Section 25 - First instances decisions to be made by employers

It is the scheme employer’s responsibility to decide whether a member is entitled to a benefit from LGPS. This includes their right to join the LGPS as well as their right to benefits when they leave.

When the Scheme employer has made a ‘first instance decision’, they’re required to notify the member of it in writing ‘as soon as reasonably practicable’ – and also tell the member the reason for the decision, the address from which further information can be obtained, along with their right of appeal under the Fund’s complaints procedure called the Internal Dispute Resolution Procedure (IDRP). A member can also initiate IDRP if a scheme employer fails to make a first instance decision.

For a list of all the decisions an employer has to make, please read Section 6 - Administering and employing authority responsibilities for more.

Providing a clear written explanation of the decision is an obvious and essential part of good administration. Employers should bear in mind, particularly when the decision results from the exercise of discretion under the Regulations, that there could be a possibility of a maladministration ruling by The Pensions Ombudsman.

All notifications must include:

• The grounds for the decision that the person is not entitled to a benefit;
• A notification about a decision on the amount of benefits must show how the benefit is calculated;
• An address from where further information about the decision can be obtained;
• A reference to the right of appeal under Regulations 74 and 76 of the Local Government Pension Scheme Regulations 2013 (the right of appeal under the IDRP);
• Time limits within which those rights may be exercised;
• The job title and address of the person appointed to whom applications may be made.

The London Borough of Southwark Pension Fund is legally required to have a formal complaints procedure under the Pensions Act 2004 and the Occupational Pension Schemes (Internal Dispute Resolution Procedure Consequential and Miscellaneous Amendments) Regulations 2008. IDRP places strict obligations on both scheme employers and the Fund.

In brief, if a person with an interest in the LGPS, such as a member or prospective member, a former member or a dependant of former member, (or the representative of any of these) writes a letter of complaint to you as their scheme employer about a decision you have made (or have failed to make) in connection with the LGPS you must inform them of:

• Their right of appeal to your nominated Stage 1 adjudicator (such as a named senior manager in your organisation) under the IDRP; and
• The time limits in which they must make their appeal.

The IDRP has two stages:

Stage 1 - dealt with by a nominated adjudicator within your organisation that is to make the Stage 1 determination. Any person with an interest in the LGPS benefit (as outlined above) can lodge an appeal under IDRP within six months of your initial decision.

Stage 2 - the London Borough of Southwark Pension Fund reconsiders the Scheme employer’s Stage 1 decision and can either uphold the decision of the scheme employer’s nominated/specified person or require them to reconsider their decision.

Please refer to Section 22 – Guidance for dealing with appeals – IDRP for more.

Scheme employers are legally required to publish formal policies on some of the discretions they have under the LGPS Regulations; these are:

• Power of employer to award additional annual pension (APC);
• Enter into a shared cost arrangement with a member (SCAPC);
• Flexible retirement;
• Switch on the rule of 85 for protected members who retire and voluntarily draw their benefits between ages 55-60; and
• Whether to waive early retirement reductions.

Employers must keep the above policies under review and, if they make any changes, send an amended, dated, and signed copy to Southwark Pension Services within one month. Failure to provide a copy of your policies could result in such cases not being processed by them.

To ensure consistency, and avoid any potential equalities claims, Scheme employers should consider adopting policies on further discretions they have under the Regulations, such as:

• Extending the time limit for aggregating former periods of membership;
• Exclusion of rights to a return of contributions;
• Forfeiture of pension rights after conviction of employment-related offences;
• Interim payments directions;
• Recovery or retention where former member has misconduct obligation;
• Transfers of sums from the Fund to compensate for member’s misconduct; and
• Inward transfers of pension rights.

For the same reasons, you might also consider adopting a policy on how members are assessed, and reassessed, and placed in the appropriate pension contribution rate bands. Read Section 7 - Employer discretion policies when producing an employer discretions policy document.