SF3: local government pension scheme funds - guidance notes

Question 1

General guidance

Accepted Answer

1. The references in these notes are to:

The Local Government Pension Scheme Regulations 2013 (SI 2013/2356); (“the 2013 Regulations”); and
The Local Government Pension Scheme (Transitional Provisions, Savings and Amendment Regulations 2014 (SI 2014/525).

except where otherwise specified.

2. Please submit the completed form on our online system, DELTA, by Friday 13 September 2024. Wherever possible local authorities should use figures drawn from or referenced to their audited final accounts. However, if it is not possible to submit audited data to this deadline, please use your unaudited data that has been submitted to your external auditor. There is a yes/no box in the form so that we know whether audited data have been submitted.

3. If unaudited data are submitted, we will accept revisions if there are substantial differences between unaudited and audited data. Revisions will need to be submitted by Friday 13 September in order to include them in the October publication. Revisions submitted after that date will be published at a later date. You will need to contact us at sf3.statistics@communities.gov.uk address if you wish to revise.

4. The data supplied should only relate to employees and pensioners who are covered by the Local Government Pension Scheme and not teachers, police and fire officers who have their own schemes.

5. The increase in the fund during the year, Line 16 less Line 10 of the ‘Statement of Expenditure and Income’ section, should be consistent with the acquisitions less realisations of long term investments and the changes in balances of short term assets and liabilities, as reported to ONS on the four quarterly Transactions in Financial Assets forms for the year, after allowing for such items as exchange rate effects.

6. The entries against pension funds in the main section of SF3 should include all pension benefits expressly authorised to be charged to pension funds. Pensions Increase Acts expenditure is now usually a charge on the pension fund and as such should generally be included in SF3 along with the corresponding income. However, some pensions increase payments are still reimbursed (under regulation 91(2)(a) of the 1997 regulations - see SI 1990 No 503), for example by the NHS, and these should be covered under Part 2 Section F and not under SF3. Compensation under the Local Government (Discretionary Payments) Regulations 1996, or under the Local Government (Early Termination of Employment) (Discretionary Compensation) (England and Wales) Regulations 2006 (SI 2006/2914) as amended and their related pensions increases, should be excluded from this return.

7. For the avoidance of doubt, AVC contributions received from and transferred to AVC providers should be excluded from this return.

8. Part 3 is a new and asks for data on investments. This has not included in the Single Data List and so we are asking you to complete this part on a voluntary basis. The data on asset classes should align with the data to be included in the Annual Report and follows the consultation and response in 2023 on ‘Next steps for investments’. We do encourage you to complete the section to ensure robustness of the data collection, as we seek to collect this data on a mandatory basis next year.

9. Please make use of comments boxes if there are points that MHCLG should be aware of about the information used to complete this SF3 2023-24 form.

10. Please complete all data entry cells. Any cells left empty will be queried and you will be asked to resubmit your form.

11. You have two ways to input data into the DELTA form. You can either complete the form via direct manual entry into DELTA or use the upload function, which allows you to populate the DELTA form by uploading from an Excel spreadsheet. You will have been sent the Excel spreadsheet ‘SF3 2023-24 data preparation template’ which should be used if you chose to complete the form using bulk upload.

12. Should you choose to use the bulk upload facility, please read the guidance tab on the template before you complete it. Once complete, please see the bulk upload guidance document on how to upload the file onto DELTA. However, you should note that calculations and validations are not contained in the bulk upload template, and so you should review your completed form in DELTA before submitting. We will only accept data submitted via DELTA.

Question 2

Guidance for completion of Part 1 Statement of Expenditure and Income 2023-24

Accepted Answer

Data input cells in Part 1 will only accept positive values. Values should be reported in £000s. Please complete all cells, including those that are zero.

Expenditure during 2023-24

Line 1 Pension (or annuities): retired employees and dependants

Data entry cell: All expenditure of pensions for members and dependents irrespective of reasons/circumstances came into payment.

Line 2 Lump sums: on retirement (including deferred)

Data entry cell: Lump sums on retirement in respect of active and deferred members and covers rights established under earlier schemes.

