An employer’s guide to the Local Government Pension Scheme

The Local Government Pension Scheme

Welcome to the Local Government Pension Scheme. This guidance is to help you understand the roles and responsibilities you will inherit as an employer within the Devon County Council or Somerset County Council Pension Funds. It will take you through what you need to know about the Local Government Pension Scheme, what you need to consider and what you need to do.

The Local Government Pension Scheme (LGPS) is a nationwide pension scheme for people working in Local Government and for other qualifying employers participating in the scheme. There is no minimum age to become a member and employees can remain in the scheme until the eve of their 75th birthday.

The LGPS is a statutory public service scheme, so the scheme’s benefits and terms are set out in regulations passed through parliament. It has members in local government, education from primary to higher (non-teaching staff), police staff, the voluntary sector, environment agencies and private contractors.

In 2010 the LGPS regulations were amended to allow non-teaching employees of academies to be members of the pension scheme.

Prior to April 2014 the LGPS was a final salary pension scheme based on the final 365 days pensionable pay and pensionable service. From April 2014 the LGPS became a ‘Career Average Revalued Earnings’ (CARE) pension scheme based on the actual annual salary each year.

LGPS 2014 key facts

Benefits from the scheme include:

• a secure annual pension
• a tax-free lump sum
• death benefit cover
• Normal retirement age is the state pension age for both men and women
• Accrual rate is at 1/49th of a member’s actual pensionable pay
• Option to draw pension from age 55 to 75 without employer’s consent
• 50/50 option to pay half contributions and accrue half pension

For more information on the LGPS and the benefits it provides, please visit our LGPS member’s pages.

How does the CARE scheme work?

A CARE scheme is still a defined benefit scheme so the member is guaranteed a pension, but the basis of accrual is different to how final salary benefits accrue.

The CARE Pension is calculated on 1/49ths of a member’s actual pensionable pay for each year in the scheme (April to March) and the accruing pension is increased each year in line with HM Treasury Orders.

For example:

Scheme year	Opening balance	Pensionable pay	Pension pot	Add annual increase	Total in account
Year 1	£0.00	£24,500 / 49 = £500	£500 in pot as at 31 March	+ 3% = £15	£515
Year 2	£515	£25,333 /49 = £517	Add to year 1 = £1032 in pot as at 31 March	+ 3.1% = £32	£1,064

Legal background

Each employer is responsible for meeting and maintaining their individual funding positions so you should be aware that certain actions, including levels of pay awards, and management of ill-health will impact on your long term pensions funding and the cost of participating in the pension scheme.

The scheme is valued formally every three years setting the employer’s contribution rates payable for the subsequent three year period. These are variable and dependent on the underlying funding position of the employer.

The LGPS is a qualifying pension scheme under the automatic enrolment provisions of the Pensions Act 2008 and is a tax approved, defined benefit, occupational pension scheme set up under the Superannuation Act 1972 and was contracted out of the State Second Pension scheme (S2P).

Automatic enrolment certificates for both the Devon and Somerset schemes can be found on our Automatic enrolment page – for your convenience, all the important reference numbers are listed below:

	Devon County Council Pension Fund	Somerset County Council Pension Fund
Scheme’s contracted out reference	S2700145L	S2700167A
Fund’s contracted out reference	E3900002R	E3900002R
Pension Scheme Registration number	10079150	10079159
Pension Scheme Tax Reference number	PSTR00328754RF	PSTR0033039RW

Peninsula Pensions are compliant with the General Data Protection Regulations 26 May 2018.

• Privacy Notice
• Memorandum of Understanding – Devon
• Memorandum of Understanding – Somerset

Current legislation in force for the Local Government Pension Scheme

• The Local Government Pension Regulations 2013
• The Local Government Pension Scheme (Transitional Provisions, Savings and Amendment) Regulations 2014

We also have regard to the Pension Regulators Code of Practice 14

Useful links

• Devon Pension Fund Administration Strategy
• Somerset Pension Fund Administration Strategy
• Pension Fund Investments
• LGPS Regulations and Guidance
• LGPS national website

Scheme overview

The three tranches

The Local Government Pension Scheme has three tranches and the date the member joined the scheme determines which tranche or tranches they have membership in so they could have membership in all three of the tranches:

Membership up to 31 March 2008 (Based on Final Salary) Normal Retirement Age = 60 or 65	Annual Pension =  Membership x Final Pensionable Pay / 80	Provides an automatic tax-free cash lump sum = 3 x Annual pension
Membership from 1 April 2008 to 31 March 2014 (Based on Final Salary) Normal Retirement Age = 65	Annual Pension =  Membership x Final Pensionable Pay ÷ 60	No automatic tax-free cash lump sum but member has the option to convert pension into tax-free cash. £12 tax-free cash is provided for every £1 of pension given up
Membership from 1 April 2014 (Career Average Revalued Earnings (CARE)) Normal Retirement Age = State Pension Age	Annual Pension = Pensionable Pay for each year / 49 50/50 Section = Pensionable Pay for each year / 98	No automatic tax-free cash lump sum but member has the option to convert pension into tax-free cash. £12 tax-free cash is provided for every £1 of pension given up

Benefits of being in the scheme

• Guaranteed defined benefit funded pension scheme
• Individual pension accounts – pension benefits calculated on a yearly basis with accrual rate of 1/49 of actual pensionable pay (from 1 April 2014)
• Protected final salary benefits for pensionable service before April 2014
• Option to take a tax-free cash lump sum
• Index-linked pensions based on consumer price index (CPI)
• Built-in Ill-health benefits/life cover
• Retirement between 55 and state pension age
• Dependants pensions

Employer responsibilities and expected standards

Under the LGPS regulations it is a statutory requirement for all employers to provide Peninsula Pensions, as the scheme administrators, with the information we require in order to carry out our duties.

Regulation 80 within the LGPS 2013 Scheme Regulations states:

Exchange of information

 80.  — (1) A Scheme employer must—

(a) inform the appropriate administering authority of all decisions made by the employer under regulation 72 (first instance decisions) or by an adjudicator appointed by the Scheme employer under regulation 74 (applications for adjudication of disagreements) concerning members; and

(b) give that authority such other information as it requires for discharging its Scheme Functions

What are your main responsibilities?

You need to:

• Automatically enrol new staff into the LGPS (if eligible)
• Ensure scheme contributions are deducted and paid over to the Fund on time each month – please refer to our page on how to make a payment to the fund
• Notify Pensions of:
  • new entrants to the LGPS
  • any material changes to pensionable employees, such as absences and changes in hours
  • Leavers, retiree’s and optant-outs
• Provide the pensionable pay (Pre-& Post 1/4/2014) required for calculation of the members benefits
• Provide accurate contribution and membership data when requested, including at the end of year
• Appoint an Internal Dispute Resolution Procedure (IDRP) Stage 1 Officer and fulfil the employer role within the process
• Appoint an Independent Registered Medical Practitioner (IRMP) to assess ill health retirement applications and decide the appropriate “tier” for ill health
• notify us of any changes / mergers to the organisation that will impact on your participation in the Fund including transfer of staff under TUPE, mergers with other organisations or another decision which may materially affect the employer’s Fund membership.
• Retain data for use by Pensions if required (see Data Retention)
• Keep your Pensions Discretions policy up to date
• Ensure action is taken if advised of new legislation or procedures
• Notify members of any relevant changes to pension scheme when advised by Pensions
• Ensure member records are accurate and provide Peninsula Pensions with what we need to administer LGPS.

While you may have delegated some of these functions to your payroll provider, you are still responsible for these actions as the scheme employer. We recommend that you check with your payroll provider to make sure that they are providing the correct data to us and within our timescales.

Expected standards

The expected standards of performance for both employers and Peninsula Pensions are outlined in the Administration Strategy Documents which you can find on our Employer’s Guidance page.

Data retention

The Pensions Regulator Code of Practice sets out some clear guidelines regarding maintaining accurate member data:

• the legal requirements for record-keeping
• what records must be kept
• the importance of reviewing and improving data

What are the legal requirements?

The Public Service Pensions (Record Keeping and Miscellaneous Amendments) Regulations 2014 set out what records must be kept:

Records of member and beneficiary information

(a) the name of each member and of each beneficiary;

(b) the date of birth of each member and of each beneficiary;

(c) the gender of each member and of each beneficiary;

(d) the last known postal address of each member and of each beneficiary;

(e) each member’s identification number in respect of the scheme;

(f) the national insurance number of each member who has been allocated such a number;

and

(g) in respect of each active member, deferred member and pensioner member—

(i) the dates on which such member joins and leaves the scheme;

(ii) details of such member’s employment with any employer participating in the scheme including—

(aa) the period of pensionable service in that employment; and

(bb) the amount of pensionable earnings in each year of that employment.

The Employer’s Duties (Registration and Compliance) Regulations 2010 (SI 2010/772) generally states that records must be preserved for a period of 6 years, starting on the day on which the record must first be kept.

The Registered Pension Schemes (Provision of Information) Regulations 2006 – Regulation 18 states that documents must be preserved for the tax year to which they relate and for a period of 6 years following that year.

However, The Pension Regulator advises:

• Schemes should retain records for as long as is relevant for the purposes for which they are needed. It is likely data will need to be held for long periods of time
• Schemes will need to keep some records for a member even after they have retired, ensuring that pension benefits can be settled for as long as they need to be paid
• It is also important that schemes have in place systems and processes so they can keep records for the necessary amount of time

What records must be kept?

Member records must be kept across all membership types to ensure a member can be uniquely identified and their benefits calculated correctly. This is particularly important for career average revalued earnings (CARE) schemes.

What do we need to achieve?

To maintain accurate data so that schemes can pay the right person, the right benefits at the right time. If records are only kept for 6 years, will this be achievable?

First instance decisions

It is your responsibility to decide whether a member is entitled to a benefit from the Local Government Pension Scheme (LGPS).  This includes their right to join the Scheme as well as their right to benefits when they leave.

When you have made a ‘first instance decision’, you must notify the member in writing ‘as soon as reasonably practicable’ and also tell them the reason for the decision.

