituted a reference to a contracted-out protected rights premium; and

(e) that paragraph 10 shall not apply to public service pension schemes.

(2C) A contracting-out certificate shall state whether the scheme is contracted-out by virtue of subsection (2) or subsection (2A) above; and where a scheme satisfies both of those subsections the employers, in their application for a certificate, shall specify one of the subsections as the subsection by virtue of which they desire the scheme to be contracted-out.

(2D) A scheme which has been contracted-out by virtue of one of those subsections may not become contracted-out by reason of the other, except in prescribed circumstances.

Section 6

(1) The words “ which is not a money purchase contracted-out scheme ” shall be inserted after the words “occupational pension scheme” in—

(a) section 33(1);

(b) section 36(1);

(c) section 40(3) and (4);

(d) section 41A(1);

(e) section 42(1);

(f) section 44(1);

(g) section 44A(1);

(h) section 45(1);

(j) section 51;

(k) paragraph 4(1) and (2) of Schedule 2.

(2) If section 9 above comes into force after this paragraph, the amendment to section 36(1) made by sub-paragraph (1) above shall be made in the subsection both as amended by section 9 above and as unamended.

(3) The words “ or a money purchase contracted-out scheme ” shall be inserted after the words “public service pension scheme” in—

(a) section 40(2);

(b) section 41(1);

(c) section 41E(1).

Section 7

The following section shall be inserted after section 44—

Money purchase schemes: contracted-out protected rights premium.

(44ZA)

(1) In the case of a scheme which is or has been a money purchase contracted-out scheme the Occupational Pensions Board may, for the event of, or in connection with, its ceasing to be contracted-out, approve any arrangements made or to be made in relation to the scheme, or for its purposes, for the preservation or transfer of protected rights under the scheme.

(2) If the scheme ceases to be a contracted-out scheme (whether by being wound up or otherwise) and the Occupational Pensions Board either—

(a) have withdrawn their approval of previously approved arrangements relating to it; or

(b) have declined to approve arrangements relating to it,

the Board may issue a certificate to that effect.

(3) A certificate issued under subsection (2)(a) or (b) above shall be cancelled by the Board if they subsequently approve the arrangements.

(4) If the scheme ceases to be a contracted-out scheme (whether by being wound up or otherwise), a state scheme premium shall be payable, except in prescribed circumstances,—

(a) in respect of each earner whose protected rights under the scheme are not subject to approved arrangements and have not been disposed of so as to discharge the trustees or managers of the scheme under section 52C of or paragraph 16 of Schedule 1A to this Act; and

(b) in respect of each person who has become entitled to receive a pension under the scheme giving effect to protected rights which are not subject to approved arrangements.

(5) A premium under subsection (4) above may be referred to as a “contracted-out protected rights premium”.

(6) A contracted-out protected rights premium shall be paid by the prescribed person, within the prescribed period, to the Secretary of State.

(7) The amount of a contracted-out protected rights premium payable in respect of any person shall be the cash equivalent of the protected rights in question, calculated and verified in the prescribed manner.

(8) Where a contracted-out protected rights premium is paid in respect of a person—

(a) the rights whose cash equivalent is included in the premium shall be extinguished; and

(b) section 29(2) and (2A) above and section 4 of the Social Security Act 1986 shall have effect in relation to that person and a widow or widower of that person as if any guaranteed minimum pension to which that person or any such widow or widower is treated as entitled under those provisions and which derives from the minimum payments, minimum contributions (within the meaning of the Social Security Act 1986) or transfer payment or payments from which those rights derive were reduced by the appropriate percentage.

(9) In subsection (8) above “ the appropriate percentage ” means, subject to the following provisions of this section,

where—

(a) X = the amount of the premium together with, if the person in respect of whom it falls to be paid gives notice to the prescribed person within the prescribed period—

(i) the cash equivalent, calculated and verified in the prescribed manner, and paid to the Secretary of State within the prescribed period, of any other rights which he has under the scheme and specifies in the notice; and

(ii) the amount of any voluntary contribution paid to the Secretary of State within the prescribed period by, or in respect of, the person concerned; and

(b) Y = the cost of providing any guaranteed minimum pension such as is mentioned in subsection (8) above.

(10) If the appropriate percentage, as calculated under subsection (9) above would fall between two whole numbers, it is to be taken to be the lower number.

(11) If it would be over 1000, it is to be taken to be 100.

(12) The remainder after the reduction for which subsection (8) above provides—

(a) if it would contain a fraction of 1p, is to be treated as the nearest lower whole number of pence; and

(b) if it would be less than a prescribed amount, is to be treated as nil.

(13) The power to make regulations conferred by subsections (7) and (9) above includes power to provide that cash equivalents are to be calculated and verified in such manner as may be approved in particular cases—

(a) by prescribed persons;

(b) by persons with prescribed professional qualifications or experience; or

(c) by persons approved by the Secretary of State,

and power to provide that they shall be calculated and verified in accordance with guidance prepared by a prescribed body.