Line 3 Optional lump sums for retirements on or after 1 April 2023.

Data entry cell: This covers the commutation of pension to lump sum by virtue of Regulation 33 of the 2013 Regulations.

Line 4 Lump sums: on death

Data entry cell: Grants payable by virtue of Regulations 40, 43 and 46 of the 2013 Regulations following the death of an active, deferred or pensioner member.

Line 5 Other benefits

Data entry cell: Only include other benefits which can be charged to the fund. Payments such as gratuities and injury allowance should not be included here.

Line 6 Transfer values i.e. “Transfers out” (including apportionments)

Data entry cell: Monies received under Regulations 100-103 of the 2013 Regulations and in line with appropriate guidance.

Line 7 Pensions Act premiums (less recoveries from employees included in line 6)

Data entry cell: Regulation 18(7) refers. These add transfer premiums and limited revaluation to the premiums payable under the Pensions Act that may be met from the pension fund. See also note 6 in the General Guidance above.

Line 8 Management expenses

Data entry cell: Administration and fund management costs charged to the fund include fund management and custody costs that may be netted off from investment income paid by fund managers. Losses on realisation of assets are excluded.

Line 9 Other expenditure

Data entry cell: Include other items of expenditure. Refunds of contributions, if any, should be included here. Include the amount of contributions returned to employee plus interest (if any, and any recovery by the Scheme employer from the funds in respect of the employee’s share of payment in lieu of contributions and any recovery from the fund of CEP paid (Regulation 18(7)). Otherwise, a zero value is expected in most cases.

Line 10 Total expenditure (sum of lines 1 to 9)

This is a calculated cell.

Income during 2023-24

Line 11 Contributions: employees (including those from other Scheme employers)

Data entry cell: All contributions collected by virtue of Regulation 9 of the 2013 Regulations.

Line 12 Contributions: employers (including those from other Scheme employers)

Data entry cell: Include employers’ contributions under regulations 67 and 68 of the 2013 Regulations including the advance payments towards the costs of pension increases in accordance with regulation 91(4) of the 1997 regulations. Include lump sum payments made under directions given under Section 16(2)(b) of the Local Government Act 2003. Recharged pensions increase expenditure should be excluded from employers’ contributions. See also note 6 in the General Guidance above.

Line 13 Investment income

Data entry cell: Investment income is gross of tax deducted at source after deducting any irrecoverable withholding taxes paid outside the United Kingdom. Income received via fund managers should be before deduction of any fund management and custody costs. Dividend income should include shares taken in lieu of cash dividend. Property income is to be shown net of collection costs. See note on Section D below.

Line 14 Transfer values i.e. “Transfers in” (including apportionments)

Data entry cell: Payments made in line with Regulations 96-99 of the 2013 Regulations and appropriate guidance.

Line 15 Other income

Data entry cell: Other income should exclude profit on realisation of assets. It should include payments from Scheme employers or successor bodies under regulation 68 of the 2013 Regulations.

Do not include any reimbursements of injury allowances or gratuities. Consider also the amount of contributions returned to employee plus interest (if any), any recovery by the Scheme employer from the funds in respect of employee’s share of payment in lieu of contributions and any recovery from the fund of CEP paid (Regulation 18(7)) of the 2013 Regulations.

Line 16 Total income (sum of lines 11 to 15)

This is a calculated cell.

Question 3

Guidance for Part 2 Sections A to I

Accepted Answer

Please complete all cells on the form including zeroes.

Section A – Membership as at 31 March 2024

Please include the number of employers (Line A1) and corresponding membership (Lines A2 – 5) data. Employer groups are based on the definitions in Schedule 2 of The Local Government Pension Scheme Regulations 2013 and the categorisation below.

