Employers

Employers' Guide

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Section Two

5 - OPTING-OUT

Action to be taken when an existing employee wishes to opt out of the LGPS:

If an employee expresses a wish to opt out of the LGPS he/she must complete Form LGPS 4.

1. the option is made within 3 months of joining the LGPS

1. If the employee opts out within 3 months of joining the LGPS, the employer must cease deduction of pension contributions from the commencement of the next pay period. Contracted-in National Insurance contributions should then commence;
   
   The pension contributions paid by the employee must be refunded through the administering authority, unless contributions were deducted in error where they can be refunded via the payroll, and National Insurance contributions and tax adjusted accordingly. It will be necessary to liaise with the Contributions Agency where a National Insurance adjustment stretches into two tax years; 
   
2. The employer must notify the Pensions Section using Form LGPS 15 that the employee has opted out of the LGPS and has had a refund of contributions made to him/her through the payroll. A copy of the employee's option to cease membership of the LGPS (Form LGPS 4) should be stapled to Form LGPS 15 when it is sent to the Pensions Section;

1. If the employee opts out more than 3 months after joining the LGPS, the employer must cease deduction of pension contributions from:

(i) the commencement of the new pay period, or

(ii) a later date that the employee may specify.

2. The employer must then notify the Pensions Section that the employee has opted out of the LGPS using Form LGPS 15 to which should be attached the employee's option to cease membership of the LGPS (Form LGPS 4) and completed Form LGPS 16.

It is important that employers retain a copy of the employee's option to cease Membership of the LGPS (Form LGPS 4) until such time as the employee ceases employment. This is for two reasons:

1. an employee who opts out of the LGPS, rejoins and again opts out during one continuous period of employment will not be allowed to rejoin the LGPS whilst he/she remains in the employment of the same employer, unless it is the employer's policy to allow such employees to rejoin, and
2. as documentary evidence against the employee who several months or even years later claims he/she did not opt out of the LGPS.

If an employee who has opted out of the LGPS and has deferred benefits subsequently dies in service or is dismissed on the grounds of permanent ill health or on the grounds of redundancy / efficiency and is over the age of fifty please contact the Pensions Section for advice.

6 – CEASING EMPLOYMENT

6.1 Resignations

The employer must complete Forms LGPS 15 & 16 in all cases and then send all forms to the Pensions Section. If these forms are not completed and sent to the Pensions Section there will be a delay in notifying the employee of his/her pension rights.

6.2 Date of Leaving

As far as the Pension Scheme is concerned the employee’s leaving date is:

1. the date the employee is paid to, or
2. if the employee leaves during a period of no pay as follows:

(i) unpaid leave of absence, if the employee has decided to pay contributions or contributions are due because the unpaid leave is less than 30 days the leaving date is the date to which the employee is paid.

If the employee has decided not to pay contributions for the period of unpaid leave (the period in excess of 30 days) the leaving date is the day that contributions were last paid.

This is because a period of unpaid leave for which no contributions are paid does not count as a period of membership in the Pension Scheme, or

(ii) unpaid maternity leave, if the employee leaves during the Ordinary Maternity Leave period the date of leaving is the date to which the employee is paid.

If the employee leaves during the Additional Maternity Leave period the date of leaving is the date on which contributions were last paid if the employee has decided to pay contributions or the date of the end of week 18 of the period of Ordinary Maternity Leave.

(iii) unpaid sick leave, if the employee leaves during a period of no pay due to the period of sick pay having finished the leaving date is the date the employee leaves the employment of the employer.

Please see Section 12 for guidance on calculating the final pay for an employee who leaves employment in the circumstances in 6.2(i), (ii) and (iii) above.

6.3 Employee with less than 3 month’s membership and with no transfer value into the Fund

In this case, the employee is entitled to the following choices:

(c) to leave their contributions in the Avon Pension Fund for a maximum of 1 year

When a refund is not paid within 12 months of the date the member ceases employment, interest is payable on the net amount.

A refund cannot be made if an employee re-enters the LGPS within 1 month and 1 day.

It is also possible to combine concurrent employments. If a member has more than one employment in local government and leaves one of them with less than 3 month’s membership, they have the option of combining the membership accrued in the job they are leaving with their continuing membership.

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6.4  Employee who is less than 60 year’s of age with more than 2 year’s membership or less than 2 year’s membership but has transferred in pension rights from another pension scheme

In this case, the employee is entitled to deferred benefits in the Avon Pension Fund. However, the employee also has the right to a transfer to another pension scheme.