What you need to do:

• provide a clear written explanation of the decision and include:
• the grounds for the decision if you have decided that they are not entitled to a benefit
• show how the benefit is calculated if the decision is about the amount of benefits
• an address from where further information about the decision can be obtained
• a reference to the right of appeal under the Internal Dispute Resolution Procedure (IDRP)
• time limits within which those rights may be exercised, and
• the job title and address of the person appointed to whom applications may be made

Please refer to The LGPS 2013 Regulations 72 and 73 for more information on what you need to do.

Discretions

The Local Government Pension Scheme is a statutory pension scheme so its rules are laid down under Act of Parliament. However, Scheme regulations do allow an employer certain discretions to enhance members’ benefits.

You must formulate, publish, and keep under review a policy on all mandatory discretions you may exercise in relation to members of the LGPS. They are as follows:

• Shared cost additional pension (Reg 16(2)(e) & 16(4)(d)). You can choose to pay for a member’s APC in whole or part. Please note that pensions awarded under regulation 16 is reduced and the full cost must be paid to the fund while the member is still in employment
• Shared Cost Additional Voluntary Contribution (Reg R17 (1) and TP15 (1) (d) and A25 (3)) You can choose to pay for a member’s AVC in whole or part
• Flexible Retirement (Reg 30(6)) It’s your decision whether to offer this as a retirement option (including a drawdown option)
• Waiving of actuarial reduction (Reg 30(8)) You can waiver reductions applied to a members benefits for Early Retirement (55-60) and Flexible Retirement
• Award of additional pension (Reg 31) You can award additional pension to an active member or member leaving on redundancy/efficiency grounds. Pension purchased by you under regulation 31 is not reduced so will incur an additional ‘strain’ costs
• Power to ‘switch on’ the 85-year rule It’s your decision whether to apply the protection
• Local Government (Early Termination of Employment) (Discretionary Compensation) (England and Wales) Regulations – You are required to formulate a policy in relation to discretionary compensation (except an Admitted Body)
• Discretions for scheme members who ceased active membership on or after 1 April 2008 and before 1 April 2014 – You still must publish a policy in respect of your discretions for these leavers under old regulations. Members who left employment before 1 April 2014 can ask you for early payment of their deferred benefits

All the discretions are ways to enhance member’s benefits but can result in costs to you as an employer.

Academies need their own policy but it’s acceptable to have one policy for Multi-Academy Trusts to cover all academies within that Trust.

For more information, please refer to the Employers Discretions page on our website which includes links to a full list of discretions and an example of a policy template.

What you need to do

• Formulate your policy and publish your decisions for all the mandatory discretions. You may wish to consult your employees and unions before making or changing your policy
• Send a copy of your policy to Peninsula Pensions within 3 months of becoming a new employer with the Devon or Somerset County Council pension funds or within 1 month if you make any revisions to your policy.

New employee and scheme member

Any person you appoint to a role may have the right to join the Local Government Pension Scheme depending on what type of employer you are:

Scheduled bodies

These are:

• county councils and district councils
• police and crime commissioners or chief constables and
• academies, universities, free schools and studio schools

If an employee’s contract is for 3 or more months they have a right to join, so automatic entry.

If an employee’s contract is for less than three months they have a right to join by only by election.

Designating bodies

These are town and parish councils. The employer chooses who can join.

If an employee’s contract is for 3 or more months they have automatic entry if eligible.

If an employee’s contract is for less than three months they will need to elect to join.

Admission body (open arrangement)

Housing associations and charities, for example, can arrange a legal admission agreement with Peninsula Pensions. The employer chooses who can join.

If an employee’s contract is for 3 or more months they have automatic entry if eligible.

If an employee’s contract is for less than three months an employee needs to elect to join.

Admission body (closed arrangement)

Private employers can arrange a legal admission agreement with Peninsula Pensions.

Employees have no right to membership as only employee’s listed in agreement can join.

For more information on the different types of employer, please refer to our guide for new employers.

Which employees are not eligible to join the scheme?

• Casual employees with contracts of less than three months – these employees have the right to opt-in by completing the opt-in form. They should only be automatically entered into the scheme if:

• • their contract is extended making it longer than three months
  • if they were then appointed to a second two-month contract they would be brought in automatically at that point (because they’re now on a contract of three or more months)
• Any employee age 75 and over – employees cannot join or remain in the scheme after the eve of their 75th birthday
• Employees eligible for membership of another public sector pension scheme (although there is some dual eligibility for the LGPS and the National Health Service Pension Scheme
• Staff employed by an admission body who are members of another occupational scheme
• Councillors – From 1 April 2014 access to the LGPS was removed for councillors or elected mayors of English county councils, district councils or London borough councils. For more information regarding this decision and a full guide, please contact the Employer & Communications Team.

What you need to do

• When you appoint a new employee and they are eligible to join the Scheme, you must inform them that they will automatically become a member of the Local Government Pension Scheme from either the date of appointment or the date they become eligible to be a member and you must do this within one month.  Please share the link to the Members pages on our website with your new employees
• If you administer your own payroll you will need to determine the employee contribution rate in accordance with salary bandings for each post (see member contributions section)
• Instruct your payroll provider to collect contributions from the date of appointment – unless the contact is for less than three months where entry is the pay period after member elects to join
• Deduct contributions and submit both employee and employer contributions to the pension fund. Deadlines are different for both Devon and Somerset fund and full details can be found on our employer’s guidance page – notification of amounts must be sent to Pensions and the relevant finance team each month so that the payments can be reconciled.
• Notify us of the new starter via the monthly interfaces.
• Notify us of the actual pensionable pay (CARE) monthly using the interface. You can find out information on the monthly interfaces here.

Auto enrolment

Automatic enrolment is a Government initiative to help more people save for later life through a pension scheme at work. The legislation runs separately from the Local Government Pension Scheme.

The LGPS Pension Scheme regulations already cover contractual automatic enrolment:

• All eligible employees under the age of 75 are contractually enrolled into the LGPS on appointment unless their contract of employment is for less than three months
• Employees with a contract of employment for less than three months will not be contractually enrolled but will be automatically enrolled if they are an eligible job holder
• Opted out members will be brought back into the LGPS during the re-enrolment process three-year cycle

What you need to do

• It is your responsibility to ensure that you are adhering to the legislation.

For more information, please refer to our guidance on automatic enrolment and on the Local Government Pension Scheme website.

Local Authority returning officers

All Local Authorities are required to employee a Returning Officer who officiates at elections. See below for the different type of elections:

Parliamentary Election – County or Local or District Returning Officer

European Election – Regional Returning Officer and Local Returning Officer

Country Election – County Returning Officer

District or Local Election – District or Local Returning Officer

Town and Parish Election – District or Local Returning Officer

Police and Crime Commissioner Election – See section on Non-Pensionable fees below

EU Referendum – See section on Non-Pensionable fees below

To Note: Unitary Councils do not have County Council elections but instead have local elections where their Local Returning Officer officiates.

Returning Officer Employment

The role of Returning Officer is usually carried out by a senior officer of that local authority (Chief Solicitor, Chief Executive for example). Regulations state that it should be treated as a separate employment which means the role has a separate pension record and accrues separate benefits to the officer main role in that local authority.

For European elections there are 2 types of Returning Officer’s:

• the Regional Returning Officer who acts for the whole region i.e. South West
• a Local Returning Officer usually at District or Unitary level

Both these types of Returning Officers receive their own fees which are pensionable in the LGPS.

Pension Contributions

Only the fees paid to a Returning Officer or Acting Returning Officer are pensionable. All other payments to a Deputy Returning Officer or election staff are not pensionable. However, the Returning Officer can opt out of paying pension contributions in this role if they wish.

Pre 2014 Pension Benefits

The pay used in the calculation of the pre 2014 pension benefits is based on:

• the highest 3-year consecutive average pensionable pay in the total employment period ending on the anniversary of leaving date; or
• with the employers consent, any 3-year consecutive average pensionable pay as at 31 March within 10 years of leaving.

When a person’s total period of membership is less than 3 years, the average is to be done by that lesser period.

Post 2014 Pension Benefits

The pay used in the calculation of post 2014 benefits is based on the member’s actual pensionable pay in a scheme year.

Non-Pensionable Fees

• The fees paid to the Police Area Returning Officer or any other Returning Officer for a Police and Crime Commissioner election are not pensionable
• The fees paid to the Returning Officer Chief Counting Officer, Regional Counting Officer or Counting Officer in respect of a referendum (local, regional, national or EU) are not pensionable

What you need to do

• Keep this role separate from the main role
• Assess the pension banding applicable to this role separately from the officer’s main job
• Deduct pension contributions accordingly and pay both employee and employer contributions to the relevant fund
• Notify us of the new post using the starter tab on the monthly interface.
• Provide details of the Returning Officers pensionable pay separately from their main job as and when they receive it
• Keep us updated with any change in officer via email to the Employer and Communications Team mailbox.

Pension contributions

The rate of contribution that a member pays to the LGPS is based on the actual pensionable pay they receive and is decided by a group of bandings which change annually.

Please see the Your Contributions page for the current bandings.

Deciding the employee contribution rate

You need to determine which part of an employee’s pay is pensionable when deducting pension contributions. Pensionable pay is the pay the member pays pension contributions on. It is all salary, wages, fees and other payments paid to the employee, and any benefit specified in the employees’ contract of employment as being pensionable. Exclusions are shown in LGPS Reg 20 (2) .

More information on how to allocate employees to bands can be found in the LGPS payroll guide (section 5.2).

If an employee wishes to join the 50/50 pension scheme the contribution is half of the main scheme rate. The employer contribution rate remains the same to cover their liabilities.

Employer Contribution Rates

Employer contributions are expressed as a percentage of the member’s actual pensionable pay.  The rate will change every three years following the actuarial valuation of the pension fund. The Fund’s Investment Team will inform you of the correct contribution rate you will need to apply following an actuarial valuation and provide a copy of the actuary’s report. The report also sets out the secondary contributions required to cover any deficit – this is shown as a second percentage rate for the Somerset Fund and a separate monetary value for the Devon Fund.

Paying over Pension Contributions to the relevant Pension Fund

It is your responsibility to ensure that prompt payment of the employer and employee pension fund contributions are made to Peninsula Pensions.

