The Local Government Pension Scheme (Administration) Regulations 2008

PART 4 PENSION FUNDS AND EMPLOYERS’ PAYMENTS

The pension funds

29.  The bodies responsible for maintaining pension funds for the Scheme immediately before the commencement date must continue to maintain them unless the fund is vested in a different body by or under any enactment.

Appropriate funds

30.—(1) The appropriate fund for a member or a person who is entitled to any benefit in respect of a person who has been a member is—

(a) in the case of an active member, the fund specified for a member of his description in accordance with Schedule 4;

(b) in the case of—

(i) a deferred or pensioner member who is an active member on the commencement date or has been an active member since that date, the fund so specified for a member of his description when he ceases to be an active member, or

(ii) a person who is entitled under the Benefits Regulations in respect of a member, the fund so specified for a member of the description of such member when he ceased to be an active member;

(c) in the case of any other deferred or pensioner member, the fund specified for him by virtue of regulation 11 of the Transitional Regulations(1).

(2) Where these Regulations or the Benefits Regulations refer to payments being made without referring to the fund to which or from which they are to be made, the reference is to payments being made to or from the fund which is the appropriate fund for the member in question.

(3) Paragraph (2) does not apply where the payments made are benefits paid under an additional voluntary contributions arrangement or a shared cost additional voluntary contributions arrangement.

Pension funds: governance compliance statement

31.—(1) This regulation applies to the written statement prepared and published by an administering authority under regulation 73A of the 1997 Regulations (2).

(2) The authority must—

(a) keep the statement under review;

(b) make such revisions as are appropriate following a material change in respect of any of the matters mentioned in paragraph (3); and

(c) if revisions are made—

(i) publish the statement as revised, and

(ii) send a copy of it to the Secretary of State.

(3) The matters are—

(a) whether the authority delegates its function, or part of its function, in relation to maintaining a pension fund to a committee, a sub-committee or an officer of the authority;

(b) if it does so—

(i) the terms, structure and operational procedures of the delegation,

(ii) the frequency of any committee or sub-committee meetings,

(iii) whether such a committee or sub-committee includes representatives of employing authorities (including authorities which are not Scheme employers) or members, and, if so, whether those representatives have voting rights;

(c) the extent to which a delegation, or the absence of a delegation, complies with guidance given by the Secretary of State and, to the extent it does not so comply, the reasons for not complying.

(4) In reviewing and making revisions to the statement, the authority must consult such persons as it considers appropriate.

Admission agreement funds

32.—(1) An administering authority which has made an admission agreement may establish a further pension fund (an “admission agreement fund”) in addition to the fund maintained under regulation 29 (“the main fund”).

(2) Immediately after an authority establishes an admission agreement fund, it must give the Secretary of State written notice that it has done so.

(3) The notice must specify the admission bodies whose employees are eligible for benefits from the admission agreement fund.

(4) Where an admission agreement fund is established—

(a) the liabilities of the main fund as respects membership in employment with those specified bodies become liabilities of the admission agreement fund; and

(b) assets of such value as an actuary appointed by the appropriate administering authority determines to be appropriate must be transferred from the main fund to the admission agreement fund.

(5) When valuations under regulation 36 of both the main fund and the admission agreement fund are first obtained after the admission agreement fund is established, the administering authority must obtain a transfer statement from an actuary appointed by the authority.

(6) The transfer statement must specify whether, in the actuary’s opinion, there is a need for further assets to be transferred from the main fund to the admission agreement fund and, if so, their value.

(7) Where the transfer statement specifies that assets of a specified value need to be transferred, the administering authority must arrange for assets of that value to be transferred as soon as is reasonably practicable.

Accounts and audit

33.—(1) After any of its pension funds has been audited, an administering authority must immediately send copies of the following to each body whose employees are active members—

(a) a summary of the revenue account and balance sheet of the fund; and

(b) any report by the auditor.

(2) The pension input period for the purposes of section 238 of the Finance Act 2004(3) is the year ending on 31st March 2009 and each year ending on 31st March after that year.

