The Local Government Superannuation (Scotland) Amendment Regulations 1989

(1) Subject to the provisions of paragraphs 2, 3, 5 and 6, a transfer value to be made in accordance with the provisions of regulation J2, J3(1), J14 or Q2 in respect of a person shall be— (1) the capitalised value of his accrued rights under these Regulations at the material date, and any associated rights under the Pensions (Increase) Act 1971[^f00026] and the Pensions (Increase) Act 1974[^f00027], less a sum, if any, in respect of any state scheme premium which has been paid and not recovered in respect of a period of service included in the valuation of those rights; together with (2) where the transfer value is, without reasonable cause or excuse, not paid within 6 months of the material date and it is not to be paid to a statutory scheme (or any other scheme which is for the time being specified by the Secretary of State as a scheme which is to be treated as a statutory scheme for the purposes of this Schedule)— (a) interest, if any, calculated on a daily basis over the period from the material date to the date on which the transfer value is paid, at the rate set out in regulation 4(4)(a) of the Occupational Pension Schemes (Transfer Values) Regulations 1985[^f00028], or, if it is greater (b) the amount by which the transfer value falls short of what it would have been if the material date had been the date on which the transfer value was paid. (2) Where, prior to the last date on which the fund authority is required to pay a transfer value under these Regulations, the employing authority has directed under regulation M1 or any corresponding provision of earlier Regulations or a local Act scheme that all or any of the benefits payable under these Regulations shall be forfeited, any transfer value payable in respect of that person shall be reduced in proportion to the reduction in the total value of the benefits or shall be withheld as the case may be. (3) Where a person requests that a transfer value be paid— (1) (a) to a superannuation scheme which is not contracted-out within the meaning of section 32 of the Pensions Act[^f00029], or (b) to a personal pension scheme which is not an appropriate personal pension scheme, or (c) to a self-employed pension arrangement; (2) the trustees or managers of the superannuation scheme, personal pension scheme or self-employed pension arrangement are able or willing to have transferred to it only the liability for a member’s accrued rights other than his and his surviving spouse’s rights to guaranteed minimum pensions; and (3) he does not require that portion of his transfer value that represents his guaranteed minimum pensions to be used in one of the ways specified in regulation J2(1), then his transfer value shall be reduced by the amount of a state scheme premium sufficient to meet the liability in respect of that person’s and his surviving spouse’s guaranteed minimum pensions. (4) (1) Subject to sub-paragraph (2), where a person has ceased to be a pensionable employee by virtue of a notification under regulation B4A, the person shall be entited to a transfer value under regulation J2(1)(b) only in respect of the following:— (a) where the person is a man, that part of his accrued rights which bears the same proportion to his total accrued rights as his reckonable service after 5th April 1988 bears to his total reckonable service; (b) where the person is a woman, the aggregate of— (i) that part of her accrued rights, other than a widower’s pension, which bears the same proportion to the total of those accrued rights as her reckonable service after 5th April 1988 bears to her total reckonable service; and (ii) that part of her accrued rights, relating to a widower’s pension, credited to her after 5th April 1988. (2) This paragraph shall not apply to a person whose reckonable service before 6th April 1988 amounts to less than 2 years. (3) Where— (a) a transfer value limited in accordance with sub-paragraph (1), has been paid in respect of a person; and (b) that person has subsequently ceased to be employed in local government employment before attaining the age of 65 years or, where regulation J2(7) applies, the age of 64 years; a right to a transfer value in respect of any part of his accrued rights to which, but for the operation of sub-paragraph (1), he would have been entitled on ceasing to be a pensionable employee, shall accrue to the person on the date on which he ceases to be employed and shall be valued accordingly. (4) In relation to any person to whom sub-paragraph (3) above applies— (a) regulation J2(2)(c)(ii) shall have effect as if the words “or to be a pensionable employee” were deleted; and (b) the definition of “material date” in paragraph 5 shall have effect as if the words “or to be a pensionable employee” were deleted. (5) For the purposes of this paragraph, where a person ceases to be employed in local government employment but that person enters again into local government employment, then, if there is between those two employments— (a) an interval not exceeding one month; or (b) an interval of any length if the second of the employments results from the exercise of a right to return to work under section 45(1) of the Employment Protection (Consolidation) Act 1978[^f00030] (right to return to work following pregnancy or confinement), they shall be treated as a single employment. (5) In this Schedule— - “accrued rights” means the rights which have accrued in respect of a person under these Regulations at the material date, or which would have accrued in respect of him if the period of service necessary to satisfy the requirements of regulation E2(1)(c) had been the period which he had completed at that date; - “capitalised value” means the capitalised value at the material date as determined by the fund authority, in such manner as may be approved by the Government Actuary or by an actuary authorised by the Government Actuary to act on his behalf for that purpose, having regard to investment conditions and the contingencies on which benefits are, or are to be, payable under these Regulations; - “material date” means the date on which the person ceased to be employed in local government employment or to be a pensionable employee, as described in regulation J2(1) or, if it is later, the date of his application for payment of a transfer value which he has not subsequently withdrawn; and - “state scheme premium” means a state scheme premium or a transfer premium under Part III of the Pensions Act. (6) Where one or more transfer values have been paid to a fund authority in respect of a person, any transfer value paid by that fund authority shall be at least equal to the aggregate of those transfer values and any contributions made by that person under Part C, except where it falls to be paid to a statutory scheme (or any other scheme which is for the time being specified by the Secretary of State as a scheme which is to be treated as a statutory scheme for the purposes of this Schedule). (7) A transfer value paid under this Schedule shall be at least equal in amount to the cash equivalent, if any, to which a person would otherwise be entitled under Part II of Schedule 1A to the Pensions Act.

