PART I

REPORT OF THE PENSION FUND PANEL

TEST VALLEY BOROUGH COUNCIL DEATH IN SERVICE

GRATUITY SCHEME

1. The Pension Fund Panel at its meeting on 8 July 2003 considered a report of the County Treasurer seeking approval to a scheme of delegation between the County Council and Test Valley Borough Council, as provided for under Section 101 (1) (b) of the Local Government Act 1972.

2. The scheme would enable the Borough Council to exercise some of the County Council's powers as a pension fund administering authority, so that it could appoint an insurance company to accept additional voluntary contributions (AVCs) to provide life cover for over 400 Borough Council employees who contribute to the Local Government Pension Scheme (LGPS). This would streamline administrative arrangements as AVCs fall outside the Pension Fund's accounts.

3. The Borough Council proposes to use its existing powers under LGPS Regulation 67 ("Establishment of shared cost AVC schemes (SCAVCs)") and 68 ("Applications to pay SCAVCs") to set up a scheme whereby each contributor could pay £1 annually for a death in service gratuity of two years pay and the Borough Council would pay the balance of the premiums. The LGPS automatically pays a death grant of two years pay so the SCAVCs would pay as much again at a cost to the contributor of just £1 per annum for the extra cover.

4. The scheme of delegation would enable the Borough Council to exercise the County Council's functions under Regulation 69 ("Functions of employing and administering authorities") and 70 ("Application and investment of SCAVCs") to pay the premiums to the insurance company which the Borough Council will appoint for this purpose.

5. In the event of a contributor's death in service the gratuity would be paid by the insurance company to the Borough Council as trustees. They would in their absolute discretion distribute it amongst such dependants of the deceased as they may decide after considering any person named by the deceased for that purpose, in accordance with Regulation 63 ("Death benefits"). Otherwise they would pay it within a year of the person's death to the deceased's legal personal representative.

6. The Local Authorities (Functions and Responsibilities) (England) Regulations 2000 list, in Schedule 1, the functions which are not the responsibility of an authority's executive. The list includes an authority's functions under (and decisions to be taken in accordance with) regulations made under Sections 7, 12 or 24 of the Superannuation Act 1972, including the LGPS Regulations 1997.

RECOMMENDATION:-

That pursuant to Section 101 (1) (b) of the Local Government Act 1972, Test Valley Borough Council be authorised to exercise the functions of the County Council under Regulations 63, 69 and 70 of the Local Government Pension Scheme to enable it to operate a shared cost additional voluntary contribution scheme with an insurance company of their choice for death in service gratuities.

J. Waddington

Vice-Chairman of the Pension Fund Panel

5NR140703