Once again, as we approach the start of a new tax year, the legislative beast awakens from a long period of slumber and (no doubt stifling a yawn!) produces a multitude of Statutory Instruments. The following may be of interest:

1. The Social Security Revaluation of Earnings Factors Order 2008 (SI 2008/730). Commonly known as the s.148 Order, this specifies the percentages by which band earnings are revalued, in order to calculate any accrued S2P, SERPS or GMP benefits. The annual s.148 Order is also relevant for revaluing state scheme pension credits and debits. The percentage for tax year 2007/08 is 4.2%.

The full Schedule of rates applicable to earners leaving contracted-out employment in 2007/08 (by authority of s.16 PSA 1993) is as follows.

This Order comes into force on 6 April 2008.

2. The Guaranteed Minimum Pensions Increase Order 2008 (SI 2008/581) specifies 3% as the percentage by which that part of any GMP attributable to earnings factors for the tax years 1988-89 to 1996-97 and payable by contracted-out salary related schemes is to be increased.

The increase is prescribed by s.109(3) of the Pension Schemes Act 1993 and is the lower of the actual percentage increase in the general level of prices in the period under review (which was 3.9%) and 3 per cent. The Order comes into force on 6 April 2008.

3. The Social Security Benefits Up-rating Order 2008 (SI 2008/632) specifies the amounts by which certain benefits are to increase. The increases are reviewed annually and by virtue of s.150 of the Social Security Administration Act 1992 the increase must be at least in line with the increase in prices (which was 3.9%). Accordingly, state benefits generally are to rise by 3.9% from 7 April 2008.

Key figures to note are:
		2007/08		2008/09
Basic State Pension		£87.30		£90.70
Graduated Retirement Benefit		10.57p		10.98p
Statutory Maternity Pay		£112.75		£117.18
Statutory Paternity Pay		£112.75		£117.18
Statutory Adoption Pay		£112.75		£117.18
Statutory Sick Pay		£72.55		£75.40

4. The Social Security Pensions (Low Earnings Threshold) Order 2008 (SI 2008/726). The Low Earnings Threshold (LET) is relevant to calculation of the additional pension (the state second pension, S2P) in a state retirement pension. From 2002 onwards, the following are treated as if they had earnings at the LET for S2P purposes:

• employees earning at or above the annual LEL (£4,680 for 2008/09) up to the LET;
• qualifying carers; and
• qualifying disabled people.

Under SSAA 92 s.148A, each year the Secretary of State is obliged to review the level of average earnings - which in practice means the National Average Earnings Index (Whole Economy, i.e. not seasonally adjusted) - for the period from 1 October to 30 September and decide on that basis whether the LET should be altered. The rise in NAE over the year to 30 September 2007 was 4.2%. The LET for the tax year 2007/08 was £13,000 by virtue of SI 2007/776. This means that, with rounding to the nearest £100 (as required under the Act), the threshold is increased to £13,500 for 2008/09. This Threshold is directed by the Order, which comes into force on 6 April 2008.

5. The Occupational Pension and Personal Schemes (General Levy) (Amendment) Regulations 2008 (SI 2008/661) increase the general levy on occupational and personal pension schemes for 2008/09 by 30 - 40%, mainly to meet the costs of the Pensions Regulator (TPR), and also the Pensions Advisory Service (TPAS) and the Pensions Ombudsman (PO). This hike follows a doubling of the levy last time it was increased in April 2005. Occupational pension schemes with fewer than 12 members will pay a flat rate of £33 (up from £24). The largest schemes with 10,000 or more members will be charged £1.00 (up from £0.74) per member, subject to a minimum of £14,300 (up from £10,600).

Personal pension schemes of the same largest size will be charged £0.41 (up from £0.30) per member with a minimum of £5,400 (up from £4,000) applicable. Personal pensions with between 2 and 11 members will pay a flat rate of £14 compared to the £10.40 that applied for 2007/08. (Note: the figures for personal pensions differ slightly from the draft regulations as they were reported in an Aries article of 14 December 2007).

The new rates are designed to cover the increased running costs of TPR, TPAS and the Pensions Ombudsman as well as helping to clear an accumulated deficit quoted as £20.8m.

6. The Pension Protection Fund (Prescribed Payments) Regulations 2008 (SI 2008/664) were also reported on in their draft form in the Aries article of 14 December 2007 (under the working title of Pension Protection Fund (Payments to meet Risk-based Administration Costs) Regulations 2008).

The Regulations make provision for the PPF Board to make payments out of the PPF itself to cover any expenditure incurred by the Board in respect of risk-based administration costs. Such costs were previously met by the administration levy under s.117 of the Pensions Act 2004. Risk based administration costs are the expenses of creating and maintaining records of persons entitled to compensation, maintaining a payroll for the payment of such compensation and verifying data required for those purposes.

7. The Income Tax (Indexation) Order 2008 (SI 2008/673) and 8. The Income Tax (Indexation)(No. 2) Order 2008 (SI 2008/709) relate to increases in the personal allowances and tax rates respectively.

The former increases the personal allowances for certain non-UK residents (who satisfy the conditions of s.278(2) of ICTA 1988) for 2008/09. The allowances that apply to individuals who are resident in the UK in the tax year 2008-09 are specified in the Income Tax (Indexation) (No. 2) Order 2007 (S.I. 2007/3481) and those figures are available under Statistics in the left hand menu.

The No. 2 Order merely specifies the Starting Rate Limit* and the Basic Rate Limit for 2008/09 as £2,320 and £36,000 respectively.

*The Starting Rate Limit for 2008/09 only applies to savings income for individuals whose taxable non-savings income is below that limit.