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Tuesday, December 02nd 2008
Home > Services > Finance Services > Payroll & Pensions > Pensions > Local Government Pension Scheme Administration Guide

Local Government Pension Scheme Administration Guide

Nothing in this guide can override the rules of the Scheme as specified in the Local Government Pension Scheme (Scotland) Regulations 1998 as amended. 

THINGS YOU MUST DO|

Table of contents

  1. Admission agreements
  1. Annual benefit statements
  2. Appeals
  3. Breaks or changes in Scheme membership

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  1. Change in Contract (e.g. from casual to permanent)
  1. Contributions - employee
  1. Contributions - employer
  2. Death benefits

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  1. Discretions to be exercised by employer
  1. Documentation to download
  • Form S/OPT/IN - Opting In Form
  • Form S/OPT/OUT - Opting Out Form
  • Form S/1 - New Member Form
  • Form S4 - Change Form
  • Form S/10 - Leaver Form
  • Form S/22 - Calculation of Pensionable Pay
  • Remit 1 - Statement of Monthly Contribution Remittance
  1. Enrolling new employees into the Scheme

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  1. Enrolling existing employees into the Scheme
  2. Final pay (i.e. completion of Form S/22)
  1. Final pay - examples

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  1. Leavers (i.e. not retirals nor deaths)
  2. Member moving to a new post with the same employer
  3. Member holding multiple posts with the same employer
  4. Outsourcings
  5. Pensionable hours
  6. Pensionable pay (i.e. what contributions should be deducted from)
  7. Retirements
  1. Returning officers
  2. Scheme background
  1. Salary sacrifice
  2. Year end returns

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Things you MUST do

  • Tell employees about the Scheme
  • Apply correct enrolment procedures
  • Deduct Pension Contributions from the correct elements of pay
  • Deduct Pension Contributions at the correct rate
  • Deduct NI Contributions at the correct rate
  • Record pensionable hours by post 
  • Remit contributions monthly
  • Provide a year end summary of contribution / hours information
  • Assist us to produce benefit statements by answering our queries    
  • Tell us about new members, leavers and optants out
  • Tell us about retirals and deaths
  • Tell us about members who change their hours
  • Tell us about breaks in membership
  • Formulate a discretions policy and keep it under review
  • Invite non members to join the scheme periodically
  • Discuss any outsourcing projects with us 

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Scheme background

Statutory basis of Scheme

Ref. Details
A.1.1 The Local Government Pension Scheme is a Public Sector Pension Scheme which operates on a contributory  basis and provides benefits that are a proportion of final salary (i.e. it is a "defined benefit" scheme").  The Scheme, as administered by Falkirk Council, is approved for tax purposes and has a Pension Schemes Office Reference No. of SF49/27788/K.
A.1.2 The scheme is also contracted out of the Second State Pension Scheme (previously called the State Earnings Related Pension Scheme or SERPS).
A.1.3 The rules of the Scheme consist of Statutory Instruments made by the Scottish Ministers under powers given to them by the Superannuation Act 1972. The benefits provided by the Scheme are therefore guaranteed by statute. In addition, scheme benefits are increased in accordance with the Pensions Increase Act 1971 which effectively means that they match inflation.  The current version of the Scheme is contained in the Local Government Pension Scheme (Scotland) Regulations 1998 as amended.
A.1.4 Scheme members and employers pay their contributions into a fund, administered in this case by  Falkirk Council. The contributions, along with the investment returns achieved by the Fund, are then used to meet the cost of benefits paid from the Scheme.
A.1.5 Prior to 31st March, 1996, each Regional Council in Scotland administered it's own Superannuation Fund.  At the Local Government Re-organisation in 1996, certain Councils were designated to operate and maintain pension funds (e.g. the Falkirk Council Pension Fund). Councils that administer the scheme are called "Administering Authorities". Other employers who participate in the Scheme are known as Employing Authorities.
A.1.6 The Pensions Section of Falkirk Council undertake the administration of the Falkirk Council Pension Fund. This involves the enrolment of new members; the transferring of pension rights; the collection of contributions and the payment of retirement and death benefits. The Pensions Section is part of the Council's Payroll and Pensions Division within Finance Services.
A.1.7 The Pensions Section address is:

Pensions Section
PO Box 14882
Falkirk Council
Municipal Buildings
Falkirk
FK1 5ZF

Telephone: 01324-506329

A.1.8 Scheme Investments are administered by the Treasury and Investments Division of Finance Services of Falkirk Council. The Statement of Investment Principles can be viewed on the Falkirk Council website by following the Treasury and Investments - Pension Fund Investment link from the A to Z search list. 

