ADUR DISTRICT COUNCIL WORTHING BOROUGH COUNCIL LOCAL GOVERNMENT PENSION SCHEME (LGPS) AND EARLY TERMINATION OF EMPLOYMENT DISCRETIONS POLICY. To be read in conjunction with: Redundancy Policy and Procedure DRAFT A list of options for allowances is attached. This is to be agreed by the Senior Management Teams and Members. This will apply where you see TBA. 1.0 Policy Statement Under various regulations, Local authorities are given authority to exercise certain discretions regarding pensions and early termination of employment and are required to issue a statement to indicate the policy of that Authority in exercising those discretionary provisions. This policy sets out the decisions of Adur District Council and Worthing Borough Council in exercising such discretions. The policy has been amended to take account of regulation changes to the Local Government Pension Scheme and the Compensation Regulations. The main changes that affect this policy are the Local Government Pension Scheme (Amendment) Regulations 2006, Local Government Pension Scheme (Amendment) Regulations 2006 (no. 2) and the Local Government (Early Termination of Employment) (Discretionary Compensation) Regulations 2006. This policy should be used in conjunction with the Redundancy policy and procedure. 2.0 Scope This policy relates to all staff employed by Worthing Borough Council and Adur District Council. Unless otherwise indicated reference to the Council in this document refers to both Councils. This policy statement will be brought to the attention of all employees at both Councils. 3.0 Policy Standards The Council has resolved that, in each of the areas listed below, it will be guided in its discretionary powers by the policy shown: 3.1 Redundancy Calculations Generally The new regulations allow the Council to calculate an employee's redundancy payment using the employees actual weeks pay rather than the statutory capped limit. To this end, both Councils have agreed to continue to calculate redundancy on the basis of the current actual week's pay. 3.2 Redundancy. The new regulations give power to pay increased redundancy compensation to a maximum of 104 actual weeks' pay to staff with at least two years' service. 3.2.2 Compulsory Redundancy The Council have agreed to make a one-off lump sum payment based on a maximum of 3.467 times the actual weeks pay to a maximum of 104 actual week’s pay. However, this maximum is used in only very exceptional cases to be approved by the [Worthing]Head of Human Resources and the Chief Executive or by the Cabinet Member for Resources if either post was affected [Adur] Head of Corporate & Legal Services and the Chief Executive or by the Housing & Central Services Committee if either post was effected. For the majority of redundancy cases the payment is to be based on a maximum 2 times the actual weeks pay to a maximum of 60 actual weeks' pay. 3.2.3 Voluntary Redundancy The Council normally will pay a one-off lump sum based on 2.67 times actual weeks pay (calculated according to length of service and age) to a maximum of 80 actual weeks' pay, although the Council retain the discretion, in exceptional circumstances to pay a one-off lump sum based on up to 3.467 times the actual weeks pay (calculated according to length of service and age). 3.2.4 Efficiency of Service. The new regulations have given the power to pay up to a maximum of 104 actual weeks' pay to staff whose contract of employment is to be terminated in the efficiency of the service. The Council have agreed to pay a one-off lump sum, based on the merits of each individual case, up to a maximum of 104 actual weeks’ pay where the contract of employment is terminated for the efficiency of the service although payments in excess of 60 weeks will only be made in exceptional circumstances. Factors to be taken into account in awarding compensation would include: • • • • Employee relations considerations The likely and foreseeable financial loss to the employee taking into account all circumstances including any other form of compensation and benefit being received Overall reasonableness, including benefits to the Council Tax Payer by the employee leaving the Council. Direct financial savings to be incurred by the employee leaving the Council. The calculation of a week’s pay is as defined by the Employment Rights Act 1996. 3.2.5 Added Pension Benefit on leaving employment due to redundancy or efficiency of service This power is to be used as an alternative to paying additional compensation for the provisions of redundancy or “efficiency of the service”. This is to be used only in wholly exceptional circumstances and must be approved by the [Worthing] Head of Human Resources and the Chief Executive or by the Cabinet Member for Resources if either post was affected [Adur] Head of Corporate & Legal Services and the Chief Executive or by the Housing & Central Services Committee if either post was affected 4.0 Conversion of Lump Sum Compensation Payment into Additional LGPS Membership. This is the power to convert lump sum compensation in excess of any statutory redundancy payment, on the employee’s request, into additional membership of LGPS. The Council will allow employees to convert the lump sum compensation in excess of any statutory redundancy payment into additional LGPS membership but does not propose to top up these benefits (i.e., the lump sum compensation will buy both employer and employee contributions). Note: The total amount of membership converted cannot exceed 6 and 2/3 years. If after conversion there were any remaining lump sum then the employee would not be able to take advantage of this option as the regulations do not allow for the employee to receive a mixture of the two benefits, unless the employee is willing to forfeit the balance. 4.1 Voluntary Early Retirement Local authorities have the power to allow an employee to retire between the ages of *50 to 59 with immediate benefits (but reduced if a qualifying formula known as the **85 year rule is not met). This discretion is to be used only in exceptional compassionate circumstances wholly at the discretion of the Council and must be approved by the [Worthing]Head of Human Resources and the Chief Executive or by the Cabinet Member for Resources if either post was affected. [Adur] Head of Corporate & Legal Services and the Chief Executive or by the Housing & Central Services Committee if either post was affected 4.2 Flexible Retirement Subject to the employer’s consent , power to allow a member of the scheme to draw their pension after the age of *50 and to continue to work for the Council providing the staff member either reduces their hours or grade. Staff are allowed to draw their pension after the age of *50 (but reduced if a qualifying formula known as the **85 year rule is not met) providing the arrangement meets the operational requirements of the Council and there is no cost to the Pension Fund. Power to waive, in full or in part, any actuarial reduction that is applied to the early payment of those benefits. The Power is to be used in wholly exceptional circumstances, for example on compassionate grounds. It must be approved by the [Worthing] Head of Human Resources and the Chief Executive or by the Cabinet Member for Resources if either post was affected. [Adur] Head of Corporate & Legal Services and the Chief Executive or by the Housing & Central Services Committee if either post was affected Notes * From 2010 the earliest a scheme member can draw his or her pension will rise from 50 to 55. ** The 85 year rule is a test to calculate whether pension benefits should be reduced if a pension is paid to a member of the scheme before they reach age 65. If the sum of the scheme member’s age plus their LGPS membership in years is equal to at least 85 years then their pension is not reduced. If it is less than 85 years then their pension benefits will be actuarially reduced. The earliest a member of staff can draw their pension without the Council’s consent is at age 60. The 85-year rule is being removed from the Scheme with effect from 1.4.2008. There are transitional protection arrangements in place for scheme members who will be 60 prior to 31.3.2020. All continuous service with bodies listed under the The Redundancy Payments(Continuity of Employment in Local Government, etc)(Modification) Order 1999 as amended will be included in all of the redundancy and compensation payments listed above.
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