The Local Government Pension Scheme (Miscellaneous Amendment) Regulations 2019

Transcription

1 The Lcal Gvernment Pensin Scheme (Miscellaneus Amendment) Regulatins 2019 Draft regulatin prpsed 1. (1) These Regulatins may be cited as the Lcal Gvernment Pensin Scheme (Miscellaneus Amendment) Regulatins (2) These Regulatins cme int frce n [date], save fr regulatins 4(b) and 5 which have effect as fllws (i) 5th December 2005 in respect f a surviving civil partner f a member; and (ii) 17th July 2013 in respect f a surviving spuse f a same sex marriage with a member. (3) These Regulatins extend t England and Wales. LGA cmment The Marriage (Same Sex Cuples) Act 2013 [SI2013/30] received ryal assent n 17 July Sectin 1, which makes same sex marriage legal, did nt cme int frce until 13 March 2014 by virtue f the Marriage (Same Sex Cuples) Act 2013 (Cmmencement N. 2 and Transitinal Prvisin) Order 2014 [SI 2014/93]). The Marriage (Same Sex Cuples) Act 2013 (Cnsequential and Cntrary Prvisins and Sctland) Order 2014 [SI 2014/560] was made in accrdance with sectin 18(2) f the Marriage (Same Sex Cuples) Act Paragraph 17 f part 2 f schedule 3 f thse regulatins inserted regulatin 42B (marriage f a same sex cuple) int the LGPS 1997 regulatins effective frm 13 March Therefre, we believe the date in draft regulatin 1(2) (ii) shuld be changed t 13 March Sectin 9 f the Marriage (Same Sex Cuples) Act 2013 prvides that the parties t a civil partnership are able t cnvert their civil partnership int a marriage. The Marriage (Same Sex Cuples) Act 2013 (Cmmencement N. 4) Order 2014 [SI 2014/3169] made sectin 9(6) f the 2013 effective frm 10 December The Marriage f Same Sex Cuples (Cnversin f Civil Partnership) Regulatins 2014 [SI 2014/3181] sets ut the prcess fr cnversin frm civil partnership t same sex marriage, effective frm 10 December Once cnverted, the date frm which the marriage is t be treated as having subsisted is the date the civil partnership was frmed, in accrdance with sectin 9(6) f the 2013 Act. D the draft regulatins need t specify that where a civil partnership is cnverted t a marriage the date that regulatins 4(b) and 5 have effect fr same sex spuses will be the date the marriage is treated as having subsisted in accrdance with sectin 9(6) f the 2013 Act? Lcal Gvernment Assciatin Nv

2 In additin, the plicy cnsultatin cnfirms that the amendment t regulatin 3 f the Transitinal 2014 Regulatins which gives effect t the change in regulatin D11 f the LGPS 1995 Regulatins will be backdated t 14 May 2018 t allw anyne wh has been prevented frm getting early access t their pensin because f the versight in the 2018 Amendment Regulatins [SI 2018/493] t be able t backdate their applicatin t 14 May Hwever, this is nt delivered by these draft regulatins. 4. In regulatin 3 ( befre 1st April 2014) (a) fr paragraph (5A)(a) substitute (a) regulatin 11 f Part D f the 1995 Regulatins (entitlement t deferred retirement benefits) has effect as fllws (i) in paragraphs (2)(d) and (4) with the substitutin f the references t age 60 with references t age 55; (ii) with the substitutin f the reference t emplying authrity with references t administering authrity in each place where it ccurs; and (iii) in paragraph (3) with the missin f the wrds within the perid f three mnths beginning with the relevant date. ; There are tw references t emplying authrity within regulatin D11 f the LGPS Regulatins The first is a decisin making event (D11 (2) (c)), the secnd, the party t whm the member makes an electin fr vluntary early payment (D11 (3)). Whilst we agree that an electin fr vluntary early payment shuld be made by the member t the administering authrity (D11 (3)), we d nt agree that this change shuld als apply t the decisin making pwers in D (11) (2) (c). The effect f draft regulatin 4(a)(ii) is t prvide that the administering authrity will make the decisin with regards t the early payment f deferred benefits n cmpassinate grunds (frm age 50 and prir t NRD NRD calculated in accrdance with regulatin C3 f the LGPS Regulatins 1995) under regulatin D11(2)(c). In mst cases, there will be a strain cst t the emplyer f a retirement n cmpassinate grunds (any early payment reductin that wuld therwise apply is waived where the retirement is n cmpassinate grunds) and the decisin shuld, therefre, remain with the emplyer. Changing the decisin maker t the administering authrity wuld lead t a perverse utcme and be incnsistent with successr regulatins (where the decisin nly rests with the administering authrity if the frmer emplyer has ceased t be a Scheme emplyer). We suggest that: draft regulatin 4(a)(ii) is amended t apply t regulatin D11(3) nly. Lcal Gvernment Assciatin Nv