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Participating employers

Ref. Details
A.2.1 Under the Scheme rules, certain employers are required to operate the Local Government Pension Scheme. These employers are called "Scheduled Bodies". They include local authorities, police and fire authorities, tourist boards and colleges of further education.
A.2.2 Certain other employers can apply to participate in the Scheme. These organisations are known as "Admission Bodies" and usually consist of non profit making or charitable organisations with a link to one of the local authorities participating in the fund. Private Sector organisations can also participate as an Admission Body if they have been engaged to undertake a function that would normally be carried out by a local authority.
A.2.3 In order to join the Scheme, an application must be approved by Falkirk Council. However, if the application is from a private sector employer providing a function that would normally be undertaken by a local authority, then Falkirk Council cannot refuse the application. See the Section on Admission Agreements for more details.
A.2.4 Employers in the Fund include Falkirk, Stirling and Clackmannanshire Councils, as well as the Scottish Environment Protection Agency, the Scottish Childrens' Reporter Administration and Falkirk and Clackmannan Further Education Colleges.
A.2.5 An almost identical (but separate) Scheme applies to local authorities in England and Wales.

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Other local authority schemes

Ref. Details
A.3.1 Teachers, Police Officers and Firefighters have their own special pension arrangements and therefore do not participate in the Local Government Pension Scheme.
A.3.2 Teachers in Scotland are eligible to join the Scottish Teachers' Superannuation Scheme and their pension arrangements are administered nationally by the Scottish Public Pensions Agency (SPPA), 7 Tweedside Park, Tweedbank, Galashiels, TD1 3TE.
A.3.3 Enquiries regarding the Teachers Scheme should be addressed to SPPA. Employees who are not teachers, but who are engaged in educational activities and who are paid under teachers' salary scales, e.g. advisors, educational psychologists, etc. are also eligible to join the Teachers' Scheme.
A.3.4 Police Officers and Firefighters are eligible to join the Police Pensions Scheme and the Firefighters Pension Scheme respectively. The Pension Section at Falkirk Council undertakes the administration of the Schemes on behalf of Central Scotland Police and Central Region Fire Brigade.

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Excluded employees

Ref. Details
A.4.1 The following persons are not allowed to join the Local Government Pension Scheme: 
  • Persons neither employed by a Scheduled Body nor an Admitted Body   
  • Councillors or Board Members of participating employers
  • Employees who are eligible to join another Public Sector Scheme (e.g. Teachers, Police, Firefighters)
  • Police Cadets
  • Retained Firefighters
  • Evening class tutors / coaches (unless they have a contract of employment with the scheme employer)
  • Persons over age 65

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Enrolment of Scheme members

Enrolling new employees into the scheme

General Points

Ref. Details

General Points

B.1.1 Where an employer is eligible to participate in the Scheme, then usually all employees of that employer will be allowed to join the Scheme (unless a certain employees have been specifically excluded through the terms of an Admission Agreement).
B.1.2 There is no lower age limit for membership, but the upper age limit for most employees is 65.
B.1.3 New employees should be advised how they will be treated for pension purposes in their letter of appointment.

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Permanent, temporary and fixed term employees

Ref. Details
B.2.1 All permanent, temporary and fixed term employees of a scheme employer should be enrolled automatically in the Scheme from their first day of employment. This applies irrespective of whether employees are full time or part time (or job share).  As enrolment is automatic, there is no need for the completion of "opting in" forms by employees.
B.2.2 Where employees, who are already in employment, wish to join the Scheme, they should  complete the Form S/OPT/IN and return this to the Payroll Manager of their employer. See Paragraph B.8.1 for more information about existing employees joining the Scheme.
B.2.3 If employees do not wish to participate, they can elect not to be included in the Scheme. Employees who do not wish to participate in the Scheme should be asked to make their elections in writing and send them to the Payroll Manager of the employing organisation. Employers should retain any elections not to participate as a defence against a future accusation from an employee that they had never been given the opportunity to join the Scheme. 

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Casual employees

Ref. Details
B.3.1 Casual employees can also join the Scheme but only if they make a positive election to do so. Such elections should be made by casual employees completing Form S/OPT/IN.
B.3.2 It is generally the case that casual employees are considered only to be members of the Scheme on the days when they are actually engaged in employment. This creates the possibility that if a casual employee dies on a day when they were not at work, they will not be covered for the death benefits that the scheme normally provides.

