Social Security Pensions Act 1975

41A Earners’ pensions.E+W+S

(1)If—

(a)there is an interval between—

(i)the date on which an earner ceases to be in employment which is contracted-out by reference to an occupational pension scheme [F1which is not a money purchase contracted-out scheme] (“the termination of employment date”); and

(ii)the date on which his guaranteed minimum pension under that scheme commences (“the commencement of payment date”);

(b)the relevant sum exceeds his guaranteed minimum on the day after the termination of employment date; and

(c)on the commencement of payment date or at any time thereafter his guaranteed minimum pension under the scheme exceeds the amount of his guaranteed minimum under it on the day after the termination of employment date,

the weekly rate on the [F2commencement of payment date] and at any time thereafter of the pension payable to him under the scheme shall be an amount not less

[F3(i)in a case where by virtue of paragraph 9(2)(b) of Schedule 16 to the Social Security Act 1973 a pension is provided by way of complete substitute for short service benefit, than the weekly rate of that pension; and

(ii)in any other case, than the relevant aggregate.]

(1A), (1B). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F4

[F5(1C)In subsection (1) above “the relevant aggregate” means the aggregate of the following—

(a)the relevant sum;

(b)the excess mentioned in subsection (1)(c) above; . . . F6

(c)any amount which is an appropriate addition at the time in question][F7and

(d)where the scheme provides that part of the earner’s pension shall accrue after the termination of employment date by reason of employment after that date, the later earnings addition.]

(2)In subsection [F8(1C)] above “appropriate addition” means—

(a)where a scheme provides that part of an earner’s pension shall accrue after the termination of employment date by reason of employment after that date, an amount equal to the part which has so accrued; and

(b)where a scheme provides that an earner’s pension which has accrued before that date shall be enhanced after it if payment of the pension is postponed, the amount by which the excess of the pension on the day after the termination of employment date over the earner’s guaranteed minimum on the day after the terminiation of employment date has been enhanced by reason of the postponement.

[F9(2A)In this section “the later earnings addition” means the amount (if any) by which (R2—G2) exceeds (R1—G1), where—

• R1 is the relevant sum;

• G1 is the earner’s guaranteed minimum on the day after his termination of employment date;

• R2 is the amount that would have been the relevant sum, had the weekly rate of the benefit which determines that sum been calculated by reference to the earner’s later earnings level; and

• G2 is that amount which bears to R2 the proportion which G1 bears to R1.

(2B)For the purposes of subsection (2A) above, the earner’s “later earnings level” is the level of earnings by reference to which the weekly rate of the benefit which determines the relevant sum would have been calculated, had the termination of employment date fallen on the earlier of—

(a)the commencement of payment date, or

(b)the date on which the earner ceased to be in pensionable service under the scheme.]

(3)Subject to subsections (6) to (8) below, in this section “the relevant sum” means—

(a)if the earner reaches normal pensionable age on or before the termination of employment date, an amount equal to the weekly rate of his pension on the day after the termination of employment date; and

(b)if he reaches normal pension age after the termination of employment date, an amount equal to the weekly rate of—

(i)any short service benefit which has accrued to him on the termination of employment date; or

(ii)where no short service benefit has then accrued to him, any other benefit to which this paragraph applies and which has then accrued to him.

(4)The benefit other than short service benefit to which subsection (3)(b) above applies is benefit—

(a)which would have been provided, as either the whole or part of the earner’s short service benefit; or

(b)of which the earner’s short service benefit would have formed part,

if paragraph 6(1) of Schedule 16 to the Social Security Act 1973 had effect with the substitution—

(i). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F10

(ii)in paragraph (b), of a reference to the service which the earner had on that date for the reference to [F112] years’ qualifying service.

(5)Any such benefit is only to be included in the relevant sum to the extent that it does not exceed the amount which the scheme would have had to provide as short service benefit if paragraph 6(1) of Schedule 16 to the Social Security Act 1973 had effect as mentioned in subsection (4) above.

(6)To the extent that amounts attributable to transfer credits have accrued by reason of any transfer before the commencement of this section they are to be disregarded for the purposes of [F12subsections (1)(c) and (1C)(b)] above.

(7)If any part of the earner’s pension is postponed beyond the termination of employment date, the relevant sum is an amount equal to what would have been the weekly rate of his pension on the day after the termination of employment date if there had been no such postponement.

(8)If—

(a)an earner’s employment ceases to be contracted-out by reference to an occupational pension scheme but the scheme continues to apply to it; or

(b)an earner transfers from employment which is contracted-out by reference to an occupational pension scheme to employment to which the scheme applies but which is not contracted-out by reference to it,

the amount of any short service or other benefit which has accrued to the earner shall be computed for the purposes of subsection (3)(b) above as it would be computed if he had ceased on the termination of employment date to be in employment to which the scheme applies.

(9)An earner shall be treated for the purpose of this section as if benefit under a scheme had accrued to him—

(a)if—

(i)one of the events mentioned in subsection (8) above occurs before he has attained the age at which, if he had attained it, that benefit would have accrued to him; and

(ii)he continues to be in employment to which the scheme applies until he attains that age; or

(b)if—

(i)one of those events occurs before he has a particular period of service; and

(ii)that benefit would have accrued to him if he had that period; and

(iii)he continues to be in employment to which the scheme applies until he has it.

(10)Nothing in this section shall be construed as entitling an earner who has not reached normal pension age to any portion of a pension under a scheme to which he would not otherwise be entitled.

(11)In this section, [F13“pensionable service” and “short service benefit” are] to be construed in accordance with Schedule 16 to the Social Security Act 1973.