The Local Government Pension Scheme (LGPS) is a registered public service pension scheme under Chapter 2 of Part 4 of the Finance Act 2004. Employees are free to choose whether to join the scheme, remain in the scheme or make their own personal arrangements outside the scheme.
Employers participating in the Islington Pension Fund include the following:
scheduled bodies, which are automatically entitled to be members of the fund
admitted bodies, which participate in the fund under the terms of an admission agreement between the fund and the employer. Admitted bodies include voluntary, charitable and similar not-for-profit organisations, or private contractors undertaking a local authority function following outsourcing to the private sector.
It is the responsibility of all our Employers to provide Islington Council’s Pension Fund with accurate and timely data. Islington Council’s Pension Fund has a legal duty to be compliant with the Pensions Regulator’s codes of practice. It is essential therefore that Employers who are members of our Pension Fund, follow the technical guidance and requirements to facilitate eligible staff membership of the LGPS. Islington Council as a statutory obligation to report to the Pensions Regulator any breaches of its code of practice by our Employers.
If you wish to be part of Islington Council’s Pension Fund as an LGPS Employer, you will need to be a body listed in
Schedule 2 of the LGPS 2013 Regulations. Further information can be obtained from the Pensions Office.
Scheme Contributions Schedules
Employers in Islington Council’s Pension Fund must make payment of scheme contributions direct to ICPF Account by the 10th of the following month after payment of salaries, together with a monthly contribution schedule emailed to Islington Council’s pension’s mailbox. The payment and the contribution schedule should at all times reconcile, if there are variances, the employer should provide a note of explanation. Late notification of contribution schedules or payments will incur an administration charge.
‘Pay’ upon which pension contributions are made include additional part time hours and any overtime [whether contractual or voluntary]. If you have any queries please contact Islington Council’s Pension’s Office.
Please note we will need to know about any periods when an LGPS member is off sick with reduced pay. In such cases we need to know the assumed total pensionable pay if the sickness had not happened. This is necessary because a person earns a Pension each year of 1/49th’s of the pensionable pay for that year, so we need to ensure that each year is correct.
If an employee moves to a period of reduced contractual pay or nil pay as a result of sickness or injury; or during relevant child related leave (i.e. ordinary maternity, paternity or adoption leave and any paid additional maternity, paternity or adoption leave) payroll should be notified of the date of the reduction (for sickness or injury), or the date the relevant child related leave began, and the requirement to apply Assumed Pensionable Pay (APP) for pension purposes. The employee will pay contributions on any pensionable pay received during such periods of absence and the employer will pay contributions on the amount of APP.
On commencement of employment all new employees who are eligible for membership of the Scheme should be made members of the main section of the 2014 Scheme.
A person cannot elect to join the 50/50 section of the Scheme prior to becoming a member of the main section of the 2014 Scheme. So, for example, a new starter could not opt for the 50/50 section before commencement of employment; but they could elect on or after starting and, if they do so before the first payroll is closed, can be brought into the 50/50 section from the first day of employment.
Contributions rate and banding
Employee contributions to the Local Government Pension Scheme are ‘banded’ based on pensionable pay. The following table gives the rate of pay and bands of contribution for 2021/2022 which will apply from 1 April, 2021.
|Actual pensionable pay for an employment (2021/2022)||Main scheme contribution rate||50/50 section contribution rate|
|Up to £14,600||5.50%||2.75%|
|£14,601 to £22,900||5.80%||2.90%|
|£22,901 to £37,200||6.50%||3.25%|
|£37,201 to £47,100||6.80%||3.40%|
|£47,101 to £65,900||8.50%||4.25%|
|£65,901 to £93,400||9.90%||4.95%|
|£93,401 to £110,000||10.50%||5.25%|
|£110,001 to £165,000||11.40%||5.70%|
|£165,001 or more||12.50%||6.25%|
The following table gives the rate of pay and bands of contribution for 2020/2021 which will apply from 1 April, 2020.
|Actual pensionable pay for an employment (2020/2021)||Main scheme contribution rate||50/50 section contribution rate|
|Up to £14,600||5.50%||2.75%|
|£14,601 to £22,800||5.80%||2.90%|
|£22,801 to £37,100||6.50%||3.25%|
|£37,101 to £46,900||6.80%||3.40%|
|£46,901 to £65,600||8.50%||4.25%|
|£65,601 to £93,000||9.90%||4.95%|
|£93,001 to £109,500||10.50%||5.25%|
|£109,501 to £164,200||11.40%||5.70%|
|£164,201 or more||12.50%||6.25%|
Records to be maintained
A separate record must be maintained for each job the employee holds unless the employer determines that a single employment relationship exists. This is the same requirement as under automatic enrolment legislation and although not a change from current requirements the need to calculate pensions on a year by year basis means that separate records are vital to the task and therefore worth re-emphasising. Examples of where the employer may determine a single employment relationship exists are:
- Two concurrent employments where, if one is terminated, the other must be terminated at the same time
- Two sequential employments without a break (e.g. a promotion).