Pension fund annual report

34.—(1) An administering authority must, in relation to each year beginning on 1st April 2008 and each subsequent year, prepare a document (“the pension fund annual report”) which contains—

(a) a report about the management and financial performance during the year of each of the pension funds maintained by the authority;

(b) a report explaining the authority’s investment policy for each of those funds and reviewing the performance during the year of the investments of each fund;

(c) a report of the arrangements made during the year for the administration of each of those funds;

(d) for each of those funds, a statement by the actuary who carried out the most recent valuation of the assets and liabilities of the fund in accordance with regulation 36 (actuarial valuations and certificates), of the level of funding disclosed by that valuation;

(e) the current version of the statement under regulation 31 (governance compliance statement);

(f) for each of those funds, the fund account and net asset statement with supporting notes and disclosures prepared in accordance with proper practices(4);

(g) an annual report dealing with—

(i) the extent to which the authority and the employing authorities in relation to which it is the administering authority have achieved any levels of performance set out in the pension administration strategy in accordance with regulation 65(2)(b), and

(ii) such other matters arising from its pension administration strategy as it considers appropriate;

(h) the current version of the statement referred to in regulation 35 (funding strategy statement);

(i) the current version of the statement under regulation 9A of the Local Government Pension Scheme (Management and Investment of Funds) Regulations 1998 (statement of investment principles)(5);

(j) the current version of the statement under regulation 67 (statements of policy concerning communications with members and employing authorities); and

(k) any other material which the authority considers appropriate.

(2) The authority must publish the pension fund annual report on or before 1st December following the year end.

(3) In preparing and publishing the pension fund annual report, the authority must have regard to guidance given by the Secretary of State.

Funding strategy statement

35.—(1) This regulation applies to the funding strategy statement prepared and published by an administering authority under regulation 76A of the 1997 Regulations (6).

(2) The authority must—

(a) keep the statement under review;

(b) make such revisions as are appropriate following a material change—

(i) in its policy on the matters set out in the statement, or

(ii) to the current version of its statement under regulation 9A of the Local Government Pension Scheme (Management and Investment of Funds) Regulations 1998 (statement of investment principles); and

(c) if revisions are made, publish the statement as revised.

(3) In reviewing and making revisions to the statement, the authority must—

(a) have regard to the guidance set out in the document published in March 2004 by CIPFA and called “CIPFA Pensions Panel Guidance on Preparing and Maintaining a Funding Strategy Statement (Guidance note issue No.6)”; and

(b) consult such persons as it considers appropriate.

Actuarial valuations and certificates

36.—(1) Each administering authority must obtain—

(a) an actuarial valuation of the assets and liabilities of each of its pension funds as at 31st March 2010 and in every third year afterwards;

(b) a report by an actuary in respect of the valuation; and

(c) a rates and adjustments certificate prepared by an actuary.

(2) Each of those documents must be obtained before the first anniversary of the date (“the valuation date”) as at which the valuation is made or such later date as the Secretary of State may agree.

(3) A report under paragraph (1)(b) must contain a statement of the demographic assumptions used in making the valuation; and the statement must show how the assumptions relate to the events which have actually occurred in relation to members of the Scheme since the last valuation.

(4) A rates and adjustments certificate is a certificate specifying—

(a) the common rate of employer’s contribution; and

(b) any individual adjustments,

for each year of the period of three years beginning with 1st April in the year following that in which the valuation date falls.

(5) The common rate of employer’s contribution is the amount which, in the actuary’s opinion, should be paid to the fund by all bodies whose employees contribute to it so as to secure its solvency, expressed as a percentage of the pay of their employees who are active members.

(6) The actuary must have regard to—

(a) the existing and prospective liabilities of the fund arising from circumstances common to all those bodies;

(b) the desirability of maintaining as nearly constant a common rate as possible; and

(c) the current version of the administering authority’s funding strategy statement mentioned in regulation 35.

(7) An individual adjustment is any percentage or amount by which, in the actuary’s opinion, contributions at the common rate should, in the case of a particular body, be increased or reduced by reason of any circumstances peculiar to that body.

(8) A rates and adjustments certificate must contain a statement of the assumptions on which the certificate is given as respects—

(a) the number of members who will become entitled to payment of pensions under provisions of the Scheme; and

(b) the amount of the liabilities arising in respect of such members,

during the period covered by the certificate.

(9) The authority must provide the actuary preparing a valuation or a rates and adjustments certificate with the consolidated revenue account of the fund and such other information as he requests.

Supply of copies of valuations, certificates etc

37.—(1) An administering authority must send copies of any valuation, report, certificate or revised certificate obtained under regulation 36 or 38 to—

(a) the Secretary of State;

(b) each body with employees who contribute to the fund in question; and

(c) any other body which is or may become liable to make payments to that fund.

(2) An administering authority must also send to the Secretary of State—

(a) a copy of the consolidated revenue account with which the actuary was provided under regulation 36(9); and

(b) a summary of the assets of the fund at the valuation date (unless such a summary is contained in the report under regulation 36(1)(b)).

Special circumstances where revised actuarial valuations and certificates must be obtained

38.—(1) When obtaining a transfer statement under regulation 32(5), an administering authority must also obtain from the actuary a rates and adjustments certificate for the admission agreement fund for each remaining year of the period covered by the most recent such certificate for its main fund.

