(This note is not part of the Regulations)
These Regulations amend the Local Government Superannuation (Scotland) Regulations 1987 (“the 1987 Regulations”), the Local Government Pension Scheme (Benefits, Membership and Contributions) (Scotland) Regulations 2008 (“the 2008 Regulations”) and the Local Government Pension Scheme (Transitional Provisions and Savings) (Scotland) Regulations 2014 to authorise the payments made by administering authorities between 12 November 1979 and 8 April 2019 of annual increases to certain persons who are entitled to a guaranteed minimum pension. They also introduce a new entitlement to an Increased Pension Entitlement (“IPE”).
Section 5 of the Pensions (Increase) Act 1971 (“the 1971 Act”) requires pensions authorities to increase annually pensions to which that Act applies. The 1971 Act is modified by sections 59 and 59A of the Social Security Pensions Act 1975 (“the 1975 Act”). Pensions authorities pay annual increases on pensions in accordance with the annual Pensions (Increase) Review Orders (“the annual PIROs”) which are made under section 59 of the 1975 Act. The combined effect of section 59(5) of the 1975 Act, Directions by the Treasury made under section 59A of the 1975 Act and relevant provisions of the annual PIROs is that the amount of increase payable by a pensions authority under the annual PIROs is reduced by the amount equal to the rate of the GMP which is paid by the Department of Work and Pensions (“DWP”).
Contracting-out of the state second pension ended from 5 April 2016, with the introduction of the single tier state pension. Schemes were required to undertake a reconciliation exercise to check the contracting-out data held against that held by HMRC.
This reconciliation exercise has been undertaken and any inconsistencies corrected.
These Regulations provide that going forward GMP-related overpayments are converted into an Increased Pension Entitlement (“IPE”) and therefore become part of the members' entitlement under the scheme.
These Regulations amend the Local Government Pension Scheme (Transitional Provisions and Savings) (Scotland) Regulations 2014 with the effect that references to the Local Government Pension Scheme (Scotland) Regulations 1998 (“the 1998 Regulations”) as saved are to be read as if the following amendments were made.
Regulation 163 of the 1998 Regulations, regulation U3 of the 1987 Regulations and regulation 46 of the 2008 Regulations define a GMP-related payment as a payment made by the administering authority applying the annual PIROs as if no reduction fell to be made in relation to the person's GMP.
Regulation 164 of the 1998 Regulations, regulation U4 of the 1987 Regulations and regulation 47 of the 2008 Regulations authorise the past payment of GMP-related payments. This provision has effect from 12 November 1979 until 8 April 2019. Paragraph (2) of each of these regulations provides that where an administering authority has made such payments to an affected pensioner, it may not recover them.
Regulation 165 of the 1998 Regulations, regulation U5 of the 1987 Regulations and regulation 48 of the 2008 Regulations set out the entitlement to IPE. Although entitlement to IPE begins on 8 April 2019, the effect of the 1971 Act is that annual increases must apply to IPE from the beginning date of the pension (usually the day after the person's date of retirement). IPE is therefore defined as the amount a pension would have to be at the beginning date of a pension in order for that amount, after annual increases have been applied under the annual PIROs, to equal the GMP-related payment for the tax year 2019-20. The effect is that for the tax year 2019–20 the IPE that the affected pensioner will receive is equal to the GMP-related payment he or she would have received were the administering authority to apply the 2019 PIRO as if no reduction fell to be made in relation to the person's GMP. Thereafter, IPE will continue to be increased in line with the annual PIROs although future PIROs will no longer be applied as if no reduction fell to be made.