Police Pensions User Group 13th February 2015

Agenda 11.00 Introduction 11.10 2015 Scheme Update Disclosure regulations Scheme Registration Transfer dates for officers Assistance with communication Pensions saving statements 12:00 Lunch 12:30 Pension Boards Terms of Reference Education The Pensions Regulators toolkit Board membership Next steps 13.30 Any other business 14.00 Close

Police Pension Scheme 2015

Police Pension Scheme 2015 National Scheme (Administered locally) Comes into force 1st April 2015 Protections available Regulations expected w/c 23 February

What’s New? Career Average Revalued Earnings (CARE) pension Registered with HMRC Contracted out of S2P Statutory status - Pension Benefits are protected and underpinned by Government -

What does it Cost? Police Authority contributes 21.3% Contributions are Tiered Tier 1 – Pensionable pay under £27,000 Tier 2 – Pensionable pay more than £27,000 but less than £60,000 Tier 3 – Pensionable pay of £60,000 and over 2.5% reduction for officers not entitled to ill health benefits Police Authority contributes 21.3%

Pensionable Pay   Determined Under Part 4 of the Police Act 2003 Included Basic Salary Temporary Promotion London Weighting Not Included Overtime Housing Allowance Rent Allowance  

Scheme Benefits “55.3ths Scheme” No service cap Pension for life with option to commute Pension 1/55.3 x Pensionable Pay Option to Commute Up to ¼ of Capitalised benefits at 12:1 Part Timers Pension calculated using actual pensionable pay

CARE Pension Individual pension pot built up for each year of membership Pay/accrual rate Pay = Pensionable pay earned during year Accrual Rate = 1/55.3th Individual pot revalued each year in line with CPI + 1.25% while active CPI only while deferred Individual pots added together and paid as one pension

CARE Pension PC Sumner – Accrued pension each year after the effects of 5 years’ increases Pensionable Pay: Pension Year 1: £34,000/55.3 = £614.83 + £7.69 + £7.78 + £7.88 + £7.98 + £8.08 = £654.24 Year 2: £34,340/55.3 = £620.98 + £7.76 + £7.86 + £7.96 + £8.06 = £652.62 Year 3: 36,000/55.3 = £650.99 + £8.14 + £8.23 + £8.34 = £675.70 Year 4: £37,254/55.3 = £673.67 + £8.42 + £8.53 = £690.62 Year 5: £37,254/55.3 = £673.67 + £8.42 = £682.09 £3,355.27 Member has the option to convert pension to lump sum

When can they get their hands on it? Refund of contributions with less than 2 years service (through payroll if < 3 months) Otherwise Normal Pension Age of 60 Reduced pension can be paid from age 55 Or Deferred Benefit payable from State Pension Age Earlier but with reduction

Ill Health Pension Benefits Two Tier System Selected Medical Practitioner Standard Ill Health Pension Unable to carry out ‘Ordinary’ duties Enhanced Top-Up Ill Health Pension As above but can not undertake ‘Regular Employment’ Not less than 30 hpw over 52 weeks Assumed Pay

Ill Health Pension Benefits Standard Tier Calculated in exactly the same as an ordinary pension Enhanced Tier Less than 5 years service: Lesser of: Pension multiplied by 3; or ½ prospective service More than 5 years service: addition of ½ prospective service

Ill Health Example Expect Police Authority to have to pay cash into pension account PC Summers 5 years service (age 36) Pensionable Pay = £37,254 Standard Tier: Pension: = £3,355.27 Enhanced Benefits: ½ Prospective Service to age 60 = 12 years Pension = (£37,254 / 55.3) x 12 = £8,084.05 Total ill health pension payable = £3,355.27 + £8,084.05 = £11,439.32

Death Benefits Nominated Cohabiting Partners Death Grant payable of 3 times pay Irrespective of length of service Death Grant Nomination Form Adult Survivor Benefits Spouse Civil Partner Nominated Cohabiting Partners Children’s Benefits Nominated Cohabiting Partners Must have completed a joint declaration Can be opposite / same sex couples Financial dependence / inter-dependence Free to Marry / enter into Civil Partnership Period of 2 years cohabiting required (albeit Discretionary)

Adult Survivor Benefits Death in Service 50% of the Officer’s Enhanced Ill Health Pension Death of Pensioner / Deferred Beneficiary / Opt Out 50% of the Officer’s actual entitlement

Adult Survivor Benefits (Misc) Remember: Significantly younger Spouse / Civil Partner / NCP Possible reduction to benefits Marry / Civil Partner within 6 months of death Possible reduction / non payment

Children’s Benefits Paid to: Natural / Stepchild / Adopted Child / Dependent Child Under age of 18 Between 18 and 23 In Full time education For life Disability Benefits 25% (Up to 50% if more than one child) Same basis as ‘Adult Survivors’ benefits

Transfers Awaiting GAD Guidance

Increasing Benefits Up to £6,500 extra pension can be purchased Payments made via lump sum if within 12 months of joining by periodical payments Can be stopped Whilst on leave / assumed pay BUT …..

Increasing Benefits Awaiting GAD Guidance

Divorce Awaiting GAD Guidance

Bits I’ve missed ? All expected to follow existing processes Early payment reductions Ability to use lump sum to cancel actuarial reductions Appeals Internal Dispute Resolution Procedure Medical Appeals Leave of Absence Maternity / Paternity / Adoption / Parental Sick Reserve duty Jury Service Injury Benefits All expected to follow existing processes

Members with Protection Protected officers Older than 45 at 1st April 2012 (Both 2006 and 1987 Scheme) Qualifying service of more than 20 years and older than 38 at 1st April 2012 (1987 Scheme) Qualifying service of 15 years and older than 40 at 1st April 2012 (1987 Scheme) Service attributable to pre 2015 scheme retains final salary link Remain in current scheme until protection ends

What happens with pre April 2015 service? Ordinary pension or deferred Pre April 2015 benefits calculated with reference to final salary May be entitled to lump sum or higher commutation rates Ill Health Pension No entitlement to lump sum (NPPS) Adult survivor benefits Pre April 2015 benefits calculated by reference to final salary

Next Steps Regulations Assessment of draft regulations complete Issues raised with Home Office Awaiting final regulations and associated guidance Pensions Administration System Requirements passed to Heywood System programmed Tested Member Communication Registration

Any Questions ?

