Local Government Pension Scheme
LGPS2014
- Employer Presentation
Andy Cunningham
Employer Relationship & Fund Development Manager
Wiltshire Pension Fund
28th & 29th January 2014
Local Government Pension Scheme
Agenda
1). The main points and changes
2). New data requirements
(including new forms/spreadsheets)
3). New Discretions Policy
4). Further guidance & information
5). Member Presentations and communications
6). Some actions to take away.
Local Government Pension Scheme
1. The main points and changes
Benefits Changes – a brief overview
• Career Average Scheme for benefits built up after April
2014
•
Final Salary Scheme for benefits before then – using the
final salary when the person leaves (i.e. not at 31/03/2014)
•
Accrual rate is now 1/49ths
•
Normal Retirement Age is linked to state pension age (with
a minimum of 65)
•
But members can draw their pension from 55 without
employer consent (but it will be reduced)
Local Government Pension Scheme
1. The main changes
Benefits Changes – a brief overview (continued)
• Underpin protecting people who were members at
01/04/2012 and who were over 55 at that time – means we
must operate the Scheme as before for these people as
well as under the new approach.
•
Changes to employee contribution bands methodology
•
Movement away from the idea of ‘service’ towards early
pensionable pay (this affects the information we require)
Local Government Pension Scheme
1. The main points and changes
1.1. Two main sections to the Scheme
• Main Section of the Scheme
•
50/50 Section of the Scheme - Broadly speaking, paying
half the contributions gets half the benefits (with some
exceptions)
•
All new member should be automatically put into the main
section of the scheme although they can later switch
between the main and 50/50 section.
Local Government Pension Scheme
1. The main changes
1.1. 50/50 and Main sections to the Scheme
• Important: We strongly recommend that you set these up
as sub-schemes or separate schemes on your payroll
system as you will need to be able to identify the
pensionable earnings relating to us for reporting purposes
etc.
•
Note that regardless of whether or not the member is in the
main section of scheme or the 50/50 section, employer
contributions based on their full pay are still required.
•
(Similarly, reductions in pay due to sickness or injury should
be disregarded when calculating employer contributions)
Local Government Pension Scheme
1. The main points and changes
1.2.a. Employee Contributions
• Still split into bands
•
Now based on expected actual pensionable for the year not
full-time equivalent pay
•
(Weighted) average rate is still around 6.5%
•
Each job still assessed separately.
•
Most part-time workers are likely to be paying less
Local Government Pension Scheme
1.2.b. The bands: Main Section of the Scheme
Pay Bands (Actual Pay)
Employee Contribution Rates
Up to £13,500
5.5%
£13,501 - £21,000
5.8%
£21,001 - £34,000
6.5%
£34,001 - £43,000
6.8%
£43,001 - £60,000
8.5%
£60,001 - £85,000
9.9%
£85,001 - £100,000
10.5%
£100,001 - £150,000
11.4%
More than £150,000
12.5%
Local Government Pension Scheme
1.2.c. The bands: 50/50 Section of the Scheme
Pay Bands (Actual Pay)
Employee Contribution Rates
Up to £13,500
2.75%
£13,501 - £21,000
2.9%
£21,001 - £34,000
3.25%
£34,001 - £43,000
3.4%
£43,001 - £60,000
4.25%
£60,001 - £85,000
4.95%
£85,001 - £100,000
5.25%
£100,001 - £150,000
5.7%
More than £150,000
6.25%
Local Government Pension Scheme
1. The main points and changes
1.2.d Implementation advice
• Must review each employee’s band amount each April (as
well as for new joiners at the time they join)
•
Employer’s discretions as to whether to review these more
frequently whenever a member’s pay changes (e.g. due to
change of hours, pay increases etc) – your approach to this
should be outlined in your discretions policy.
•
Further information will be available in the new employer’s
guide when this has been updated on the website.
Local Government Pension Scheme
1.3. New Definition of pensionable pay
Main change is that all types of overtime will now be pensionable.
Local Government Pension Scheme
1.4. Refunds
It is now possible for members to have refunds for service up to 2
years (depending on whether they started before or after April
2014).
Only refunds through payroll = Opt outs within 3 months
All other early leaver refunds will be dealt with by the pension fund.
Local Government Pension Scheme
1.5. Types of retirements
Redundancy/Efficiency:
From age 55, members are entitled to unreduced benefits (costs to
employers will still apply in most cases) - unchanged
Ill Health (any age):
Process and tiers are similar although there is some changes to
the wording.
Certificates will need to be updated
Local Government Pension Scheme
1.5. Types of retirements (Continued)
Early Retirement (from age 55):
Members no longer need employer permission to rely early but the
pension will normally be reduced substantially
No employer costs will apply
Note: If members retire before age 60, they will lose any rule of 85
protection.
Flexible Retirement (from age 55):
Will operate as before – employer permission still needed but no
costs will apply in any case (again reductions will often be
substantial)
Local Government Pension Scheme
1.5. Additional Contribution Options
AVCs: Unchanged.
Prudential is the current provider, but some members have stayed
with previous providers.
Added Years Arrangements (set up before April 08):
Unchanged
ARCs are now called APCs:
As before but members can now may lump sum, one-off top ups to
contributions
Existing ARCs to continue as before.
Local Government Pension Scheme
1.6. Types of leave: Full pay, reduced pay and unpaid
Full pay: Deduct employee and employer contributions as normal
as if they were working.
