[2025] UKUT 353 (AAC)

As can be inferred from the various components making up the appellant’s pension, he has become entitled to the state pension he now receives under various pieces of legislation. In order to set the context of the relevant provisions for present purposes, it is helpful to refer to some of the earlier legislation. For convenience, in explaining the various provisions I shall follow the appellant’s example and refer to the person entitled under the legislation as “he” or “him” when the use of a personal pronoun is appropriate.

The National Insurance Act 1946 established the structure of post-war social security benefits, including retirement pensions. S.20 provided that a person over pensionable age who had retired from regular employment and who satisfied the relevant contribution conditions was entitled to a retirement pension. The rate was specified in Schedule 2. He was not to be treated as having retired from regular employment unless he had given the prescribed notice, but was in any event deemed to retire from regular employment on the expiration of five years from his attaining pensionable age if he had not previously retired. Under s.20(4) the weekly rate of pension was increased by one shilling for every 25 contributions paid by the pensioner in respect of the period after he attained pensionable age.

The National Insurance Act 1951 made various adjustments to the rate of benefits, including increasing the increment earned by late retirement from one shilling to one shilling and sixpence. S.7 gave power to make regulations to make provision for enabling persons less than five years over pensionable age to elect “to be treated as from the date of their election as if they had not so retired”. This was the original right to de-retire, but was only available for a period of six months from “the prescribed date”. The power to make regulations expressly envisaged that the regulations might provide for determining how contributions paid by such a person, “whether before or after his first retirement”, were to be dealt with for the purposes of s.20(4).

That power was exercised in the making of the National Insurance (Increase of Benefit, Re-entry into Regular Employment and Miscellaneous Provisions) Regulations 1951, S.I. 1951 No. 1232. Reg. 9 specified those persons who had retired for the purposes of the 1946 Act who could de-retire, stating that they should “be treated from the date of their election as if they had not so retired” and reg. 11(2) provided that in the application of s.20(4) in such a case:

“contributions as an employed or self-employed person paid in respect of any period occurring after pensionable age and before as well as after his first retirement shall be taken into account.”

It seems to me clear that on this wording, when a pensioner de-retired and then retired again his increments were calculated afresh from the date when he attained pensionable age to ensure that the contributions paid during the first period of retirement were taken into account. This was, of course, fairly straightforward, since his retirement pension at his new retirement date would be whatever the flat rate was then. The right to de-retire was, however, limited to those who had retired at 16^th July 1951 and the election had to be made within 6 months of that date.

A permanent right to de-retire, to be governed by regulations, was introduced by s.1 of the National Insurance Act 1957, which provided that the 1946 Act should apply to a person who exercised the right “as if that person had not retired or become entitled as aforesaid”. There was no limitation such as “from the date of the election”. The relevant regulations were the National Insurance (Widow’s Benefit and Retirement Pensions) Amendment Regulations 1957, S.I. 1957 No. 1309. Reg. 2 of those Regulations introduced new regs. 8 to 12 into the principal regulations governing widow’s benefit and retirement pensions. (Footnote: ¹) The new reg. 8(1) provided that the consequence of an election was that the 1946 Act should have effect “as if that person had not retired or become entitled as aforesaid”. Reg. 10(1) repeated the wording set out in the preceding paragraph in relation to increments, which, as I have said, in my view has the effect that increments are to be calculated afresh from the date the person attained pensionable age.

Graduated retirement benefit was introduced by the National Insurance Act 1959, which made provision for the payment of graduated contributions related to income where remuneration exceeded a certain level and for graduated retirement benefit calculated by reference to the number of units notionally purchased from graduated contributions. Under s.4(5), where a person did not retire from regular employment on attaining pensionable age, for the purpose of calculating his graduated retirement benefit from the date of his retirement there was to be added an amount equal to half the graduated retirement benefit which would have been paid if he had retired on attaining pensionable age and had received the benefit for the whole of the period.

The appellant’s entitlement to graduated retirement pension arises under the National Insurance Act 1965. That was an Act which consolidated the National Insurance Acts 1946 to 1964 and some delegated legislation made thereunder, together with some related enactments. As originally enacted, and consistently with the earlier legislation, it provided for employers and employees to pay flat rate and, where remuneration exceeded a certain level and the employer had not contracted out, graduated contributions and for a range of social security benefits including retirement pension and graduated retirement benefit. Under s.30, a person who satisfied the contribution conditions would be entitled to a retirement pension at a flat rate if he was over pensionable age and had retired from regular employment. Under s.30(3) and (4) a person was not treated as having retired unless he had complied with prescribed requirements as to notice of the date of retirement, but if he had not previously retired he was deemed to retire on the expiration of five years from attaining pensionable age. Under s.30(6), subject to the provisions of the Act, a retirement pension commenced from the date of retirement and was payable for life. S.31 provided for increments in the flat rate pension in the case of late retirement.

