Agenda item

            The Committee considered the following report and accompanying response in respect of the Department for Communities’ consultation on the draft Local Government Pension Scheme (Amendment) Regulations (Northern Ireland) 2022:

 

“1.0      Purpose of Report/Summary of Main Issues

 

1.1             The purpose of this report is to make the Committee aware of the Department for Communities consultation on the draft Local Government Pension Scheme (Amendment) Regulations (Northern Ireland) 2022 and to seek its approval of the Council’s draft response. 

 

2.0       Recommendations

 

2.1       The Committee is asked to consider the draft response and approve its submission to the Department for Communities, subject to any comments or amendment provided, with the proviso that the response is subject to ratification by the Council on 10th January 2022.

 

3.0       Main Report

 

            Key Issues

 

3.1       On 8th October 2021, the Department for Communities published a consultation to seeks views on changes to the Local Government Pension Scheme in Northern Ireland (LGPS(NI)). It outlines proposed changes to the LGPS (NI) to cover both the changes required by an Employment Tribunal ruling in relation to survivor benefits, and a number of technical amendments and minor policy updates.  The Department for Communities (DfC) is consulting on changes to the regulations governing the LGPS (NI).

 

3.2       Members should note that the closing date for responses was 10th December 2021, but officers have sought an extension to allow the draft response to be brought to this Committee.  A copy of the draft response to the consultation is attached and a summary of the key issues are outlined below.  As the closing date for responses is prior to the Council meeting on 10th January, it is proposed that the response, subject to any comments or amendments from Members, be submitted with the caveat that it is still subject to ratification by the Council.

 

            A Link to the Consultation is provided below.

 

            Consultation on the draft Local Government Pension Scheme (Amendment) Regulations (Northern Ireland) 2022 | Department for Communities (communities-ni.gov.uk)

 

3.3       NILGOSC has provided information on the proposed key changes and these are outlined below.

 

            In summary the key areas are:

 

1.     Survivor Benefits

2.     30 Day Rule

3.     Additional Voluntary Contributions (AVCs) – removal of 50% limit

4.     Refunds – discretion to pay out after five years

5.     Death Grants

6.     Exit certificates

7.     Internal dispute resolution procedures

8.     Forfeiture

9.     Fluctuating emolument for final salary pay

 

            The summary and rationale for the changes are as follows:

 

3.4       1. Survivor Benefits

 

            Historically, the Local Government Pension Scheme (Northern Ireland) (‘LGPS (NI)’) had different treatments for survivors of marriages than took place while the member was either a deferred member or a pensioner. A surviving widow’s pension was based on service from 6th April 1978, whereas a surviving widower’s pension was based on service from 6th April 1988. Surviving civil partners were treated as widowers. Earlier in January 2020, amendments made some headway towards equalising survivors’ benefits. Same-sex survivors’ benefits were equalised with widows of opposite sex marriages and male survivors of opposite sex civil partnerships had the same benefits as widowers of opposite sex marriages for deaths from 13 January 2020. However, it is now proposed that both the changes made in January 2020 and these amendments are backdated to 2005 and that there will be equal treatment regardless of gender of the [deceased] member or the surviving spouse or civil partner

 

3.5       2. 30 Day Rule

 

            At present members pay contributions for the first 30 consecutive days of absence e.g., while on a career break or authorised unpaid leave. It is proposed that this rule be amended so that employees only pay contributions where the break is for 30 consecutive days or less.

 

3.6       3. Additional Voluntary Contributions (AVCs) – removal of 50%         limit

 

            The regulations currently restrict member contributions to an AVC to 50% of pensionable pay in each pay period. It is proposed that this limit be removed.

 

3.7       4. Refunds – discretion to pay out after five years

 

            Under current regulations refunds must be paid by NILGOSC within five years of the date of leaving. The amending regulations propose giving NILGOSC discretion to pay refunds out after five years has elapsed. Refunds must be paid out before age 75.

 

3.8       5. Death Grants

 

            Currently, a death grant can only be paid where a member dies before the age of 75. It is proposed that this age limit is removed, and death grants would be paid to the estates/survivors of those over age 75 on the same basis as pensioners i.e., 10 times the annual pension earned less any pension payments already made. It is proposed that this be backdated to 1st April 2015.

 

3.9       6. Exit certificates

 

            It is proposed that NILGOSC could issue an interim exit certificate, subject to the Department’s approval and conditions. This proposal would allow NILGOSC to react quickly in some circumstances and issue an interim exit certificate e.g., insolvency. The final exit certificate would then be issued in due course once all the data was available and the actuary had calculated the exit position.

 

3.10      7. Internal dispute resolution procedures

 

            The amending regulations propose increasing the time for each of the two stages from two to four months.

 

3.11      8. Forfeiture

 

            At present it is difficult for an employer to seek forfeiture of pension rights as an offence must have been committed in connection with an employment for which an employee is convicted and because of which they left employment. Generally, these offences are not uncovered until after the employee has left employment. The amendments propose removing the requirement that the person must have left their employment because of the offence. As before, the forfeiture certificate can only be issued by a Minister.

 

3.12      9. Fluctuating emolument for final salary pay

 

            Currently, for calculation of final salary pay, fluctuating emoluments are averaged over the period that they were paid for, if it is less than three years; otherwise, they are averaged over three years. The amendments propose reverting to the earlier position where these fluctuating emoluments are always averaged over three years. This only applies to those members who have final salary membership i.e., before 1 April 2015.

 

3.13      Members are asked to consider the attach draft response included in and approve its submission to the Department for Communities.

 

            Financial and Resource Implications

 

3.14      There are no implications associated with this report. 

 

            Equality or Good Relations Implications/

            Rural Needs Assessment

 

3.15      There are no implications associated with this report. 

 

            Members are advised that DfC has undertaken an equality screening assessment on the proposed changes and this is available on their website.”

 

Council Response

 

“The Council notes that the changes proposed to the scheme, as indicated in section 3, brings it in line with ensuring equality of treatment regardless of gender or sexual orientation through equalisation of survivor benefits.  It is also noted that it is best implemented through making both amendments retrospective to 2005.

 

However, as liabilities are underwritten by the employers any increase in benefits could potentially become an employer cost, therefore any financial impact on the employer should be considered by the Department.

 

In relation to the “Other Amendments” proposed in Section 4, the Council is in agreement with these proposed policy amendments.”

 

            The Committee approved the foregoing response for submission to the Department for Communities.