The Local Government Pension Scheme (Scotland) Amendment Regulations 2005

Explanatory Note

(This note is not part of the Regulations)

These regulations make various amendments to the Local Government Pension Scheme (Scotland) Regulations 1998 (“the principal Regulations”), which regulate the Local Government Pension Scheme in Scotland (“the Scheme”). Regulation 3 takes effect on a date before the Regulations come into force (as set out in regulation 1). Section 12 of the Superannuation Act 1972 provides that regulations made under section 7 of that Act may have retrospective effect.

Regulation 3 amends various Regulations of the principal Regulations so as to take account of new entitlements to paternity and adoption leave provided for by the Employment Act 2002 that came into force on 8th December 2002. Accordingly, the principal Regulations are amended with effect from that date as follows–

• A new Regulation 8(7) is inserted which provides for a period of membership before and after any unpaid period of maternity or adoption absence or period of parental leave in respect of which the member does not pay contributions to be treated as continuous.

• Regulation 16(2) is amended so that members of the scheme taking paternity or ordinary adoption leave who are in receipt of pay (including statutory paternity or adoption pay) will be obliged to make contributions to the Scheme on that pay.

• New Regulations 16(3A), 20(6A) and 78(6) are inserted which ensure that periods of unpaid statutory ordinary maternity, paternity or adoption leave are treated as periods of membership.

• Regulation 17(2) is amended so that those members of the scheme taking additional adoption leave can opt whether or not to pay contributions during the additional leave period. Under the amended regulation 17(2), if they choose not to pay contributions, then the period of additional leave will not count for membership purposes, although the periods of employment before and after the additional leave will be treated as continuous.

• Regulation 54(8) is amended so that where a member elects to make an additional contribution, a reduction in pay as a result of periods of paternity or adoption leave taken during the interval at the end of which the additional contribution falls to be paid, will be taken into account when assessing the amount of the additional contribution.

• Consequential amendments are also made to Schedule 1 to define ordinary adoption, maternity and paternity leave and periods of paternity or adoption absence.

Regulation 4 is a minor clarification to ensure that an appropriate member of a transferee admission body is included in the list of persons who may be an active member of the Scheme.

Regulation 5 amends regulation 4 of the principal Regulations by substituting new regulations 4, 4A and 4B, which provide for administering authorities to make admission agreements to enable employees of non Scheme employers to be members of the Scheme. The main changes are–

• to separate the requirements for “community” and “transferee” admission bodies into separate regulations;

• to extend the definition of transferee admission body, to include bodies (other than community admission bodies) that carry out a public service and have been approved by the Scottish Ministers for admission to the Scheme; and

• to require an indemnity or bond to be entered into by the transferee admission body where it is identified as being necessary following a risk assessment.

The amended regulation 4 of the principal Regulations makes provision for the admission of community admission bodies. These are bodies that provide public services, otherwise than for the purposes of gain, and which have links with local government.

The inserted regulation 4A of the principal Regulations makes provision for the admission of transferee admission bodies. These are bodies that either provide a service or assets transferred from Scheme employers, or carry out a public service and have been approved by the Scottish Ministers for admission to the Scheme.

The inserted regulation 4B of the principal Regulations makes further provisions in relation to admission agreements with both types of admission bodies.

Regulation 6(1)(a) substitutes a new regulation 5(10) in the principal Regulations, a consequential amendment to new regulations 4, 4A and 4B to provide for when employees of the transferee admission bodies are treated as leaving local government employment for the purposes of the Scheme.

Regulation 6(1)(b) adds a new regulation 5(11) to the principal Regulations which allows members who become employees of an NHS Superannuation Scheme employing authority as a result of an arrangement under section 15 of The Community Care and Health (Scotland) Act 2002 (asp 5) to remain members of the Scheme.

Regulation 7 makes a minor drafting amendment to regulation 8(2) of the principal Regulations (periods of membership).

Regulation 8 deletes provisions for Scheme employers and employee representatives to agree a method for determining employees' pay.