S.35 of the 1965 Act read as follows:

“(1)

Regulations may provide that, in the case of a person of such description as may be prescribed who –

(a)

has retired from regular employment or has otherwise become entitled to a retirement pension but is [less than five years over pensionable age]; and

(b)

elects, in such manner and in accordance with such conditions as may be prescribed, that the regulations should apply in his case,

this Act shall have effect as if that person had not retired or become entitled as aforesaid …”

There was also provision for the regulations to modify the Act as appeared to the Secretary of State to be necessary or expedient.

S.36 of the 1965 Act provided for payment of graduated retirement benefit to any person over pensionable age who was entitled to a retirement pension by reference to units of graduated contributions paid by him. As originally drafted, he was entitled to an extra 6d of pension for each unit. Under s.36(4), repeating the effect of the relevant provision in the 1959 Act, if a person did not retire on attaining pensionable age the graduated retirement benefit was calculated by treating the graduated contributions paid as increased by half the graduated retirement benefit which would have been paid if he had retired, with the consequence that extra units were acquired. No specific provision was made for the case where a person retired but exercised the right to de-retire, which was presumably left to be governed, if at all, by the regulations made under, or treated as made under, s.35.

The 1957 Regulations remained in force after the consolidation but were revoked by the National Insurance (Widow’s Benefit and Retirement Pensions) Regulations 1972, S.I. 1972 No. 606. Reg. 8 of the 1972 Regulations was to the same effect as reg. 8 of the earlier Regulations. Reg. 10 was in similar terms to reg. 10 of the earlier Regulations, and so applied only to increments under s.31 of the 1965 Act, not to increases under s.36, which were dealt with under that section.

The system of contributions and benefits consolidated in the 1965 Act was substantially changed by the Social Security Act 1973, Part 1 of which introduced a system of four classes of national insurance contributions and provided for, inter alia, Category A retirement pensions payable to a person by virtue of his own contributions. By s.100 and Schedule 26, the 1973 Act provided that after the appointed day no person should be insured under the 1965 Act or entitled to benefit under it, subject to transitional provisions. The transitional provisions made included the Widow’s Benefit, Retirement Pension and Other Benefits (Transitional) Regulations 1974, S.I. 1974 No. 1757, which by reg. 15 provided that s.36 of the 1965 Act should continue for the purpose of preserving any existing entitlement to graduated retirement benefit and added the following at the end of s.36(4):

“Provided that, if a person to whom this sub-section applies has retired from regular employment after attaining pensionable age and has subsequently elected to re-enter employment, in computing the addition to be made in accordance with this sub-section to the amount of graduated contributions paid by him, no account shall be taken of such part (if any) of the period between the date of his first retirement and the date of his re-entry into regular employment as falls on or after 6^th April 1975.”

This proviso appears to have been intended to correct the anomaly that under s.36(4) as originally drafted a person who exercised the right to de-retire would apparently become entitled on his second retirement to graduated retirement benefit calculated as if there had been no previous retirement and no receipt of benefit. It is consistent with making the increments calculation again from the date of the person’s pensionable age, but disregarding the period during which he was receiving a pension.

Under s.24 of the 1973 Act, the weekly rate of a Category A pension was the rate specified in Schedule 4, namely, a flat rate of £6.75 plus an age addition of £0.25 where appropriate. Graduated retirement benefit had been criticised as providing a very poor return for money contributed and as lacking any inflation-proofing, and a new earnings-related personal pension was to be provided from a state Reserve Pension Fund for employees who were not in “recognised pensionable employment”. S.24(4) made provision for the weekly rate of the Category A pension to be increased for the period between the person’s attaining pensionable age and his retiring by 1/8^th per cent of the weekly pension rate for every six days excluding Sundays in that period which were treated by regulations as being days of increment. It is to be noted that under s.23(5) a person was still deemed to retire on the expiration of 5 years from attaining pensionable age if he had not previously done so. S.26(2) of the Act was the same terms as s.35 of the National Insurance Act 1965, so far as material, although the pension to which it applied was the Category A (or potentially Category B) pension and it was only the relevant Part of the Act which was to have effect as if the person concerned had not retired. That is to say, a right to de-retire was given in relation to Category A pensions in addition to the right already given in relation to graduated retirement benefit under the 1965 Act.

