1 lgps 2014 essex pension fund march 2014 matt mott
Post on 18-Dec-2015
228 Views
Preview:
TRANSCRIPT
1
LGPS 2014
Essex Pension FundMarch 2014Matt Mott
2014 Scheme Overview
50/50 section
APC
AVC
Flexible retirement
Protections
Pensionable Pay & Contributions
Employer Responsibilities & Discretions
2
LGPS 2014
CARE Scheme (Career Average Revalued Earnings)
Accrual rate of 1/49th - It’s better
Annual revaluation by CPI
Normal retirement age (NRA) is State Pension Age (SPA)◦ Find your SPA at www.gov.uk/calculate-state-pension
Voluntary retirement from age 55 (without employer consent)
Flexible retirement From age 55 (with employer consent)
2014 Scheme Overview
50/50 section
Benefits accrued prior to 1st April 2014 protected
Protection for those within 10 years of retirement in April 2012
Actuarial reductions for ER will differ for different periods of membership
Pensionable pay is actual pay
Vesting (refund) period increased to 2 years
Average member contributions of 6.5%
Cost envelope of 19.5%
2014 Scheme Overview
5
Contributions bands Band pensionable pay range
for an employmentContribution rate for that employment
1 Up to £13,500 5.5%
2 £13,501 to £21,000 5.8%
3 £21,001 to £34,000 6.5%
4 £34,001 to £43,000 6.8%
5 £43,001 to £60,000 8.5%
6 £60,001 to £85,000 9.9%
7 £85,001 to £100,000 10.5%
8 £100,001 to £150,000 11.4%
9 £150,001 or more 12.5%
All other ancillary benefits to remain the same
Additional Pension Contributions (APC)
Pension accounts
Automatic Aggregation
Link to Public Service schemes
AVC
Benefit Regulations Received September 2013
6
2014 Scheme Overview
CARE ExamplePay Accrual Pension CPI Total
Pension
Year 1 £20,000 1/49 £408.16 n/a £408.16
Year 2 £22,000 1/49 £448.98 n/a
£408.16 £12.65 £869.79
Year 3 £24,000 1/49 £489.80 n/a
£869.79 £45.23 £1404.82
Employee pays ½ contributions
Benefits accrue at 1/98th
All other ancillary benefits to remain the same
Temporary arrangement◦ Employees put in main section on AE re-
enrolment date
Cannot begin or continue APC◦ Unless for “lost pension”
8
50/50 section
During periods of nil pay sick leave 50/50 section members must be re-enrolled into main section
Employers must maintain full contributions
9
50/50 section
Spouses benefits
Lump sum death grant
Death benefits
Co-habiting partners
Civil partners
Maximum £6,500
Monthly or lump sum contribution
A scheme member benefit only
Must cease if employee elects for 50/50 section
Also shared cost APC◦ Contribution split must be agreed
11
APC
Buy extra pension
Used to buy “lost pension”◦ Authorised unpaid leave◦ Child related unpaid leave◦ Strike*
If election is made within 30 days of return to work:◦ Employee pays 1/3◦ Employer 2/3 (except strike*)
Election after 30 days of return to work:◦ Full cost paid by employee
12
APC
Current 2014 regulations◦ Contributions up to 100% of pay after LGPS contributions
and NI◦ Tax free cash 100% of AVC fund◦ Added to 25% LGPS lump sum = 55% tax charge
Intention (probable amendment) 2014 regulations◦ Contributions up to 100% of pay after LGPS contributions
and NI◦ Tax free cash restricted to 25% of fund◦ Added to 25% LGPS lump sum = Nil tax charge
Pre 1 April AVC administered by 2008 regulations
13
AVC
From age 55 with employer consent
Actuarial reduction or strain may apply
Employees can choose to receive payment:◦ of all benefits◦ of all pre 2008 benefits◦ of all, part or none post 2008 benefits◦ of all, part or none post 2014 benefits
Plus “additional benefits” in accordance with actuarial guidance issued by the Secretary of State
14
Flexible Retirement
All membership accrued pre 1 April 2014 protected
LGPS 2008 regulations apply including:◦ 60th & 80th
◦ If applicable lump sums◦ Normal retirement age 65◦ Link to final salary at eventual retirement
Members in receipt of a pension or a deferred benefits are unaffected by LGPS 2014
15
Protections - Pre 2014 membership
Protections can be lost if 2008 deferred benefits are aggregated with current 2014 membership if employee has had a break in public sector pension schemes of more than 5 years
16
Protections - Pre 2014 membership
17
18
Active members on 31 March 2008
Were within 10 years of NRA on 1 April 2012
Receive pension on or after NRA
Do not have more than 5 year break in membership of any public sector pensions
The underpin is only paid if the 2008 scheme (had it continued) provides a better pension than LGPS 2014
19
Protections - The Underpin
Is so complicated I am not going to try and explain it!!
