Pensions Act 2004

Commentary on Sections

Part 5 – Occupational and Personal Pension Schemes: Miscellaneous Provisions

Annual increases in rate of pensions

Section 279: Annual increase in rate of certain personal pensions

1129.Section 162 of the Pensions Act 1995 requires that personal pensions deriving from protected rights (rights that derive mainly from a National Insurance contribution rebate and its investment return) built up on or after 6^th April 1997 must be increased by at least the appropriate percentage. This is the lesser of the percentage which appears to the Secretary of State to be the percentage increase in the Retail Price Index and 5%. This requirement is modified by section 279 so that the annual increase does not apply to pensions deriving from protected rights which come into payment on or after the “commencement day”.

1130.Subsection (2) amends section 162(1) in order to clarify the basis on which the section applies. It has the effect of removing the requirement to increase pensions that come into payment on or after the “commencement day”.

1131.Subsection (3) amends section 163(3) of the Pensions Act 1995 by:

• amending the definition of “appropriate percentage” to bring it into line (in part) with the definition as used in section 51 of that Act; and

• defining “commencement day” as being the day appointed for the coming into force of section 279.