The Local Government Pension Scheme (Amendment) (No. 3) Regulations 2023

• (2) The 2014 Regulations (as applied by regulation 4(4)) apply in relation to the person with the following modifications.

• (3) Regulation 4H (final underpin date) applies as if in paragraph (1), for the words before sub-paragraph (a), there were substituted—

(1) An eligible member’s final underpin date, in relation to a pension account, is the first of the following dates which occur in relation to the eligible member in respect of the pension account to which the eligible member’s underpin date applies—

• (4) Regulation 4I (calculation of provisional assumed benefits) applies as if at the end there were inserted—

(11) The calculation in this regulation must be performed without undue delay following 1st October 2023 in respect of an eligible member to whom regulation 13 of the Local Government Pension Scheme (Amendment) (No. 3) Regulations 2023 applies.

• (5) Regulation 4J (calculation of provisional underpin amount) applies as if at the end there were inserted—

(11) The calculation in this regulation must be performed without undue delay following 1st October 2023 in respect of an eligible member to whom regulation 13 of the Local Government Pension Scheme (Amendment) (No. 3) Regulations 2023 applies.

Interest on payments under the statutory underpin

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• (1) This regulation applies in relation to a person to whom regulation 5(3), (4), (5), (6) or (7), 6(5), 7(3), 8(4)(a) or (b), 10(5), 11(4) or 12(6)(b) applies.

• (2) An administering authority must pay interest in respect of the following sums—

• (a) the amount to be added to the person’s pension account under regulation 5(3) or (4) (retired members) relating to the period beginning with the date on which the pension in question was put into payment and ending with the date on which the final guarantee amount was added to the pension account;

• (b) the amount to be paid under regulation 5(5) or (6) (deceased members);

• (c) where regulation 5(7) applies (person who elected to commute an amount of their pension), any new lump sum arising from the amount added to the person’s account under regulation 5(3) or (4);

• (d) the amount to be paid under regulation 6(5) or 7(3) (death grants);

• (e) the amount to be added to the survivor member’s pension account under regulation 8(4)(a) or (b) (survivor member’s pension account) relating to the period beginning with the date on which the survivor pension was put into payment and ending with the date on which the survivor guarantee amount was added to the survivor pension account;

• (f) the amount to be paid to the member under regulation 11(4) (commutation payments);

• (g) the amount to be added under regulation 12(6)(b) (difference between recalculated pension credit and pension in payment) relating to the period beginning with the date on which the pension credit member’s pension was put into payment and ending with the date on which the difference between the recalculated annual pension and the pension in payment is to be added to the retirement pension account under regulation 12(6)(b).

• (3) An administering authority must take reasonable steps to pay interest in respect of the amount to be paid to the scheme under regulation 10(5) (transfers out).

• (4) The interest is to be paid—

• (a) where paragraph (2)(a), (c), or (f) applies, to the person;

• (b) where paragraph (2)(b) applies, to the personal representatives in question;

• (c) where paragraph (2)(d) applies, to the recipient of the death grant;

• (d) where paragraph (2)(e) applies, to the person who has the survivor member’s pension account;

• (e) where paragraph (2)(g) applies, to the pension credit member;

• (f) where paragraph (3) applies, to the scheme that received the original transfer;

• (5) Interest under this regulation is payable from the relevant date until the day on which the amount in respect of which the interest is payable and the accrued interest are repaid in full.

• (6) The “relevant date” is—

• (a) where regulation 5(3), (4), (5) or (6) applies, the day that falls half-way through the period beginning with the day after the member’s final underpin date and ending with the date on which payment is made;

• (b) where regulation 5(7) applies, the earliest day from which the administering authority would have been able to make the payment for a lump sum paid under regulation 5(7);

• (c) where regulation 6(5), 7(3), 10(5) or 11(4) applies, the day on which the original payment was made;

• (d) where regulation 8(4)(a) or (b) applies, the day that falls half-way through the period beginning with the day after the person’s date of death and ending with the date on which payment is made;

• (e) where regulation 12(6)(b) applies, the day that falls half-way through the period beginning with the day on which the pension credit member’s pension was put into payment and ending with the date on which payment is made.

• (7) In paragraph (6)(c), “original payment” means—

• (a) the death grant;

• (b) the transfer out; or

• (c) the lump sum

that was paid, or, as the case may be, made before 1st October 2023.

• (8) Interest payable under this regulation is to be calculated in accordance with direction 38 of the PSP Directions 2022.

• (9) For the purposes of paragraph (6), where there is no day that falls half-way through the period in question, any reference to that day is to be read as a reference to the first day of the second half of the period.

