Changes During Employment Requiring Action

General

Action may need to be taken in the following cases - please see the separate notes about each case:

• A whole-time active member becomes part-time
• The contractual hours or weeks worked by a part-time active member vary
• Pensionable Pay is reduced because of sickness or injury
• Leave without pensionable pay is granted
• Maternity, Paternity and Adoption Absence
• Jury Service
• Absence in the case of trade disputes
• An active member's pensionable pay is permanently reduced
• An active member's pensionable pay is reduced as a result of Local Government Re-organisation
• A member takes flexible retirement

Whole-time Active Member becoming Part-time

A whole-time active member who reduces their hours to become part-time remains in the Scheme.

The LPFA must be advised of the date of any change to contractual working hours or term-time only weeks, giving the part-time hours/weeks worked and the equivalent whole-time hours/weeks.

This should be done using the online form, entitled change of hours, on the secure section of www.yourfund.org.uk The form should be completed as follows:

• Enter the member's NI number and hit the validate button. You will not be able to progress unless you have entered an NI number for which we hold a record on our system.
• The member's name and date of birth will automatically be completed on the next screen.
• Please complete the details for the member's current working hours/weeks and for the new working hours/weeks.
• If the member is going from whole time to part time, please enter their whole time hours in Current PT Hours.
• FTE Factor is the Full-time Equivalent; i.e. what a full-time employee would be working.
• Current PT Hours, FTE Hours, Term Time Weeks, FTE Factor, New PT Hours, New FTE Hours and New Term Time Weeks must all be greater than 00.00.
• FTE Hours must be equal to or greater than Current PT Hours.
• New FTE Hours must be equal to or greater than New PT Hours.
• All hours and weeks fields must be in the format 00.00.
• Once completed, click "Submit" and keep a note of the reference number generated.

If you are still using paper forms, form LG/172 should be used for this purpose.

In both cases, the employee will then be issued with a revised notice of his status in the Scheme and you will be sent a copy.

Contributions should still be deducted at the same rate if the member's whole-time equivalent pay has not changed.

Part-time Active member Changing Contractual Hours

A part-time active member whose contractual hours are either increased or decreased remains in the Scheme. As with a whole-time employee changing their hours, the online form should be used, or paper form LG/172 should be completed and returned to the LPFA.

Reduction in Pensionable Pay because of Sickness or Injury

If the reduction is temporary, both the employee's and the employer's contributions are payable on the pay the employee receives before any reduction on account of Statutory Sick Pay or other appropriate National Insurance benefit.

No further action need be taken, provided that a record of the full amount of the pay before reduction is available, should it be required for the purpose of calculating benefits.

If the reduction is likely to be permanent, you must contact the LPFA for further guidance.

Unpaid Leave and Leave on Reduced Pensionable Pay

Where the period of absence is less than 31 days

This section applies if you grant an active member leave of absence from his employment without pay, or with reduced pay. If a member is away from his employment with permission (otherwise than because of illness or injury) for a continuous period of less than 31 days and is receiving reduced or no pensionable pay, he must make contributions at his normal contribution rate on the pensionable pay he would have received during the period but for his absence.

You should make arrangements with the employee direct for the appropriate contributions to be collected from his pensionable pay through the payroll. In this way he will receive immediate tax relief. Employer's contributions are also payable in full. Both the employee's and the employer's contributions should be included in your monthly and annual returns. The LPFA does not require any other notification if the period of leave does not exceed 30 days. The employee's membership counts in full.

An employee who is paying additional percentage contributions or instalments to the Scheme to increase their benefits (other than AVCs) must continue to pay those contributions in full during the period of absence. If this is not practicable, the contributions must be collected as soon as possible on their return.

This does not apply to AVCs paid to Prudential Corporate Pensions via the employer; an employee can choose whether or not to pay.

