REPORT TO:
Executive Board
DATE:
7 July 2014
REPORTING OFFICER:
Strategic Director, Policy and Resources
PORTFOLIO:
Resources
SUBJECT:
Pensions Discretions Policy
WARDS:
N/A
1.0 PURPOSE OF THE REPORT
The Council is required to publish a written policy statement annually,
confirming how it will exercise its discretions allowed under the Local
Government Pension Scheme (LPGS). The 1st April 2014 introduced
significant changes to the Scheme and the Discretions Statement requires
updating to reflect these.
2.0 RECOMMENDATION: That
1) the Board approve the recommendations to exercise the
discretions as outlined in Appendix A to this report; and
2) those discretions be exercised by the appropriate Strategic
Director, in consultation with the Portfolio Holder for Resources
and Operational Director Finance. (In the case of applications
from Strategic Directors/Chief Executive, replace appropriate
Strategic Director with Chief Executive/Strategic Director, Policy
and Resources respectively.)
3.0 BACKGROUND INFORMATION
3.1
Following the Hutton Review, the Governments fundamental review of
public sector pension provision, the Government decided that changes
were required to public sector pension provision.
3.2
The main recommendations of this were that:



All public sector pension schemes should change from final salary
pension schemes to career average revalued earnings schemes
(CARE).
Scheme retirement ages should be the same as state retirement ages
There should be a cost sharing mechanism introduced that provided
that scheme members should also share the increasing costs of
providing public sector pensions and not just the employers
Existing rights of current scheme members be protected.
3.3
The new LGPS accommodates all of these requirements. Benefits
accrued prior to 1st April 2014 are largely unaffected by the new
scheme and that element of an individual’s pension will continue to be
assessed on a final salary basis.
3.4
The Council’s Pensions Discretion Statement now requires review to
reflect the changes that have taken place in the LGPS. There are
certain compulsory employer discretions from April 2014 which the
Council is required by law to include in its policy statement. These are
set out in this report along with other discretions where it is felt best
practice to publish a statement regarding the Councils view on their
application.
3.5
The Regulations require that in preparing or making revisions to its
pension policy statements, the scheme employer must have regard to
the extent to which the exercise of any of its policies could lead to a
serious loss of confidence in the public service.
3.6
Appendix A outlines the Councils current position along with the
proposed position. It is recommended that these are adopted by the
Executive Board. In the case of the award of additional pension, this
will need to be subsequently reflected in the Council’s Staffing
Protocol.
3.7
The policies adopted seek to achieve the correct balance between cost
to the council tax payer, good employee relations and staff recruitment
and retention.
4.0
POLICY IMPLICATIONS
4.1
The Council is required to publish a written policy statement on how it
will exercise its discretions provided by the scheme.
5.0
OTHER IMPLICATIONS
5.1
There are financial implications for the Council in considering the
application of these discretions. Each case will be different. The
proposed policy changes state that a business case will be required
when such a discretion is exercised balancing the interests of the
Council the interests of the individual. It is proposed that any exercise
of that discretion should be done in consultation with the Resources
Portfolio Holder and the Operational Director Financial Services.
6.0
RISK ANALYSIS
6.1 This report and recommended changes ensure that the Council complies
with the Local Government Pension Scheme Regulations 2013.
7.0 EQUALITY AND DIVERSITY ISSUES
The recommendations will apply equally to all staff who are members of
the LGPS. Employees have a right of appeal if they feel they have been
treated incorrectly/unfairly.
8.0 LIST OF DOCUMENTS UNDERS SECTION 100D OF THE LOCAL
GOVERNMENT ACT1972
None under the meaning of the Act.
Appendix A
Discretion
Power to
increase total
membership of
active members.
(Added years)
Power to award
additional
Pension
Flexible
Retirement Employees who
are aged 55 and
above may apply
to have their
hours and/or pay
grade reduced
HALTON B.C. PENSIONS DISCRETIONS
Current Policy
Proposed Policy Reason for
Proposal
The Council
Remove
Under the new
currently
augmentation of
LGPS
exercises this
membership.
Regulations,
discretion by
members no
agreeing to
longer build up
augment LGPS
service in years.
service if the
As a result, the
employee meets
employer’s ability
the criteria as set
to grant additional
out in the Staffing
year’s pension
Protocol and
has been
there is an
removed.
efficiency reason
for so agreeing.