Agenda 11.00 Introduction 11.10 2015 Scheme Update Disclosure regulations Scheme Registration Transfer dates for officers Assistance with communication Pension Saving Statements 12:00 Lunch 12:30 Pension Boards Terms of Reference Education The Pensions Regulators toolkit Board membership Next steps 13.30 Any other business 14.00 Close

Disclosure Regulations 13 February 2015

Background Effective from 6 April 2014 The Occupational and Personal Pension Scheme (Disclosure of Information) Regulations 2013 Effective from 6 April 2014 Consolidate the disclosure requirements contained in- The Occupational Pension Schemes (Disclosure of Information) Regulations 1996 The Personal Pension Schemes (Disclosure of Information Regulations 1987

Key changes Simplify the structure and language of the disclosure regime Simplify some of the basic information that must be provided to new and prospective members Clarify how electronic communications may be used

The regulations DO NOT apply to- Pensions sharing on divorce Pensions on Divorce etc (Provision of Information) Regulations 2000 Transfer values The Occupational Pension Schemes (Transfer Values) Regulations 1996

Summary of disclosure requirements Basic scheme information Members, prospective members, spouse, civil partner and scheme beneficiary Automatically for new joiners Within 2 months of joining the scheme (and in advance where practicable) On request, no more than once a year Within 2 months of the request being made

Summary of disclosure requirements Any material change in basic scheme information must be notified to all members and beneficiaries before, or as soon as possible after the alteration (and in any event within 3 months) Scheme member guide should contain at the very least, all the basic scheme information Home Office expect guide to be available this month

Notification to scheme members You must send a notification to officers- moving to the new (2015) scheme Within 2 months (in advance where practicable) remaining in the 1987 or 2006 scheme Within 3 months (in advance where practicable)

Annual Benefit Statements 2015 Scheme Automatic for active members of 2015 By 31 August 2016 On request for deferred and pension credit members Within 2 months of request 1987 & 2006 scheme On request for all membership types (within 2 months)

Summary of disclosure requirements Pension Savings Statement Members Automatically to those who exceed the AA By 6 October following the end of the tax year On request Within 3 months of the request or by 6 October, if later

Methods of Disclosure Disclosure regulations were amended in 2010 and again in 2014 to enable electronic communication Information and documents can now be disclosed- By post By email or By website

Disclosure by electronic means Before information is provided electronically there are important steps and safeguards that must be met. These include- Scheme members and beneficiaries being provided with the option to opt out of receiving information electronically by giving written notice Scheme managers being satisfied that the electronic communications have been designed: So that the person will be able to access and either store or print the information and Taking into account the requirements of disabled people Ensuring that members and beneficiaries who were members or beneficiaries on 1 December 2010 (where you had not provided information electronically before that date) have been sent a written notice (other than via email or website), informing them that: It is proposed to provide information electronically in the future and Members and beneficiaries may give written notice to opt out of receiving information electronically

Registering the scheme with HMRC

How can Mouchel help?

Mouchel will provide a report listing all members- How can Mouchel help? Mouchel will provide a report listing all members- Protected, unprotected and tapered Can provide specimen template letters New website - myownpension.co.uk Section for each scheme 1987, 2006 & 2015 Includes scheme member guides

myownpension.co.uk

Penalties for non-compliance The 2013 Disclosure Regulations make it very clear that while scheme managers may delegate the task of sending out information to third parties (e.g. a scheme administrator), they are the ones who remain ultimately responsible for ensuring compliance. Failure to comply with the regulations can result in a fine, imposed by The Pensions Regulator and can be up to £50,000.

Any Questions ?

Agenda 11.00 Introduction 11.10 2015 Scheme Update Disclosure regulations Scheme Registration Transfer dates for officers Assistance with communication 12:00 Lunch 12:30 Pension Boards Terms of Reference Education The Pensions Regulators toolkit Board membership Next steps 13.30 Any other business 14.00 Close

Police Pension Scheme Governance Assisting the Scheme Manager with: Compliance with legislation Compliance with the requirements of the Pensions Regulator Other matters as the Regulations may specify

Police Pension Scheme Governance Terms of Reference Final copy almost ready to go to Scheme Managers for approval Certain areas need final discussion before we can complete

Police Pension Scheme Governance Terms of Reference Rolling appointment periods to ensure continuity of knowledge Fees and expenses Schemes covered Indemnity Insurance

Police Pension Scheme Governance Education Knowledge & Understanding? What is necessary on day one? Initial training offered by ACPO, Mouchel, other parties The Pensions Regulators toolkit http://thepensionsregulator.gov.uk/public-service-schemes/learn-about-managing- public-service-schemes.aspx#s16691

Police Pension Scheme Governance

Police Pension Scheme Governance

Police Pension Scheme Governance Education Knowledge & Understanding? What is necessary on day one? A Pass in the Public Service Toolkit Enough knowledge to decide what is needed next.

Police Pension Scheme Governance Board Membership How many members and who should they be? Open discussion Stakeholder parties - Employers, active members, pensioners, deferred beneficiaries Interested parties – ACPO, Federation, NARPO, Superintendents Association, others? The able and willing