Where the period of absence is greater than 30 days

If the period of absence granted to an active member is greater than 30 days then, on his return to work or following his retirement or resignation, the employee must pay contributions as above on the first 30 days and has an option to pay contributions for the rest of the period of his absence or, if it exceeds 36 months, for 36 months. If contributions are paid, the period of membership counts in full. Periods for which contributions are not paid do not count for pension purposes.

Where the employee elects to pay contributions, employer's contributions must also be paid in full.

Where an employee is paying additional percentage contributions these may continue to be paid throughout the absence as detailed above. If the employee wishes to cease paying the additional contributions, please notify the LPFA immediately when arrangements will be made to end the contract. The period of membership or amount of pension already bought will be calculated and the employee will have the right to apply to start a further contract to purchase additional pension (members are no longer able to start contracts to purchase additional years of membership) on return to work, but it will usually be more expensive because their age is greater than when the first contract was entered into.

Payments are assessed against the pensionable pay they would have received but for their leave of absence.

On the commencement of an active member's leave of absence that will extend beyond 30 days you must complete the online form "Notification of Absence". This should be completed as follows:

• Log on to the secure part of the website www.yourfund.org.uk and click on the online forms link, then chose "Notification of Absence". Enter the member's NI number and hit the validate button. You will not be able to progress unless you have entered an NI number for which we hold a record on our system.
• The member's name and date of birth will automatically be completed on the next screen.
• Complete all the yellow coloured fields. The date last contributions deducted must be the last day of the last pay period from which pension contributions were deducted.
• Ensure that the correct reason for absence is selected from the drop down box. "Parental Leave" refers to statutory maternity, paternity or adoption leave where the member would be expected to receive statutory maternity, paternity or adoption pay. It is not for leave granted on compassionate grounds to look after children; this would count as authorised absence.
• Once all the fields have been completed, hit submit and then take note of the reference number generated. You will also need to print off the linked form and give it to the member to complete.

If you are still using the paper forms, you must:

• Complete form LG/210 and forward it to the LPFA
• Give the employee for LG/211 (UL) which explains the options available and includes a form for him to complete on his return

On the employee's return to work, or following his retirement or resignation, you should complete the online form "Return from Absence" on the secure part of the website wwww.yourfund.org.uk by:

• Enter the member's NI number and hit validate. Again, if we do not hold a record for that NI number, you will not be able to proceed.
• All yellow fields must be completed
• The contributions for the first 30 days must be repaid if the reason for absence was authorised unpaid leave. See the paragraphs below for details of the other types of leave.
• In all cases, employer contributions must be repaid if the member repays their contributions and are calculated on the member's notional full pay.
• Please also complete the member's contract status for pre- and post-absence.
• Once all fields are completed, hit submit. Please keep a note of the reference number generated.

If you are still using paper forms, you must:

• Complete form LG/212 and send it together with a copy of the employee's election form, LG/211 (UL), to the LPFA
• Deduct the appropriate contributions from the employee's pay, and include both the employee's and employer's contributions in your monthly and annual returns (LG/221 and LG/99)

Maternity, Paternity and Adoption Absence

This section applies where a member is absent from work with a statutory right to maternity, paternity or adoption leave. The tables below indicate what contributions must be paid for which period of leave.

Maternity, Paternity and Adoption Leave Reference table (PDF 108KB - opens new window)

Paid maternity, paternity or adoption leave

If a person who is a member or who has applied to be a member goes on maternity, paternity or adoption leave, they must make contributions at their appropriate contribution rate, as respects any part of their period of absence for which they are a member and entitled to receive pensionable pay. Pensionable pay includes any statutory maternity, paternity or adoption pay payable to them, but not any amount by which their actual pensionable pay is reduced on account of their possible entitlement to such statutory pay. It also includes the value of any childcare vouchers that the employer treats as pensionable pay.

Both the employee's and the employer's contributions should be included in your monthly and annual returns. The LPFA does not require notification of maternity, paternity or adoption absence unless it becomes unpaid.