The Social Security (Widow’s Benefit and Retirement Pensions) Regulations 1974, S.I. 1974 No. 2059, included regulations made under ss.24(4) and 26(2) of the 1973 Act. They provided as follows, so far as material:

“2.

(1) Subject to the provisions of these regulations, where any person … -

(a)

has retired for the purposes of the Act [i.e., the 1973 Act] from regular employment or has otherwise become entitled to either a Category A or a Category B retirement pension but is [less than five years over pensionable age]; and

(b)

elects that this regulation shall apply in his case,

the Act shall have effect as if that person had not retired or become entitled as aforesaid. …

3.

Where an election has been made in accordance with regulation 2 –

(a)

… no Category A retirement pension shall be payable to a person … by virtue of his contributions for any period on or after the date of his election and before he subsequently retires for the purposes of the Act from regular employment or dies …

4.

(1) For the purposes of section 24(4) of the Act, a day shall be treated as a day of increment in relation to any person if it is a day in respect of which –

(a)

if he had been treated as having retired from regular employment, he would have been entitled to a Category A retirement pension; and

(b)

he has not received any of the following benefits [which include a retirement pension of any category].”

In the event most of the provisions of Part 1 of the 1973 Act, including those relevant for present purposes, were consolidated in the Social Security Act 1975, which took effect, so far as material, from 6^th April 1975, and the provisions of the 1973 Act itself were repealed by the Social Security (Consequential Provisions) Act 1975, also taking effect on 6^th April 1975. That Act in turn re-enacted the transitional provisions of Schedule 26 to the 1973 Act. The relevant parts of the Social Security Act 1975 are s.28, which is where the provisions of s.24 of the 1973 Act, including the right to increments in the case of deferment in subs.(4), are to be found, and s.30, which contains the right to de-retire in subs. (3). It was still the case that, under s.27, a person was deemed to retire on the expiration of 5 years from pensionable age if he had not already done so. The repeal of parts of the 1973 Act did not affect either set of 1974 Regulations, although they were made under the provisions of the 1973 Act, because para. 13 of Schedule 3 to the Social Security (Consequential Provisions) Act contained a saving in what was then the standard form for regulations made under any of the Acts being repealed if the regulations in question could have been made under one of the consolidated provisions.

It was, however, desirable to make some amendments to achieve conformity with the new regime. So far as material, this was done by the Social Security (Graduated Retirement Benefit) Regulations 1975, S.I. 1975 No. 557. Reg. 2 replaced s.36 of the National Insurance Act as maintained in force by S.I. 1974 No. 1757 with a revised version, of which the material change is that s.36(4) thereafter referred to an election to de-retire under s.30(3) of “the Act”, defined as the Social Security Act 1975. Reg. 15 of S.I. 1974 No. 1757 was revoked.

Further changes to the state retirement pension were made by the Social Security Pensions Act 1975 as a result of the change of government in 1974. S.6 provided that the weekly rate of a Category A pension should consist of a basic component, at a flat rate initially of £11.60, and an additional component which was linked to earnings and became known as the state earnings-related pension (“SERPS”). The provisions of the Social Security Act 1975 relating to the Pension Reserve Fund were repealed by Schedule 5. No relevant amendments were made to s.30 of the Social Security Act, which continued to provide in subs.(3) the right to de-retire, but most of s.28 was also repealed and under s.12 of the Social Security Pensions Act the provisions of Schedule 1 were to govern increases to pension in the case of deferment. Schedule 1 provided as follows, so far as material:

“1.

Where a person defers his retirement from regular employment after attaining pensionable age, the rate of his Category A or Category B retirement pension shall be increased by an amount equal to the aggregate of the increments to which he is entitled under paragraph 2 below …

2.

(1) Subject to paragraph 3 below, a person is entitled to an increment under this paragraph for each complete incremental period in his period of deferment.

(2)

In this Schedule –

(a)

“incremental period” means any period of six consecutive days, excluding Sunday …; and

(b)

“period of deferment”, in relation to any person, means the period beginning with the day on which he attains pensionable age and ending with the day before that of his retirement.

