The Local Government Pension Scheme (Scotland) Regulations 2018

Pension accounts

Pension accounts

22.—(1) An administering authority must open and maintain one or more pension accounts for each member of the Scheme.

(2) A separate pension account must be opened in relation to each employment where a member is or was employed in 2 or more Scheme employments.

(3) A pension account—

(a) must contain such matters as are required by these Regulations;

(b) must identify which one of the following categories of pension account it is—

(i) an active member’s pension account;

(ii) a deferred member’s pension account;

(iii) a deferred refund account;

(iv) a retirement pension account;

(v) a flexible retirement pension account;

(vi) a pension credit account; or

(vii) a survivor member’s account; and

(c) may otherwise be kept in any form that the administering authority considers appropriate.

(4) An administering authority must close a member’s pension account if—

(a) a transfer value payment is made in respect of the member if the effect of the transfer is that the member is no longer entitled to any benefits from the account;

(b) a refund of contributions is paid under regulation 18 (rights to return of contributions);

(c) all the benefits in the account are forfeited under regulation 86 (forfeiture of pension rights after conviction for employment-related offences);

(d) the member dies;

(e) the last survivor entitled to a benefit from a survivor member’s account ceases to be entitled to a benefit from the account (by reason of death or upon ceasing to be an eligible child);

(f) due to aggregation of the benefits in the account with a different account, it is no longer required;

(g) a payment under regulation 33(1) has been made; or

(h) the member’s benefits are transferred to another fund under regulation 97.

(5) Where a member with an active member’s pension account also has a deferred refund account, the benefits in the deferred refund account must be aggregated with the active member’s pension account and the deferred refund account closed.

(6) Where an active member with concurrent employments ceases an employment and does not have qualifying service for a period of 2 years, the active member’s pension account in respect of that employment must be closed and the benefits in that account must be aggregated with the ongoing active member’s pension account and, if there is more than one such account, the one chosen by the member.

(7) Where an active member with concurrent employments ceases an employment with entitlement to a deferred pension, the benefits in the deferred member’s pension account must be aggregated with those in the on-going active member’s pension account and, if there is more than one such account, the one chosen by the member, unless within—

(a) 12 months of the date the concurrent employment ceased; or

(b) such longer time as the Scheme employer in relation to the relevant on-going active member’s pension account permits,

the member makes an election to the appropriate administering authority to retain the deferred member’s pension account.

(8) Where a deferred member again becomes an active member, the benefits in the deferred member’s pension account must be aggregated with those in the active member’s pension account unless within—

(a) 12 months of the active member’s pension account being opened; or

(b) such longer time as the Scheme employer in relation to that active member’s pension account permits,

the member makes an election to the appropriate administering authority to retain the deferred member’s pension account.

(9) Where a deferred member’s pension account or a deferred refund account is to be aggregated with an active member’s pension account and the gap between the member’s last day of membership to which the deferred member’s pension account or deferred refund account relates and the first day of active membership to which the active member’s pension account relates does not exceed 5 years, the balance in the deferred member’s account or deferred refund account shall be recalculated, before aggregation, as if the amount in that account had been increased by the revaluation adjustment and not the index rate adjustment.

(10) The option under paragraphs (7) and (8) to elect to retain the deferred member’s pension account does not apply to a member who is the subject of a transfer—

(a) to which the TUPE Regulations apply; or

(b) which is treated as if it were a relevant transfer within the meaning of regulation 2(1) and 3 of the TUPE Regulations, notwithstanding regulation 3(5) of those Regulations.

Active member’s pension accounts

23.—(1) At the beginning of each Scheme year, an active member’s pension account in relation to an employment must specify the opening balance for that year.

(2) At the end of each Scheme year—

(a) the balance mentioned in paragraph (1); plus

(b) the amount of earned pension, if any, for the Scheme year; plus

(c) the amount of any additional member pension acquired during the Scheme year pursuant to arrangements made under regulation 16(1) or (3) (additional pension contributions); plus or minus, as the case may be;

(d) the sum resulting from any pension account adjustment during the Scheme year,

must be aggregated and the revaluation adjustment for that Scheme year must be applied at the beginning of the next Scheme year in accordance with guidance issued by the Scottish Ministers.

