OpenLegislation

The Pensions Increase (Review) Order 2003

S.I. 2003/681 · Made 12 March 2003

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PENSIONS

Made 12th March 2003

Laid before Parliament 12th March 2003

Coming into force 7th April 2003

Whereas by virtue of section 151(1) of the Social Security Administration Act 1992f1 a direction has been givenf2 under section 150(2) and section 190(1)(a) of that Act by the Secretary of State for Work and Pensions that the sums mentioned in section 150(1)(c) of that Act are to be increased;

Now therefore the Treasury, in exercise of the powers conferred by section 59(1), (2), (5) and (5ZA) of the Social Security Pensions Act 1975f3 and now vested in themf4, and all other powers enabling them in that behalf, hereby make the following Order:

Annotations to the whole text

Footnotes

f1

1992 c. 5.

f2

The direction is contained in S.I. 2003/526.

f3

1975 c. 60; section 59(1) was amended by section 1(7) of the Pensions (Miscellaneous Provisions) Act 1990 (c. 7) and by the Social Security (Consequential Provisions) Act 1992 (c. 6) Schedule 2, paragraph 34. Section 59(5) was amended by section 11 of the Social Security Act 1979 (c. 18) and the Social Security Act 1985 (c. 53), Schedule 5, paragraph 33. Section 59 was also amended by the Social Security Act 1979, sections 11 and 21(4) and Schedule 3, paragraph 20, section 9(8) of the Social Security Act 1986 and section 5 of the Pensions (Miscellaneous Provisions) Act 1990, which inserted sub-section (5ZA). Section 59 is modified by section 59A, which was inserted by section 11(4) of the Social Security Act 1979 and amended by section 9(9) of the Social Security Act 1986, and further amended by section 190, Schedule 8, paragraph 9(2) of the Pension Schemes Act 1993.

f4

S.I. 1981/1670.

Contents

  1. 1Citation and commencement
  2. 2Interpretation
  3. 3Pension increases
  4. 4Increases in certain lump sums
  5. 5Reductions in respect of guaranteed minimum pensions
  6. 6Reductions in respect of guaranteed minimum pensions
  7. Signature
  8. Explanatory note

1Citation and commencement

(1)

This Order may be cited as the Pensions Increase (Review) Order 2003 and shall come into force on 7th April 2003.

(2)

This Order and the existing Orders may be cited together as the Pensions Increase (Review) Orders 1972 to 2003.

2Interpretation

(1)

In this Order—

  • “the 1971 Act” means the Pensions (Increase) Act 1971f1;

  • “the 1974 Act” means the Pensions (Increase) Act 1974f2;

  • “the 1975 Act” means the Social Security Pensions Act 1975;

  • “basic rate” and “derivative pension” have the meanings given by section 17(1) of the 1971 Actf3;

  • “the existing Orders” means the Pensions Increase (Annual Review) Order 1972f4, the Pensions Increase (Annual Review) Order 1973f5, the Pensions Increase (Annual Review) Order 1974f6, the Pensions Increase (Annual Review) Order 1975f7, the Pensions Increase (Annual Review) Order 1976f8, the Pensions Increase (Annual Review) Order 1977f9, the Pensions Increase (Annual Review) Order 1978f10, the Pensions Increase (Review) Order 1979f11, the Pensions Increase (Review) Order 1980f12, the Pensions Increase (Review) Order 1981f13, the Pensions Increase (Review) Order 1982f14, the Pensions Increase (Review) Order 1983f15, the Pensions Increase (Review) Order 1984f16, the Pensions Increase (Review) Order 1985f17, the Pensions Increase (Review) Order 1986f18, the Pensions Increase (Review) Order 1987f19, the Pensions Increase (Review) Order 1988f20, the Pensions Increase (Review) Order 1989f21, the Pensions Increase (Review) Order 1990f22, the Pensions Increase (Review) Order 1991f23, the Pensions Increase (Review) Order 1992f24, the Pensions Increase (Review) Order 1993f25, the Pensions Increase (Review) Order 1994f26, the Pensions Increase (Review) Order 1995f27, the Pensions Increase (Review) Order 1996f28, the Pensions Increase (Review) Order 1997f29, the Pensions Increase (Review) Order 1998f30, the Pensions Increase (Review) Order 1999f31, the Pensions Increase (Review) Order 2000f32, the Pension Increase (Review) Order 2001f33, and the Pension Increase (Review) Order 2002f34;

  • “official pension” has the meaning given by section 5(1) of the 1971 Actf35;

  • “pension authority” has the meaning given by section 7(1) of the 1971 Act;

  • “qualifying condition” means one of the conditions laid down in section 3 of the 1971 Actf36;

  • “relevant injury pension”, “substituted pension” and “widow’s pension” have the meanings given by section 17(1) of the 1971 Act.