The categories are:

Group 1 (local authorities, internal drainage boards, and connected bodies) – Part 1, Paragraphs 1-7 and 24; and Part 2, Paragraphs 2 and 5,
Group 2 (centrally funded public sector) – Part 1, Paragraphs 8, 14, 17, 20 and 22,
Group 3 (other public sector) – Part 1, Paragraphs 4, 9-13, 15-16, 18-19, 21 and 23; and schools in Part 4,
Group 4 (private sector, voluntary sector and other) – Part 2, other than those bodies falling within Paragraphs 2 and 5; and Part 3.

Row and column totals will calculate automatically.

Section B – Realisation of fund assets at 31 March 2024

The profit and the loss should be entered in the first two lines in Section B. Both lines B1 & B2 should be shown as positive.

The net profit (B3) is automatically calculated (B1 – B2). Any negative net profit figure (a net loss) in B3 will be shown as a minus figure. Gains and losses, other than those on assets realised, should not be included here.

You will be asked to explain if the net profit is a zero value.

Section C – Employers’ contributions during 2023-24

Two figures are required at C1:

the primary contribution rate specified in accordance with Regulation 62 of the 2013 regulations and
the amount paid under Regulation 67 of the 2013 Regulations which corresponds to that rate.

Please report the primary contribution rate as a percentage of pensionable employees’ remuneration, expressed to 2 decimal places.

The contribution rate paid by a Scheme employer includes an individual adjustment - as certified by the actuary under regulation 62(7) of the 2013 Regulations - to reflect the Scheme employer’s particular circumstances. The figure at C2 is the net total of amounts certified under regulation 62 of the 2013 Regulations, including payments Scheme employers had to make because of deficits (net of any exit credits paid to employers where there was a surplus) and any reductions in their contribution rates to reflect surplus funding.

In C2a report the figure for all Section 16(2)(b) (of the Local Government Act 2003) contributions. Section 16(2)(b) contributions are lump-sum contributions made by a local government employer, following the issue of a direction under Section 16(2)(b).

Note: The figure in C2a should have been include in the figure at C2.

C3 is automatically calculated (C1 + C2). It should equal line 12 from the Statement of Expenditure and Income (Part 1). You will not be able to submit the form if these are different.

Section D – Investment income during 2023-24

Income from investments should be given gross of tax deducted at source after deducting any irrecoverable withholding tax paid outside the United Kingdom.

Income from property (D1) should be taken as rents received from the ownership of land and buildings net of collection costs. Other investment income should be reported in D2.

Dividends receivable (D3) includes dividends due in the reporting period on equity investments and includes value of shares taken in lieu of cash.

Interest receivable (D4) covers interest on cash and interest bearing securities to be received during the reporting period regardless of whether actually received or not.

D5 is automatically calculated (D1 + D2 + D3 + D4). It should equal line 13 from the Statement of Expenditure and Income (Part 1). You will not be able to submit the form if these are different.

Section E – Market value of the fund

The market value as at 1 April 2023 should be reported in E1, with the market value of the fund at 31 March 2024 should be reported in E2.

The market value of the fund at end of year should be consistent with the Balance of the Pension Fund at market value as reported to the ONS on their annual balance sheet form.

Section F – Pensions (increase) payments reimbursed by employers during 2023-2024

Payments made to Local Government Pension Fund pensioners and reimbursed by Scheme employers should be entered in F1. See also note 6 in General Guidance.

Section G – Administration staff of the fund at 31 March 2024

Include only the number of full-time equivalent staff involved in pension duties within the administering authority, in pension administration duties (G1) and pension fund management (G2). If pension duties have been contracted out, do not include staff employed by the contractor.

Figures can be reported to 1 decimal place.

Section H – Management expenses charged to the fund during 2023-24

The Management expenses are to be broken down into the following three components:

H1) Investment management expenses

H2) Administration expenses

H3) Oversight and governance expenses

All administering authorities should use the guidance set out in the CIPFA publication “Accounting for Local Government Pension Scheme Management Expenses” (2016 edition) published in June 2016 to complete this section.

