Policy Statements
Policy statements for Derbyshire County Council as a scheme employer.
Policy statements for other scheme employers are held by those employers directly.
The Pensions Committee approved the policies, under Regulation 66 of the Local Government Pension Scheme (Administration) Regulations 2008 and Regulation 7 of The Local Government (Early Termination of Employment) (Discretionary Compensation) (England and Wales) regulations 2006.
1a) Award of additional period of membership (augmentation)
An employing authority has the discretion to award up to 10 years additional membership to an active member.
1b) Award of additional pension
An employing authority has the discretion to award a member additional pension of not more than £5000 a year payable from the same date as their pension payable under any other provisions of the regulations.
Our policy is not to award additional membership or additional pension under the above provisions. However, if there are instances where it can be demonstrated that the use of these discretions would be in the interests of the employer, taking into account all the relevant factors of the case including costs, then such cases would be reported to committee for individual consideration.
2) Early Retirements
Voluntary Early Retirement (VER)
The VER Scheme will only be applied to those areas of employment where we wish to reduce our workforce. Application of the Scheme shall be solely at our discretion and confers no rights or entitlements.
Employees must be age 55 or over at the date of leaving, have at least three months' service for pension purposes and contribute to the Local Government Pension Scheme.
All applications will be subject to our approval.
We may amend or withdraw the Scheme at any time after giving 1 month's notice.
An employee whose application for VER is accepted will be required to enter into a consensual agreement with us which will include mutual agreement as to the date of retirement. Retirement will be on the grounds of business efficiency. The date of leaving must not be later than the date the employee would have left had a period of contractual notice been applicable.
The annual leave entitlement for the year is limited to that earned up to the date of leaving and must be taken before leaving.
The Scheme provides for the immediate payment of an unreduced pension and lump sum from the Local Government Pension Scheme. The cost of the early payment (i.e. the Pension Fund shortfall) will be met by the council.
We will not make compensation payments under the VER Scheme.
There is no right of appeal against the Chief Officer's decision not to allow an employee to take VER or the amounts payable under the terms of the Scheme.
Voluntary Retirement (VR)
The VR Scheme will only be applied to those areas of employment where we wish to reduce our workforce. Application of the Scheme shall be solely at our discretion and confers no rights or entitlements.
All applications will be subject to our approval.
We may amend or withdraw the Scheme at any time after giving 1 month's notice.
An employee whose application for VR is accepted will be entitled to their contractual period of notice although this can be waived at the employee's request. The reason for leaving will be redundancy.
The annual leave entitlement for the year is limited to that earned up to the date of leaving and must be taken before leaving.
Redundancy and Compensation payments
6(i) To qualify for a redundancy payment, employees must have been continuously employed for at least two years in local government or with an employer covered by The Redundancy Payments (Continuity of Employment in Local Government, etc.) (Modification) Order 1999, as amended.
6(ii) There is no entitlement to a payment under paragraph 6(iii) if, prior to leaving, the employee receives an offer of employment in local government or with a body included in the Modification Order, which commences within four weeks of the last day of employment.
6(iii) Subject to the provisions of paragraph 6(ii), the payments are:
(a) A statutory redundancy payment and, if applicable,
(b) In accordance with this policy an amount of compensation not exceeding the difference between the amount of the statutory redundancy payment and the amount that would have been payable, but for the imposition of the maximum weekly pay figure.
The total of these amounts is equivalent to a redundancy payment calculated on the employee's weekly rate of pay for normal working hours. The maximum payment is 30 weeks' pay and the amount will depend on age, period of continuous service and pay.
6(iv) We will not make discretionary compensation payments under the VR Scheme.Pension benefits -
7(i) Employees aged 55 or over: - Those aged 55 or over at the date of leaving who contribute to the LGPS and have at least three months' membership will receive the immediate payment of an unreduced pension and lump sum.
7(ii) Employees under age 55 - Pension benefits can either be preserved in the LGPS or transferred to another pension scheme. Under normal circumstances preserved benefits can be paid from age 60 although they may be reduced to reflect early payment.There is no right of appeal against the Chief Officer's decision not to allow an employee to take VR or the amounts payable under the terms of the Scheme.
Flexible Retirement (Routine Cases)
An employer can consent to a reduction in an employee's hours or grade and consent to the release of pension benefits where the employee is aged 55 and over.