(2)

For the purposes of this Order the time when a pension “begins” is that stated in section 8(2) of the 1971 Actf37, and the “beginning date” shall be construed accordingly.

(3)

Where, for the purposes of this Order, it is necessary to calculate the number of complete months in any period an incomplete month shall be treated as a complete month if it consists of at least 16 days.

3Pension increases

The annual rate of an official pension may, if a qualifying condition is satisfied or the pension is a derivative or substituted pension or a relevant injury pension, be increased by the pension authority in respect of any period on or after 7th April 2003 as follows—

(1)

a pension beginning before 8th April 2002 may be increased by 1.7 per cent of the basic rate as increased by the amount of any increase under section 1 of the 1971 Act or the existing Orders;

(2)

a pension beginning on or after 8th April 2002 and before 7th April 2003 may be increased by 1.7 per cent multiplied by

AB

where

a

  • A is the number of complete months in the period between the beginning date of the pension and 7th April 2003; and

    • b

  • B is 12.

    • 4Increases in certain lump sums

    In respect of any lump sum or instalment of a lump sum which became payable before 7th April 2003 but on or after 8th April 2002 there may be paid an increase of 1.7 per cent of the amount of the lump sum or instalment (as increased by the amount under section 1 of the 1971 Act or under the existing Orders) multiplied by

    AB

    where

    a

  • A is the number of complete months in the period between the beginning date for the lump sum or, if later, 8th April 2002 and the date on which it became payable; and

    • b

  • B is 12.

    • 5Reductions in respect of guaranteed minimum pensions

    The amount by reference to which any increase in the rate of an official pension provided for by this Order is to be calculated shall, in the case of a person—

    (a)

    who is entitled to a guaranteed minimum pension on 7th April 2003, and

    (b)

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

    be reduced by an amount equal to the rate of the guaranteed minimum pension unless the Treasuryf1 otherwise direct, in accordance with the provisions of section 59A of the 1975 Act.

    6Reductions in respect of guaranteed minimum pensions

    The amount by reference to which any increase in the rate of a widow’s or widower’s pension provided for by this Order is to be calculated shall, where the pensioner becomes entitled on the death of the deceased spouse to a guaranteed minimum pension, be reduced in accordance with section 59(5ZA) of the 1975 Act.

    Signature

    Nick Ainger

    Jim Fitzpatrick

    Two of the Lords Commissioners of Her Majesty’s Treasury

    12th March 2003

    Explanatory note

    (This note is not part of the Order)

    Under section 59 of the Social Security Pensions Act 1975 as amended, and as modified by section 59A of that Act, the Treasury (in whom the functions conferred by those provisions are now vested) are required to provide by order for the increase in the rates of public service pensions. Under section 59(7) of the 1975 Act, section 59 of that Act has effect as if it were contained in the Pensions (Increase) Act 1971. Section 9(2)(c) of the 1971 Act provides that references to the “rate” of pension shall have effect as references also to the amount of a lump sum benefit. The increase is the percentage (or in some circumstances a fraction of the percentage) by which the Secretary of State for Work and Pensions has, by direction given under the provisions of section 151(1) of the Social Security Administration Act 1992, increased the sums referred to in section 150(1)(c) of that Act. These are the sums which are the additional pensions in long term benefits, namely the additional pension entitlements accruing to employees in respect of earnings after 5th April 1978.

    For pensions which began before 8th April 2002 the increase is 1.7 per cent. For pensions which began on or after 8th April 2002 the increases are as follows—

    Pensions beginningPercentage increasePensions beginningPercentage increase
    8th April 2002 to 22nd April 20021.7%23rd September 2002 to 22nd October 20020.85%
    23rd April 2002 to 22nd May 20021.56%23rd October 2002 to 22nd November 20020.71%
    23rd May 2002 to 22nd June 20021.42%23rd November 2002 to 22nd December 20020.57%
    23rd June 2002 to 22nd July 20021.28%23rd December 2002 to 22nd January 20030.43%
    23rd July 2002 to 22nd August 20021.13%23rd January 2003 to 22nd February 20030.28%
    23rd August 2002 to 22nd September 20020.99%23rd February 2003 to 22nd March 20030.14%

    Article 4 of the Order provides for increases on certain deferred lumps sums which became payable on or after 8th April 2002 and before 7th April 2003.

    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. This is required by section 59(5) of the Social Security Pensions Act 1975. However, by virtue of section 59A of that Act and the Transfer of Functions (Minister for the Civil Service and Treasury) Order 1981 the Treasury are empowered to direct that in respect of specified cases or classes of case either no such reduction be made or the reduction shall be less than the rate of the guaranteed minimum pension. Section 59(5ZA) was inserted into section 59 by section 5 of the Pensions (Miscellaneous Provisions) Act 1990. This applies section 59(5) to a widow’s or widower’s pension.