Teachers’ Pension Scheme: proposed changes to scheme regulations Government consultation

TPS Pensions Policy Team

Department for Education

Bishopsgate House

Darlington

DL1 5QE

21 January 2022

Dear Sir or Madam

Thank you for the Department’s consultation document inviting comments on proposed changes to the Teachers’ Pension Scheme (TPS).

I respond on behalf of the Local Government Association (LGA). The LGA is a politically led, cross-party membership organisation that works on behalf of councils to ensure local government has a strong, credible voice with national government. In total, 350 local authorities are presently members of the LGA.

Overall, we agree that the draft amendments to the TPS regulations deliver the policy objectives as set out in the consultation document. This letter sets out the LGA’s comments on some of the policy areas.

Ill-health applications

We have considered the question in the consultation as to whether there would be entitlement to an IH pension in the legacy scheme for a full protection member who transitions to the new scheme on 1 April 2022.

We are not aware of any scenarios where a full protection member who transitions to the new scheme on 1 April 2022 could have entitlement to IH pension in the legacy scheme if their application was instead approved on 31 March 2022.

Do the draft amendments achieve the policy aims as described in the consultation document?

We agree that the draft regulations facilitate the closure of the TPS legacy schemes to future accrual from 31 March 2022 and move all active members into the new scheme on 1 April 2022.

We concur that there is not a need for extensive amendments to the 2014 regulations as the regulations already provide for members transitioning from the legacy scheme to the new scheme. All members will be treated equally from 1 April 2022 as they will all accrue benefits in the new scheme from that date.

We have one technical comment on the draft regulations. Amendment regulation 2(4) states that a full protection member ceases to be a full protection member on 31 March 2022 unless the member ceased to be in pensionable service in the scheme before that date. We would suggest that the regulation is amended to clarify that the member will cease to be a full protection member at the end of 31 March 2022, rather than at the beginning of that date.

Draft regulations 2(6) and 2(7) deliver the requirement under Clause 77 of the Public Service Pensions and Judicial Offices Bill to provide for an exception to the closure of the legacy scheme from 1 April 2022, for transfers of past service.

Multiple contracts/LGPS

Overall, we agree with the policy for the treatment of service over 365 days that is pensionable in the Local Government Pension Scheme (LGPS).

We have the following comments in respect of full protection members who will become deferred members of the LGPS in respect of their additional contracts. The consultation document says that these members will have the option to transfer LGPS service into the TPS within 12 months of moving to the new scheme.

Full protection members will have reached the legacy scheme’s normal pension age (NPA) of 60 or 65 on or before 1 April 2022. There may be some full protection members who will be less than one year from their NPA in the LGPS on 1 April 2022. The LGPS rules prohibit those members from transferring their service out of the LGPS.
If the members are able to transfer their LGPS to TPS, will they be able to do so under the Public Sector Transfer Club? Paragraph 2.6 of the Club Memorandum says that club transfers only apply where an employee voluntarily resigns from employment covered by one Club scheme and takes up a separate employment covered by another Club scheme. We are seeking clarification that paragraph 2.6 will be amended in order for full protection members to have the right to transfer their LGPS service into the TPS under Club arrangements.

LGPS administering authorities are required to provide information about the LGPS to new members and information about members’ benefits when members leave the LGPS, including any options available to them, such as transferring out service. However, teachers tend not to have as much understanding of the LGPS as they do of the TPS as they were enrolled into the LGPS as the default scheme.

We would support a communication from the TPS to full protection members that explains why they are being enrolled in the TPS for their additional contract from 1 April 2022. This should include details of the information that members should receive from the LGPS, including that they may have an option to transfer LGPS service into the TPS. As we have highlighted on page 2, some protected members may not be eligible to transfer out their LGPS service. As the LGPS posts will be enrolled into the TPS on 1 April 2022, this information could be included in ‘starter pack’ information sent to members joining the TPS after that date.

It will be a challenge for some employers to identify all full protection members with LGPS service and ensure that these posts are enrolled in the TPS on 1 April 2022. We are also concerned that some employers could overlook conducting this exercise and that some posts could remain in the LGPS. We are aware that there are some members who were enrolled in the LGPS a number of years ago for part-time employment where the full-time post is with another employer. Due to changes in payroll providers and the arms-length relationship that local authorities have with schools, these posts could be over-looked as eligible for the TPS. Employers will also need to consider full protection members who have opted out of the LGPS; if an opted out member is not enrolled in the TPS on 1 April 2022, this could result in arrears of contributions and compound interest for employers. We request that there is clear communication from the TPS to employers about this exercise.

It is our understanding that the TPS will not have details of all full protection members with LGPS service. It is our view that the TPS must request this information from employers.

I hope the above is helpful; if you have any questions, please do not hesitate to contact me.

Yours faithfully

Jeff Houston

Head of Pensions