Regulation 9 omits regulation 19(6)(a) of the principal Regulations to remove a reference to regulation 28 of the principal Regulations (re employed pensioners).

Regulation 10 omits regulation 20(8) of the principal Regulations (final pay).

Regulation 11 amends regulation 24 of the principal Regulations (normal retirement) to ensure that certain members of the Scheme who were members before 1st April 1998 continue to have a normal retirement date between age 60 and 65 as provided in the Local Government Superannuation (Scotland) Regulations 1987 (S.I. 1987/1850), the regulations which were superseded by the principal Regulations.

Regulation 12 amends regulation 26 of the principal Regulations (ill health) to clarify the definition of “permanently incapable”.

Regulation 13(1)(a) amends regulation 27 of the principal Regulations (amounts of ill health pension and grant) to provide that where a member becomes entitled to a further ill health pension and grant (unless by virtue of being in concurrent employments which cease simultaneously), the multiplier for that pension and grant will be total membership without enhancement.

Regulations 13(1)(b) and (c) amend regulation 27 of the principal Regulations by making minor drafting amendments to paragraph (6) and adds a new paragraph (6A) to limit the reduction required to be made to the enhanced membership period of a member who becomes entitled to ill health benefits and has membership in part time employment.

Regulation 14 amends regulation 28 of the principal Regulations (re employed pensioners) to remove provisions relating to re employed pensioners' entitlement to elect for a single new pension and provides for when periods of former membership may be taken into account when calculating the total membership of a re employed pensioner.

Regulation 15 omits regulation 29 of the principal Regulations (further provisions about elections under regulation 28).

Regulation 16 amends regulation 30 of the principal Regulations dealing with early leavers. Regulation 41, which amends regulation 122 of the principal Regulations (right to count credited period), makes an amendment consequential upon these changes.

Regulation 17 adds a new regulation 31A to the principal Regulations dealing with concurrent employments to provide a method of calculating membership where one of two concurrent employments terminates and the member elects to keep the periods of service aggregated for the purposes of calculating benefits.

Regulation 18 omits regulation 38 of the principal Regulations (reduction of death grants: re employed pensioners).

Regulation 19 amends regulation 43 of the principal Regulations, which defines an eligible child for the purpose of children’s pension rights. Also the test of financial dependency required in the case of a child who is not the legitimate or adopted child of a member is extended to include a child born after the death of a member, who would have been dependent on that member had the member not died before the birth.

Regulation 20 omits regulation 47 of the principal Regulations (dependants of re employed pensioners) from the principal Regulations to remove calculations in relation to re employed pensioners.

Regulations 21 and 22 amend regulations 51 and 52 of the principal Regulations to provide that employing authorities may increase an active member’s total membership.

Regulation 23 amends regulation 57 of the principal Regulations (election for pension in lieu of retirement grant) removing the requirement for a member to be 50 before he can exercise the right to elect for the pension in lieu of retirement grant.

Regulation 24 amends regulation 63 of the principal Regulations (retirement benefits) to allow a longer period after retirement before the value of the additional voluntary contributions must be used to pay for a pension. This is to take advantage of a change in Inland Revenue practice.

Regulation 25 substitutes a new regulation 65 in the principal Regulations only allowing the use of the accumulated value of the additional voluntary contributions to provide a scheme benefit when a member ceases to be an active member of the Scheme with immediate entitlement to a pension. The changes do not affect the rights of a member who entered into the additional voluntary contributions scheme before the change takes effect.

Regulations 26 and 27 amend regulations 75 (accounts and audit) and 76 (actuarial valuations and certificates) of the principal Regulations to make provision for administering authorities to prepare, maintain and publish a written funding strategy statement, which must be taken into account by the actuary in specifying the common rate of employer’s contribution.

Regulation 28 amends regulation 77 of the principal Regulations (special circumstances where actuarial valuations and certificates must be obtained) to require an indemnity or bond instead of a guarantee or indemnity and to allow the actuary to provide, in certain circumstances, that where an outgoing admission body cannot pay revised contributions to a fund, that liability is borne by the Scheme employer who is a party to the admission agreement.

