The Local Government Pension Scheme (the "LGPS") is one of the largest pension funds in the UK. It is a statutory pension arrangement and comprises 99 separate funds operated by local authorities throughout the UK to provide pension benefits for their employees. The terms governing the LGPS are set out in UK legislation. Much of the detail is contained in regulations. Local authorities have for many years outsourced services to the private sector usually involving the transfer of employees from local authorities to service providers. To protect employees in terms of their pension benefits, the LGPS has been available to the private sector for quite some time enabling employees who have transferred from local authorities the opportunity to continue to benefit from the defined benefits on offer under the LGPS. To do so, a service provider participates in the LGPS as an admission body by signing up to an admission agreement.
What are the changes?
In August 2012, changes to the LGPS regulations were laid before Parliament by the Department for Communities and Local Government ("DCLG"). The changes will impact all local authorities and service providers when they come into force on 1 October 2012. Most of the changes are administrative in nature or are otherwise relatively immaterial. However, the DCLG has slipped into the amending regulations certain provisions requiring the automatic enrolment of transferring employees into the LGPS.
In relation to outsourcing contracts entered into on and after 1 October 2012, service providers who are admission bodies will be obliged to automatically enrol their employees into the LGPS either when employees join the service providers or, if later, at the date on which the service provider becomes an admission body.
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