Contact: Mike Crowfoot, Assistant Head of Pension Services, (01962) 847584; [email protected]

1 Summary

1.1 At its September meeting this committee approved a new early retirement discretionary policy for the County Council in anticipation of proposed new legislation from the Department of Communities and Local Government (DCLG).

1.2 This report informs the committee of the position concerning a delay in producing the new legislation.

2 Statutory position

2.1 The DCLG considered the powers given to local authorities under The Local Government(Early Termination of Employment)(Discretionary Compensation) (England and Wales) Regulations, (the Compensation Regulations) to be age discriminatory under The Employment Equality (Age) Regulations, (the Age Regulations) which took effect from 1 October 2006.

2.2 The Compensation Regulations provide local authorities with the discretion to:

· Calculate redundancy and other compensation payments on an employees actual pay instead of the statutory maximum (£290 for 2006/7).

· Pay lump sum compensation of up to 66 weeks pay where added years are not awarded (NB the County Council does not use this discretion).

· Award `added years' up to a maximum of 10 years, depending upon age and service, to employees leaving on redundancy or efficiency of the service grounds between the ages of 50 and 65.

2.3 DCLG proposed repealing the Compensation Regulations and produced draft replacement regulations which would :

· Retain the discretionary power to waive the weekly pay ceiling of (£290) for calculating statutory redundancy payments and to calculate these on actual weeks pay.

· Provide a discretionary power to award a one off lump sum payment of up to 104 weeks pay, inclusive of the statutory redundancy payment.

· Remove the power to award `added years'.

2.4 The Department for Work and Pensions (DWP) has recently published draft amendments to the Age Regulations which are anticipated to allow the award of `added years' as compensation for early retirement to continue.

2.5 The Local Government Pension Scheme (LGPS) provide the County Council with the discretion to augment all members service by up to 6 years 243 days additional service. This can be used as an alternative to awards under the Compensation Regulations.

3 Current position

3.1 The DCLG have stated the current Compensation Regulations are age discriminatory in respect of both the award of `added years' and the calculation of 66 weeks pay and should not be used after the 30 September 2006 or authorities will be open to challenge under the Age Regulations.

3.2 Replacement legislation for the Compensation Regulations has been delayed while DCLG consider the options following the DWP proposals to amend the Age Regulations.

3.3 The methodology used for the calculation of redundancy payments and the use of actual pay instead of the statutory maximum can still be used as can the augmentation provisions in the LGPS.

4 Current policy

4.1 The policy approved at the September meeting provided:

· Augmentation of LGPS membership will be considered in any redundancy or efficiency of the service retirement case, instead of the award of compensatory `added years'.

· Alternative lump sum compensation of up to 104 weeks pay, inclusive of any redundancy payment will be considered.

Recommendations

1 The committee note the position.

2 The current policy remain in place until amending legislation is available.

3 An amended policy is presented for consideration at the earliest opportunity after amending legislation is in place.

5 Section 100D - Local Government Act 1972 - background documents

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

NB: The list excludes:

None