30 June 2003

Dear Sir/Madam,

1. Regulation 33 – Surrender of Pensions

I am pleased to attach the latest GAD guidance on the surrender of pension options’ available to members of the scheme under Regulation 33.

Under Regulation 33(3) of the Local Government Pension Scheme Regulations 1997 the administering authority must allow an application for surrender if they think the member is in good health. However, the regulations do not prevent the surrender if the administering authority believes the applicant may not be in good health. In such a case it is up to the administering authority to decide whether or not to allow the surrender. The tables attached to GAD’s guidance have been calculated using a uniform set of mortality assumptions irrespective of the member’s state of health. GAD have particularly asked us to draw your attention to this point which is highlighted in paragraph 6 of page 1 of the guidance note. GAD feels that it is worth reiterating the fact that there is a significant financial risk in allowing a surrender of pension where a member does not have a normal life expectancy. If any [of you] - delete whichever- (authority)? have any queries on this point I would be grateful if you could channel them, in the first instance, to Terry Edwards, Pension Consultant, at the Employer’s Organisation.

2. Regulation 118 – Public Sector Transfer Club : Protected Rights Factors.

The factors for Regulation 118 were originally circulated to all LGPS Pension Managers under cover of Mrs Macreadie’s letter of 8 December 1999. However, as a result of an enquiry from an administering authority, GAD they have now extended the factors in respect of members aged between 60 to 64. It is felt that other Pension Manager’s may wish to have a copy of the attached extended factors.

3. Regulation 156 – Commutation of Small Pensions : Pension Sharing on Divorce : Commutation for Pension Credit Members

Under Regulation 156(3) the capital value of a pension must be calculated in accordance with guidance issued by the Government Actuary. GAD have advised that they do not consider it necessary to issue a different set of tables and guidance from that already issued in respect of regulation 49 – which refers to the general commutation of small pensions in the Local Government Pension Scheme. Administering Authorities should therefore continue to use the table of factors issued for regulation 49. The guidance for Regulation 49 will be updated in the usual fashion. If it is necessary to revise the guidance and/or factors then these should automatically be applied for Regulation 156.

These tables of factors will appear on the LGPS website as soon as possible.

Yours faithfully

Local Government Pensions Unit

P:\DATA\GAD\Reg 118.156.33 circulate LA's.4.doc

Pension Managers :

County Councils (England and Wales)

London Borough Councils

Tameside Metropolitan Borough Council

Wirral Metropolitan Borough Council

Bradford Metropolitan Borough Council

South Tyneside Metropolitan Borough Council

Wolverhampton Metropolitan Borough Council

The Town Clerk, City of London

Chief Executive, London Pensions Fund Authority

Clerk, South Yorkshire Pensions Fund Authority

Clerk, South Yorkshire PTA

Clerk, West Midlands PTA

Cc: Terry Edwards (Pensions Consultant) E.O.