Local Government Pension Scheme Employer Training Cory Blose and Beth Sargent Employer Liaison and Communication Officers

Introduction This presentation is intended to be a overview of what you need to provide to the Pensions Service from 1 April 2014 For more detailed guidance, fact sheets and forms see our website – – Detailed HR and Payroll Guides –

2014 Scheme overview Account based scheme with 1/49 th accrual and CPI revaluation 50/50 section - pay half, get half Employee contribution rate determined by actual pay for part-time staff and higher rates for higher paid Normal Pension age linked to State Pension Age (SPA) Voluntary retirement from age 55 without requiring employer consent Benefits on pre 1 April 2014 membership still based on Final Pay and underpin for those nearest retirement

2014 Scheme overview Account based system means greater reliance than ever on employer data We are unable to validate data in the manner we could in the past Annual benefit build up means greater accuracy required Member could challenge your data at any point in the future – we will only be able to check that we have recorded your data correctly Employer data requirements challenging - various pay definitions, cumulatives and Scheme Sections

Who can be in the LGPS? Entry is now automatic for all employees under the age of 75 Contracts of less than three months and non-contracted workers become members: –On their Automatic Enrolment Date unless, employer issues a postponement notice E.g Eligible Jobholders contractually enrolled from first day of employment E.g Non-Eligible Jobholders and Entitled Workers should be contractually enrolled from the first day they become an Eligible Jobholder –On first day of pay period following extension of contract to more than three months –On opting in All new members need to complete a Membership Information form, unless they opt out within 3 months of joining

What if an employee doesn’t want to be in the LGPS? An employee can opt out of the LGPS at any time, once they are a member Opt out forms can be obtained from our website, or directly from the Pensions Service. They must not come from you Change to vesting period - If opt out with less than two years membership eligible for a refund of contributions. –Less than three months – refund through payroll –Three months or more - refund via Pension Fund All opt out forms should be returned to you but the Pensions Service must receive a copy

Employee Contributions The rate of pension contributions an employee pays is determined on their actual pensionable pay You are responsible for deciding which contribution band an employee falls into –Review band each April and on material change in pay Must inform employee of the contribution band from 1 April 14 and when any change to band is applied –May be an issue with variable pay employees These contributions must be paid monthly to the LGSS Pensions Service by 19 th of month following collection along with your employer contributions

2014 Employee Contribution Table Pay BandContribution Rate Up to £13,5005.5% £13,501 - £21,0005.8% £21,001 - £34,0006.5% £34,001 - £43,0006.8% £43,001 - £60,0008.5% £60,001 - £85,0009.9% £85,001 - £100, % £100,001 - £150, % More than £150, %

50/50 Section Half contribution for half pension Other benefits paid in full e.g Death in Service Employer still pays full contribution from 1 April 2014 Automatic re-entry into main section from next available pay period when: ‒ You reach your re-enrolment date under the automatic enrolment legislation ‒ An employee has unpaid sick leave that crosses a pay period Unless member elects otherwise Ensure payroll can cope with two different sections of the LGPS

How to Notify the Pensions Service of a New Starter Once you have decided on a new starter’s contribution rate you must then notify the Pensions Service that they are now a member of the Pension Fund This information should be provided within 30 days of the individual commencing membership There are a number of ways you can do this: ‒ Fill in a new starter form ‒ Send us an interface ‒ Use employer self service (to either create a ‘new starter’ or send us an interface) ‒ Use I-Connect

Changes to Employment Protection/Underpin means we still require notification of any changes/absence periods for many individuals ‒ Change in hours or weeks worked ‒ Change to personal details ‒ Authorised unpaid leave - dates, whether paid APC/SCAPC to buy all of lost pension back and pensionable pay lost ‒ Unauthorised Leave ‒ Unpaid Additional Maternity/Adoption/Paternity Leave – dates, whether paid APC/SCAPC to buy all of lost pension back and pensionable pay lost ‒ Strike Action - dates, whether paid APC to buy all of lost pension back and pensionable pay lost ‒ Reservist Leave Complete a variation form to notify us of these

Separate records Requirement to maintain separate records per employment –except where employer determines there is a single employment relationship This is the same principle as for automatic enrolment Employee contribution rates then separately assessed We need separate data/cumulatives per section per employment –This includes Assumed Pensionable Pay Ensure that timesheet claims distinguish between employments

Pensionable Pay An employees pensionable pay is the total of: –all the salary, wages, fees and other payments paid to the employee and –any benefit specified in the employee’s contract of employment as being a pensionable emolument –However it does not include certain elements e.g. Pay in lieu of notice Full list of exclusions is available in the Payroll Guide available from Changes: - non-contractual overtime (incl. excess hours) is now pensionable - any pay paid by employer whilst on reserve forces service leave is not pensionable - any pay paid by employer as consideration for loss of future pensionable pay is not now pensionable

Cumulative Pensionable Pay Benefit built up is based on Pensionable Pay received in each Scheme Year (1 April to 31 March) –No longer Pensionable Pay due in the relevant Scheme Year Cumulative Pensionable Pay = Pensionable Pay PLUS any Assumed Pensionable Pay (APP) Cumulative Pensionable Pay is required separately per Section and per employment Cumulative Pensionable Pay to be reported within three months of that scheme year end Payments due for period pre April 2014 paid after March 2014 –apply 2008 Scheme employee contribution rate to 2008 Scheme pensionable pay BUT don’t drop pensionable pay into post 2014 cumulatives

Assumed Pensionable Pay Assumed Pensionable Pay (APP) replaces current Notional Pensionable Pay APP accrues during: –periods of sickness on reduced or nil pay –reduced or nil pay during relevant child related leave (ordinary and paid additional) –reserve forces service leave Based on last complete 3 months or 12 weeks Pensionable Pay including any APP in that period (but excluding all lump sums) You can add back any regular lump sum paid in last 12 months if you think the member will still be on APP when lump sum next due

Assumed Pensionable Pay Exception: actual pay is higher such as on KIT day Following KIT/Stringer Day APP is not recalculated and continues to be based on the three months/12 weeks prior to the start of the reduced/unpaid pay period If unpaid sick leave crosses two 31 st March, APP is increased / decreased by Treasury Order revaluation (CPI) APP drops into Cumulative Pensionable Pay DO NOT drop both Pensionable Pay and APP into cumulatives for the same day

Assumed Pensionable Pay APP and 50/50 -Monthly paid employee on half pay sick drops to nil pay in mid-August -Move to main section from 1 September -APP does not change but in August APP drops into 50/50 Section cumulative, from September APP drops into Main Section cumulative APP to be calculated for Tier 1 and Tier 2 ill health retirements and death in service

Assumed Pensionable Pay - Contributions Employee pays contributions on Pensionable Pay received, not APP, (except for reserve forces service leave) –No pay = No basic Employee Contributions (certain types of additional contributions are still due) Employer pays contributions on APP not on Pensionable Pay received during relevant child related leave/sick leave on reduced or nil pay –Big Change for Employer Contributions: No Pay = Employer Contribution based on APP Except for Reserve Forces Leave – MoD pays contributions on APP during reserve forces service leave and remits to Fund

Final Pay You still need to supply the 2008 Scheme definition Final Pay as follows: - each 31 March for pre 2014 benefits on ABS - at date of leaving for pre 2014 membership - at date of leaving or old NPA if earlier for underpin Final Pay calculated as at present Certificates of protection and 2008 Scheme 10 year protection for pay cuts/restrictions, in relation to pre 1 April 2014 service, still hold LGA are pushing for simplification of the Final Pay calculation

Data Requirements Contributions and Cumulative Pensionable Pay required for each Section Cumulative Pensionable Pay for each section includes any periods of Assumed Pensionable Pay (APP) whilst in that section Protections/underpin/Added Years/ill health underpin means requirement for old Final Pay and changes/absence periods for many individuals Remember we are unable to validate data in the manner we could in the past therefore greater employer accuracy required

Main Section Cumulative Pensionable Pay (CPP1) 50/50 Section Cumulative Pensionable Pay (CPP2) Main Section Cumulative Employee’s Conts (CEC1) 50/50 Section Cumulative Employee’s Conts (CEC2) Cumulative Employer’s Contributions (CRC) Main Section50/50 SectionAdditional Contributions Cumulative Additional Employee’s Contributions (CAC) Additional Pension Contribution (EAPC) Additional Voluntary Contribution (EAVC) Cumulative Additional Employer’s Contributions (CARC) Additional Pension Contribution (RAPC) Additional Voluntary Contribution (RAVC) Dates of active membership FTE Final Pay

Data requirements Provides data ByImpact i-ConnectUpdated i-Connect extract InterfacesAll existing interfaces including End of Year Additional End of Year CARE interface Employer Self Service (ESS)Existing ESS updates and End of Year interface Additional End of Year CARE spreadsheet Manual formsExisting manual forms and End of Year interface Additional End of Year CARE spreadsheet What does this mean:

AVCs AVCs continue to be a facility to buy additional pension Members continue to be able to pay a cash amount or a % of pay Two changes from 1 April 2014 –For new contracts the 50% of pay limit has been removed –BUT 25% limit on tax free cash from AVCs has been introduced

APC’s Additional Pension Contributions (APCs) are the successor to ARCs Full and Shared Cost APC contracts possible, providing a maximum of £6,500 additional annual pension -Whole cost to employee – like 2008 Scheme ARCs -Whole cost to employer – like 2008 Scheme augmentation -Shared cost APC contract can be paid for by either a one off lump sum payment or regular additional contributions APCs only increase the member’s pension, there is no increase in survivors’ pensions

APC’s APCs also used to buy pension ‘lost’ during: ‒ Authorised unpaid leave of absence (including unpaid additional child related leave) ‒ Strike No longer compulsory for member to pay contributions on first 30 days of unpaid leave APCs to buy back “lost” pension (except due to strike) are at shared cost (1/3rd employee, 2/3rds employer) providing employee makes an election within 30 days of return to work Online modeller, including election form, being produced by LGA

Employee Estimates An employee can request an estimate of pension benefits should they wish to voluntarily retire between ages 55 and 75 –Please refer them to the website to complete an estimate request form The employee completes what they can and then sends the form to you to complete their employment details Once done you then return form to employee Two estimate types per request and only one request in a 12 month period

Employer Estimates If you are considering terminating an employment, before NPA, for one of the following reasons an estimate request must come from you: ‒ Redundancy over 55 ‒ Business efficiency ‒ Flexible retirement ‒ Ill Health retirement Please Note – Changes to vesting period may affect any cases already in progress

How do I tell the Pensions Service that an employee is leaving? With the exception of those employees opting out of the Scheme with less than 3 months service, when a member leaves the LGPS you will need to provide: To the Pensions Service: –Leavers Form To both the member and the Pensions Service: –Entitlement Award To the member –Appeals leaflet ‘Checking and Disputing Your Employer’s Pension Decision’ –Transfer out forms

Retiring Although our normal retirement age is now linked to individual SPA (min 65) anyone can voluntarily retire between 55 and 75. However if taken before SPA a reduction may apply If you have someone in the Scheme that is coming up to their 75 th birthday you must bring them out of the Scheme two days before their 75 th birthday Alongside the usual leavers forms you must also provide the member with retirement forms If the member is taking flexible retirement, you are allowing them to retire at your discretion and you must complete employer decision form

Voluntary retirement from Age 55+ Member’s choice – no employer consent needed Actuarial reduction/increase may apply to benefits taken before/after NPA –Extent of which has yet to be finalised with the Government Actuary's Department –You can waive any actuarial reduction if you choose 85 year rule protections from age 60 May also apply from ages 55 – 59 if you exercise a discretion Protections for those who were members of the LGPS before 1st April 2014 mean that different reductions or increases may apply to different parts of your benefits

Flexible Retirement From 55 an employee can take flexible retirement at your discretion A reduction must be applied to their hours and/or grade. It is at your discretion as to how to apply this You must get an estimate before agreeing to a flexible retirement request and if you do agree, you should complete an employer decision form Should an employee take flexible retirement and they are paying AVCs which they wish to continue doing in their ‘re-employment’ then a new AVC contract will need to be started Along with the usual leaver forms we’ll also need a change form, letting us know of changes to their ongoing employment

Redundancy If you have an employee being made redundant before age 55 then we will need the usual leavers forms If you have an employee being made redundant from age 55 then they are entitled to immediate payment of pension benefits The benefits will be paid without a percentage reduction for early payment You are responsible for the cost of early payment –We will provide details of the costs immediately following the retirement, which must be paid as a one off lump sum Use estimate form to get figures regarding capital costs

Ill Health Retirement Member, as a result of ill-health, must: –be permanently incapable of continuing their current employment and; –not immediately capable of undertaking any gainful employment* and; –have had their employment terminated, by you, on the grounds of ill health Three tiers of benefits Gainful employment = 30 hours per week for period of at least 12 months

Ill Health Retirement The level of benefits awarded is determined by your assessment of the member’s prospect of being capable of undertaking gainful employment before their NPA TierCriteriaBenefitPayment Period 1Member is incapable of undertaking any gainful employment before NPA Enhancement based on 100% of the further annual pension that would have been achieved between leaving and NPA Permanent 2Member is incapable of undertaking any gainful employment for at least 3 years but it is likely they will be capable of doing so before NPA Enhancement based on 25% of the further annual pension that would have been achieved between leaving and NPA Permanent 3It is likely that the member will be capable of undertaking gainful employment within 3 years No enhancement - Based on actual membership only Maximum 3 years but will cease if member obtains gainful employment

Ill Health Retirement Manage the ill health process according to the appropriate internal procedures Make decisions about whether: ‒an active member is fit enough to continue to be employed to do their current job ‒an active member is immediately incapable of undertaking any gainful employment ‒an active member is entitled to ill health retirement benefits, and if they are, what Tier of benefits is to be awarded ‒a deferred pensioner member is eligible for early payment on grounds of permanent ill health Complete all forms and documentation (including ill health insurance) and provide to the member, the IRMP and the Pensions Service as appropriate ‒If ill health insurance claim is not successful you will have to pay the associated strain costs Review Tier 3 Cases after 18 months, when notified of employment and when requested within 3 years of discontinuation of payment

Protection Benefits built up to 31 March 2014 protected for all members Additional protection for those within 10 years of retirement as at 1 April 2012 Protection applies to members who:  were an active member of the LGPS on 31 March 2012 and,  within 10 years of their then Normal Pension Age (i.e. 65) on 1 April 2012,  are not opted out when either they cease employment or flexibly retire,  have not already drawn benefits under LGPS 2014 in relation to an employment,  and haven’t had a disqualifying break in membership of a public service pension scheme since 1st April 2012 of more than 5 years They will receive a pension at least equal to that which they would have received had the Scheme not changed on 1 April 2014

Employing Authority Discretions The LGPS is a statutory scheme which means most of the rules and regulations regarding the Scheme are laid down by the Government However you are given a significant amount of choice regarding how you choose to apply some of these regulations. These are known as discretions Your discretions policy will determine how you handle specific requests from employees regarding their LGPS pension Once completed a copy of your discretions policy must be given to the Pensions Service by the 30 June 2014

List of Employing Authority Discretions There are four areas for which you are required to formulate, publish and keep under review a policy statement: ‒ Voluntary funding of additional pension via a Shared Cost APC contract; ‒ Flexible retirement; ‒ Waiving all or part of any actuarial reduction; and ‒ Award of additional pension (at whole cost to the employer) A full list of discretions is available in the Administration Guides to the 2014 scheme which are available at In addition to this, you will need to review and update your existing polices under LGPS 2008 etc in line with LGPS2014 provisions

How do I produce a discretions policy? Things to think of when developing your policy: ‒ Cost – almost every decision to not accept the minimum option and exercise your discretionary powers will come at a cost. It is advisable to get an estimate first ‒ Discrimination – when drafting your policy you must be sure it does not have any age related criteria or indirect sex discrimination ‒ Fettering - we would recommend that rather than trying to cover absolutely every situation you have an overarching statement so that you still have the opportunity to exercise the discretions differently in different situations If you are agreeing to the exercise of a discretion then you must use the employer decision form, which can be found on our website, to tell us

Service Level Agreement LGSS Pensions Service has developed a Service Level Agreement (SLA) Voluntary sign up SLA intended to clearly set out the: –Roles –Responsibilities –Relationship Between the LGSS Pensions Service and our employers What services we will provide and what we need from you to do so A copy of the SLA is available on our website Please contact the Employers Team if you would like more information or to sign up

Find out more..... Web: – HR and Payroll Guides plus Administration Guide Phone: (General) (Beth) (Cory)

Thank You. Any questions?