The Local Government Pension Scheme (Miscellaneous Amendments) (Scotland) Regulations 2011

EXPLANATORY NOTE

(This note is not part of the Regulations)

These Regulations amend the Local Government (Discretionary Payments and Injury Benefits) (Scotland) Regulations 1998 (“the Discretionary Regulations”), the Local Government Pension Scheme (Scotland) Regulations 1998 (“the 1998 Regulations”), the Local Government Pension Scheme (Benefits, Membership and Contributions) (Scotland) Regulations 2008 (“the Benefits Regulations”), the Local Government Pension Scheme (Administration) (Scotland) Regulations 2008 (“the Administration Regulations”) and the Local Government Pension Scheme (Transitional Provisions) (Scotland) Regulations 2008 (“the Transitional Regulations”).

Regulation 1(2) provides that the Regulations come into force on 14th November 2011 and regulations 1(3) to (6) provide for certain provisions to have effect from a date earlier than that (which is authorised in terms of section 12 of the Superannuation Act 1972 (c.11)). These provisions have effect as follows:

• those relating to the transfer of staff from the Scottish Legal Services Ombudsman (SLSO) to the Scottish Legal Complaints Commission (SLCC) have effect from 30th September 2008;

• those relating to the transfer of staff from the Scottish Administration to Learning and Teaching Scotland (LTS) have effect from 31st March 2010;

• those relating to the transfer of pension entitlement from the SDS Scheme (as defined in new regulation 16B) to the Local Government Pension Scheme (“LGPS”) have effect from 30th April 2010; and

• those relating to the transfer of staff from the Scottish Administration (HMIE/SWIA) to Social Care and Social Work Improvement Scotland (SCSW1S) have effect from 31st March 2011.

Regulations 2 to 7 amend the Discretionary Regulations.

Regulation 3, 5 and 7 correct certain references to “Benefit” (within the title to the Benefits Regulations) to read “Benefits”.

Regulation 4 amends regulation 17 (cessation of new employment) to provide that the reduction applicable to Compensatory Added Years awarded under the Discretionary Regulations on the termination of the member’s subsequent re-employment should only be based upon service up to age 65.

Regulation 6 adds a reference to regulation 13 of the Benefits Regulations to regulation 35 of the Discretionary Regulations. The effect is to add additional pension awarded by an employer under regulation 13 to augmentation of service under either regulation 51 of the 1998 Regulations or regulation 12 of the Benefits Regulations, as factors which would disallow the award of lump sum compensation under regulation 35.

Regulations 8 to 9 amend the 1998 Regulations.

Regulation 9 amends regulation 150 (“appropriate rights”/“pension credit benefits” under the scheme) which deals with the application of Pension Sharing Orders. The amendment provides that a pension credit member, who previously could not access their share of the benefits until they reached the scheme’s normal retirement age of 65, will now be able to access their share of the benefits at any time on or after age 60, but on an actuarially reduced basis.

Regulations 10 to 19 amend the Benefits Regulations.

Regulation 11 amends regulation 5 of the Benefits Regulations (meaning of “pensionable pay”) by inserting into the list of exclusions to the meaning of “pensionable pay”, the pay uplift paid to former staff of the Scottish Administration who have transferred to LTS in recognition of the higher contribution rates paid under the LGPS compared to the principal civil service pension scheme (“PCSPS”). Regulation 11 also makes equivalent provision for staff formerly entitled to a pension under the SDS Scheme, staff of the SLCC and staff of SCSWIS.

Regulation 12 amends regulation 6 (benefits) by inserting a reference to regulation 82A, 82B, 82C and 82D (bulk transfers in) of the Benefits Regulations, so that staff of LTS, those staff who were entitled to a pension under the SDS Scheme, staff of SLCC and staff of SCSWIS are not subject to an initial qualifying period before entitlement to benefits under the LGPS.

Regulation 13 amends regulation 7 (periods of membership) by inserting a reference to regulation 82A, 82B, 82C and 82D (bulk transfers in) of the Benefits Regulations, so that the bulk transfer in of LTS staff, those staff who were entitled to a pension under the SDS Scheme, staff of the SLCC and staff of SCSWIS will enable their membership of the PCSPS or, as the case may be, the SDS Scheme, to be counted towards their period of membership in the LGPS.

Regulation 14 amends regulation 13 (power of employing authority to award additional pension) to make it clear that only an active member can be awarded additional pension (not a deferred or a pensioner member).

Regulation 15 inserts new regulation 14A (election to pay additional contributions: survivor benefits). Survivor benefits for nominated cohabiting partners were first provided within the Local Government Pension Scheme by virtue of regulations 24 and 25 of the Benefits Regulations. However, regulation 3(4) of the Transitional Regulations specifies that only periods of membership after 5th April 1988 should be taken into account when calculating the survivor benefit. This date was chosen to be in line with previous improvements to the LGPS which allowed for survivor benefits to be paid to the surviving partner of a civil registered same sex partnership based only on membership accruing since April 1988.

Regulation 16 makes a minor amendment to regulation 16 (retirement benefits) by introducing a reference to new regulation 16A, 16B, 16C and 16D.

Regulation 17 inserts a new regulation 16A into the Benefits Regulations, to enable staff of LTS, on transfer to the LGPS, to retain the benefit of the normal retirement age of 60 offered under the PCSPS to which they previously belonged. Regulation 17 also inserts regulation 16B into the Benefits Regulations (which makes equivalent provision in relation to those staff formerly entitled to a pension under the SDS Scheme), regulation 16C (which makes equivalent provision in relation to staff of the SLCC and regulation 16D (which makes equivalent provision in relation to staff of SCSWIS.