Regulation 29 amends regulation 79 of the principal Regulations (employer’s further payments) to remove reference to regulation 136 (conversion of periods credited under Discretionary Payments Regulations, etc. into membership).

Regulation 30 amends regulation 81(1) of the principal Regulations (interest) to remove a reference to regulation 127 of the principal Regulations (liability for combined benefits).

Regulation 31 amends regulation 82(9)(b) of the principal Regulations (discontinuance of additional contributions) to remove a reference to an election under regulation 28 of the principal Regulations (re employed pensioners).

Regulation 32 makes an amendment to regulation 85 of the principal Regulations (cost of calculations for transfer of additional voluntary contributions or shared cost additional voluntary contributions into the Scheme) consequential on the changes from the substitution of the new regulation 65 in the principal Regulations.

Regulation 33 amends regulation 86 of the principal Regulations (rights to return of contributions) by substituting a formula for the calculation of the period of membership the contributions can buy in place of the existing provision that the period will be calculated in accordance with guidance issued by the Government Actuary.

Regulation 34 makes consequential amendments to regulation 92 of the principal Regulations (Commencement of pensions) required as a result of the amendment to regulation 30(7) of the principal Regulations.

Regulation 35 makes amendments to regulation 96 of the principal Regulations (first instance decisions). The amendment to regulation 96(9) is a clarifying amendment and the amendment to regulation 96(14) updates the definition of “qualified in occupational health medicine” to reflect the updated definition of “component authority” in the General and Specialist Medical Practice (Education, Training and Qualifications) Order 2003 (S.I. 2003/1250).

Regulations 36 and 37 amend provisions in regulations 100 and 102 respectively of the principal Regulations dealing with resolution of disputes in connection with the information which must be given to members about the Pensions Advisory Service in the internal dispute resolution procedure. These changes are necessitated by the Occupational Pension Schemes (Disclosure of Information) Regulations 1999 (S.I. 1999/3198).

Regulation 38 inserts a new Regulation 105A into the principal Regulations making provisions for the issue of annual benefit statements.

Regulation 39 makes a minor change to regulation 113 of the principal Regulations (recovery or retention where former member has misconduct obligation) consequential on the substitution of the new regulation 65.

Regulation 40 amends regulation 121 of the principal Regulations (inward transfer of pension rights) to exclude rights under a non-Scheme additional voluntary contributions scheme from the list of relevant pension rights which may count as membership in the Scheme. Those rights are dealt with in regulation 59 of the principal Regulations (election to pay AVCs).

Regulation 41 makes a consequential amendment to the changes made by regulation 16 of these Regulations.

Regulation 42 amends regulation 126 of the principal Regulations (changes of fund) to provide that where a transfer involves ten or more members, the calculation of the transfer amount is to be by way of agreement between fund actuaries with reference to a third actuary to resolve disagreements.

Regulation 43 omits regulation 127 of the principal Regulations (liability for combined benefits).

Regulation 44 omits regulation 136 of the principal Regulations (conversion of periods credited under Discretionary Payments Regulations etc. into membership).

Regulation 45(1)(a) corrects an error in Schedule 1 of the principal Regulations. The remainder of regulation 45 and regulation 47 make consequential amendments from the changes in these Regulations, to definitions in Schedules 1 and 4 to the principal Regulations.

Regulation 46 substitutes a new Schedule 2A to the principal Regulations, as set out in Schedule B to these Regulations. Schedule 2A sets out matters which are to be included in an admission agreement in certain cases.

Regulation 48 makes transitional provisions and Regulation 49 allows certain persons who would be placed in a worse position by amendments made in these Regulations to elect for the amendments not to apply in their case.

The guidance published by CIPFA, the Chartered Institute of Public Finance and Accountancy, referred to in regulation 26, can be purchased from CIPFA, 3 Robert Street, London WC2N 6RL, Tel. [phone]. The publication costs £50 to members of the public, £25 to local authorities and £12.50 to an administering authority.