For the purpose of this policy, requests for flexible retirement can be categorised as follows:
Category 1 - Employee is age 60 or over − There is no cost to the county council as the employee is at or past their earliest retirement date. If they do not meet the Rule of 85 (*1) their pension benefits will be reduced to reflect early payment.
Category 2 - Employee is age 55 or over but less than 60 and does not meet the Rule of 85 until on or after their 60th birthday. In this case the Regulations allow for the cost of the early payment of pension benefits to be borne by the employee so as to avoid a Pension Fund shortfall. The benefits are actuarially reduced to reflect the fact that they are paid early.
Category 3 - Employee is age 55 or over but less than 60 and does meet the Rule of 85 either at the date of flexible retirement or at a later date that is before their 60th birthday. In this case we would have to meet the Pension Fund shortfall arising from the early payment of pension benefits from the date when the Rule of 85 is met.
For those cases that fall within categories 1 and 2 above, our general policy is to consent to the payment of benefits from the Local Government Pension Scheme subject to a reduction of half of the employee's contractual hours.
A reduction of less than half of the employee's contractual hours may be considered:
i) in exceptional circumstances, and provided that this would also bring an ongoing financial benefit to the county council or
ii) where service delivery requires whole shifts to be worked
The chief officer, taking account of HR, legal and financial advice under the established process, makes the decision.
Where the benefits payable are reduced to reflect early payment the employer can agree to waive in whole or in part the reduction and pay the cost to the Pension Fund. It is our policy, as a general rule, not to agree to this. However, the Pensions Committee will consider applications from departments where it is considered that it would be in our interests to meet this cost.
For category three cases, as there would be a cost to us, the general policy is not to agree to the early release of pension benefits. However, where it is considered to be in our interests, taking into account all the relevant factors including the cost, the Pensions Committee will consider applications for flexible retirement.
In every case the needs of the service must be paramount.
For a reduction in grade - the current policy does not provide for flexible retirement in this situation. Further guidance will be formulated if the policy needs to be extended to include this.
Increases in hours after taking flexible retirement
Where an employee has been allowed to reduce their hours for the purposes of flexible retirement they will not be allowed to increase them on a permanent basis. Where it is in our interests, a temporary increase in hours for a period not exceeding six months can be permitted. The temporary increase in hours must be authorised by the chief officer.
An employee who has reduced their hours and taken flexible retirement must only be allowed to work additional hours or overtime at the same level that applied prior to the reduction in contractual hours. The aim is to prevent employees compensating for a reduction in contractual hours by working additional hours and overtime. The chief officer must approve requests for temporary increases in additional hours and overtime in advance.
Appeals
Categories 1 & 2 − An employee who is dissatisfied with the chief officer's decision in response to a request for flexible retirement can appeal in writing within 14 days of receiving the decision to the Chief Executive.
In category 3 - where the chief officer has refused an employee's request to reduce the hours they work for the purposes of flexible retirement, the person can appeal in writing within 14 days of receiving the decision to the Chief Executive.
Category 3 - Where the chief officer has approved a reduction in hours but the application for the payment of pension benefits on flexible retirement is refused by the Pensions Committee, a dissatisfied employee can appeal under the pensions internal dispute resolution procedure writing in the first instance to Kay Riley, Assistant Director of Legal Services as the "specified person".
Details of the internal dispute resolution procedure can be found in the pensions section of our website at www.derbyshire.gov.uk/working_for_us/pensions (opens in a new window)
Appeals should be made in writing stating the reasons for the appeal to:
Nick Hodgson
Chief Executive
Derbyshire County Council
PO Box 2
County Hall
Matlock
Derbyshire
DE4 3AG
Kay Riley
Assistant Director of Legal Services
Derbyshire County Council
PO Box 2
County Hall
Matlock
Derbyshire
DE4 3AG
(*1 The Rule of 85 is where the sum of the Scheme member's age plus period of membership in the Pension Scheme (both in whole years) is 85 or greater).
Flexible Retirement (Workforce Reductions) Scheme
An employer can consent to a reduction in an employee's hours or grade and consent to the release of pension benefits where the employee is aged 55 and over.
The Flexible Retirement (Workforce Reductions) Scheme will only be applied to those areas of employment where we wish to reduce our workforce. Application of the Scheme shall be solely at our discretion and confers no rights or entitlements.
Employees must be age 55 or over at the date of leaving, have at least three months' service for pension purposes and contribute to the Local Government Pension Scheme (LGPS).
All applications will be subject to our approval.
In every case the needs of the service must be paramount and the application of the Scheme affordable.