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Letters of appointment

Ref. Details
B.4.1 The letter of appointment which is issued to new employees by your Human Resources Section should (except in the case of casual employees) advise the employee that they will be brought into the Scheme automatically, subject however to them having an option not to participate.
B.4.2 Where the employee is a casual employee, then the letter should indicate that the employee may elect to join the Scheme by completing the Form S/OPT/IN.  HR and Payroll should decide between them which Section is to issue the Form S/OPT/IN.  In all cases, the introductory guide "An introduction to the Local Government Pension Scheme" should be enclosed with the letter of appointment.
B.4.3

Here are some sample paragraphs to include in your letters of appointment. 

For non-casual employees

"[Enter Employer name] is required by law to operate the Local Government Pension Scheme. The Scheme is a Final Salary Scheme which provides high quality inflation proofed benefits. It is fully approved by the Inland Revenue and is Contracted Out of the Second State Pension.

Any enquiries you have regarding the Scheme should be directed to the Pensions Section of Falkirk Council by telephoning 01324-506325 or 01324-506329. A short guide outlining the main points of the Scheme is enclosed for your information.

Under the rules of the scheme, you will become a member automatically, unless you write to the Payroll Section, confirming that you do not wish to join the Scheme." 

For casual employees

"[Enter Employer name] is required by law to operate the Local Government Pension Scheme. The Scheme is a Final Salary Scheme which provides high quality inflation proofed benefits. It is fully approved by the Inland Revenue and is Contracted Out of the Second State Pension.

Any enquiries you have regarding the Scheme should be directed to the Pensions Section of Falkirk Council by telephoning 01324-506325 or 01324-506329. A short guide outlining the main points of the Scheme is enclosed for your information.

Please note that as a casual employee, you will only be considered a scheme member on the days you are actually undertaking work. This means that you may not have the full coverage of retirement and death benefits that the scheme normally provides. 

If you wish to join the Scheme, you should complete Form S/OPT/IN and return it to the Payroll Section. The form can be obtained from the Payroll Section or from the Pensions Section at Falkirk Council." 

B.4.4

If you are an Admission Body, then the first sentence should be along the lines that you operate the Local Government Pension Scheme by virtue of an agreement with Falkirk Council. You should not say that you are required to operate the Scheme by law.

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Deducting contributions and notifying the Pensions Section

Ref. Details
B.5.1 Where an employee is being enrolled in the Scheme automatically, or an existing employee has elected to join the Scheme, an employer should begin to deduct pension contributions. See Paragraph E.1.1 for more information on this topic.
B.5.2 The Pension Section maintain a computerised database of all Scheme Members. Employers (usually Payroll Units) are therefore required to notify the Section of any new employees joining the Scheme.
B.5.3 The documentation to be supplied to the Pensions Section in respect of a new member is as follows:
  • Form S1, and   
  • Form S/OPT/IN in the case of existing employees joining the scheme
B.5.4 Under the Disclosure of Information Regulations which govern all occupational pension schemes, a Scheme Booklet must be given to new members by the scheme administrator within 13 weeks of the member joining the Scheme. In order to comply with this obligation, it is important that Forms S/1 are sent to the Pension Section timeously. It is therefore recommended that payroll sections complete and forward this documentation as part of their regular duties in completing the payroll cycle.

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Completing New Member Notification - Form S/1

Ref. Details
B.6.1 Form S/1 has been mentioned in the previous section.
B.6.2 The front of the form is designed to ensure that employers only enrol employees who are legally permitted to participate in the Scheme.
B.6.3 The reverse of the form contains the detailed information that the Pensions Section needs to create a record for the employee. Whilst the bulk of information is self explanatory, certain items on the reverse of the form warrant further explanation. These have been highlighted below:
B.6.4 "Whole time / Part time" indicator should be set according to the status of the employee:

A whole time (i.e. full time) employee is:

  • an employee whose contract of employment provides that he/she is such an employee for the purposes of the scheme; or
  • the employee's contractual hours are not less than the contractual hours for a person employed in that employment on a whole time basis

A part time employee is:

  • an employee whose contract of employment provides that he/she is such an employee for the purposes of the scheme; or
  • an employee who is not a whole time employee
B.6.5

"Non cyclical fluctuating hours"

This field on Form S/1 relates to part time employees and requires employers to indicate whether or not the contractual hours fluctuate in a way that is not cyclical. In other words, do the hours worked follow a regular pattern or not.

