employer guide...page 1 of 28 introduction this guide has been designed to help employers of the...
TRANSCRIPT
Looking forward to your retirement
Employer Guide
Contents
Introduction 1
Legal Background 2
Scheme Overview 3
Employer responsibilties and expected standards 4
New Employer/Scheme Member 5
Auto Enrolment 6
Employee/er Contribution Rates 7
Pensionable Pay 8
Discretions 9
Changes and Options during Membership 11
Multiple Employments 12
50/50 Pension Scheme
13
Unpaid Leave of absence/Strikes/Maternity 14
Opting-out of the Local Government Pension Scheme 15
Leaving the Local Government Pension Scheme 16
Leaving with retirement options (age 55 or over)/Strain costs 17
Ill Health Retirement
18
Death benefits
20
Pensionable pay (on leaving) 21
Assumed pensionable pay(APP) 25
Employer Self Service/Data Collection 27
Need Help 28
Page 1 of 28
Introduction
This guide has been designed to help employers of the Devon and Somerset Pension
Funds, administered by Peninsula Pensions. Its purpose is to help you as an employer to
carry out your statutory responsibilities.
Peninsula Pensions who are we and what do we do?
Peninsula Pensions is provided by Devon County Council and is a shared service with
Somerset County Council. We administer the Local Government Pension Scheme, as one of
89 funds across England and Wales. Peninsula Pensions has in excess of 400 participating
employers throughout Devon and Somerset and a scheme membership of more than 100,000
members.
The Local Government Pension Scheme(LGPS)
The LGPS is a statutory public service scheme, so the scheme’s benefits and terms are set
out in regulations passed through parliament. It has members in local government,
education from primary to higher (non-teaching staff), police staff, the voluntary sector,
environment agencies and private contractors.
Prior to April 2014 the LGPS was a final salary pension scheme based on the final 365
days pensionable pay and pensionable service. From April 2014 the LGPS became a
‘Career Average Revalued Earnings’(CARE) pension scheme based on the actual annual
salary each year.
Benefits from the scheme include;-
• A secure annual pension.
• A tax free lump sum.
• The option to draw pension from age 55 to 75.
• Death benefit cover.
• The 50/50 pension scheme.
Page 2 of 28
Legal Background
The current legislation in force for the Local Government Pension Scheme are:-
The Local Government Pension Regulations 2013
https://www.lgpsregs.org/schemeregs/lgpsregs2013.php
The Local Government Pension Scheme (Transitional Provisions, Savings and Amendment)
Regulations 2014
https://www.lgpsregs.org/schemeregs/tpregs2014.php
The Local Government Pension Scheme(LGPS) is a registered public service pension
scheme under Chapter 2 of Part 4 of the Finance Act 2004. It achieved automatic
registration by virtue of Part 1 of Schedule 36 of that Act (because the scheme was,
immediately before 6 April 2006, both a retirement benefits scheme approved under
Chapter I of Part XIV of the Income and Corporation Taxes Act 1988 and a relevant
statutory scheme under section 611A of that Act). This means, for example, that scheme
members receive tax relief on contributions. It complies with the relevant provisions of the
Pension Schemes Act 1993, the Pensions Act 1995 and the Pensions Act 2004.
The LGPS meets the government's standards under the automatic enrolment provisions of
the Pensions Act 2008.
General Data Protection Regulations(GDRP)
For further information go to the GDRP section on our web site.
Page 3 of 28
Scheme Overview
The Three Tranches
The Local Government Pension Scheme has three tranches, and depending on when the
member joined the scheme as to which tranches they have membership in. A member may
have membership in all three of the tranches ;-
Benefits of being in the scheme
• Guaranteed defined benefit funded pension scheme.
• Individual pension accounts – pension benefits calculated on a yearly basis with
accrual rate of 1/49 of actual pensionable pay(from 1st April 2014)
• Protected final salary benefits for pensionable service before April 2014.
• Option to take a tax free cash lump sum.
• Index-linked pensions based on consumer price index (CPI)
• Built in Ill-health benefits/life cover.
• Retirement between 55 and state pension age.
• Dependants pensions.
