Local Government Pension Scheme November 2013 Auto-enrolment & the Local Government Pension Scheme Presented by Andy Cunningham

Local Government Pension Scheme What am I going to cover? 1.Basic Overview of Auto-enrolment 2.More Detailed Look at Auto-enrolment 3.Other things to remember about Auto-enrolment 4.General HR matters (not specifically auto-enrolment) 5.LGPS 2014 (not specifically auto-enrolment)

Local Government Pension Scheme 1). Basic Overview a). Background Introduced through the Pensions Act 2008 Impact on every UK employer (Public & Private sector) Government intention is to significantly increase the number of people paying into a pension scheme. Legislation starting applying to the largest organisations in October 2012

Local Government Pension Scheme 1). Basic Overview b). Main Requirement To auto-enrol eligible jobholders into a qualifying pension scheme with effect from and following the employers staging date (this includes all future staff and all staff who become eligible jobholders)

Local Government Pension Scheme Where: Eligible Jobholders: An employee aged 22 –> State Pension Age with qualifying earnings above the earnings trigger (currently about £9400p/a) Qualifying pension scheme: This is defined by the Pension Regulator, but for simplicity both the LGPS & TPS are qualifying schemes. Staging Dates: Depending on largest PAYE size, staging dates range between Oct 2012 and Oct 2017 (largest employers went first) 1). Basic Overview (cont.)

Local Government Pension Scheme In addition to this, there are two principle complications: A number of fairly prescriptive and complex monitoring and communication requirements. For LGPS employers, to understand the dual responsibility to meet auto-enrolment legislation and the LGPS Regulations (and TPS Regulations where relevant) 1). Basic Overview (cont.)

Local Government Pension Scheme c). Compliance & Legislation The Pension Regulator is responsible for monitoring compliance with the auto-enrolment legislation. In cases, of non-compliance the Pension Regulator has the power to issue significant fines to employers. d). Useful point to remember Excluding the time of the staging date and when another employee starts, the only people you need to worry about are those who are not in a Pension Scheme. 1). Basic Overview (cont.)

Local Government Pension Scheme 2). Auto-enrolment in more detail

Local Government Pension Scheme a). Interaction of the LGPS/Auto-enrolment Contractual enrolment (LGPS) LGPS – staff with a contract of 3 months of more are contractually enrolled (regardless of age and income) TPS – if some teaching staff are not eligible for the TPS, they will eligible for the LGPS instead. Automatic enrolment Requirement to continually monitor their workforce and take certain actions (including automatic enrolment) at specified times – again this is mainly relevant to those who are not in a pension scheme. 2). Auto-enrolment in more detail

Local Government Pension Scheme b). Safeguarding From 1 July 2012 employers cant encourage employees to opt out of a pension scheme or to take any account of employee decisions regarding staying in the pension scheme as part of the recruitment process. 2). Auto-enrolment in more detail (cont.)

Local Government Pension Scheme c). Opt Outs i). Employers cannot give a member an opt out form(these are no longer in our starter packs) although the Pension Fund can. However, you can tell them where to find one (i.e. on the Pension Funds website) ii). An employee cannot opt out before their date of starting (any form signed before this date must be disregarded) 2). Auto-enrolment in more detail (cont.)

Local Government Pension Scheme c). Opt Outs (continued) iii). Employers must keep a record of completed opt out forms. iv). With effect from your staging date, we need to know the details of all employees who opted out on starting as we are required to keep this information (starter information would be sufficient) 2). Auto-enrolment in more detail (cont.)

Local Government Pension Scheme d). Casuals With effect from Oct 2012, all casuals and staff with a contract of three months or less are eligible for the LGPS but they are not contractually enrolled A problem exists if they are Eligible Jobholder but also a casual (or short-term contract) as the member cannot be auto- enrolled. Proposed solutions to this are either repeated postponement (problem is that you need to send a letter each time) or to enter some wording on the timesheet as an alternative to repeated letters. 2). Auto-enrolment in more detail (cont.)

Local Government Pension Scheme e). Postponement of employer responsibilities Bearing in the mind the LGPS Regulations requirements, this can only be used: To delay enrolling someone who opted out before you start date (only relevant if you are not using transitional delay) In relation to casuals (as described in d) 2). Auto-enrolment in more detail (cont.)

Local Government Pension Scheme f). Transitional Delay (till Sept 2017) Option to not enrol w/e from the staging date all eligible jobholders who joined their employer before the employers staging date, with a contract of three months or more who has opted out. However, this only applies to staff who were eligible jobholders on the staging date. Therefore for all staff who have opted out who are under 22 or whose earnings were below the limit, once they become eligible jobholders they will still need to be re-enrolled (and sent a letter) 2). Auto-enrolment in more detail (cont.)

Local Government Pension Scheme h). The different categories of worker

Local Government Pension Scheme i). Monitoring from your staging date If someone becomes an eligible jobholders for the first time, auto-enrol them from the next pay period. If someone becomes a non-eligible jobholder or entitled worker for the first time since the employers staging date then send them a letter within 1 month telling them that they have the right to opt into the LGPS or TPS. If an employee has been in the LGPS or TPS whilst an eligible jobholder but then opts out there is no further requirement to monitor them but action may need to be taken at the employers re-enrolment date (see next page). 2). Auto-enrolment in more detail (cont.)

Local Government Pension Scheme j). Re-enrolment Every three years from your staging date, all eligible jobholders who are not in the scheme should be re-enrolled (unless they opted-out within a year of the relevant date) 2). Auto-enrolment in more detail (cont.)

Local Government Pension Scheme k). Brief Summary of Communication Requirements (template letters can be found in the LGE full guide) Transitional Delay -Must write to all eligible employers who are affected telling them they can still opt-in. -Issue postponement notices to casuals (reminding them that they can still opt in) who become eligible jobholders (casuals that are already eligible jobholders dont need monitoring) (continued) 2). Auto-enrolment in more detail (cont.)

Local Government Pension Scheme k). Brief Summary of Communication Requirements (template letters can be found in the LGE full guide) Transitional Delay (continued) -Non-eligible jobholders and entitled workers with a contract for 3 months or more – write to them notifying them of their right to join the LGPS. - Non-eligible jobholders and entitled workers with a contract of less than 3 months duration – issue a 3 month postponement notice but inform them they have the right to opt into the LGPS if they wish to do so. 2). Auto-enrolment in more detail (cont.)

Local Government Pension Scheme k). Brief Summary of Communication Requirements (template letters can be found in the LGE full guide) Without transitional delay - Tell eligible jobholders that they have been automatically enrolled (where applicable) and that they have the right to opt out - Non-eligible jobholders and entitled workers with a contract for 3 months or more – write to them notifying them of their right to join the LGPS. - Non-eligible jobholders and entitled workers with a contract of less than 3 months duration – issue a 3 month postponement notice but inform them they have the right to opt into the LGPS if they wish to do so. 2). Auto-enrolment in more detail (cont.)

Local Government Pension Scheme 3). Other things to remember Register Employers must register with the Pensions Regulator within 4 months of their staging date and of their subsequent re- enrolment dates. Record Keeping Employers must keep comprehensive records about their employees and the scheme they have used to meet their automatic enrolment obligations. Records must be kept for 6 years. Employers must keep opt out forms for 4 year.

Local Government Pension Scheme 4. HR Responsibilities i). Ill Health – a LGPS member should not be dismissed on Ill Health grounds without first being assessed against the 3 tiers. ii). Redundancy – any LGPS member who is made redundant an aged 55 or over is entitled to early receipt of their pension (without reductions) – this may create a strain on the employer involved; we re-charge for this cost at the time. (cont.)

Local Government Pension Scheme 4. HR Responsibilities (continued) iii). Employers Discretions Policy - Academies are required to create their own policy in relation to matters such as: Early Retirement, flexible retirement and agreeing to increase members pensions.

Local Government Pension Scheme 5. LGPS 2014 Some Key Points (Specific presentations will be available in December/January) Career Average Scheme using 1/49ths Main Scheme/50-50 Scheme Employee Contributions – new bands and based on actual pay Earliest Retirement age = 55 Normal Pension Age linked to State Pension Age Refunds possible up to a period of 2 years