3 Lcal Gvernment Assciatin Nv in rder t be cnsistent with paragraph 1(5) f Schedule 2 f the Transitinal 2014 Regulatins, which applies t benefits paid n cmpassinate grunds under the 1997 and 2008 schemes, we suggest that regulatin D11(2)(c) is amended t include that where a member's frmer emplyer has ceased t be a Scheme emplyer, the apprpriate administering authrity shuld make the decisin fr payment n cmpassinate grunds. We understand that the plicy intent is fr a member wh left active prir t 1 April 1998, t be able t elect fr vluntary early payment f their pensin benefits frm age 55 and prir t NRD (NRD is defined within regulatin C3 f the LGPS Regulatins 1995). As currently wrded draft regulatin 4(a)(iii) remves the requirement that the member must elect fr vluntary early payment within 3 mnths f the relevant date, but des nt achieve the plicy intent as it still defines the relevant date (defined in regulatin D11(4)) as age 55 r the date f his ceasing t be emplyed in lcal gvernment emplyment, if later. We suggest that a further amendment is included s that regulatin D11(4)(a) f the 1997 regulatins reads: (a) a date n r after which he attains the age f 55, r (b) if later, the date f his ceasing t be emplyed in lcal gvernment emplyment. We wuld als suggest that regulatin D11(4)(b) be deleted. The requirement t have ceased all lcal gvernment emplyment fr vluntary early payment f benefits was remved frm the scheme with effect frm 1 April In ur view, it is incnsistent fr payment f deferred benefits befre this date t have different qualifying cnditins, t thse paid under later regulatins. It is als nt in-line with the Gvernment s plicy n pensin freedms. Draft regulatin 4(a)(iii) We als suggest that draft regulatin 4(a)(iii) is amended t exclude the

4 wrd given befre within (this maybe just a typ within the draft regulatins?). 4. (b)after paragraph (5A)(b) insert (ba) regulatin 42 f the 1997 Regulatins (reductin f sme surviving spuses pensins) has effect with the substitutin f the references t i. widwer with references t widw r widwer; and ii. she with references t the member;. We suggest that draft regulatin 4(b) is amended t change regulatin 42(3) and (4) nly rather than the whle f regulatin 42, this is because by changing all references in regulatin 42 frm widwer t widw and widwer, regulatin 42(2) will read as belw: 42.-(1) Where a male pensiner member r deferred member marries and dies, the pensin t which his widw is entitled under regulatin 40 r 41 is calculated as if his retirement pensin were nly s much f his actual pensin as is attributable t the perid f his in cntracted-ut emplyment after 5th April (2) Except in the case f a shrt term pensin payable t the widw r widwer f an active member, the pensin t which a widw r widwer is entitled under regulatin 40 r 41 is calculated as if the member's retirement pensin were nly s much f her actual pensin as is attributable t her after 5th April This has the effect f restricting used in the calculatin f a widw s pensin t after 5 April 1988 which is cntradictry t that in 42(1) and is nt in line with the stated plicy intent (this maybe just an versight within the draft regulatins?). Regulatins 42(4)(a) f the 1997 Regulatins Regulatins 42(4)(a) f the 1997 Regulatins als needs t be amended t incrprate widw s ill health enhancement and we suggest that it shuld read: 42(4)(a) frming the enhanced element f a member s ttal perid f by virtue f a retirement t which regulatin applied after 5 th April 1988 in respect f widwers and 5 th April 1978 in respect f widws Lcal Gvernment Assciatin Nv