(3)

Subject to paragraph 3 below, the amount of the increment for any such incremental period shall be 1/8^th per cent of the weekly rate of the Category A or Category B retirement pension to which that person would have been entitled for the period if he had retired on attaining pensionable age.

…

(5)

Where one or more [up-rating] orders have come into force … during the period of deferment the rate for any incremental period shall be determined … as if the order or orders had come into force before the beginning of the period of deferment.

3.

Regulations may provide that a day shall be treated in relation to any person or his pension as not being a day of increment …”

The provisions mentioned above were brought into effect from 6^th April 1979 and gave rise to a need for further secondary legislation. In relation to Category A retirement pensions, this took the form of the Social Security (Widow’s Benefit and Retirement Pensions) Amendment Regulations 1978, S.I. 1978 No. 392, which amended S.I. 1974 No. 2059. Reg. 2 replaced the definition of “the Act” (i.e., the Social Security Act 1973) with definitions of “the 1975 Act” and “the Pensions Act”, meaning the Social Security Act 1975 and the Social Security Pensions Act 1975 respectively. Reg. 4 then amended reg. 4 of S.I. 1974 No. 2059 by using the terminology and appropriate references contained in the Social Security Act 1975 and the Social Security Pensions Act, but without altering the substantive effect of the provisions as to the days to be treated as days of increment. The amended S.I. 1974 No. 2059 was then revoked by the Social Security (Widow’s Benefit and Retirement Pensions) Regulations 1979, S.I. 1979 No. 642, reg. 18 and Schedule 2, and the relevant provisions were replaced with a new reg. 2 and reg. 4 to the same effect, so far as material.

In relation to graduated retirement benefit, the further legislation took the form of the Social Security (Graduated Retirement Benefit) (No. 2) Regulations 1978, S.I. 1978 No. 393, which, so far as material, also took effect from 6^th April 1979. Reg. 2 applied the up-rating provisions of the Social Security Act 1975 to graduated retirement benefit. Reg. 3 continued in force s.36 of the National Insurance Act 1965, but subject to modifications to bring s.36 into conformity with the provisions of the Social Security Act and the Social Security Pensions Act. Specifically, s.36(4), dealing with increases in the case of deferred retirement, was amended as set out in Schedule 1 to the Regulations to correspond with paragraphs 1 to 3 of Schedule 1 to the Social Security Pensions Act. As a result, s.36(4) read:

“Where a person defers his retirement from regular employment after attaining pensionable age or has made an election by virtue of section 30(3) of the [Social Security] Act and has not revoked it, then, for the purpose of calculating the graduated retirement benefit payable to him from the date of his retirement, there shall be applied the provisions of Schedule 2 to the Social Security (Graduated Retirement Benefit) (No. 2) Regulations 1978, and those provisions shall be construed and have effect as if they were part of this subsection.”

Schedule 2 itself read:

“1.

Where a person defers his retirement from regular employment after attaining pensionable age, or has made an election by virtue of section 30(3) of the Act and has not revoked it, then for the purpose of calculating the graduated retirement benefit payable to him from the date of his retirement –

(a)

there shall be added to the amount of the graduated contributions properly payable by him as an insured person one-half of the aggregate graduated retirement benefit which would have been payable to him for any period before 6^th April 1979 (disregarding the effect of any [up-rating] order …) if he had retired from regular employment on attaining pensionable age and had received that benefit for the whole of the period without any interruption or abatement:

Provided that, in computing the addition to be made in accordance with this paragraph in the case of a person who made an election by virtue of section 30(3) of the Act … no account shall be taken of any period between 6^th April 1975 and 5^th April 1979 … which falls between the date of that election and the date of his previous retirement; and

(b)

the rate of his graduated retirement benefit shall be increased by an amount equal to the increments to which he is entitled under paragraph 3 below, but only if either –

(i)

that amount is enough to increase the rate of benefit by at least 1 per cent …

…

3.

(1) Subject to paragraph 4 below, a person is entitled to an increment under this paragraph for each complete incremental period (beginning not earlier than 6^th April 1979) in his period of deferment.

(2)

In this Schedule –

(a)

“incremental period” means any period of 6 days which are treated by the Social Security (Widow’s Benefit and Retirement Pensions) (Amendment) Regulations 1978 as days of increment for the purposes of Schedule 1 to the Social Security Pensions Act 1975 …

(b)

“period of deferment”, in relation to any person, means the period beginning with the day on which he attains pensionable age and ending with the day before that of his retirement.