(2) Where an admission agreement ceases to have effect, the administering authority which made it must obtain—

(a) an actuarial valuation as at the date it ceases of the liabilities of the fund in respect of current and former employees of the admission body which is a party to that agreement (“the outgoing admission body”); and

(b) a revision of any rates and adjustments certificate for any fund which is affected, showing the revised contributions due from that body.

(3) Where, for any reason, it is not possible to obtain revised contributions from the outgoing admission body, or from an insurer or any person providing an indemnity or bond on behalf of that body, the administering authority may obtain a further revision of any rates and adjustments certificate for the fund, showing—

(a) in a case where that body is a transferee admission body within regulation 6(2)(a) or (b), the revised contributions due from the body which is the Scheme employer in relation to that admission body; and

(b) in any other case, the revised contributions due from each employing authority which contributes to the fund.

(4) An administering authority may obtain from an actuary a certificate specifying, in the case of an admission body, the percentage or amount by which, in the actuary’s opinion—

(a) the contribution at the common rate should be adjusted; or

(b) any prior individual adjustment should be increased or reduced,

with a view to providing that the value of the assets of the fund in respect of current and former employees of that body is neither materially more nor materially less than the anticipated liabilities of the fund in respect of those employees at the date the admission agreement is to end.

(5) Paragraph (6) applies where—

(a) an administering authority agrees with an employing authority as mentioned in regulation 40(4); or

(b) it appears to an administering authority that the amount of the liabilities arising or likely to arise in respect of members in employment with an employing authority exceeds the amount specified in, or likely as a result of, the assumptions stated for that authority in a rates and adjustments certificate by virtue of regulation 36(8).

(6) The administering authority must obtain a revision of the rates and adjustments certificate concerned, showing the resulting changes as respects that employing authority.

Employer’s contributions

39.—(1) An employing authority must contribute to the appropriate fund in each year covered by a rates and adjustments certificate under regulation 36 or 38 the amount appropriate for that authority as calculated in accordance with the certificate and paragraph (4).

(2) During each of those years an employing authority must make payments to the appropriate fund on account of the amount required for the whole year.

(3) Those payments on account must—

(a) be paid at the end of the intervals determined under regulation 42; and

(b) equal the appropriate proportion of the whole amount due under paragraph (1) for the year in question.

(4) An employer’s contribution for any year is the common percentage for that year of the pay on which contributions have, during that year, been paid to the fund under regulations 18 (contributions during child-related leave), 19 (contributions during reserve forces service leave) or 21 (contributions during absences with permission) or regulation 3 of the Benefits Regulations (contributions payable by active members) by employees who are active members, increased or reduced by any individual adjustment specified for that employer for that year in the rates and adjustments certificate.

(5) The common percentage is the common rate of employer’s contribution specified in that certificate, expressed as a percentage.

(6) Where an employee—

(a) is treated under paragraph (4) of regulation 18 as if he had paid contributions; or

(b) has paid contributions during a period of maternity, paternity or adoption absence (within the meaning of that regulation),

the pay on which the common percentage is calculated is the pay the employee would have received if he had not been absent.

Employer’s payment following resolution to increase membership or award additional pension

40.—(1) This regulation applies where an employing authority makes a resolution under—

(a) regulation 12 of the Benefits Regulations (which confers power to increase the membership of an active member by an additional period); or

(b) regulation 13 of those Regulations (which confers power to award additional pension).

(2) Unless paragraph (4) applies, the employing authority must pay the appropriate sum for the person to whom the resolution relates to the appropriate fund before the expiry of the relevant period.

(3) The appropriate sum for a person is such sum as is shown as appropriate in guidance issued by the Government Actuary.

(4) This paragraph applies where the administering authority and the employing authority agree before the expiry of the relevant period that the employing authority will pay increased contributions under regulation 39 or an amount to meet the cost of the increase in membership or the additional pension.

(5) Any extra charge on the appropriate fund resulting from the resolution must be repaid to the fund by the employing authority concerned but only so far as not paid under paragraph (2) or (4).

(6) In the case of a resolution under regulation 12 of the Benefits Regulations, the additional period in question may only be counted as a period of membership if one of the conditions in paragraph (8) is met.

(7) In the case of a resolution under regulation 13 of those Regulations, a person is only entitled to the additional pension awarded if one of those conditions is met.

(8) The conditions are that either—

(a) the employing authority makes the payment required by paragraph (2) within the relevant period; or

(b) paragraph (4) applies.

