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A copy of Bexley's Discretions Policies can be downloaded and printed
Discretionary Powers in relation to the Local Government Pension Scheme (LGPS)
All Scheme employers, and Administering Authorities, are required to specifically consider a number of areas and to publish policies accordingly. Here are the policies currently in force, updated December 2008 , that have been determined by London Borough of Bexley who retain the right to change the policies at any time.
The policies originally made in April 1998 were published in July 1998 to all members. A copy of the document is still available at the moment and can be obtained by contacting TOPS Section (Pensions), London Borough of Bexley.
Decisions Taken by Bexley Council (as an Employing Authority) in relation to the Discretionary Powers under the Local Government Pension Scheme (LGPS)
Note: All other employers in the Bexley Council Pension Fund will make their own decisions in relation to these discretions
Widower’s Buy-Back Contracts Deemed Complete
Widower’s Buy-Back - Waiving of Time Limits
Early Payment of Pension Benefits on the request of the Member (Active Members)
Early Payment of Pension Benefits on the request of the Member (Deferred Members)
Augmentation of Local Government Pension Scheme Membership
Establishment of Shared Cost Additional Voluntary Contributions (SCAVC’s) Schemes
Certificates of Protection
Flexible Retirement
Additional Pension
Industrial Injury
Decisions Taken by Bexley Council (as an Administering Authority) in relation to the Discretionary Powers under the Local Government Pension Scheme (LGPS)
Conversion of Periods Credited Under Discretionary Payments Regulations Etc into Scheme Membership
Re-Employed Pensioners - Abatement of Pension
Continuation of Spouse's Pension on Cohabitation or Remarriage where Scheme Member Left Before 1 April 1998
WIDOWER’S BUY-BACK CONTRACTS DEEMED COMPLETE
Before April 1988 there was no general provision in the Local Government Pension Scheme (LGPS) to pay a widower’s pension in the event of death of a female Scheme member. With effect from 6 April 1988 the Scheme was amended to provide widowers’ pensions automatically, but with the benefits assessed by reference only to service accrued from that date. Subsequently, however, female contributors were given a time-limited option to purchase an eventual widower’s pension based on any service accrued before April 1988. This is known as a ‘Widower’s Buy-back Contract’.Discretion
Widowers’ buy-back contracts back to 1 April 1972 ceased to have effect. The regulations required that all employing authorities pass a resolution deeming the period of service being purchased from that date as fully paid.
Decision
London Borough of Bexley resolved to deem all widowers’ buy-back contracts in respect of service since 1 April 1972 complete on 31 March 1998.
WIDOWER’S BUY-BACK - WAIVING OF TIME LIMITS
The previous widower’s buy-back provisions contained time limits within which elections had to be made. These were twelve months after the introduction of the provisions (February 1992), or the date of a woman’s marriage, whichever was the later. Administering authorities also had the discretion to extend this time limit.Discretion
This discretion transferred to employers, but limited the service in respect of which the discretion could be exercised to service on or after 1 April 1972. Where a belated election was accepted, the employer must resolve to treat the resultant buy-back as fully paid up in the same way as for elections in place at 31 March 1998. The intention was to give those employers who wished, the ability to provide ‘free’ (for the employee) widower’s cover in respect of service between April 1972 and April 1988.
Decision
London Borough of Bexley resolved to deem that all female Scheme members have elected to ‘buy back’ their pensionable service between 1 April 1972 and 5 April 1988 for the purposes of widowers’ benefits.
EARLY PAYMENT OF PENSION BENEFITS ON THE REQUEST OF THE MEMBER (ACTIVE MEMBERS)
Scheme members can receive payment of benefits if they retire voluntarily at or after age 60.Apart from Regulation 31, benefits cannot be taken before age 60 unless the employee is retired on health grounds, made redundant or required to leave in the interests of the efficiency of the service.
Discretion
Scheme members who elect to leave voluntarily (i.e. by giving notice themselves), between ages 55 - 60 years, (or in the case of a person who is a member on 31st March 2008, and who makes such a request before 31st March 2010 between age 50 and 60) may receive premature payment of their benefits, subject to their employer’s consent. The benefits that they receive may be subject to percentage reductions to reflect early payment and the fact that the pension is being paid for longer.
Decision
London Borough of Bexley resolved to make use of this discretion only where there is clear financial or operational advantage for doing so. Each case will be the subject of individual consideration with elected Members’ decisions required for Member level appointments and above. Consideration for other cases has been delegated to the appropriate Designated Officer in consultation with the Deputy Chief Executive and Director of Finance and Business Services.
EARLY PAYMENT OF PENSION BENEFITS ON THE REQUEST OF THE MEMBER (DEFERRED MEMBERS)
Scheme members who cease employment with at least two years’ pensionable service, but are not eligible to take immediate payment of benefits, become entitled to deferred benefits, i.e. payments made later. This takes the form of a pension and lump sum, calculated by reference to the accrued pensionable service and these benefits usually become eligible for payment from age 60.Discretion
Former Scheme member (only those who became ‘deferred pensioners’ after 31 March
1998) may elect to receive payment of the benefits between ages 55 to 60, (or in the case of a person who makes such a request before 31st March 2010 between age 50 and 60), but this is subject to the consent of their former employer. The benefits accrued at the date of election may be subject to percentage reductions to reflect early payment and the fact that the pension is being paid for longer.
