pension liaison officers group 8 th july 2008

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Pension Liaison Officers Pension Liaison Officers GroupGroup

88thth July 2008 July 2008

Presented by Viv Ray, Presented by Viv Ray,

Charlotte Thompson and Charlotte Thompson and

Shirley CuthbertShirley Cuthbert

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AgendaAgenda

New Employers ManualNew Employers Manual Additional Regular Contributions (ARCs) Additional Regular Contributions (ARCs) Stage 1 of Internal Dispute Resolution Stage 1 of Internal Dispute Resolution

Procedure (IDRP) appointed personProcedure (IDRP) appointed person Change to calculation of pensionable Change to calculation of pensionable

remuneration with unpaid leave remuneration with unpaid leave Ill-health Retirement ProceduresIll-health Retirement Procedures

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DEVON PENSION SERVICES

EMPLOYER’S GUIDE

44

DEVON PENSION SERVICESDEVON PENSION SERVICES IndexIndex IntroductionIntroduction1.1. Joining the Pension SchemeJoining the Pension Scheme

1.1 Eligibility to join the Pension Scheme1.1 Eligibility to join the Pension Scheme1.2 Appointment of Staff1.2 Appointment of Staff

Option FormsOption Forms Nominated Cohabiting Partner’sNominated Cohabiting Partner’s

1.3 Contributions and Pay1.3 Contributions and Pay Pensionable PayPensionable Pay Pension ContributionsPension Contributions Revising contribution bandsRevising contribution bands

1.4 Re-employed members1.4 Re-employed members Deferred BeneficiariesDeferred Beneficiaries PensionersPensioners Previous redundant/efficiency pensionersPrevious redundant/efficiency pensioners

1.5 Administering and Employing Authority responsibilities1.5 Administering and Employing Authority responsibilities

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DEVON PENSION SERVICESDEVON PENSION SERVICES2.2. Changes during employmentChanges during employment

2.1 Changes in employment2.1 Changes in employment Hour changesHour changes Reduced pay due to sicknessReduced pay due to sickness Unpaid leaveUnpaid leave Maternity/Paternity/Adoption leaveMaternity/Paternity/Adoption leave Other absencesOther absences Change of nameChange of name Change of pension contribution percentageChange of pension contribution percentage Opting Out of Pension SchemeOpting Out of Pension Scheme

2.2 Purchase of Additional Benefits2.2 Purchase of Additional Benefits Additional Regular Contributions (ARCs)Additional Regular Contributions (ARCs) Additional Voluntary Contributions (AVCs)Additional Voluntary Contributions (AVCs) Employer OptionsEmployer Options

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DEVON PENSION SERVICESDEVON PENSION SERVICES33 Leaving EmploymentLeaving Employment

3.1 Rule of 853.1 Rule of 853.2 Early Leaver Options3.2 Early Leaver Options

Deferred BenefitDeferred Benefit Transfer out of Pension rightsTransfer out of Pension rights

3.3 Retirements3.3 Retirements EstimatesEstimates Strain costStrain cost Award of additional membership and/or pensionAward of additional membership and/or pension

3.4 Outsourcing3.4 Outsourcing

3.5 Death in Service3.5 Death in Service3.6 Pensionable pay for benefit calculations3.6 Pensionable pay for benefit calculations

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DEVON PENSION SERVICESDEVON PENSION SERVICES44 Additional InformationAdditional Information

4.1 Divorce4.1 Divorce

4.2 Pension Contribution returns4.2 Pension Contribution returns MonthlyMonthly AnnuallyAnnually

4.3 Valuation and Investments4.3 Valuation and Investments

4.4 Employer Discretions4.4 Employer Discretions

4.5 Internal Resolution Dispute Procedure4.5 Internal Resolution Dispute Procedure Stage 1 (Appointed person)Stage 1 (Appointed person) Stage 2Stage 2