B.6.6

"Percentage of full time hours/weeks"

Form S/1 requires Payroll Sections to advise

  • the contractual hours worked per week (excluding any allowances paid in the form of hours)
  • the equivalent full time hours for the post
  • the contractual weeks for which the person is to be paid (including any holidays)

From the above information, it should be possible for payroll sections to calculate the percentage of full time hours/weeks being worked.  If in doubt, work out how much the employee will be paid in a year and divide this by the amount which an employee working full time would receive in a year.

B.6.7

"Annual rate of remuneration" is the annual rate of all elements of pay on which superannuation contributions are to be paid. In particular, if the employee is being paid bonus or some other pensionable addition, then an best estimate of the annual amount of the additions should be included.  See Paragraphs E.1.1. and F.1.1 for more information about Contributions and Pensionable Pay.

Where the employee is a part time employee, then the annual rate of remuneration must be the annual pay that the employee would have been paid if they had worked the full time hours for the post for a whole year. This is referred to as the full time equivalent pay.

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Creating the link between Payroll & Pensions records

Ref. Details
B.7.1 Once the Pensions Section have received the Form S/1, they will create a computerised record. Once this has been set up, they will forward a notification of this via Form S/3 to the member. A copy of Form S/3 will be sent to the employer for retention.
B.7.2 In creating the computerised record for the employee, the Pensions Section will allocate a unique reference number to the employee - the "Superannuation Number". The employer will be advised of this number on a monthly list of all new members with that employer. The numbers should be held on the payroll record of the employee in question, so that it can be reproduced in any payroll system generated output such as the year end contribution return.

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Enrolling existing employees into the Scheme

Ref. Details
B.8.1 Where an existing employee wishes to join the Scheme, the employee should be asked to complete Form S/OPT/IN and the employer should send this to the Pensions Section along with a completed Form S/1.
B.8.2 Pension contributions should be start to be deducted and the rate of NI contributions adjusted if necessary.
B.8.3 The employee should only be allowed to backdate the date of scheme entry if there has been clear maladministration on the part of the employer.  Such cases should be discussed with the Pensions Section because it may be necessary to collect interest on any arrears of contributions being repaid by the employee and the employer.

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Changes in members' contractual terms 

Changes in status

Change of status from casual to permanent or temporary

Ref. Details
C.1.1 Where a casual employee who is not already a scheme member becomes either permanent or temporary, the employee should be treated as if he or she were a new start and should be enrolled in the Scheme automatically. (The employee should have been advised of this action in their letter of appointment and given a chance to elect not to join). The employer should then forward Form S/1 to the Pensions Section.
C.1.2 If the employee is already a member of the Scheme, then you should send the Pensions Section:
C.1.3 Form S/10 - Advising end date of casual status and including details of pensionable hours that year

Form S/22 - Giving details of the Pensionable Remuneration as at the end of casual employment

Form S/1 - Giving details of the new ongoing employment

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Change of status from permanent or temporary to casual

Ref. Details
C.2.1 If an employee has not been a member of the Scheme as a permanent or temporary employee, then it is unlikely that they would wish to join the scheme as a casual. Strictly speaking though, they should be given the opportunity to join.  If they actually join then you should send Form S/1 to the Pension Section. 
C.2.2 Assuming that the employee has been a scheme member as a permanent or temporary employee, then they should be given the chance to remain in the Scheme as a casual. In these circumstances, you should send the Pensions Section:
C.2.3 Form S/10 - Advising the end of permanent / temporary status and give details of pensionable hours

Form S/22 - Giving details of Pensionable Remuneration, and (if they are continuing in the Scheme)  

Form S/1   - Giving details of the ongoing casual employment  

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Change of post

Ref. Details
C.3.1 Where an employee moves to a new post, there may be implications for their pension rights, particularly if there has been a significant change in their pensionable pay. 
C.3.2 Where there has been a change of post, then you should send the Pensions Section a Form S/1 with the new post details and mark it "Change of Post".  Depending on the circumstances, the Pensions Section may need to ask for a Form S/10 and a Form S/22 in respect of former post. 
C.3.3 Form S/10 - Advising the end of permanent / temporary status and give details of pensionable hours

Form S/22 - Giving details of Pensionable Remuneration, and (if they are continuing in the Scheme)  

Form S/1 - Giving details of the ongoing casual employment  

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Multi post holders

Ref. Details
C.4.1 Where a member takes up a second (or even a third) employment, that employment should be treated as a distinct employment both in terms of the enrolment process and in calculating scheme benefits. 
C.4.2 In respect of enrolment, the normal rules will apply, i.e. the person should be brought into the Scheme automatically, unless they elect not to join. This of course means that an employee could be a member in one employment but not a member in the other employment.
C.4.3 It is likely that separate superannuation numbers will have to be allocated to each employment. Care should be taken to ensure that the correct number is held against the correct post.
C.4.4 Employers must ensure that they have systems in place that will allow pensionable hours to be records separately for concurrent employments.