Page 4 of 28
Employer responsibities and expected standards
Under the LGPS regulations it is a statutory requirement for all employers to provide their
administrators with the information they require in order to carry out their duties
Regulation 80 within the LGPS 2013 Scheme Regulations states:
Exchange of information
80. — (1) A Scheme employer must—
(a) inform the appropriate administering authority of all decisions made by
the employer under regulation 72 (first instance decisions) or by an
adjudicator appointed by the Scheme employer under regulation 74
(applications for adjudication of disagreements) concerning members; and
(b) give that authority such other information as it requires for
discharging its Scheme Functions
• Automatically enrol new staff into the LGPS (if eligible)
• Ensure scheme contributions are deducted and paid over to the Fund each
month
• Notify Pensions of any Starters, Opt-outs and changes to employees’ records
• Notify Pensions of Opt-Outs and Leavers and calculate Pensionable Pay (Pre-&
Post 1/4/2014)
• Provide member data to Pensions when requested
• Appoint Internal Dispute Resolution Procedure (IDRP) Stage 1 Officer - 2 stage
complaints procedure for scheme members
• Appoint an Independent Registered Medical Practitioner (IRMP) to assess ill
health retirement applications
• Record keeping - HMRC rules state need to keep records for 6 years plus
current but TPR states data to be kept for as long as Pensions need it – needed
until the death of the last dependent.
• Keep your Pensions Discretions policy up to date
• Ensure action is taken if advised of new legislation or procedures
• Notify members of any relevant changes to pension scheme when advised by
Pensions
• Ensure member records are accurate and provide Peninsula Pensions with
what we need to administer LGPS.
Expected Standards
Expected standards of performance for both employers and Peninsula Pensions are
outlined in our Administration Strategy document on the web site.
Page 5 of 28
New Employee/Scheme Member
Any person you appoint to a role may have the right to join the Local Government Pension
Scheme depending on what type of employer you are; -
Contract of three months or more
Contract of less than three months
Scheduled Body • County councils and district councils, • Police and Crime Commissioners/Chief
Constables • Academies, Universities, Free Schools
and Studio Schools
Employee Right Automatic Entry
Employee Right By Election
Designating Body (Town & Parish Councils)
Employer Choice Automatic Entry
Employer Choice By Election
Admission Body (Open) (Housing Associations, charities, etc) can arrange a legal admission agreement with
Peninsula Pensions
Employer Choice Automatic Entry
Employer Choice By Election
Admission Body (Closed) No right to membership
No right to membership
What you need to do
When you appoint a new employee, you must inform them that they will
automatically become a member of the Local Government Pension Scheme (unless
the contract is for less than three months or the employee is an eligible job holder
(See Auto Enrolment section and pages on our website) when you must inform
them that they can elect to join the scheme). This must be done within a month of
them either becoming or being eligible to be a member of the scheme. A leaflet can
be found on our web site; -
• Inform you payroll provider to collect contributions from the date of appointment
(unless the contact is for less than three months – entry from the pay period after
member elects to join)
If you administer your own payroll you will need to determine the employee
contribution rate in accordance with salary bandings for each post (see member
contributions section)
Notify Peninsula Pensions of the new starter via our Employer Self Service:
https://employers.peninsulapensions.org.uk/employerservicesweb/login
Page 6 of 28
Deduct contributions and submit both employee & employer contributions to the
pension fund. Deadlines are different for both Devon and Somerset fund and full
details can be found on our website.(notification of amounts MUST be sent to Pensions and the
relevant Finance team each month so that the payments can be reconciled - done via the Monthly
Contributions (EAS5) form on our website)
Notify us of the actual pensionable pay(CARE) monthly using the monthly CARE
data template.
Auto Enrolment
Automatic enrolment is a Government initiative to help more people save for later life
through a pension scheme at work. The legislation runs separately from the Local
Government Pension Scheme. The LGPS Pension Scheme regulations already cover
contractual automatic enrolment; -
all eligible employees under the age of 75 are contractually enrolled into the LGPS
on appointment unless their contract of employment is for less than three months.