Reduced and unpaid leave:
• Deduct employee contributions based on any pay received
•
Employer contributions should be paid based on ‘assumed pay’
for relevant child related leave, sick leave & reserve forces
leave
•
Pension will be based on the member’s ‘assumed pay’ for child
related leave and sick leave & reserve forces leave
Assumed pay should not be used for strikes and other unpaid
leave.
Local Government Pension Scheme
1.6. Types of leave: Full pay, reduced pay and unpaid
Repaying contributions for missing service:
Note there is no longer a specific option to do this*
For relevant child related, sick and reserve forces leave – this is
not necessary as the person’s pension is unaffected.
For trade disputes and other types of unpaid (e.g. career breaks &
unpaid additional maternity leave) –this option does not need to be
offered (although note that members can still use APCs to top up
pensions)
(*Unless the member is covered by the Underpin)
Local Government Pension Scheme
1.7. Opting in and out and changing from Main to 50/50
Subject to the employee being eligible to join the scheme,
members can:
•
Opt in and out when they wish (but in line with payroll periods)
•
Change between the main section of the scheme and 50/50
section when they wish.
Local Government Pension Scheme
1.7. Opting in and out and changing from Main to 50/50
(cont.)
Notes:
• Auto-enrolment and re-enrolment dates – When these events
occur, members should be enrolled into the main section of
scheme.
•
If they are in the 50/50 section, still need to be enrolled into
main section
•
If the employee is in the 50/50 section and goes on to no pay
due to sickness or injury, the employee must be (notionally)
moved back into the main section from the beginning of the
next pay period if they are still on nil pay at that time.
Local Government Pension Scheme
1.8. Casuals & Variable Workers
For most members, it no longer matters if they are casual or
variable workers as the pension is based on pensionable earnings.
Hence we don’t need to know the hours for these workers in most
cases.
Exception: Members covered by underpin (member as at
01/04/2012, aged 55 or over at that time)
Local Government Pension Scheme
1.9 Starter Packs
•
Some of the content in existing packs will soon be out of date
•
Movement to on-line packs wherever possible (main reason is
version control is easier)
•
Some hard copies to be kept.
•
New versions yet to be completed.
Local Government Pension Scheme
2. New data requirements
2.1. Starter Forms/ spreadsheets
Generally speaking: the same information is needed
Except we will no longer need to know part-time percentages
for most workers*
*Apart from a handful of members who could be covered by the
underpin e.g.re-joiners who members as at 1 April 2012 and
over 55 at this date with a gap of no more than 5 years)
Local Government Pension Scheme
2.2. Changes
Personal Changes: Required as before (addresses, name etc)
Part-time Percentage Changes (either hours or weeks):
We only need to know these for members covered by the
underpin (born before April 1957)
Opting in and out: Forms needed as before
50/50 <-> Main Section: We don’t need to know the date of
change – just earnings when they leave or at the end of year.
Local Government Pension Scheme
2.3 Leavers (under 55)
More pay figures required:
a). FTE Salary
b) Pension Remuneration (for all pre-2014 members):
Using the old definition of pensionable pay (i.e. excluding non
contractual overtime)
c). Actual or assumed pay since most recent first of April
(split between 50/50 and Main Section)
Assumed pay for those who were on reduced or no pay.
Local Government Pension Scheme
2.4 Retirements and leavers over 55
Also, more pay figures required:
a). FTE Salary
b) Pension Remuneration (for all pre-2014 members):
Using the old definition of pensionable pay (i.e. excluding non
contractual overtime)
c). Actual or assumed pay since most recent first of April
(split between 50/50 and Main Section)
Assumed pay for those who were on reduced or no pay.
Local Government Pension Scheme
2.5 Monthly/Annual Returns
Main Changes:
We need total pensionable earnings (annual report only):
•
Split between 50/50 and Main Section of the scheme
•
Adjusted for assumed pay.
Local Government Pension Scheme
3. Employers’ Discretions Policies
•
New template will be on-line shortly
•
Most of same discretions apply
•
One additional (mandatory) discretion
•
Old policies can continue to apply (where relevant) but we
recommend that employers review their policy to update it
where necessary.
Local Government Pension Scheme
4. Further Guidance
•
Employers’ guide and new forms/spreadsheets on
www.wiltshirepensionfund.org.uk
•
Employers’ site – include HR/Payroll Guide:
www.lgpsregs.org
•
Members’ site (in addition to our website)
www.lgps2014.org
Contact Me
E: [email protected]
T: 01225 713612
Local Government Pension Scheme
5. Members’ Presentations and Communications
•
Active newsletters – sent out last week
•
Presentations/Road-shows:
A number already organised across Wiltshire.
•
Presentations on site:
Contact Zoe Stannard
[email protected]
01225 718054
Local Government Pension Scheme
6. Some actions to take away
•
Ensure payroll system is set-up to cope with:
- 50/50 and main scheme separation
- Different methodology for calculating employee
contributions
•
Review employee contribution rates from April 2014
•
Use new forms for events after April 2014
(although we may need to phase this transition after your
data is not up to date on our system)
Local Government Pension Scheme
6. Some actions to take away
•
Familiarise yourself with the new employer’s guide content
(once on-line)
•
Use new monthly contribution spreadsheet from April
•
Check any references you make to pensions in contracts,
employee documentation is still correct.
•
Ensure relevant employer representatives are aware of the
changes.
Local Government Pension Scheme
Any Questions?
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LGPS2014 Presentation - Wiltshire Pension Fund