A Fair Deal For LGPS Members?

The Ministry of Housing, Communities and Local Government (MHCLG) has now published its long awaited consultation on changes to the Local Government Pension Scheme (LGPS or the Scheme) to bring the LGPS into line with the requirements of New Fair Deal.

Letting authorities and service providers can expect changes to how they approach pension provision and risk sharing on a transfer of employees from local government. There are also changes around what happens to pension liabilities when Scheme employers are involved in mergers and takeovers. Once finalised, the regulations will amend the Local Government Pension Scheme Regulations 2013 (the 2013 Regulations). This Insight summarises the key changes proposed by the Government.

Key consultation points for letting authorities and service providers to consider 1. It is proposed that service providers will be required to offer LGPS membership on all compulsory transfers of employees from a 'Fair Deal employer'

The Government is proposing to remove the option for service providers to put employees transferring from local government to the service provider into a broadly comparable pension scheme. Instead, such employees would remain in the LGPS.

2. Employers with broadly comparable schemes should prepare for changes on contract re-lets

   It is proposed that on future contract re-lets, protected employees who have been transferred to another employer in the past and participate in a broadly comparable scheme should be offered membership of the LGPS and the opportunity to transfer their accrued benefits into the LGPS.

3. It is proposed that the 'deemed employer' approach is extended and used in place of the service provider entering into an admission agreement

   Under the proposals, the letting authority would have the option to remain the deemed employer in relation to the transferring employees for certain LGPS purposes, such as contributions and funding risk, even though the service provider would become the employer in all other respects.

4. A change to the regulations would provide for the automatic transfer of assets and liabilities to a successor body where a Scheme employer is taken over or is part of a merger

   The change is proposed to address concerns that on mergers or take overs, exit payments can sometimes be triggered unintentionally. The proposed change would mean that the pensions liability automatically transfers, unless specific legislative provisions require otherwise. This will apply even where the successor body is in another LGPS fund.

   Introducing a Fair Deal approach to the LGPS MHCLG has published a consultation on proposed changes to the LGPS, together with draft regulations, to:

   implement a New Fair...