Employees with a contract of employment for less than three months will not be
contractually enrolled but will be automatically enrolled if they are an eligible job
holder.
Opted out members will be brought back into the LGPS during the re-enrolment
process three year cycle.
What you need to do
As an employer it is your responsibility to ensure that you are adhering to the legislation.
Further guidance can be found on our website and on the Local Government Pension
Scheme website.
Page 7 of 28
Employee Contribution Rates
The rate of contribution that a member pays to the LGPS is decided by a group of bandings
which change annually.
The latest contribution bandings can be found here
If an employee wishes to join the 50/50 pension scheme the contribution is half of the
main scheme rate.
What you need to do
Decide the contribution rate, for each job the member holds by estimating the
actual annual pay earned at the date of joining or on 1st April each year and which
section of the pension scheme they are joining (main scheme or 50/50 scheme).
Decide on how and when an employees pay banding is assessed i.e. Annually, on
pay change, overtime average etc. The rate may be adjusted during the year or in
April of the following year.
Inform the member in writing which band they have been allocated each year and
inform them of the appeals proceedure.
Employer Contribution Rates
Employer contributions are expressed as a percentage of the member’s actual pensionable
pay. The rate will change every three years following the actuarial valuation of the pension
fund. Peninsula Pensions will inform you of the correct contribution rate following an
actuarial valuation, together with a copy of the actuary’s report. You will need to inform us
and the finance team each time you make a payment by filling in the monthly contributions
form EAS5 ( if you do not have employer access to our website -please email finance.peninsulaemployers-
[email protected]) Deadlines are different for both Devon and Somerset fund and full
details can be found on our website.
Page 8 of 28
Pensionable Pay
Definition
Pensionable pay is the pay the member pays pension contributions on. It is all salary,
wages, fees and other payments paid to the employee, and any benefit specified in the
employees’ contract of employment as being pensionable. Exclusions shown in LGPS Reg
20 (2)
There are three main difference between 2008 and 2014 definitions of what is pensionable:
non-contractual overtime becomes pensionable;
payment in consideration of loss of future pensionable payments or benefits is now
not pensionable
any actual pay paid by Scheme employer to a reservist during Reserve Forces
Service Leave is not pensionable
Pensionable or not
Item 2008 2014
Salary Yes Yes
Performance Related Pay Yes? * Yes
Contractual Overtime Yes Yes
Non-Contractual Overtime No Yes
Travelling Expenses No No
Subsistence Expenses No No
First Aid Allowance No? * No? *
Honoraria Yes? * Yes? *
Payment in lieu of notice No No
Payment in Lieu of holidays not taken No No
*First Aid Allowance = depends if “contractual”
* Performance related pay/bonus’s 2008 has to be contractual
*Honoraria = depends what its paid for:
• if contractual and relates to role= Yes
• difference in salary = Yes
• due to overtime = No (2008) Yes (2014)
Page 9 of 28
Discretions
As a scheme employer participating in the Local Government Pension Scheme you must
formulate, publish, and keep under review a policy on all mandatory discretions you may
exercise in relation to members of the LGPS. These discretions are ways to enhance
member’s benefits but can result in costs to you as an employer.
What you need to do
Formulate your policy and publish your decisions for all mandatory discretions.
Please note you may wish to consult employees/unions before making or changing
you policy. The mandatory discretions are as follows ;-
Shared cost additional pension (Reg 16(2)(e) & 16(4)(d))*
Employer can choose to pay for APC in whole or part
Shared Cost Additional Voluntary Contribution (Reg R17 (1) and
TP15 (1) (d) and A25 (3)) Employer can choose to pay for AVC in
whole or part
Flexible Retirement (Reg 30(6)) Employers decision to offer as a
retirement option (including a drawdown option)
Waiving of actuarial reduction (Reg 30(8)) Flexible Retirement
and Early retirement (55-60)
Award of additional pension (Reg 31)** Employer APC for active
member or member leaving on redundancy/efficiency
▪ Power to ‘switch on’ the 85 year rule Employers decision to apply
the protection
Local Government (Early Termination of Employment)
(Discretionary Compensation) (England and Wales) Regulations
Each employer (other than an Admitted Body) is required to formulate
a policy in relation to discretionary compensation.
