16 September 2003

Dear Colleague

1. With the Minister’s agreement, I enclose, for your comments, draft regulations which amend the Local Government Pension Scheme Regulations 1997 by adding elected members of county and county borough councils in Wales to those who are eligible to receive pensions under the provisions of the Local Government Pension Scheme (LGPS). Your comments are invited no later than 31 October 2003.

2. The Local Government Pension Scheme and Discretionary Compensation (Local Authority Members in England) Regulations 2003, which came into effect on 1 May 2003, set out the detailed arrangements for applying the LGPS to eligible elected councillors in England. Decisions on which councillors should be eligible are taken by councils, following a recommendation by their Independent Remuneration Panel (IRP), under separate regulations - The Local Authorities (Members’ Allowances) (England) Regulations 2003. These contain provisions to deal with allowances and IRPs’ recommendations on pensions. Both sets of regulations apply to English local authorities only (copies of these regulations are available on the ODPM website at www.odpm.gsi.gov.uk.). The National Assembly for Wales (NAW) have requested regulations be made, under the powers contained in section 7 of the Superannuation Act 1972, to extend the pensions provisions to eligible councillors in Wales with effect from 1 January 2004.

3. The enclosed draft regulations extend the provisions of the LGPS as they apply to councillors in England, to apply to councillors in Wales. The way the LGPS regulations apply will be the same in all key respects as in England, except that in Wales both the basic and special responsibility allowances will automatically be pensionable, rather than this being a matter for each council to decide.

4. The key points in the way the LGPS regulations apply to eligible councillors are:

they are deemed to be employees for the purposes of the LGPS;

they have to make a positive election to become a member of the Scheme;

pension benefits are based on career average not final pay;

retirement age is 70; and

Councillor membership does not count towards calculating any other period of LGPS membership in local government employment.

5. A scheme of allowances is already in place in Wales under The Local Authorities (Allowances for Members of County and County Borough Councils and National Park Authorities) (Wales) Regulations 2002 (S.I. 2002 No.1895) but these do not provide for allowances to be treated as amounts in respect of which pensions are payable. The NAW have drafted and are consulting on separate regulations to create an all-Wales IRP, give councils the necessary powers to decide which councillors should be given access to the LGPS and to treat the basic and special responsibility allowances as pensionable (The Local Authorities (Allowances for Members of County and County Boroughs)(Pensions)(Wales) Regulations 2003).

7. The Department may wish to publish responses to this consultation in due course, or deposit them in the libraries of the House of Parliament or the Department’s library, unless we are asked specifically to treat a response as confidential. Confidential responses will be included in any published statistical summary of comments received and views expressed.

Yours sincerely,

Keith Bloomfield

ADDRESSEES

The Chief Executive of:

County and County Borough Councils in Wales

The Secretaries of: -

Welsh Local Government Association

Local Government Association

LGPC

EO

SOCPO

SOLACE

ALACE

North Wales Association of Town Councils

Association of Council Secretaries and Solicitors

Convention of Scottish Local authorities (COSLA)

Trades Union Congress

UNISON

TGWU

GMB

AEEU

Audit Commission

National Assembly for Wales (NAW)

The Wales Office

Government Actuary’s Department

ACA

SPPA

NI DOE

Other Government Departments