The LGPS require pension decisions to be made by scheme employers in a wide range of circumstances, some of these decisions may require scheme employers to exercise a discretion.
Decisions made by a scheme employer can be divided into three basic types:
- A decision made on employment grounds and this, combined with basic information on the person, dictates the pension decision that has to be made; e.g. a member, who is over age 55 but below their Normal Pension Age, is being made redundant; therefore immediate payment of unreduced pension benefits should be made on grounds of redundancy.
- A decision that requires the employer to exercise a discretion on the pension decision; e.g. whether to allow flexible retirement.
- A decision on which the regulations are technically clear but, in reality, reasoned judgment is needed on making decisions; i.e. tiered contribution rate.
Please note that any decision made by a scheme employer could be subject to an appeal.
LGPS regulations give scheme employers some discretionary powers where employers are required to:
- Formulate, publish and keep an up to date policy statement on the main discretions
- Ensure you are applying any other discretions correctly
- Have a procedure in place to respond to individual requests for you to exercise your discretionary powers.
Further information and guidance on how to develop a Discretions Policy Statement can be found in the HR Guide and Discretions Policies Guide which are available from the LGPS Regulations and Guidance website along with a full list of administering authority and scheme employer discretions.
The LGPS Regulations 2013 specify that existing scheme employers should have provided the Pensions Service with a copy of their Discretions Policy. New scheme employers are required to provide the Clwyd Pension Fund with a copy of their Discretions Policy within 30 days of joining the Pension Fund.
Service Level Agreement
Each Scheme employer is required to agree and sign a Service Level Agreement (SLA) with the Clwyd Pension Fund. The SLA provides a standard by which both parties will agree to administer the Local Government Pension Scheme (LGPS) on behalf of its current and former Scheme members.