You will need to inform us and the Finance team each time you have made a payment:

•  If you are a Devon Fund Employer:
  Please complete and submit our online EAS5 form – please refer to our instructions on how to pay scheme contributions to the Devon Pension Fund.
• If you are a Somerset Fund employer: Please contact the Corporate Finance Team for a copy of the Monthly Contribution Return: corporatefinancepens@somerset.gov.uk. Please refer to our instructions on how to pay scheme contributions to the Somerset Pension Fund.

What you need to do

• Decide the contribution rate, for each job the member holds by estimating the actual annual pay earned at the date of joining or on 1st April each year and which section of the pension scheme they are joining (main scheme or 50/50 scheme)
• Decide on how and when an employees pay banding is assessed i.e. Annually, on pay change, overtime average etc. The rate may be adjusted during the year or in April of the following year
• Inform the member in writing which band they have been allocated each year and inform them of the appeals procedure
• Pay over pension contribution to the relevant Pension Fund promptly and complete the monthly contributions form each time you make a payment
• Any reductions in pensionable pay due to sickness, child related leave, reserve forces leave, or other absence from work are to be disregarded when reviewing/assessing the appropriate band/contribution rate
• As the contribution bands are reviewed on 1 April each year, you will need to review each employee’s position on that date and reattribute as necessary
• If the employee has a reduction in pay they will continue to pay contributions on the amount of pensionable pay received (if any) except in the case of employees on reserve forces leave
• If a member has more than one job, each pensionable pay is assessed separately for contribution banding which means a member could pay different percentages in each employment
• If you have/or are considering a salary sacrifice scheme further information can be found  in LGE Circular 244

Pensionable pay

What does ‘pensionable pay’ mean?

The definition of pensionable pay is very simply, any pay the member actually receives. This includes non-contractual overtime or payment for additional hours.

There are payments which do not count as pensionable pay such as a payment in consideration of loss of holiday. Please see the extract below from the LGPS 2013 Regulations for the full list:

Meaning of pensionable pay 20. -(1) Subject to regulation 21 (assumed pensionable pay), an employee’s pensionable pay is the total of-

(a) all the salary, wages, fees and other payments paid to the employee, and

(b) any benefit specified in the employee’s contract of employment as being a pensionable emolument.

(2) But an employee’s pensionable pay does not include-

(a) any sum which has not had income tax liability determined on it;

(b) any travelling, subsistence or other allowance paid in respect of expenses incurred in relation to the employment;

(c) any payment in consideration of loss of holidays;

(d) any payment in lieu of notice to terminate a contract of employment;

(e) any payment as an inducement not to terminate employment before the payment is made;

(f) any amount treated as the money value to the employee of the provision of a motor vehicle or any amount paid in lieu of such provision;

(g) any payment in consideration of loss of future pensionable payments or benefits;

(h) any award of compensation (excluding any sum representing arrears of pay) for the purpose of achieving equal pay in relation to other employees;

(i) any payment made by the Scheme employer to a member on reserve forces service leave;

(j) returning officer, or acting returning officer fees other than fees paid in respect of-

(i) local government elections,

(ii) elections for the National Assembly for Wales,

(ii) Parliamentary elections, or

(iv) European Parliamentary elections.

Generally, pay is pensionable unless specifically listed within the exclusions. Please contact us if you are not sure how to treat any particular item of pay.

A note on Pensionable Emoluments – in other words, a bonus or allowance which counts when deducting pension contributions.

• First Aid Allowance is pensionable if it’s deemed as “contractual” so it’s a requirement of the employee’s contract that they be First Aid qualified. If it’s voluntary, then it is not deemed as pensionable
• Honoraria can be pensionable depending on what its paid for:
  • if contractual and relates to role= Yes
  • difference in salary = Yes
  • due to overtime = Yes (post 2014 benefits), No (pre 2014 benefits)

What you need to do

• Determine which part of the members salary is pensionable
• Assess their pay before deciding which contribution banding will apply – the rate of contributions a member pays is based on their actual pensionable pay not the full time equivalent.

Cumulative pensionable pay

Cumulative pensionable pay is the total of the ‘career average pensionable pay’ and/or the ‘assumed pensionable pay’ in either the Main or 50/50 section of the Scheme in the scheme year.

Cumulative pensionable pay must be provided separately for each section of the Scheme because different accrual rates will apply when calculating the pension benefits.

If the employee moves between sections more than once in a Scheme year, there is no requirement to differentiate between different periods in the sections. The cumulative amounts should include all the relevant pensionable pay in each section during the year.

For periods of reduced or nil pay due to sickness or injury, relevant child related leave or reserve forces service leave, an Assumed Pensionable Pay (APP) needs to be included. Please see the section on Assumed Pensionable Pay in this guide for more information.

From April 2014, pensionable pay is now applicable to when it was paid, not to the period of work it relates to so if a member receives an extra payment for arrears of pay, the payment should be notified against the month it is paid.

What you need to do

• Notify us of the cumulative CARE (actual pensionable pay) for a given year using the Care Template – ideally a monthly submission. You can find out more information on the monthly interfaces here.

Changes and options during membership

You will need to notify Peninsula Pensions when an employee has a change in personal details or contractual changes in the following circumstances:

• Change of name or address
• Change in employment
• Change in Hours (please see note below regarding term-time employees)
• Unpaid leave of absence, maternity leave, adoption leave, and strikes

Any changes need to be submitted to us as soon as possible after the change has occurred.

What you need to do

You can submit employee changes in bulk via our interface. You can find out more information on the monthly interfaces here.

A note regarding term-time members

How you record hours for term-time members depends on whether you are part of the Devon Pension Fund or the Somerset Pension Fund so you will need to follow the guidance below when adding a member on the Interface.

Somerset CC Fund employees:
The pay is reduced according to the total number of weeks worked each year not the hours so just state the actual part-time hours over the full-time equivalent hours e.g.; 18.50/37.00 and 50% in the percentage.

Devon CC Fund employees: 

Hours are adjusted not the pensionable pay so the term-time adjustment should be done to the hours – this can be done in 2 ways:

1) Using a week’s factor: actual weekly hours / 37.00 x 43.145 (wks. factor) / 52.143 (FTE annual hours)

(18.50 / 37.00 x 43.145 / 52.143 x 100 = 41.3718%)

or

2) Using annual hours: actual weekly hours x weeks worked: 20 hpw x 40 wks = 800 total actual hours pa

total actual hours pa / full-time equivalent annual hours: 800 / 1700 x 100 = 48.2353%**

** If you use SIMS Payroll software, the percentage you need is stated in the ‘Pay factor’ field

Multiple employments

Where an employee has multiple posts that are separate contracts you will need to keep separate records.

The exception to this is where there is a single employment relationship for example:

• Two concurrent employments – both must be terminated
• Two sequential employments without a break (i.e. promotion)*

*Please note that your payroll provider could treat these changes as new roles so you will have to submit a Leaver form each time. We therefore recommend that you speak to them to see how they deal with these changes and what you will need to do.

What you need to do

In cases of multiple employments with separate contracts you will need to:

• keep separate data for each job
• provide separate data for main scheme and 50/50 scheme for each job
• provide actual pensionable pay figures to include any assumed pay for each job
• submit separate pension forms for each separate job

50/50 Pension Scheme

Since 1 April 2014, there have been two sections to the Local Government Pension Scheme:

• The main 100/100 section
• The 50/50 section

By paying into the 50/50 section, the member pays half the contributions for half the benefits – the member’s pension accrues at 1/98th instead of 1/49th.

The 50/50 option is useful for members who don’t want to opt out of the pension scheme but are finding it difficult to pay their full pension contributions each month. It is not designed to replace long-term membership of the main section but has been introduced as a short-term option for when times are tough financially.

The member has to complete the 50/50 Section form and then pass to you to action their request accordingly.

Points to note:

• All new eligible employees must be brought into the main scheme on joining so cannot complete a 50/50 election prior to becoming a member of the LGPS
• Employees can then elect to join the 50/50 section, and if they do so before the first payroll is closed, they can be brought into the 50/50 section from the first day of their employment
• You continue to pay the full employer’s contribution rate to ensure that the member receives the same level of life and ill-health cover so that benefits will be calculated as if the member was in the main section of the Scheme
• If the member has multiple contracts, they can pay into the 50/50 on one employment and the full scheme on others
• Members will automatically revert to the main scheme if they go onto no pay though sickness or injury or child-related leave provided that the member is still on no pay at the beginning of that pay period – this is to ensure they receive full benefits for this period of no pay. Once they return to work, they will be able to opt for the 50/50 section scheme again if they so wish
• When you reach your “automatic re-enrolment date”, any members in the 50/50 section must be moved back to the main section from the beginning of the following pay period. Members can elect to go back into the 50/50 section and if the election is received before the payroll is closed, the member would have continuous 50/50 membership
• The member can elect to re-join the main section at any time by completing the Main Scheme form. They would remain in that section until they make a subsequent election to move back to the 50/50 section
• There is no limit to the number of times a member can move between the two sections
• If a member is paying additional pension contributions, they may not be able to continue to do so under the same terms in the 50/50 section. However, they will be able to take out a new contract to purchase additional pension or pay additional voluntary contributions

What you need to do

• On receipt of the member’s completed 50/50 Election form, you will need to complete the “For Official Use Only” section and notify payroll to adjust the contribution rate from the next available pay period
• Once processed, a copy of the actioned election must be forwarded to Peninsula Pensions
• Notify us of 50/50 actual pensionable pay periods and changes between the full scheme and 50/50 scheme
• Bring the member back into the main scheme after a nil pay period, auto re-enrolment date or on election

You must hold records for each section of the scheme and separately per job of:

• the cumulative pensionable pay paid
• employee contributions deducted during membership of that section within the scheme year
• the dates the member joined and ceased membership of each section
• If an employee is moved back to the main section due to absence with no pay, automatic re-enrolment or on election, you will need to notify us of the applicable date and amended contribution rate

Authorised unpaid leave of absence

When a member has an unpaid break, a period of unpaid maternity, or strike break, and no pay is received it does not count for pension purposes and they will have a period of ‘lost’ pension.

On return to work, you must inform the member that they can elect to buy the ‘lost’ pension by paying Additional Pension Contributions (APC) and therefore the period will count in full for pension purposes.

