LPFA Pensions UpdateA newsletter for LPFA employers

London Pensions Fund Authority

January 2014

Contact us

If you would like more information regarding the services we offer or would like to discuss your requirements with us in more detail then please contact us on:

Tel: 020 7369 6000www.lpfa.org.ukwww.yourfund.org.uk

Issue Highlights:►Yourfund

►LGPS2014Workshops

►March 2014 FRS17

►ValuationUpdate

►EmailaddressesandABS

►NewLGPS2014

►MonthlyReturns

►LGPCBulletin110

WATCH THIS SPACE!

We are currently reviewing the www.yourfund.org.uk website and are hoping to give this a fresh look & feel later in 2014! Here is an early indication of how it may look:

In addition to this we are also reviewing the functionality of the site and will look to introduce some new features to help you with the administration of the Scheme. Watch this space!

All valuation results have now been issued to employers in the fund. The results package includes details outlining LPFA’s approach to contribution rate setting based on the new ‘risk based approach’.

Throughout the valuation process we are looking to engage and work with employers to reach agreement on the employer contributions payable for the next 3 years and would ask that you contact us to resolve any issues that either require clarification or are causing you concern.

Results at Fund LevelIn terms of funding levels, the general position has improved with the Fund now funded at 91% compared to 83% at the 2010 valuation. It’s important to note that this is at whole fund level, and each employer’s results will be different depending on their experience over the last three years and their categorisation under this new approach.

Results at Employer LevelYou will be aware that over the past three years the LPFA has been carrying out annual reviews of the strength of the employer covenant for all bodies in the Fund. These annual reviews have become increasingly important in informing our Board’s desire to move towards a risk-based strategy which considers the risk profile of each organisation and categorises them appropriately.

The decision has been made at this valuation to use varying discount rates across the categories to mitigate the relative risk to the fund and help closed employers address their pension liabilities in advance of any potential future cessation event.

There are a number of employers who are potentially facing significant increases in the overall level of contribution due. These are principally those employers who do not currently have security in place or tax raising abilities in order to prevent their liabilities falling on other fund employers.

If you have closed to new members, deficit contributions need to be recovered over a shorter period of time from a decreasing number of scheme members.

We have, however been mindful of the difficult economic climate that many of our employers are operating in and, having considered both employer and funding risk together, adjusted many rates to take account of both affordability and sustainability (with consideration for the Pension Regulators draft guidance, although this currently only relates to private sector pension schemes) where we feel that those proposed by the actuary could cause financial difficulty.

Please note that proposed results will not necessarily take account of any ongoing negotiations or proposals being considered by LPFA and these issues can be taken forward at valuation meetings.

Finalising, Discussing and Confirming Employer Contribution RatesAn appointment system will be in place to enable employers to meet with LPFA if they wish to discuss their results and options. Meetings and telephone conferences may be booked by contacting Helen Connor on 020 7369 6067. Email and written correspondence remain available should you prefer and wherever possible an alternative proposal should be made available in writing to LPFA for our consideration before any meeting.

We will endeavour to resolve any proposed changes to employer categorisations by 28 February 2014. The discussion period will close on 12 March to allow the Rates and Adjustments Certificates (confirming your contribution requirement for the three years commencing 1 April 2014) to be prepared by the statutory deadline of 31 March 2014.

If we have not received your signed confirmation by this date the default option on the summary/reply form will be imposed by the actuary and the Rates & Adjustment Certificate you receive will be legally binding.

Valuation Update

E-mail addresses & online ABS

As you will be aware, ABS’s this year will be issued via our member self-service portal http://www.yourpension.org.uk/LPFA/In-The-Scheme/My-Online-Records.aspx

We are still collecting member e-mail addresses, so if you haven’t already, please can you provide us with this information securely via the www.yourfund.org.uk website. Alternatively, please can you encourage your membership to register for member self-service. We currently have 50% of member e-mail addresses!

If you would like to discuss this further please contact:

John CrowhurstPension Services Manager020 7369 6038john.crowhurst@lpfa.org.uk

March 2014 FRS17 exercise

We will be writing to all employers by 31 January 2014 outlining the costs and timescales around the March 2014 FRS17/IAS19 process.

Following discussions with our actuary, we expect reports to be available to issue by 30 April 2014. It is also essential that your auditors highlight any questions or queries they are aware of prior to 7 March 2014 when we will submit all data to our actuary.

Please note that documentation must be completed and returned to LPFA by 7 March 2014 at the latest in order to guarantee a report under the standard annual arrangements. If you have any questions, please contact Jody Ann-Grant on 02073692693.

Should a differing option be negotiated with LPFA, a revised results package will be provided for your completion. Where discussions and consultations have not been completed by 12 March it will be possible to make reference to this in any Certificate issued, confirming the impact on future contribution rates if agreement is subsequently reached within a specific timescale.

To acknowledge your results, confirm any payment decisions and to avoid the imposition of the default payment option indicated on the Results Summary, please complete and return the summary/reply form by 12 March 2014.

Our overall aim remains to agree steps as appropriate with individual employers to mitigate or improve your overall covenant position, with a view to agreeing a sensible and workable route map for implementation of such arrangements and any increase in contributions required.

We look forward to working with you to successfully conclude your part of the valuation.

Tony WilliamsEmployer Services Team Manager020 7369 6237tony.williams@lpfa.org.uk

Valuation Update continued . . .

