Agenda Item 10
Pensions, Retirement and
Discretionary Compensation Payments
- Policy Statements
Equalities Statement
North Norfolk District Council wishes to promote equality and has a number of
obligations under equality legislation. All employees are expected to adhere to
this procedure in line with these obligations. Reasonable adjustments or
supportive measures should be considered to ensure equality of access and
opportunity regardless of age, gender, gender reassignment, pregnancy,
maternity, race, ethnicity, sexual orientation, marriage, civil partnership,
disability, religion or belief.
General Introduction
Since 1997, Local Government Pension Scheme (LGPS) legislation has
required all local authority employers to publish a written Policy Statement on
how it will exercise the various discretions provided by the scheme; to keep it
under review; and to revise it as necessary.
This policy statement is outlined below:
In developing these Policy Statements it is important to clarify that:
a. The Policy Statements confer no contractural rights in relation to the
Local Government Pension Scheme and discretionary compensation
payments.
b. The Policy Statements may be changed by the Council at any time.
c. These policies should not restrict the Council’s discretion. There may
be circumstances where the Council may decide to make an exception
to any of these particular policies. Any exceptions to a policy contained
within these Policy Statements will only be made following consultation
with the Council’s Monitoring Officer.
It should be noted that any future changes to this policy statement will only
become effective one month after the revised policy statement is published.
The policies incorporated within this Policy Statement include:
1)
2)
3)
4)
General policy - retirement
Policy relating to flexible retirement
Statements relating to the exercise of discretionary powers under
the LGPS
Discretionary compensation payments policy
It is important in considering this document to note the following: All decisions relating to the operation of the policies outlined in this document
are delegated to the Corporate Leadership Team, Leader and Cabinet
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Agenda Item 10
Member for Human Resources following consultation with the Council’s s151
Officer, Monitoring Officer and the Head of Organisational Development.
1)
General Policy - retirement
The Council’s policy relating to employee retirement is:
a. Employees who wish to retire from their employment are required to
give notice of their intended date of retirement to their manager in
writing. The length of notice required must be at least the same as the
notice required to resign from employment. However, employees are
encouraged to give an early indication of their planned retirement date
b. Retirement from employment does not establish entitlement to either
occupational or state pension benefits. Equally this policy does not
change an employee’s entitlements as a member of an occupational
pension scheme. Employees who are members of the LGPS are
advised to seek advice about the impact of their planned retirement
date on their Pension benefits. This is particularly important where the
employee is planning on retiring either earlier or later than the
retirement age of the LGPS which is 65.
c. Employees who are members of the LGPS can elect to retire and
receive their benefits from age 60 onwards. Pension benefits must be
drawn by the age of 75.
d. Employees aged between 55 and 59 may with the Council’s consent
retire earlier or opt for flexible retirement provided a full business case
is approved by CMT.
2)
Policy Relating to Flexible Retirement
Flexible retirement occurs where an employee draws their pension and
carries on working, either at a lower grade and or on reduced hours. It is
available to LGPS members who are aged 55 or over, and who with the
Council’s consent reduce their hours or grade. Subject to necessary
approvals, such employees will be able to draw their local government
pension whilst continuing to work. In addition they can remain in the LGPS
th
until the day before their 75 birthday, building up further benefits in the
scheme. In all cases, employees must receive advice as to how flexible
retirement will affect their net pay and pension entitlement. This is important,
as an employee’s pension will normally be actuarially reduced if paid before
age 65.
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Agenda Item 10
3)
Statement Relating to the Exercise of Discretionary Powers under
the LGPS
Since 1997, the LGPS has required the Council to issue a written policy
statement on how it will exercise the various discretions provided by the
scheme; to keep it under review; and to revise it as necessary.
These discretions are outlined below and it is compulsory for the Council to
make an individual decision for each of the first four discretions (a – d) and
outline these decisions in the Council’s Policy Statement. It is also a legal
requirement that the employer has regard to the extent to which the policy on
exercising these four discretions might lead to a serious loss of confidence in
public service. The remaining discretions are not compulsory but are
recommended by the Norfolk Pension Fund (e – k).
Compulsory Items in the LGPS 2007 Regulations
a)
Awarding Additional Membership: B Regs, Regulation 12
An employer is allowed to increase a member’s benefits by awarding
additional membership up to a maximum of 10 years.