If the member elects to pay for the period of ‘lost pension’ within 30 days of returning to work, you must enter into a Shared Cost Additional Pension Contributions (SCAPC) arrangement in which the member will pay 1/3rd of the cost and you will pay 2/3rd’s. You have the discretion to extend the period by which the member must elect to pay. For example, the 30 days can count from the date of your notification rather than the date they return to work.

If the member elects after the 30 days deadline, they can still buy back the amount of lost pension, but it will be at whole cost to them. Active members can opt to pay at any time and can cover the lost pension for a period of absence up to a maximum of 36 months.

Strike action – If a member goes on strike, they will not receive any pay and therefore will lose pension. They can elect to purchase lost pension following strike action at any time whilst still an active member, but it is at full cost to them. There is no option for a shared cost arrangement with the employer.

Reserve Forces Leave – the member may be eligible to be in the Armed Forces Pension Scheme however they can elect to remain a member of the LGPS. If they do, contributions are paid through the Ministry of Defence. Any actual pay you pay to the member (reservist) whilst they’re on Reserve Forces Leave is not pensionable. Please refer to the LGA HR guide for more information.

Please see the Additional Pension Contributions (APC) and Absences page for more information.

What you need to do

• Inform the member on return to work of the SCAPC option. Your notification must state:
  • the amount of lost pensionable pay
  • instructions on how they can purchase the ‘lost pension’
  • Refer members to the Absences page which links to the on-line calculator and the election forms for member needs to complete to send to you and us
• When you receive the signed election form from the member, you must:
  • check that the information on the form is correct – please see the employers guide to Buying lost pension for what you need to check and what you need to do if the form is incorrect
  • set up the payroll deduction
  • complete the Employer Confirmation form and send it to Peninsula Pensions along with a copy of the members election form
  • send a confirmation letter to member

Quick guide to contributions and absences

Authorised unpaid leave

• No employee contributions
• No employer contributions
• No CARE pension accrued but member has option to buy ‘lost’ pension via an APC

Unauthorised unpaid leave

• No employee contributions
• No employer contributions
• No CARE pension accrued but member has option to buy ‘lost’ pension via an APC

Jury Service

• No employee contributions
• No employer contributions
• No CARE pension accrued but member has option to buy ‘lost’ pension via an APC

Trades Dispute (Strike)

• No employee contributions
• No employer contributions
• No CARE pension accrued but member has option to buy ‘lost’ pension via an APC

Sickness or Injury

• Employee contributions paid on actual pay received
• Employer contributions paid on Assumed Pensionable Pay (APP)
• CARE pension accrues as normal at 1/49th of Assumed Pensionable Pay (APP) (or 1/98th if in 50/50 section)

Ordinary Child Related Leave (Maternity, Paternity, Adoption or Statutory leave)

• Employee contributions paid on actual pay received
• Employer contributions paid on Assumed Pensionable Pay (APP)
• CARE pension accrues as normal at 1/49th of Assumed Pensionable Pay (APP) (or 1/98th if in 50/50 section)

Paid Additional child related leave

• No employee contributions
• No employer contributions
• No CARE pension accrued but member has option to buy ‘lost’ pension via an APC

KIT Days

• Employee contributions paid on actual pay received
• Employer contributions paid on higher of actual pay received or APP
• CARE pension accrues as normal at 1/49th of Assumed Pensionable Pay (APP) (Or 1/98th if in 50/50 section)

Reserve Forces Service Leave

If elected to remain in LGPS, contributions are paid through Ministry of Defence (MOD). Please see the HR Guide on the LGPS Website for more guidance

Additional Contracts APC’s, SCAPCs, AVCs, SCAVCs, ARCs, ASBCs, Added Years, PTBB

Member paying extra contributions for can be quite complex so please refer to the HR and Payroll Guides on the LGPS Website for more guidance.

Leaving the Local Government Pension Scheme

When to submit a Leavers form

There can be some confusion on when you need to submit a Leavers form so hopefully the guidance below should help:

A Leaver form is required when a member:

• has multiple employments and is ceasing one but continuing with the other role(s)
• opts-out of the Scheme in any of their roles
• dies in service
• leaves the employment completely
• takes Flexible Retirement
• moves to a lower grade role

A Leaver form is not required when a member:

• changes roles with the same employer – instead you need to notify us of this change using the monthly interface.

*Please note that your payroll provider could treat these changes as new roles so you will have to submit leaver details each time. We therefore recommend that you speak to them to see how they deal with these changes and what you will need to do.

• reaches the end of their temp cover role at a higher grade
• is TUPE transferred**

**For members involved in a TUPE transfer to an Admitted Body, are part of an academy conversion or a transfer to another Multi-Academy Trust (MAT), the process will be different and we will not require any Leaver forms. Please see our TUPE’s and admitted bodies page or contact the Employer and Communications Team for more information.

How to notify Peninsula Pensions of a leaver

You will need to use the leavers spreadsheet to notify us of any members leaving, opting-out and retiring from the Local Government Pension Scheme.  Please refer to our Employer Interfacing Guide to help you with the process.

For any employer led retirements or where you are enhancing the members benefits, you will also need to complete the HR Authorisation form on our Forms page.

Opting out of the LGPS

Employees are automatically enrolled into the Local Government Pension Scheme (if eligible) but membership is not compulsory so they may opt-out of the pension scheme at any time. They will be brought back into the Scheme on your auto re-enrolment date.

Members cannot complete an opt out form before starting employment, as everyone must be bought into the scheme on the first day of employment. If they do not want to be in the Scheme, they can complete an opt out form on their first day and if the election is actioned in time for the first pay run, they may not pay any contributions. They cease to be an active member from the next available pay period after the date they have signed the form.

If they have opted out within three months of joining, the employee is treated as having never joined the scheme in relation to that opt out election and their pension contributions must be refunded through your payroll.

If they have more than three months’ but less than two years’ membership, they can still receive a refund of contributions, but we must process the refund and make an adjustment for tax. You must submit a copy of the actioned election form with the Leavers’ form which will confirm that they have ceased membership of the scheme.

Employees are free to opt out and re-join the scheme as many times as they wish. They can also elect for the 50/50 section of the scheme.

Please note you must not issue opt out forms to any employees.  Please refer them to the member’s pages of the website, where the opt out, opt in and 50/50 election forms can be downloaded, or they can contact us directly.

What you need to do

• When an employee completes an opt-out form you must forward it to your payroll section for actioning.

It should then be dealt with as follows:

Period in the LGPS in less than three months membership:

• The opt out form should be forwarded to your payroll department who should then refund any contributions already paid back to the employee through their pay. Payroll should then complete the bottom of opt-out form to confirm refunded via payroll.
• The leaver’s spreadsheet should be completed to confirm the member has opted out and contributions have been refunded via the payroll.

Period in the LGPS is more than three months but less than two years membership

• The Opt out form should be forwarded to your payroll department who should then stop deducting contributions and bring the member out of the pension scheme. Payroll should then complete the bottom of opt-out form to confirm date member stopped paying contributions.
• The leaver’s spreadsheet should be completed to confirm the member has opted out and contributions have been refunded via the payroll.

Please refer to our Employer Interfacing Guide to help you with the process.

Leavers under age 55

When a member leaves their employment and has between 3 months’ and 2 years’ membership in total and is under age 55, they can choose between:

• a refund of contributions
• deferred benefits
• an immediate pension if they have reached their normal retirement age – see the Leavers age 55 and over section of this guide
• a transfer out of their accrued pension rights to another pension scheme

Refund of contributions

If a member leaves the Scheme with less than two years qualifying membership in total (including separate posts or other local government membership) they can have a refund of contributions, less a statutory deduction for tax, and in some cases National Insurance.

Entitlement to a refund depends on whether they have had a break of at least a month and one day before returning to work.  If they haven’t had the break, they will not be entitled to a refund and the membership will be combined with the a new pension record.

Important: A refund of contributions through the employer’s payroll must not be given for a member who has ceased employment with less than three months service. This is only possible if the member opts-out of the scheme, as this can be treated as never having been a member.

What you need to do

• Complete the leaver’s spreadsheet confirming the reason for leaving, along with the relevant pension contributions and pensionable pay that will allow us to calculate the refund.

Please refer to our Employer Interfacing Guide to help you with the process.

Deferred benefits

If a member leaves their employment before becoming entitled to immediate payment of their benefits and they have more than two years’ membership, they have an automatic right to a deferred benefit (also known as a preserved benefit).

These benefits are calculated as at the date of leaving the scheme and are payable from the member’s normal retirement age.  Benefits paid before normal retirement age will suffer a reduction for early payment. Members can also defer payment up to age 75 and any benefits drawn after their normal retirement age will be subject to an actuarial increase.

Members who opt out with more than two years membership will also be awarded deferred benefits however, their benefits are not payable until they have ceased employment.

What you need to do

• Complete the leaver spreadsheet confirming the reason for leaving, along with the relevant pension contributions and pensionable pay that will allow us to calculate the deferred benefit.

Please refer to our Employer Interfacing Guide to help you with the process.

Transfer out of pension rights

Once a member has been awarded a deferred benefit, they have the option to preserve it within the pension scheme until they reach their normal pension age or they can choose to transfer their accrued pension rights to:

• Another Local Government Pension Scheme authority
• Another occupational pension scheme
• A personal pension provider

Members who have opted out will not be able to transfer their deferred pension to another provider until they have ceased their employment.

Leavers age 55 and over

Under the Local Government Pension Scheme, the normal retirement age for members is their state pension age or age 65, whichever is later.

Normal age retirement – once a member reaches their state pension age, or age 65 if later, they can simply resign from their employment and start drawing their pension benefits.

Late retirement – this is the opposite of early voluntary retirement. Where there is an actuarial reduction for early release of benefits, there is an actuarial increase for taking them late.

There are some circumstances where benefits can be paid earlier than the members normal retirement age:

Optional/Early voluntary retirement – this is where the employee chooses to retire (leaving employment) at or after age 55.

• pension can be paid immediately but an actuarial reduction is applied for early payment
• there is no need for your consent and no cost to you
• employee benefits may be reduced for early payment depending on their age and length of service – you can waive the actuarial reduction and pay the cost of doing so if they wish but you should have a written policy on whether reductions will be waived

Redundancy – this is where a job has disappeared and a statutory redundancy payment is due.