New LGPS 2014

In the first week of January we received an apologetic email from the DCLG explaining that it had not been possible to release the Transitional Regulations in the timeframe originally envisaged. They were however able to share with us as trusted partners a ‘near final’ draft of the regulations on the condition they were not circulated or published. I can confirm that there was nothing in these draft regulations that was not expected and the final regulations are due to be released shortly.

Keep your eye out for a . . . Scheme Change Notification EmailUnder Disclosure Regulations we are obliged to inform all active scheme members of the changes to the scheme and plan to notify all active members in February. We will also be asking employers to assist by passing on an email designed to compliment our message.

Electronic Online FormsNew scheme online forms will be available for the 1 April 2014. These will enable employers to provide us with details of employees joining, leaving, changing hours and moving between 50:50 and full scheme.

Paying into the LGPS before April 2014?Watch the video here

LGPS 2014 Workshops

Neil Lewins (LPFA Technical Specialist) hosted Pension Workshops recently. These workshops described the new scheme changes in more detail and and explained the auto enrolment process.

The presentation slides and the hand outs are available from our website http://www.lpfa.org.uk/Employers/EMPLOYER-NEWS.aspx

Thank you to all those who attended. We hope you found the workshop helpful and informative.

Neil LewinsTechnical Specialist020 7369 6066neil.lewins@lpfa.org.uk

Also . . . the www.lgpsregs.org website provides employers with useful guides and publications such as HR and Payroll Guides to LGPS 2014

PostersThe next two posters in the series are attached here. We would be grateful if you could place copies around your office where they are likely to be seen by members and we hope you are finding these useful in communicating the message to members.

Monthly ReturnsAs you know, from 1 April 2014 the Scheme is changing, which also means there is a requirement for employers and their payroll providers to record and report on certain information to the Administering Authority. We have developed a monthly return template which includes all of the information you need to record and report to us from 1 April 2014. The return will not only ensure you are LGPS 2014 compliant, but it will also manage a large proportion of the data requirements outlined by the Pensions Regulator.

The template has been developed in line with the payroll & HR guidance issued by the Local Government Association which can be found at the following link http://www.lgpsregs.org/. We recommend that you refer to this guidance when preparing your returns.

If you haven’t already, please now begin working with your Payroll providers to ensure you are ready to record and report on this information from 1 April 2014. The facility to upload the data to us will be available from May 2014 where we will carry out a number of data quality checks and updates to member records including:

• Creation of any missing joiners• Updates to member records for missing changes of hours• Notification to you of any missing leavers• Updates to member records for movements to and from the 50/50 section of the Scheme

As always, we are happy to support you with these changes and are happy to meet with you to discuss this further. Our recommendation is that you submit all of the data required from the return on a monthly basis to ensure we are carrying out the full range of checks throughout the year. This will significantly reduce queries raised at year end and give you peace of mind that your data is in excellent condition. From 1 April 2014, your payroll providers must also be able to record separate records for each job – more information can be found within the FAQ document which will be issued to you shortly.

Submission of the monthly return is likely to become compulsory from 1 April 2015 for employers with over 50 active members and will be a requirement outlined within the Pensions Administration Strategy.

Please note: • All of our online forms will be live and ready for LGPS 2014 from 1st April 2014• The year-end file specification in respect of data for 2013/14 will be the same as last year. The monthly return template is to be used for data from 1st April 2014 and will be used for 2014/15 year end• An ‘auto format’ version of this template will be issued in due course.

If you wish to discuss these points with us or have any other queries regarding the Monthly Return Template or the process as a whole, please do not hesitate to contact us

John CrowhurstPension Services Manager020 7369 6038john.crowhurst@lpfa.org.uk

Local Government Pensions Committee (LGPC) Bulletin 110

The Local Government Pensions Committee (LGPC) has released their latest bulletin at the start of the year, number 110. The document itself can be found here. Below is a summary of what the bulletin contains.

The Pensions Bill 2013/14The Bill continues its progress through the House of Lords with its Second Reading having occurred on 3rd December. The debate included the LGA’s position on the ways that the cessation of contracting out and resulting increases in employer and employee National Insurance contributions can be mitigated to reduce the impact on the LGPS. Further meetings to discuss this matter were arranged between HM Treasury, LGA, DCLG, DWP and members of the House of Lords.

Autumn StatementGeorge Osborne delivered the Autumn Statement on 5th December which covered several pension related areas: State Pension Age (SPA), the State Pension and Individual Protection 2014 (IP14).

SPA: the Pensions Bill contains legislative proposals for regular reviews of SPA and it is possible that the increase of the SPA to 68 could be brought forward to the mid 2030s with a further increase to 69 possible in the late 2040s.

State Pension: Basic State Pension will rise by £2.95 per week in April.

IP14: this will be introduced, allowing people protection from the 2014 reduction in the Lifetime Allowance (LTA). Those with IP14 will retain a maximum LTA of £1.5 million with legislation to implement this being included in the Finance Bill 2014.

Consultation on draft LGPS (Offender Management) Regulations 2014DCLG have released a consultation regarding those employees affected by the transfer of probation services to the National Probation Service or to a Commercial Rehabilitation Company and covers the continued provision of the LGPS for those members. The consultation closes on 10th February.

More details can be found here

There is also information surrounding LGPS 2014 and Auto Enrolment.

Jacqui LawrenceTechnical Officer020 7369 2688jacqui.lawrence@lpfa.org.uk