NON-PROTECTED
sportscotland
Human Resources Toolkit
Employer Discretions under the Local Government Pension Scheme
1.0Introduction
1.1.sportscotland is an admitted body into the Local Government Pension Scheme administered by the Strathclyde Pension Fund, and all existing and new sportscotland staff are eligible to join this scheme.
1.2.This is a statutory scheme established and governed by the following legislation:
- The Local Government Pension Scheme (Benefits, Membership and Contributions) (Scotland) Regulations 2008 (the ‘Benefit Regulations’);
- The Local Government Pension Scheme (Administration) (Scotland) Regulations 2008 (the ‘Administration Regulations’);
- The Local Government Pension Scheme (Transitional Provisions) (Scotland) Regulations 2008.
- The Local Government Pension Scheme (Discretionary Payments and Injury Benefits) (Scotland) Regulations 1998 (as amended)
1.3.These regulations permit sportscotland to exercise discretion on certain aspects of the application of the pension scheme and require the organisation to set out a policy in relation to these discretions and to keep such a policy under regular review.
2.0Scope of Policy
2.1This policy relates to all members of staff employed by sportscotland who are member of the Local Government Pension Scheme administered by the Strathclyde Pension Fund or who are eligible for membership. It provides specific information on the key areas where sportscotland has the option to exercise discretion including the following:
- Decide which employees to nominate for membership of the fund;
- Determine the rate of the employee’s contribution;
- Specify Pensionable Pay and Benefits
- Award of additional years’ membership;
- Award of additional pension to members;
- Flexible retirement;
- Early retirement between 55 and 60 years;
- Late application for payment of optional contributions;
- Shared cost AVCs;
- Transfers of previous pension benefits;
- Forfeiture of Pension Rights After Conviction;
- Recovery due to Misconduct;
- Appeals.
2.2These areas must be specifically addressed in accordance with Regulation 61(2) of the Local Government Pension Scheme (Administration) (Scotland) Regulations 2008.
2.3sportscotland also has a few members of staff in the Teachers Pension Scheme administered by the Scottish Public Pensions Agency. Where a similar provision or discretion exists within the Teachers Pension Scheme the policy set out in this document will also apply. Entry to this scheme is now closed to new members.
3.0Employers Discretions
3.1Discretion: Decide which employees to nominate for membership of the pension fund
All employees of sportscotland who meet the necessary criteriaare automatically opted in to membership of the Strathclyde Pension Fund under the pension autoenrolment regulations (commencing in February 2014). They have the option to opt-out of this should they wish to do so, however the opt-in process will be repeated every three years,
3.2Discretion:Determine the rate of employee’s contribution
The employee’s rate of contributions is determined in accordance with Regulation B(4) of The Local Government Pension Scheme (Benefits, Membership and Contributions) (Scotland) Regulations 2008 (as amended) and guidance produced by Scottish Ministers. In effect this is not discretionary for sportscotland.
Employee Contribution rates are set as a tiered percentage of gross annual pensionable salary as at 31 March each year. Rates are effective from 1 April each year and on an annual basis, all members of staff participating in the scheme will have their new contribution rate communicated to them via their payslip. Rates remain in effect for a full twelve month period.For part-time staff the contribution rate is based on the full-time equivalent salary for the post held, but the amount of contribution is based on actual salary.
3.3Discretion: Specify Pensionable Pay and Benefits
All the salary, wages, fees and other payments paid to the employee for his or her own use in respect of the employee’s employment will be pensionable. Elements of pay otherwise received by anemployee will only be pensionable if specified as such in the employee’s contract of employment.
3.4Discretion: Augment the membership of an active member
The Scheme Regulations enable sportscotland to exercise discretion to make an additional payment to the scheme to award a member additional years’ membership – not exceeding 6 2/3rd years, thereby increasing their total membership.
sportscotlanddoes not have a general policy of exercising this discretion.However individual cases will be considered on their merits and, in exceptional circumstances, where financial or operational advantages can be demonstrated, the Senior Management Team may make a written resolution to award additional membership.
3.5Discretion: Award additional pension toan active member
sportscotland has the discretion to award additional pension contributions above the normal employer contribution rate to any member of the scheme, where any additional payment is not more than £5,000 per annum.
sportscotland does not have a general policy of exercising this discretion.However individual cases will be considered on their merits and, in exceptional circumstances, where financial or operational advantages can be demonstrated, the Senior Management Team may make a written resolution to award additional membership.
