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The Local Government Pension Scheme (Amendment) (No. 2) Regulations 2004

S.I. 2004/3372 · Made 17 December 2004

Original text. legislation.gov.uk does not revise statutory instruments, so later amendments are not shown here. Changes made to it are listed under each provision when known.

PENSIONS, ENGLAND AND WALES

Made 17th December 2004

Laid before Parliament 22nd December 2004

Coming into force 1st April 2005

The First Secretary of State, in exercise of the powers conferred on him by sections 7 and 12 of the Superannuation Act 1972f1 and of all other powers enabling him in that behalf, after consultation with such associations of local authorities as appeared to him to be concerned, the local authorities with whom consultation appeared to him to be desirable and such representatives of other persons likely to be affected by the Regulations as appeared to him to be appropriate, hereby makes the following Regulations:

Annotations to the whole text

Footnotes

f1

1972 c. 11; section 12 was amended by section 10 of the Pensions (Miscellaneous Provisions) Act 1990 (c. 7).

Contents

  1. 1Citation, commencement, interpretation and extent
  2. 2Amendment of Regulations
  3. 3Normal retirement
  4. 4Redundancy etc.
  5. 5Other early leavers: deferred retirement benefits and elections for early payment
  6. 6Re-employed and rejoining deferred members
  7. 7Power of employing authority to increase total membership
  8. 8Payments to increase total membership
  9. 9Employer’s further payments
  10. 10Commencement of pensions
  11. 11Right to count credited period
  12. 12Credited periods for transferring members with mis-sold pension rights
  13. 13Rights as to service not matched by credited period
  14. 14Excluded membership
  15. 15Former members of the Metropolitan Civil Staffs Superannuation Scheme
  16. 16Transitional provisions and savings
  17. 17Right to opt out
  18. Signature
  19. Schedule: TRANSITIONAL PROVISIONS AND SAVINGS
  20. Redundancy
  21. 1Paragraph 1
  22. Other early leavers: elections under regulation 31 where the member is aged 50 or more on 31st March 2005
  23. 2Paragraph 2
  24. 3Paragraph 3
  25. 5Paragraph 5
  26. Other early leavers: other elections under regulation 31
  27. 6Paragraph 6
  28. The 85 year rule
  29. 7Paragraph 7
  30. 8Paragraph 8
  31. Payments to increase total membership
  32. 9Paragraph 9
  33. Revenue restrictions
  34. 10Paragraph 10
  35. Saving for transitional and incidental provisions
  36. 11Paragraph 11
  37. Explanatory note

1Citation, commencement, interpretation and extent

(1)

These Regulations may be cited as the Local Government Pension Scheme (Amendment) (No. 2) Regulations 2004.

(2)

These Regulations shall come into force on 1st April 2005.

(3)

In these Regulations, “the principal Regulations” means the Local Government Pension Scheme Regulations 1997f1.

(4)

These Regulations extend to England and Walesf2.

2Amendment of Regulations

The principal Regulations shall be amended in accordance with regulations 3 to 15 of these Regulations.

3Normal retirement

In regulation 25, delete paragraph (3A).

4Redundancy etc.

In regulation 26(1), for “50” substitute “55”.

5Other early leavers: deferred retirement benefits and elections for early payment

In regulation 31—

(a)

in paragraph (1), for “50” substitute “55”;

(b)

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

(c)

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

6Re-employed and rejoining deferred members

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

7Power of employing authority to increase total membership

In regulation 52, after paragraph (10), insert—

“(11)

An additional period arising from a resolution under this regulation on or after 1st April 2005 shall be treated as a period of membership after that date.”.

8Payments to increase total membership

In regulation 55(10), for sub-paragraphs (a) and (b) substitute “his NRD”.

9Employer’s further payments

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

“(5)

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

10Commencement of pensions

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

11Right to count credited period

In regulation 122—

(a)

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

(b)

after paragraph (6), insert—

“(6A)

A credited period arising from a request to accept a transfer value under regulation 121 which is made by a person who was a member immediately before 1st April 2005 shall be treated as a period of membership before that date.

(6B)

A credited period arising from a request to accept a transfer value under regulation 121 which is made by a person who becomes a member on or after 1st April 2005 shall be treated as a period of membership after that date.”.

12Credited periods for transferring members with mis-sold pension rights

In regulation 122Af1, add at the end of paragraph (3) “(and regulation 122(6B) does not apply to a transfer value credited under this regulation)”.

13Rights as to service not matched by credited period

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

14Excluded membership

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

15Former members of the Metropolitan Civil Staffs Superannuation Scheme

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

16Transitional provisions and savings

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

17Right to opt out

(1)

Where—

(a)

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

(b)

that relevant beneficiary so elects by notice in writing given to the appropriate administering authority within the period of six months beginning with 1st April 2005,

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

(2)

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

(a)

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

(b)

dies while in such employment,

before 1st April 2005.

Signature

Signed by authority of the First Secretary of State

Phil Hope

Parliamentary Under Secretary of State

17th December 2004

1

Nothing in these Regulations shall affect the right of any member, who is aged 50 or more on 31st March 2005, to a pension and grant payable in accordance with regulation 26 of the principal Regulations (redundancy etc.).

2

Nothing in these Regulations shall affect the right of any member, who is aged 50 or more on 31st March 2005, to elect to receive the immediate payment of retirement benefits in accordance with regulation 31(1) of the principal Regulations (other early leavers: deferred retirement benefits and elections for early payment).