5 5. (1) In regulatin 17 (survivr benefits) (a) after paragraph (9)(b) insert (c) Any calculatin f the survivr pensin payable under the Earlier Regulatins t a persn wh is the surviving civil partner f a member r wh is the surviving spuse f a same sex marriage with a member is t be n the basis that the survivr is a widw, irrespective f the sex f the member. ; (b) mit paragraphs (11)(a) and (c); (c) in paragraph (11)(b), fr survivr substitute male survivr ; and (d) in paragraph (13), after cunted as fr the purpse f insert regulatin F6 f the 1995 Regulatins r. Hw the changes are being made We understand the Transitinal 2014 Regulatins [SI 2014/525] can be used t effect change in the earlier regulatins in respect f events that ccur frm the date the Transitinal 2014 Regulatins became effective i.e. 1 April 2014 nwards. Hwever, we are unclear hw the Transitinal 2014 Regulatins can be used t effect change in the earlier regulatins in relatin t events that have ccurred befre 1 April 2014 (e.g. the benefits that were paid as a result f a death that ccurred in 2010 have never been subject t the Transitinal 2014 Regulatins). We wuld be grateful fr clarificatin f hw the changes apply in these circumstances? Our analysis f the regulatins frm this pint nwards assumes that the draft regulatins can effect change in relatin t events that ccurred befre 1 April Ptential wrsening fr civil partners and same sex spuses The regulatins as drafted will lead t the ptential wrsening fr sme civil partners/same sex spuses and culd ptentially put sme civil partners/same sex-spuses in a better psitin than widws (fr deaths that ccurred befre 1 April 2014). Because f the cmplexities f survivr pensins we have demnstrated all the scenaris when we think these incidents will ccur in appendix 1 but have prvided sme backgrund infrmatin and examples in the text belw: The incidents relate t civil partners and same sex spuses wh currently receive survivr pensins based n after 5/4/1988 plus relevant additinal as defined in regulatin 42(4) f the 1997 regulatins r regulatin F8(3) f the 1995 Regulatins. Under the prpsals they wuld be treated as widws s this additinal wuld nly cunt where they were married r in a civil partnership with the deceased at sme time whilst they were an active member after 31/3/1972 (whereas currently this additinal Lcal Gvernment Assciatin Nv

6 is included autmatically in the calculatin f pre and pst survivr benefits under the 1995 and 1997 Regulatins fr civil partners and same sex spuses). A plicy decisin was made in 2005 t make relevant additinal under the 1997 regulatins and additinal under F8(3) f the 1995 Regulatins, uncnditinal fr civil partners (i.e. it is cunted in the calculatin f all pre and pst survivr pensins under these regulatins) because civil partners had nt had the pprtunity t enter int a civil partnership befre. This als applies t the survivr f a same sex marriage by virtue f 42B f the 1997 Regulatins. This applies t the 1995 and 1997 regulatins and wuld fr pst civil partnerships/same sex marriages, be taken away if the draft regulatins are enacted, as is. Whilst the survivr pensin wuld be based n a lnger perid f i.e. frm 5/4/1978 as ppsed t the current 5/4/1988 this is f n cnsequence if the value f the relevant additinal r under F8(3) f the 1995 Regulatins was higher, r n was built up befre 6/4/1988 but additinal under regulatin 42 f the 1997 Regulatins r F8(3) f the 1995 Regulatins, wuld have cunted. An example f hw these members culd nw be disadvantaged is: Member jined LGPS 1/5/1988 Retired n ill health n 31/3/1998 Entered int a civil partnership n 1/1/2006 Member dies after 31/3/2014 Under the current rules the survivr s pensin wuld be based n the member s frm 1/5/1988 plus relevant additinal which includes the ill health enhancement awarded. Under the prpsals the survivr pensin wuld be based n the member s frm 1/5/1988 nly and the ill health enhancement wuld nt be included. Lcal Gvernment Assciatin Nv

7 The draft regulatins make this change retrspectively s as drafted this wuld require administering authrities t reduce such survivr pensins in payment? In ur view this wuld be in cntraventin f sectin 12 f the Superannuatin Act 1972, which states: N prvisin shall be made by any regulatins by virtue f subsectin (2) abve unless any persn wh is placed in a wrse psitin than he wuld have been in if the prvisin had nt applied in relatin t any pensin which is being paid r may becme payable t him is by the regulatins given an pprtunity t elect that the prvisin shall nt s apply in relatin t that pensin except as prvided by subsectin (4A) belw Other incidents where a civil partner r same sex partner wuld be made wrse ff is where the member left under the 2008 regulatins and died befre 1/4/2014. The survivr benefits fr pre and pst civil partnerships were based n all (due t an errr in the 2008 regulatins) which made them mre generus than survivr pensins paid t pst widws (widws were based n cntracted-ut emplyment after 5 April 1978). This inequality was crrected frm 1/4/2014 but the draft regulatins prvide that, fr deaths befre 1/4/2014, such survivr pensins will be retrspectively adjusted t be based n pst 5/4/1978 cntracted ut nly. Plicy intent where the calculatin f survivr benefits is changed retrspectively? We appreciate that the plicy intent is t put civil partners and same sex spuses in the same psitin as widws and in many cases this will lead t an imprvement in the benefits paid. The plicy cnsultatin makes it clear that administering authrities will be required t pay any additinal amunts due. Hwever, what is the plicy intent where a member has transferred ut and the survivr benefit used t calculate the CETV wuld nw be different as a result f the retrspective implementatin date f Lcal Gvernment Assciatin Nv