(3) The revalued balance calculated under paragraph (2) becomes the new opening balance for the next Scheme year.

(4) Except where regulation 10 (temporary reduction in contributions) applies, the amount of earned pension for a Scheme year is 1/49th of the member’s pensionable pay received in that year (irrespective of whether it relates to work carried out in that period).

(5) Where regulation 10 (temporary reduction in contributions) applies, the amount of earned pension for a Scheme year is 1/98th of the member’s pensionable pay received in that year while that regulation applies (irrespective of whether it relates to work carried out during that period).

(6) Other than to correct an error in a pension account, a pension account adjustment can only arise as a consequence of—

(a) an award of additional pension under regulation 30 (award of additional pension);

(b) a transfer value payment being made or received;

(c) a pension debit being made;

(d) a Scheme pays election;

(e) a transfer into the member’s pension account from a different account upon aggregation of those accounts;

(f) an adjustment of a description mentioned in regulation 88 (adjustment of accounts following forfeiture etc);

(g) an adjustment of the description mentioned in paragraph (10); or

(h) an adjustment resulting from a certificate of protection.

(7) If an active member’s pension account is closed before the end of a Scheme year any pension account adjustment applicable to the account must be made immediately before the date the account is closed, but no revaluation adjustment is to be made to the active member pension account for that Scheme year.

(8) If a member starts to draw benefits under regulation 29(6) (flexible retirement) any pension account adjustment applicable to the active member’s pension account must be made immediately before the date on which benefits start to be paid.

(9) Where—

(a) a pension debit as is mentioned in paragraph (6)(c) is made; or

(b) the joint liability amount specified in a notice given in relation to an election as mentioned in paragraph (6)(d) is met by the pension fund,

the appropriate administering authority shall reduce the balance in the member’s account to reflect the reduction in the value of the member’s rights, calculated in accordance with actuarial guidance issued by the Scottish Ministers.

(10) Where pensionable pay relating to a period before a member ceased to be an active member is paid after the period of active membership has ended, it is to be treated as if it were received on the day before the active member’s account was closed.

Deferred member’s pension account and deferred refund account

24.—(1) If a member ceases to be an active member and becomes a deferred member in relation to an employment—

(a) the active member’s pension account must be closed; and

(b) a deferred member’s pension account must be opened.

(2) The deferred member’s pension account must specify the opening balance in that account.

(3) On the day the account is opened, the opening balance is the amount of pension the member has accrued.

(4) The amount of pension a member has accrued is—

(a) the opening balance for the member’s last active Scheme year; plus

(b) the amount of earned pension, if any, from the first day of the member’s last active Scheme year until the last day of active membership; plus

(c) any additional pension acquired during that period pursuant to arrangements made under regulation 16(1) or (3) (additional pension contributions); plus, or minus, as the case may be;

(d) any pension account adjustment applicable during that period.

(5) Except where regulation 10 (temporary reduction in contributions) applied, the amount of earned pension for the period mentioned in paragraph (4)(b) is 1/49th of the pensionable pay received during that period (irrespective of whether it relates to work carried out in that period).

(6) Where regulation 10 (temporary reduction in contributions) applied to any of the period mentioned in paragraph (4)(b), the amount of earned pension is 1/98th of the member’s pensionable pay received while that regulation applied (irrespective of whether it relates to work carried out in that period).

(7) The balance in the member’s account at the end of the Scheme year in which the member becomes a deferred member is adjusted at the beginning of the following Scheme year by the revaluation adjustment applicable to the Scheme year in which the member became a deferred member in accordance with guidance issued by the Scottish Ministers.