If a member's pensionable pay is reduced temporarily because they are on maternity, paternity or adoption leave, they are required to pay the full amount of any additional contributions they may be paying to increase their membership or pension. Payments are assessed against the pensionable pay they would have received but for the reduction, and arrangements will need to be made to continue making payments throughout their absence or immediately upon their return.

Unpaid ordinary maternity, ordinary adoption or statutory paternity leave

If a person who is a member, or who has applied to be a member, goes on ordinary maternity leave, ordinary adoption leave or statutory paternity leave, and is not entitled to receive pensionable pay for all or any part of that period of leave, they shall be treated as if they had paid contributions for the unpaid period of that leave on the pensionable pay that they would have received during that period but for their absence. That is any period during the first 26 weeks when the employee is not in receipt of statutory maternity, paternity or adoption pay, or contractual maternity pay or during any period of unpaid ordinary paternity leave (e.g. some low earners).

Any period of unpaid maternity, paternity or adoption leave, other than ordinary maternity, ordinary adoption or statutory paternity leave

If a person who is a member, or has applied to be a member, is on maternity, paternity or adoption leave, other than ordinary maternity, paternity or adoption leave, and for the whole or part of the period of their maternity, paternity or adoption absence they are not entitled to receive pensionable pay (including and statutory maternity or adoption pay), they may make contributions at their appropriate contribution rate as respects the unpaid period.

If the member makes an election to pay contributions at their appropriate contribution rate as respects the unpaid period, the contributions are calculated as if their pay in the employment were equal to the pensionable pay they were entitled to receive immediately before the unpaid period began. Pensionable pay would include any statutory pay, but not any amount by which their actual pensionable pay is reduced on account of their possible entitlement to such statutory pay. The employer's pension contributions would be due on notional full pensionable pay. Such an election would have to be made within the period of 30 days beginning with the day the person returns to work or ceases employment, or such longer period as the employer may allow.

On the commencement of an active member's unpaid maternity, paternity or adoption leave, other than unpaid ordinary maternity, ordinary paternity or ordinary adoption leave, you must complete the online "Notification of Absence" as detailed above. If you are still using paper forms:

• Complete form LG/210 and forward it to the LPFA
• Give the employee for LG/211 (MA) which explains the options available and includes a form for them to complete on their return to work.

On the employee's return to work, you should complete the online "Return from Absence" form as detailed above. If you are still using paper forms:

• Complete form LG/212 and send it together with a copy of the employee's election form, LG/211 (MA), to the LPFA
• Deduct the appropriate contributions from their pay, and include both the employee's and employer's contributions in your monthly and annual returns (LG/221 and LG/99)

Keeping in Touch Days

When an employee works a Keeping in Touch (KIT) day, both the employer and employee must pay contributions on the pensionable pay received for that day. This day does count for membership purposes and therefore the LPFA must be informed if the KIT day falls in the middle of a period of unpaid leave.

If the member wishes to pay contributions for the unpaid leave which contains a KIT day, the pay received for the KIT day must be disregarded for the purpose of calculating the contributions due. This is probably best explained via some examples.

Example 1 - KIT day during the unpaid additional maternity leave period

An employee is in receipt of SMP on the last day of paid maternity leave. She has a period of unpaid additional maternity leave, but works a full KIT day in the middle of the unpaid additional maternity leave period. The unpaid additional maternity leave period either side of the KIT day does not count as "reckonable" membership in the LGPS but the KIT day does. The employee and employer pay contributions on the KIT pay received.

If the employee wishes the unpaid additional maternity leave period either side of the KIT day to count as "reckonable" membership, she would have to pay contributions to cover both those periods based on the pay she would have received if she had continued to receive SMP throughout the unpaid additional maternity leave periods falling either side of the KIT day and the employer would have to pay contributions based on the notional full pay for those periods. If the employee doesn't elect to pay, the unpaid additional maternity leave period either side of the KIT day will not count as "reckonable" membership for pension purposes (and no employer contributions will be due for those periods).