8 these changes? Similarly what is the plicy intent where pensin sharing rders have been implemented, where the survivr benefits have been trivially cmmuted t a single lump sum payment r where the member has trivially cmmuted their wn benefits? As already mentined, there are quite a few incidents where, as currently wrded, the regulatins wuld make peple wrse ff. We have already expressed ur view that this wuld be in cntraventin f sectin 12(4) f the Superannuatin Act 1972; but as drafted, because the regulatins make the changes retrspective wuld there be a requirement fr administering authrities t reduce survivr pensins in payment? There is als the issue f prspective survivr benefits already ntified n deferred annual benefit statements being reduced. Hw wuld any retrspective changes impact n CETVs, trivial cmmutatin lump sums and pensin credits/debits? Putting civil partners and same sex spuses in a better psitin than widws The civil partners/same sex spuses wh culd ptentially be in a better psitin than widws as a result f these changes are in relatin t members wh left under the 1997 Regulatins. Widw Pst marriage where the widw was als married t the member at sme time while he was in lcal gvernment emplyment after 31/3/1972 Member died befre 1/4/2014 Widw s pensin was based n pst cntracted ut 5/4/1978 Survivr f same sex marriage r civil partnership Pst marriage/partnership where the survivr was als married/ in a partnership with the member at sme time while he/she was in lcal gvernment emplyment after Lcal Gvernment Assciatin Nv

9 31/3/1972 Member died befre 1/4/2014 Lcal Gvernment Assciatin Nv Survivr s pensin will nw be based n pst cntracted ut 5/4/1978 plus RAM (because f draft regulatin 4(b) amending regulatin 42(3)) This is prviding a higher benefit that wuld have been prvided t a widw Hwever, the benefit that wuld have been prvided t the civil partner/same sex spuse prir t these draft regulatins wuld have been pst 5/4/1988 plus RAM and this culd ptentially be higher than cntracted ut pst 5/4/1978 plus RAM if the member had cntracted in frm a transfer in. Amendment t the 1995 regulatins fr widws We understand the plicy intent f draft regulatin 5(1)(d) is t crrect an errr in the Transitinal 2014 Regulatins in relatin pst widws where the widw was married t the member at sme time whilst they were an active member after 31 March Fr deaths befre 1/4/2014 these widws wuld have received a survivr pensin based n all their husband s. Frm 1/4/2014, in respect f deaths frm that date, the calculatin is based n pst 5/4/1978 plus relevant additinal by virtue f regulatins 17(13) f the Transitinal 2014 Regulatins this is a wrsening. Hwever, draft regulatin 5(1)(d), in ur view, des nt achieve the plicy intent because regulatin F6 f the 1995 regulatins des nt prvide fr any additinal. Regulatin F6 restricts the cunted fr pst-retirement widws but als prvides that where a widw was married t the member at sme time whilst they were an active member after 31 March 1972 the survivr pensin shuld be based n all, as set ut in F3, F4 and F5. We suggest that regulatin 17(13) be adjusted t smething like:

10 (13) Membership fr the purpses f paragraphs (10) and (12) includes any relevant additinal that wuld have cunted as fr the purpse f regulatin F6 f the 1995 Regulatins r regulatins 42 and 42A f the 1997 Regulatins (reductin f sme surviving spuses' and civil partners' pensins), that wuld have cunted under regulatins F3, F4 r F5 by virtue f F6 f the 1995 Regulatins and any purchased under regulatin 14A f the Benefits Regulatins (electins t pay additinal cntributins: survivr benefits). Lcal Gvernment Assciatin Nv

11 Appendix 1 Fr deaths after 31/3/2014 Nte: the tables d nt include pre survivr benefits where the benefits are already equalised. Regulatins applicable 1995 Regulatins Civil partner 1997 Regulatins Regulatins applicable Civil partners - Member dies after 31/3/2014 If draft regulatin Pst relatinship Current psitin implemented effective frm 5/12/2005 Civil partner 1995 Regulatins Same sex spuse 1997 Regulatins Same sex spuse Entered int partnership after Entered int partnership after Pst 5/4/1988 plus relevant additinal Pst 5/4/1988 plus relevant additinal Pst 5/4/1978 Pst 5/4/1978 Same sex spuses - Member dies after 31/3/2014 If draft regulatin Pst relatinship Current psitin implemented effective frm 13/3/2014 Married after Married after Pst 5/4/1988 plus relevant additinal Pst 5/4/1988 plus relevant additinal Pst 5/4/1978 Pst 5/4/1978 Effect Pssible wrsening as RAM n lnger included and member may nt have befre 6/4/1988 Pssible wrsening as RAM n lnger included and member may nt have befre 6/4/1988 Effect Pssible wrsening as RAM n lnger included and member may nt have befre 6/4/1988 Pssible wrsening as RAM n lnger included and member may nt have befre 6/4/1988 Lcal Gvernment Assciatin Nv