(8) The revalued balance calculated under paragraph (7) is the opening balance for the following Scheme year and thereafter, subject to paragraph (9), the balance in the account is adjusted each year by the index rate adjustment from the date that an increase would apply if that balance were a pension in payment to which the Pensions (Increase) Act 1971(1) applied.

(9) If a deferred member’s account is closed before the end of a Scheme year, any pension account adjustment applicable to the account must be made immediately before the date the account is closed.

(10) Other than to correct an error in a deferred member’s pension account, the only pension account adjustment that can arise under this regulation is an adjustment as a consequence of a matter specified in regulation 23(6) (adjustments to active member’s pension accounts).

(11) If a member ceases to be an active member without becoming entitled to any benefits because that member has less than 2 years qualifying service—

(a) the active member’s pension account must be closed; and

(b) a deferred refund account must be opened.

(12) Paragraphs (3) to (10) of this regulation apply to deferred refund accounts as they apply to deferred member pension accounts.

Retirement pension accounts: active members

25.—(1) When an active member becomes entitled to immediate payment of a full retirement pension in relation to an employment—

(a) the active member’s pension account must be closed; and

(b) a retirement pension account must be opened.

(2) The retirement pension account must specify—

(a) the amount of accrued pension;

(b) the amount of any additional pension (if any) purchased under regulation 17(6)(b)(i) (additional voluntary contributions);

(c) the early payment reduction or deferred payment enhancement (if any) and the amount of pension to which that reduction or enhancement is to be applied;

(d) the commutation amount (if any);

(e) the amount of any pension adjustment; and

(f) the amount of pension payable from time to time and the date from which it is to be paid.

(3) Subject to paragraph (4), the amount of accrued pension for the purposes of paragraph (2)(a) is the amount that would have been specified under regulation 24(4) (deferred member’s pension account) if a deferred member’s pension account had been opened for that member.

(4) The amount of accrued pension specified in paragraph (2)(a) must be reduced to take account of the commutation amount.

(5) The amount of any pension adjustment not already accounted for under paragraph (2)(a) is, for the purposes of paragraph (2)(e) the amount calculated in accordance with actuarial guidance issued by the Scottish Ministers to account for any tax to which the administering authority may become chargeable under the Finance Act 2004 in accordance with regulation 82 (tax) or as a result of a pension sharing order.

(6) The balance in the member’s account at the end of the Scheme year in which the member becomes a pensioner member is adjusted at the beginning of the following Scheme year by the revaluation adjustment applicable to the Scheme year in which the member became a pensioner member in accordance with guidance issued by the Scottish Ministers.

(7) The revalued balance calculated under paragraph (6) is the opening balance for the following Scheme year and, thereafter, the balance is adjusted each year by the index rate adjustment from the date that an increase would apply if that balance were a pension in payment to which the Pensions (Increase) Act 1971 applied.

(8) For the purposes of this regulation a full retirement pension means a retirement pension other than a pension payable under regulation 29(6) (flexible retirement pensions).

Retirement pension accounts : deferred and pension credit members

26.—(1) When a deferred member becomes entitled to immediate payment of a retirement pension—

(a) the deferred member’s pension account must be closed; and

(b) a retirement pension account must be opened.

(2) The retirement pension account must specify—

(a) the amount of accrued pension;

(b) the amount of any additional pension (if any) purchased under regulation 17(6)(b)(i) (additional voluntary contributions);

(c) the early payment reduction or deferred payment enhancement (if any) and the amount of pension to which that reduction or enhancement applies;

(d) the commutation amount (if any);

(e) the amount of any pension adjustment; and

(f) the amount of pension payable from time to time and the date from which it is to be paid.

(3) Subject to paragraph (4), the amount of accrued pension for the purposes of paragraph (2)(a) is the amount specified in that member’s deferred member’s pension account immediately before it was closed.

(4) The amount of accrued pension specified in paragraph (2)(a) must be reduced to take account of the commutation amount.