• (10) In this Regulation—

• “final underpin date” has the meaning given in regulation 4H(1) of the 2014 Regulations;

• “pension credit member” has the meaning given in regulation 8(1) of the 2013 Regulations;

• “the PSP Directions 2022” means the Public Service Pensions (Exercise of Powers, Compensation and Information) Directions 2022.

Signed

We consent to the making of these Regulations

Steve Double — Andrew Stephenson — Two of the Lords Commissioners of His Majesty’s Treasury — 4th September 2023

Signed by authority of the Secretary of State for Levelling Up, Housing and Communities

Lee Rowley — Parliamentary Under Secretary of State — Department for Levelling Up, Housing and Communities — 5th September 2023

Explanatory note

(This note is not part of the Regulations)

EXPLANATORY NOTE

The Public Service Pensions Act 2013 (c. 25) (“the 2013 Act”) makes provision, and confers further powers to make provision (in the form of “scheme regulations” as defined in section 1 of that Act) about the establishment of public service pension schemes. The Local Government Pension Scheme Regulations 2013 (S.I. 2013/2356, “the 2013 Regulations”) are the scheme Regulations establishing the successor local government pension scheme (“the 2014 Scheme”) to the pension scheme constituted by the Local Government Pension Scheme (Administration Regulations) 2008, The Local Government Pensions Scheme (Benefits, Membership and Contributions) Regulations 2007 and the Local Government Pension Scheme (Transitional Provisions Regulations 2008) (“the 2008 Scheme”). The Local Government Pension Scheme (Transitional Provisions, Savings and Amendment) Regulations 2014 (S.I. 2014/525, “the 2014 Regulations) provide transitional protection (“the statutory underpin”) for 2008 Scheme members including, in particular, for members who were within 10 years of their normal pension age under the 2008 Scheme. Similar transitional protection was made under the 2013 Act for members of judicial pension schemes and members of firefighters pension schemes. The transitional protection for members of the judicial and firefighters schemes was subsequently found to unlawfully discriminate between members of the respective schemes on the basis of age. Although the statutory underpin was not subject to legal action, all schemes established under the 2013 Act are subject to review. These Regulations do this in relation to the 2014 Scheme.

The Public Service Pensions and Judicial Offices Act 2022 (c. 7) (“PSPJOA 2022”), at Chapter 3 of Part 1, makes provision, and confers powers for scheme regulations under the 2013 Act to make further provision, in relation to specified service (“remediable service”, as defined in section 77 of PSPJOA 2022) of members who benefitted from the statutory underpin or who did not by reason of their age. Section 85 of PSPJOA 2022 requires certain powers in Chapter 3 of Part 1 to be exercised in accordance with Treasury Directions.

These Regulations are scheme regulations under the 2013 Act and are made in accordance with PSPJOA 2022 in relation to a member’s remediable service in the local government legacy schemes and the 2014 Scheme. They are, to the extent required by section 85 of PSPJOA 2022, made in accordance with Treasury Directions (in the form of the Public Service Pensions (Exercise of Powers, Compensation and Information) Directions 2022). These Regulations have retrospective effect, which is authorised by section 3(3)(b) of the 2013 Act.

Part 1 of these Regulations makes general provision.

Part 2 amends the 2014 Regulations in relation to the statutory underpin:

Regulation 2(2) amends regulation 1 of the 2014 Regulations and introduces the concept of the “final guarantee amount”. This is the amount by which a member’s benefits under the 2014 Scheme (as assessed in accordance with the amendments made by these Regulations) are exceeded by the amount the member would have been entitled to under the local government legacy schemes.

Regulation 2(3) omits regulation 4 of those regulations (which contained the original provision relating to the statutory underpin)

Regulation 2(4) inserts new regulations 4A to 4V, which, by their effect, replace regulation 4:

• Regulation 4A makes provision in relation to the application of the replacement statutory underpin provisions to certain members (“eligible members”) and in respect of a certain period (“the underpin period”).

• Regulation 4B makes provision for eligible members who become entitled to a pension on the basis of retirement, redundancy, or ill health to have their pension account increased by the final guarantee amount on the day after they become so entitled.

• Regulation 4C makes provision for eligible members who become entitled to a pension on the basis of taking flexible retirement under regulation 30(6) of the 2013 Regulations to have their pension account increased by the final guarantee amount depending on the reason for their next final underpin date.

• Regulation 4D prevents eligible members who take a lump sum payment from having their pension account increased by the final guarantee amount relating to the pension account.

• Regulation 4E prevents eligible members who transfer to a different scheme from having a final guarantee amount determined in relation to their pension account.

