The Local Government Pension Scheme (Amendment) (No. 2) Regulations 2003

Citation, commencement, interpretation and extent

1.—(1) These Regulations may be cited as the Local Government Pension Scheme (Amendment) (No. 2) Regulations 2003.

(2) These Regulations shall come into force on 19th December 2003, but shall have effect from 1st January 2003.

(3) In these Regulations “the principal Regulations” means the Local Government Pension Scheme Regulations 1997(1).

(4) These Regulations extend only to England and Wales(2).

Amendment of Regulations

2.  The principal Regulations shall be amended in accordance with regulations 3 to 9 of these Regulations.

Employees of non-Scheme employers: community admission bodies

3.  For regulation 5 substitute—

“Employees of non-Scheme employers: community admission bodies

5.— (1) Subject to the requirements of this regulation and regulation 5B, an administering authority may make an admission agreement with any community admission body.

(2) These are community admission bodies—

(a) a body, other than the governors or managers of a voluntary school, which provides a public service in the United Kingdom otherwise than for the purposes of gain and which either—

(i) has sufficient links with a Scheme employer for the body and the Scheme employer to be regarded as having a community of interest, whether because the operations of the body are dependent on the operations of the Scheme employer or otherwise, or

(ii) is approved by the Secretary of State for the purposes of admission to the Scheme;

(b) a body, other than the governors or managers of a voluntary school, to the funds of which any Scheme employer contributes;

(c) a body representative—

(i) of local authorities,

(ii) of local authorities and officers of local authorities,

(iii) of officers of local authorities which is formed for the purpose of consultation as to the common interests of local authorities and the discussion of matters relating to local government, or

(iv) of Scheme employers;

(d) the Housing Corporation;

(e) the Commission for the New Towns;

(f) a company for the time being subject to the influence of a local authority as described in section 69 of the Local Government and Housing Act 1989(3); and

(g) a company for the time being subject to the influence of a Scheme employer listed in Schedule 2 (other than a local authority) as described in section 69 of the Local Government and Housing Act 1989 as if references in that section to a local authority were references to the listed Scheme employer.

(3) Approval under paragraph (2)(a)(ii) may be subject to such conditions as the Secretary of State thinks fit and he may withdraw approval at any time if such conditions are not met.

(4) Where, at the date that the admission agreement is made with a body within paragraph (2)(b), the contributions paid to the body by any one or more Scheme employers equal in total 50% or less of the total amount it receives from all sources, it must be a term of the admission agreement that the Scheme employer who provides funding (and, if more than one, all of them) guarantees the liability of the body to pay all amounts due from it under the Regulations.

(5) For the purposes of paragraph (2)(c) and (f), “local authority” includes the Greater London Authority.

Employees of non-Scheme employers: transferee admission bodies

5A.— (1) Subject to the requirements of this regulation and regulation 5B, an administering authority may make an admission agreement with any transferee admission body.

(2) A transferee admission body is a body, other than a community admission body, that is providing, or will provide—

(a) a service or assets in connection with the exercise of a function of a Scheme employer as a result of—

(i) the transfer of the service or assets by means of a contract or other arrangement;

(ii) a direction made under section 15 of the Local Government Act 1999(4); or

(iii) directions made under section 497A of the Education Act 1996(5); or

(b) a public service and which is approved by the Secretary of State for the purposes of admission to the Scheme.

(3) Only those employees of the transferee admission body who are employed in connection with the provision of the service or assets referred to in paragraph (2) are eligible to be members of the Scheme.

(4) In the case of an admission agreement with a transferee admission body under paragraph (2)(a) the Scheme employer, if it is not also the administering authority, must be a party to the admission agreement.

(5) Approval under paragraph (2)(b) may be subject to such conditions as the Secretary of State thinks fit and he may withdraw approval at any time if such conditions are not met.

(6) An admission agreement with a transferee admission body shall require that:

(a) in the case of a body under—

(i) paragraph 2(a), the Scheme employer; or

(ii) paragraph 2(b), the transferee admission body, to the satisfaction of the administering authority,

shall carry out an assessment, taking account of actuarial advice, of the level of risk arising on premature termination of the provision of the service or assets by reason of the insolvency, winding up or liquidation of the transferee admission body, and

(b) that where the level of risk identified by the assessment is such as to require it, the transferee admission body shall enter into an indemnity or bond to meet the level of risk identified.

(7) The indemnity or bond must be with—

(a) a person who has permission under Part 4 of the Financial Services and Markets Act 2000(6) to accept deposits or to effect and carry out contracts of general insurance;

(b) an EEA firm of the kind mentioned in paragraph 5(b) and (d) of Schedule 3 to that Act, which has permission under paragraph 15 of that Schedule (as a result of qualifying for authorisation under paragraph 12 of that Schedule) to accept deposits or to effect and carry out contracts of general insurance; or

(c) a person who does not require permission under that Act to accept deposits, by way of business, in the United Kingdom.