Example 2 - KIT day on last day of paid maternity leave

An employee is in receipt of full pay on last day of paid maternity leave as a result of that day being a KIT day but, if it hadn't been a KIT day, would otherwise have only received SMP on that day. She has a period of unpaid additional maternity leave which does not count as "reckonable" membership in the LGPS.

If she wishes the unpaid additional maternity leave period to count, she would have to pay contributions to cover that period based on the pay she would have received had she continued to receive SMP throughout the period of unpaid additional maternity leave (i.e. the calculation would only be based on the rate of SMP as any increase in pay on the last day of paid maternity leave as a result of it being a KIT day must be ignored) and the employer would have to pay contributions based on the notional full pay for that period. If the employee doesn't elect to pay, the unpaid additional maternity leave period will not count as "reckonable" membership for pension purposes (and no employer contributions will be due for that period).

Maternity, paternity or adoption leave means any period throughout which a member is absent from duty because he is exercising his right to take maternity, paternity or adoption leave in accordance with sections 71, 73, 75 of the Employment Rights Act 1996 or regulations 4 or 8 of the Paternity and Adoption Leave Regulations 2002.

Ordinary adoption leave means leave under section 75A of the Employment Rights Act 1996.

Ordinary maternity leave means leave under section 71 or the Employment Rights Act 1996.

Jury Service

Where an active member is away on jury service for any period, and is receiving reduced, or no pensionable pay, he must make contributions at their appropriate contribution rate on the pensionable pay he would have received during that period but for his absence. Employer's contributions are also payable in full. "Away on jury service" means being away from work with permission given so that an employee can attend for jury service in pursuance of a summons under the Juries Act 1974 or attend as a juror at an inquest under the coroners Act 1988.

Trade dispute Absence

"Trade dispute absence" means absence from duty, otherwise than with leave, for a period of one or more days during and because of a trade dispute.

If an active member's absence results from his participation in a Trade Dispute and the absence is for at least one day, special provisions apply. A Trade Dispute is defined in the Trade Union and Labour Relations (Consolidation) Act 1992, to be an industrial dispute between an employer and his employees in connection with the employee's conditions of employment.

He may make a contribution for the relevant contribution period at the rate of 16% on his lost pensionable pay for that period. His lost pensionable pay is the difference between his actual pensionable pay (if any), and the pensionable pay he would have received but for any trade dispute absence, (disregarding any guarantee payments under Part III of the Employment Rights Act 1996).

Where a person pays contributions under the provisions regarding trade disputes for any period, that period counts as a period of membership, even if his contract of employment did not subsist throughout that period. The termination of a person's contract of employment because of a trade dispute does not prevent this provision from applying to him if he again becomes an employee of the same Scheme Employer and a member no later than the day after the dispute ends.

To make contributions under these provisions a person must apply to the employing authority in writing before the expiry of the period of 30 days beginning with the day on which he returns to work or such longer period as the authority may allow. However, if he ceases to be employed by that authority without returning to work, he may apply to make contributions before the expiry of 30 days beginning with the day he ceases employment or such longer period as the authority may allow.

Online forms "Notification of Absence" and "Return from Absence" must be completed whenever a Trade Dispute absence occurs. If using paper forms, form LG/210 must be completed and sent to the LPFA at the start of any absence and should be followed by form LG/212 on the employee's return. The employee should be given form LG/211(TD) which explains the options available to him.

Provided the employee elects to do so within 30 days of the end of the period of Trade Dispute, the period of membership that would otherwise have been forfeited for pension purposes can be "bought back". If the member was paying Additional Contributions these must be repaid in any event (see paragraph 5.5). If the employee elects to repay his standard contributions, he must make payment of 16% of the pensionable pay lost during the dispute. Payments can be spread over a suitable period.

The payment of 16% is common to all employees, regardless of the normal contribution rate that they pay, and represents an average of employee's and employer's contributions otherwise due. Consequently, no separate employer's contribution is required upon that payment. Once payment is complete, the period counts in full for all pension purposes. The employee cannot choose to repay contributions for only part of a period; he must buy all or none of the period of a particular dispute.

