Additional help
The first six discretions are mandatory and need to be included in your Employer Discretion Policy under the LGPS Regulations. The other discretions in the standard template are also included, as we often need to ask these questions of employers, and we feel that it would be useful if each employer has a consistent policy related to these.
The LGPS Regulations are produced by the department of CLG (Communities and Local Government) and passed by Parliament.
Where an employer does not have a policy in place covering the statutory discretions, we are unable to allow the employer the option of exercising one of these discretions until a policy is in place.
1. BMC12: Augmentation of membership of an active member (up to 10 years)
(Required in Policy Statement)
Augmentation of membership essentially means giving added years service to a member.
Example: An employee has worked 75% part-time hours for 24 years and has therefore built up 18 years of pension service. The employer can increase this amount from 18 years to a higher amount (up to 10 years more).
It is possible to use a fixed scale i.e.
1 to 10 years = 1 added year
11 to 20 years = 2 added years
It is advisable that your policy does not commit you fully to do this for all types of circumstances but give you some flexibility to apply the discretion on a 'case by case' basis. There will be a cost implication for the employer to allow for the fact that they will receive more pension than anticipated.
2. BMC13: Whether to grant additional pension to a member (up to £5000pa)
(Required in Policy Statement)
This is hopefully fairly self-explanatory. If you offer this, you may wish to limit it to a case by case basis and write some guidelines into your policy. There will be a cost implication for the employer should they choose to offer this.
3. BMC18(1): Whether all or some benefits can be paid if an employee reduces hours/grade and continues to work (Flexible Retirement).
(Required in Policy Statement)
This discretion effectively states whether you enable an employee to take flexible retirement or not. Flexible retirement means they will begin to draw their pension and continue to work at the same time.
Note: The member can only do this if they reduce their hours or grade.
4. BMC(3): Waiving actuarial reduction on flexible retirement.
AND
6. BMC30(3): Waiving actuarial reduction on early retirement.
(Both required in Policy Statement)
Normally when someone takes either standard early retirement or flexible retirement benefits a reduction in their pension is made; because it is assumed they will be drawing it for longer than if they had waited until they reached their normal retirement age.
By opting to waive the actuarial reduction the employer is effectively willing to pay an amount to the pension fund so that their pension is not reduced in either of these circumstances. Employers are only able to waive the reduction on compassionate grounds. These discretions apply to both active and deferred members.
5. BMC30(2): Whether to allow early payment of benefits at or after age 50 (55 from 2010 for active members).
(Required in Policy Statement)
The employer would pay the cost for this because it is assumed the person would be drawing their pension for more years. This discretion applies to both active and deferred members.
7. Admin16(4)(b)(ii): Whether to extend 12-month period to combine previous LG service.
When someone joins your employment they have up to 12 months to decide to transfer in a pension relating to a different employment, in this case from Local Government. Hence, this discretion gives the option to extend this limit.
It is worth noting that if someone is going to be made redundant, or is granted early retirement, by allowing them to transfer in service beyond the normal 12 month window which must be given, this would increase the payment that the employer needs to make to the fund as the member would have more service.
If this is not the case there would be no direct cost by allowing them to transfer in past service, although this would often be unknown at the point in time that the decision is made.
8. BMC 3 Determine rate of employees' contributions.
Each employer needs to have a policy in respect to how it applies employee contribution bands. All employers must do this each April but you are able to decide whether you review bands during the financial year when changes in the pay occur.
More information on this can be found by following the link below:
9. Admin 22(2): Whether to extend the period for a member to elect to pay contributions to cover unpaid leave of absence, maternity, paternity or adoption leave beyond 30 days after returning to work or leaving.
The key cost implication here is that the employer must also pay contributions for the same periods that the employee pays.
10. Admin 83(8): Whether to extend 12 month period to allow a transfer-in of non-LG pension rights.
As per point 7, but refers to non-LGPS transfer ins.
Wiltshire Pension Fund, Wiltshire Council - Bythesea Road,Trowbridge, Wiltshire, BA14 8JN.
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