• Regulation 4F prevents eligible members who take a repayment of contributions from having a final guarantee amount calculated in respect of those repaid contributions.

• Regulation 4G provides for an “underpin date” to be determined in respect of eligible members. The underpin date is the date in respect of which a provisional calculation of the member’s benefits under the 2014 Scheme and the 2008 Scheme in respect of the underpin period are made.

• Regulation 4H provides for a “final underpin date” to be determined in respect of eligible members. The final underpin date is the date in respect of which the final calculation of the eligible members benefits under the 2014 Scheme and 2008 Scheme, on the basis of which the final guarantee amount is calculated.

• Regulation 4I contains the calculation of an eligible member’s provisional assumed benefits. This is the provisional calculation of the benefits a member is entitled to under the 2014 Scheme.

• Regulation 4J contains the calculation of an eligible member’s provisional underpin amount. This is the provisional calculation of the benefits a member would otherwise have been entitled to under the 2008 Scheme.

• Regulation 4K provides for the calculation of an eligible member’s “final assumed benefits” for the purpose of the statutory underpin. This is the final calculation of the benefits the person is entitled to under the 2014 Scheme.

• Regulation 4L provides for the calculation of an eligible member’s “final underpin amount” for the purpose of the statutory underpin. This is the final calculation of the benefits the person is entitled to under the 2008 Scheme.

• Regulation 4M sets out the effect of the cessation of “Tier 3 benefits” under regulation 35(7) of the 2013 Regulations on an eligible member’s final guarantee amount.

• Regulation 4N sets out the effect of an eligible member’s Tier 3 benefits being uplifted to Tier 2 benefits under regulation 37(7)(b) of the 2013 Regulations.

• Regulation 4O makes provision for the calculation of a “survivor guarantee amount” and for that amount to be added to a survivor member’s pension in respect of a deceased eligible member’s entitlement to a final guarantee amount.

• Regulation 4P makes provision for the calculation of a “deferred guarantee amount” relating to an eligible member who is deceased and for that amount to be included in the calculation of a death grant payable in respect of the member.

• Regulation 4Q makes provision in relation to the calculation of provisional assumed benefits and provisional underpin amount for eligible members who have a pension account that has been aggregated from two or more pension accounts.

• Regulation 4R makes provision for the calculation of the cash equivalent value of an eligible member’s relevant benefits (as defined in section 29 of the Welfare Reform and Pensions Act 1999 (c. 30)) where the eligible member is divorced or dissolves a civil partnership.

• Regulation 4S empowers an administrative authority to pay additional benefits under the 2014 Scheme, instead of an amount under section 82 of PSPJOA 2022, in respect of a compensatable loss that is a Part 4 tax loss.

• Regulation 4T prevents an administering authority from paying an amount by way of compensation under section 82 of PSPJOA 2022, or additional benefits under regulation 4S, unless the eligible member concerned or their personal representatives have made an application. It makes provision for the contents of such an application, requires administering authorities to determine the amounts payable to the eligible member or their personal representatives and for appeals against such determinations.

• Regulation 4U provides that compensation under section 82 of PSPJOA 2022 or regulation 4S may be paid from the pension fund concerned.

• Regulation 4V makes provision for the payment of interest in respect of the payment of an additional benefit under regulation 4S.

Regulation 2(5) amends regulation 9 of the 2014 Regulations to provide that where a transfer payment is received into the 2014 Scheme, which includes a payment in respect of remediable service, in respect of a person from a different public service pension scheme, that payment entitles the person to benefits under the 2014 Scheme, so long as there has been no continuous break of more than 5 years in active membership since the remediable service was accrued.

Regulation 3 makes consequential amendments to the 2013 Regulations, including the following:

Regulation 3(2) amends regulation 28 to ensure that any final guarantee amount calculated in relation to discontinued Tier 3 benefits or any related revaluation adjustment is not to be included in the amount of accrued pension for the purpose of a member’s deferred pensioner account.

Regulation 3(3) amends regulation 30 to provide, in respect of a member’s pension, that an enhancement (where the member receives their pension after their normal pension age), reduction (where the member receives their pension earlier than their normal pension age), or adjustment (where the member reduces working hours or grade), does not apply to any final guarantee amount which has been added to the pension account in question.

Regulation 3(4) amends regulation 34 to provide that the pension used to calculate a member’s commutation payments may under certain circumstances include a final guarantee amount.

Regulation 3(5), (6), (8), (9), (10) and (11) exclude the final guarantee amount to which an eligible member may otherwise have been entitled from the pension the member would have been entitled to for the purpose of the calculation of survivor benefits.

