11 April 2003

1. I enclose regulations which the Secretary of State has made under powers contained in section 7 and section 24 of the Superannuation Act 1972. The regulations amend the Local Government Pension Scheme Regulations 1997, The Local Government (Discretionary Payments) Regulations 1996 and The Local Government (Early Termination of Employment) (Discretionary Compensation) (England and Wales) Regulations 2000. The amending regulations are linked to and dependant on the Local Authorities (Members’ Allowances) (England) Regulations 2003 S.I. No 1021 and come into effect on the same date, 1 May 2003.

2. The regulations modify the Local Government Pension Scheme Regulations 1997 where appropriate and introduce a new Schedule 8. The key changes to the LGPS as it applies to Councillors’ include: they are deemed to be employees for the purposes of the LGPS; they will have to positively elect to become a member of the Scheme; pension benefits will be based on career average pay not final salary; retirement age for a councillor will be 70; and Councillor membership will not count towards calculating any other period of local government employment/LGPS membership.

3. Local Authorities have been given until 30 September to put the new allowances regime in place and may backdate its effect to 1 May when the Regulations come into force. Thus the relevant allowances received after 1 May 2003 may be taken into account in calculating a councillor’s career average pay in the first year. Furthermore a councillor will be able to contribute to AVCs in order to increase their pension benefits where appropriate.

4. These regulations apply only in England. The Department is considering their extension to Wales in due course.

5. It has been necessary to make some consequential amendments to the injury allowances and gratuities provisions of the Discretionary Payments Regulations to exclude eligible councillors. In addition the Discretionary Compensation Regulations have been amended to exclude a period of membership as a councillor for the purposes of calculating compensation for redundancy.

Any comments or questions relating to the application of these changes should be addressed in the first instance to Roisin Macreadie, Local Government Pensions Division, ODPM, Zone 2/E8, Ashdown House, 123 Victoria Street, London, SW1E 6DE. Electronic enquiries can be sent to [email protected]

Keith Bloomfield

LIST OF ADDRESSEES

THE CHIEF EXECUTIVE OF:

County and District Councils in England

County and Borough Councils in Wales

London Borough Councils

South Yorkshire Pensions Authority

Tameside Metropolitan Borough Council

Wirral Metropolitan Borough Council

Bradford City Council

South Tyneside Metropolitan Borough Council

Wolverhampton Metropolitan Borough Council

London Pensions Fund Authority

Environment Agency

The Town Clerk, City of London

Clerk, South Yorkshire PTA

Clerk, West Midlands PTA

The Secretaries of:

Local Government Association

LGPC

New Towns Pension Fund

Commission for New Towns

Association of Council Secretaries and Solicitors

SOCPO

SOLACE

ALACE

Convention of Scottish Local Authorities (COSLA)

Welsh Local Government Association

North Wales Association of Town Councils

Trades Union Congress

UNISON

TGWU

GMB

AEEU

Audit commission

Government Actuary’s Department

ACA

SPPA

NI DOE

National Assembly for Wales (NAW)

The Wales Office

AOC

UCEA

Other Government Departments