Discretions for scheme members (excluding councillor members)
who ceased active membership on or after 1.4.08 and before
1.4.14 - Still have to publish a policy in respect of your discretions for
these leavers
Pre 1st
April 204 leavers can ask for employer consent to the early
release of their deferred benefits.
Page 10 of 28
* Please note that pensions awarded under regulation 16 is reduced and
the full cost must be paid to the fund while the member is still in
employment.
**Pension purchased by the employer under regulation 31 is not reduced
so incurs additional ‘strain’ costs(can apply within 6 months of leaving)
A copy should be sent to Peninsula Pensions within 3 months of becoming a new
employer with the Devon or Somerset County Council pension funds. A copy should
be sent to Peninsula Pensions within 1 month following any revisions to your policy.
Academies need their own - One policy for Multi-Academy Trust to cover all
Academies.
Points to consider when formulating your policy
1. Costs
2. ‘Follow the Leader’ not always sensible
3. Anti-discrimination laws - Care needs to be taken that there is no
discrimination (Age – wording is free of age influence)
4. Fettering discretions (restricting or limiting) - policy should show the basis
on which you would make the decisions on the various discretions.
NB: The government has advised you should not ‘fetter your discretion’;
i.e. policies should not be so rigid or restrictive as to prevent flexibility where a
(possibly unanticipated) situation requires it.”
Your policy needs to be:
Workable – easy and definitive
Affordable – fits in with your budget
Reasonable – fair or ‘not unreasonable’
Foreseeable – affordable for the future budget (2/3 years)
For a full list of discretions, example policy template, and guidance notes, please visit our
website.
Page 11 of 28
Changes and options during membership
You will need to notify Peninsula Pensions when an employee has a change in personal
details or contractual changes in the following circumstances;
Change of name or address
Change in employment
Change in Hours
Unpaid leave of absence, maternity leave, adoption leave, and strikes
Changes of name/address or hours
These need to be submitted to us as soon as possible after the change has occurred.
What you need to do
For changes in name and address, employment, or hours please login on employer
self-service.
If you complete the forms via interface, please complete the spreadsheet relating to
the change on our website and return to: pensionsinterfaces-
If you are signed up to Employer Self Service (ESS) you can upload your interface
file through ESS.
Page 12 of 28
Multiple employments
Where an employee has multiple post that are separate contracts you will need to keep
separate records.
What you need to do
In cases of multiple employments with separate contracts you will need to; -
• Keep separate data for each job
• Provide separate data for MAIN scheme and 50/50 scheme for each job
• Provide actual pensionable pay figures to include any assumed pay for each
job
• Submit separate pension forms for each separate job.
The exception to this is where there is a single employment relationship for example:
Two concurrent employments - both must be terminated
Two sequential employments without a break (i.e. promotion)
Page 13 of 28
50/50 Pension Scheme
Since 1st April 2014 there have been two sections to the Local Government Pension
Scheme; -
The main 100/100 section.
The 50/50 section.
By paying into the 50/50 section the member pay’s half the contributions for half the
benefits. During this period the member receives the same level of life and ill-health cover,
as the employer still pays the full contribution rate. The member’s pension accrues at
1/98th instead of 1/49th. The 50/50 scheme is a short-term option for a maximum period of
3 years but there is no limit to the number of times the member can move between the two
schemes. If the member has multiple contracts they are able to pay into the 50/50 on one
employment and the full scheme on others. The election form to join is on our website.
What you need to do
Bring the member into the 50/50 scheme on election.
Notify Peninsula Pensions of 50/50 actual pensionable pay(CARE) periods and
changes between the full scheme and 50/50 scheme.
Bring the member back into the main scheme after a nil pay period and auto-
enrolment date.(can elect to go back into the 50/50 scheme).
For futher guidence please visit our website.
Page 14 of 28
Unpaid Leave of absence, maternity/adoption, and strikes
When a member has an unpaid break, a period of unpaid maternity, or strike break, and no
pay is received they will have a period of ‘lost’ pension.