3.6Discretion: Flexible Retirement
Regulation 18 of the Regulations enables a member of the scheme aged 55 or over to request early payment of some or all of his or her retirement benefits and to continue working where the member of staff has also reduced his or her working hours and/or grade. Early payment of retirement benefits between the ages of 55 and 60 years are subject to sportscotland’s agreement. A reduction in working in hours and/or grade in relation to a flexible retirement request requires the sportscotland’s agreement in all cases.
Where a member of staff wishes to make an application for flexible retirement and wishes to reduce his or her working hours, there must be a minimum reduction of 20% in the member of staff’s contracted working hours.
sportscotland will not have a general policy of agreeing to requests for flexible retirement and will consider all applications on an individual basis. Where such an arrangement can be demonstrated to be in the organisation’s operational or financial interests, sportscotland may exercise discretion to permit flexible retirement.
In cases of flexible retirement, the pension benefits to which a scheme member would be entitled would be based on his or her total scheme membership to the date on which pension payments were put into effect, not the member of staff’s normal date of retirement. Under the provisions of the scheme, such early payment could result in a reduction being applied to the member of staff’s pension benefits. Should sportscotland agree to any request for flexible retirement, it would not normally waive any such reduction, in whole or in part, as sportscotland would be required to bear the financial obligation of meeting any additional costs.
3.7Discretion:Voluntary Early Retirement between 55 and 60 years
A member of the scheme who is aged 55 or over provided he or she has left employment can ask for early payment of pension benefits. However, where the member is under 60 years, it is atsportscotland’s discretion to agree to early payment of pension benefits, as sportscotland must bear the increased strain costs of early payment. Any benefits paid to a scheme member under such an arrangement would be based on his or her scheme membership to date of leaving only, not to the normal retirement date and the member’s pension and any lump sum payment would be reduced under the scheme provisions.
sportscotland will not have a general early retirement policy, but will consider applications on an individual basis. Under the terms of Regulation 30 of the Local Government Scheme (Benefits, Membership and Contributions) (Scotland) Regulations 2008, sportscotland may agree to voluntary early retirement where it can be demonstrated as being in the organisation’s operational or financial interests. Where sportscotland agrees to early release, it may further decide that the member’s benefits should not be reduced. This discretion will only be exercised in exceptional circumstances.
This provision also applies to members of staff who were previously members of the scheme who have deferred pension rights relating to previous membership.
3.8Discretion: Early Retirement on the Grounds of Redundancy or Efficiency
Where a scheme member has reached the age of 55 (50 if they were a member as at 6 April 2006) or over and is made redundant, the Scheme allows for the immediate early payment of pension benefits. Such benefits are not reduced as a result of early payment and the additional costs are borne by sportscotland. Members of the Scheme who are made redundant before the age of 55(50 if they were a member as at 6 April 2006)are entitled to preserved benefits.
3.9Discretion: Certificate of Protection
Regulation A43(5) states that if a member suffers a reduction in pay through no fault of their own, for example as a result of a re-grading exercise, then a Certificate of Protection must be completed by the employer to protect that members pay for pension purposes for a period of 10 years following the date of reduction or restriction. There will be no general policy on this; however, sportscotland will deal with such an event on an individual basis.
3.10Discretion: Final Pay Period
sportscotland will allow a member to select final pay for fees to be any three consecutive years ending 31st March in the 10 years prior to leaving. sportscotland agree that this will automatically be done by SPF.
3.11Discretion: Late Application to Pay Optional Contributions
Under the Administration Regulations, members of the scheme returning from an approved period of unpaid absence, such as strike leave, family leave etc, is permitted to make payment in respect of the pension contributions that would have been payable if they had not been absent. The scheme member must make payment in respect of the first 30 days of absence to ensure that there is no break in service for pension purposes. Where a leave of absence extends beyond 30 days, the member can, within 30 days of their return to work or the date of leaving employment if earlier, choose to make payment in relation to the pension contributions for that period.
sportscotland will not normally agree to extend this 30-day time limit, but may choose to extend the period by a further 30 days where a member can demonstrate extenuating circumstances.
sportscotland will not normally allow a late application by a member to pay optional contributions for a period of unpaid leave except where the employee can demonstrate exceptional circumstances apply.