(3)

… the amount of the increment for any such incremental period shall be 1/7^th per cent of the weekly rate of the graduated retirement benefit to which that person would have been entitled for that period if he had retired on attaining pensionable age, the result being rounded to the nearest whole penny …

(4)

Where one or more [up-rating] orders have come into force … during the period of deferment the rate of the benefit for any incremental period shall be determined as if the order or orders had come into force before the beginning of the period of deferment.”

S.I. 1975 No. 557 was itself revoked.

The primary legislation, other than s.36 of the National Insurance Act 1965, was then consolidated again in the Social Security Administration Act 1992 and the Social Security Contributions and Benefits Act 1992. The Social Security (Consequential Provisions) Act 1992 provided by s.2 that the consolidation did not affect the continuity of the law and anything done under a provision of the repealed enactments which could have been done under a corresponding provision of the new legislation should have effect as if done under the corresponding provision. The provisions relating to the right to de-retire moved to s.54 of the Social Security Contributions and Benefits Act and the provisions relating to deferment moved to s.55 and Schedule 5. Those various provisions are still in force, although they have been amended, and so they govern the appellant’s entitlement as respects his Category A pension. His entitlement as respects his graduated retirement benefit continues to be governed by s.36 of the National Insurance Act.

As originally enacted, s.54(1) and (2) of the Social Security Contributions and Benefits Act were in the same terms so far as material as s.30(3) of the Social Security Act 1975 (the power to make modifications having been moved to a separate subsection). It was therefore still necessary to identify the relevant regulations, which remained the Social Security (Widow’s Benefit and Retirement Pensions) Regulations 1979, S.I. 1979 No. 642, on this occasion by virtue of the Consequential Provisions Act and, if necessary, s.17 of the Interpretation Act 1978, which provides that where an Act repeals and re-enacts a previous enactment, in so far as any subordinate legislation made under the enactment so repealed could have been made under the provision re-enacted, it shall have effect as if made under that provision. Those regulations are also still in force, although amended.

Again as originally enacted, s.55 provided that where a person’s entitlement to a Category A pension was deferred, Schedule 5 should have effect for increasing the rate of his pension. It also provided that entitlement to a Category A pension was deferred if and so long as the person in question did not become entitled to the pension because he had not made a claim. The previous statutory provision under which a person was deemed to have retired if he was five years over his pensionable age and had not made a claim was not repeated. As a result, Schedule 5, while largely repeating the provisions of Schedule 1 to the Social Security Pensions Act (as set out in the Table of Derivations at the end of the 1992 Act), distinguished between the period of deferment, determined as set out in s.55, and the “period of enhancement”, which began on the same day as the period of deferment and ended on the same day as the period of deferment or, if earlier, on the day before the fifth anniversary of that period. Incremental periods could only occur during the period of enhancement. The effect was that the right to increases was limited to the first five years of deferment, if deferment exceeded that length of time, and the financial effect of the increase provisions from the point of view of the Secretary of State was the same as it had previously been, except that the amount of the increment was increased from 1/8^th per cent to 1/7^th per cent of the weekly rate of pension.

Although the legislation has not been further consolidated, it has been amended, as I have said. For present purposes, the most significant amendments were made by the Pensions Act 2004, through amendments to the Pensions Act 1995 to bring into force earlier than originally intended a number of changes introduced by the latter Act and to give a right to a lump sum payment on deferment and by the Social Security (Deferral of Retirement Pensions) Regulations 2005, S.I. 2005 No. 453. The new legislative policy was to encourage potential pensioners to remain in work and so the right to de-retire is no longer restricted to persons who are less than five years over their pensionable age, there is no longer a maximum five year period of deferment, a person deferring retirement is now offered a choice between a lump sum and an increased pension by reference to increment periods and the increment rate has increased from 1/7^th per cent to 1/5^th per cent. It is no longer necessary to distinguish between the period of deferment and the period of enhancement. Ss. 54 and 55 of and Schedule 5 to the Act and the 1979 Regulations have been amended accordingly. S.36 of the National Insurance Act 1965 and Schedule 2 to the Social Security (Graduated Retirement Benefit) (No. 2) Regulations 1978 have also been amended to reflect the new policy.

The net effect is that at the date of the appellant’s second claim the relevant legislation read as follows, so far as material: