Guidance on special severance payments

On 12 May 2022, DLUHC (Department for Levelling Up, Housing and Communities) published statutory guidance on special severance payments, which are additional payments, over and above statutory and contractual requirements, that can be made when someone leaves employment. This guidance applies only to Best Value Authorities in England. Please check whether this applies to your organisation, at the Government's legislation website, this can be found under the related links.

The guidance is particularly relevant when processing special severance payments for your staff. It sets out the criteria to consider when making and disclosing these special severance payments, as well as the reporting requirements.  

The new guidance makes it clear that a LGPS pension strain paid by an employer when an LGPS member is made redundant is not a Special

 Severance Payment. The different circumstances are listed below, however you can also find further details within the guidance. 

• A strain cost related to the early payment of LGPS benefits (regulation 30(6) or (7)) if the employee is to flexibly retirement, gets made redundant or takes efficiency retirement over age 55, does not constitute a special severance payment. 

• A strain cost of awarding additional pension (regulation 31 of the LGPS Regulations 2013), may constitute a special severance payment, but this depends on the terms of the individual’s contract. 
• A strain cost related to waiving an actuarial reduction when a member retires under regulation 30(5) may constitute a special severance payment, but this also depends on the terms of the individual’s contract. 

Links to the original consultation, the LGA response and the Government response are on the Scheme consultations page of LGPS this can also  be found under related links.