On return to work the member can elect to buy the ‘lost’ pension by paying Additional
Pension Contributions (APC) or if election within 30 days Shared Cost Additional Pension
Contributions (SCAPC).
What you need to do
• Inform the member on return to work of the SCAPC option – notification must state:
• the amount of lost pensionable pay
• Instructions on how they can purchase the ‘lost pension’
• Refer members to the Absences – Buying Lost Pension section of our website.
This links to the on-line calculator and forms for member to send to employer
and Peninsula Pensions.
• If the member opts to pay for the period of ‘lost pension’ within 30 days of
returning to work (or longer period if you allow – you can extend the period by
which the member has to elect to pay) then the member will pay 1/3rd of the
cost and you will pay 2/3rd’s of the (SCAPC)
Further guidance is available on our website
Page 15 of 28
Opting-Out of the LGPS
Employees are automatically enrolled into the Local Government Pension Scheme (if
eligible). Membership to the Local Government Pension Scheme is not compulsory so a
member may opt-out of the pension scheme at any time (will be brought back in on the
LGPS enrolment date). They are free to opt back in and out as many times as they wish.
Members can obtain the opt-out form from our web site. Please note you must not issue
forms to the employee.
What you need to do
When an employee completes an opt-out form you must forward to your payroll section for
actioning. It should then be dealt with as follows; -
Period in the LGPS
pension scheme
Action required
Less than three months
Form should be forwarded to Payroll who should then
refund any contribution through the member’s pay,
complete the bottom of opt-out form and forward to
Peninsula Pensions.
More than three months
but less than two years
Form should be forwarded to Payroll who should then
bring the member out of the pension scheme. A leaver’s
form (including member contributions) together with the
opt out form should be forwarded to Peninsula Pensions.
For further information please visit our website
Page 16 of 28
Leaving the Local Government Pension Scheme
Leaving with less than 2 years in the LGPS(Under age 55)
If a member leaves the LGPS with less than 2 years in the pension scheme, and they don’t have any
other posts where they are contributing, they have entitlement to a refund of contributions or a
transfer of pension rights to another pension scheme.
What you need to do
If a member leaves the scheme with less than 2 years in the LGPS you are required to complete the
leavers form on our website and complete the employee contributions section.
Leaving with more than 2 years in the LGPS(Under age 55)
If a member leaves the LGPS with more than 2 years in the pension scheme they have entitlement to
deferred benefits or a transfer of pension rights to another pension scheme.
What you need to do
If a member leaves the scheme with more than 2 years in the LGPS you are required to complete the
leavers form on our website.
Page 17 of 28
Retirement from the LGPS (age 55 or over)
Full benefits are payable from Normal Retirement Age (linked to State Pension Age).
Benefits can be paid early; -
• Redundancy/Efficiency from age 55 - Payable immediately with no reduction
for early payment applied (possible Strain cost – see below).
• Flexible Retirement – Reduction of grade or hours from age 55 with employers’
consent. Pension can be brought into payment early (possible Strain cost – see
below). (Employers discretion to offer Flexible Retirement)
• Ill health retirement – Pension could be brought into payment immediately
from any age and may also be enhanced. Three Tiers depending on ability to
undertake future employment.
• Voluntary retirement from age 55 with actuarial reduction.
Strain Costs
The funding of the LGPS is based on all members retiring at their normal retirement age. If
benefits are paid before this the pension fund suffers a detriment resulting in a ‘strain’
cost. If you as an employer agree to the early release of a member’s pension, then you are
responsible for covering the cost in the following situation; -
If a member is made redundant or leaves on efficiency grounds and is age 55 or
over.
If a member is retired at age 55 or over on flexible retirement grounds.
• If you choose to waive a member’s actuarial reduction and the member has left on
flexible retirement.
If you are considering releasing an employee on any of the above grounds, please see
‘requesting estimates’.