3

But a member to whom paragraph 2 of this Schedule applies shall have his retirement benefits reduced in accordance with regulation 31(4) of the principal Regulations (as amended by regulation 5 of these Regulations) except in accordance with paragraphs 4 and 5 of this Schedule.4. Where a member to whom paragraph 2 of this Schedule applies—

(a)

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

(b)

satisfies the 85 year rule,

that part of his retirement pension and grant which is calculated by reference to any period of membership prior to the relevant date shall not be reduced in accordance with regulation 31(4) of the principal Regulations (as amended by regulation 5 of these Regulations).

5

For the purposes of paragraph 4 of this Schedule, the relevant date is—

(a)

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

(i)

1st April 2013, and

(ii)

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

(b)

in any other case, 1st April 2005.

6

Where a member, who was a member prior to 1st April 2005 and to whom paragraph 2 of this Schedule does not apply,—

(a)

elects to receive the immediate payment of retirement benefits under regulation 31(1) of the principal Regulations (as amended by regulation 5 of these Regulations); and

(b)

satisfies the 85 year rule,

that part of his retirement pension and grant which is calculated by reference to any period of membership prior to 1st April 2005 shall not be reduced in accordance with regulation 31(4) of the principal Regulations (as amended by regulation 5 of these Regulations).

7

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

(a)

his age in whole years on the date his local government employment ends or the date he elects under regulation 31(1) if later;

(b)

his total membership in whole years;

(c)

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

(d)

in the case of a person who was a member immediately before 1st April 1998, any qualifying period counted by virtue of regulation 123 which was awarded before 1st April 2005,

is 85 years or more.

8

Where a member who may elect under regulation 32(1) of the principal Regulations (re-employed and rejoining deferred members) does not do so or does not elect as respects all periods of his membership, in applying paragraph 7 of this Schedule as respects any later membership, his total membership excludes unaggregated periods.

9

(1)

This paragraph applies to a member who—

(a)

prior to 1st April 2005 elected to make additional contributions to the Scheme to increase his total membership under regulation 55(1) of the principal Regulations (payments to increase total membership); and

(b)

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

(2)

Where a member to whom this paragraph applies—

(a)

continues paying the additional contributions until the assumed date; and

(b)

retires on or after the assumed date,

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

(3)

An additional period counted as a period of total membership as a result of this paragraph shall be treated as a period of membership prior to 1st April 2005.

10

Nothing in these Regulations shall affect the right of any Class B or Class C member under Schedule 4 of the principal Regulations (revenue restrictions) to count more than 40 years' service in calculating his maximum benefit entitlement where, but for the changes made by these Regulations, he would have been taken as retiring after his NRD.

11

So far as it is necessary to give effect to the entitlements in this Schedule and to make provision for any matters incidental to them, the principal Regulations shall be treated as if they had continued in effect without the amendments made by these Regulations.

Explanatory note

(This note is not part of the Regulations)

These Regulations amend the Local Government Pension Scheme Regulations 1997 (the “principal Regulations”) to have effect from 1st April 2005. The main changes are as follows—

  • to raise the normal retirement date for members who joined the scheme prior to 1st April 1998, to their 65th birthday (regulation 25 of the principal Regulations, as amended by regulation 3);

  • to raise the age at which a member will be entitled to the immediate payment of retirement benefits following redundancy from 50 to 55 (regulation 26 of the principal Regulations, as amended by regulation 4);

  • to raise the age at which a member can elect to receive early payment of their retirement benefits from 50 to 55 and to provide that where an early leaver retires and elects to receive benefits prior to their 65th birthday, those benefits are reduced by the amounts shown as appropriate in guidance issued by the Government Actuary (regulation 31 of the principal Regulations, as amended by regulation 5); and

  • to provide that an administering authority may require an employing authority to make additional payments to the appropriate fund where there is an extra charge on the fund resulting from a pension and retirement grant becoming payable to a member under regulation 26, 31(1) or 31(6) of the principal Regulations (regulation 80 of the principal Regulations, as amended by regulation 9).

The effect of these changes is to remove the “85-year rule” from the Scheme. This allowed benefits to be paid before age 65 without being reduced to reflect the fact that they were being paid early, provided that the member’s age and period of Scheme membership totalled 85 years or more.

The Schedule to these Regulations provides for transitional arrangements for members who were members of the Scheme before 1st April 2005. These provide that:

  • the minimum age that benefits may be paid will continue to be aged 50 for members who are 50 or more on 31st March 2005;

  • benefits accrued prior to 1st April 2013 will not be reduced for members who will be aged 60 or more on 31st March 2013 and who satisfy the 85 year rule and elect to receive their benefits under regulation 31(1); and

  • benefits accrued prior to 1st April 2005 will not be reduced for other members who meet the 85 year rule and elect to receive their benefits under regulation 31(1).

Further information and examples of how these Regulations may affect certain members can be found on the website of the Office of the Deputy Prime Minister, which is available at http://www.xoq83.dial.pipex.com.

Regulation 17 allows certain deferred and pensioner members and certain persons who may be in receipt of survivor benefits, who would be placed in a worse position by amendments made in these Regulations, to elect for the amendments not to apply in their case.

A full regulatory impact assessment has not been produced for this instrument, as it has no impact on the costs of businesses, charities or voluntary bodies. The effect of the Regulations is to mitigate the increased financial cost arising because of average increases to the life expectancy of scheme members, and they are therefore expected to be cost neutral on public bodies participating in the Local Government Pension Scheme.