This section of the return collects information about expenditure charged to funds. All funds also participate in an asset management pool, which in most cases will be set up as a separate legal entity, and only costs incurred by pools and charged directly to the fund by the administering authority need to be recorded here. Pool members are required to report total investment costs and performance against benchmarks publicly and transparently in their annual reports, following the CIPFA guidance ‘Preparing the Annual Report’, with effect from the 2022-2023 report. So ongoing investment management costs incurred by the pool and charged to the fund by the administering authority should still be recorded here, as should any expenses incurred directly by the fund through establishing or participating in the governance of the pool.

H4 is a calculated field (H1 + H2 + H3). It should also equal line 8 from the Statement of Expenditure and Income (Part 1). You will not be able to submit the form if these are different.

Section I - Retirements

The ill health retirement numbers shown in Section I should represent those retiring in the period 1 April 2023 to 31 March 2024, whose payments are recorded in the financial year for 2023-24. Those who are ill health retired on 31 March 2024 and who would receive their payments in the financial year for 2023-24 should not be recorded on this form. Ill health retirement regulations quoted in this section refer to the LGPS Regulations 2013.

I1 – The total number made redundant in the period 1 April 2023 – 31 March 2024 following the guidelines above.

I2 – Ill-health retirement (Regulation 35 of the 2013 regulations) (I2(a) + I2(b) + I2(c)). This is automatically calculated.

I2(a) should be the number of Tier 1 ill-health retirements: this should then be split by Male & Female in the following “of which” line, which will appear once I2(a) is filled.

I2(a)(i) Please calculate the average age of the members recorded in line I2(a).

I2(b) should be the number of Tier 2 ill-health retirements: this should be split by Male & Female in the following “of which” line, which will appear once I2(b) is filled.

I2(b)(i) Please calculate the average age of the members recorded in line I2(b).

I2(c) should be the number of Tier 3 ill-health retirements: this should then be split by Male & Female in the following “of which” line, which will appear once I2(c) is filled.

I2(c)(i) Please calculate the average age of the members recorded in line I2(c).

I2(d) Please state how many members’ Tier 3 payments were stopped under Regulation 37(3) and 37(7)(c).

I2(e) Please state how many members’ Tier 3 payments were uplifted to Tier 2 under Regulation 37(7)(b) and 37(10).

I2(f) Please state how many awards made use of the age 45 protection i.e. under Regulation 12 of the Local Government Pension Scheme (Transitional Provisions, Savings and Amendment) Regulations 2014.

I3 – The total number of members that have chosen to take an early payment of pension, (Regulation 30(5)) of the 2013 regulations applies.

I4 – The total number of members that have taken the early payment of pension as a result of ill health, (Regulation 38) of the 2013 regulations applies.

I5 – Is an automatically calculated field (I1 + I2 + I3 + I4).

I6 – The total number of members that have taken “normal” retirement in the period April 2023 - March 2024.

I7 – Is an automatically calculated field (I5 + I6).

Question 4

Guidance for Part 3 Sections A, B and C

Accepted Answer

We are asking you to complete this part on a voluntary basis. The definitions shown here are the same as required for annual reports under 2024 guidance^{[footnote 1]} and should be completed with the input of pensions colleagues. We do encourage you to complete the section to ensure robustness of the data collection, as we seek to collect this data on a mandatory basis next year.

In Part 3 there are references to pools and pooling. These refer exclusively to the LGPS investment pools, which as at the date of this guidance are ACCESS, Border to Coast Pensions Partnership, Brunel Pension Partnership, LGPS Central, London LGPS CIV, Local Pensions Partnership, Northern LGPS and Wales Pension Partnership.

“Pooled” means that the investment has been made in a collective investment vehicle or segregated management arrangement for which the LGPS asset pool is accountable (by regulation or contract). Assets invested through the fund’s chosen pool in a vehicle managed by another LGPS pool are considered pooled.
“Under pool management” means that the pool is responsible for the oversight or discretionary management of the investment, whether or not procured through the pool, (including passive market index tracker funds procured before pooling). In these cases, a description of the nature of the pool’s role in oversight or management may be added.
“Not pooled” means that the asset is neither pooled nor under pool management.

Values should be reported in £000s. Please complete all cells, including those that are zero.