If the employee does not take a transfer to another pension scheme he/ she retains the deferred benefits and has the following rights:

1. to take a transfer to another pension scheme, or
2. request the early release of the deferred benefits under Regulation 31 (See below)

Regulation 31

Under this regulation a member who leaves a local government employment before the age of 50 and has two or more years’ membership in the LGPS, or has less than two years membership but has transferred pension rights into the LGPS from another scheme may elect to receive immediate payment of his/her pension benefits once he/she has reached the age of 50 or over.

An employee aged 50 or over who leaves employment may also seek the immediate payment of his/her pension benefits. In either case, if the employee is aged under 60 when the election is made, the consent of his/her former employer is required. Once the employee has reached the age of 60, the payment of the pension benefits becomes an entitlement and does not need the consent of the former employer.

Each employer must have a policy in place to consider any requests for the early payment of pension benefits where the employee or ex-employee is aged between 50 and 60.

If the person has not attained Normal Retirement Date at the time the benefits become payable and the sum of:

is less than 85, (the so-called 'Rule of 85') the retirement pension and lump sum must be reduced by the amounts shown as appropriate in guidance issued by the Government Actuary (see Section 9).

The employer may determine on compassionate grounds that the reduction under the ‘Rule of 85’ should not apply. Employers may wish to consider the criteria to apply in such cases in order for there to be a consistent approach.

A member who has left an employment with an entitlement to deferred pension benefits may elect to have immediate payment of the benefits because of permanent ill-health. The election is made to the former employer. If such an election is received the benefits can be released subject to a medical examination to determine that the ex-employee is permanently incapable of discharging efficiently the duties of the former employment because of infirmity of mind or body. The ‘Rule of 85’ does not apply in these cases. Please arrange for Form LGPS 18 to be completed in these cases. No payment will be made without this form

An employee’s Normal Retirement Date is-

1. if the person has been in the LGPS since before 1 April 1998

2. if the person joined the LGPS on or after 1 April 1998

6.5 Dismissals

(i) Recovery of monetary obligation or financial loss – Regulations 113 to 115

The Scheme rules allow an employer to recover a monetary obligation from an employee’s pension benefits when:

To trigger the process the employer must give the member or former member at least three months’ warning of its intention to recover and a statement showing the calculation of the amount to be recovered and the effect it will have on the pension benefits. The administering authority with the actuary to the Pension Fund will be able to assist in this calculation.

If the calculation is disputed no recovery action can take place until the matter has been referred to a court or arbitrator to decide.

In cases where no monetary obligation is incurred but there is a financial loss as a result of an offence involving fraud or grave misconduct in connection with the employment the employer may apply to the administering authority for reimbursement.

(ii) Forfeiture certificates – Regulation 111,112 &114

In exceptional cases where employment is terminated as a result of an employee being convicted of an offence so serious that it:

the employer may apply to the Secretary of State for a certificate to the effect that the member’s rights under the Scheme are forfeited.

An application must be made within three months from the date of conviction and a copy sent to both the convicted person and the administering authority.

(iii) Other dismissals

If an employee is dismissed or resigns due to some other circumstances involving misconduct, e.g. bad timekeeping, persistent absence, poor quality work, or an offence entirely unconnected with his work for his employer, (this list is not exhaustive), then the provisions mentioned in above will NOT apply.

6.6 Best Value Transfers

Private contractors of out-sourced services can apply to be admitted to Avon Pension Fund in order that the former employees can remain members of the Pension Scheme.

This legislation was introduced in January 2000 for local authorities and was amended in November 2001 to include Further and Higher Education Corporations. Another amendment was made in March 2002 to include admitted bodies providing that the Office of the Deputy Prime Minister has given approval for the admitted body to be treated as a best value authority.        

The Local Government Pensions Committee of the Employers' Organisation has issued Guidance for both employers and the Pension Fund.

Part of the process involves the actuary to the Pension Fund. The actuary is responsible for calculating the employer’s contribution rate and the amount of indemnity that will apply to the private contractor. The details that the Pensions Section requires in order to prepare the data required by the actuary is listed below. The actuary normally expects to report within four weeks of the receipt of clean and complete data.

For each employee in the Local Government Pension Scheme, the following information is required from the employer. If an employee has multiple contracts then the data required must be shown separately for each contract.