Page 18 of 28
Ill Health Retirement
Active members with 2 years or more within the LGPS who’s employment is terminated
due to ill health may be eligible for ill health retirement. For this to occur they must be
deemed to be permanently incapable of carrying out the duties of their role and not
immediately capable of undertaking gainful employment (at least 30 hours a week for
12 months). There are 3 different tiers of ill health for an active scheme member; -
Tier
Degree/Level of ill health LGPS pension and
enhancement level
1 Unlikely to be capable of
undertaking any gainful
employment before normal
retirement age.
Unlikely to be capable of undertaking
any gainful employment within 3 years
of leaving employment but likely to be
capable before normal retirement age
2
Unlikely to be capable of
undertaking any gainful
employment within 3 years of
leaving employment but likely to be
capable before normal retirement
age
Accrued pension rights plus an
enhancement of membership of 25%
of prospective benefits up to normal
retirement age
3
Likely to be capable of undertaking
gainful employment within 3 years
of leaving employment or normal
retirement age if sooner
Accrued pension rights only with no
enhancement, with award subject to
review and suspension
Deferred members may also apply for their LGPS benefits on ill health grounds.
Depending on when the member left employment there are slightly different rules that
apply. Further details are available in out ill-health guide.
Page 19 of 28
What you need to do
Decide whether to terminate employment due to ill health or deferred member
on application for early release.
Complete the correct relevent ill health form and forward to your appointed
Independent Registered Practitioner(IRMP) (must be on our approved list)
• IRMP then reviews case and complete’s form with their opinion.
As the employer you then make a decision as to whether to award ill health
pension and which tier/ early release for a deferred member.
You must then notify the member of your decision and reasons behind your
decision, including the right to appeal.
Notify Peninsula Pensions of your decision enclosing the ill health forms and if
different decision from the IRMP a covering letter explaining your decision not to
follow the IRMP.
There is no direct Strain cost for ill health retirement. The cost is factored into the
scheme actuarial valuation and your employer contribution rate.
Page 20 of 28
Death benefits
The Local Government Pension Scheme provides benefits on death for an active
member, deferred member, and pensioner.
Pension payable on death
A Spouse’s pension can be payable based on 160ths of a member’s pensionable
service. This will continue for life even if the spouse re-marries. Pensions are also
payable to civil partners and co-habiting partners based on pensionable service after
April 1988. Co-habiting partner’s will need evidence of living together/financially
dependent on each other.
Death grant
A death grant of 3 times actual pensionable salary is payable if a member dies whilst in
active employment with you. There may also be a death grant payable if the member
passes away after being in receipt of their pension for less than 10 years (balance of
the 10 years payble as a death grant)
What you need to do
If a member dies whilst in active employment with you we will require a leaver’s form
completing. We will also require the assumed pensionable pay(APP) figure
completing(see guidance below)
Page 21 of 28
Pensionable Pay
When a member leaves employment we will require pensionable pay completed on the
leaver’s form. You will need to hold 2 different pensionable pay figures for employees
with pre and post 2014 LGPS membership;-
Pre 1st April 2014 Final Salary pension scheme – final 365 days pensionable pay.
Post 1st
April 2014 Career Average Revalued Earnings(CARE) – actual pensionable
pay from 1st April to 31st
March or date of leaving.
What you need to do
Pensionable Pay Pre 1st April 2014
If a member has any scheme membership in the pre-1st April 2014 final salary pension
scheme, we will require the final 365 days pensionable pay at date of leaving
employment (Not salary point).
Example 1
A member leaves employment on 30th
November 2018, we would require pensionable
pay for the period 1st December 2017 to 30th
November 2018.
If the member is part-time we would require the full time equivalent pensionable pay
for the period (not FTE salary) based on the hours the member worked.
If a member works 18.50 hours per week (37 hours per week full time equivalent)
Actual pensionable pay for the period 1st
December 2017 to 30th November 2018 is
£12000.
Calculation:-
£12000/18.50 hpw X 37 = £24000 (full time equivalent pensionable pay)
(see example over page)
Page 22 of 28
If the member has a change in working hours in the final 365 days, the pensionable
pay would need to be split with the change.
