lgps2014 - employer presentation

Local Government Pension Scheme

28th & 29th January 2014

LGPS2014- Employer Presentation

Andy Cunningham Employer Relationship & Fund Development Manager

Wiltshire Pension Fund


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.


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)


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)



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.


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)



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


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%

1.2.b. The bands: Main Section of the 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%



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.


1.3. New Definition of pensionable pay

Main change is that all types of overtime will now be pensionable.


1.4. Refunds

It is now possible for members to have refunds for service up to 2years (depending on whether they started before or after April2014).

Only refunds through payroll = Opt outs within 3 months

All other early leaver refunds will be dealt with by the pension fund.


1.5. Types of retirements

Redundancy/Efficiency: From age 55, members are entitled to unreduced benefits (costs toemployers will still apply in most cases) - unchanged

Ill Health (any age): Process and tiers are similar although there is some changes tothe wording.

Certificates will need to be updated


1.5. Types of retirements (Continued)

Early Retirement (from age 55): Members no longer need employer permission to rely early but thepension will normally be reduced substantially No employer costs will apply

Note: If members retire before age 60, they will lose any rule of 85protection.

Flexible Retirement (from age 55): Will operate as before – employer permission still needed but nocosts will apply in any case (again reductions will often besubstantial)


1.5. Additional Contribution Options

AVCs: Unchanged. Prudential is the current provider, but some members have stayedwith 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 tocontributionsExisting ARCs to continue as before.


1.6. Types of leave: Full pay, reduced pay and unpaid

Full pay: Deduct employee and employer contributions as normalas 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.


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 isnot 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 beoffered (although note that members can still use APCs to top uppensions)

(*Unless the member is covered by the Underpin)


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.


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 ofscheme.

• 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.


1.8. Casuals & Variable Workers

For most members, it no longer matters if they are casual orvariable workers as the pension is based on pensionable earnings.

Hence we don’t need to know the hours for these workers in mostcases.

Exception: Members covered by underpin (member as at 01/04/2012, aged 55 or over at that time)


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.


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 percentagesfor most workers*

*Apart from a handful of members who could be covered by theunderpin e.g.re-joiners who members as at 1 April 2012 andover 55 at this date with a gap of no more than 5 years)


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 theunderpin (born before April 1957)

Opting in and out: Forms needed as before

50/50 <-> Main Section: We don’t need to know the date ofchange – just earnings when they leave or at the end of year.


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 noncontractual 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.


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 noncontractual 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.


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.


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.


4. Further Guidance

• Employers’ guide and new forms/spreadsheets onwww.wiltshirepensionfund.org.uk

• Employers’ site – include HR/Payroll Guide:www.lgpsregs.org

• Members’ site (in addition to our website)www.lgps2014.org

Contact MeE: [email protected]: 01225 713612


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 [email protected] 718054


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)


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.


Any Questions?

lgps2014 - employer presentation

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