Absence without Permission

Generally, when an active member is absent and is not receiving full pensionable pay (except where the period is authorised sick leave or authorised leave of absence) no pension contributions are payable and the period does not count for pension purposes. However, if the employee has previously elected to make additional pension contributions to purchase additional membership or pension, those additional contributions must continue to be paid as if full pensionable pay had been received during the absence.

Should an active member not return from any period of absence (excluding maternity, paternity and adoption leave), he should, for pension purposes, be treated as having resigned on the last day in respect of which he received pensionable pay.

Permanent Reductions in Pensionable Pay

Certificates of Protection of Pension Benefits for Pensionable Pay drops before 01.04.2008

When, following a material change in his circumstances that was beyond his control and occurred before 01.04.08, an active member's rate of pensionable pay was reduced or the rate at which it may be increased was restricted in such a way that it is likely that the rate of his retirement pension will be aversely affected, he was entitled to be issued with a certificate to that effect by his employing authority, which permits benefits to be calculated on his pensionable pay before the reduction took place.

Pensionable Pay Protections from 01.04.2008

Certificates of Protection do not apply to any reductions in pensionable pay which occur after 31.03.2008. A member will be entitled to use pensionable pay from a previous year for the purpose of calculating his pension if his pensionable pay in a continuous period of employment is reduced or restricted as a result of one of the following situations:

• the member chooses to be employed by the same employer at a lower grade or with less responsibility;
• for the purposes of achieving equal pay in relation to other employees of that employer;
• as a result of a job evaluation exercise;
• a change in the member's contract of employment resulting in the cessation or restriction of, or reduction in, payments or benefits specified in the member's contract of employment as being pensionable emoluments; or
• the rate at which the member's rate of pay may be increased is restricted in such a way that it is likely that the rate of the member's retirement pension will be adversely affected.

Please see section 9 for more details on pay from a previous year.

In order to avoid future uncertainty, the LPFA believes it to be good practice for employing authorities to notify a member if they satisfy the conditions of Regulation 10 of the Benefits Regulations, entitled "Final Pay: Reductions" (see Appendix 9 for further information).

Reduction of Pensionable Pay as a Result of Local Government Re-organisation

Should an active member transfer employment within the same employer, or to a different employer, as a result of Local Government Re-organisation and receive a lower pensionable pay, he is entitled to defer his benefits from the first employment, provided that he has at least three months membership or had a membership credit in respect of a transfer value. This may be to his advantage and should such a case arise, please contact the LPFA for more information.

Other Changes in Circumstances

Please notify the LPFA in writing in the event of any of the following:

• A change of name of any active member
• A change in an active member's National Insurance number or National Insurance contribution table letter

A change in a member's address can be notified to the LPFA by using the Change of Address form on the secure section of www.yourfund.org.uk as follows:

• Enter the member's NI number and hit the validate button. You will not be able to progress unless you have entered an NI number for which we hold a record on our system.
• The member's name and date of birth will automatically be completed on the next screen
• Simply complete all the new information in the yellow fields, click "Submit" and keep a note of the reference number generated.

Added Years/Pension - Cost Borne by Employer

An employing authority may resolve to add a maximum of ten years to his membership, and/or increase his final pension by a maximum of £5,000 per annum. The full cost of the additional benefits arising from the exercise of these discretions will be charged to the employing authority, before the added benefits can be credited. Should you wish to use either or both of these discretions, please let the LPFA have full details of the case so that you may be advised as to the formalities required. See also Appendices 2 and 8 on increase of benefits for active members.

The Local Government Pension Scheme (Miscellaneous) Regulations 2009 now allow employers who have previously awarded compensatory added years (CAY) under various Discretionary Compensation Regulations, to convert all or part of the period credited into additional membership. The effect of this is to convert the CAY into funded membership which would be paid for through a lump sum payment. If you are interested in this, please contact the LPFA. Please note, any decisions regarding this must be made before 31st March 2012.