Example: 58 year old member Rule of 85 satisfied Can retire and immediately receive pension
Will there be an actuarial reduction? Yes,11% of pension and 6% of lump sum!
20
Protections – Rule of 85
Why?
Age plus membership in whole years = 85
Who has protection? = In before 1 October 2006
This protection continues from April 2014
*Does not apply to* new option of drawing your pension from age 55-60
21
Protections – Rule of 85
Exercise discretion to waive the reduction ◦ If so you will have a strain cost
Employers must publish a policy
Essential to read the HR and Payroll guides
22
Protections – Rule of 85
Actual pensionable pay (PP)◦ Including overtime◦ Does not include expenses
Assumed Pensionable Pay (APP)◦ What the employee would have earned◦ Replaces notional pay◦ See HR/Payroll guides
1/2 employee contribution rate if 50/50 elected
Employer contributions always paid in full
23
Pay & Contributions
Final Pay (2008 definition)◦ Required for all pre 2014 membership◦ 10 year Underpin◦ Also PT hours and average hours◦ Added years and CoP
Will you know who these apply to?
Therefore, we require them for all employees!!
Contribution bands will be revalued every 3 years only
Employers to review employee contributions ◦ Annually in April◦ When material change occurs ie promotion
24
Pay & Contributions
To provide starter details to the Fund within 1 month◦ By spreadsheet
To request within 3 months of employee start date employment and LGPS histories
Inform employee:◦ Contractual enrolment◦ Auto Enrolment◦ Contribution rate payable◦ They can opt out ◦ Where to find scheme information ie website!
25
Employer Responsibilities
Upon 50/50 section election provide employee with impact of pension loss
Upon AE re-enrolment all 50/50 section members must be put into main section
For periods of nil pay sick leave 50/50 section members must be put into main section
Inform employees where to find the opt out form◦ But not to supply it!!
Opt out with less than 3 months membership, refund contributions and notify the Fund
26
Employer Responsibilities
Opt out with over 3 months membership, send the Fund normal leaver forms
APC for “lost pension” employers must:◦ Enable employee to make election within 30 days
Should ideally:◦ inform employee of the amount of lost pay ◦ inform employee of the amount of lost pension
To provide data on spreadsheets (do not amend) each month◦ Same data fields for all employees
To provide end of year data (correct) by date specified by Fund, usually mid April
27
Employer Responsibilities
28
50 50 switch form
29
Main switch form
30
Join the scheme form
31
Opt out form
All leaving details must be provided within 1 month of date of leaving:
All pay figures
Periods of membership◦ Main Section◦ 50/50 Section
Contribution amounts◦ Main Section◦ 50/50 Section
32
Employer Responsibilities
The draft pay form contains up to 9 different values
Required for all employees
33
Pay Form
34
35
Employers must formulate, publish and keep under review policy statements
The Fund should receive these by 30 June
Five main areas:◦ Voluntary funding of additional pensions (SCAPC)◦ Awarding additional pension via whole cost APC◦ Switching on 85 year rule for those 55-60◦ Flexible retirement◦ Waiving of actuarial reductions
A list of discretions will be provided by the Fund
36
Discretions & Policies
www.lgps2014.org www.lgpsregs.org
Please read the HR & Payroll Guides Contains essential information!
www.essexpensionfund.co.uk
email: pensionenquiries@essex.gov.uk telephone: 01245 431912
37
More Information
Thank you for listening
Essex Pension Fund 38
top related