In addition, the following information is required

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7- RETIREMENTS

7.1 Retirements – General

Please see Section 6.2  for advise on leaving dates as the Pension Scheme is concerned. A retirement is when an employee leaves your employment with an entitlement to immediate payment of benefits if he/she is either,

(i) retiring at age 65 (see Section 7.2), or

(ii) aged 60 or more having completed 2 years membership or has less than 2 years membership but has brought in a transfer from another pension scheme (see Section 7.2), or

(iii) is dismissed on the grounds of permanent ill-health having completed 2 years membership or has less than 2 years membership but has brought in a transfer from another pension scheme. Age is irrelevant (see Section 7.4), or

(iv) retiring over the age of 65 – late retirement (see Section 7.5)

(vi)  is dismissed on the grounds of permanent ill-health and has completed less than 2 years membership with no transfer of benefits. (see Section 7.4), or

Please see Section 6.2 for advice on leaving dates as far as the Pension Scheme is concerned.

7.2 Retiring at age 65, aged 60 or more having completed 2 years membership or has less than 2 years membership but has brought in a transfer from another pension scheme, or

Please ask the employee to complete Form LGPS 20 and to return it to you. Complete Forms LGPS 15 & 16 and send them with Form LGPS 20 to the Pensions Section.

If an employee decides to retire at the age of 60 or between the ages of 60 and 65, and does not satisfy the ‘Rule of 85’ (see Section 9) he/she will be given the opportunity of either choosing reduced benefits, payable immediately, or leaving payment until a later date but not later than age 65.

7.3 Redundancy/Efficiency Retirement - Benefits Payable from the LGPS – Regulation 21

Immediate benefits will be paid to an employee aged 50 years or over and who has 3 or more month’s membership, or has less than 3 month’s membership but has transferred rights from another pension scheme. Providing the employer certifies that cessation of employment is on the grounds of redundancy or in the interests of the efficient exercise of the employer's functions, the “Rule of 85” does not apply to these cases.

Other employees with less than 3 months membership will be entitled to receive a refund of contributions with interest or a transfer to another approved pension scheme. 

Please complete Forms LGPS 15, 16 & 26. Request the employee to complete and return Form LGPS 20 to you.

If you are giving the employee added years please ask the employee to complete and return Form LGPS 25 to you.

All completed forms must then be sent to the Pensions Section.

An employee leaving on redundancy or efficiency grounds who is under age 50 and has 3 or more month’s membership, or less than 3 month’s membership but has transferred rights from another pension scheme. Is entitled to deferred benefits or a transfer to another pension arrangement (see Section 6.4)

The Regulations do not define "interests of the efficient exercise of the employer's functions" thus giving employers maximum discretion when considering either individual employees or groups of employees.

7.4 Ill-Health Retirement – Regulations 27 & 28

(a) A member who has less than 3 month’s membership in the LGPS and who has not transferred pension rights from another scheme into the LGPS is entitled to a refund of pension contributions less the statutory deductions. If the member wishes to transfer the accrued pension rights from the LGPS to another scheme a refund cannot be made.

[Paragraph on Ill health grants no longer applicable with effect from 1 April 2004]

Please complete Forms LGPS 15 & 16 and send them to the Pensions Section together with Form LGPS 17.

(b) A member whose total membership is two years or more, or who has transferred pension rights from another scheme into the LGPS, and leaves employment by reason of being permanently incapable of discharging efficiently the duties of that employment or any available comparable employment with the employer because of ill health or infirmity of mind or body, is entitled to an immediate pension and lump sum.

Please complete Forms LGPS 15 & 16 and ask the employee to complete and return Form LGPS 20 when retirement occurs. All forms are to be sent the Pensions Section together with Form LGPS 17.

No ill-health retirement will be processed without Form LGPS 17.

When, at the date of retirement, the administering authority is satisfied that the member has a life expectancy of less than 1 year, the ill health pension in excess of the member’s Guaranteed Minimum Pension may be commuted for a lump sum of 5 times the amount of pension given up.

The Local Government Pension Scheme (Amendment No. 2) Regulations 2001 [SI 2001/3401] introduced a requirement that, as from 1 April 2002, the approved independent medical practitioner who signs a certificate of permanent ill health or permanent infirmity of mind or body must be in a position to certify that:

a) he / she has not previously advised, or given an opinion on, or otherwise been involved in the particular case for which the certificate has been requested, and

b) he / she is not acting, and has not at any time acted, as the representative of the scheme member, the scheme employer or any other party in relation to the same case.

The implication is that the approved medical practitioner must be able to give an objective opinion based solely on the relevant medical evidence and free from any influence. 

