Proposed Amendment to the Age at Which an Lgps Employee Can Make an Application for Flexible Retirement
Argyll and Bute Council · 8 May 2025
Back to Policy and Resources Committee — 8 May 2025 and its agenda
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ARGYLL AND BUTE COUNCIL POLICY AND RESOURCES COMMITTEE CUSTOMER SUPPORT SERVICES 8 MAY 2025 PROPOSED AMENDMENT TO THE AGE AT WHICH AN LPGS EMPLOYEE CAN MAKE AN APPLICATION FOR FLEXIBLE RETIREMENT 1.0 EXECUTIVE SUMMARY 1.1 It is proposed the Council should amend its existing Flexible Retirement Procedure to allow Scottish Local Government Employees (SLGE) aged 55 and over with at least two years’ pension scheme membership to be able to make a request for flexible retirement. 1.2 In order to do this an amendment to the Council’s Pensions discretions policy for Scottish Local Government Employees is required. It is recommended that Policy and Resources Committee approves the proposal to amend the qualifying age of flexible retirement to 55 and approve the changes to the Pensions Discretion Policy to allow this to be implemented. RECOMMENDATIONS i. The Policy and Resources Committee approves the proposal to amend the qualifying age to request flexible retirement to employees aged 55 and who have at least two years pension scheme membership. ii. The Policy and Resources Committee approve the amendment to the Pensions Discretions Policy as outlined below to support the above proposal if agreed. This will continue to allow for discretion to be applied in exceptional circumstances in relation to the Council rather than the employee accepting the actuarial strain.
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ARGYLL AND BUTE COUNCIL POLICY AND RESOURCES COMMITTEE CUSTOMER SUPPORT SERVICES 8 MAY 2025 PROPOSED AMENDMENT TO THE AGE AT WHICH AN LPGS EMPLOYEE CAN MAKE AN APPLICATION FOR FLEXIBLE RETIREMENT 2.0 INTRODUCTION 2.1 Flexible Retirement enables the employee to access their pension benefits while continuing to work, through either a reduction in working hours or grade. An employee of the approved age can request Flexible Retirement. The request requires to be considered but does not require to be granted, it is at the discretion of the Council as employer. 2.2 The Council currently has a Flexible Retirement process for SLGE employees in place that sets the qualifying age that someone can make a request to flexibly retire at 60 years of age. The Local Government Pension Scheme (Scotland) Regulations 2018 allows for this to be reduced to 55. Many local authorities have set 55 years of age as the qualifying age for making a flexible retirement request. Teachers are covered by a separate pension scheme which includes provisions for similar phased retirement arrangements commencing at age 55. 2.3 To support succession planning it is proposed that the Council should amend its existing Flexible Retirement Procedure to allow employees aged 55 and over with at least two years’ pension scheme membership to be able to make a request for flexible retirement. 2.4 It is anticipated that in cases where there is any actuarial strain identified that the employee who is choosing to flexibly retire will accept that strain cost and not the Council. 2.5 In exceptional cases (for example significant workforce planning risks) and only in circumstances that are initiated by the employer, the discretions policy allows for the Council to choose to accept the actuarial strain rather than the employee. This would require scrutiny and sign off by an Executive Director. 2.6 It is intended that once the revised flexible retirement procedure is signed off that an effective communication strategy is adopted to ensure that all employees are aware of the procedure.
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3.0 RECOMMENDATIONS 3.1 The Policy and Resources Committee approves the proposal to amend the qualifying age to request flexible retirement to employees aged 55 and who have at least two years pension scheme membership. 3.2 The Policy and Resources Committee approve the amendment to the Pensions Discretions Policy as outlined below to support the above proposal if agreed. This will continue to allow for discretion to be applied in exceptional circumstances in relation to the Council rather than the employee accepting the actuarial strain. Proposal that the following change be made to the wording in the Pensions Discretions Policy. Amend this: R29(7)* & TP11(2) Whether all or some benefits can be paid if an employee reduces their hours or grade prior to age 60 (flexible retirement) Argyll & Bute Council may exercise this discretion. Arrangements and eligibility criteria are set out in the Council’s Flexible Retirement Procedure To this: R29(7)* & TP11(2) Whether all or some benefits can be paid if an employee reduces their hours or grade prior to age 55 (flexible retirement) Argyll & Bute Council may exercise this discretion. Arrangements and eligibility criteria are set out in the Council’s Flexible Retirement Procedure 4.0 DETAIL 4.1 It is proposed that the Council should amend its existing Flexible Retirement Procedure to allow employees aged 55 and over with at least two years pension scheme membership to apply for flexible retirement. The current scheme allows those over 60 to apply but the Local Government Pension Scheme (Scotland) Regulations 2018 allowed this to be reduced to 55. There is a proposal that this will rise to age 57 years from 6 April 2028 but the Scottish Government have not yet confirmed this. If approved and while amending the age, we propose to put in place a more user friendly and efficient process for employees wishing to explore flexible retirement as a possibility. 4.2 Flexible Retirement enables the employee to access their pension benefits whilst continuing to work through either a reduction in working hours or grade.
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An employee of the approved age can request Flexible Retirement but the request requires to be approved by the Council before it can be progressed. 4.3 In our most recent Strategic Workforce Planning report, it was identified that like other Local Authorities in Scotland, we have an ageing workforce with around half of our employees being currently age 50 and over. Strategic Workforce Planning Priorities 2024-25 The Council values the skills and knowledge of this demographic within our workforce and the advantages to the council in reducing the age for flexible retirement would be in the improved succession planning and scope to increase growing our own activities. The advantages for the employee is that it can help ease employees into retirement by giving them access to pension benefits and to continue earning a salary. 4.4 Reducing the age for Flexible Retirement may give more scope for creation of trainee posts or sharing of duties in preparation for the future ensuring that replacements can work alongside these employees sharing that skills and experience in a structured way before they exit the organisation, and the Council is left with a skills shortage or a labour shortfall. 5.0 CONCLUSION 5.1 That the Policy and Resources Committee agree to amend the qualifying age to request flexible retirement from 60 to 55 but still allowing for discretion to accept actuarial strain in exceptional circumstances. 5.2 That following approval of the revised Flexible Retirement Guidance and the revision of the qualifying age of flexible retirement by the Policy and Resources Committee, that the revised Flexible Retirement Procedure be communicated to employees in June 2025. 6.0 IMPLICATIONS 6.1 Policy: Amendment to the Pensions Discretions Policy as outlined above Pensions discretion policy | The Hub 6.2 Financial: There are no immediate financial implications as a result of the amendment. However, there will be a reduction in the pension payments to the employee should they accept an actuarial reduce pension or a cost to the Council should it exercise its discretion to waive this. 6.3 Legal: None – the policy meets statutory obligations.
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6.4 HR: None – the application of the Flexible Retirement Procedure is monitored by HR to ensure consistency of approach. 6.5 Fairer Scotland Duty: 6.5.1 Equalities – Protected Characteristics 6.5.2 Socio Economic Duty 6.5.3 Islands Discretions are determined by pension regulations with local authorities determining whether or not to exercise a specific discretion. A number of discretions are age specific but again this is not imposed by the Council but is a requirement of the Regulations. Nevertheless, discretions that are age specific may give rise to an adverse impact on account of age. To mitigate this impact, discretions will be applied in a fair, consistent and transparent manner. 6.6 Climate Change: None. 6.7 Risk: The Council must publish its Policy on Discretions under the Local Government Pension Scheme (Scotland) Regulations 2018. HR will monitor the application of the policy and the Flexible Retirement Procedures to ensure fairness and consistency. 6.8 Customer Service: The provision of a Policy on Discretions will make it clear to both current employees and deferred members the council’s position on the discretions and in what circumstances they may be used. 6.9 The Rights of the None. Child (UNCRC): Kirsty Flanagan, Executive Director with responsibility for Customer Support Services Policy Lead: Councillor Mark Irvine April 2025 For further information contact: Jane Fowler, Head of Customer Support Service, jane.fowler@argyll-bute.gov.uk Susan Hamilton, HR Operations Manager, susan.hamilton2@argyll-bute.gov.uk