The Council does Award added
This is
not currently
pension, up to the recommended
exercise this
maximum limit of under the new
discretion. As an £6,500 in
scheme, as the
alternative, it did
exceptional
option of
exercise the
circumstances.
augmentation has
ability to augment This will be based been removed.
in the form of
upon a business
added years.
case where it is
The award of
felt to be in the
additional
best interest of
pension is added
the Council in
into the
terms of
employees’
operational
pension pot.
service
requirements and
the costs of
allowing any such
requests will be
considered
against the
benefits to the
Council.
The Council
That this
This requirement
exercises this
discretion
has not changed
discretion if the
remains the
under the LGPS
employees
same.
2014.
contractual hours
are reduced by
25% (not for a
grade reduction.)
and to seek
payment of their
accrued benefits
without retiring
from the Council
Early Payment of
Pension - Active
and Deferred
Members
and it is felt to be
in the interest of
the service,
financially sound
and operationally
possible.
The Council only
considers
requests on
compassionate
grounds to
members aged
55 - 59. If the
application is
approved,
benefits will be
unreduced
however the
Council is
required to make
a payment to the
pension fund to
make up the
short fall.
Contribution
Bands
Employees are
allocated to a
band once a year
from 1st April and
subsequently
only if their
contract changes
significantly i.e.
promotion, hours
etc.
Extension of time
limits for active
members to
This discretion is
exercised if
employees elect,
The Council
considers, on a
case by case
basis, exercising
its discretion to
waive some or all
of the reduction
the employee is
subject to. This
will be where it is
felt to be in the
best interest of
the Council as
well as the
employee and the
costs of allowing
any such
requests will be
considered
against the
benefits to the
Council.
This review
process will
continue annually
or at time of
significant
change unless an
employee
exercises their
right to appeal
their band
allocation.
Aggregation of
current and
previous service
Under the new
regulations, all
scheme members
have an
automatic right to
receive benefits
from age 55 (with
no cost to the
employer).
Under the new
regulations, the
employer can
agree to waive
some or all of the
reduction. This
criterion is no
longer restricted
to compassionate
grounds for
service post April
2014.
Under the new
regulations,
pension
contribution rates
are based on
actual salary,
including
overtime. For
casual
employees,
bands will be
allocated at the
lowest
percentage level
or may be higher
based on salary
received in the
preceding 12
months.
Aggregation is
automatic under
the new
aggregate
deferred periods
membership
Inward transfer of
pension rights
Discretion to
allow late
application by an
employee to pay
optional
contributions for a
period of unpaid
child related
leave or unpaid
leave of absence
beyond 30 days.
Discretion to
“switch on” the 85
year rule for 55 to
60 year olds.
in writing, to the
administering
body, before the
expiry of 12
months from the
date they became
an active
member. The
Council will not
extend this time
limit.
will be automatic
unless the
member chooses
not to aggregate
service. If the
member does not
wish to aggregate
service, this
decision must be
given in writing
within 12 months
of becoming an
active member.
This discretion is This discretion
exercised if
will be agreed
employees elect, with approval
in writing to the
from the
administering
administering
body, before the
authority. The
expiry of 12
Council will not
months from the
extend the time
date they became limit beyond 12
an active
months.
member. The
Council will not
extend this time
limit.
No current policy There will be no
on this.
exercise of this
discretion beyond
the 30 day
period.
regulations
unless the
employee
chooses to keep
benefits separate.
In light of this the
proposal is
amended to allow
employees 12
months NOT to
aggregate
benefits.
This has now
become a joint
discretion
requiring
employer and
Administering
Authority
agreement.
Under the new
regulations there
is no discretion to
extend the time
limit. The full cost
of purchasing lost
pension will be
met by the
individual who
must enter into
and Additional
Pension
Contribution
Agreement
directly with the
Pensions
provider after the
30 day period.
It is proposed that There is no
in exceptional
longer an
circumstances,
automatic
where this is in
entitlement for
the interest of the employees aged
Council and the
costs of allowing
such requests are
considered
against the
benefits to the
Council, that the
Council will pay
the additional
cost of an
unreduced
pension.
between 55 – 60
for unreduced
pension if their
age plus length of
service equal 85
or more.