Decision
London Borough of Bexley resolved to make early payment of a deferred pension only on compassionate grounds. All decisions are to be taken by elected Members.
AUGMENTATION OF LOCAL GOVERNMENT PENSION SCHEME MEMBERSHIP
Discretion
Under the provisions of the Local Government Pension Scheme the Council may resolve to increase the total membership of an active member. A member’s total additional membership (including additional membership in respect of different employments) must not exceed –
- 6 2/3rds years; or
- the period by which the member’s total membership falls short of the total membership the member will have if he continues as an active member until he is 65; whichever is the shortest.
Local Government Pension Scheme Regulations 1997 - Regulation 52
Decision
London Borough of Bexley resolved that this discretion would only be used in the following circumstances.
For new Scheme members
Only where exceptional difficulties are experienced in recruiting staff.
As a Retention Measure
In exceptional circumstances when it would be beneficial to the organisation, for example to encourage a key employee to stay who might otherwise choose to leave at times of uncertainty or once they reach voluntary retirement age. Consideration will only be given to the use of augmentation in these circumstances:-
- during times of uncertainty or re-organisation; and
- where a valuable worker on a key project needs to be retained who might otherwise leave; and
- where retention of the employee would ensure stability in times of a reducing workforce.
On Termination of Employment
Only where there is a clear financial or operational advantage or compassionate grounds are appropriate.
If a decision to augment scheme membership is agreed, the amount of service that will be awarded will be limited to a maximum of 5 years.
The amount of augmented service to be awarded will be determined on a case-by-case basis, depending upon the individual circumstances, and with due consideration to the operational and financial advantage of the London Borough of Bexley. Only in extremely rare cases will the maximum be awarded.
The Deputy Chief Executive and Director of Finance and Business Services, in consultation with the relevant Director, has delegated authority to agree to augmentation of LGPS pensionable service, (except for those posts which are subject to Member level appointment where a Member decision will still be required). The cost of augmentation will be borne by the employing Department and not by the pension fund.
ESTABLISHMENT OF SHARED COST ADDITIONAL VOLUNTARY CONTRIBUTIONS (SCAVCS) SCHEMES
Under the regulations, Scheme members have the option to pay Additional Voluntary Contributions (AVCs) into the London Borough of Bexley’s ‘in-house’ AVC scheme. This allows them to increase their eventual retirement benefits and/or to increase the value of the lump sum payable in the event of their death in service.
Discretion
In addition to these provisions, the 1997 regulations made a further provision that enabled employers, at their discretion, to establish and maintain SCAVC arrangements whereby both the Scheme member and the employer contribute to increase the member's eventual retirement benefits and/or death benefits.
Decision
London Borough of Bexley resolved not to make use of discretion to set up and maintain SCAVC arrangements. This is because any use of this discretion would increase their costs and there was already ample opportunity both within the Regulations and outside for Scheme members to increase their benefits if they so wished.
CERTIFICATES OF PROTECTION
N.B. This Discretion was removed from the Scheme with effect from 1st April 2008
As pension benefits are usually based on pensionable pay earned in the final year, a pay reduction, pay-freeze, or restricted pay increase policy can adversely affect the level of benefits paid at retirement.
The 1995 Scheme had a provision whereby, at the employee’s request, a certificate could be issued which protected the Scheme member’s pay for pension purposes. This applied only where a reduction in pay had occurred.
The effect was that eventual benefits were based on a higher pensionable remuneration than that on which contributions had been paid and Pensions Increase was applied immediately to up-rate the protected figure to values current at retirement.
Discretion
The 1997 regulations allowed employers to issue a Certificate of Protection, with or without a formal application from the employee, in cases where pay was permanently reduced, frozen or increases were restricted in order to avoid eventual benefits being adversely affected.
Employing authorities did not need to issue a certificate if a Scheme member did not apply for one within 12 months after the date of the event.
Decision
London Borough of Bexley resolved to issue a Certificate of Protection automatically in all cases where pay is permanently reduced or frozen.
FLEXIBLE RETIREMENT
Discretion
Following tax regulation changes from 5 April 2006 the option of Flexible Retirement was introduced into the Local Government Pension Scheme. This allows an active scheme member to elect to receive their accrued pension benefits from the age of 55 (or in the case of a person who is a member on 31st March 2008, and who makes such a request before 31st March 2010 between age 50 and 60) if, with employers consent, they take a reduction in their hours or grade. (Note: this option should not be confused with allowing an employee to reduce their hours leading up to retirement without also wishing to take their pension benefits).
If the benefits are put into payment before the age of 65 they will be actuarially reduced. The employer may, however, choose to waive any reduction, in whole or in part. The costs of waiving any reduction would need to be paid into the Pension Fund and would be calculated by the Actuary.
