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

1 Summary

1.1 The new Local Government Pension Scheme regulations came into effect on 1 April 2008. Existing employer discretionary policies needed to be updated in light of these new regulations.

1.2 The regulations granted employers two new powers to increase an employee's pension benefits. Hampshire County Council has chosen not to use similar powers in the past and it is recommended that these new powers are not applied.

1.3 The revised discretionary policy statement for Hampshire County Council is set out in Appendix A.

2 Background

2.1 The Local Government Pension Scheme (LGPS) regulations give employing authorities certain discretions over the exercise of their functions in the LGPS. These discretions need to be updated for the new LGPS that came into effect on 1 April 2008.

2.2 At its meeting on 17 April 2008, the Committee approved the report of the County Treasurer and Director of Human Resources (Item 6 in the Minute Book) reviewing the County Council's discretionary policies with regard to the exercise of their functions in the Local Government Pension Scheme.

2.3 The Committee resolved that, in order to comply with the new Local Government Pension Scheme Regulations:

a) The Director of Human Resources and County Treasurer draft a policy for the next meeting of the Employment in Hampshire County Council Committee on whether, and in what circumstances, to award additional membership years to active members

b) The Director of Human Resources and County Treasurer draft a policy for the next meeting of the Employment in Hampshire County Council Committee on whether, and in what circumstances, to award additional pension to active members

c) That the updated flexible and early retirement policies reflecting the change to the earliest age a pension can be paid be approved.

3 New powers for employers

3.1 The new LGPS regulations gave employers two new discretionary powers:

· power to increase total membership of active members (regulation 12)

· power to award additional pension to active members (regulation 13)

3.2 Under the old LGPS regulations, employers had a similar discretionary power to purchase additional service for active members. Hampshire County Council resolved not to use this power.

3.3 This committee also resolved to limit augmentation (increasing pensionable service) to the value of the statutory redundancy payment, under the Local Government (Early Retirement) (Discretionary Compensation) (England and Wales) Regulations 2006.

3.4 It is therefore recommended that the Committee continue with this approach and approve a policy that Hampshire County Council will not consider increasing total membership of, or awarding additional pension to, active members.

3.5 The proposed revised discretionary policy statement is set out in Appendix A.

Revised LGPS policy statement for Hampshire County Council

Pension policy statement for non-teaching employees

"Your Pension - An Employee's Guide" explains that your employer can exercise certain discretions under the Local Government Pension Scheme (LGPS).  In addition, if you are made redundant or retired  in the interests of the efficient exercise of your employer's functions - known as early retirement -  your employer can compensate you under the Local Government (Early Termination of Employment) (Discretionary Compensation) (England and Wales) Regulations. From 1 April 2008 the County Council will exercise these discretionary powers as set out below, and inform you if it alters them in future :

·                    It will consent to immediate payment of benefits to an employee who requests this and retires voluntarily between age 55 and 60 (or age 50 for employees who have been in the LGPS since 31 March 2008, leaving before 31 March 2010), provided the relevant Chief Officer, the Director of Human Resources and the County Treasurer agree that it is in the Council's interests to do so, and having regard to the Pension Fund charge for paying benefits early being affordable in each case.

In exceptional circumstances the waiving of any reduction in benefits under the LGPS's `rule of 85' will also be considered.    

·                    It will consent to pension benefits being paid under the flexible retirement policy to an employee over the age of 55 (or age 50 for employees who have been in the LGPS since 31 March 2008, leaving before 31 March 2010), who requests this, provided their remuneration is reducing typically by 40 per cent through either a reduction in contractual hours or grade. In addition agreement must be obtained from The Executive Member for Policy and Resources, or the Chief Officer and the Director of Human Resources and the County Treasurer, whichever is appropriate under the policy, that it is in the Council's interest having regard to the requirements of the service, and that any Pension Fund charge for paying benefits early is affordable in each case.
In exceptional circumstances the waiving of any reduction in benefits under the LGPS's `rule of 85' will also be considered.    

·                    It will base any redundancy payment due to you on your actual weekly rate of  pay (rather than the current statutory maximum of £330 per week) and on your years of continuous local authority service. The part of your redundancy payment that relates to earnings in excess of the statutory maximum can be used to buy additional service in the Local Government Pension Scheme. This option is only open to you if you request it before your employment ceases.

·                    If you are retired in the interests of the efficiency of the service it will consider buying you additional service in the Local Government Pension Scheme using an amount no greater than  the payment you would have received had you been made redundant.

·                    If you are a Chief Officer or a Hampshire management grade employee in the situations listed above then it will submit your case for prior approval to the Executive Member for Policy and Resources

·                    It will pay preserved benefits without reductions to an ex-employee over age 55 (or age 50 for employees who have been in the LGPS since 31 March 2008, leaving before 31 March 2010), on compassionate grounds, provided that the Chief Executive and the County Treasurer are satisfied that the person had to give up work to care for an aged or sick relative or partner.  Serving employees can apply for this before leaving

·                    It will automatically include a woman's LGPS membership between 1 April 1972 and 5 April 1988 in the calculation of her widower's pension at no charge to her.

·                    It will reduce or suspend where necessary the added years pension paid to you during a period of re-employment with a LGPS employer.  At the end of the period of re-employment it will reduce, according to a set formula, the added years element of your pension.  In both instances you will be no better off, in pension terms, than if you had remained in the original job.  Details of the formula are available from Pensions Services Section.   

·                    It will not consider either increasing total membership of active members or awarding an additional amount of pension  

· It will only accept elections to combine pension rights from previous local government employment with a current period of membership, which are made within 12 months of re-joining the scheme, except for those members who hold certificates of protection or whose pension rights are affected by Pay & Benefits..

· It will only accept the election for transfer of pension rights from an external pension provider into the LGPS if this election is made within 12 months of the member joining the LGPS.