These notes do not form legal advice and it is recommended that you receive your own legal advice before applying to join The Kent Pension Fund.
Overview
The Local Government Pension Scheme (LGPS) is a national public sector pension scheme for local government employees in England and Wales, although it does not apply to teachers as they can join the Teachers’ Pension Scheme. The LGPS is administered by regional funds, Kent County Council is the administering authority for Kent. Unlike most other public sector pension schemes, the LGPS is ‘funded’ which means that contributions are invested in a fund with assets from which benefits can be paid.
2018/19 has seen a good return on the Fund assets of 7.1% and the fund increased in value to £6,218m. Outside the investment area, the most significant issue for the Fund has been the increase in the number of employers joining, mainly academies and free schools and an increase in the outsourcing to private sector organisations. We ensure that the long-term financial position of the Fund is protected and the pension liabilities are provided for if these organisations were to become insolvent.
The LGPS rules are set out in statutory regulations laid by Parliament, which include a definition of the benefits payable to its members regardless of the investment performance of the Fund. The LGPS is a defined benefit scheme where any investment risk lies with the employer and not members of the scheme.
Employers are required to pay employer contributions as certified by the Fund actuary when joining, which are reassessed at the triennial valuation. The last valuation of the Fund was due at 31 March 2019, with new employer contribution rates applicable from 1 April 2020. The next valuation of the Fund is 31 March 2022, with new employer contribution rates from 1 April 2023.
Employers have a statutory obligation to pay other liabilities such as:
- early retirement strain costs (where a scheme member retires early) and
- exit liabilities (where the employer has no active scheme members, but they have not paid enough in employer contributions).
The Fund seeks to recover actuary fees and legal costs from employers (including prospective employers).
Eligibility to join the Fund
The LGPS Regulations 2013 outline a number of ways to become an employer in the LGPS, read the regulations for help in identifying which type of employer you are:
- Academies – Schedule 2, Part 1, Number 20
- Local authority body (resolution body) – Schedule 2, Part 2
- Commercial company or charity (admission body) – Schedule 2, Part 3.