SCHEDULE 3 — SCHEDULE TO BE SUBSTITUTED FOR SCHEDULE 17 TO THE PRINCIPAL REGULATIONS

SCHEDULE 17 (1) Where a transfer value has been paid to, and accepted by, the fund authority, there shall be credited to the person in respect of whom the payment was made a period of reckonable service calculated in accordance with paragraph 2. (2) For the purpose of paragraph 1— (1) where the transfer value— (a) is paid by the trustees or managers of a statutory scheme, or any other scheme which is at the appropriate date specified by the Secretary of State as a scheme which is to be treated as a statutory scheme for the purpose of this Schedule, (b) represents all of the person’s accrued rights in that scheme, and (c) has been calculated in a manner consistent with the methods adopted and assumptions made by the fund authority in determining the amount of transfer values to be paid to schemes which are, or which fall to be treated as, statutory schemes under Schedule 16; the period of reckonable service to be credited to the person shall be equal to the period of service which if used to calculate a transfer value to be paid to a superannuation scheme which is, or which falls to be treated as, a statutory scheme under Schedule 16 would produce an amount equal to the transfer value received by the fund authority, and in making the calculation regard shall be had to the person’s age, rate of pensionable remuneration, marital status and, in addition, to any other factor notified to the fund authority by the trustees or managers of the scheme making the payment as having been taken into account in determining its amount; and (2) in any other case the period of reckonable service credited to the person shall be calculated in a manner consistent with the methods adopted and assumptions made by the fund authority in determining the amount of transfer values to be paid to superannuation schemes (which do not fall to be treated as statutory schemes) under Schedule 16, due allowance being given for the expected increase in the pensionable remuneration of a local government employee between the appropriate date and the date on which the person in respect of whom the transfer value was paid would attain pensionable age. (3) In this Schedule “appropriate date” means the date on which the person in respect of whom the transfer value is paid became a pensionable employee, or if the transfer value is received more than 12 months after that date, the date on which it is received.

Signed

Michael B Forsyth — Parliamentary Under Secretary of State, Scottish Office — 3rd May 1989

Explanatory note

(This note is not part of the Regulations)

These Regulations amend the Local Government Superannuation (Scotland) Regulations 1987 (“the principal Regulations”) as follows:—

• (1) to take account of the relevant provisions of the Social Security Act 1986—

• (a) new regulations (B1, B2, B4, B4A and B4B) are inserted into Part B of the principal Regulations, to provide that those who were not pensionable employees on 5th April 1988 shall not subsequently become such unless they so elect; to give those who at any time are pensionable employees the opportunity to opt out of the local government superannuation scheme established under the principal Regulations; and to give those who have opted out of the scheme the opportunity to opt back in (regulations 3 and 5);

• (b) amendments are made which are consequential on the new right to elect not to be a pensionable employee, particularly in relation to—

• (i) certain existing rights of election available to part-time employees, which are being replaced (regulations 3, 4 and 5);

• (ii) certain additional payments (regulation 7);

• (iii) refunds of contributions (regulation 9);

• (iv) benefits on retirement due to ill-health (regulation 13);

• (v) death gratuities (regulation 18);

• (vi) gratuities for non-superannuable local government employees (regulation 29); and

• (vii) injury allowances (regulations 30 and 31);

• (c) a new regulation C9A and Schedule 7A are inserted to allow a pensionable employee to elect to make additional voluntary contributions, up to certain limits, under the local government superannuation scheme. The new Schedule provides that the additional contributions are to be used by the administering authority to provide money purchase benefits under a scheme approved for the purposes of Chapter I of Part XIV of the Income and Corporation Taxes Act 1988. The new Schedule also makes provision, amongst other matters, for changes of employment by the pensionable employee and for the making of new elections (regulations 7 and 43);

• (d) the period of reckonable or qualifying service after which a pensionable employee becomes entitled to preserved benefits (instead of a refund of contributions) has been reduced from 5 years to 2 years (regulations 9(a) and (d), 12(a), 14, 15(a), 16(a) and 17);

• (e) provision is made for the payment of benefits to dependants of deceased female local government employees in respect of service after 5th April 1988 on the same basis as is currently provided for dependants of male employees (regulations 10, 16(c) and 19);

• (2) to take account of the relevant provisions of the Social Security Act 1985—

• (a) provision is made for the method of revaluation of a pensionable employee’s guaranteed minimum, and where appropriate that of his widow, to be altered where the pensionable employee, on ceasing employment, or otherwise ceasing to be a pensionable employee, has elected to use his transfer value to purchase an annuity which meets certain requirements (regulation 11);

