Since September 2010, a large number of schools have converted to academy status and many schools continue to do so. The guidance and information available from the Department of Education has changed over this period of time in relation to how they advise that Local Government Pension Funds treat these conversions. The current guidance can be found here
It is important that any school considering a conversion is aware of the pension implications within the Local Government Pension Scheme (LGPS). we have explained some of the key points and procedures below.
Pension Position for Support Staff
At the date of conversion, all support staff will continue to be eligible for the LGPS, in the same way as they were immediately before the conversion date. The academy must automatically enter all new support staff that have a contract of three months or more into the scheme. After conversion, any non-teaching staff that have previously opted out will be brought back into the LGPS from day one of conversion, but with the option to opt back out again.
All members who transfer under TUPE will have continuous pensionable service on the employment(s) that transfer.
Employee contribution bands remain the same across the LGPS, regardless of a change in employer.
In summary, there is no significant change from a member’s perspective.
Pension Position for the Academy
Prior to conversion
Local Authorities are defined as scheduled bodies in the LGPS, which in brief means they must automatically enter eligible staff into the LGPS and adhere to the LGPS Regulations. From a LGPS pension perspective, all non-academy schools, for most purposes, come under the umbrella of the relevant local authority. Therefore, all the assets and pension liabilities for non-academy schools and the local authority are currently combined.
Every three years, Dorset County Pension Fund completes a Fund Valuation which is used to determine the contribution rate for all employers. Non-academy schools’ employer contribution rates are the same as that of the appropriate local authority.
Conversion and Post Conversion
From the date of the conversion, a new academy will be defined as a stand-alone scheduled body in our Pension Fund. Dorset Pension Fund’s actuary will calculate how many assets the new academy should be credited with by calculating the total value of pension liabilities needed to transfer across and by applying the current funding level of the previous local authority. Based on this information, the actuary will also provide the initial employer contribution rate that the academy should pay. The Fund has decided to pool academy schools to give a composite result, meaning there is full cross subsidy of costs between all academies in the Dorset County Pension Fund. Pooling will give employers less volatility of contribution rate than those employers in the group may see if they were treated individually. Currently the employer’s contribution rate for an academy is set at 18.8%.
It is worth emphasising that the new employer contribution is an initial contribution rate which is subject to change as a result of changes in the academy’s membership profile and the general economic conditions. Contribution rates will be reviewed every three years at the Fund Valuation, the next valuation will take place in 2019.
Local Government Association – Arrangements for academies
In conjunction with the Department for Communities and Local Government and the Department for Education, the Local Government Association has published a guide called Local Government Pension Scheme – arrangements for academies. This is intended for schools considering conversion to academy status, academy trusts, multi-academy trusts and administering authorities.
- guidance for academy trusts on preparing to be an LGPS employer
- their role and responsibilities post conversion
- the position of multi-academy trusts in the scheme
- pooling arrangements
- understanding scheme deficits
- outsourcing services
- the Department for Education guarantee and
- academy re-brokerage
The guide can be found here
An academy may be required to include details of its pension liabilities as part of their annual accounts. This may be in the format of an FRS102 report, but the academy would need to contact their auditors for further clarification.
We require a point of contact, address, email address and telephone number for our Employers Database and for any queries there may be regarding your Scheme members
LGPS scheme members
It is the Academy’s responsibility to ensure all eligible employees are given a Pension Information Pack on commencement of employment so that they can make an informed decision regarding membership of the LGPS. If you require supplies of these forms, please email the pensions helpline. Please ensure the Membership Form (green form) is completed by both the employee and the Academy and returned to this office so that we have a complete record of the individual and can apply for any transfer of pension rights as required.
If an Academy LGPS member wishes to opt out of the scheme, they will need to contact the Dorset County Pension Fund to obtain a form. There is a dedicated LGPS opt out telephone line, please call 01305 221140 for all queries.
Please complete the Notification of Retirement form as soon as you are aware of your employee’s intention to retire. It is important that Pensions Section are aware of this so they can begin gathering the appropriate information and ensure a timely payment of pension. You may use the form LGPS – Estimate Request if you wish us to provide an estimate of your employee’s retirement benefits, this is commonly used in redundancy and efficiency retirements.
As a Scheme Employer you will need to draw up your employer policy on the LGPS discretions. A highlighted version of the document, which shows which discretions you have to decide upon, can be viewed on our Useful Documents and Links page.
Internal Dispute Resolution Procedure (IDRP)
You will also need to select a person to investigate any Stage 1’s of the Internal Dispute Resolution Procedure (IDRP).
Use of DC / BCP Payroll
Currently the Pension Fund has an electronic download of data from the above-named payroll systems to the Pensions computerised record-keeping system (Altair) which enables us to keep your Scheme members details up to date and create records for new Scheme members. If you decide not to continue using your local LEA’s payroll services please let the Dorset County Pension Fund know as soon as possible who you will be using and what experience they have of dealing with the LGPS. We will then require monthly updates of any changes (new starts, leavers, hours, name, address, maternity/paternity leave etc) as the data will have to be uploaded manually. We also require End of Year Returns showing each Scheme member’s contributions to the LGPS, again if you use one of the above payroll systems this will be dealt with for you.
Useful information can be found in:
- the Academies FAQ Document on the LGPS Timelines Regulations website.
- Department for Education – Guide for Schools
- LGA Guide – LGPS Arrangements for Academies
Please contact Karen Gibson, Pensions Manager, for more guidance and information tailored specifically to your establishment.