Local Government Pensions Scheme in England and Wales - Scheme Improvements (Access and Protections)

Principles 

29. The government intends to develop new regulations to give effect to the proposal. Since mayors and councillors are not local government workers, the new regulations will need to cover numerous areas where the existing regulations would not function correctly. A draft set of regulations has been published alongside this consultation and we welcome views. The draft regulations categorise mayors and councillors as “elected members”. 

30. The government plans to use two key principles in developing the regulations: 

• As far as possible, elected members should be treated the same as other members of the LGPS; 

• As far as possible, elected members should be treated in a way that is consistent with the LGPS in Scotland, Northern Ireland and pre-2014 England & Wales.  

31. Specifically, these principles lead to the following proposals: 

• Elected members will not be subject to auto-enrolment and, whilst each individual will have the right to join the scheme, elected members will need to assess whether they wish to do so; 

• An employer will not be allowed to award additional pension, make shared additional voluntary contributions or fund additional pension contributions to an elected member; 

• A new definition of pensionable pay will be used, to cover both basic allowances and special responsibility allowances paid to elected members; 

• Elected members will pay employee contributions at the same rates as other members, using the same bandings applied to their pensionable pay; 

• A member will not be permitted to combine any LGPS membership they may have as an elected member with any other type of LGPS membership; 

• Flexible retirement (where a member over the age of 55 can start to receive their pension whilst still working, if the member reduces hours or grade) will not be permitted for an elected member; 

• Early access on redundancy will not be permitted for an elected member; 

• Elected members will be permitted to transfer benefits in and out of the LGPS in the same way as other members, with the exception of final salary benefits; 

• Early and late retirement will be permitted in the same way as for other members; 

• Elected members will be in scope of forfeiture regulations; 

• Elected members will have access to the 50:50 scheme; 

• Elected members will have the same protections around Assumed Pensionable Pay as other members. 

32. The government also intends to make consequential amendments, both to the Local Authorities (Members' Allowances) (England) Regulations 2003, and to establishment orders for combined authorities. These are considered necessary changes to give authorities the powers to pay pensions to elected members. The draft statutory instrument published alongside this consultation shows the proposed changes. Access to the pension scheme for elected members is intended to be an automatic right, and so the draft amendment requires that where an allowance is paid to an elected member, the authority must provide the member is entitled to a pension in accordance with the Public Service Pensions Act 2013 (i.e. must be offered access to the LGPS).  

Cost 

33. The Government Actuary’s Department has estimated the potential increase in employer contributions at between £40-45m per year, across England. This estimate relies on assumptions about the structure of local government, how many councillors and Mayors will choose to join the scheme, the demographics of those in office, and the level of allowances paid locally.  As changes to local government are made through reorganisation, the number of councillors will decrease.   

34. The government will not provide funding for employer contributions for the proposal. There is no funding for pension access for councillors in Scotland, Northern Ireland or Wales. The proposal should be seen in the context of the LGPS 2025 revaluation, where actuarial assessments suggest that there may be reductions in employer contribution rates.