The LGA Safer and Stronger Communities Committee has submitted a response to the Government’s consultation on giving mayors and councillors access to the Local Government Pension scheme, supporting proposals for councillors to have the right to access the pension scheme going forward.
Do you agree with the two principles of how the government plans to develop regulations?
Yes, the LGA generally support the principles that, as far as possible, elected members should be treated the same as other employee members of the LGPS and in a consistent manner with the member LGPS in Scotland, Northern Ireland and pre-2014 England & Wales. However, the councillor role has changed substantially since 2014 and will continue to evolve in response to changes in the sector, demand and public expectation. It is now common for councillors, particularly those with special responsibilities, to substantially give up other forms of paid work to fulfil their councillor role. Many councillors in this position feel their role functions similarly to employed colleagues, particularly in relation to time commitment and impact on personal finances. Indeed, councillors' responsibilities are often much higher than officers' on commensurate pay.
We therefore propose that where these two principles are incompatible, and the schemes materially differ, the first principle of aligning the member scheme with the employee scheme should be prioritised. Only where this is impractical or undesirable should the member’s scheme pre-2014 and in the other UK nations be considered. Prioritising in this way reflects the Government’s ambition to recognise the contribution of individuals who serve their communities, while ensuring fairness, equality, efficiency and access. In line with this principle, we propose the following changes and clarifications.
Elected members’ roles do not meet the requirements for auto-enrolment. However, relying on self-enrolment could result in elected members accidentally missing out on early contributions; instead, we propose that contractual enrolment would be more appropriate. This would ensure councillors are enrolled at the point they formally take up their elected role, with the option to opt out. This would conform to the principle of treating councillors the same as employee members of the scheme, as well as reducing the risk of accidental exclusion. Councillors who do not wish to join the pension scheme would still have the option to opt out.
The consultation sets out that councillors' allowances related to roles on combined and combined county authority boards and committees will be counted as pensionable pay. However, there is a plethora of other allowances councillors are paid by other public authorities mentioned in the draft regulations, including fire authorities, parks authorities, the Broads Authority, London waste authorities and other joint boards or authorities. Taken together, these allowances are made to compensate elected members for the time spent fulfilling these roles to ensure that no one is financially disadvantaged by taking up their public role.
The Government should clarify whether the policy intention was to make all allowances councillors receive from public authorities pensionable pay and how this would be practically managed. Incorporating these allowances would align the new member scheme with the employee scheme, where all pay is in scope, but would create administrative complexity due to the various ‘employers’.
Additionally, the Government should ensure that the new scheme is developed with full awareness of reform across the sector, including the abolition of police and crime commissioners, which in some areas will result in transition boards before mayoral authorities are fully established. Members of these police and crime boards will include councillors, and they are likely to be paid an allowance, which should be treated similarly to other additional allowances paid to members.
The Government proposes to make the principal authority responsible for the employer contributions associated not only with allowances the principal authority pays, but also those associated with allowances paid by combined and county authorities. This means principal councils will be responsible for costs they have no power to control, as they do not set these allowances; we would question the fairness of principal councils being responsible for this cost.
Additionally, if the Government intends to include wider allowances paid by other public bodies, then the cumulative impact on principal councils could be more significant than anticipated.
In principle, the relevant authority to which councillors are appointed must be responsible for the cost of employer contributions and contribute to the cost of administering the pension provision. Practically, this could be achieved by those authorities setting up pension pots for their members; alternatively, a process of reimbursing the principal authority might be preferred to avoid councillors accumulating multiple pension pots.
The Government should not rely on LGPS surpluses and the results of the 2025 revaluation. Although improvements in funding levels and a reduction in the average employer contribution rate, not all employer contribution rates will reduce, and reductions may not offset the new costs associated with the member scheme. These costs, while modest overall, will create additional financial commitments for many local authorities, and the net effect may still be an increase in pension-related expenditure for some employers. This may particularly impact smaller employers or those undergoing reorganisation, where financial planning is already complex.
The draft regulations set out the relevant amendments in relation to allowances paid by principal councils and combined authorities and combined county authorities. However, in several parts of the draft regulations, there are references to other authorities and types of allowances being in scope. For example, in Part 4 117(b)(iii), an “eligible councillor” is defined as a member of a local authority in England who is entitled to be a member of the Scheme under a scheme made in accordance with the Local Authorities (Members’ Allowances) (England) Regulations 2003. These regulations include principal authorities, as well as fire authorities, joint authorities under the Local Government Act 1985, the Broads Authority, national park authorities, conservation boards, and waste disposal authorities. For the purposes of administration, clarity is needed as to whether allowances paid for these roles are in scope of the pension scheme and how this will practically be managed.
Do you have any specific comments on the draft regulations?
The draft regulations set out the relevant amendments in relation to allowances paid by principal councils and combined authorities and combined county authorities. However, in several parts of the draft regulations, there are references to other authorities and types of allowances being in scope. For example, in Part 4 117(b)(iii), an “eligible councillor” is defined as a member of a local authority in England who is entitled to be a member of the Scheme under a scheme made in accordance with the Local Authorities (Members’ Allowances) (England) Regulations 2003. These regulations include principal authorities, as well as fire authorities, joint authorities under the Local Government Act 1985, the Broads Authority, national park authorities, conservation boards, and waste disposal authorities. For the purposes of administration, clarity is needed as to whether allowances paid for these roles are in scope of the pension scheme and how this will practically be managed.