The right to membership of the Local Government Pension Scheme (LGPS) for employees in eligible posts, is protected under law. Usually eligible employees work for a local authority, public service provider, or an employer providing a service once performed by a local authority.
Where a service has been outsourced to a private sector employer, it will usually only be the employees that were transferred to the new employer who have this protection.
If you represent an employer that is new to the LGPS, you can find more information on our pages about academies, admission bodies and town and parish councils.
Automatic enrolment
Under legislation introduced in the Pensions Act 2008, all employees that meet eligibility criteria must be automatically enrolled into a workplace pension scheme. This can happen after an employee's start date, having later met the criteria. Employers must re-enrol employees that meet the criteria, but aren't in a scheme, every 3 years.
The LGPS is a qualifying pension scheme, so those in LGPS eligible posts must be automatically enrolled into the LGPS. At an employer's 3 yearly re-enrolment date, those in LGPS eligible posts who previously opted out of the LGPS, should be re-enrolled back into the LGPS.
To meet the automatic enrolment criteria an employee should:
- be between the ages of 22 and State Pension Age
- earn more than £10,000 a year (including additional payments such as overtime)
- work in the UK
Contractual enrolment
In addition to auto enrolment, all employees in LGPS eligible posts that are below 75 years old, should be enrolled when issued a contract for 3 months or more. This could be due to an employee starting a new LGPS eligible post, or a change to an existing post.
Those employees in LGPS eligible posts who have a contract for less than 3 months, or are employed on a relief basis, should not automatically be enrolled into the LGPS, but must be given the opportunity to join the scheme.
Opting out
If an employee wishes to opt out, they should complete the opt out form. It is important that employers are not seen to induce opting out, therefore you cannot provide the opt out form to employees directly. Completed opt out forms should be kept by the employer for their own records.
Employees can opt out at any point, including from:
- the employment start date
- the enrolment date (if they subsequently met the enrolment criteria)
- the employer's triennial re-enrolment date.
When re-enrolling an employee who has opted out, it must be to the main section of the LGPS.
50/50 section
The 50/50 section of the LGPS enables employees to maintain the membership benefits of the LGPS, whilst paying in less. It is as an alternative to opting out. The employee will build up pension at half the rate for the duration they are in the 50/50 section. The employee can choose to move back to the main section of the LGPS when they wish.
The employee should make their election to change to the 50/50 section, by completing the pension option form. On receipt of the form, the employer should apply half the normal employee contribution rate from the next available pay period. The employer contribution rate remains the same.
If an employee has opted to join the 50/50 section of the LGPS, when re-enrolled, it must be to the main section of the LGPS.
Resources
A technical guide, sample automatic enrolment letters and qualifying scheme certificates are available on the LGPS Regulations and Guidance website.
You can find more information about workplace pensions on the gov.uk website.