• unreduced benefits are payable immediately if member is age 55 or over
• you must cover the cost of paying pension benefits early – this is called the Strain Cost

Interests of efficiency – this is where an employee aged 55 or over is retired (leaves employment) on efficiency grounds.

• unreduced benefits are payable immediately
• you must cover the cost of paying pension benefits early – this is called the Strain Cost

Flexible retirement – this is where a member aged 55 or over requests to have their pension benefits paid but continues working for the same employer.

• the member must reduce hours or grade (or both) from the date pension benefits are paid
• benefits may be reduced for early payment – you can waive the actuarial reduction and pay the cost of doing so
• the member will remain in the scheme and accrue further pension benefits, unless they opt out
• you must cover the cost of paying pension benefits early – this is called the Strain Cost
• all flexible retirement cases must be fully approved, even if the member is over 60/65
• flexible retirement is not an automatic benefit in the Scheme – it’s your decision whether you offer this option to your members. You should have a written policy on whether flexible retirement will be allowed and whether reductions will be waived. Please refer to the Employer discretions page for more information.

Ill-health retirement – this is where an active member with 2 years or more membership has their employment terminated due to ill health and they may be eligible for ill-health retirement.

• no minimum age
• The member must be deemed to be permanently incapable of carrying out the duties of their role and not immediately capable of undertaking gainful employment (at least 30 hours a week for 12 months)
• must meet criteria set in the regulations as certified by an independent medical practitioner
• no upfront cost to you as its already covered within your employers’ contributions
• there are 3 different tiers of ill health for an active scheme member
• the member receives unreduced benefits and may get enhancement dependent upon the tier they fall into
• Tier 3 is a reviewable benefit which is payable for a maximum of three years – you must arrange a review after 18 months. Please refer to the Employers Guide to ill health retirement for more information.

Summary of retirements and possible costs

Ill-health retirement

• No minimum age
• Employers consent is needed with medical approval
• No strain cost payable as built into employer contribution rate
• Benefits are not reduced for early payment
• Benefits could be enhanced depending on tier awarded

Early and normal voluntary retirement

• Minimum age is 55
• Employers consent is not needed
• No cost to employer
• Benefits may be reduced for early payment
• Enhancement of benefits depends on employers policy

Late retirement

• From State Pension Age (SPA) to Age 75
• Employers consent is not needed
• No cost to employer
• Benefits are not reduced for early payment
• No enhanced benefits

Flexible retirement

• Minimum age is 55
• Employers consent needed even if over 65
• Strain cost payable by employer
• Benefits may be reduced for early payment
• Enhancement of benefits depends on employers policy

Redundancy retirement

• Minimum age is 55
• Employers consent is needed
• Strain cost payable by employer
• Benefits may be reduced for early payment
• Enhancement of benefits depends on employers policy

Retirement on interests of efficiency

• Minimum age is 55
• Employers consent is needed
• Strain cost payable by employer
• Benefits may be reduced for early payment
• Enhancement of benefits depends on employers policy

Award of additional pension by employer

You can choose to award a member any amount of additional pension up to the maximum amount allowed for that year but only if your discretions policy allows. The maximum amount is increased each April by Pensions Increase Orders – please see the Additional Pension Contributions page for this year’s purchase limit.

The additional pension would be payable in full at the member’s normal retirement age or on retirement for Tier 1 or 2 ill health cases but would be actuarially reduced for early payment in all other cases. There are no survivors’ benefits attached to the award so only counts for the members pension.

This is only available to active members of the scheme, or those leaving on redundancy or efficiency. The award can be made up to 6 months after the member has retired on redundancy or efficiency grounds, but you will have to pay the amount required as an immediate one-off cost at least four weeks before the member leaves.

You need to be aware that any pension bought by you isn’t reduced in the cases of redundancy or efficiency retirements so will incur an additional strain cost.

All employers should have a policy on awarding additional service. Please refer to the Employers discretions page for more information.

Strain costs

The funding of the scheme is based on all members retiring at their normal retirement age and receiving their benefits for a certain number of years, as well as a few other factors.

If benefits are paid before they were expected to be, the pension fund suffers a detriment resulting in a ‘strain’ on the pension fund.

A very simple example:

Let’s assume that the LGPS uses a normal retirement age of 67 with an expected age at which a member will die is 90. The scheme therefore expects to pay out the pension for 23 years.

If the member retires at 60, then the pension is going to have to be paid for 30 years, 7 years longer than planned and therefore there will be a shortfall of monies in the fund.

This means that:

• either the member’s pension needs to be reduced or
• an extra amount of money needs to be paid into the fund by you to allow the pension to be paid for a longer period

The actual strain cost will depend on the individual member as the amount is based on several factors, including age and gender.

The calculation formula is determined by the Government Actuary so Peninsula Pensions has no control over how the cost is calculated.

If you as an employer agree to the early release of a member’s pension, then you are responsible for covering the cost in the following situations:

• If a member is made redundant or leaves on efficiency grounds and is age 55 or over
• If a member is retired at age 55 or over on flexible retirement grounds
• If you choose to waive a member’s actuarial reduction and the member has left on flexible retirement

What you need to do

• If you are considering releasing an employee on any of the above grounds, we recommend you obtain an estimate so that you are aware of the possible strain cost. Please use the Bulk Pension Estimate spreadsheet on our Forms page.
• We will calculate the strain cost when you confirm the member’s benefits can be released for payment. The strain cost can be paid as one lump sum immediately, or over three years where interest is added. If paid over three years, the first payment is due in the April after the member has left.

Estimates

You can request an estimate for any of the following employer driven retirements:

• Redundancy or interests of efficiency
• Ill Health Retirement (Tier 3)
• Flexible Retirement

All calculation results will confirm the strain costs payable, if applicable. Please use the Estimate Request Form on our Forms page.

Points to note:

• We will not provide any estimates to the member for any of the above types of retirement as these need your consent to release the benefits
• If a member requires an estimate, please refer them to our Member Self Service portal where they can process voluntary retirement and early leaver calculations themselves.
• Any estimates you have asked us to produce will be returned directly to you not the member
• If you ask us to calculate an estimate in relation to ill health, then the relevant certificate must be provided for Tier 1 and Tier 2. If no certificate is provided, the calculation is processed on Tier 3 only
• If you are having to go through a redundancy exercise and need figures for more than 8 members, we can process these calculations in bulk. Please contact the Employer and Communications Team for more information.

Please remember that the scheme rules and Government legislation is subject to change, so you should try to request estimates as close to the potential leaving date as you can. Changes to legislation could impact on the figures provided.

Early voluntary retirement

The earliest age at which benefits can be paid from the scheme, other than ill health, is age 55.

Once a member reaches age 55, they can simply resign from their employment and start drawing their pension benefits.  However, if they have not reached their normal retirement age, the benefits would be actuarially reduced for early payment. Please see the LGPS reduction table for the current rates of reduction.

There is not normally any ‘Strain cost’ associated with this type of retirement unless you decide to waive the actuarial reduction.

The member may have a protection under the ’85-year rule’ which relates to previous legislation. This rule was removed from the scheme at the point where the earliest voluntary retirement age was 60 so the protections do not automatically apply between age 55 and 60 which means a member’s benefits would be reduced. You have the option of switching on the protections, but this would incur a strain cost.

You must have a policy in place for waiving reductions and switching on the ’85-year rule’. Please see the Employer discretions page for more information.

What you need to do

• Complete the Leaver spreadsheet confirming the reason for leaving, along with the relevant pay details that will allow us to calculate the pension benefits.

Please refer to our Employer Interfacing Guide to help you with the process.

Early payment of deferred benefits

An ex-employee who left the LGPS with a deferred benefit, can now choose to take early payment of their deferred benefits from age 55 rather than 60. The change to the scheme rules on 14th May 2018, means that an ex-employee no longer needs the consent of their former employer to take their benefits between the ages of 55 and 59.

Members who left the LGPS with a deferred benefit on or after 1st April 2014 (except councillors) were already able to choose to take early payment of their deferred benefits from age 55 without needing their former employers’ consent, and this has not changed.

If a member chooses to take deferred benefits earlier than their normal pension age, they will normally be reduced to take account of the fact the pension will be paid for longer. Early reduction factors are set by Government and can vary from time to time. You can waive the actuarial reduction on compassionate grounds but this could result in a cost to you called the ‘Strain Cost’ – see the Strain Costs section of this guide for more information.

If the ex-member is aged between 55 and 60, then could still be a strain cost payable if they have any protections in place. We therefore suggest that you contact us to obtain an estimate before agreeing to release benefits.

You need to ensure you have a policy in place to cover early release of benefits and waiving of reductions – please see the Employer discretions page.

Redundancy and interests of efficiency retirement

Under current Scheme regulations, if a member’s employment ceases due to redundancy or the employment is terminated by mutual consent on grounds of business efficiency and they are aged 55 or over with at least 2 years’ service, the member is entitled to and must take their pension benefits immediately without any actuarial reduction.

The member must also take their pension benefits from any additional pension contributions contract they have but unlike the main benefits, the amount will be reduced for early payment.

In most cases, there will be a ‘strain cost’ payable to the fund by you so we recommend you obtain an estimate for any cases where the member will be age 55 or over at the date of employment ceasing.

Meaning of ‘business efficiency’ grounds for retirement
The scheme regulations themselves do not include a definition of ‘business efficiency’ and there isn’t a general law definition that you can rely on either. It will therefore be your responsibility to interpret what is meant by ‘business efficiency’ within your organisation.

When considering this, bear in mind that if a member over age 55 is dismissed or their employment terminated by mutual consent and you determine that it is not a redundancy or business efficiency situation, you could be challenged by the member on this matter and cases could be referred to the Pensions Ombudsman who may take a different view.

What you need to do

• Complete the Leaver spreadsheet confirming the reason for leaving, along with the relevant pay details that will allow us to calculate the pension benefits.

Please refer to our Employer Interfacing Guide to help you with the process.

Flexible retirement

Flexible Retirement allows a member aged 55 or over access to their pension benefits whilst remaining in employment with the same employer.