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Notifying changes in Scheme membership

General points

Ref. Details
D.1.1 Scheme benefits are based on pensionable membership, it is therefore essential that the pensions section are notified of key events that can affect member's entitlements.  More information about these notifable events are listed below.
D.1.2 Generally, details of the events are notified to the Pensions Section using Form S/4.

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Membership based on pensionable hours

Ref. Details
D.2.1 Under scheme rules, the pensionable membership of part time and casual employees who work variable hours or who work no set hours should be calculated by dividing the actual hours worked (i.e. pensionable hours) by the hours that an equivalent full time person would have worked. Such employees are referred to as being "Hours Based" employees.
D.2.2 Employers should have notified the Pensions Section on Starter Form S/1 whether the employee is hours based or not (i.e. Non Cyclical Fluctuating Hours).
D.2.3 Employers should ensure that their payroll system has the capacity to store this information, since without it, the Pensions Section will not be able to calculate the employee's pension entitlement accurately.
D.2.4 In calculating pensionable hours, only include basic hours on which contributions have been paid. Do not include pay additions (e.g. travelling time) which may be based on an hourly rate and are paid as hours.
D.2.5 The total pensionable hours worked by "hours based" members should be reported on the year end return made by employers to the Pension Section. See Paragraph N.1.3 for more information on this topic.
D.2.6 Where an employee changes from being hours based to not hours based or vice versa the change should be notified via Form S/4.

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Sick leave

Ref. Details
D.3.1 Until 12th January, 1998, any period of absence due to illness or ill health where the member made no contributions (i.e. where the member's entitlement to sick pay had been exhausted) resulted in a break in pensionable membership.
D.3.2 From 12th January, 1998 any period of absence due to illness or ill health without pay still counts as pensionable membership.
D.3.3 Employers should be aware that where an employee whose sick pay is exhausted remains in employment, he or she will be earning pension rights without making a contribution. This will have a detrimental effect on the pension fund and could lead to an increase in the employer's contribution rate.

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Maternity leave

Ref. Details
D.4.1 Generally, the first part of any Maternity Leave (Ordinary Maternity Leave) is paid maternity leave, although the rate is less than normal pay.  Thereafter, there is likely to be a further period of unpaid leave (Additional Maternity Leave).
D.4.2 From 6/4/2003, national rules increased the period of Ordinary Maternity Leave (OML) from 18 to 26 weeks. In addition, women with at least 26 weeks continuous employment by the 15th week before their  Expected Week of Confinement (EWC) are entitled to a further 26 weeks Additional Maternity Leave (AML).
D.4.3 There are some other rules governing entitlement to Maternity Pay such as having to earn at a given level for a certain number of weeks.  This could lead to some lower earners being unpaid during their OML.
D.4.4 In normal circumstances however, a woman will be paid 6 weeks at 9/10ths pay for the 6 weeks of OML, then 20 weeks at £100 per week. This is known as Statutory Maternity Pay (SMP).
D.4.5 Local authority employees also receive 12 weeks half pay provided they have completed at least one year's continuous local government employment by the 11th week before the EWC. A local authority employee who qualifies for the full entitlement would expect to be paid as follows:  in Weeks 1 to 6 - SMP of 9/10ths pay; Weeks 7 to 18 - half pay plus SMP of £100; and Weeks 19 to 26 will be paid at SMP of £100.
D.4.6 Pension Contributions should be deducted from all maternity pay.  In return, the member will be granted full membership rights  (even although their contribution is less than the contribution they would normally have paid). Employers should pay employer's contributions in the normal fashion.
D.4.7 With regard to any unpaid maternity leave, the member will be given the chance to buy back this period when she returns to work.
D.4.8 The calculation of the arrears of contributions covering the unpaid period of maternity leave should be based on the member's pay immediately prior to the commencement of the unpaid part of the leave.
D.4.9 Employers should notify the Pensions Section of any the commencement and cessation of  unpaid maternity leave on Form S/4, together with a note of the arrears to be repaid. The Pensions Section will contact the employee  to ascertain whether the arrears are to be repaid.
D.4.10 Where the arrears are being repaid the Pensions Section will ask the employer to recover the arrears - usually by doubling up the employee contributions.
D.4.11 When completing Form S/22 for leavers, you should not include any periods during which pension contributions have not been paid (or have not been paid back). Where contributions have been paid (or paid back), you should base the calculation of Final Pay on the salary that the employee would have received but for being on maternity leave.

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Adoption leave

Ref. Details
D.5.1 Adoption Leave was introduced on 6/4/2003 and applies where an employee is notified of being matched with a child, or a child has been placed with that employee for adoption.  Where a couple are adopting jointly, one must take the adoption leave and the other can take paternity leave.
D.5.2 To be eligible for adoption leave, the employee must be the child's adopter, must have 26 continuous weeks service at the date of being told that a match has been made, and have notified the adoption agency that he/she agrees with the placement.
D.5.3 The entitlement to leave is to 26 weeks Ordinary Adoption Leave during which time statutory adoption pay will be paid at the same as the standard rate of SMP. This will be followed by a further 26 weeks unpaid Additional Adoption Leave.
D.5.4 Pension Contributions should be deducted from all paid adoption leave.  In return, the member will be granted full membership rights  (even although their contribution is less than the contribution they would normally have paid).  Employers should pay the employer's contributions in the normal fashion.
D.5.5 With regard to any unpaid adoption leave, the member will be given the chance to buy back this period when he or she returns to work. 
D.5.6 The calculation of the arrears of contributions covering the unpaid period of adoption leave should be based on the member's pay immediately prior to the commencement of the unpaid part of the leave. 
D.5.7 Employers should notify the Pensions Section of any the commencement and cessation of  unpaid adoption leave on Form S/4, together with a note of the arrears to be repaid.  The Pensions Section will contact the employee to ascertain whether the arrears are to be repaid.
D.5.8 Employers should notify the Pensions Section of any the commencement and cessation of  unpaid adoption leave on Form S/4, together with a note of the arrears to be repaid.  The Pensions Section will contact the employee to ascertain whether the arrears are to be repaid.
D.5.9 Where the arrears are being repaid the Pensions Section will ask the employer to recover the arrears - usually by doubling up the employee contributions.
D.5.10 When completing Form S/22 for leavers, you should not include any periods during which pension contributions have not been paid (or have not been paid back). Where contributions have been paid (or paid back), you should base the calculation of Final Pay on the salary that the employee would have received but for being on adoption leave.

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Paternity leave

Ref. Details
D.6.1 Paternity Leave is granted for the purpose of caring for a child, caring for a child's mother, caring for an adopted child, or caring for the adopter of a child.
D.6.2 Paternity Leave was introduced from 5/4/2003. To be eligible, an employee must have 26 weeks continuous service by the end of the 15th week before the Expected Week of Childbirth, and must be the father of the child or be married to the child's mother, and must expect to have responsibility for the child.
D.6.3 The national condition is for Statutory Paternity Leave of 2 weeks to be granted during which time Statutory Paternity Pay (SPP) will be payable. This will be at the same rate as the standard rate of Statutory Maternity Pay.
D.6.4 Local Government employees are also entitled to Paternity Support Leave, which is a similar entitlement to Paternity Leave. Employees who qualify for both will effectively be able to take the first week of Paternity Leave at full pay and optionally a second week at the rate of SPP.
D.6.5 During any paid statutory paternity leave, employee and employer contributions should be collected.  Even if the paternity pay is less than normal pay, contributions will be deemed to have been paid in full and there will be no break in pensionable membership.
D.6.6 In the case of some low earners,  the paternity leave may be unpaid. In this instance,  pension contributions will be deemed to have been paid and the employee will still count pensionable service in full.
D.6.7 As Statutory Paternity Leave is entirely paid (or deemed paid in the case of low earners), there is no need for employers to notify the Pensions Section about it.
D.6.8 When completing Form S/22 for leavers, Final Pay should be calculated as if the member had received their normal pay as opposed to the paternity pay.

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Change of hours

Ref. Details
D.7.1 Paternity Leave is granted for the purpose of caring for a child, caring for a child's mother, caring for an adopted child, or caring for the adopter of a child.
D.7.2 Where an employee changes from part time to full time, the Pensions Section should be advised of this via Form S/4.

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Unauthorised leave

Ref. Details
D.8.1 Any periods of unauthorised (and therefore unpaid) leave should be notified to the Pensions Section on Form S/4. Such periods will be recorded as a break in service and cannot be bought back by the member.
D.8.2 In addition, any periods of unauthorised leave should be excluded by employers when calculating Final Pay (on Form S/22).