The Council has decided to use its discretion to enhance an employee’s
pension at the point of retirement in the following circumstances.
Where an employee is Retired or is made Redundant in the Interests of
the Efficiency of the Service, the Council will allow the employee to use the
whole of their compensation payable in accordance with the provisions of the
Discretionary Compensation policy (See Section 4) (less any redundancy
payment) to purchase permissible augmented years in the LGPS if they wish
to do this.
Such possible augmentation will not apply to an employee whose fixed term
contract comes to an end only if this can be objectively justified.
b)
Awarding Additional Pension: B Regs, Regulation 13
An employer is allowed to increase a member’s benefits by awarding
additional pension up to a maximum of £5000 per annum.
The Council will not use the discretion available to it to award additional
pension, other than that which results from augmentation referred to under
Regulation 12 above.
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c)
Flexible Retirement: B Regs, Regulation 18
An employer may consent to flexible retirement for a member aged 55 or
more who reduces their grade or hours of work (or both) to receive all or part
of their LGPS benefits immediately, even though they have not left its
employment.
The Council has decided that:
¾ Early release of benefits following reduced hours or salary will be
allowed only in circumstances where it is demonstrated to be in the
Council’s long term interests
¾ Before a decision is made, the Council must be informed of the full
economic cost of granting flexible retirement and of any financial and
non-financial benefits
If the benefits payable on flexible retirement would normally be reduced for
early payment, the employer may agree to waive all or part of the reduction.
The Council has decided that¾ Each case will be considered on its merits. Before a decision is made,
the Council must be informed of the full economic cost of waiving all or
part of the reduction and of any financial and non-financial benefits
(Note:- the above decisions are delegated to the Corporate Leadership Team,
Leader and Portfolio Member for Human Resources following consultation
with the Council’s s151 Officer, Monitoring Officer and the Head of
Organisational Development.
d)
Early Payment of Pension: B Regs, Regulation 30
An employer may give consent for a member aged 55 or more who leaves its
employment without an entitlement to immediate LGPS benefits to receive
them straight away regardless.
The Council has decided that:¾ Voluntary early retirement with immediate payment of benefits will be
allowed only in circumstances where it is demonstrated to be in the
Council’s long-term interests
¾ Before a decision is made in any case, the Council must be informed of
the full economic cost of granting early retirement and of any financial
and non-financial benefits
If the benefits payable would normally be reduced for early payment, the
employer may agree to waive all or part of the reduction on compassionate
grounds.
The Council has decided that:¾ Each case will be considered on its merits. Before a decision is made,
the Council must be informed of the full economic cost of waiving all or
part of the reduction and of any financial and non-financial benefits
(Note:- the above decisions are delegated to the Corporate Leadership Team,
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Agenda Item 10
Leader and Portfolio Member for Human Resources following consultation
with the Council’s s151 Officer, Monitoring Officer and the Head of
Organisational Development.
Non-Compulsory Items in the 2008 Regulations
e)
Absence Contribution Time Limit: A Regs, Regulation 22(2)
A member who has been away from work as a result of maternity, paternity or
adoption leave, industrial action (mainly strikes) or unpaid leave of absence
has the right to pay voluntary pension contributions to prevent any gap in
membership.
The request to do so normally has to be made with 30 days of returning to
work (or within 30 days of the last day of service if they do not return to work)
The Council will not use the discretion available to it to extend the 30 days
application period.
f)
Membership Aggregation: A Regs, Regulation 16(4)(b)(ii)
A member who transfers from another LGPS employer, either directly or after
a break, may opt to aggregate the two periods of membership provided they
do so while still an active member in the new post and within twelve months of
joining. The employer has discretion to extend the twelve months time limit.
The Council requires any request to aggregate LGPS membership to be
made within the twelve months time limit.
g)
Shared Cost AVCs: B Regs, Regulation 15(3)
Regulation 25(3)
and A Regs,
It is implicit in these two Regulations that an employer may contribute towards
a Shared Cost Additional Voluntary Contribution (AVC) Scheme, i.e. an AVC
Scheme into which the employer pays contributions as well as the member.
