STATUTORY INSTRUMENTS

The Local Government Pension Scheme (England and Wales) (Amendment) Regulations 2003

The Secretary of State, in exercise of the powers conferred on him by section 7 of the Superannuation Act 1972() and of all powers enabling him in that behalf, after consultation with such associations of local authorities as appeared to him to be concerned, the local authorities with whom consultation appeared to him to be desirable and such representatives of other persons likely to be affected by the Regulations as appeared to him to be appropriate, hereby makes the following Regulations:

1. These Regulations may be cited as the Local Government Pension Scheme (England and Wales) (Amendment) Regulations 2003 and shall come into force on ________________ 2003.

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

3.The Local Government Pension Scheme Regulations 1997() shall be amended in accordance with regulations 4 to 11 of these Regulations.

4. For the heading and text of 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 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 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, 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(); 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) But the governors or managers of a voluntary school do not count as a body within paragraph (2)(a) or (b) and a body is only within paragraph (2)(c)(iii) if it is formed for the purpose of consultation as to the common interests of local authorities and the discussion of matters relating to local government.

(4) 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.

(5) It must be a term of an admission agreement made with a body within paragraph (2)(b) where, at the date that the admission agreement is made, the total contribution from any one or more Scheme employers to its funds equals less than 50% of funding contributed by third parties, 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.

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

5. For regulation 5A substitute—

“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, for the purposes of this regulation, regulation 6 and Schedule 2A, is a body which is providing, or will provide, services or assets in connection with the exercise of a function of a Scheme employer as a result of–

(a) the transfer of the service or assets by means of a contract or other arrangement between that Scheme employer and the body;

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

(c) directions made under section 497A of the Education Act 1996().

(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 the Scheme employer, if not also the administering authority, must be a party to the admission agreement.

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

(a) the Scheme employer 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, and

(b) where the Scheme employer identifies the level of risk as such as to require it, the transferee admission body shall enter into an indemnity or bond to meet the level of risk identified.

(6) The indemnity or bond must be with–

(a) a person who has permission under Part 4 of the Financial Services and Markets Act 2000() 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;

and references in this paragraph to that Act must be read with section 22 of, and Schedule 2 to, that Act and any relevant order made under section 22 of that Act.

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

(8) Where a Scheme employer and a transferee admission body undertake to meet the requirements of paragraphs (3), (4), (5), (6) and (7) 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.

(9) Where a transferee admission body contracts another body (a "third party") to provide the service or assets of the Scheme employer:

(a) the administering authority, subject to the approval of the Secretary of State, may enter into an admission agreement with the third party,

(b) the requirements of paragraphs (3), (4), (5), (6) and (7) shall apply as if references in those paragraphs to the Scheme employer refer to the transferee admission body and references in those paragraphs to the transferee admission body refer to the third party, and

(c) regulations 5B and 6(10) and Schedule 2A and paragraph 1 of Schedule 4 will apply as if references to the admission body or transferee admission body are to the third party.

 

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, 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() 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()) 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 was a Scheme employer.”.

6. 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.”.

7. In Regulation 32(11), for “a non-associated admission body (as defined in regulation 5(17)(e))” substitute “a community admission body within regulation 5(2)(a)(ii), or 5(2)(b) where, at the date that the admission agreement is made, the total contribution from any one or more Scheme employers to its funds equals less than 50% of funding contributed by third parties,”.

8. In regulation 78(2A), for “a guarantee or indemnity” substitute “an indemnity or bond”.

9. 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(8)” substitute “regulations 5(2) and 5A(2)”.

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

10. In Schedule 2A—

(a) For “Regulation 5(7)(d) and (8)” substitute “Regulation 5A(7)”.

(b) For “A reference to the date of the best value arrangement, section 15 direction or section 497A directions” substitute “A reference to the date of the contract, other arrangement or direction by which the transferee admission body met the requirements in regulation 5A(2)”.

(c) For “A reference to the indemnity or bond in the approved form” substitute “A reference to the indemnity or bond in accordance with regulation 5A(6)”.

(d) In the paragraph beginning “A representation and warranty”, for “the services, assets or function referred to in the best value arrangement, section 15 direction or section 497A directions” substitute “the provision of the service or assets being carried out by the transferee admission body as a result of those matters referred to in 5A(2)”.

(e) For “5(9)” substitute “5B(2)”.

(f) Delete the word “transferor” in each place where it appears.

11. In paragraph 1 of Schedule 4, for “a non-associated or transferee admission body (as defined in regulation 5(17)(e) and (i))” substitute “a community admission body within regulation 5(2)(a)(ii), or 5(2)(b) where, at the date that the admission agreement is made, the total contribution from any one or more Scheme employers to its funds equals less than 50% of funding contributed by third parties, or to a transferee admission body as defined in regulation 5A(2)”.

12. The amendments made by regulations 4 to 11 shall not affect any admission agreements made in accordance with the Local Government Pension Scheme Regulations 1997 before the date on which these Regulations come into force.

Signed by authority of the Secretary of State

________________________________

Parliamentary Under Secretary of State

________________________ Office of the Deputy Prime Minister

These Regulations amend the Local Government Pension Scheme Regulations 1997 (“the principal Regulations”) which comprise the Local Government Pension Scheme (“the Scheme”).

Regulations 4 to 11 make a number of amendments to the principal Regulations and the amendments take effect from the date that these Regulations come into force.

Regulations 4 and 5 amend regulations 5 and 5A of the principal Regulations by substituting new regulations 5, 5A and 5B which provide for administering authorities to make community and transferee admission agreements to enable employees of non-Scheme employers to be members of the Scheme.

The amended regulation 5 of the principal Regulations brings together and clarifies the procedural requirements for the admission of community admission bodies. These are bodies that provide public services with links to local government.

The amended regulation 5A of the principal Regulations brings together and clarifies the procedural requirements for the admission of transferee admission bodies. These are bodies to which the services or assets in connection with the functions of Scheme employers have been transferred through a contract or other arrangement, a direction made under section 15 of the Local Government Act 1999 or as a result of directions made under section 497A of the Education Act 1996. The principal change is to require an indemnity or bond to be entered into by the transferee admission body only where it is identified as being required following an assessment of risk by the Scheme employer.

The inserted regulation 5B of the principal Regulations sets out the procedural requirements relevant to admission agreements with both types of admission bodies.

Regulation 6 makes a consequential amendment to regulation 6(10) of the principal Regulations to provide when employees of the transferee admission bodies are treated as leaving local government employment for the purposes of the Scheme.

Regulation 7 amends regulation 32 of the principal Regulations, which covers re-employed and rejoining deferred members, to provide that for members who have accrued Scheme membership with certain admission bodies, specified periods of such membership may not be aggregated in calculating lump sum benefits.

Regulation 8 amends regulation 78 of the principal Regulations, which deals with special circumstances where revised actuarial valuations and certificates must be obtained.

Regulations 9, 10 and 11 make consequential amendments to references to the amended Regulations in Schedules 1, 2A and 4 to the principal Regulations.

Regulation 12 provides that the amendments made by these Regulations do not affect admission agreements entered into before the date that these Regulations come into force.