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Introduction

General

This guide has been prepared for employers whose employees are eligible to contribute to the Local Government Pension Scheme (LGPS), administered by the London Pensions Fund Authority (LPFA). Please ensure that all staff who will be dealing with these matters have access to it. We would welcome any comment or suggestions you may have regarding it.

The guide deals with the practical administrative tasks which are necessary to ensure that proper records of your employees are kept so that the right contributions are paid and that when they leave your employment, they receive the benefits to which they are entitled.

From time to time you will be issued with updated procedures and additional guidance which you should follow as requested.

The Regulations

The Local Government Pension Scheme (LGPS) is contained in the LGPS (Benefits, Membership and Contributions) Regulations 2007, the LGPS (Administration) Regulations 2008 and the LGPS (Transitional Provisions) Regulations 2008, Statutory Instrument numbers 2007/1166, 2008/239 and 2008/238 respectively. Copies of relevant Acts or Statutory Instruments may be purchased from the Stationary Office Online Bookshop or viewed and downloaded at the Office of Public Sector Information website or inspected at the LPFA.

These regulations came into effect on 01/04/2008, but some scheme members may have retained rights under earlier legislation.

Anyone wishing to check the current provisions of the regulations will need to refer to an updated version of the regulations incorporating all the amendments made to date. A version of the regulations including amendments to date is available at http://timeline.lge.gov.uk/regidx.html

Social Security, tax and other related legislation may, in certain circumstances, override the provisions of the pension regulations. Again, copies of relevant Acts, Statutory Instruments may be purchased from the Stationary Office Online Bookshop, viewed at the Office of Public Sector Information website or inspected at the LPFA.

This guide, which outlines the employer's responsibilities, together with "A Brief Guide to your Pension Scheme", the guide for LPFA scheme members, should be adequate for the needs of most employers. Staff will be pleased to help by letter or telephone with any points that may arise. Appendix 1 to this guide includes a contact list that you may find helpful.

Nothing in this guide can override the provisions of the Pension Regulations, or related legislation. The guide was up-to-date at the time of publication in February 2011. It is for general use and cannot cover every personal circumstance, nor does it cover specific protected rights that apply to a very limited number of employees. In the event of any dispute over a member's pension benefits, the appropriate legislation will prevail as this guide does not confer any contractual or statutory rights and is provided for information purposes only. LPFA will not be held responsible for any loss, damage or inconvenience caused as a result of any inaccuracy or error.

Local Government Pension Scheme (LGPS) - Employer Discretions

The LGPS (Benefits, Membership and Contributions) Regulations 2007, the LGPS (Administration) Regulations 2008 and the LGPS (Transitional Provisions) Regulations 2008 became effective from 1st April 2008 and replaced the provisions of the existing legislation. They contain several discretionary provisions that apply to you as an employing authority. You should formulate policies regarding the exercise of these discretions and subsequently keep them under review. A complete list of employer discretions is available on request.

The Regulations require you to issue a Policy Statement for certain of these discretions, which you must send to the LPFA as your administering authority. These are:

  • The power of employing authority to increase total membership of active members
  • The power of employing authority to award additional pension
  • Flexible retirement and
  • Member election early payment of pension before age 60

In respect of the third and fourth items there is a further discretion for employer to waive any actuarial reductions that may apply in relation to early retirement.

In preparing, or reviewing and making revisions to its Statement an employing authority must have regard to the extent to which their policies could lead to a serious loss of confidence in the public service and the ministry concerned with local government affairs has issued a reminder that all employing authorities have a responsibility to act with prudence and propriety when considering the exercise of discretions.

Effective use of these discretions will be of benefit to your employees who are pension scheme members, but you should be aware of the following points:

  • You should ensure that you do not establish blanket policies around these discretions such as stating you will always (or never) exercise your discretion in a particular way. There is always a duty for any discretions to be exercised on a reasonable basis and by establishing a blanket policy it could be argued no discretion is being exercised at all. The Actuary will refer to your Policy Statement, together with your predicted level of use, when assessing your contribution rate at each valuation of the Fund. The LPFA will be responsible for monitoring your actual use of each discretion and, where you exceed the predicted use, will instruct the Actuary to review your contribution rate before the next valuation.
  • It is also important to have in place a clear policy on when they will be used, to avoid claims of discrimination and complaints under the Internal Disputes Resolution Procedure. As a guide you may find it helpful to refer to the decisions taken by the LPFA and these have been included. Appendix 8 has been updated to reflect the changes from April 2008.

Your Responsibilities

It is important that you follow the procedures in this guide closely. Any under-collection of contributions or failure to notify LPFA of events in accordance with the procedures laid down in this guide could lead to significant additional costs falling onto you through increases to your ongoing employer's contributions.

From time to time details of regulations amendments etc. and other notifications will be sent to you for onward transmission to your employees. It has been established, through court cases, that employers are liable for any loss in employee benefit expectation caused by the failure to pass on relevant information.

Please remember that the LPFA can only provide quality services to you and your employees if you provide prompt and complete information.

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