ITEM PF21
PENSION FUND COMMITTEE – 27 AUGUST 2008
THE LOCAL GOVERNMENT PENSION SCHEME (AMENDMENT) REGULATIONS 2008
Report by Assistant Chief Executive & Chief Finance Officer
Introduction
1. Statutory Instrument (SI) 2008 / 1083 was effective from 7 May 2008 but has retrospective effect from 1 April 2008. This SI makes changes to:
· the Local Government Pension Scheme (Benefits, Membership and Contributions) Regulations 2007 [SI 2007/1166], · the Local Government Pension Scheme (Transitional Provisions) Regulations 2008 [SI 2008/238], and · the Local Government Pension Scheme (Administration) Regulations 2008 [SI 2008/239]
2. This report is to update members of those changes.
Changes to Regulations
3. Regulation 2 – Active members – the definition has changed from must be employed for more than 3 months to must be employed for at least 3 months. This minor change will require employers to review their procedures to ensure that where temporary contracts are extended the member of staff is brought into the Local Government Pension Scheme (LGPS). For employees of scheduled bodies staff will get an opportunity to back date their contributions to the first day of employment.
4. Regulation 3 – Contributions – this changes the way in which contribution bands are allocated to new members by now taking his rate of pensionable pay at the beginning of employment.
5. The way in which the ranges of pensionable pay will be revalued is changed from being increased by the application of pension’s increase to the application of pension’s increase and then rounding down to the nearest £100.
6. The wording suggests that an employer may change the pay band allocation if there is a permanent material change during the year. Employers will need to look at this in connection with their current policies and how they deal with temporary changes. For Oxfordshire County Council who have a policy stating that there will not be any assessment during the year except where there is a change of job this will mean a review of their policy.
7. Regulation 5 – Benefits – Further clarification is being sought on this change since the SI seems to be making a significant change to the current position whereby if you opt out of the scheme within three months you are entitled to a refund of contributions and are treated as not having been a member of the scheme.
8. The reading of this change indicates that when someone joins and then opts out of the scheme (post April 2008) within the three month period they would only be eligible for a refund of contributions if they could declare that they did not have any deferred benefits within the LGPS (could be any employer or fund). If this change is confirmed this will require all paperwork to be amended along with changes to the way in which an employer’s payroll department actions refunds and potentially an increase in the number of complaints received.
9. Regulation 20 – Ill Health – introduction of a reviewable third tier of ill health retirement for employees who leave employment having been assessed by an Independent Occupational Health Physician as being permanently incapable of carrying out the duties of their current role. This medical assessment would also need to confirm that they are capable of obtaining gainful employment within three years of leaving their current job. The individual will be required to keep in contact with their previous employer to advise them when they have found other employment, although employers will carry out periodic reviews. Benefits will be based on the un-enhanced period of membership at the date of leaving and will stop after three years; however, a further medical review could result in a tier two benefit becoming payable.
10. Tier two benefits are payable where, after assessment by an Independent Occupational Health Physician, the member is considered as being permanently incapable of carrying out the duties of their current role but likely to obtain gainful employment before reaching normal retirement age, but not within three years of leaving employment. Benefits will be calculated by enhancing membership by 25% of the period between the date of leaving and normal retirement date.
11. Tier one benefits are payable where, after assessment by an Independent Occupational Health Physician, the member is considered as being permanently incapable of carrying out the duties of their current role until normal retirement age. Benefits will be calculated by enhancing membership by 100% of the period between the date of leaving and normal retirement date.
12. Regulation 25 – Nominated Co-habiting Partners – regulations now state that changes to declarations should be sent to the Administering Authority rather than the Secretary of State.
13. Regulation 26 – Meaning of eligible child – increases age from 17 years to 18 years where the child is wholly or mainly dependent on the member at date of death
14. Regulation 30 – Choice of early payment of pension – requests are to be made to the scheme employer with earliest age being 55 unless there is a protection at age 50. This SI allows the employer to determine on compassionate grounds that the pension should not be reduced.
15. Regulation 31 – Early payment of pension on grounds of ill health – the SI replaces this section in the benefit regulations to make wording consistent with wording of regulation 20.
16. Regulation 35 – Death grants – for pensioner members the SI confirms that the death grant payable is 10 times pension in payment, inclusive of pension increase, transfer credit from additional voluntary contributions etc less any pension already paid. It is not yet clear whether it is also the intention to disregard any abatement.
17. There are other changes arising from the statutory instrument that are not detailed above which will affect the administration processes, or need further clarification before any changes are made. A report will be made once further guidance has been obtained.
RECOMMENDATION
18. The Committee is RECOMMENDED to note the report.
SUE SCANE Assistant Chief Executive & Chief Finance Officer
Background papers: Statutory Instrument 2008/1083
Contact Officer: Sally Fox, Tel: 01865 797111
August 2008
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