Archived decisions

Hampshire Fire and Rescue Authority Item 7

Human Resources Committee

8 September 2005

Local Government Pension Scheme - Discretionary Powers - Joining Previous Periods of Local Government Pensionable Service

Report of the Chief Officer

Contact: Jennifer McNeill (023 8064 4000 ext 2348) (Email: [email protected])

1

Summary

This report is to inform Members of the changes to the Local Government Pension Scheme (LGPS) that took effect from 1 April 2004 and to seek approval for the HFRA Powers of Discretion to be applied to support these changes. Delegated powers has already been granted to the Chief Officer and Deputy Chief Fire Officers in liaison with the Director of Corporate Services, with effect from 1 January 2004, to agree benefits regarding:

· efficiency of service

· redundancy (voluntary and enforced)

· early retirement requests from employees and on compassionate grounds

· augmentation of service for a new scheme member or retiring scheme member

· counting service before 6 April 1998 for widowers pension

· reducing a pension whilst a pensioner is re-employed

· reducing an employee's contribution after 40 years' service

· shared cost of additional voluntary contributions

(minute 223 of the HFRA Committee 26 May 2004 refers)

2

Recommendations

That it be a RECOMMENDATION to the Authority to agree the following discretionary powers under the Local Government (Discretionary Payment) (Amendment) Regulations 1999 and the LGPS Regulations 1997.

2.1

To allow employees of HFRS the option to join previous periods of LGPS employment, unless joining will increase the employers early retirement charge from the Hampshire Pension Fund. In the unlikely event that such cases might arise, the individual circumstances and the merits of the case will be considered by the Head of Human Resources and the Chief Officer and a decision taken accordingly under delegated powers.

2.2

To allow employees of HFRS the option to join previous periods of LGPS employment where the deferred benefits have been awarded following a reduction in pensionable pay by HFRS through no fault of the employee without exception.

3

Introduction and Background

3.1

These changes affect Local Government Pension Scheme (LGPS) members who

(i) move between LGPS employers, or

(ii) have a previous period of LGPS employment with the same employer.

3.2

Previous changes in Scheme regulations have allowed members the option of joining earlier periods of LGPS service to their current period at either the time of re entry, at any time during the new employment or at retirement.

3.3

The usual reason for not joining previous periods of LGPS service upon re entry is where the employee has a lower rate of pay in the new employment. Joining would, therefore, lower the value of their accrued pension benefits. The previous rules allowed the employee the option to join at a time when the new pay rose above the previously higher level.

3.4

An employee who is redeployed into a lower paid post by their employer can also freeze their pension benefits at the point of the reduction in pay and have separate benefits for the lower paid employment. The same options for rejoining apply in this case.

3.5

The delaying of the choice can lead to underfunding of a members benefits and consequently the Pension Fund. This in turn leads to higher employer Pension Fund contributions if delaying the option is a common practice, which it is not in the Hampshire Pension Fund.

3.6

The LGPS was amended from 1 April 2004. This now requires new employees to elect to combine previous periods of LGPS employment within 12 months of rejoining the scheme, or such longer period as the new employer may allow. In the case of HFRS, there has been no formal provision made as yet to allow this extension. If the 12 month period is not extended, any employees affected by this will never again have the opportunity to join previous periods.

3.7

A further change applied to employees who had re entered employment before 1 April 2004. This required the option to join previously unjoined periods to be taken up by 31 March 2005, or such longer period as the new employer may allow. In the case of HFRS, there has been no formal provision made as yet to allow this extension. Again, if this deadline is not extended, any employees affected by this will never again have the opportunity to join previous periods.

3.8

A letter was sent from Hampshire County Council, the LGPS administrator for the Hampshire Pension Fund, in June 2004 advising employers and employees of these changes. A further letter circulated in July 2004 advising employers of the change to this discretion did not reach HFRS. However, as a result of other work being done on the LGPS, the omission was recognised and this report aims to rectify this and to enable the changes to be implemented fairly, and at minimal cost and risk to HFRS.

4

Contribution to Corporate Aims and Objectives

4.1

This is a change by Hampshire County Council (HCC) as the LGPS Pension Fund Managers for which the HFRA must make a policy decision in the exercise of its discretionary powers as regards Hampshire Fire and Rescue Service employees.

4.2

The contribution relates to HFRS values in respect of management of its employees and ensures that no LGPS scheme member is detrimented by the changes to the LGPS from April 2004.

5

Risk Analysis

Negligble.

6

Resource Implications

6.1

Human Resources

Minimal impact.

6.2

Physical Resources

None.

6.3

Information and Communications Technology Resources

None.

6.4

Financial Implications

Recommendation 2.1: There will be no cost to HFRS for employees joining periods of service where there is no increase to the employers early retirement charge, for example for ill health retirement and normal retirement. There may be a charge for other retirements, eg, on the grounds of redundancy or early retirement in the efficiency of the Service in which instance a business case will need to be considered and any additional costs will inform that decision making process.

Recommendation 2.2: There will be a cost to HFRS in respect of an increase in the employers early retirement charge but this discretionary power is aimed not to compound damage to an employee disadvantaged by an omission by HFRS on their pensionable pay.

7

Equality Impact Assessment

7.1

These discretionary powers relate to all employees with pensionable service in the LGPS and therefore no EIA is required.

7.2

The proposals within this report are considered compatible with the provisions of the European Convention on Human Rights, the Human Rights Act 1998, and the Race Relations (Amendment) Act 2000.

9

Conclusion

9.1

The Recommendations are in line with Hampshire County Council discretionary powers with the addition of giving HFRS discretion to consider individual circumstances and the merits of a case in respect of 2.1.

Background Information (Section 100D of Local Government Act 1972)

The following documents disclose the facts or matters on which this report, or an important part of it, is based and has been relied upon to a material extent in the preparation of the report:

None

Note: The list excludes: (1) published works; and (2) documents that disclose exempt or confidential information defined in the Act.