Citation and commencement

1

(1)    This Order may be cited as the Pensions Increase (Review) Order 2007 and comes into force on 9th April 2007.

(2)    This Order and the existing Orders may be cited together as the Pensions Increase (Review) Orders 1972 to 2007.

NOTES
Initial Commencement
Specified date

Specified date: 9 April 2007: see para (1) above.

Interpretation

2

Interpretation2

(1)    In this Order—

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

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

“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 Act;

“the existing Orders” means the Pensions Increase (Annual Review) Order 1972, the Pensions Increase (Annual Review) Order 1973, the Pensions Increase (Annual Review) Order 1974, the Pensions Increase (Annual Review) Order 1975, the Pensions Increase (Annual Review) Order 1976, the Pensions Increase (Annual Review) Order 1977, the Pensions Increase (Annual Review) Order 1978, the Pensions Increase (Review) Order 1979, the Pensions Increase (Review) Order 1980, the Pensions Increase (Review) Order 1981, the Pensions Increase (Review) Order 1982, the Pensions Increase (Review) Order 1983, the Pensions Increase (Review) Order 1984, the Pensions Increase (Review) Order 1985, the Pensions Increase (Review) Order 1986, the Pensions Increase (Review) Order 1987, the Pensions Increase (Review) Order 1988, the Pensions Increase (Review) Order 1989, the Pensions Increase (Review) Order 1990, the Pensions Increase (Review) Order 1991, the Pensions Increase (Review) Order 1992, the Pensions Increase (Review) Order 1993, the Pensions Increase (Review) Order 1994, the Pensions Increase (Review) Order 1995, the Pensions Increase (Review) Order 1996, the Pensions Increase (Review) Order 1997, the Pensions Increase (Review) Order 1998, the Pensions Increase (Review) Order 1999, the Pensions Increase (Review) Order 2000, the Pensions Increase (Review) Order 2001, the Pensions Increase (Review) Order 2002, the Pensions Increase (Review) Order 2003, the Pensions Increase (Review) Order 2004, the Pensions Increase (Review) Order 2005 and the Pensions Increase (Review) Order 2006.

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

“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 Act;

“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 Act, 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.

NOTES
Initial Commencement
Specified date

Specified date: 9 April 2007: see art 1(1).

Pension increases

3

Pension increases3

(1)    The pension authority may, if any of the conditions in paragraph (2) are fulfilled, increase the annual rate of an official pension in respect of any period on or after 9th April 2007 as follows—

(a)    a pension beginning before 10th April 2006 may be increased by 3.6 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);

(b)    a pension beginning on or after 10th April 2006 and before 9th April 2007 may be increased by 3.6 per cent multiplied by:

A / B

where:

(i)    A is the number of complete months in the period between the beginning date of the pension and 9th April 2007; and

(ii)    B is 12.

(2)    Those conditions are—

(a)    a qualifying condition is satisfied;

(b)    the official pension is—

(i)    a derivative pension;

(ii)    a substituted pension; or

(iii)    a relevant injury pension.

NOTES
Initial Commencement
Specified date

Specified date: 9 April 2007: see art 1(1).

Increases in certain lump sums

4

Increases in certain lump sums4

(1)    This article applies to any lump sum or instalment of a lump sum which became payable on or after 10th April 2006 but before 9th April 2007.

(2)    The pension authority may increase a lump sum or instalment of a lump sum to which this article applies by 3.6 per cent of the amount of the lump sum or instalment (as increased by the amount of any increase under section 1 of the 1971 Act or the existing Orders) multiplied by:

A / B

where:

(a)    A is the number of complete months in the period between the beginning date for the lump sum or, if later, 10th April 2006 and the date on which it became payable; and

(b)    B is 12.

NOTES
Initial Commencement
Specified date

Specified date: 9 April 2007: see art 1(1).

Reductions in respect of guaranteed minimum pensions

5

Reductions in respect of guaranteed minimum pensions5

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 9th April 2007; 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 Treasury otherwise direct, in accordance with the provisions of section 59A of the 1975 Act.

NOTES
Initial Commencement
Specified date

Specified date: 9 April 2007: see art 1(1).

6

6

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.

NOTES
Initial Commencement
Specified date

Specified date: 9 April 2007: see art 1(1).

Signature

Signatory text

Frank Roy

Dave Watts

Two of the Lords Commissioners of Her Majesty's Treasury

1 Horse Guards Road, London SW1A 2HQ

12th March 2007

EXPLANATORY NOTE

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 10th April 2006 the increase is 3.6 per cent. For pensions which began on or after 10th April 2006 the increases are as follows—

Pensions BeginningPensions Increase
10th April 2006 to 24th April 20063.60%
25th April 2006 to 24th May 20063.30%
25th May 2006 to 24th June 20063.00%
25th June 2006 to 24th July 20062.70%
25th July 2006 to 24th August 20062.40%
25th August 2006 to 24th September 20062.10%
25th September 2006 to 24th October 20061.80%
25th October 2006 to 24th November 20061.50%
25th November 2006 to 24th December 20061.20%
25th December 2006 to 24th January 20070.90%
25th January 2007 to 24th February 20070.60%
25th February 2007 to 24th March 20070.30%

Article 4 of the Order provides for increases on certain deferred lump sums which became payable on or after 10th April 2006 and before 9th April 2007.

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.