There are two conditions that must be met:

• you must agree to the release of the pension – all flexible retirement cases must be fully approved, even if the member is over 60 or 65
• the member must reduce hours or grade (or both) from the date pension benefits are paid – there is no specific reductions set out in the regulations so you must confirm the minimum requirements within your flexible retirement policy

Points to note:

• you must cover the cost of paying pension benefits early – this is called the Strain Cost
• if the member takes flexible retirement at their normal retirement age then the benefits are paid without reduction
• members benefits may be reduced for early payment – you can choose to waive any reduction in whole or in part in the case of flexible retirement but this will increase the Strain cost payable
• the member will remain in the scheme and accrue further pension benefits, unless they opt out
• any benefits paid as a result of flexible retirement are not subject to abatement under the administering authority’s abatement policy whilst the member remains with the same employer
• We recommend that you obtain an estimate to determine any ‘strain cost’ that would be payable before flexible retirement is agreed

Flexible retirement is not an automatic benefit in the Scheme so it’s your decision whether to offer this type of retirement to your members. For this reason, you should have a written policy in place to cover flexible retirement. Please refer to the Employers discretions page for more information on what needs to be included in your policy.

Please note that we are unable to process flexible retirements where no policy exists.

What you need to do

• Complete the Leaver spreadsheet confirming the reason for leaving, along with the relevant pay details that will allow us to calculate the pension benefits.

Please refer to our Employer Interfacing Guide to help you with the process.

Ill-health retirement

Active members with 2 years or more membership whose employment is terminated due to ill health may be eligible for ill health retirement.

For this to occur they must be deemed to be permanently incapable of carrying out the duties of their role and not immediately capable of undertaking gainful employment – gainful employment means paid employment for at least 30 hours per week for a period of at least 12 months.

There are 3 different tiers of ill health for an active scheme member:

Tier	Degree/level of ill health	LGPS pension and enhancement level
Tier 1	Member is unlikely to be capable of undertaking any gainful employment before normal retirement age	Member receives accrued pension rights plus an enhancement of membership of 100% of prospective benefits up to normal retirement age. Tier 1 is payable to the member for life.
Tier 2	Member is unlikely to be capable of undertaking any gainful employment within 3 years of leaving employment but likely to be capable before normal retirement age	Member receives accrued pension rights plus an enhancement of membership of 25% of prospective benefits up to normal retirement age. Tier 2 is payable to the member for life.
Tier 3	Member is likely to be capable of undertaking gainful employment within 3 years of leaving employment or normal retirement age if sooner	Member receives accrued pension rights only with no enhancement. Tier 3 benefits are payable for a maximum of 3 years with a review after 18 months.

You decide if a member qualifies for ill-health retirement and which tier applies but in doing so, you must have regard to the advice of a doctor qualified in occupational health medicine. This decision should be made only on medical considerations, based on a doctor’s certificate. Economic considerations (such as the availability of work) should not be considered.

There is no direct Strain cost for ill health retirement.  The cost is factored into the scheme actuarial valuation and your employer contribution rate.

Early payment of deferred benefits due to ill health

Deferred members can ask their previous employer to release their pension on ill health grounds at any age.

If since leaving the scheme, the member has suffered ill-health the like of which would have required them to retire from the role they held immediately before leaving, then benefits can be put into payment immediately.

The process is very much the same as an active member so you must consider their application and refer them to your approved Occupational Health Doctor (IRMP). However, the benefits and conditions for eligibility and the ill health certificates you need to use will depend on the date they left employment.

What you need to do

• Decide whether to terminate the employment due to ill health or agree early release of benefits to a deferred member on application
• Complete the correct relevant ill health certificate and forward to your appointed Independent Registered Practitioner (IRMP) who must be on our approved list. IRMP then reviews case and completes the certificate with their opinion. The approved list is kept internally but you can request a copy from the Employer and Communications Team
• You must decide whether to award ill health pension and which tier applies or whether you agree to early release for a deferred member
• You must then notify the member of your decision and reasons behind your decision, including the right to appeal
• You will also need to notify us that we need to pay some benefits to the member or ex-member and this can be done as follows:
  • For active members, you will need to complete the Leaver spreadsheet and send to us along with the ill health certificate completed by the IRMP and the employer’s decision notice
  • For ex-members, we do not require another leaver form, so you just need to send us the relevant ill health certificate completed by the IRMP and the employer’s decision notice

Please refer to the employers guide to ill health retirement for more guidance and the process you need to follow.

Forfeiture of pension rights after conviction for employment-related offences

There have been a couple of cases where former LGPS members have been convicted of employment-related offences. We therefore thought it was appropriate to remind all employers of your ability to forfeit a member’s LGPS pension rights if the reason they ceased employment related to these offences.

Regulation 91(1) of the LGPS 2013 Regulations states:

91. -(1) If a member is convicted of a relevant offence, the former Scheme employer may apply to the Secretary of State who may issue a forfeiture certificate.

(2) A relevant offence is an offence committed in connection with an employment in which the person convicted is a member, and because of which the member left the employment.

(3) Where a former Scheme employer applies for a forfeiture certificate, it must at the same time send the convicted person and the appropriate administering authority a copy of the application.

(4) Where a forfeiture certificate is issued, the member’s former Scheme employer may direct that any of the member’s rights under these Regulations are forfeited.

(5) The former Scheme employer must serve a notice of its decision to make a direction on the member.

(6) A forfeiture certificate is a certificate that the offence-

(a) was gravely injurious to the State, or
(b) is liable to lead to a serious loss of confidence in the public service
(7) If the former Scheme employer incurred loss as a direct consequence of the relevant offence, it may only give a direction under paragraph (4) if it is unable to recover its loss under regulation 93 (recovery or retention where former member has misconduct obligation) or otherwise, except after an unreasonable time or at disproportionate cost.

(8) A direction under paragraph (4) may only be given if an application for a forfeiture certificate has been made by the former Scheme employer before the expiry of the period of three months beginning with the date of conviction.

If you wish to investigate forfeiture, please contact the Employer and Communications Team for assistance in the first instance.

Death benefits

The Local Government Pension Scheme provides benefits on death for an active member, deferred members and pensioners.

Pension payable on death

A Spouse’s pension can be payable based on 160ths of a member’s pensionable service.  This will continue for life even if the spouse re-marries.

Pensions are also payable to civil partners and co-habiting partners based on pensionable service after April 1988.  Co-habiting partners will need evidence of living together/financially dependent on each other, but we will request that when we need to.

Children’s benefits are also payable to any eligible child:

• under age 18
• aged between 18 and 23 who is still in full-time education
• at any age if the child was still dependent on their parent for reasons of physical or medical incapacity

Death grant

A death grant of 3 times the late members assumed pensionable salary is payable if a member dies whilst in active employment with you.

There may also be a death grant payable for deferred members depending on when they ceased employment. If the member passes away after being in receipt of their pension for less than 10 years, then the balance of the 10 years pension will be payable as a death grant.

The death grant can be paid to anyone who the member nominates on the Death Grant Expression of Wish form.

What you need to do

• If a member dies whilst in active employment with you, it is very important that you informed us as soon as possible so that the next of kin can be given details of benefits due as quickly as possible
• Complete the Leaver spreadsheet confirming the reason for leaving, along with the relevant pay details that will allow us to calculate the death benefits. We will also require the assumed pensionable pay (APP) figure completing

Pensionable pay on leaving

LGPS benefits are based on pensionable pay so it’s very important that the figures you provide on the Leaver form have been calculated thoroughly and accurately.

Please see the ‘Pension Contributions’ part of this guidance under the ‘what you need to do section’ for the definition of Pensionable Pay and what can be included.

Members who have service prior to 1 April 2014 will be entitled to a Final Salary pension for the pre 2014 part of their membership and a Career Average Revalued Earnings (CARE) for the post 2014 membership.

When the scheme changed from a Final Salary to a Career Average Revalued Earnings (CARE) Scheme on 1st April 2014, the definition of pensionable pay also changed which means some elements of pay that were previously not allowed to be pensionable became pensionable. This means that there are two definitions of pensionable pay as follows:

• Final Salary Pension (Pre 1 April 2014) – this will be the final 365 days of full-time equivalent pensionable pay the member has earned. Non-contractual overtime is not pensionable for the pre 2014 pension
• Career Average Revalued Earnings (CARE) Pension (Post 1 April 2014)  – the actual pensionable pay the member has received in the scheme year (1 April to the date of leaving), including non-contractual overtime or payment for additional hours

For any leavers with pre and post 1 April 2014 membership, you will need to provide 2 different pensionable pay figures for employees:

Actual Pensionable Pay for CARE Pension (April to March/DOL)(2014 pensionable pay definition)
PLUS
Pensionable Pay for full 365 days prior to date of leaving (for final salary link)
(2008 pensionable pay definition)

The next part of the guidance provide more detail on how to calculate the two pensionable pay figures you will need to provide.

You might also find our Pensionable Pay Focus Session videos helpful along with the employer bitesize training on the Local Government Association website

Pensionable pay pre 1 April 2014

For calculation of Final Salary Pre-2014 pension benefits

The Local Government Pension Scheme prior to 2014 was a final salary related defined benefit pension scheme and pre-1 April 2014 scheme benefits are based on the member’s service and their full-time equivalent final pensionable pay.

Full-time equivalent final pay means the pay the member would have earned over the last 365 days of their employment had they been whole-time and had the old definition of pensionable pay continued (e.g. overtime is non-pensionable). It is not their actual last rate of pay.

If a member has any scheme membership in the pre-1 April 2014 final salary pension scheme, we will require the final 365 days pensionable pay at the date of leaving employment. (Not their salary point).

How to calculate the full-time equivalent pensionable pay

Example full-time pensionable pay calculation for a full-time member
A full-time member leaves on 30/11/2019

1 ) Look at the last 365 days of pensionable pay so for this example it would be 01/12/2018 to 30/11/2019.

Pensionable pay rates:

01/04/2018 to 31/03/2019 = £26067.00
01/04/2019 to 30/11/2019 = £26835.00

Days in periods:
01/12/2018 to 31/03/2019 = 121 days
01/04/2019 to 30/11/2019 = 244 days
365 days*
*should always add up to 365 unless worked less than a full year

2) You then need to calculate the proportion of pay per period:

01/12/2018 to 31/03/2019 = 121 / 365 x £26067.00 =
£ 8641.39

01/04/2019 to 30/11/2019 = 244 / 365 x £26835.00 = £17939.01

FTE Final pay for the last 365 days = £26580.40     

If a previous year’s pensionable pay is higher than the final year, you will also need to provide that figure. Calculate it in the same way as above but use the anniversary of the date of leaving, 01/12/2017 to 30/11/2018 for example.