(8) An admission agreement with a transferee admission body shall make provision for the relevant matters set out in Schedule 2A.

(9) Where a transferee admission body undertakes to meet the relevant requirements of this regulation, and—

(a) in the case of a body under paragraph 2(a), the Scheme employer undertakes to meet the relevant requirements of this regulation; or

(b) in the case of a body under paragraph (2)(b), the Secretary of State approves the body for admission to the Scheme and the conditions, if any, to which the approval is subject have been met;

an administering authority must admit to the Scheme the eligible employees of the transferee admission body specified by the body and where it does so, the terms on which it does so are the admission agreement for the purposes of these Regulations.

Requirements for admission agreements

5B.— (1) In regulations 5 and 5A an admission agreement is an agreement that all or any specified class of the admission body’s employees may be members.

(2) An admission agreement must terminate if the admission body ceases to be such a body and may make such other provision about its termination as the parties consider appropriate.

(3) When an administering authority makes an admission agreement, it must promptly inform the Secretary of State of the date the agreement takes effect, the admission body’s name and, in the case of an admission agreement with a transferee admission body under paragraph 5A(2)(a), the name of the relevant Scheme employer.

(4) An administering authority must notify the Commissioners of the Inland Revenue of the admission of an admission body within the time prescribed in regulations made under section 605 of the Taxes Act(7) and provide such information as may be so prescribed.

(5) An administering authority and an admission body may make an admission agreement despite the fact that they do not exercise their functions or provide services or assets in areas that overlap or adjoin each other.

(6) Any question which may arise between the parties to an admission agreement relating to the construction of the agreement or the rights and obligations under that agreement shall be referred in writing for determination to the Secretary of State.

(7) An employee of an admission body may not be a member if he is a member of another occupational pension scheme (within the meaning of section 1 of the Pension Schemes Act 1993(8)) other than where the accrual of benefits under the occupational pension scheme would not affect approval of the Scheme as an approved scheme.

(8) These Regulations apply to employment with an admission body in which the employee is an active member in the same way as if the admission body were a Scheme employer.”.

Further restriction on eligibility

4.  For regulation 6(10) substitute—

“(10) A person who is a member and is an employee of a transferee admission body is treated as leaving a local government employment when he ceases to be employed in connection with the provision of the service or assets under regulation 5A(2) as a result of which employment he became eligible to join the Scheme.”.

Re-employed and rejoining deferred members

5.  For regulation 32(11) substitute—

“(11) In the case of a member who first becomes a member on or after 13th January 2000 any period of membership in the employment of a community admission body within—

(a) regulation 5(2)(a)(ii); or

(b) regulation 5(2)(b) where, at the date that the admission agreement is made, the contributions paid to the body by any one or more Scheme employers equal in total 50% or less of the total amount it receives from all sources;

shall not be aggregated with any other periods of membership for the purpose of calculating his retirement grant.”

Special circumstances where revised actuarial valuations and certificates must be obtained

6.  In regulation 78(2A)—

(a) for “a guarantee or indemnity” substitute “an indemnity or bond”;

(b) for “5(17)(i)” substitute “5A(2)(a)”; and

(c) delete “transferor” and “within the meaning of regulation 5(17)(j)”.

Interpretation

7.  In Schedule 1—

(a) in the definition of “Admission Agreement”, for “5(2)” substitute “5B(1)”;

(b) in the definition of “Admission agreement employee”, for “5(16)” substitute “5B(8)”;

(c) in the definition of “Admission body”, for “regulation 5(3)” substitute “regulations 5(2) and 5A(2)”; and

(d) in the definition of “Scheme employer”, for “5(16)” substitute “5B(8)”.

Matters to be included in an admission agreement in certain cases

8.  For Schedule 2A, substitute Schedule 2A as set out in the Schedule to these Regulations.

Revenue restrictions

9.  In paragraph 1(1) of Schedule 4, for the definition of “continuity break” substitute—

““continuity break” is a change of employment from a Scheme employer (including an admission body) to—

(a)

a community admission body within—

(i)

regulation 5(2)(a)(ii); or

(ii)

regulation 5(2)(b) where, at the date that the admission agreement is made, the contributions paid to the body by any one or more Scheme employers equal in total 50% or less of the total amount it receives from all sources; or

(b)

a transferee admission,

but does not include a change in the case of a person who was a member of the Scheme on 13th January 2000.”.

Transitional provisions

10.  Nothing in these regulations shall affect any admission agreement made in accordance with the principal Regulations before the date on which these Regulations came into force and so far as it is necessary to give effect to any such agreement, the principal Regulations shall be treated as if they had continued in effect without the amendments made by these Regulations.

Signed by authority of the Secretary of State

Phil Hope

Parliamentary Under Secretary of State,

Office of the Deputy Prime Minister

19th November 2003