(5) The amount of any pension adjustment not already accounted for under paragraph (2)(a) is, for the purposes of paragraph (2)(e), the aggregate of the amounts calculated in accordance with actuarial guidance issued by the Scottish Ministers to account for—

(a) any tax to which the administering authority may become chargeable under the Finance Act 2004 in accordance with regulation 82 (tax); or

(b) a pension sharing order.

(6) The balance in the member’s account is adjusted each year by the index rate adjustment from the date that an increase would apply if that balance were a pension in payment to which the Pensions (Increase) Act 1971 applied.

(7) This regulation applies in relation to pension credit members who become entitled to immediate payment of a retirement pension as it applies to deferred members with the following modifications—

(a) all references to deferred members are to be read as references to pension credit members; and

(b) the reference to accrued pension in paragraph (2)(a) is to be read as a reference to the amount of pension credit in the pension credit member’s account.

(8) If the member ceased to be an active member, became a deferred member and a pensioner member within the same Scheme year, the balance in the member’s retirement pension account at the end of the Scheme year in which the retirement pension account was opened is adjusted at the beginning of the following Scheme year by the revaluation adjustment applicable to the Scheme year in which the retirement pension account was opened, in accordance with guidance issued by the Scottish Ministers.

Flexible retirement pension accounts

27.—(1) When an active member is entitled to immediate payment of a retirement pension under regulation 29(6) (flexible retirement pensions) in relation to an employment—

(a) a flexible retirement pension account must be opened; and

(b) the balance in the active member’s pension account must be reduced by the amount of accrued pension transferred into the member’s flexible retirement account.

(2) The flexible retirement pension account must specify—

(a) the amount of accrued pension transferred from the active member’s pension account;

(b) the amount of additional pension (if any) purchased under regulation 17(6)(b)(i) (additional voluntary contributions);

(c) the early payment reduction or deferred payment enhancement (if any) and the amount of pension to which that reduction or enhancement is to be applied;

(d) the commutation amount (if any);

(e) the amount of any pension adjustment; and

(f) the amount of pension payable from time to time and the date from which it is to be paid.

(3) The amount of accrued pension specified in paragraph (2)(a) must be reduced to take account of the commutation amount.

(4) The amount of any pension adjustment not already accounted for under paragraph (2)(a) is, for the purposes of paragraph (2)(e), the aggregate of the amounts calculated in accordance with actuarial guidance issued by the Scottish Ministers to account for an adjustment as a consequence of a matter specified in regulation 23(6) or 25(5) (adjustments to active member’s pension accounts).

(5) The balance in the member’s flexible retirement pension account at the end of the Scheme year in which the member became entitled to the immediate payment of a retirement pension under regulation 29(6) (flexible retirement) is adjusted at the beginning of the following Scheme year by the revaluation adjustment applicable to the Scheme year in which the member became entitled to that retirement pension, in accordance with guidance issued by the Scottish Ministers.

(6) The revalued balance calculated under paragraph (5) is the opening balance for the following Scheme year and, thereafter, the balance in the account is adjusted each year by the index rate adjustment from the date that an increase would apply if that balance were a pension in payment to which the Pensions (Increase) Act 1971 applied.

Pension credit accounts

28.—(1) When a person becomes a beneficiary of a pension sharing order, a pension credit member account must be opened.

(2) The pension credit account at the date it is opened must be credited from the member’s pension account that is to be debited with an amount in compliance with the pension sharing order and calculated in accordance with actuarial guidance issued by the Scottish Ministers.

(3) The amount credited under paragraph (2) is the opening balance for the following Scheme year and, thereafter, the balance in the account each year is adjusted by the index rate adjustment from the date that an increase would apply if that balance were a pension in payment to which the Pensions (Increase) Act 1971 applied.

(4) The amount in a pension credit account may be adjusted by amounts calculated in accordance with actuarial guidance issued by the Scottish Ministers—

(a) as a result of a further pension sharing order; or

(b) to account for any tax to which the administering authority may become liable under the Finance Act 2004 in accordance with regulation 82 (tax).

(1)

1971 c.56.