Regulation 3(7) makes similar provision in relation to death grants.

Regulation 3(12) and (13) provides that compensation paid under section 82 of PSPJOA 2022 or additional benefits paid under regulation 4S are liabilities for the purpose of actuarial valuations of a pension fund’s liabilities.

Regulation 3(14) amends regulation 81 to disapply its provisions on the payment of interest in relation to sums in respect of which interest is payable under regulation 4V of the 2014 Regulations or regulation 14 of these Regulations.

Regulation 3(15) amends regulation 96 to provide that, where a non-Club transfer out of the pension fund is applied for by an eligible member under paragraph (1) of that regulation, the value of the transfer is to be calculated in accordance with actuarial guidance issued by the Secretary of State, taking into account the member’s provisional underpin amount and provisional assumed benefits.

Regulation 3(16) and (17) provide that an actuary determining the amount of a bulk transfer payment must take into account the member’s provisional underpin amount and provisional assumed benefits.

Regulation 3(18) inserts a number of definitions into the 2013 Regulations, including the definition of “final guarantee amount”, which is linked to the definition in the 2014 Regulations.

Part 3 makes provision in relation to certain specified classes of person to put them in the position they would have been had the amendments made by these Regulations been in force from 2014. The provision being made is as follows:

Regulation 4 makes general provision, including about the persons to whom, or in respect of whom, provision is made.

Regulation 5 makes provision in relation to members who retired or died before 1st October 2023. It is to be determined whether the person should be entitled to a final guarantee amount. If so, the amount is to be paid to the member’s pension account or personal representatives.

Regulation 6 makes provision in relation to death grants in respect of members who died before 1st October 2023. Provisional assumed benefits and a provisional underpin amount are to be calculated in respect of the member and regulation 43 of the 2013 regulations is to be applied to recalculate the death grant, with any excess being paid to the original recipients of the death grant.

Regulation 7 makes provision in relation to pensioner member death grants in respect of members who died before 1st October 2023. The death grant payable in respect of the person is to be recalculated under regulation 46 and the amount is to be paid to the original recipients of the death grant.

Regulation 8 makes provision in relation to survivor benefits in respect of members who died before 1st October 2023. Provisional assumed benefits and a provisional underpin amount are to be calculated in respect of the member and regulation 4O is to be applied to the person and any survivor guarantee amount is to be added to the original survivor member’s pension account payable under regulation 41, 42, 44, 45, 47 or 48 of the 2013 Regulations.

Regulation 9 makes provision in relation to members who transferred into the fund before 1st October 2023 from certain schemes. Where that transfer results in the person being entitled to benefits under the 2014 Scheme or having a transfer value accepted under regulation 100 of the 2013 Regulations, the transfer is to be treated as a transfer to which regulation 9(1ZA) and, as the case may be (1ZB) of the 2014 Regulations applies.

Regulation 10 makes provision in relation to members who transferred out of the fund before 1st October 2023 under regulation 96 or 98 of the 2013 Regulations. Provisional assumed benefits and a provisional underpin amount are to be calculated in respect of the member and the transfer value is to be recalculated. Where a payment must be made, it is to be made to the trustees or manager of the new scheme for the benefit of the person.

Regulation 11 provides that where a person took a trivial commutation payment or lump sum under regulation 34(1) of the 2013 Regulations before 1st October 2023, it is to be determined whether the person is entitled to a final guarantee amount in accordance with regulations 4A to 4V of the 2014 Regulations.

Regulation 12 makes provision in relation to members who divorced or dissolved a civil partnership before 1st October 2023. The cash equivalent value of the person’s relevant benefits (for the purpose of section 29 of the Welfare Reform and Pensions Act 1999) is to be recalculated in accordance with actuarial guidance issued by the Secretary of State. Where the recalculated amount exceeds the original calculation, the annual pension awarded to the member’s spouse or civil partner is to be recalculated based on that amount.

Regulation 13 makes provision for a member with underpin dates (within the meaning of regulation 4G of the 2014 Regulations) that occur before 1st October 2023, but who do not have a final underpin date (within the meaning of regulation 4H of those Regulations) before that date. This regulation makes provision for the calculation of a provisional underpin amount and provisional assumed benefits in relation to the member and for the modification of the provision applying a final underpin date to the member.

Regulation 14 makes provision for the payment of interest in respect of sums payable under this Part of the Regulations.

No impact assessment has been produced for this instrument as no, or no significant, impact on the private or voluntary sectors is foreseen.

Footnotes

Editorial notes