We administer the Sutton and Kingston Local Government Pension Scheme (LGPS) on behalf of just over 100 scheme employers. As well as administering the LGPS for both the London Borough of Sutton and Royal Borough of Kingston, other scheme employers include; Sutton Housing Partnership, Kingston University, the borough’s schools (non teaching staff), including academies and other bodies such as Achieving for Children, Encompass, Cognus, Mitie and Engie.
Scheme employers are either scheduled bodies or admitted bodies.
Have an automatic right and requirement to be an employer in the LGPS that covers their geographical area. Therefore, scheduled bodies do not need to sign an admission agreement, although it is vital that we are notified as soon as there are plans to create one. Scheduled bodies include local authorities, further education colleges, post 92 universities and academies. Here you can find out more about the LGPS scheme for scheduled bodies.
All non teaching staff, including teaching assistants are members of the Local Government Pension Scheme.
Teaching staff of the boroughs’ schools and academies are members of a the Teachers Pension Scheme, a separate pension scheme that is run by the Department for Education and Skills. Further information on this scheme can be found on the Teachers’ Pensions Website.
Conversion to Academy
At the date of conversion, all non teaching staff will continue to be eligible for the LGPS, in the same way as they were immediately before the conversion date. The academy must automatically enter all new staff that have a contract of three months or more into the scheme and they will have continuous pensionable service on the employment(s) that transfer. Employee contribution bands remain the same across the LGPS, regardless of a change in employer. There is no significant change from a member's perspective, although it is worth noting that the academy will be required to produce an employers discretions policy which may differ from that of the local authority.
From the date of the conversion, a new academy will be defined as a stand-alone scheduled body in either the Sutton or Kingston Pension Fund. The fund’s respective actuary will calculate how many assets the new academy should be credited with by calculating the total value of pension liabilities needed to transfer across and by applying the current funding level of the previous local authority. Based on this information, the actuary will also calculate the initial employer contribution rate that the academy should pay.
The initial employer contribution rate could be significantly different to the current rate that the school is paying. Contribution rates will be reviewed every three years at the Fund Valuation, the next valuation will take place in 2019.
It is important that the relevant fund’s actuary is able to accurately assess the new contribution rate and the amount of assets that the academy will be credited with at the date of conversion. Most of the calculations will be based on the data of the members transferring, and therefore data that is provided to the pension administration team is correct. The actuary is normally able to calculate the new contribution rate and asset allocation amount within three weeks of the data being submitted. It is our policy to recharge the actuarial costs incurred for providing this information; this is normally in the region of £3,000.
Academy - other considerations
An academy may be required to include details of its pension liabilities as part of their annual accounts. This may need to be in a FRS102 report format, but the academy would need to contact their auditors for further clarification. Both Sutton and Kingston Pension Funds can commission these reports from their actuary and further details of the cost, timescales and terms and conditions are available on application.
Are required to meet eligibility criteria and a legal agreement, called an admission agreement, being signed by the relevant parties.
Since 13 January 2000, LGPS Regulations have permitted "external providers" to enter into an Admission Agreement with a "best value authority" as an alternative to offering a broadly comparable pension scheme. Such agreements allow scheme members who are TUPE transferred from their local government employment to an external provider of those services, to remain in the LGPS for so long as they are employed in connection with the delivery of the outsourced service.
Other staff employed by the external provider, who work in connection with the delivery of the outsourced service, may also be allowed to join the LGPS if the admission agreement permits.
It is crucial that officers who have responsibility for or have involvement in commissioning and procurement or other forms of potential outsourcing discuss the pension implications of outsourcing staff with the Pension Administration Team as early as possible in the procurement process. Pension issues should be considered when drawing up a tender specification include the instruction for an actuarial assessment of the transferring staff to set the employer contribution rate and whether the tenderer intend to offer a broadly comparable pension scheme.
Broad comparability relates to the protection of transferring employees’ future pension rights and ensures that transferring staff are entitled to pensions in respect of future service that are worth as much as they would have had, were they to have remained with their original employer. To be assessed as being ‘broadly comparable’ to a public sector pension scheme, it does not need to offer identical benefits. However, it must offer the same range of benefits, with the same (or greater) overall value. The pension scheme put forward by the contractor as broadly comparable has to be assessed by an actuary in accordance with the Government Actuary’s Department Statement of Practice.
Failure to consult with the administration team at an early stage will create problems and delays during later stages of the process. At different stages in the procurement process pension issues will need to be considered.