Example 2
The member works 18.5 hours per week to 31st
March 2018 then changes to 20 hours
per week from 1st April 2018. In this case you would need 2 lines on the leavers form
(£4600/18.5 X 37)(£8000/20 X 37)
Page 23 of 28
Actual Pensionable Pay Post 1st April 2014(CARE)
What you need to do
For members who have post 1st
April 2014 membership we require the actual
pensionable pay from 1st April to 31st
March the following year, or to date of
leaving.
Example 3
If a member left on 30th
November 2018 and actual pensionable pay for the period 1st
April 2017 to 31st March 2018 was £13000, and 1st
April 2018 to 30th November 2018
was £7000 this would be filled in on the leavers form as follows;-
The above figures must include any Assumed Pensionable Pay (APP) and has to be
split for any 50/50 scheme membership.
Pay Protections
Final salary(Pre 14) automatic 3 protection
If a member’s rate of pay is reduced in last 3 years to date of leaving then the last 365 day
pensionable pay, together with the previous 2 anniversary’s may be looked at in calculating
the best pay to use.
What you need to do
If one of the previous 2 years to the anniversary of the date of leaving is higher
please provide us with the final 3 years pensionable pay on the leaver’s form.
Page 24 of 28
Average of best 3 consecutive years in 13
If a member suffers a reduction in their rate of pay in the final 10 years to retirement they
can elect to look at the best 3 consecutive years in the last 13. For this to apply the
member has to elect in writing at least a month before the date of leaving.
What you need to do
• If a member elects for this option you will need to complete the previous years
pay form on our web site and submit with the leaver’s form.
Calculating full time pensionable pay for Term Time Employees
The calculation of pensionable pay for term-time member’s is dependent on which
pension fund you are part of;-
Devon Fund Employers
Term-time employees have their hours adjusted to equate to a full year and the full-time
equivalent pay is worked out by uprating the actual pay by the adjusted hours
Divide the actual hours by the whole-time equivalent hours for the week then multiply by
the week’s factor:
• For example: 25.00 (hours per week) ÷ 37.00 (FTE hours) x 44.50 (weeks
factor) ÷ 52.143 (FTE Weeks) x 100 = 57.6637%
• Then use the percentage of hours to up-rate part-time pensionable pay to the
full-time equivalent pensionable pay: £12,000 ÷ 57.6637% = £20,810.32 FTE
Somerset Fund Employers
Historically, service for term-time employees within the Somerset Fund has not been
adjusted and hours have been recorded as the hours they work. Term-time employees
should have their pay reduced according to the total number of weeks worked each year so
please provide the adjusted actual pensionable pay, (plus any additional pensionable
recurring pay), and then uprate to the full-time equivalent pay using the part-time hours.
• For example: £8.83 (hrly rate) x 18 (hours per week) x 43.1281 (weeks factor)
= £6854.78 (adjusted actual pay)
• Then uprate to a FTE = £6854.78 x 37 (FTE Hours per week) ÷ 18 (hours per
week)
= £14090.38 = FTE adjusted pay).
Please refer to pensionable pay guide for more guidance
Page 25 of 28
Assumed Pensionable Pay
Assumed pensionable pay is a notional pensionable pay figure that is used to ensure a
member’s pension is not affected by any reduction to, or suspension of, pensionable pay
due to a period of sickness or injury, or any reduction due to relevant child related leave or
reserve forces leave. The cumulative pensionable pay should be the assumed pensionable
pay and not the actual pensionable pay received (if any).
When does APP not apply?
• during any part of relevant child related leave if the pensionable pay received is
greater than the assumed pensionable pay for that period.
• during any period of unpaid additional maternity, paternity, adoption leave or
shared parental leave available at the end of relevant child related leave.
(Treated as an unpaid leave of absence = option to purchase ‘lost pension’)
•
• If the employee has a period of authorised unpaid leave of absence or is absent due
to industrial action
What you need to do
APP is calculated as an annual rate then applied to the relevant period as a proportion of
that rate. The relevant period starts on the date:
• the employee drops to reduced or no contractual pay due to sickness or injury, or
• when ‘relevant’ child related leave or reserve forces service leave commences.
a) Calculate average pensionable pay for the 3 complete months/12 complete
weeks* prior to the date of reduced/no pay**
b) Gross up to an annual figure.
c) Annual figure is then apportioned to the applicable period and replaces any pay
received.