The Council has decided that a Shared Cost AVC Scheme be not set up1.
h)
Forfeiture of Pension Rights: A Regs, Regulations 47(2), 72, 73, 74
& 76
If a member leaves as a result of a conviction for an offence in connection
with their LGPS employment or as a result of their own criminal, negligent or
fraudulent act in connection with that employment, the employer has
discretion (within the terms of these five regulations) to direct that all or part of
their LGPS pension rights should be forfeited and/or paid over to the employer
or specified dependants of the member.
The Council will exercise this discretion depending on the circumstances of
the case. These decisions are delegated to the Corporate Leadership Team,
Leader and Portfolio Member for Human Resources following consultation
1
To our knowledge, no Norfolk Pension Fund employer has set up a shared cost AVC
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Agenda Item 10
with the Council’s s151 Officer, Monitoring Officer and the Head of
Organisational Development.
i)
‘Specified Person’
Regulation 57(5)(c)
for
Member
Disagreements:
A
Regs,
There is a three-stage dispute procedure for members who disagree with any
LGPS decision made by their employer. The first stage is handled by an
independent referee appointed by the employer. Second Stage appeals are
dealt with by the administering authority, Norfolk County Council. The third
and final stage is an appeal to The Pensions Ombudsman.
The Council has appointed:
Mr Chris Harding, MBE, LL.B, Solicitor, c/o Norfolk Police Authority,
Jubilee House, Falconers Chase, Wymondham, Norfolk, NR18 0WW
to resolve first stage appeals on its behalf.
j)
Transfers of Pension Rights: A Regs, Regulation 83(8)
A member who has previous pension rights in a different pension scheme
may transfer them into the LGPS provided they opt to do so within twelve
months of joining it. The employer has discretion to extend the twelve months
time limit.
The Council will not use the discretion available to it to extend the twelve
month application period.
k)
Members’ Contribution Rates: B Regs, Regulation 3(4)
Employers are required to allocate employees into the appropriate
contribution band when they become an active member of the pension
scheme. If a permanent material change to the employee’s terms and
conditions of employment would later move them into a different band in the
course of a financial year, the employer has discretion to change their
contribution rate.
As required by the Regulations, employees’ contribution bands will be
determined by the Council on the basis of their pensionable pay and
contributions deducted accordingly.
Contribution bands will be initially based on full time equivalent salaries and
will be determined at the beginning of each financial year. Salary will include
all pensionable elements of pay.
Where an employee receives an increase or decrease in their salary during
the course of a year (whether as a result of job evaluation, a promotion or
some other reason) and this involves them moving into a new salary grade,
their contribution banding will be reassessed and where appropriate will pay a
revised contribution rate.
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An employee may request a reassessment if they believe that their banding
assessment was inaccurate or if they are aware of a factor that had not been
taken into account.
n.b. In the first instance employees should assist Human Resources in
correctly
determining their banding before invoking the dispute
procedure referred to in this Policy Statement.
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4)
Discretionary Compensation Payments Policy (Required by The
Local
Government
(Early
Termination
of
Employment)
(Discretionary Compensation) (England and Wales) Regulations
2006)
The Council can exercise certain discretions under the LGPS. In addition, if it
is necessary to declare posts redundant or consider early retirement, the
Council can compensate employees under the provisions outlined in the
above regulations.
Therefore, under this policy the Council will:
a)
In the case of redundancy operate with its general policy which is
outlined in the Employee adjustment Procedure
b)
Discretionary compensation for redundancy:- calculate redundancy pay
using the statutory redundancy calculator, the actual weekly rate of pay
multiplied by 1.5 weeks for each year of completed local government
service (up to a maximum of 45 weeks pay). This compensation will be
payable in the form of a lump sum with any statutory redundancy
payment offset against the discretionary award
c)
Where a business case has been agreed pay a one-off payment,
based on the merits of each individual case, up to a maximum
permitted under the new regulations (i.e.104 week’s pay calculated on
a sum up to the employees actual week’s pay). Only in exceptional
cases would the payment exceed 45 weeks pay (the maximum
proposed for redundancy cases)
d)
Consider the immediate payment of benefits (without any discretionary
compensation) to an employee, who requests voluntary retirement
between ages 55 and 60. This will be determined on a case by case
basis subject to a full costed business case being submitted and
agreed by CLT in consultation with Cabinet, s151, Monitoring Officer
and the Head of Organisational Development (as per section D of the
pensions policy)
e)
The Council will aim to achieve a payback period of up to 3 years to
cover associated costs.
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