• (b) revised arrangements and conditions are introduced relating to—

• (i) payment of transfer values to occupational pension schemes, personal pension schemes, self-employed pension arrangements and insurance companies representing the cash equivalent of the accrued pension benefits being transferred; and

• (ii) the amount of reckonable service to be credited upon receipt of a transfer value calculated in a manner consistent with the methods and assumptions made in determining a transfer value

(regulations 23, 25, 27, 28, 37, 38, 44 and 45);

• (c) allowance is made for the calculation of transfer values in respect of reckonable service undertaken before 6th April 1988 to be made under previous provisions where this proves to be more favourable (regulation 46(3) and (4));

• (3) the period between valuations of a superannuation fund is reduced from 5 years to 3 years (regulation 33);

• (4) the meaning of paragraph 14(1) of Part IV of Schedule 6 to the principal Regulations is clarified (regulation 42);

• (5) a number of consequential and technical amendments are also made (regulations 6, 8, 12(b), 15(b) and (c), 16(b), 20, 21, 22, 24, 26, 32, 34, 35, 36, 39, 40 and 41);

• (6) transitional provisions are contained in regulation 46.

Provision is made for opting out if a person is placed in a worse position as a result of the retrospective effect of any of the regulations (regulation 47).

These Regulations (except for regulations 11, 32, 33, 34, 35, 41 and 42) have retrospective effect as authorised by section 12 of the Superannuation Act 1972.

Footnotes

[^f00001]: 1972 c. 11

[^f00002]: S.I. 1987/1850, amended by S.I. 1988/625 and 1989/422

[^f00003]: S.I. 1986/24, amended by S.I. 1987/293 and 1579.

[^f00004]: S.I. 1974/812; the relevant amending instrument is S.I. 1982/1303

[^f00005]: S.I. 1989/802

[^f00006]: The Social Security Pensions Act 1975 (c. 60); section 37A was inserted by the Social Security Act 1986 (c. 50), section 9(7).

[^f00007]: Schedule 1A was inserted by the Social Security Act 1985 (c. 53), Schedule 1, paragraph 3, and amended by the Social Security Act 1986 (c. 50), Schedule 10, paragraphs 29 and 30 and Schedule 11; paragraph 13 of Schedule 1A was further amended by S.I. 1987/1116, Schedule 6.

[^f00008]: Section 52C was inserted by the Social Security Act 1985, Schedule 1, paragraph 2, and was amended by the Social Security Act 1986, Schedule 10, paragraph 26.

[^f00009]: Section 35(2) was amended by the Social Security Act 1986, Schedule 8, paragraph 8.

[^f00010]: 1970 c. 24; paragraph 2 was substituted by the Finance Act 1971 (c. 68), Schedule 3, paragraph 7.

[^f00011]: 1988 c. 1

[^f00012]: The Social Security Pensions Act 1975 (c. 60); section 52C was inserted by the Social Security Act 1985 (c. 53), Schedule 1, paragraph 2, and was amended by the Social Security Act 1986 (c. 50), Schedule 10, paragraph 26.

[^f00013]: 1973 c. 65; section 216 was amended by the Local Government and Planning (Scotland) Act 1982 (c. 43), Schedule 4, Part I.

[^f00014]: 1986 c. 50

[^f00015]: Schedule 1A was inserted by the Social Security Act 1985 (c. 53), Schedule 1, paragraph 3, and amended by the Social Security Act 1986 (c. 50), Schedule 10, paragraphs 29 and 30 and Schedule 11; paragraph 13 of Schedule 1A was further amended by S.I. 1987/1116, Schedule 6.

[^f00016]: 1975 c. 14; section 13 was amended by the Social Security Pensions Act 1975 (c. 60), Schedule 4, Part I, paragraph 38; the Social Security Act 1979 (c. 18), Schedule 3, paragraph 5; the Social Security Act 1980 (c. 30), section 5; the Social Security (No. 2) Act 1980 (c. 39), Schedule; the Social Security Act 1985 (c. 53), Schedule 5, paragraph 6; and the Social Security Act 1986 (c. 50), Schedule 8, paragraph 2 and Schedule 11.

[^f00017]: 1986 c. 50

[^f00018]: 1988 c. 1

[^f00019]: S.I. 1987/1108

[^f00020]: 1988 c. 1

[^f00021]: 1982 c. 50

[^f00022]: 1974 c. 46

[^f00023]: 1970 c. 31 (N.I.).

[^f00024]: 1986 c. 50

[^f00025]: 1986 c. 53

[^f00026]: 1971 c. 56

[^f00027]: 1974 c. 9

[^f00028]: S.I. 1985/1931, to which there are amendments not relevant to these Regulations.

[^f00029]: The Social Security Pensions Act 1975 (c. 60); section 32 was amended by the Social Security and Housing Benefits Act 1982 (c. 24), Schedule 4, paragraph 20, and by the Social Security Act 1986 (c. 50), Schedule 2, paragraph 5, Schedule 10, paragraph 16 and Schedule 11.

[^f00030]: 1978 c. 44