(14) The cost of providing the appropriate percentage of the guaranteed minimum pension shall be certified by the Secretary of State, and in calculating and certifying it the Secretary of State—

(a) shall apply whichever of the prescribed actuarial tables (as in force at the time when the scheme ceases to be appropriate) is applicable in accordance with the regulations prescribing the tables; and

(b) may make such adjustments as he thinks necessary for avoiding fractional amounts.

Section 8

In section 48 (guaranteed minimum pensions to be inalienable)—

(a) in subsection (1)—

(i) after the word “scheme”, in the first place where it occurs, there shall be inserted the words “or to payments giving effect to protected rights under such a scheme”; and

(ii) after the word “pension”, where it occurs in paragraphs (a) and (b), there shall be inserted the words “or those payments”; and

(b) in subsection (3), for the words from “any”, in the first place where it occurs, to “not” there shall be substituted the words “nothing whose assignment is or would be made void by that subsection shall”

Section 9

In section 49 (supervision of schemes which have ceased to be contracted-out)—

(a) the following paragraph shall be substituted for subsection (1)(b)—

(b) there has not been a payment—

(i) of a premium under section 44 above in respect of each person entitled to receive, or having accrued rights to, guaranteed minimum pensions under the scheme; or

(ii) of a premium under section 44ZA above in respect of each person who has protected rights under it or is entitled to any benefit giving effect to protected rights under it;

(b) in subsection (2)(a), after the word “above” there shall be inserted the words “or, by virtue of subsections (2A) and (2B) of section 32 above, paragraph 10(1) of Schedule 1 to the Social Security Act 1986”; and

(c) in subsection (5), “ 32 ” shall be substituted for “33”.

Section 10

At the end of subsection (3) of section 50 (alteration of rules of contracted-out schemes) there shall be added the words “or any person has protected rights under it or is entitled to any benefit giving effect to protected rights under it”.

Section 11

In section 66(1) (interpretation)—

(a) the following definition shall be inserted before the definition of “ guaranteed minimum pension ”—

“ average salary benefits ” means benefits the rate or amount of which is calculated by reference to a member’s average salary over the period of service on which the benefits are based;

(b) the following definitions shall be inserted after the definition of “ long-term benefit ”—

“ minimum payments ” shall be construed in accordance with section 30 above;

“ money purchase benefits ” in relation to an occupational pension scheme, means benefits the rate or amount of which is calculated by reference to a payment or payments made by a member of the scheme or by any other person in respect of a member, other than average salary benefits;

“ money purchase contracted-out scheme ” means an occupational pension scheme which is contracted-out by virtue of satisfying section 32(2A) above;

(c) the following definition shall be inserted after the definition of “ the principal Act ”—

“ protected rights ” has the meaning given by Schedule 1 to the Social Security Act 1986 with the substitution made by section 32(2B) above.

Section 12

In paragraph 2 of Schedule 3 (priority in bankruptcy etc. )—

(a) the following sub-paragraph shall be inserted after sub-paragraph (1)—

(1A) This Schedule applies to any sum owed on account of an employer’s minimum payments to a contracted-out scheme falling to be made in the period of twelve months immediately preceding the relevant date.

(b) in sub-paragraph (2)—

(i) the words “ or payments ” shall be inserted after the word “contributions”; and

(ii) the words “ or (1A) ” shall be inserted after the words “sub-paragraph (1)”.

Section 1

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Section 17

(1) Section 2 of the Pneumoconiosis etc. (Workers’ Compensation) Act 1979 (conditions of entitlement to lump sum payments) shall be amended as follows.

(2) At the end of subsection (1)(a) there shall be added the words “or, subject to subsection (3A) below, would be payable to him in respect of it but for his disablement amounting to less than the appropriate percentage”.

(3) At the end of subsection (2)(b) there shall be added the words

or, subject to subsection (3A) below, would have been so payable to him—

(i) but for his disablement amounting to less than the appropriate percentage; or

(ii) but for his not having claimed the benefit; or

(iii) but for his having died before he had suffered from the disease for the appropriate period

(4) In subsection (3) the following definitions shall be inserted before the definition of “ death benefit ”—

“ the appropriate percentage ” means, in the case of any disease, the percentage specified in subsection (1) of section 57 of the Social Security Act 1975 or, if regulations have been made under section 77 of that Act specifying a different percentage in relation to that disease, the percentage specified in the regulations;

“ the appropriate period ” means, in the case of any disease, the period specified in subsection (4) of the said section 57 or, if regulations have been made under the said section 77 specifying a different period in relation to that disease, the period specified in the regulations;

(5) The following subsection shall be inserted after that subsection—

(3A) No amount is payable under this Act in respect of disablement amounting to less than 1 per cent.

Section 1

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