Employer discretionary policies

The Local Government Pension Scheme (LGPS) requires all scheme employers to formulate, publish and keep under review a statement of policy on all mandatory discretions which they may exercise in relation to members of the LGPS.

Under Regulation 60 of the LGPS Regulations 2013, (as amended), each scheme employer must publish and keep under review a Statement of Policy to explain how it will apply certain discretions allowed under the Pensions Regulations.

Setting a discretions policy as a scheme employer gives you flexibility in managing issues relating to LGPS benefits for your current and former employees. Exercising these discretions can have immediate costs for employers, however, please be aware that failing to set a policy is a breach of the scheme regulations.

A copy of the policy must be sent to the relevant administering authority. Your policy should be reviewed annually to ensure that the decisions are still relevant to you as an employer and your scheme members. 

If you decide to amend the policy, you must publish the revised policy and send a copy to us within one month of making the changes.

The mandatory LGPS 2013 & 2014 discretionary policies are:

Shared Cost Additional Pension Contribution (APC’s) 

Where an active member wishes to purchase extra annual pension by making additional pension contributions, an employer can choose to voluntarily contribute towards the cost of purchasing that extra pension through a Shared Cost Additional Pension Contribution (SCAPC).

Flexible Retirement 

An employer can decide whether to permit flexible retirement for staff aged 55 or over who reduce their working hours and/or grade and wish to access their pension benefits.

Flexible Retirement 

An employer can decide whether to waive, in whole or in part, actuarial reduction on benefits paid on flexible retirement.

Power of employing authority to grant additional pension

An employer can decide whether to grant additional pension to an active member or within 6 months of ceasing to be an active member by reason of redundancy or business efficiency.

‘Switch on’ the 85-year rule

The employer can decide whether to ‘switch on’ the 85-year rule for a member voluntarily drawing benefits on or after age 55 and before 60 (other than on the grounds of flexible retirement).

Please note that this list is not exhaustive. In the guidance documents you can locate the pre 2014 mandatory discretions and other policies that you are advised to consider and publish. 

The LGPS website provides the full list of discretions along with guidance for scheme employers.

We are holding several webinars on discretionary policies, to sign up please visit Support for employers or alternatively email wmpfemployerliaison2@wolverhampton.gov.uk for more information.