This builds on the existing requirement that the employer must obtain a certificate from an independent registered medical practitioner who is qualified in occupational health medicine and who is approved by the Pension Fund administering authority. 

The certificate must give the approved medical practitioner’s opinion as to whether the person is permanently incapable of discharging efficiently the duties of the relevant employment or any other comparable employment with the employer because of ill health or infirmity of mind or body. 

The words highlighted in bold are expanded upon below:

Qualified in occupational health medicine - regulation 97 lists the qualifications that allow a medical adviser to be described as “qualified in occupational health medicine”. These are that the adviser –

• holds a diploma in occupational medicine (D Occ Med) or 

• holds an equivalent qualification issued by a competent authority in an EEA State (which has the meaning given by the European Specialist Medical Qualifications Order 1995) or 

• is an Associate, a Member or a Fellow of the Faculty of Occupational Medicine or an equivalent institution of an EEA State.

Approved - the Avon Pension Fund is responsible for deciding whether or not to approve the medical practitioners that employers in the Fund nominate to provide medical opinions for the purposes of the pension scheme. The key criteria for approval are that nominated practitioners have one or more of the specified qualifications, and that there is ‘independence’ from the employer. It is not be possible for the Fund to investigate whether the medical practitioner can make the statements regarding whether they have previously been involved in the case or have acted as the representative of the member or the employer. Therefore employers need to consider these points carefully when referring an employee for an opinion. 

Permanently incapable - this is defined in regulation 27 as meaning “incapable until, at the earliest, the member’s 65th birthday”. Although not explicitly stated, it appears from appeal determinations to have been the intention of those drafting this regulation that a “balance of probability” test should be applied in assessing permanent incapacity. In other words, the test appears to be “Is it more likely than not that this person will be incapable of performing efficiently the duties of the relevant employment until age 65?”

Discharging efficiently - this is not defined in the regulations. Subject to any relevant judicial or quasi-judicial interpretations of its meaning, it needs to be given its commonly understood meaning. The approved medical practitioner has to certify whether the member is permanently incapable of discharging efficiently the duties of the relevant employment (or any other comparable employment). In practice, it is for employers to first define what constitutes an acceptable standard of performance.

Comparable employment - this is defined in regulation 27. In order to be a comparable employment – 

• the alternative job’s contractual pay, hours, location, holiday entitlement, sickness and injury entitlement and other material terms must not differ substantially from the normal job, and

• the contractual provisions as to capacity in the alternative job must be either the same as in the normal job or differ “only to the extent that is reasonable given the nature of the member’s ill-health or infirmity of mind or body”

It is for the employer to identify any available job that may be suitable and obtain a medical opinion to identify what changes to a person’s normal duties would be sufficient to allow a person to perform the job. Irrespective of whether a job is deemed to be comparable, or whether its capacity requirements are identical to those of the normal job or different, approved medical practitioners giving medical opinions for the purposes of the Scheme will need to consider whether any incapacity that affects the normal job would also affect the identified alternative job and assess whether incapacity for either job (or both jobs) is likely to be permanent.

To be regarded as comparable, a job must be with the same employer. The DTLR, now the ODPM, have advised that the job must be an actual available job, although this is not explicitly stated in regulation 27. So, for the purposes of regulation 27, no account need be taken of whether a person can do any job available at another employer or any job not currently available with the present employer. 

Ill health or infirmity of mind or body - this is not defined in the regulations. Subject to any relevant judicial or quasi-judicial interpretations of its meaning, it needs to be given its commonly understood meaning.

[Source: Local Government Pension Committee – Circular 113, March 2002]
Where the member’s total membership of the LGPS is five years or more (excluding any added years purchased by the member), the pension and lump sum is calculated by reference to enhanced service, rather than the member’s actual service. A member’s enhanced membership period for ill-health retirement is:

However, the enhanced membership must not exceed the total membership that he/she would have had had he/she continued as an active member of the LGPS until he/she was 65.

For part-time employees the period of extra membership granted is scaled down in proportion to the whole time equivalent. Where an employee’s membership consists of a mixture of whole time and part time employment, the period of extra membership is adjusted. This is to reflect the employee’s historic work pattern unless the employee has at least 13 1/3rd years of whole time membership in which case no adjustment is made.

