Joining the Scheme
Who can join?
Local Government employees who do not have the right to join another public service pension scheme, such as police officers, fire fighters and teachers, can join. There are no medical requirements, no lower age limit and the upper age limit is 75.
The Local Government Pension Scheme (LGPS) is open to all Local Government employees.
The LGPS has 2 sections to the scheme:
- The main scheme
- The 50/50 scheme
The 50/50 scheme is available for members who, maybe due to temporary financial pressures, wish to pay half the contributions for half the benefits. This would be an alternative to leaving the scheme completely. A person cannot elect to join the 50/50 section of the scheme prior to becoming a member of the main section of the main scheme.
New starters should always be entered into the main section of the LGPS.
Employees with contracts in excess of 3 months, are to be brought into the main scheme automatically, and must take action if they wish to opt out.
Employees with contracts of less than 3 months in duration will not automatically be brought into the scheme. Employers will need to give employees the option to join, and bring them into the pension scheme if the employee requests it in writing.
However, there are some employers who may employ staff on open ended or zero hours contracts. There are two courses of action open to employers here:
- Is to deem these contracts to be, in essence, long term contracts and therefore greater than 3 months. If this approach is taken then employees should be brought into the pension scheme. You will be aware that these types of contracts were generally accepted to be where a mutuality of obligation existed i.e. it was likely to be a longer term arrangement.
- If it is deemed that each offer of work is a separate contract, and so less than 3 months, then these staff won’t be brought into the scheme but must be given the opportunity to join if they so wish, this notification could be incorporated into a timesheet for example.
New employees at town or parish councils are to be treated slightly differently. This is because a new employee may not be automatically entitled to join LGPS from day one. They can only do so with the agreement of the council concerned. Town and parish councils are known as 'resolution bodies'. That is to say that not only must a town or parish council pass a resolution to be a participating employer, on top of that, councils have made differing resolutions on which of their employees can join. Some admit all new employees, some may have resolved only to admit employees in certain positions, such as the Clerk, or maybe the Deputy Clerk, and some councils wish to make an individual resolution in each case.
If you're a Clerk from a council and you are unsure what decision your council has taken in the past, please email Jaishika Patel who will be able to check the position for you.
Only once the new employee is allowed to join the LGPS in accordance with a resolution by the council in question, should that employee be admitted to the scheme and supplied with the letter of admission and a membership form.
Frequently asked questions
What is the current position regarding employees aged 65 or over?
A new employee can join and remain in the Scheme up to age 75. The member will receive pension benefits once they have finished their employment.
The member MUST receive their pension by at least age 75, under Inland Revenue and Pension Scheme legislation. Therefore all pension contributions must cease on the last day a member is 74, and is considered to be a retirement, irrespective of whether or not they have terminated their employment.
What should be done if an employee opts out?
The regulations state that any employee who opts out within the first three months shall be treated as never having been a member of the scheme. The employer must refund, via payroll, any contributions the employee has paid. The employers’ contributions are also refundable.
Our main page on opting out of the scheme contains all the information a member will need.
In all cases, the employee will return the form to their employer, who will liaise with payroll and arrange the opt out. If the member is opting out after 3 months of joining, but with less than 2 years membership, the member will receive their refund from the Pension Section, not through the payroll.
A member who opts out of the scheme after 2 years will have a deferred benefit calculated for them. The entitlement to a refund will have ended.
A member cannot opt out of the LGPS before they have started the employment in question. Any form signed and dated before the employment start date is invalid, and the employer should return it to the employee and instruct them to submit a new, valid form.
The employer is required to retain a copy of the member’s election to leave the scheme for future reference. However if you wish the Pension Section to retain a duplicate copy on our records, which are likely to have more historical permanence and be more accessible if a query arises in the future, we are happy to store this for you on our Imaging system. Please make sure that the 'Actioned by Payroll' section at the foot of the form is completed, so that we know that this form has been seen by Payroll and we need take no action other than to store it.