Part-time members

For part-time employees, their membership is pro-portioned down by the hours they work to reflect that they are not employed on a whole-time basis. Whilst the membership is affected, their benefits are calculated using a full-time equivalent pensionable pay instead of their actual pay (what they would earn if they were working on a whole-time basis).

To calculate the final pay for a part-time member, you use the actual pay received in the final year and multiply that figure by hours worked.

Example full-time pensionable pay calculation for a part-time member

A part-time member leaves on 30/11/2019

1 ) You will need to look at the last 365 days of pensionable pay and the hours worked for the same period so for this example it would be 01/12/2018 to 30/11/2019

Weekly hours during the final 365 days:
01/11/2018 = 16.65 / 37.00
01/05/2019 = 18.50 / 37.00

Pensionable pay rates: 01/12/2018 to 31/03/2019 = £18135.41
01/04/2019 to 30/04/2019 = £18835.41
01/05/2019 to 30/11/2019 = £18835.41

Days in periods:01/12/2018 to 31/03/2019 = 121 days
01/04/2019 to 30/04/2019 =30 days
01/05/2019 to 30/11/2019 =214 days
365 days

2) Work out the actual pensionable pay for the relevant period:

01/12/2018 to 31/03/2019 = 121 / 365 x £18135.41          = £  6012.01

01/04/2019 to 30/04/2019 = 30 / 365 x £18835.41          = £  1548.12

01/05/2019 to 30/11/2019 = 214 / 365 x £18835.41         = £11043.23

Actual part-time pensionable pay for last 365 days            = £18603.36

3) Divide the actual hours by the whole-time equivalent hours to convert them to a percentage:

16.65 / 37.00 x 100 = 45.0811%
18.50 / 37.00 x 100 = 50.0000%

4) Use the percentage of hours to up-rate the part-time pensionable pay to the full-time equivalent pensionable pay:

Dates for period	Actual Pay	Full-time Equivalent (FTE)
1/12/2018 – 31/3/2019	£6012.01/45.0811%	=£13335.99
01/04/2019 – 30/4/2019	£1548.12/45.811%	= £3434.08
01/05/2019 to 30/11/2019	£11043.23 / 50.0000%	= £22086.45

Total Pensionable Pay for last 365 Days = £38856.52

If a previous year’s pensionable pay is higher than the final year, you will also need to provide that figure. Calculate it in the same way as above but use the anniversary of the date of leaving, 01/12/2017 to 30/11/2018 for example.

Casual members

Like part-time members, the membership for a casual member is pro-portioned down by the hours they work to reflect that they are not employed on a whole-time basis. Whilst the membership is affected, their benefits are calculated using a full-time equivalent pensionable pay instead of their actual pay (what they would earn if they were working on a whole-time basis).

To calculate the final pay for a casual member, you use the hourly rate to calculate the whole-time annual salary.  This is done by taking the total pay for the period and calculating the hours based on how many weeks worked.

Example full-time pensionable pay calculation for a casual member

A casual member leaves on 30/11/2019

1)  You will need to look at the last 365 days and the hourly rates within that period. For this example, it would be 01/12/2018 to 30/11/2019.

01/12/2018 to 31/03/2019 = £9.56 per hour over 17 ½ weeks – total pay £700.00

01/04/2019 to 30/11/2019 = £10.28 per hour over 35 ½ weeks – total pay £600.00

2)  Then calculate the average weekly hours:

£700.00 /9.56= 73.22 hours/17.5 = 4.18 / 37.00 x 100 = 11.2973%

£600.00/£10.28 = 58.37 hours/35.5 weeks = 1.64 / 37.00 x 100 = 04.4324%

This provides the percentage of hours worked per week to be recorded on the members pension record.

3)  Use the percentage of hours to up-rate the part-time pensionable pay to the full-time equivalent pensionable pay. Take the part-time pensionable pay and divide by the weekly hour’s percentage:

Dates for period	Actual pay	Full-time equivalent (FTE)
01/12/2018 – 31/03/2019	£700.00/11.2973%	=£6196.17
01/04/2019 – 30/11/2019	£60.00/04.4324%	=£13536.68

Total pensionable pay for last 365 days = £19732.85

If a previous year’s pensionable pay is higher than the final year, you will also need to provide that figure. Calculate it in the same way as above but use the anniversary of the date of leaving, 01/12/2017 to 30/11/2018 for example.

Term-time members

Term-time members do not work a full year over 52 weeks so either the membership or the pensionable pay needs to be adjusted accordingly to reflect that they are not employed on a whole-time basis.

The calculation of pensionable pay for term-time members depend on whether you are part of the Devon Pension Fund or the Somerset Pension Fund.

Devon Fund Employers

Term-time employees have their hours adjusted to equate to a full year and the full-time equivalent pay is worked out by uprating the actual pay by the adjusted hours.

Please note that any adjustment that was made for the employee not working the full year should be ignored, as the pensionable pay is based on periods of a year not academic year so any period of 365 is a year.

Example full-time pensionable pay calculation for a term-time member in the Devon Fund

A term-time employee leaves on 30/11/2019

1)  You will need to look at the last 365 days of pensionable pay and the hours worked for the same period so for this example it would be 01/12/2018 to 30/11/2019.

Member works 25.00 hours per week over 44.5 weeks per year and has not changed during the last 365 days period.

Pensionable Salary Rates over last 365 days:
01/12/2018 to 31/03/2019 = £12000.00
01/04/2019 to 30/11/2019 = £12500.00

Days in periods:01/12/2018 to 31/03/2019 =121 days
01/04/2019 to 30/11/2019 =244 days
total = 365 days

2) Work out the pensionable pay for the relevant period:

01/12/2014 to 31/03/2015 is 121 / 365 x £12000.00 =
£ 3978.08

01/04/2015 to 30/11/2015 is 244 / 365 x £12500.00 =
£ 8356.16

Actual part-time pensionable pay for last 365 days = £12334.24

3) Convert the hours to a percentage by dividing the actual hours by the whole-time equivalent hours for the week then multiply by the week’s factor:

25.00 / 37.00 x 44.50 / 52.143 x 100 = 57.6637%

4) Use the percentage of hours to up-rate the part-time pensionable pay to the full-time equivalent pensionable pay:

5) Part-time pensionable pay divided by the weekly hour’s percentage:

Dates for period	Actual pay	Full-time equivalent (FTE)
01/12/2018 – 31/3/2019	£3978.08/57.6637%	= £6898.76
01/04/2019 – 30/11/2019	£8356.16/57.6637%	=£14491.20

Total pensionable pay for last 365 days = £21389.96

If a previous year’s pensionable pay is higher than the final year, you will also need to provide that figure. Calculate it in the same way as above but use the anniversary of the date of leaving, 01/12/2017 to 30/11/2018 for example.

Somerset fund employers

Historically, membership for term-time employees within the Somerset Fund has not been adjusted and their hours have been recorded as the hours they work. The full-time equivalent pensionable pay is then reduced according to the total number of weeks worked each year.

You will therefore need to provide the adjusted actual pensionable pay, (plus any additional pensionable recurring pay), and then uprate to the full-time equivalent pay using the part-time hours.

Example full-time pensionable pay calculation for a term-time member in the Somerset Fund

A term-time employee leaves employment on 31/08/2018.

In the final year the member had an hour change from 14.5 hours per week over 44 weeks per year to 25 hours per week over 44 weeks per year on 01/03/2018.

The hourly rate for the whole period was £8.10 per hour.

As the employee has pre-April 2014 membership, you will have to calculate the pensionable pay for the final 365 days. The hours on the members record would be 14.50 up to 28/02/2018 and 25.00 from 01/03/2018. Because the employee is term-time, you only need to adjust the pensionable pay.

The period you need to look at for this example is 1st September 2017 to 31st August 2018

As there has been an hour change in the final year, you will need to split the pensionable pay at the date of the hour change:

1 September 2017 to 28 February 2018

£8.10 per hour x 14.5 hours per week x 44 weeks per year = £5167.80
14.50 / 37.00 x 100 = 39.1892%

Now you need to proportion this for part of the year (1 September 2017 to 28 February 2018)

£5167.80 / 365 days x 181 days = £2562.66

Then uprate the actual pay for the period by the hours worked to get the full-time equivalent pay

Full time equivalent pay for the period = £2562.66 / 39.1892% = £6539.20

1 March 2018 to 31 August 2018

£8.10 per hour x 25 hours per week x 44 weeks per year = £8910.00
25.00 / 37.00 x 100 = 67.5676%

Now you need to proportion this for part of the year (1 March 2018 to 31 August 2018)

£8910.00 / 365 days x 184 days = £4491.62

Then uprate the actual pay for the period by the hours worked to get the full-time equivalent pay.

Full time equivalent pay for period = £4491.62/67.5676% = £6647.60

Total full time equivalent pay = £6539.20 + £6647.60 = £13186.80

If a previous year’s pensionable pay is higher than the final year, you will also need to provide that figure. Calculate it in the same way as above but use the anniversary of the date of leaving, 01/12/2017 to 30/11/2018 for example.

Dealing with arrears and extra payments

Arrears of Final Salary Pensionable Pay

If a member receives any part of their pay in arrears, that payment can only be included in their final pensionable pay figure if the period it relates to falls within the 365 days being used for the calculation.

The Local Government Association (LGA) has published a document covering the common questions that arise when an employer pays a backdated pay award. You can find the backdated pay award FAQs on the employer guides and sample documents page of www.lgpsregs.org

Enhancements

Where a member is paid enhancements for night or weekend duty within the 365 days being used for the calculation, the payments must be added to the full-time equivalent pay. If they are part-time, the actual rate of enhancements should be uprated to a full-time equivalent figure.

Honoraria

If an employee is paid an honorarium and contributions have been deducted from it in the final year period, the honorarium must be included in the final pensionable pay and apportioned accordingly if necessary.

Paid Maternity/Paternity/Adoption Leave

Whole-time equivalent pay for this type of absence will count in the calculation of final pay for pre 1st April 2014 benefits if that period of leave falls in the final pay period.