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Authorised leave of absence

Ref. Details
D.9.1 Where an employee has a period of authorised Leave of Absence of up to 30 days, the employer should automatically recover the pension contributions that would have been paid but for the leave (i.e. when the employee returns from the leave of absence). There is no need to notify the Pensions Section.
D.9.2 Where an employee has a period of authorised Leave of Absence of at least 30 days, the employer should notify the Pensions Section of the start date and end date of the leave using  Form S/4. Depending on the length of the absence, it may be necessary to issue separate forms at the start and at the end of the leave. The "end" Form S/4 should specify the arrears of contributions to be repaid (split between the 1st 30 days of the leave and the excess above 30 days.
D.9.3 The Pensions Section will find out if the employee wishes to repay the excess period or not.
D.9.4 Where arrears of employee contributions are to be collected, these should be the contributions that the employee would have paid but for the leave of absence. 
D.9.5 The maximum period of leave that can be repaid is 3 years. 
D.9.6 When completing Form S/22 to provide details of Final Pay, employers should only include periods of leave of absence in respect of which pension contributions have been collected. 
D.9.7 When notifying periods of leave of absence, employers should make sure that the circumstances of the leave do in fact constitute leave of absence. In other words, is there still a contractual relationship between the employee and the employer during the leave period. This should not be confused with certain types of Career Break which may at first sight appear to be leave of absence situations but in reality sever the employer/employer contract and should be treated as breaks in membership.

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Industrial action

Ref. Details
D.10.1 Where a member of the pension scheme has a period of absence arising from a Trade Dispute as defined in Section 218 of the Trade Union and Labour Relations (Consolidation) Act 1992, this requires to be recorded as a break in pensionable membership.
D.10.2 Employers must maintain a record of the dates on which industrial action took place, together with the amount of pay lost in respect of each period of absence.   At the conclusion of the industrial action, the employer should send the Pension Section a file containing the following information:
D.10.3
  • Member name
  • Payroll number
  • Superannuation number
  • Start Date of industrial action
  • End Date of industrial action
  • Number of days lost
  • Amount of lost pay
D.10.4 The file should be constructed so that there is a "row" per pension scheme member on strike for each period of continuous absence (e.g. if a member had been absent from 1/4/2003 to 3/4/2003 and then on 1/5/2003, 2 rows should be written out, one covering the first continuous period and the second row covering the single day).
D.10.5 Once the Pensions Section has validated the file, it will give the employee the opportunity to repay contributions in order to count the period of industrial action for pension purposes.  The amount to be repaid by the employee is 16% of lost pay. 
D.10.6 Lost Pay is the difference between a person's actual pay and the pay they would have received but for the trade dispute.

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Employee and employer contributions

Employee contributions

Basic contributions

Ref. Details
E.1.1 Prior to 1/4/1998, the Scheme classified members as either Officers or Manual Workers. This was in order to determine their basic rate of contribution to the Scheme.
E.1.2 Officers were employees whose duties were wholly or mainly Administrative, Professional, Technical or Clerical Officers.  Manual Workers were all other employees who are not deemed to be Officers. The basic contribution rate for Officers was 6% of pensionable pay for Officers, whereas the rate for Manual Workers was 5% of pensionable pay.
E.1.3 From 1/4/1998, all new members must pay at the rate of 6% of pension, however those employees who are already paying at the rate of 5% are able to continue at this rate for as long as they remain in the same post.  In addition, manual employees who have been employed continuously in the same post from before 1/4/1998 may join the Scheme and pay at the reduced rate of 5%.
E.1.4 Do not deduct contributions from an employee who is remaining in the Scheme after age 65.
E.1.5 Certain employers in the Fund allow members who have completed 40 years local government membership before age 60 to take a contribution holiday. The Pensions Section monitors  such cases and will advise if an employer is to waive contributions for a period. 

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Additional contributions

Ref. Details
E.2.1 Members of the LGPS can top-up their pension entitlement by paying a regular additional contribution to the Pension Fund. Additional contributions, which qualify for tax relief, are payable from the member's birthday until age 60 at least.
E.2.2 Where additional contributions are to be deducted, the Pensions Section will notify the relevant Payroll Section with the details. Payroll will be asked to deduct an additional percentage contribution from the member's pensionable pay over a specified period of time.
E.2.3 The Pensions Section will notify the employer when the "contract" to pay added years is about to end. 
E.2.4 Additional contributions do not attract an employers' contribution. This contrasts with situations where arrears of contribution are to be recovered (e.g. after maternity leave, or leave of absence). In those circumstances, employers contributions would be payable.

