The Pensions Increase (Review) Order 1994

Statutory Instruments

1994 No. 776

PENSIONS

The Pensions Increase (Review) Order 1994

Made

15th March 1994

Laid before Parliament

16th March 1994

Coming into force

11th April 1994

Whereas by virtue of section 151(1) of the Social Security Administration Act 1992(1) a direction has been given(2) under section 150(2) and section 190(1)(a) of that Act by the Secretary of State for Social Security 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 1975(3) and now vested in them(4), and all other powers enabling them in that behalf, hereby make the following Order:

Citation and commencement

1.  This Order may be cited as the Pensions Increase (Review) Order 1994 and shall come into force on 11th April 1994.

Interpretation

2.—(1) In this Order—

“the 1971 Act” means the Pensions (Increase) Act 1971(5);

“the 1974 Act” means the Pensions (Increase) Act 1974(6);

“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(7);

“the existing Orders” means the Pensions Increase (Annual Review) Order 1972(8), the Pensions Increase (Annual Review) Order 1973(9), the Pensions Increase (Annual Review) Order 1974(10), the Pensions Increase (Annual Review) Order 1975(11), the Pensions Increase (Annual Review) Order 1976(12), the Pensions Increase (Annual Review) Order 1977(13), the Pensions Increase (Annual Review) Order 1978(14), the Pensions Increase (Review) Order 1979(15), the Pensions Increase (Review) Order 1980(16), the Pensions Increase (Review) Order 1981(17), the Pensions Increase (Review) Order 1982(18), the Pensions Increase (Review) Order 1983(19), the Pensions Increase (Review) Order 1984(20), the Pensions Increase (Review) Order 1985(21), the Pensions Increase (Review) Order 1986(22), the Pensions Increase (Review) Order 1987(23), the Pensions Increase (Review) Order 1988(24), the Pensions Increase (Review) Order 1989(25), the Pensions Increase (Review) Order 1990(26), the Pensions Increase (Review) Order 1991(27), the Pensions Increase (Review) Order 1992(28) and the Pensions Increase (Review) Order 1993(29);

“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(30);

“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(31), 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.

Pension increases

3.  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 11th April 1994 as follows—

(1) a pension beginning before 12th April 1993 may be increased by 1.8 per cent of the basic rateas 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 12th April 1993 and before 11th April 1994 may be increased by 1.8 per cent multiplied by

where—

a

A is the number of complete months in the period between the beginning date of the pension and 11th April 1994, and

b

B is 12.

Increases in certain lump sums

4.  In respect of any lump sum or instalment of a lump sum which became payable before 11th April 1994 but on or after 12th April 1993 there may be paid an increase of 1.8 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

where—

a

A is the number of complete months in the period between the beginning date for the lump sum or, if later, 12th April 1993 and the date on which it became payable; and

b

B is 12.

Reductions in respect of guaranteed minimum pensions

5.  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 11th April 1994, 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(32) otherwise direct, in accordance with the provisions of section 59A of the 1975 Act.

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.

Tim Wood

Irvine Patnick

Two of the Lords Commissioners of Her Majesty’s Treasury

15th March 1994

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. The increase is the percentage (or in some circumstances a fraction of the percentage) by which the Secretary of State for Social Security 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 12th April 1993 the increase is 1.8 per cent. For pensions which began on or after 12th April 1993 the increases are as follows—

Pensions Beginning	Percentage Increase
12th April 1993 to 26th April 1993	1.8%
27th April 1993 to 26th May 1993	1.65%
27th May 1993 to 26th June 1993	1.5%
27th June 1993 to 26th July 1993	1.35%
27th July 1993 to 26th August 1993	1.2%
27th August 1993 to 26th September 1993	1.05%
27th September 1993 to 26th October 1993	0.9%
27th October 1993 to 26th November 1993	0.75 %
27th November 1993 to 26th December 1993	0.6%
27th December 1993 to 26th January 1994	0.45%
27th January 1994 to 26th February 1994	0.3%
27th February 1994 to 26th March 1994	0.15%

Deferred lump sums beginning on or before 26th March 1994 and which become payable after 10th April 1994 receive the same percentage increase as pensions which began on the same date. Article 4 of the Order provides for increases on certain deferred lump sums which became payable on or after 12th April 1993 and before 11th April 1994.

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 but 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.

(1)

1992 c. 5.

(2)

The direction is contained in S.I. 1994/542.

(3)

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 of the Social Security Act 1979 and amended by section 9(9) of the Social Security Act 1986.

(4)

S.I. 1981/1670.

(5)

1971 c. 56.

(6)

1974 c. 9.

(7)

Section 17(1) was amended by sections 1(3) and 3(3) of the 1974 Act and by sections 1(6) and 7(3) of the Pensions (Miscellaneous Provisions) Act 1990.

(8)

S.I. 1972/1298.

(9)

S.I. 1973/1370.

(10)

S.I. 1974/1373.

(11)

S.I. 1975/1384.

(12)

S.I. 1976/1356.

(13)

S.I. 1977/1387.

(14)

S.I. 1978/1211.

(15)

S.I. 1979/1047.

(16)

S.I. 1980/1302.

(17)

S.I. 1981/1217.

(18)

S.I. 1982/1178.

(19)

S.I. 1983/1264.

(20)

S.I. 1984/1307.

(21)

S.I. 1985/1575.

(22)

S.I. 1986/1116.

(23)

S.I. 1987/130.

(24)

S.I. 1988/217.

(25)

S.I. 1989/477.

(26)

S.I. 1990/483.

(27)

S.I. 1991/684.

(28)

S.I. 1992/198.

(29)

S.I. 1993/779.

(30)

Section 3 was amended by section 3(3) of the 1974 Act, section 1 of the Pensions (Miscellaneous Provisions) Act 1990 and by the Pensions Increase (Reduction of Qualifying Age) Order 1972 (S.I.1972/1299).

(31)

Section 8(2) was amended by section 1(5) of the Pensions (Miscellaneous Provisions) Act 1990.

(32)

See S.I. 1981/1670, articles 2(1)(c) and 3(5).