Commentary on Sections Part 2 – Option to Boost Old Retirement Pensions Section 25: Option to boost old retirement pensionsSchedule 15: Option to boost old retirement pensions
As National Insurance contributions are an excepted matter, the provisions contained in Schedule 15 to the Pensions Act 2014, will extend to Northern Ireland. The Pensions Act 2014 provides for a new Class of voluntary National Insurance contributions, Class 3A. To be eligible to pay Class 3A contributions the individual must have reached pensionable age before 6 April 2016 (the start date for the new state pension in Part 1 of the Act) and they must be entitled to some form of state pension under current rules.
Schedule 15 to the Act provides for amendments to the Contributions and Benefits Act in consequence of Schedule 15 to the Pensions Act 2014 and allows for the payment of extra units of additional state pension to those individuals who have paid Class 3A contributions.
In line with current rules, the additional state pension obtained through the payment of Class 3A contributions could be deferred, inherited by a surviving spouse or civil partner, shared with a former spouse or civil partner and up-rated annually by prices. There are rules that restrict entitlement in cases where a person is entitled to more than one category of State Pension, e.g. Category A and B. Under current rules a person with simultaneous pension entitlements, for example, as a result of bereavement, is prevented from receiving multiple payments. Paragraph 6 of Schedule 15 inserts new sections 61ZA to 61ZC into the Contributions and Benefits Act to disapply the bar on simultaneous entitlements where this would arise solely as a result of entitlement gained from the payment of Class 3A contributions or inheritance of additional state pension derived from Class 3A contributions. Similarly, paragraph 5 of Schedule 15 exempts inherited amounts of additional state pension obtained through the payment of Class 3A contributions from the rule that caps additional state pension when contribution records are combined following bereavement. In this way the surviving spouse will still inherit that part of the late spouse’s or civil partner’s additional pension attributable to payment of Class 3A contributions.