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7.5 Late Retirements

If an employer decides that an employee can remain in employment beyond the age of sixty-five the benefits due to the employee at date of leaving are different according to the employees start date in the Pension Scheme as follows:

(b) if the employee first joined the Pension Scheme after 31 March 1998 the employee must leave the Scheme although he/she may remain in employment beyond the age of 65. Benefits are calculated at the age of sixty-five and held until the employee finally retires and then paid at a higher level to compensate for the late payment. Please complete Forms LGPS 15 & 16 and send them to the Pensions Section as if the employee was retiring at the age of 65.

7.6 Estimates of Benefits

Where employees who are considering retirement require an estimate of the benefits they will receive, or where such an estimate is required in connection with a possible ill health retirement or redundancy / efficiency, this will be supplied on request from the employer. Please complete Form LGPS 22 and forward it to the Pensions Section. A reply will be sent direct to the employee at their home address or in a sealed envelope via the employer as requested.

Care must be taken when advising the Pensions Section of the final pay that is to be used in the calculation of the estimate.

There has been a case with the Pensions Ombudsman where a local authority calculated an employee’s final pay for an estimate and when the employee accepted the offer of early retirement the final pay calculation was less. The Ombudsman ruled that the employer had to calculate a lump sum compensation payment based on the difference in the benefits offered in the estimate and the benefits actually paid.

8 - OPTIONS FOR MEMBERS RETIRING

8.1 Converting Pension to Lump Sum - Regulation 20 (3A)

This option is available to those eligible members entitled to receive immediate benefits including eligible deferred members when their benefits are brought into payment. The HMRC rules limit the amount of lump sum that can be provided.

Any additional lump sum generated does not affect any contingent spouse’s and children’s pensions.

9 - RULE OF 85

The following table shows the percentage reduction that is applicable for each "year early" from 1 year to 15 years. Separate factors are shown for the reduction in pension for men, the reduction in pension for women, and the reduction in lump sum retirement grant. The factors should be interpolated for part years, when the number of "years early" is not an exact whole number.

Notes:

(1) The number of "years early" is the period between the dates (i) and (ii) below, where:

(i) is the effective date of the member's election under Regulation 31(1) or Regulation 35(1A) of the LGPS; and

(ii) is the date (or dates) on which the member would be entitled to unreduced benefits (assuming, where relevant, that the employer would consent to an election for the early payment of benefits if the member is under age 60 or remains in employment), as outlined in paragraph 4 of this guidance note.

(2) Practitioners may need to refer to this table twice (with different values of Years Early) when preparing calculations for Group 1, 2 or 3 members. If tapered factors are required they are derived from these two sets of factors.

Two simple examples are described to illustrate the application of the factors.

Example 1: Female employee, whose membership commenced at the exact age of 45, serves continuously until exact age of 58, and then elects for early payment of her retirement benefits.

1. the employer’s consent would be required as age is below 60.
2. the earliest age at which unreduced benefits would be applicable is age 65 as the "Rule of 85" cannot be satisfied before the age of 65. The period of years between the date of election and the date of entitlement to unreduced benefits is 7 years (the difference between age 65 and age 58).
3. Taking the factors in the table, the accrued pension benefit would be reduced by 30%, resulting in pension payment of 70% of the accrued pension. The lump sum retirement grant would be reduced by 16%, resulting in a payment of 84% of the accrued retirement grant.

Example 2: Male employee becomes an employee at the exact age of 27 serves continuously until age 56, which is the earliest age at which he would satisfy the "Rule of 85" requirement. (The "Rule of 85" is satisfied because the employee’s age of 56, plus his total membership of 29 years, is equal to 85.)

1. if the employer were to give his consent to the immediate payment of benefits from age 56, then there would be no reduction in accrued benefits payable, because the employee satisfies the rule of 85.
2. if the employer does not give consent to the payment of immediate benefits at age 56, then the earliest age at which unreduced benefits could be payable would be on attainment of age 60.
3. if the same employee were to apply for immediate early payment of benefits from age 54, and the employer gave his consent, the period of years between the date of election and the date of entitlement to unreduced benefits would be two years. This being the difference between age 56 and age 54. The pension would then be reduced by 11% and the lump sum retirement grant reduced by 5%.

9.2 Abolition of Rule of 85

Any new starters from 1st October 2006 onwards will not be able to retire before age 65 with full benefits.

All existing members on 30th September 2006 will have service up to 31st March 2008 protected. 

Any members, who reaches age 60 before 1 April 2016, will also have their rights on satisfying the rule of 85 protected.