Where an admission agreement is to be entered into, the Scheme employer (the transferor scheme employer), the successful external provider (the transferee admission body) and the Pension Fund administering authority (London Borough of Sutton or Royal Borough of Kingston) need to work together to complete the process prior to the commencement of the contract. Before the agreement can be signed it is necessary to:
- confirm whether the agreement will be open or closed
- provide information to the Pension Fund actuary to enable a final employer contribution rate to be determined and
- agree an appropriate bond, indemnity, or guarantee to protect the Pension Fund
It is important that the admission agreement includes provisions for the termination of the contract and the circumstances in which this may occur.
The following schedules should be attached to the admission agreement:
- Schedule 1 - A list of eligible employees
- Schedule 2 - A guarantee bond (where required)
The agreement needs to be signed and sealed by the transfer or scheme employer (the outsourcing employer), the admission body (the newly admitted body) and the Pension Fund administering authority.
A standard admission agreement format has been agreed. In order to conclude the admission agreement quickly and efficiently the transferor scheme employer should be advised and encouraged not to make any significant changes to this format.
Sutton and Kingston Administration Strategy
The LGPS 2013 Regulations allows an administering authority to prepare an pension administration strategy for the purpose of improving administrative processes within their fund and its relationship with employers. The aims of the strategy are to:
- provide a high quality and value for money service
- meet the highest professional standards in all our customer dealings
The strategy covers:
- roles and responsibilities of the Scheme Employer and the Pension Administration Team
- service level standards with associated timescales
- schedule of charges
The Sutton and Kingston adminstration strategy will be reviewed every 3 years and when there are significant changes in LPGS regulations.
All employers pay the balance of the cost of providing pension benefits payable on retirement from the Local Government Pension Scheme (LGPS). Every three years, the fund valuation calculates how much employers should contribute to the Scheme. The date of the last valuation was 31 March 2016 and employer contribution rates have been set for the period 1 April 2017 to 31 March 2020.
All employers are required to make payments for all employee and employer contributions to the administering authority within statutory deadlines as referred to by Regulation 7 of the Public Service Pensions Regulations 2014. This means that contributions must be received in the Sutton and Kingston Pension Funds by the 19th day of the month following the month to which the pension contribution deductions relate (e.g. pension contributions deducted from a payroll run in April must be received by the Pension Fund on or before the 19th of May).
A monthly schedule that breaks down the payments for all members must also be completed to accompany the payments.
All schedules related to Sutton and Kingston members must be sent to firstname.lastname@example.org.
Where payments are received later than the 19th day and it is considered that the late payment is of material significance, S&K PAT has a duty to notify the Pensions Regulator of the employer’s failure to meet the required deadline. A charge will also be levied detailed in section 10 of the Sutton and Kingston administration strategy.
Employee Contribution rates
Under the 50/50 Section of the LGPS the member pays half their normal contribution rate, but the employer continues to pay the full employer's contribution rate.
In April of each year it is the responsibility of the employer to ensure that their payroll provider applies the appropriate contribution rate for that year. They are also responsible for applying the new employee contribution band based on the LGPS contribution table.
Payment of Employer Contributions during sickness absence or parental leave.
During a period of reduced pay, due to sickness, parental leave or armed forces absence, the employer’s contributions must be paid in full on the on the member’s Assumed Pensionable Pay (APP) for this period.. The APP figure is based on the average three whole months prior to the date the member’s pay was first reduced.
It is also vital that the member’s APP figure is reported along with their reduced earnings on the employers end of year return. Failure to do this will result in the member’s not receiving the pension they are entitled to.
Employer Self Serve
If you are a scheme employer, you can have access to Employer Self Serve. There, you will be able to:
- view the membership details of the staff at your employer in the LGPS, including earnings and contributions and service
- submit changes to service
- produce a requirement estimate
A handy employer self service user guide outlines the key functionality of the site.
If you would like to register or have any issues logging on please contact email@example.com
End of year activities
It is the responsibility of scheme employers to ensure accurate LGPS annual returns are submitted to the Pension Administration Team by the annual deadline date even if an employer’s payroll is outsourced to a third party payroll provider. The team will provide employers with an annual return spreadsheet with set columns of the data required for each pension scheme member for the full 12 month period or for part of the year for new starters and leavers. A charge can be levied on employers for late submissions or inaccurate data; details of charges are listed in the Sutton and Kingston administration strategy.
The Pension Regulator requires all LGPS scheme administrators to issue annual benefit statements to all active and deferred members by 31 August each year. If this cannot be achieved due to late submission of annual returns or poor data quality, the scheme is legally required to report the scheme employer to the Regulator. Likewise, if the scheme fails to issue statements by the deadline date, then they are required to self report their breach also. The Regulator has the power to impose fines on employers and LGPS scheme administrators or both.