2005 No. *

PENSIONS, ENGLAND AND WALES

The Local Government Pension Scheme (Amendment) (No. 3) Regulations 2005

Made     -     -       -      -                             XX XXXX 2006

Laid before Parliament                                XX XXXX 2006

Coming into force  -      -       In accordance with regulation 1

These Regulations are made in exercise of the powers conferred by sections 7 and 12 of the Superannuation Act 1972([a]).

In accordance with section 7(5) of that Act, the First Secretary of State has consulted (a) such associations of local authorities as appeared to him to be concerned; (b) the local authorities with whom consultation appeared to him to be desirable; and (c) such representatives of other persons likely to be affected by the Regulations as appeared to him to be appropriate.

The First Secretary of State makes the following Regulations:

PART I

General

Citation, commencement, interpretation and application

1.—(1)(1) These Regulations may be cited as the Local Government Pension Scheme  (Amendment) (No. 3) Regulations 2005.

(2) These Regulations apply in relation to England and Wales([b]).

(3) These Regulations shall come into force as follows—

(a)     Parts 1,2 and 5 on 1st April 2006;

(b)     Part 3 on 6th April 2006; and

(c)     Part 4 on 1st October 2006.

(4) In these Regulations, “the principal Regulations” means the Local Government Pension Scheme Regulations 1997([c]).

Amendment of Regulations

2. The principal Regulations shall be amended in accordance with regulations 3, 5 to 7(1) and 8 to 36 of these Regulations.

PART II

Cost of liabilities

Calculations

3.  In regulation 20, after paragraph (3) insert—

(3A) A member who retires on or after 6th April 2006 may elect to increase the retirement grant payable under paragraph (3) by commuting his pension, or a part thereof, at a rate of £12 for every £1 of annual pension entitlement surrendered.

(3B) But the total amount of the member’s retirement grant, including any sum received in accordance with an election under paragraph (3A), shall not exceed 25% of the capital value of his accrued rights.

(3C) The capital value of a person’s accrued rights shall be calculated as shown in guidance issued by the Government Actuary..

 

Revised rates and adjustments certificates: period over which increased costs to be spread

4.—(1)(1) This regulation applies where in considering whether to obtain a revised rates and adjustment certificate an administering authority pursuant to regulation 7 of the Local Government Pensions Scheme (Amendment) Regulations 2005([d]) has determined an increased liability over that shown in the valuation of the relevant pension fund as at 31st March 2004 (“the 2004 valuation”).

(2) The administering authority shall spread the increased liability over the 2005 Funding Strategy Statement Period.

(3) In this regulation, “the 2005 Funding Strategy Statement Period” means the period over which the administering authority decided to spread the liabilities identified in the 2004 valuation, as set out in the first statement of their funding strategy published in accordance with regulation 76A of the principal Regulations.

 

PART III

The tax regime

Further restrictions on eligibility

5. In regulation 6(3), for “his 65th birthday” substitute “his 75th birthday”.

Periods of membership

6. In regulation 9, delete paragraph (1A).

Employer’s discretion to reduce member’s contribution rate

7.—(1)(1) Delete regulation 15.

(2) Where, before its revocation by paragraph (1), a member’s liability to make contributions to the Scheme has been reduced or, as the case may be, extinguished in accordance with regulation 15, he may elect within six months after the coming into force of this regulation to pay to the relevant fund the amount of the contributions which he would have paid had it not been for the resolution under regulation 15(1), and any period in respect of which he makes payment shall count towards his total period of membership for the purposes of regulation 9.

Inland revenue limits on contributions

8. Delete regulation 16.

Optional contributions during absences

9. For the words from “he may make” to the end of regulation 18(3) substitute—

he may make a contribution under regulation 17 for the relevant contribution period at a rate calculated as the sum of the relevant employee contribution rate set out in regulation 12 and   the common rate of employer contribution, calculated as set out in the most recent actuarial valuation obtained in accordance with regulation 77(4) .

Limit on total amount of benefits

10. After regulation 19 insert—

Limit on total amount of benefits

19A. A member and any dependant of his shall not be entitled, under any provision of these Regulations, to receive benefits that, in total, exceed the limits calculated in accordance with the Finance Act 2004([e]).

Calculations

11. For regulation 20(4A) substitute—

(4A) Benefits payable to a person who remains in service after his 65th birthday shall be increased at such a rate as is shown as appropriate in guidance issued by the Government Actuary..

Final pay

12. In regulation 21(1), delete the words “and Schedule 4”.

Retirement after the normal retirement date

13. For regulation 25A(2) substitute—

(2) The pension and retirement grant are payable immediately on retirement or, if earlier, on the member’s 75th birthday.