3.12Discretion: Shared Cost AVC
Members of the Local Government Pension Scheme have access to an Additional Voluntary Contributions (AVC) scheme which accepts member-only contributions. The Scheme Regulations also allow sportscotland to set up an AVC which requires a contribution from the organisation, referred to as a ‘Shared Cost AVC’. sportscotland has exercised its discretion to establish a shared cost AVC scheme which is accessible only to employees in specified positions within the organisation. Details of eligible posts are available from Human Resources and the scheme is no longer open to new employees.
sportscotland expects that an employee leaving employment who contributes to a shared cost AVC to convert their AVC into membership credit within 30 days of their employment terminating except where the employee can demonstrate that exceptional circumstances apply.
3.13Discretion: Transfers of Previous Pension Benefits into the LGPS
The Scheme Regulations allow members to transfer previous pension rights into the Local Government Pension Scheme, provided that such a transfer is requested within 12 months of the member joining the scheme. sportscotland does, however, have discretion to permit late transfers after this time limit.
While sportscotland will not have a general policy of permitting late transfers, all applications will be considered individually and the organisation may agree to a late transfer where there is no financial impact on either sportscotland or the Strathclyde Pension Fund. The maximum extension under these circumstances will be 24 months from the date of the member joining the scheme.
3.14Discretion: Forfeiture of Pension Rights after Conviction of a Serious Offence
Regulation 66 of the Administration Regulations permits sportscotland to make application to the Scottish Ministers for a forfeiture certificate. Following issue of the certificate to direct that all or part of a scheme member’s benefits are to be forfeited, where the member has been convicted of a serious offence that is either ‘gravely injurious to the State’, or which is ‘liable to lead to serious loss of confidence in the public service’.
In the interest of maintaining public confidence, sportscotland reserves the right to exercise this discretion should such circumstances arise.
3.15Discretion: Recovery or Retention of Pension Contributions Due to Misconduct
The Regulations permit sportscotland to recover from a former member of staff’s pension benefits any loss arising from a criminal, negligent or fraudulent act by the former member of staff, providing that all other efforts to recover monetary obligations have been exhausted.
In the interest of maintaining confidence in public services, sportscotland reserves the right to exercise this discretion should such circumstances arise.
3.16Discretion: Return of Contributions
Regulation A42(2) determines that there is no right to a return of a members contributions due to an offence of fraudulent character or grave misconduct unless sportscotland directs a total or partial refund is to be made.
sportscotland will not direct a return of contributions in the event of an offence of a fraudulent character or grave misconduct.
3.17APPEALS
A designated person has been appointed in accordance with Regulation 54 of the Administration Regulations to receive appeals from members on first instance decisions.
Should you wish to make such an appeal, please write to:
Head of Human Resources
sportscotland
Doges
Templeton on the Green
62 Templeton Street
GLASGOW
G40 1DA
3.18MONITORING AND REVIEW
This policy will be reviewed regularly in line with good practice and any amendments to the regulations applicable to the operation of the pension schemes. Human Resources will be responsible for maintaining and reviewing this policy.
4.0 Compliance
4.1Employees who do not support this policy and procedure may be subject to disciplinary action.
4.2Compliance with this policy will be monitored by the Head of Human Resources.
5.0 Associated Documents
5.1APPENDIX 1
Discretionary Payments and Injury Benefits Regulations discretions below are only available to Scheduled bodies and those admitted bodies where the admission agreement permits such awards and the admitted body is adopting those provisions. sportscotland is an Admitted Body for these purposes.D 4 (1) / Power to increase statutory redundancy payments above statutory weekly pay limit / sportscotland’s policy is to calculate redundancy payments as agreed in our Redundancy Policy(as revised from time to time).
D 8(1) / Decision on whether to award compensatory added years to an individual on retirement on efficiency / redundancy grounds / sportscotland’s Admission Agreement allows us to award compensatory added yearsto augment the individual members service. Whilst it is not sportscotland’s general policy to award added years, where an acceptable business case is made, the Senior Management Team may, at its discretion, award compensatory added years.
D 35 / Decision to award up to 104 weeks compensation instead of compensatory added years / It is not the organisation’s general policy to award this. However where an acceptable business case is made, the Senior Management Team may, at its discretion, award up to104 weeks compensation on compassionate grounds.
sportscotland HR Toolkit – Employer Discretions Under the Local Government Pension Scheme
Last Reviewed December 2013 – Version 0.2
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