(9) The relevant period is—

(a) the period of one month beginning with the date of the resolution; or

(b) such longer period as the employing authority and the administering authority agree.

(10) If neither of the conditions in paragraph (8) is met, the resolution ceases to have effect.

Employer’s further payments

41.—(1) Any extra charge on the appropriate fund resulting from a member’s becoming entitled to benefits calculated under paragraph (2)(b), (3)(b) or (4) of regulation 20 or regulation 31 of the Benefits Regulations must be repaid to the fund by the employing authority concerned.

(2) 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 retirement benefits becoming immediately payable to a member under regulation 18 or 19 of the Benefits Regulations, including the cost, as calculated by the fund’s actuary, incurred by the fund as a result of a waiver of such reduction as is referred to in regulation 18(2) of those Regulations.

Payment by employing authorities to appropriate administering authorities

42.—(1) Every employing authority must pay to the appropriate administering authority on or before such dates falling at intervals of not more than 12 months as the appropriate administering authority may determine—

(a) all amounts from time to time deducted from the pay of its employees under these Regulations;

(b) any amount it has received by deduction or otherwise under regulation 18(5), 20, 21 or 25 during the interval;

(c) any extra charge payable under regulation 40 or 41 of which it has been notified by the administering authority during the interval; and

(d) a contribution towards the cost of the administration of the fund, which shall include any amount specified in a notice given in accordance with regulation 43.

(2) But—

(a) an employing authority must pay the amounts mentioned in paragraph (1)(a) not later than the time required under section 49(8) of the Pensions Act 1995(7); and

(b) paragraph (1)(d) does not apply where the cost of the administration of the fund is paid out of the fund under regulation 5(6) of the Local Government Pensions Scheme (Management and Investment of Funds) Regulations 1998(8).

(3) Every payment under paragraph (1)(a) must be accompanied by a statement showing—

(a) the name, pay and band (as set out in column 1 of the table in regulation 3(2) of the Benefits Regulations) of each of the employing authority’s employees who is an active member;

(b) which employees are paying contributions under regulation 23(1) (payment of additional regular contributions) or 25(1) (additional voluntary contributions and shared cost additional voluntary contributions); and

(c) the amounts which represent deductions in each of the pay bands from the pay of each of the employees and the periods covered by the deductions, distinguishing amounts representing deductions for any voluntary contributions.

(4) An appropriate administering authority may direct that the information mentioned in paragraph (3) shall be given to the authority in such form and at such intervals (not exceeding 12 months) as it specifies in the direction.

(5) If an amount payable under paragraph (1)(d) cannot be settled by agreement, it must be determined by the Secretary of State.

(6) Paragraphs (1) and (3) do not apply to an employing authority which is an appropriate administering authority.

(7) An administering authority must pay to the fund of which it is the administering authority its fair share of any contribution towards the cost of the administration of the fund in circumstances where it has required a contribution towards such cost from employing authorities as referred to in paragraph (1)(d).

(8) An administering authority must also pay any additional costs due to the fund which are incurred because of its level of performance in carrying out its functions under these Regulations.

Additional costs arising from employing authority’s level of performance

43.—(1) This regulation applies where, in the opinion of the appropriate administering authority, it has incurred additional costs which should be recovered from an employing authority because of that employing authority’s level of performance in carrying out its functions under these Regulations or the Benefits Regulations.

(2) The administering authority may give written notice to the employing authority stating—

(a) the administering authority’s reasons for forming the opinion mentioned in paragraph (1);

(b) the authority’s opinion that the employing authority’s contribution under regulation 42(1)(d) should include an amount specified in the notice in respect of the additional costs attributable to that authority’s level of performance;

(c) the basis on which the specified amount is calculated; and

(d) where the administering authority has prepared a pension administration strategy under regulation 65, the provisions of the strategy which are relevant to the decision to give the notice and to the matters in sub-paragraph (a), (b) or (c).

Interest

44.—(1) An administering authority may require an administering or employing authority from which payment of any amount due under regulations 39 to 42 (employers’ contributions or payments) or regulation 86 (changes of fund) is overdue to pay interest on that amount.

(2) The date on which any amount due under regulations 39 to 41 is overdue is the date one month from the date specified by the administering authority for payment.

(3) The date on which any amount due under regulation 42 (other than any extra charge payable under regulation 40 or 41 and referred to in regulation 42(1)(c)) is overdue is the day after the date when that payment is due.

(4) Interest due under paragraph (1) or payable to a person under regulation 45(5) (deduction and recovery of member’s contributions), 46(2) (rights to return of contributions) or 51 (interest on late payment of certain benefits) must be calculated at one per cent. above base rate on a day to day basis from the due date to the date of payment and compounded with three-monthly rests.