Employers are required to inform the Pension Section with full details of new members and opt outs on a monthly basis. All employers are provided with a copy of the monthly pensions return for this purpose.
What do I need to know about an auto enrolment?
New laws covering auto enrolment came into effect in October 2012. This means all employers must automatically enrol eligible jobholders into a suitable pension scheme and to make contributions to their pensions. Although the new rules came into effect from October 2012, not all employers will be required to enrol “eligible jobholders” from this date. The date when this applies will be dependent on the size of the employer as of 1 April 2012, with the very large employers first. You will need to establish when your “Staging Date” is.
Eligible jobholders
At the relevant staging date employers will need to begin enrolling all “eligible jobholders” into a suitable pension scheme. An eligible jobholder is defined as an employee or worker who is not already enrolled in an eligible pension scheme and who meets the following criteria:
- is aged 22 or over
- is under State Pension age
- earns more than £10,000 (2014-2017 amount)
- works in the UK
Opting out
Eligible jobholders who have been automatically enrolled into a pension scheme can choose to opt out of the scheme, and for LGPS members, if this is within 3 months of paying into the scheme they will be treated as never joining and be able to receive a refund of their contributions.
An eligible jobholder will not be able to opt out in advance and any request for a form to opt out of the scheme must come through the pension section. In the past the LCC Pension Section has issued Starter forms for employers to distribute, which did incorporate a section to indicate a members wishes to opt out. Under the new laws an employer is unable to provide the forms for an employee to opt out.
The ability to opt out of the scheme will still exist, however members will either have to contact the pension section directly or go to the relevant page on this website, this will need to be communicated to them when you issue the appropriate letters/contracts etc.
Even where members have opted out, employers will be required to automatically re-enrol eligible jobholders on the third anniversary of the staging date and then every 3 years thereafter.
Opting in
There is no duty on an employer to automatically enrol workers or employees who do not meet the criteria of eligible jobholders into a pension scheme.
More information is available on auto enrolment, including flow charts and templates of letter. Please update your letters if you have previously saved older letters.
What do I need to know about the 50/50 scheme?
The new LGPS contains two sections, the main scheme and the 50/50 scheme. The only difference with the 50/50 scheme is the amount of contributions to be deducted for the employee, which is half that due under the main scheme.
Please note that the employer contribution is still the normal full contribution rate (not half).
The employee may elect to move between the main and 50/50 schemes any number of times but the election only takes effect from the next available pay period. For concurrent employments the employee may elect to move between sections for any or all of the jobs they hold.
New starters should always be entered into the main section of the LGPS.
If the employee is in the 50/50 section they must be moved back to the main section from the beginning of the pay period following the employers’ automatic re-enrolment date. Note that the initial staging date for those employers yet to meet their staging date has no implication on 50/50 elections.
A form is available for the member to complete and return to their payroll office in order to join and/or leave the 50/50 Scheme.
Our main page on leaving the scheme contains all of the information a member will need.
At year end (or date of leaving if earlier), employers should confirm to the pensions administrator which section the member was in at that time.
If the employee is in the 50/50 section and goes onto no pay due to sickness or injury or unpaid child related leave, the employee must be moved back into the main section from the beginning of the next pay period if they are still on nil pay due at that time. This would even be the case where, for example, an employer has a policy of nil pay for the first 3 days of sickness, and the first 2 days of sickness fall at the end of one pay period and the third day is the first day of the following pay period – in such a situation the employee would have to be put into the main section from the beginning of that next pay period.
If a member elects to move to the 50/50 section: any existing additional pension contribution contract which is at whole cost to employee must cease (unless it is to purchase an amount of pension “lost” due to industrial action).
A member in the 50/50 section cannot commence payment of an additional pension contribution contract which is at whole cost to the employee (unless it is to purchase an amount of pension “lost” due to industrial action).
Can a member transfer in previous pension rights?
If that pension is with another Local Authority or a scheme which is a member of the Public Sector Transfer Club, then a member can request a transfer, as long as it takes place within the first 12 months of joining.
