The Local Government Pension Scheme (Scotland) Regulations 1998

Explanatory Note

(This note is not part of the Regulations)

These Regulations replace the provisions of the Local Government Superannuation (Scotland) Regulations 1987 (S.I. 1987/1850) and constitute the occupational pension scheme for persons engaged in local government employment in Scotland (other than teachers, policemen and firemen) who are active members of the Scheme (previously “pensionable employees”) on or after 1st April 1998. They also replace them in part for other (deferred or pensioner) members in accordance with the Local Government Pension Scheme (Transitional Provisions) (Scotland) Regulations 1998 (S.I. 1998/364). Except as so replaced the 1987 Regulations will continue to apply to deferred or pensioner members unless they become active members again.

The main changes are as follows–

Part II

• the restrictions on eligibility for membership have been simplified to exclude only those who have access to another occupational pension scheme or are part-time firemen from membership;

• regulation 11 sets a standardised contribution rate of 6 per cent. for all new members, while regulation 13 protects the position of existing members currently paying contributions at the rate of 5 per cent.;

• regulation 14 gives employers a new discretion to reduce or waive a member’s contribution rate once 40 years of local government employment have been served;

• regulations 15, 23, 50 and Schedule 4 set out overriding Inland Revenue limits on contributions and benefits, in particular incorporating the requirements of the Finance (No. 2) Act 1987 and the Finance Act 1989;

• regulations 20 to 22 define final pay and make provision for protecting the value of a member’s pension following a change in the circumstances of employment;

• regulation 24 defines the normal retirement age for new members as 65 but protects the position of existing members who may retire between the ages of 60 and 65;

• regulation 30 gives members aged at least 50 the right to apply for early payment of scheme benefits (subject, in the case of members aged less than 60 to the consent of the employer);

• regulation 31 places the onus on a deferred member to elect to carry earlier periods of membership forward on rejoining the Scheme, enabling an election to be made at any time during the fresh spell of membership;

• regulation 37 provides for a grant on the death of active members of two years' pay; for pensioners there is a standardised death grant of five times the annual pension;

• regulations 39 to 42 set out the arrangements for spouse’s pensions which are payable for the life of the beneficiary;

• regulations 43 to 47 provide a simplified structure for the payment of children’s pensions;

Part III

• regulation 51 gives employers a new discretionary power to augment scheme membership by up to 6 2/3 years on the termination of a member’s employment;

• regulations 57 and 58 allow for the conversion of the retirement grant to pension or vice versa;

• regulations 59 to 65 set out a simplified structure for the payment of additional voluntary contributions and give the member the option to transfer the accumulated value of the contributions into additional scheme membership;

• regulations 66 to 71 allow employers to operate a shared-cost additional voluntary contributions scheme and give members the option to transfer the accumulated value of the contributions into additional scheme membership;

Part IV

• regulation 77 gives administering authorities the power to set revised contribution rates for employers with immediate effect where the costs to the fund exceed the assumptions stated in the rates and adjustment certificate which would otherwise determine these rates;

• regulation 81 gives administering authorities the power to charge interest where an employing authority is more than one month overdue in making certain payments;

• regulations 109 and 110 give administering authorities the discretion to decide their own abatement policy;

• regulations 116 to 120 apply the provisions in the Pension Schemes Act 1993 about transfers of rights out of occupational pension schemes with a few modifications and enable an alternative basis to be used for bulk transfers out;

• regulations 121 to 127 set out a simplified procedure for transferring rights into the Scheme, operating on a cash equivalent transfer basis, and provide for adjustments between funds where internal transfers occur;

• regulation 136 gives employers the discretion to convert awards made under the Local Government (Discretionary Payments and Injury Benefits) (Scotland) Regulations 1998 into Scheme membership.