(5) Interest on any amount due in respect of regulation 86 shall be calculated in accordance with guidance issued by the Government Actuary.

Deduction and recovery of member’s contributions

45.—(1) An employing authority may deduct from a person’s pay any contributions payable by him under these Regulations or the Benefits Regulations.

(2) Sums payable under regulation 19(2) or (5) (reserve forces) may be deducted by the member’s former employer from any payment made to him under Part 5 of the Reserve and Auxiliary Forces (Protection of Civil Interests) Act 1951(9), to the extent that they are payable in respect of the same period.

(3) The appropriate administering authority may recover any contributions or sum remaining due and not deducted under paragraph (1) or (2)—

(a) as a simple contract debt in any court of competent jurisdiction; or

(b) by deducting it from any payment by way of benefits to or in respect of the person in question under these Regulations or the Benefits Regulations.

(4) But the sums mentioned in paragraph (2) are only recoverable under paragraph (3) if unpaid for 12 months after the person ceases to perform relevant reserve forces service.

(5) If—

(a) an employing authority deduct in error any amount in respect of contributions from a person’s pay or any other sum due to him; and

(b) the amount has not been repaid to him before the expiry of the period of one month beginning with the date of deduction,

the appropriate body must pay him interest on that amount; and the due date for the calculation of the interest under regulation 44(4) is the date of deduction.

(6) Where the employee’s contributions have been paid into the appropriate fund, the repayment and interest must be made out of that fund.

(7) The “appropriate body” for the purpose of paragraph (5) is—

(a) the appropriate administering authority where the employee’s contributions have been paid into the appropriate fund; and

(b) the person’s employing authority where the employee’s contributions have not yet been paid into the appropriate fund.

Rights to return of contributions

46.—(1) If a member with less than three months’ membership ceases to be employed by an employing authority or to be an active member without becoming entitled to a retirement pension he is entitled to be repaid his contributions from the appropriate fund.

(2) If repayment of the contributions has not been made before the expiry of the period of one year beginning with the date when active membership ceases, the person is entitled to interest on the repayment which should have been made, calculated as provided in regulation 44(4), the due date being the date when active membership ceased.

(3) A person who is entitled to a repayment of contributions under paragraph (1) may waive his entitlement for any period and, if he becomes an active member again before the expiry of that period, he shall cease to be so entitled (but without prejudice to any entitlement arising later under that paragraph in respect of those contributions).

(4) A person who continues as an active member in another employment he held concurrently with the employment in which he has ceased to be an active member may elect for an amount equal to the repayment to be treated as contributions to the Scheme as respects his membership in that concurrent employment, entitling him to a period of membership equal to the period of membership in the employment which has ceased, as reduced under regulation 7(3) of the Benefits Regulations if the employment which has ceased was part-time, multiplied by the fraction—

whole-time rate of pay of the employment which has ceased

whole-time rate of pay of the employment which is continuing

where the rate of pay in each case is the annual rate of pay on the last day of employment in the employment that has ceased.

(5) A person who elects under paragraph (4) ceases to be entitled to that repayment (but without prejudice to any entitlement arising later in respect of the concurrent employment).

Exclusion of rights to return of contributions

47.—(1) A person is not entitled to a repayment under regulation 46 if—

(a) he becomes a member again within one month and one day;

(b) he left his employment because of—

(i) an offence of a fraudulent character, or

(ii) grave misconduct,

in connection with his employment; or

(c) regulation 79(2) (right to payment out of fund authority’s pension fund) applies.

(2) But where paragraph (1)(b) applies, the employing authority may direct the payment out of the appropriate fund to him or, in a case of an offence of a fraudulent character, to him or to his spouse, civil partner, nominated cohabiting partner or any dependant of his, of a sum equal to all or part of his contributions.

(3) A person is not entitled to a repayment under regulation 46(1) if a transfer value has been credited to the appropriate fund for him.

(4) A person ceases to be entitled to such a repayment if he returns to local government employment before receiving it.

(1)

S.I. 2008/238.

(2)

Regulation 73A was inserted by S.I.2005/3199 and substituted by S.I.2007/1561.

(3)

2004 c.12.

(4)

For “proper practices” see section 21 of the Local Government Act 2003 (c.26) and regulation 31 of S.I. 2003/3146.

(5)

S.I. 1998/1831; regulation 9A was inserted by S.I. 1999/3259 and amended by S.I. 2002/1852.

(6)

Regulation 76A was inserted by S.I.2004/573.

(7)

1995 c.26.

(8)

S.I. 1998/1831.

(9)

1951c.65.