Re-employed and rejoining deferred members

14. In regulation 32, delete paragraph (2).

Surrenders of pensions

15. Delete regulation 33.

Requirements as to time of payment

16.—(1)(1) After regulation 35(1) insert—

(1A) But where, after 5th April 2006, a member who has attained the age of 60 elects, with his employer’s consent, to reduce the hours he works, or the grade in which he is employed, such benefits may be paid to him notwithstanding that he has not retired from that employment.

(1B) If the payment of benefits referred to in paragraph (1A) takes effect before the member’s earliest retirement age, the benefits payable are reduced in accordance with guidance issued by the Government Actuary.

(1C) But the employer may choose to waive, in whole or in part, any such reduction.

(1D) Where the employer so chooses, it shall pay to the fund the cost thereof as calculated by the fund’s actuary.

(2) In paragraph (2), for “But they” substitute “In any event, retirement benefits under this Chapter”.

Guaranteed minimum pensions etc.

17. In regulation 36, delete paragraphs (7), (8) and (9).

Meaning of “eligible child”

18. In regulation 44—

(a)     At the beginning of paragraph (2) insert—

Subject to paragraph (2A).

(b)     After paragraph (2) insert—

(2A) Notwithstanding paragraph (2)(b), a pension coming into payment on or after 5th April 2006 which would otherwise be payable by virtue of that paragraph shall only continue while the child is aged under 23..

Scope of Part III: limits on benefits

19. In regulation 51, delete paragraph (2).

Power of employing authority to increase total membership

20. In regulation 52—

(a)     at the end of sub-paragraph (2)(a) insert “or”;

(b)     delete sub-paragraph (2)(b); and

(c)     after paragraph (10), insert—

(11) An additional period arising from a resolution under this regulation on or after 1st October 2006 shall be treated as a period of membership after that date..

Effect of increases under this Chapter for older members

21. Delete regulation 54.

Payments to increase total membership

22. In regulation 55—

(a)     for paragraph (2) substitute—

(2) That period must not exceed 6? years; and

(b)     for paragraph 10(a) and (b), substitute “his NRD”.

Effect of increases under this Chapter for older members

23. Delete regulation 57.

Election for pension in lieu of retirement grant

24. Delete regulation 58.

Employer’s further payments

25.In regulation 80, after paragraph (4), insert —

(5) The appropriate administering authority may require the employing authority concerned to make additional payments to the appropriate fund in respect of any extra charge on the fund resulting from a pension and retirement grant becoming immediately payable to a member under regulations 26, 31(1) or 31(6)..

Over-provision: calculation and return of surplus AVC and SVAVC funds

26. Delete regulation 85.

Commencement of pensions

27.—(1)(1) In regulation 93(2), delete sub-paragraph (aa).

(2) For regulation 93(2)(b) substitute—

(b) otherwise, unless he elects to defer payment, with his NRD (but any such deferral shall not extend beyond the date of his 75th birthday).

First instance decisions

28. In regulation 97(6) —

(a)     at the end of sub-paragraph (b), insert “and”;

(b)     in sub-paragraph (c), for “membership; and” substitute “membership.”; and

(c)     delete sub-paragraph (d).

Revenue restrictions

29. Delete Schedule 4.

PART IV

The 85 year rule

 

Normal retirement

30. In regulation 25, delete paragraph (3A).

 

Other early leavers: deferred retirement benefits and elections for early payment

31. In regulation 31

(1) In paragraph (4), delete the words from the beginning of the paragraph up to and including “is less than 85 years,”; and

(2) In paragraph (7), delete the words “or from such” to the end of the paragraph.

32. In regulation 32 (5)(a), for “29 and 31(4)” substitute “and 29”.

Nomination of early retirement date and payment of additional contributions

33. After regulation 55 insert—

55A(1) A member whose 60th birthday falls on or after 1st April 2013 may nominate a date after his 60th and before his 65th birthday on which he intends to retire (“his nominated date”).

(2) Such a member may elect to pay additional contributions under this regulation.

(3) The payment of such contributions offsets any actuarial reduction that would otherwise be applied to his pension in accordance with regulation 31 (Other early leavers: deferred retirement benefits and elections for early payment).

(4) The amount of such contributions shall be determined by the administering authority in accordance with guidance issued by the Government Actuary.

(5) But if the member continues in relevant employment after his nominated date, he shall cease to pay contributions under this regulation on that date.

(6) And the benefits payable to such a member on his retirement shall be increased in accordance with regulation 20(4A) which shall apply as if the words “his retirement date” were substituted for the words “his 65th birthday”..

Right to count credited period

34.In regulation 122 —

(1) In paragraph (4), delete the words “or, if earlier” to the end of the paragraph; and

(2) After paragraph (6), insert -

(6A) A credited period arising from a request to accept a transfer value under regulation 121 which is made by a person who was a member immediately before 1st October 2006 shall be treated as a period of membership before that date.

(6B) A credited period arising from a request to accept a transfer value under regulation 121 which is made by a person who becomes a member on or after 1st October 2006 shall be treated as a period of membership after that date.