12 Fr deaths befre 1 April 2014 Nte: the tables d nt include pre survivr benefits where the benefits are already equalised. Regulatins applicable 1997 Regulatins Pst relatinship Widw ppsite sex marriage married after but als married t member at sme pint after 31/3/1972 whilst member was active Widws - Member dies befre 1/4/2014 Current psitin Pst 5/4/1978 cntracted ut If draft regulatin implemented Pst 5/4/1978 cntracted ut plus relevant additinal 1 Effect N change fr widws as change is nt retrspective fr widws but ptential knck n effect fr civil partners and same sex spuses puts them in a better psitin than widws Regulatins applicable 1995 Regulatins Civil partner 1997 Regulatins Civil partners - Member dies befre 1/4/2014 If draft regulatin Pst relatinship Current psitin implemented effective frm 5/12/2005 Civil partner Entered int partnership after Entered int partnership after Pst 5/4/1988 plus additinal defined in F8(3) f the 1995 Regulatins Pst 5/4/1988 plus relevant additinal Pst 5/4/1978 cntracted ut Pst 5/4/1978 cntracted ut Effect Pssible wrsening as RAM n lnger included and member may have cntracted in that wuld have cunted previusly e.g. frm a transfer in Pssible wrsening as RAM n lnger included and member may have cntracted in 1 Awards will nt be revisited as draft regulatin 4(b) is nt retrspective fr widws Lcal Gvernment Assciatin Nv

13 that wuld have cunted previusly e.g. frm a transfer in 6/4/ Regulatins Civil partner Entered int partnership after but als in partnership with member at sme pint after 31/3/1972 whilst member was active Entered int partnership after Entered int partnership after but als in partnership with member at sme pint after 31/3/1972 whilst member was active Pst 5/4/1988 plus relevant additinal All All Pst 5/4/1978 cntracted ut plus relevant additinal Pst 5/4/1978 cntracted ut Pst 5/4/1978 cntracted ut plus relevant additinal Pssible wrsening if the member had cntracted in that wuld have cunted previusly e.g. frm a transfer in Pssible wrsening if member had befre 6/4/1978, cntracted in r ther that previusly cunted twards survivr benefits e.g. ill health enhancement, added years etc. Pssible wrsening if member had befre 6/4/1978, cntracted in e.g. frm a transfer in. Lcal Gvernment Assciatin Nv

14 Regulatins applicable 1995 Regulatins Same sex spuse 1997 Regulatins Same sex spuse 2008 Regulatins Same sex spuse Same sex spuses - Member dies befre 1/4/2014 Current psitin If draft regulatin implemented Pst relatinship effective frm 13/3/2014 Married after Married after Married after but als married t member at sme pint after 31/3/1972 whilst member was active Married after Pst 5/4/1988 plus additinal defined in F8(3) f the 1995 Regulatins Pst 5/4/1988 plus relevant additinal Pst 5/4/1988 plus relevant additinal All Pst 5/4/1978 cntracted ut Pst 5/4/1978 cntracted ut Pst 5/4/1978 cntracted ut plus relevant additinal Pst 5/4/1978 cntracted ut Pssible wrsening as RAM n lnger included and member may have cntracted in that wuld have cunted previusly e.g. frm a transfer in Pssible wrsening as RAM n lnger included and member may have cntracted in that wuld have cunted previusly e.g. frm a transfer in 6/4/1988 Pssible wrsening if the member had cntracted in that wuld have cunted previusly e.g. frm a transfer in Pssible wrsening if member had befre 6/4/1978, cntracted in r ther that previusly cunted twards survivr benefits e.g. ill health Lcal Gvernment Assciatin Nv

15 enhancement, added years etc. Married after but als married t member at sme pint after 31/3/1972 whilst member was active All Pst 5/4/1978 cntracted ut plus relevant additinal Pssible wrsening if member had befre 6/4/1978, cntracted in e.g. frm a transfer in. Lcal Gvernment Assciatin Nv