Added Benefits - Purchase by Employee

There are essentially three methods by which an active member can purchase additional benefits under the Scheme Regulations:

Purchase of Added Pension

Additional payments can often be made into the Fund to buy additional pension. Benefits purchased under this method are for guaranteed amounts payable at retirement.

In-House Additional Voluntary Contributions

Alternatively, extra benefits may be purchased by the payment of In-House Additional Voluntary Contributions (AVCs). These contributions are invested with Prudential Corporate Pensions, as directed by the active member. The accrued fund is used to purchase additional benefits, either through the Scheme or on the open market, and at the same time as the main LGPS benefits are paid or from any later time, up to the eve of the member's 75th birthday. Benefits provided through this method cannot be guaranteed at the outset since the eventual amounts will depend on fluctuating investment returns and annuity rates.

Concurrent Stakeholder and Personal Pensions

Members of the LGPS may also contribute to a Stakeholder or a Personal Pension scheme if, in at least one of the five tax years preceding the year in which the contributions are made, their earnings did not exceed £30,000 but not counting any tax year prior to 2000/2001.

Stakeholder and concurrent personal pensions represent an alternative to Additional Voluntary Contributions and the purchase of additional scheme pension for some scheme members wishing to increase their scheme benefits.

Government legislation requires employers who do not already offer an occupational pension scheme to identify a Stakeholder pension scheme and facilitate access to it for their employees. The major LGPS employers who automatically admit all regularly employed staff are therefore not required to offer Stakeholder pensions to their employees and in fact have no legal remit to do so.

Certain smaller employers who do not admit all staff to the local government scheme, but who employ more than 5 people aged 18 or over, are required to facilitate access to Stakeholder pensions. If you require advice concerning this please contact the LPFA.

An employee who wishes to make concurrent contributions to a Stakeholder or personal pension will have to make his own arrangements with a provider of his choice. Contributions would be paid to a Stakeholder provider via, for example, a direct debit or standing order from the employee's bank account. The minimum contributions to a Stakeholder pension will be £20 for both regular and one-off payments.

The LGPS (Miscellaneous) Regulations 2009 introduced the facility for active members with a nominated-co-habiting partner to pay increased contributions in order to provide a larger pension for their partner. This option is only available until 31st March 2011.

Further details concerning the options available to scheme members who wish to increase their pension rights may be found in the booklet "Increasing Pension Scheme Benefits", available either through the LPFA's website or as a hard copy on request, see Appendix 6. Extra copies are available to active members on request to the LPFA. The procedure to be followed when an active member decides to pay an AVC is given in section 10.

Contributions

Where the employee is an active member the appropriate contributions deductions must be made within your payroll system.

The rate is dependent on the employee's pensionable pay and is normally determined at the commencement of his membership. Active members who have had a material change to their terms and conditions can also have their contribution rate adjusted. The pay ranges for the contributions rates are reviewed and amended at 1st April each year and employees are to have deductions made according to the following table for the year 2011/12:

Employing authorities will be notified at the end of each year of the up-rated pay ranges to apply for the following year.

With regards to part-time employees, the pensionable pay to be used is the full-time equivalent pensionable pay (i.e. the pensionable pay received by a full-time employee doing the same job). No adjustment is made for term-time only employees (i.e. an employee who only works during school term time) except in the case of part-time term-time only employees (i.e. an employee who only works during school term time) where the pensionable pay to be used is equal to that which would have been received if the employee was full-time during those term-time weeks.

All active members continuously employed since before 1st April 2008 in a manual grade, with a protected contribution rate of 5% prior to that date, will need to have their contribution rate increased gradually until it is level with the prescribed contribution rate for their pensionable pay. This is also the case for any member who would have satisfied the above criteria but for having opted-out, and now rejoins the scheme.

The contribution rate for the year commencing 1st April 2011 is the same for all other active members.

Contributions are payable against Gross Taxable Pay. Net Pay arrangements operate so that the contributions are deducted from the gross pay before tax is levied.

Site navigation

you are in:

• home
• employers
• employers guide