Any period of unpaid leave for this type of absence will not count in the final pay calculation so if they wish it to count, they would need to take out an Additional Pension Contract (APC) to cover the ‘lost’ pension for the whole period of unpaid leave of absence.

Illness or Injury

Where absence is due to illness or injury, any reduction or loss of pay is disregarded so the final pay is calculated as if the reduction or loss had not occurred (what pay would they have received had they not been absent).

Protections for reduction in pay

Final salary (Pre 14) automatic 3 protection

If a member’s rate of pay is reduced in last 3 years to the date of leaving, then the last 365 days pensionable pay, together with the previous 2 anniversary’s may be looked at in calculating the best pay to use.

What you need to do

• If one of the previous 2 years to the anniversary of the date of leaving is higher, please provide us with the final 3 years pensionable pay on the leaver’s form and select ‘Best’ instead of ‘Final’ on the Leaver form.

Please refer to our Employer Self Service (ESS) page which contains a guide and a video to help you through the process. There’s also a guide to help with completion of the leaver form.

Average of best 3 consecutive years in 13

If a member suffers a reduction in their rate of pay in the final 10 years before they leave or retire, they can elect to look at the best 3 consecutive years in the last 13.  For this to apply the member must elect in writing at least a month before the date of leaving. For simplicity, these 13 years all end on 31 March rather than anniversaries of the date of leaving.

It is member’s responsibility to request this in writing at any time, up to one month before they leave to initiate the above protection.

Please refer any affected employees to the Pensionable Pay page which helps to explain the protection and process involved. It would be good practice to remind your members that when they have a drop in pay,  that they can elect for this protection.

What you need to do

• If a member elects for this option, you will need to complete the previous year’s pay form on our web site and submit with the leaver’s form

Actual pensionable pay post 1 April 2014

For calculation of career average revalued earnings (CARE) pension benefits

Career average revalued earnings pensionable pay (which we will now refer to as CARE Pay) is the amount of pay on which a member has paid pension contributions, in other words their actual pay.

A member’s actual pay includes:

• their normal salary
• any shift allowance or bonuses
• overtime (both contractual and non-contractual)
• maternity, paternity or adoption pay
• any other taxable benefit specified in their contract as being pensionable.

It does not include any payment that is made in consideration of loss of future pensionable payments or benefits.

CARE benefits are based on the pensionable pay that is received in a scheme year (1 April to 31 March) and not for the period that the pay was due.

How to calculate the actual pensionable pay for CARE pension

For members who have post 1 April 2014 membership, you will need to provide the actual pensionable pay from 1 April to the date of leaving along with the previous year.

Example

A member leaves on 30/11/2018.

Actual pensionable pay:
01/04/2017 to 31/03/2018 = £13000
01/04/2018 to 30/11/2018 = £7000

The figures must include any Assumed Pensionable Pay (APP) and must be split for any 50/50 scheme membership.

Arrears of CARE pensionable pay

Benefits in the 2014 scheme are calculated based on the pensionable pay that is received in the Scheme year (1 April to 31 March) and not the pay due for the period.

There is therefore no need to adjust the pensionable pay on payment of arrears or other payments which are paid in the current pay period but relates to another.

The Local Government Association (LGA) has published a document covering the common questions that arise when an employer pays a backdated pay award. You can find the backdated pay award FAQs on the employer guides and sample documents page of www.lgpsregs.org

Assumed pensionable pay

Assumed Pensionable Pay (APP) is a notional pensionable pay figure that is used to ensure a member’s pension is not affected by any reduction to, or suspension of, pensionable pay due to a period of absence.

When does APP Apply?

• member moves to reduced or no contractual pay because of sickness or injury
• during relevant paid child related leave (ordinary maternity, paternity or adoption leave, paid shared parental leave and any paid additional maternity or adoption leave)
• whilst a member is on reserve forces service leave.

The cumulative pensionable pay should be the assumed pensionable pay and not the actual pensionable pay received (if any).

The member will pay contributions on any pensionable pay received during such periods of absence, but your contributions will be paid on the amount of the assumed pensionable pay.

 When does APP not apply?

•  during any part of relevant child related leave if the pensionable pay received is greater than the assumed pensionable pay for that period
• during any period of unpaid additional maternity, paternity, adoption leave or shared parental leave available at the end of relevant child related leave. This is treated as unpaid leave and the member has the option to purchase ‘lost pension’
• If the employee has a period of authorised unpaid leave of absence or is absent due to industrial action

How to calculate APP

APP calculated as an annual rate then applied to the relevant period as a proportion of that rate.  The relevant period starts on the date:

• the employee drops to reduced or no contractual pay due to sickness or injury, or
• when ‘relevant’ child related leave or reserve forces service leave commences

a) calculate average pensionable pay for the 3 complete months or 12 complete weeks prior to the date of reduced or no pay

If 3 or 12 complete pay periods do not exist, use whatever number of complete periods are available

b) remove any ‘lump sums’ but include any APP already credited in those 3 months – regular lump sum payments can be included at your discretion (see note on Lump Sums below)

c)  gross up to an annual figure.

d) annual figure is then apportioned to the applicable period and replaces any pay received.

For example:
Month 1 = £1400
Month 2 = £2500 (including £1000 regular bonus and £100 overtime)
Month 3 = £1400
Annual rate of APP = (£1400 + £1500 + £1400) / 3 x 12) = £17200

If the APP figure above is lower than the actual pensionable pay normally received, you can substitute a higher level of pensionable pay for the APP, but you must have regard to the pensionable pay received by the member in the previous 12 months.

Note on Lump Sums – The annual rate should be increased if the employee received any regular lump sum payments in the 12 months before the relevant event. A payment is a regular lump sum if the employer determines that there is a reasonable expectation that it would be paid on a regular basis.

APP Figure used for enhancement Tier 1 and Tier 2 Ill health and Death in Service

APP will need to be calculated for any members who retire on the grounds of permanent ill-health with a Tier 1 or Tier 2 ill health pension and for any death in service cases.

The APP figure is calculated in the normal way but using the average of the pensionable pay for the 12 (weekly) or 3 (monthly) complete pay periods prior to the date of retirement or death (including any APP credited in and relating to those pay periods).

Any regular lump sums paid in the 12 months prior can be added back into the annual rate of APP if you determine there is a ‘reasonable expectation’ it would again have been paid to the member*.

This APP figure is needed to calculate the amount of the enhancement to the benefits due under the LGPS.

Has there been a reduction in contractual hours during the relevant pay periods wholly or partly because of the condition that caused or contributed to the ill health retirement?

If the Independent Registered Medical Practitioner (IRMP) certifies Yes to this question, then the APP figure is to be calculated on the pay the member would have received during this time – they are treated as if they had not been working reduced contractual hours.

*Changes in legislation in May 2018, allows you to use a different pensionable pay figure that reflects the normal pay of the member over a longer period. In doing so, you must have regard to the pensionable pay received by the member in the previous 12 months.

Please note that this is only a summary of Assumed Pensionable Pay. For more information, please see Section 4.2 of the LGPS 2014 Payroll Guide and the bite-size training in the Employer Resources section of the LGPS website.

What you need to do

• Calculate the APP where necessary and ensure pension contributions are deducted on the correct pensionable pay – please see Quick Guide to Contributions and Absences for more information
• When submitting the CARE monthly Interface for active members, ensure you provide the cumulative pay to date PLUS any Assumed Pensionable Pay, for every employee currently on payroll (including casuals, regardless of whether they have been paid in that month or not)
• For Leavers, you will need to include APP in the LGPS 2014 Pensionable Pay figures
• If a member is taking tier 1 or 2 ill health benefits or has died in service, you will also need to provide the additional APP figure on the Leavers spreadsheet – we need it for the enhanced benefits.

TUPE’s and admitted bodies

TUPE stands for the Transfer of Undertakings (Protection of Employment) Regulations and its purpose is to protect employees if the business in which they are employed changes hands. Its effect is to move employees and any liabilities associated with them from the old employer to the new employer by operation of law.

TUPE transfer Members Joining

When members already in the LGPS, from either another employer within the Devon or Somerset Pension Funds or another LGPS Fund, join your employment via a TUPE transfer, we need to know as soon as possible.

What you need to do

• Notify us of the TUPE transfer as early as possible – please email the Employer and Communications Team with details of the TUPE and transfer date
• Please do not submit any Starters information for these members as this will complicate the process – we will send you a Staff Data Capture form to complete

Please note that if we do not have an active record for the member, we will require some additional member data from you but will notify you where this is required.

TUPE Transfer Member Leaving

If you are outsourcing services and have a number of staff who will be subject to TUPE, you will need to consider obligations regarding the affected employee’s pension rights.

This will also apply to any schools moving away from the local authority and converting to an Academy and/or joining a Multi Academy Trust (MAT) or moving to another MAT.

What you need to do

• Notify us of the TUPE transfer as early as possible – please email the Employer and Communications Team with details of the TUPE and transfer date
• Please do not include these members on the leaver spreadsheet as this will complicate the process – we will send you a Staff Data Capture form to complete along with the TUPE Transfer Mid-Year Return to ensure members CARE pension records are correct on the transfer date

Please refer to our TUPE’s and Admitted Bodies page which contains some guides for prospective new employers and academies.

Internal dispute resolution procedure (IDRP)

As administrators of the Devon and Somerset Pension Funds, Peninsula Pensions is legally required to have a formal complaints procedure and ours is the IDRP which places strict obligations on both scheme employers and Peninsula Pensions.

The IDRP is a formal procedure which is in place to resolve disagreements about decisions taken regarding LGPS pension matters. The process is in two stages:

• Stage 1 is looked at by your nominated IDRP stage 1 Appeals Officer (the ‘adjudicator’)
• Stage 2 is looked at by Pensions Pensions

Please refer to our Internal dispute resolution procedure (IDRP) guide.

We are here to help you

We have a dedicated Employer & Communications team that will work with you to ensure the best possible service for all your LGPS staff, by providing guidance and support for you. We can arrange training to help you understand your responsibilities as an employer within the LGPS and what you need to do.

Please contact the Team direct by email at peninsulaemployers@devon.gov.uk to find out how they can help.