*If 3 or 12 complete pay periods do not exist, use whatever number of complete periods are
available.
**remove any ‘lump sums’ but include any APP already credited in those 3 months - regular
lump sum payments can be included at employer’s discretion
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Example:
Month 1 = £1400
Month 2 = £2500 (including £1000 regular bonus and £100 overtime)
Month 3 = £1400
Annual rate of APP = (£1400 + £1500 + £1400) / 3 x 12) = £17200
If APP figure above is lower than the actual pensionable pay normally received,
employer may substitute a higher level of pensionable pay for the APP. NB: employer
must have regard to the pensionable pay received by the member in the previous 12
months.
APP Figure used for enhancement Tier 1 and Tier 2 Ill health and Death in Service
The APP figure is calculated in the normal way but using the average of the pensionable
pay for the 12 (weekly) or 3 (monthly) complete pay periods prior to the date of retirement
or death (including any APP credited in and relating to those pay periods).
Any regular lump sums paid in the 12 months prior can be added back into the annual
rate of APP if the employer determines there is a 'reasonable expectation' it would
again have been paid to the member*.
Has there been a reduction in contractual hours during the relevant pay periods
wholly or partly because of the condition that caused or contributed to the ill health
retirement?
If IRMP certifies Yes to this question, then the APP figure is to be calculated on the
pay the member would have received during this time – treated as if they had not been
working reduced contractual hours.
*Changes in legislation in May 2018, allows employers the discretion to use a different
pensionable pay figure that reflects the normal pay of the member over a longer period. In
doing so, an employer must have regard to the pensionable pay received by the member
in the previous 12 months.
Disclaimer: Please note that this is only a summary of Assumed Pensionable Pay. For
more information, please see the Assumed Pensionable Pay Guidance on our website.
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Employer Self Service(ESS) and Data Collections
As an employer in the LGPS you will need to access our Employer Self Service(ESS) facility. By
signing up you will have access to our Altair database over a secure connection. ESS will allow you
to;-
Advise us of new starters via an online form
Change and update member details such as hours, changes.
• Check your employee’s records to ensure the correct data is held
Produce your own estimates(Redundancy exercises avoid Peninsula Pensions turnaround
times for ‘strain’ costs)
The system is free to use and as long as you are on our contacts lists for your organisation, you should
Sign up at : https://employers.peninsulapensions.org.uk/employerservicesweb/login
When we authorise access to Employer Self Service (ESS) for an authorised contact they will be able to view all the employee’s listed under that employer number. In the case of Multi Academy Trusts (MAT’s) who report as one entity, this means that any users registered under that employer will be able to see the employee’s records for all schools within that MAT. Please note that we would not authorise access for a delegated payroll
provider unless they provide the service for all schools within the MAT.
Annual and Monthly Data Collections
There are a number of submissions that we require monthly and annually;-
As an alternative to Employer Self Service
Interface Templates: It is possible to submit information to us by interface for starters, hour
changes, address changes, and service breaks. If you would like to sign up to this please
email [email protected]
Care Template: This, ideally should be a monthly submission showing cumulative
CARE(actual pensionable pay) for a given year.
Annual Return Template: This is requested from you once a year and includes employee
contributions, current working hours,contributions,and full-time equivalent salary as at
31/03/XXXX. We also request CARE pay in case this has not been submitted monthly.
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Need Help
Further guidance can be found on the following web sites ;-
www.peninsulapensions.org.uk
http://www.lgpsregs.org/index.php
Peninsula Pensions Employer Team
Mark Griffin – Employer Liaison Officer – Tel: 01392 385372, direct email
Emma Davies – Senior Employer Liaison Officer – Tel 01392 386588, direct email
Shirley Cuthbert – Employer & Communications Manager – Tel 01392 385229, direct email
Beverly McCarthy - Employer & Communications Team Pensions Assistant – Tel TBC, direct email
Peninsula Pensions is provided by Devon County Council and is a shared service with Somerset County Council
www.peninsulapensions.org.uk (Updated August 2019)