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10 - COST OF EARLY RETIREMENT

System for Recovering Early Retirement Costs

10.1 Principal Elements of System

The principal elements of the system are as follows:-

1. a maximum five year payback period for all early retirements which are at the discretion of the employer (this includes early retirements under Regulation 31);
   
2. the cost of ill-health retirements will continue to be recovered over a period of 15 years through the employer’s contribution rate. However, any employing body whose ill-health retirements exceed the number estimated by the actuary will have its contribution rate re-assessed, resulting in a possible increase during the three years to which the actuarial certificate relates;
   
3. the early release of pension on compassionate grounds will be treated in the same way as ill-health retirements. However, the incidence of early release on compassionate grounds will be monitored and the policy reviewed as necessary;

10.2 Cost Estimates

The Pensions Section will provide estimates of the cost of all proposed early retirements under Section 12.1(i) when an estimate of the employee’s benefits is requested using Form LGPS 22 ("Request for Estimate of Pension Benefits"). The information will be supplied in a standard format (see Appendix 7, which includes hypothetical figures).

None of the costs shown under the heading ‘Additional Cost Calculation – CAY’ will be recovered by the Avon Pension Fund under the new system except where an employing body has elected to grant added years through augmentation (Regulation 52). Where an employing body grants added years under the Local Government (Early Termination of Employment) (Discretionary Compensation) (England and Wales) Regulations 2000, the costs shown will constitute management information only.

The costs which will be recovered by the Avon Pension Fund under the new system are those shown under the heading ‘Net Capital Cost’ (also known as the "Strain on the Fund"). These are the costs which result from a pension being paid earlier than LGPS rules would normally allow.

10.3 Cost Recovery

The rechargeable costs of an early retirement will be those calculated from details supplied on Form LGPS 15. An invoice will then be sent to the employing body to recover those costs as a single, upfront payment which must be paid within one month of the date of the invoice, unless the employing body has indicated that the cost is to be spread, with interest, over a period of years. In the latter case, the period must not exceed 5 years. Where the amount is payable by instalments, each instalment must be paid by the date shown on the invoice.

Where the amount to be recovered by the Avon Pension Fund is £1000 or less, this will be payable in a single, upfront payment.

10.4 Augmentation

As indicated earlier, the costs shown under the heading ‘Additional Cost Calculation – CAY’ are for information only unless an employer resolves to augment a LGPS member’s pensionable service within the LGPS (Regulation 52).

Prior to the Local Government Pension Scheme Regulations 1997, those employing bodies which chose to grant added years could only do so under the Discretionary Payments Regulations 1996 now replaced by the Local Government (Early Termination of Employment) (Discretionary Compensation) (England and Wales) Regulations 2000. The additional costs are met on a "pay as you go" basis.

If it wishes to do so, an employing body can now meet the cost of added years "upfront" by using augmentation (an employer’s Discretion under the new Pension Regulations). Employers are reminded that the maximum number of added years which can be granted under augmentation is 6 2/3rds. whereas 10 years can be granted under the Discretionary Compensation Regulations.

If an employing body wishes to grant added years to LGPS members whose benefits have been released under Regulation 31, it must use augmentation.

The costs which fall to be met by augmentation will be those shown under the heading ‘Net Capital Cost’.

The Pensions Sub-Committee has agreed that, as with the cost of paying a pension early, the augmentation costs can also be spread over a period not exceeding 5 years. If an employer wishes to augment a LGPS member’s service, it will need to have the appropriate policy statement in place (Regulations 52 and 143). Subject to this condition being met, an employer must indicate in a covering letter with Form LGPS 15 that augmentation will apply. In addition, unless the instances where augmentation will apply are clearly identifiable from the employer’s published augmentation policy, a copy of the resolution passed in respect of the retiring LGPS member must be enclosed. The employer must also indicate whether the cost is to be met in a single, up-front payment or spread over a period of up to 5 years.

10.5 Interest

Where an employer elects to spread the cost of an early retirement over a period of years (not exceeding five), an annuity system of cost recovery will be used. Interest will be charged at the rate of 8%.

Where any payment is not received by the due date, employers will be charged interest as follows:-

(ii) where payment is by annuity, additional interest at 1% above base rate on the outstanding annuity from the due date to the date of payment.

10.6 Ill-Health Retirements and Compassionate Cases

Although the financing of ill-health retirements will remain substantially the same as now, the Avon Pension Fund will supply the cost of all ill-health retirements on request. The same facility will be available for early retirement on compassionate grounds. This would be for information only.

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