PF24 - page 3

 
Area under review 	Current practice 	New proposal 	Comment 	
1. Admission Agreements with non-local authority employers for staff involved with partnership arrangements. 	If staff are eligible to join other statutory schemes such as the NHS, admission to LGPS is not permitted.	In the event of approved NHS partnership, current members of LGPS may remain in the scheme but employers must enter an admission agreement.   	Will help reassure staff involved with these transfers if parties are willing to enter into admission agreements.  	
2. Definition of pay for pension purposes can be agreed with specific groups of employees.   	Not aware of any such agreements held with employers and their staff in this fund.	No new agreements to be set up, although those in operation may continue.	No effect in this fund. 	
3. Introduction of ‘immediate vesting’ for anyone with more than 3 months scheme membership. 	Refunds of contributions may be paid on request to leavers or to staff who opt out within 2 years membership unless a transfer of previous pension rights has been completed. 

Last year the pensions team processed approx 1200 refunds.	Award of deferred benefits to all with over 3 months membership.

Will apply to all new starters from date of new regulations (1.4.2004) 	Significant increase to administration when comparing process of refund to deferred benefit, although there is an element of phasing into the change.
 
Scheme literature may need to be changed to encourage a positive attitude to the long-term benefits of pension provision otherwise may expect a larger number opting out within the 3 month period.	
4. Combining of pensions at retirement.	When a reemployed pensioner retires from their second job, they can elect to link the previous rights in payment to the second.	This option will no longer be available to pensioners who accept further employment.
	This will reduce administration, but this does not happen very often.	
5. Aggregating benefits.	A positive option to link periods of LGPS membership when changing employment is currently required, final chance to link at the end of employment available.	Instead of the open-ended option, proposals introduce requirement to make decisions within 12 months of moving employment. 
 Would apply to all current re employed deferred pensioners.  	The intention of this is to ensure that employers and actuaries know of potential liabilities, but this would be more straightforward if regulations reverted to the automatic transfer within LGPS at 1995.   

ANNEX 1

There would be considerable administration in contacting all deferred pensioners to advise of this change, although could be linked with the benefit statement requirement.

PF24 - page 4

6.  Ill Health retirement 	Referral to independent medical advisor who determines whether or not applicant is permanently incapable of continuing their employment or any other comparable employment until at least age 65,  (70 for Councillors) 

Employing authority determines entitlement to a benefit, and Admin authority determines amount of benefit dependant on time in LGPS and pre set table of   enhancements if member has at least 5 years membership.
Once awarded pension remains in payment for life.

When less than 2 years membership there is no entitlement to pension but a single grant payment.

(See also about IDRP process) 	Changes to the definition and process of ill health retirement Certification by Independent Medical Advisor allows for an element of uncertainty about the permanence of the incapacity and needs to specify when the ill health needs to be reviewed.
 Review should be at least every 5 years until 65. 
The advisor may specify a shorter review period. 
At the review time the employer has to decide whether the pension is reduced, increased or remain relating to improvement of health. 
Currently employers are not involved with the benefit calculation.

The proposals do not cover the mechanics of review for example if pensioner is resident abroad or refuses to attend or submit medical reports, or whether costs for the review should be met by the employer and not out to the pension fund. 
Unsure how the review would take place with employers who cease to exist. 

. 

No further grants for short service to be paid, unless in the LGPS on day before new regs effective. 

Although the proposals would apply to ill health decisions made from 1.4.2004, it seems that current employees could opt to disapply these regulations, and retain the current regulations.	Significant changes in the ill health process, but no specific guidance supplied with these proposals.  
This may result in considerable differences adopted by neighbouring employing authorities, which would be inappropriate for a national scheme.
Requires employers to have responsibility for benefit calculation after a review for which small employers may not have the capabilities.
Proposals do not appear to cover scheme members who may be entitled to immediate payment on health grounds but have no enhancements, ie with under 5 years or at least 40 years. 
This draft does not make it clear whether the whole pension or the enhanced portion is to be reviewed, and so leads to concern about lack of protection of non enhanced benefits. 
Officers had understood that ill health retirement is to be radically changed with the next stage of scheme amendments, and in their opinion it would be preferable to bring in a single set of changes, especially as the current proposals would not be effective for at least 5 years from introduction. No cost savings could be expected within the next two valuations. It is the officers opinion that a single set of changes should be introduced rather than in two steps. 

PF24 - page 5

7.  Simplifying the options available to employers to augment benefits 	The employers have discretionary powers to increase membership for new starters or for leavers, should be part of their published policy statement.   	Proposal will enable employers to award additional membership at any time, and this single provision replaces the two previous arrangements.
To be provided within the policy statements. 	Will require changes to employers policies to use their powers of discretion, could assist with flexibility, but these powers are rarely used currently within the Oxfordshire fund.	
8. Change to IDRP processes. 	An independent referee appointed by the administering authority deals with complaints. (Stage 1)
If claimant, or employer is unhappy with decision may move to 2nd stage and take complaint to Secretary of State.
From there the decision may be referred to Ombudsman.	Employers must take their own 1st stage complaints, arranging for an independent referee.

2nd Stage to be decided within the administering authority. No option to contract this out as at present. 

Secretary of State no longer involved in process.	May raise concerns about the independence of complaint process, especially when linked with ill health.
Appears to take away the employers right of appeal.

Unsure how the County as both administering and employing authority will operate, and maintain the appearance of providing an independent decision.
Loss of the central role Secretary of State provided through the appeal process.
Does not resolve the need to be able to settle minor maladministration cases. 	
9. Funding Strategy Statement 			Was covered within previous meeting.	
10. Annual Benefit Statements.	Currently Oxfordshire does not issue statements, although is part of the service to be delivered within the Best Value requirements. 	Benefit statements to be issued to all current active members and all deferred members by 1.4.2005, and annually thereafter.
	Proposals currently require statements to be issued against a member’s  ‘pay’. This is not a term recognised within the regulations.
This proposal appears to have several technical failings in the drafting, by not including pension credit members or providing detail on dealing with multiple employments. 
Should annual statements be required to go to returning officers and casual staff?
 	
11. Transitional arrangements. 		Sets out how the proposals will affect scheme members and who may be able to keep the earlier provisions. Generally these are covered in categories above.