For the purpose of this Scheme, requests for flexible retirement can be categorised as follows:
Category A - Where an employee is age 60 or over and past their earliest retirement date at which unreduced LGPS benefits are payable, there is no cost to the county council.
Category B - Employee is age 55 or over but has not passed their earliest retirement date at which unreduced LGPS benefits are payable. We may agree to flexible retirement and, in those cases where the benefits are reduced under Regulation 18 of the LGPS (Benefits, Membership & Contributions) Regulations 2007 and guidance issued by the Government Actuary, shall waive the whole of any such reduction.
Under Category B, the cost of the Pension Fund shortfall and waiving a reduction shall be met by the county council.
As a general rule, a reduction of half of the employee's contractual hours is required.
A reduction of less than half of the employee's contractual hours would only be considered in exceptional circumstances and provided that this would bring a significant financial benefit to the council or where service delivery requires whole shifts to be worked.
The Chief Officer, taking account of HR, legal and financial advice under the established process, makes the decision.
For a reduction in grade - the current policy does not provide for flexible retirement in this situation. Further guidance will be formulated if the policy needs to be extended to include this.
Increases in hours after taking flexible retirement
Where an employee has been allowed to reduce their hours for the purposes of flexible retirement, the reduction will be permanent. No temporary increases in hours will be permitted.
An employee who has reduced their hours and taken flexible retirement must only be allowed to work additional hours or overtime in proportion to the level that applied prior to the reduction in contractual hours. The aim is to prevent employees compensating for a reduction in contractual hours by working additional hours and overtime. The Chief Officer must approve requests for additional hours and overtime in advance.
Appeals
There is no right to appeal against a request for a reduction in hours so as to secure Flexible Retirement under the workforce reductions Scheme.
3) The early payment of pension scheme benefits at the request of the scheme member
If a scheme member leaves a local government employment before they are entitled to the payment of retirement benefits once they have attained age 55, they may request payment. However, the consent of the employing authority (or former employing authority) is required where the member is under age 60.
Our policy is not to agree to the early release of pension benefits under this regulation. In those cases where it can be demonstrated to be in our interests, or in the interests of the scheme member on compassionate grounds, taking into account all the relevant factors, we will consider applications for the early payment of benefits.
4) Shared cost Additional Voluntary Contributions (AVC)
An employing authority can contribute to a shared cost Additional Voluntary Contribution arrangement along with a scheme member.
Our policy is not to have shared cost AVC arrangements.
5) Inward transfers of pension rights
Where a transfer request has been made to the county council within the first 12 months of a person becoming a scheme member our policy is to only accept a transfer from a previous local authority or a club scheme where reciprocal transfer arrangements apply (eg Teachers,NHS,Civil Service)
Rejoining the scheme
There is no longer a requirement to have a policy on re-joining the pension scheme where the employee had previously opted out. The Local Government Pension Scheme (Administration) Regulations 2008 provide for a person to reapply to become an active member again. The consent of the employing authority is no longer required.
Certificates of Protection
The Local Government Pension Scheme (Benefits. Membership and Contributions) Regulations 2007 do not provide for a Certificate of Protection where a scheme member has a permanent reduction to their rate of pay.
However, there is protection under these regulations where a scheme member has reduced pensionable pay because they have chosen to work at a lower grade or with less responsibility.
In these situations, they may choose to have their final pay calculated by dividing by three the annual pensionable pay in any three consecutive years ending with 31 March within the period of 10 years ending with the last day they were an active member.
Policy statements for Derbyshire County Council as administering authority
We are the administering authority for the Local Government Pension Scheme in Derbyshire has to make a statement of policy on certain aspects of the scheme.
Nothing in this statement can override the provisions of the Local Government Pension Scheme (LGPS) Regulations.
Reduction or suspension of pensions on re-employment
We will reduce (or suspend) a pension if a pensioner is re-employed in a job covered by the Local Government Pension Scheme where the total pay and pension during a 12 month period exceeds the current value of their final pay on leaving their former job.
Spouses pensions on re-marriage or cohabitation
Where a person receiving a widow's/widower's pension remarries or cohabits on or after 1 April 1998 their pension will not be suspended.
Inward transfers of pension rights
Where a transfer request has been made to the county council within the first 12 months of a person becoming a scheme member our policy is to only accept a transfer from a previous local authority or a club scheme where reciprocal transfer arrangements apply (eg Teachers,NHS,Civil Service)