Regulation 18 amends the title to regulation 22 (limit on total amount of benefits) to add the words “and liability to tax” to clarify the fact that the provision gives the fund administering authority the power to deduct tax on refunds of contributions.

Regulation 19 amends the title to regulation 27 (children’s pensions) to provide that the administering authority may pay all or part of a child’s pension to a person other than an eligible child.

Regulations 20 to 37 amend the Administration Regulations.

Regulation 21 amends regulation 10 (joining the scheme). This is a tidying-up amendment to allow those members whose enrolment into the LGPS takes place subsequently to their first taking up employment with an LGPS employer, to allow them to count their earlier period of employment as part of their Scheme membership, provided they apply to their employer to pay their arrears of contributions within three months of becoming eligible to join the Scheme, or such longer period as the employer may allow.

Regulation 22 amends regulation 13 (re-employed and rejoining deferred members) by inserting a new sub-paragraph (7A) to allow members to aggregate any of their previous periods of membership, not just the immediately preceding one, provided that they elect to do so within the first 12 months of their new period of membership or within 12 months of the coming into force of these Regulations, whichever is later.

Regulation 23 amends regulation 14 (concurrent employments). This amendment also gives certain employees more freedom to aggregate membership, in this case those who have in the past held Scheme membership in respect of more than one employment at the same time. Such members are now able to aggregate membership if they have an entitlement to benefits under Regulation 6 (benefits) of the Benefits Regulations, without necessarily having at least three months membership in respect of that employment.

Regulations 24 to 27 amend regulations 15 (contributions during child-related leave), 16 (contributions during reserve forces leave), 17 (contributions during trade dispute absence) and 18 (contributions during absences with permission) to insert a reference to regulation 14A of the Benefit Regulations.

Regulation 28 inserts new regulations 21A (payment of additional contributions: survivor benefits (ASBCs)) and 21B (discontinuance of ASBCs). Regulation 21A provides that a member who wishes to pay additional contributions under regulation 14A of the Benefits Regulations must make a request to do so in writing to the appropriate administering authority. Regulation 21B makes provision for persons who wish to stop paying ASBCs.

Regulation 29 amends regulation 27 (governance compliance statement) to change the date by which Administering Authorities must have published such a statement to 14th December 2011.

Regulation 30 amends regulation 31A(1)(c) to provide that in the pension fund annual report the report of the arrangements for the administration of each fund should include details of any borrowings of the funds outstanding at the end of the accounting period.

Regulation 31 amends regulation 43 (permanent reductions in pay: certificates of protection of pension benefits) to reduce the period that a member may take into account in the calculation of pensionable pay to a period of no more than three years prior to the date of reduction in the person’s rate of pay. The regulation also removes the words “(including the member’s ill-health)” in sub-paragraph (3) and for “date” substitutes the word “rate”.

The regulation also adds new paragraph (11) which clarifies that if the member ceases to be an active member with the employing body that issued the certificate, the certificate does not carry forward in relation to any further period of membership, except where the transfer to another employing authority is as a result of a transfer to which TUPE applies or which is treated as if it were a relevant transfer.

Regulation 32 inserts after regulation 46 (commence of pensions) new regulation 46A (guaranteed minimum pensions) (“GMPs”). This amendment is being made in order to bring the scheme in Scotland into line with a similar change which was introduced to the LGPS in England and Wales on 31st December 2009. The amendment deals with the postponement of GMP payments for the increasing number of members who continue working beyond normal pensionable age. Those who change their employment and leave local government may now elect for the payment of their GMP to be suitably postponed if they choose thus enabling them to enjoy actuarial increases and avoid unfair restrictions on access to tax-free lump sums.

Regulation 33 amends regulation 68 (recovery or retention where former member has misconduct obligation) to include among the rights which are not protected service credited by virtue of ARCs or ASBCs.

Regulation 34 amends regulation 81 (changes of fund) to update a reference to the President of the Scottish Faculties of Actuaries to refer to the President of the Institute and Faculty of Actuaries.

Regulation 35 inserts Part 9A comprising five new regulations 82A, 82B, 82C, 82D and 82E.

Regulation 82A and 82D provide for the bulk transfer in of the pension rights of former Scottish Administration staff (LTS, SWIA and HMIE), accrued under the PCSPS. Regulation 82B provides for the bulk transfer in of the pension rights of those staff formerly entitled to a pension under the SDS Scheme, accrued under the SDS Scheme. Regulation 82C provides for the bulk transfer in of pension rights of former SLSO staff, accrued under the PCSPS.

Regulation 82E provides that references to normal retirement age in relation to staff of LTS, those staff formerly entitled to a pension under the SDS Scheme, staff of the SLCC and staff of SCSWIS, are references to 60 instead of 65. There is an exception relating to regulation 84(4), where normal retirement age is still 65.

Regulation 36 amends regulation 95 (“appropriate rights”/“pension credit benefits” under the scheme) to provide that a pension credit member may elect to receive their benefits from age 60, but that such benefits would be reduced as calculated by the Government Actuary’s Department.

Regulation 37 amends Schedule 1 (interpretation) to insert a definition of ASBCs (additional survivor benefits contributions), to update the definition of “actuary” to read “a Fellow of the Institute and Faculty of Actuaries”, and to define “normal retirement age” as age 65 (except in regulation 82E).

Regulations 38 to 39 amend the Transitional Regulations.

Regulation 39 amends regulation 4 (membership accrued before 1st April 2009: rejoining deferred members) of the Transitional Regulations to insert a reference to the 1987 Scheme and to substitute for paragraph (2) that a member can choose within 12 months of becoming an active member that any service prior to 1st April 2009 should be treated as post 1st April 2009 service.