Where a single relationship does not exist, separate records will be required for each job in order to calculate and hold the data needed to correctly determine the amount of pension accrued in each year for each job.
The two sections of the LGPS 2014 Scheme
The LGPS 2014 contains two sections – the main or 100/100 section and the 50/50 section. The only difference between the two sections is that in the 50/50 section the amount of contributions to be deducted from the employee is half that due under the main section (and the member accrues half the normal pension whilst in the 50/50 section). Note that whilst an employee is in the 50/50 section the employer contribution is still the normal full contribution rate (not half).
The employee may elect to move between the main and 50/50 sections of the Scheme any number of times but each election only takes effect from the next available pay period. Note that for concurrent employments the employee may elect to move between sections for any or all of the jobs they hold.
All eligible employees should always be put into the main section on being brought into, or upon electing to join, the Scheme in an employment after which the following circumstances may lead to a change of section during the Scheme year:
- Notification that the employee has elected to move from the main section to the 50/50 section (or vice versa) from the beginning of the next pay period following the election.
- If the employee is in the 50/50 section and goes on to no pay due to sickness or injury, 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 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. The person will, of course, have the right to make a further 50/50 election which, if made before the payroll is closed, would mean the member would have continuous 50/50 membership.
- 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”. The person will, of course, have the right to make a further 50/50 election which, if made before the payroll is closed, would mean the member would have continuous 50/50 membership.
An “eligible jobholder” who is eligible for membership of the Scheme, but who is not an active member in that employment and who doesn’t apply to their employer to join the Scheme, nevertheless becomes an active member of the main section on the “automatic enrolment date” or “automatic re-enrolment date” relating to that employment.
Although they would initially be brought into the main section they could elect, on or after joining the main section, to join the 50/50 section. If they do so before the first payroll is closed (after they are enrolled into the Scheme), they can, in effect, be brought into the 50/50 section from the first day of joining the Scheme.
Movement between contribution bands
Once the initial pay band and contribution rate has been determined for an employee the employer is required by the regulations to reassess the appropriate band and rate each April (in the pay period in which 1st April falls) and is permitted by the regulations to review the appropriate band and rate on any material change in pay. In practice, the latter means that the employer can, for example, review the band and rate during a Scheme year should the employee have a material change in contractual pay (e.g. a change of job, a promotion / demotion, a regarding, a pay award or a change in contractual hours).
An employee may opt for retirement from age 55 onwards on termination of pensionable employment. The employee will not require employer consent and should have been provided with an estimate of any reduction to their pension prior to making such an election.
Normal Pension Age in the 2014 Scheme is the employee’s State Pension Age (with a minimum of age 65).
Where the employee either opts out of the Scheme, or ceases pensionable employment, or attains age 75 the Employer must inform Payroll and Islington Council’s Pension’s Office should be notified of:
- the date of cessation
- the reason for cessation
- the relevant section of the Scheme on cessation
- any existing Additional Pension Contribution(APC) / Shared cost (APC) contracts in force (and the amount of employee and/or employer contributions paid to the APC / Shared cost(APC) in the final Scheme year)
- pension contributions paid in relation to the job in the final Scheme year
- cumulative pensionable pay (per section) in relation to the job in the final Scheme year
- an Assumed Pensionable Pay (APP) figure where employment has been terminated on the grounds of permanent ill-health with a Tier 1 or Tier 2 ill health pension or an active member dies in service, or where a Tier 3 ill health pension is awarded which is subsequently changed to a Tier 1 or Tier 2 ill health pension. This APP figure is needed to calculate the amount of the enhancement to the benefits due under the LGPS.
The LGPS is a statutory scheme, governed by the Local Government Pension Scheme Regulations. These regulations outline your statutory responsibilities as an LGPS employer.
- collect and pay over to the Pension Fund employer and employee pension contributions and AVCs to the appropriate party
- provide accurate contribution and membership data including at the end of year
- notify us of any changes / mergers to the organisation that will impact on your participation in the Fund including transfer of staff under TUPE, mergers with other organisations or another decision which may materially affect the employer's Fund membership
- make a decision on the LGPS employer discretions for your organisation, supply us with a copy of the policy statement and publish these for your current and former members to view.
If you have delegated some of these procedures to a third party, as the Local Government Pension Scheme Employer you are still responsible for these actions. You are required to review and check that these procedures are carried out correctly according to the appropriate timeframe.
Payment of sums to Islington pension fund
Employers are required to pay to Islington Council’s Pension Fund any amount notified by ICPF to cover any extra charge for payment of:
- ill health pensions or early payment of deferred benefits or deferred pensioner benefits on ill health grounds
- any strain on fund costs in respect of flexible retirements, redundancy or business efficiency retirements
- any strain on fund costs relating to the waiver by the employer of any actuarial reduction; and the cost of any additional annual pension granted to the member by the employer.