Contact: Nick Weaver, Head of Pension Services (01962) 847587; [email protected]

1 Summary

1.1 Since 2004, an election to combine pension rights from previous local government employment with a current period of membership must be made within 12 months of re-joining the scheme, unless the employer exercises its discretion to extend that period.

1.2 There is a similar provision applying to members' rights to transfer pension rights from an external pension provider into the Local Government Pension Scheme (LGPS).

1.3 Hampshire County Council has chosen to extend the 12 month period for transferring in, indefinitely, except in cases where the employer has issued a notice of redundancy.

1.4 This policy puts a cost pressure on the pension fund and also on staff resources.

1.5 It is recommended that the policy is amended to apply the 12 month limit on transferring in, except for those members who hold certificates of protection or whose pension rights are affected by Pay & Benefits.

2 12 month rule

2.1 LGPS members can elect to combine pension rights from previous local government employment with their current period of membership.

2.2 Before 2004, members could elect to combine their benefits at any time, thereby enabling them to do so on the most advantageous terms to themselves.

2.3 Administering authorities raised objections to this open ended right to combine because of the cost burden it imposed upon them. Payments between authorities are made up of a basic payment relating to service and salary with the previous employer, plus age with interest added for the period between termination of membership and date of payment. There is no consideration for fluctuating market conditions nor for the lost investment potential.

2.4 In 2004, LGPS rules were amended to restrict this right so that an election to combine had to be made within 12 months of re-joining the scheme. The amended rules provided for an employer discretion to extend the 12 month period.

3 Hampshire County Council's policy

3.1 Hampshire County Council has exercised the discretion to extend the 12 month period indefinitely, except in cases where the employer has issued a notice of redundancy.

3.2 This means that the Fund bears any additional cost of these transfers in arising from fluctuating market conditions and lost investment potential.

3.3 There are also several other issues arising Hampshire's current stance on the 12 month rule.

· Members can make repeated requests to re-visit the issue of whether or not to combine service, putting pressure on staff resources

· Members can elect to combine up until an actual notice of redundancy has been issued. Redundancy estimates provided to an employing department can be therefore be invalidated by a late election to transfer (received before a notice of redundancy has been issued).

· Early payment of pension benefits and the resulting Fund charge in redundancy cases are only an issue in the case of older members. Therefore the only restriction currently applied by Hampshire to the 12 month rule could be held to be age discriminatory.

3.4 Hampshire County Council's current policy of permitting late transfers is almost unique among administering authorities.

3.5 Whilst transfers from external pension providers that take place outside of the 12 month limit, are subject to market related factors, the issues around staff resources, redundancy and age discrimination remain valid.

Section 100 D - 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: