1 Pension Liaison Officers Group 8 th July 2008 Presented by Viv Ray, Charlotte Thompson and Shirley Cuthbert

2 Agenda  New Employers Manual  Additional Regular Contributions (ARCs)  Stage 1 of Internal Dispute Resolution Procedure (IDRP) appointed person  Change to calculation of pensionable remuneration with unpaid leave  Ill-health Retirement Procedures

3 DEVON PENSION SERVICES EMPLOYER’S GUIDE

4 DEVON PENSION SERVICES  Index  Introduction 1. Joining the Pension Scheme 1.1 Eligibility to join the Pension Scheme 1.2 Appointment of Staff  Option Forms  Nominated Cohabiting Partner’s 1.3 Contributions and Pay  Pensionable Pay  Pension Contributions  Revising contribution bands 1.4 Re-employed members  Deferred Beneficiaries  Pensioners  Previous redundant/efficiency pensioners 1.5 Administering and Employing Authority responsibilities

5 DEVON PENSION SERVICES 2. Changes during employment 2.1 Changes in employment  Hour changes  Reduced pay due to sickness  Unpaid leave  Maternity/Paternity/Adoption leave  Other absences  Change of name  Change of pension contribution percentage  Opting Out of Pension Scheme 2.2 Purchase of Additional Benefits  Additional Regular Contributions (ARCs)  Additional Voluntary Contributions (AVCs)  Employer Options

6 DEVON PENSION SERVICES 3 Leaving Employment 3.1 Rule of Early Leaver Options  Deferred Benefit  Transfer out of Pension rights 3.3 Retirements  Estimates  Strain cost  Award of additional membership and/or pension 3.4 Outsourcing 3.5 Death in Service 3.6 Pensionable pay for benefit calculations

7 DEVON PENSION SERVICES 4 Additional Information 4.1 Divorce 4.2 Pension Contribution returns  Monthly  Annually 4.3 Valuation and Investments 4.4 Employer Discretions 4.5 Internal Resolution Dispute Procedure  Stage 1 (Appointed person)  Stage 2 5Available Forms

8 DEVON PENSION SERVICES EMPLOYER’S GUIDE Presented by Viv Ray Deputy Pensions Manager Tel. No: (01392)

9 Ill Health  Reminder of the 1997 regulations  2007 regs – what employer’s have to determine…… Tier one Tier one Tier two Tier two Tier three Tier three  Deferred members  Overview of process  What’s changed

Regulations  Employer had to determine… Is the member leaving employment by reason of being permanently incapable of discharging efficiently the duties of that employment or any other comparable employment with his employing authority because of ill health or infirmity of mind or body?’

Regulations  Comparable employment Contractual provisions as to capacity are same or differ only to the extent of being reasonable. Place of work /remuneration /terms etc do not differ substantially Contractual provisions as to capacity are same or differ only to the extent of being reasonable. Place of work /remuneration /terms etc do not differ substantially  Permanently incapable member will, more likely than not, be incapable, until, at the earliest, his 65th birthday member will, more likely than not, be incapable, until, at the earliest, his 65th birthday

Regulations Total Membership Total after enhancement Less than 5 years Actual total membership only Between 5 and 10 years Total membership doubled Between 10 and 13 1/3 years Total membership increased to 20 years Over 13 1/3 years Total membership increased by 6 2/3 years

Regulations Employers to determine…. Is the length of total membership at least three months (Regulation 5 (1)(a) and 20(1); Is the length of total membership at least three months (Regulation 5 (1)(a) and 20(1); Will the employment be terminated on the grounds that the member’s ill-health or infirmity of mind or body renders him permanently incapable of discharging efficiently the duties of his current employment (Regulation 20(1)(a)) Will the employment be terminated on the grounds that the member’s ill-health or infirmity of mind or body renders him permanently incapable of discharging efficiently the duties of his current employment (Regulation 20(1)(a))

Regulations Does the member have a reduced likelihood of obtaining gainful employment (whether in local government or elsewhere) before his normal retirement age (Regulation 20(1)(b)). Does the member have a reduced likelihood of obtaining gainful employment (whether in local government or elsewhere) before his normal retirement age (Regulation 20(1)(b)). If the answers to all three questions is ‘Yes’, member entitled to ill health pension

Regulations  Employer must now decide… Is there no reasonable prospect of the member obtaining gainful employment before reaching his normal retirement age? Is there no reasonable prospect of the member obtaining gainful employment before reaching his normal retirement age? Is the member incapable of obtaining gainful employment within three years, but is likely to be able to do so before reaching his NRA? Is the member incapable of obtaining gainful employment within three years, but is likely to be able to do so before reaching his NRA?

Regulations Is the member capable of recovering sufficiently from his incapacity to enable him to be capable of obtaining gainful employment within three years of leaving local government employment? Is the member capable of recovering sufficiently from his incapacity to enable him to be capable of obtaining gainful employment within three years of leaving local government employment?

Regulations  Permanently incapable Member will, more likely that not, be incapable until, at the earliest, his 65 th birthday Member will, more likely that not, be incapable until, at the earliest, his 65 th birthday  Gainful employment Paid employment for not less than 30 hours in each week for a period of not less than 12 months. Paid employment for not less than 30 hours in each week for a period of not less than 12 months.

Regulations  Reasonable period Three years Three years  Obtaining Looking at capacity of individual, taking into account the medical effects of the condition that gave rise to the ill health retirement. Non medical factors such as the general availability of gainful employment should not be considered Looking at capacity of individual, taking into account the medical effects of the condition that gave rise to the ill health retirement. Non medical factors such as the general availability of gainful employment should not be considered

Regulations  Reduced likelihood Policy objective to incentivise a return to work. Therefore no ill health retirement benefit who those who have been judged to be capable immediately of obtaining employment. Ill health retirement benefit (all tiers) only available to those whose likelihood of obtaining gainful employment, because permanent incapacity, is reduced Policy objective to incentivise a return to work. Therefore no ill health retirement benefit who those who have been judged to be capable immediately of obtaining employment. Ill health retirement benefit (all tiers) only available to those whose likelihood of obtaining gainful employment, because permanent incapacity, is reduced

Regulations  The First Tier – 100% prospective service enhancement, payable for life, no review Qualifying period of at least 3 months Qualifying period of at least 3 months Based on certificate, employer decides to terminate employment on grounds of permanent incapacity and because of that condition, they have a reduced likelihood of obtaining any gainful employment Based on certificate, employer decides to terminate employment on grounds of permanent incapacity and because of that condition, they have a reduced likelihood of obtaining any gainful employment No reasonable prospect of member obtaining any gainful employment before NRA No reasonable prospect of member obtaining any gainful employment before NRA

Regulations  The Second Tier – 25% prospective service enhancement, payable for life, no review Qualifying period of at least 3 months Qualifying period of at least 3 months Based on certificate, employer decides to terminate employment on grounds of permanent incapacity and because of that condition, they have a reduced likelihood of obtaining any gainful employment Based on certificate, employer decides to terminate employment on grounds of permanent incapacity and because of that condition, they have a reduced likelihood of obtaining any gainful employment Likely that member will be capable of obtaining gainful employment before NRA but there is no reasonable prospect of this happening within three years of leaving. Likely that member will be capable of obtaining gainful employment before NRA but there is no reasonable prospect of this happening within three years of leaving.

Regulations  The Third Tier – accrued service only, payable for maximum of 3 years, subject to review. Qualifying period of at least 3 months Qualifying period of at least 3 months Based on certificate, employer decides to terminate employment on grounds of permanent incapacity and because of that condition, they have a reduced likelihood of obtaining any gainful employment Based on certificate, employer decides to terminate employment on grounds of permanent incapacity and because of that condition, they have a reduced likelihood of obtaining any gainful employment Is capable of obtaining gainful employment within three years of leaving Is capable of obtaining gainful employment within three years of leaving

Regulations  The Third Tier Member must inform employing authority if he obtains employment Member must inform employing authority if he obtains employment  18 month review Employing authority make inquiries on current employment status Employing authority make inquiries on current employment status Benefits discontinued if now in gainful employment Benefits discontinued if now in gainful employment Employing authority may recover payments made for any period in which member had been in gainful employment Employing authority may recover payments made for any period in which member had been in gainful employment

Regulations If not in gainful employment, authority shall obtain a further certificate from an IRMP If not in gainful employment, authority shall obtain a further certificate from an IRMP Still incapable of gainful employment – benefits continueStill incapable of gainful employment – benefits continue Move member to tier 2. Based on initial medical condition and new benefits start on date of this second determinationMove member to tier 2. Based on initial medical condition and new benefits start on date of this second determination Member now capable of gainful employment – benefits discontinue.Member now capable of gainful employment – benefits discontinue.  In all third tier cases, benefits payable for maximum of 3 years.

Regulations Protections  20 (15) – determinations made before 1 st October 2008, member’s get the better of the old/new service enhancements  20 (13) – existing 1997 members aged 45 or over on 31/03/2008, who fall into tier 1 or 2 only, get the better of the old/new service enhancements

26 Deferred members  When did they leave? Pre April 1998 Pre April 1998 Entitlement to unreduced benefits (no enhancements) if permanently incapable of discharging duties of that employment and ‘any employment’. IRMP to determine date of incapacity, benefits payable from this date. Can commute on serious ill health.Entitlement to unreduced benefits (no enhancements) if permanently incapable of discharging duties of that employment and ‘any employment’. IRMP to determine date of incapacity, benefits payable from this date. Can commute on serious ill health.

27 Deferred members Between April 1998 – April 2008 Between April 1998 – April 2008 Entitled to unreduced benefits (no enhancements) if permanently incapable of discharging duties of that employment and also ‘any employment’. Payable from date of certificate. Can commute on serious ill health.Entitled to unreduced benefits (no enhancements) if permanently incapable of discharging duties of that employment and also ‘any employment’. Payable from date of certificate. Can commute on serious ill health.

28 Deferred members From 1 st April 2008 From 1 st April 2008 Entitled to unreduced benefits (no enhancements) if permanently incapable of discharging the duties of that employment and condition likely to prevent member obtaining employment before 65 or for at least 3 years (i.e. tier 1 & 2). Payable from date of certificate. Cannot commute on serious ill healthEntitled to unreduced benefits (no enhancements) if permanently incapable of discharging the duties of that employment and condition likely to prevent member obtaining employment before 65 or for at least 3 years (i.e. tier 1 & 2). Payable from date of certificate. Cannot commute on serious ill health

29 Employer process  Send member to IRMP  Obtain certification of permanent incapacity and reduced likelihood of obtaining gainful employment  Terminate employment  Ill health pension commences  Tier 1 & 2 payable for life  Tier 3 requires review

30 Employer process  18 months – ascertain if member in gainful employment Yes – stop pension and recovery any overpayments Yes – stop pension and recovery any overpayments No – send member to IRMP No – send member to IRMP  IRMP report Now capable of gainful employment – stop pension Now capable of gainful employment – stop pension Still incapable – continue paying benefits Still incapable – continue paying benefits Now deemed tier 2 – pension increased and now payable for life Now deemed tier 2 – pension increased and now payable for life  3 years – stop pension

31 What’s changed  Comparable employment – now ‘reduced likelihood of obtaining gainful employment’  Enhancements based on ‘reduced likelihood…’ instead of service based enhancements  Enhancements paid to eligible members with more than 3 months (was 5 years)  Benefits subject to review (third tier)  Serious ill health commutation removed, no longer need to establish if member has less than 1 year to live

32 Devon Pension Services Estuary House Peninsular Park Rydon Lane EXETER – Viv Ray – Charlotte Thompson – Shirley Cuthbert –