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Additional voluntary contributions (AVCs)

Ref. Details
E.3.1 The Scheme allows members to pay additional voluntary contributions in order to top up their pension rights.
E.3.2 Contributions, which qualify for tax relief, are not paid into the pension fund but should be sent directly to the Scheme's AVC provider - Standard Life. Contributions should be sent to Standard Life on at least a monthly basis, although remittances on a fortnightly basis is preferred.
E.3.3 Each payment should be accompanied by a listing showing the name and national insurance number of the contributors and the amounts being remitted by individual.  The schedule should quote the Falkirk Council AVC Policy Number of H90349. The address to which remittances and schedules should be sent is Public Sector Department, Standard Life, Standard Life House, 30 Lothian Road, Edinburgh, EH1 2DH.
E.3.4 AVC's can be paid as either a percentage of taxable pay, or a fixed sum, or as a combination of the two.
E.3.5 Do not deduct an AVC unless you have been asked to do so by the Pensions Section. This is because all cases need to be scrutinised by the Section to ensure that the deduction complies with Inland Revenue requirements.
E.3.6 Application forms and information about AVC's can be obtained from the Pensions Section.

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Inland revenue rules

Ref. Details
E.4.1 The Local Government Pension Scheme is a tax approved pension scheme which means that tax relief is given on employee contributions, including any additional contributions, AVC's or arrears of such contributions being recovered.
E.4.2 Total employee pension contributions in any single tax year must not exceed 15% of relevant earnings.
E.4.3 If the employee is a Class A member (i.e. this means that they are deemed to have joined the Scheme after 31st May,1989, they cannot pay pension contributions on any part of their earnings that falls above the "Earnings Cap" (for 2004/05 this was £102,000). This figure is increased each year broadly in line with inflation. The Pensions Section will be able to confirm whether a member is "caught by the "Earnings Cap."  No such limit applies to employees who joined the Scheme before June, 1989 and who have been continuous members from that date.
E.4.4 As the Local Government Pension Scheme is contracted out of the Second State Pension Scheme (previously called SERPS),  scheme members must pay national insurance contributions at the contracted out rate. This is most commonly the "D" rate, but where the scheme member has attained State Pension Age (65 for males and 60 for females), the appropriate rate is "C".  Where a married women has a made an election to pay NI contributions at the reduced rate, then the appropriate rate is "E".
E.4.5 When submitting the year end returns to the Inland Revenue, employers will be asked to provide the Employers' Contracting Out Number (ECON) and the Scheme Contracting Out Number (SCON), these are as follows: 
  • ECON is E3900002R
  • SCON is S2700205B

The above numbers only apply to the Local Government Pension Scheme as administered by Falkirk Council (other ECON and SCONs apply in respect of the Teachers Scheme and Police and Fire Schemes). 

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Employer contributions

Ref. Details
E.5.1 Each employer is required to make a contribution to the Pension Fund. The amount is calculated as a percentage of employee contributions. The employers' rate is set on a three yearly basis following a valuation of the Pension Fund by an independent Actuary.
E.5.2 The next valuation is scheduled for 31/3/2005 and this will set the rate for the three years 2006/07, 2007/08, 2008/09. The Pensions Section will tell you what your rate is and when to apply it.
E.5.3 In calculating the employer's contribution, you should apply the appropriate percentage to an employee's basic contributions only. Do not include any additional contributions or additional voluntary contributions.
E.5.4 In certain circumstances, the Actuary may amend the contribution rate for an employer during an inter valuation period. This may be because of an admitted body leaving the Scheme with a deficit which has to be borne by a continuing scheme employer, or it may be result of an employer having a higher than expected number of ill health retirements.

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Remittance of contributions

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Ref. Details
E.6.1 Pension Contributions should be remitted to the Pensions Section on a monthly basis.  Payments must reach the Council by no later than the 19th of the month following the pay month to which the contributions relate. 
E.6.2 Payment can be made either by cheque or credit transfer and must be accompanied by the payment form REMIT 1.
E.6.3 The bank details for credit transfer payments are:

Clydesdale Bank
1 Bank Street
Falkirk
FK1 1NB

Sort Code 82-63-12
Account No 10001007

E.6.4 The address for cheques and remit forms is:

Pensions Section
PO Box 14882
Falkirk Council
Municipal Buildings
Falkirk
FK1 5ZF

E.6.5 At the end of each financial year, employers should ensure (i) that the total employee contributions on the end of year return correspond to the contributions remitted during the year, and (ii) that the employers contribution is the correct proportion of employee contributions.