Credited periods for transferring members with mis-sold pension rights

35. In regulation 122A(1), at the end of paragraph (1) add “(and regulation 122(6B) does not apply to a transfer value credited under this regulation)”.

Rights as to service not matched by credited period

36.In regulation 123(2), delete sub-paragraph (b).

Excluded membership

37.In Schedule 3, in paragraphs 7 and 8 of the Table, delete “or calculating NRD under regulation 25(3A)”.

Former members of the Metropolitan Civil Staffs Superannuation Scheme

38.In Schedule 7, in paragraph 2(4), for “for the words from the beginning of the paragraph to “is less than 85 years” substitute” substitute “add at the beginning”.

PART V

Miscellaneous

Transitional provisions and savings

39. The Schedule to these Regulations (transitional provisions and savings) shall have effect.

Right to opt out

40.—(1)(1) Where–

(a)     apart from this regulation, the amendments made by these Regulations would place any relevant beneficiary in a worse position that he would otherwise be, and

(b)     that relevant beneficiary so elects by notice in writing given to the appropriate administering authority within the period of six months beginning with 1st October 2006,

then the principal Regulations shall have effect in relation to him as if those amendments had never been made.

(2) For the purposes of paragraph (1), a relevant beneficiary is a person to whom any benefit is or may become payable being a benefit payable to or in respect of a person who–

(a)     ceased to hold any employment in respect of which he was a member (whether or not he had subsequently recommenced any such employment), or

(b)     dies while in such employment,

before—

                            (i)     1st April 2006, in respect of amendments made by Parts 2 and 5;

                          (ii)    6th April 2006, in respect of amendments made by Part 3; and

                         (iii)    1st October 2006, in respect of amendments made by Part 4. 

 

Signed by authority of the First Secretary of State

 

                                                                                                                                         

                                                                                                                   Minister of State

* 2005                                                                             Office of the Deputy Prime Minister

                                              SCHEDULE                                             

Regulation 39

TRANSITIONAL PROVISIONS AND SAVINGS

Early leavers

1. Where a member —

            (a) elects to receive the immediate payment of retirement benefits under regulation 31(1) of the principal Regulations; and

            (b) satisfies the 85 year rule;

that part of his retirement pension and grant which is calculated by reference to any period of membership prior to the relevant date shall not be reduced in accordance with regulation 31(4) of the principal Regulations (as amended by regulation 31 of these Regulations).

2. For the purposes of paragraph 1 of this Schedule, the relevant date is —

            (a) in the case of a member who will be aged 60 or more on 31st March 2013, the earlier of —

            (i) 1st April 2013; and

            (ii) the date on the day after the day on which the member leaves local government employment; or

            (b) in any other case, 30th September 2006.

3. Where a member, who was a member prior to 30th September 2006 and to whom paragraph 2 of this Schedule does not apply —

            (a) elects to receive the immediate payment of retirement benefits under regulation 31(1) of the principal Regulations (as amended by regulation 31 of these Regulations); and

            (b) satisfies the 85 year rule,

that part of his retirement pensions and grant which is calculated by reference to any period of membership prior to 30th September 2006 shall not be reduced in accordance with regulation 31(4) of the principal Regulations (as amended by regulation 31 of these Regulations).

4.  For the purposes of this Schedule, a member satisfies the 85 year rule if the sum of —

(a) his age in whole years on the date his local government service ends or the date he elects under regulation 31(1) of the principal Regulations if later;

(b) his total membership in whole years;

(c) in a case where he elects after his local government employment ends, the period beginning with the end of that employment and ending with the date he elects; and

(d) in the case of a person who was a member immediately before 1st April 1998, any qualifying period counted by virtue of regulation 123 which was awarded before 1st October 2006,

is 85 years or more.

5. Where a member who may elect under regulation 32(1) of the principal Regulations (re-employed and rejoining deferred members) does not do so or does not so elect as respects all periods of his membership, in applying paragraph 3 of this Schedule as respects any later membership, his total membership excludes unaggregated periods.

6. -(1) This paragraph applies to a member who –

            (a) prior to 30^th September 2006 elected to make additional contributions to the Scheme to increase his total membership under regulation 55(1) of the principal regulations (payments to increase total membership); and

            (b) was assumed to retire from a local government employment on a date prior to his 65th birthday (“the assumed date”) for the purposes of calculating his additional contributions under regulation 55(6) of the principal Regulations.

(2) Where a member to whom this paragraph applies —

            (a) continues paying the additional contributions until the assumed date; and

            (b) retires on or after the assumed date,

he shall not pay any additional contributions after that date and the whole of the additional period may be counted as part of his total membership.

(3) An additional period counted as a period of total membership as a result of this paragraph shall be treated as a period of membership prior to 30th September 2006.

 

 

EXPLANATORY NOTE

(This note is not part of the Regulations)

The amendments in these Regulations …