Decision
London Borough of Bexley resolved that early release of pension benefits under Flexible Retirement be permitted for LGPS employees with due consideration to the impact on business and service delivery; Delegation was given to the appropriate Designated Officer in consultation with the Deputy Chief Executive and Director of Finance and Business Services to agree to the early release of pension benefits under flexible retirement for posts below Member Level Appointment; The Deputy Chief Executive and Director of Finance and Business Services will consider the strain on the pension fund of any request and ensure that adequate provision is made to address this through the relevant staffing budget; Early release of pension benefits under flexible retirement for posts at Member Level Appointment level may only be agreed by Members; and Consideration will not be given to waiving the actuarial reduction, in whole or in part, of early payment of pension benefits under flexible retirement.
ADDITIONAL PENSION
Discretion
From April 2008 the Scheme regulations give employers the discretion to award members additional pension of not more than £5,000 per year payable from the same date as their normal pension.
Decision
London Borough of Bexley resolved not to make use of discretion to award additional pension in any circumstances.
CONVERSION OF PERIODS CREDITED UNDER DISCRETIONARY PAYMENTS REGULATIONS ETC INTO SCHEME MEMBERSHIP
When a Scheme member was retired on the grounds of redundancy or in the interest of the efficiency of the service, they could be awarded compensatory added years under the Local Government (Discretionary Payments) Regulations 1996, which were directly funded by the employer on an ongoing basis.
Discretion
As an alternative, the 1997 Scheme allowed the employer to resolve that extra service previously awarded be converted into Scheme membership, by payment to the Fund. The additional benefits then become chargeable to the Fund. So that Fund employers could make an informed resolution regarding the use of this discretion, the Council, as administering authority, had to resolve whether it would require payment to the Fund to be made by way of a lump sum payment at the time of conversion, or if it would permit payment to be made by way of additional employers’ contributions over a period of time.
Resolution Passed by London Borough of Bexley as an Employing Authority
Resolved to continue with the existing practice of charging added years previously granted under the discretionary regulations to the General Fund on an annual basis.
Resolution Passed by London Borough of Bexley as the Administering Authority
Resolved as the Administering Authority to permit other employing bodies who chose to make use of this Regulation to make payment by way of additional contributions over a period of years to be determined on a case-by-case basis.
RE-EMPLOYED PENSIONERS - ABATEMENT OF PENSION
Under the old Regulations, when a pensioner became re-employed with any employer who was eligible to be an employing body in the LGPS, the pension in payment had to be reduced or suspended when the new pay plus pension was higher than the pay of the employment from which the individual retired. Adjustments were made for inflation since retirement.Discretion
The 1997 regulations require the administering authority (on behalf of the Fund as a whole) to formulate a policy on the extent to which a pension should be abated.
Decision
London Borough of Bexley resolved to continue to abate pensions in line with the provisions of the 1995 Regulations until normal retirement age (60).
CONTINUATION OF SPOUSE'S PENSION ON COHABITATION OR REMARRIAGE WHERE SCHEME MEMBER LEFT BEFORE 1 APRIL 1998
The LGPS regulations provide that when a contributor or pensioner dies, a widow’s or widower’s pension is payable to his or her spouse. Under the 1995 Scheme, this pension is payable for life unless the widow or widower later co-habits or remarries, in which case the pension ceased. Where the widow or widower marries or co-habits with another Scheme widow or widower only one pension ceased. The administering authority (Bexley) could exercise a discretion to reinstate the pension should the re-marriage or co-habitation cease for any reason. The practice at Bexley was always to do so.
The 1997 Scheme removes the re-marriage and co-habitation restrictions and allows spouses’ pensions to be paid for life, irrespective of the personal situation of the surviving spouse, but only where the member leaves the Scheme on or after 1 April 1998. This will result in different treatment for surviving spouses depending on when their husband or wife left the Scheme.
Discretion
The 1997 Transitional Provisions give the administering authority the power (on behalf of the Fund as a whole) to resolve that all spouses’ pensions paid from the Fund will continue in the event of co-habitation or re-marriage commencing on or after 1 April 1998, where their husband or wife left the scheme prior to 1 April 1998.
Decision
Resolved to continue payment of spouse’s pensions where re-marriage or cohabitation occurs after 31 March 1998, regardless of date of leaving.
INDUSTRIAL INJURY
Discretion
Determined under the Local Government (Discretionary Payments) (Injury Allowances) Regulations 2011.
Decision
The Council may consider making a payment where the injury or disease has been certified by an Independent Registered Medical Practitioner (via the Occupational Health Service) as:
The allowance is payable as an annual amount which is paid monthly, funded by the devolved staffing budget. The amount is reviewable and can be reduced or stopped altogether if the individual becomes capable of working again. Contributory negligence may also reduce the allowance.
The calculation for an allowance is based on:- A � B x C
A = the rate of remuneration then the individual ceased to be employed*
B = minus the income from all sources, including pension, benefits and allowances
C = multiplied by the percentage disability determined by the Department for Social Security
* If remuneration has been reduced because of absence, the rate that would have applied if the individual had not been absent should be used.
The allowance plus other income is not to exceed 85% of the individuals annual rate of remuneration on ceasing employment.
An individual may ask for the decision to be reconsidered through the Internal Dispute Resolution Procedure (IDRP). Time limits apply.