55 Available FormsAvailable Forms

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DEVON PENSION SERVICES

EMPLOYER’S GUIDE

Presented by Viv Ray

Deputy Pensions ManagerTel. No: (01392) 688211

Email: [email protected]

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Ill HealthIll Health

Reminder of the 1997 regulationsReminder of the 1997 regulations 2007 regs – what employer’s have to 2007 regs – what employer’s have to

determine……determine…… Tier oneTier one Tier twoTier two Tier threeTier three

Deferred membersDeferred members Overview of processOverview of process What’s changedWhat’s changed

1010

1997 Regulations1997 Regulations

Employer had to determine…Employer had to determine…

Is the member leaving employment by reason of Is the member leaving employment by reason of being permanently incapable of discharging being permanently incapable of discharging efficiently the duties of that employment or any efficiently the duties of that employment or any other comparable employment with his other comparable employment with his employing authority because of ill health or employing authority because of ill health or infirmity of mind or body?’infirmity of mind or body?’

1111


Comparable employmentComparable employment Contractual provisions as to capacity are Contractual provisions as to capacity are

same or differ only to the extent of being same or differ only to the extent of being reasonable. Place of work /remuneration reasonable. Place of work /remuneration /terms etc do not differ substantially/terms etc do not differ substantially

Permanently incapable Permanently incapable member will, more likely than not, be member will, more likely than not, be

incapable, until, at the earliest, his 65th incapable, until, at the earliest, his 65th birthday birthday

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1997 Regulations1997 RegulationsTotal MembershipTotal Membership Total after Total after

enhancementenhancement

Less than 5 yearsLess than 5 years Actual total Actual total membership onlymembership only

Between 5 and 10 Between 5 and 10 yearsyears

Total membership Total membership doubleddoubled

Between 10 and 13 1/3 Between 10 and 13 1/3 yearsyears

Total membership Total membership increased to 20 yearsincreased to 20 years

Over 13 1/3 yearsOver 13 1/3 years Total membership Total membership increased by 6 2/3 increased by 6 2/3 yearsyears

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Employers to determine….Employers to determine…. Is the length of total membership at least Is the length of total membership at least

three months (Regulation 5 (1)(a) and 20(1);three months (Regulation 5 (1)(a) and 20(1);

Will the employment be terminated on the Will the employment be terminated on the grounds that the member’s ill-health or grounds that the member’s ill-health or infirmity of mind or body renders him infirmity of mind or body renders him permanently incapable of discharging permanently incapable of discharging efficiently the duties of his current efficiently the duties of his current employment (Regulation 20(1)(a))employment (Regulation 20(1)(a))

1414


Does the member have a reduced likelihood Does the member have a reduced likelihood of obtaining gainful employment (whether in of obtaining gainful employment (whether in local government or elsewhere) before his local government or elsewhere) before his normal retirement age (Regulation 20(1)(b)).normal retirement age (Regulation 20(1)(b)).

If the answers to all three questions is ‘Yes’, If the answers to all three questions is ‘Yes’, member entitled to ill health pensionmember entitled to ill health pension

1515


Employer must now decide…Employer must now decide…

Is there no reasonable prospect of the Is there no reasonable prospect of the member obtaining gainful employment before member obtaining gainful employment before reaching his normal retirement age?reaching his normal retirement age?

Is the member incapable of obtaining gainful Is the member incapable of obtaining gainful employment within three years, but is likely to employment within three years, but is likely to be able to do so before reaching his NRA?be able to do so before reaching his NRA?

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Is the member capable of recovering Is the member capable of recovering sufficiently from his incapacity to enable him sufficiently from his incapacity to enable him to be capable of obtaining gainful employment to be capable of obtaining gainful employment within three years of leaving local government within three years of leaving local government employment?employment?

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Permanently incapablePermanently incapable Member will, more likely that not, be incapable Member will, more likely that not, be incapable

until, at the earliest, his 65until, at the earliest, his 65 thth birthday birthday Gainful employmentGainful employment

Paid employment for not less than 30 hours in Paid employment for not less than 30 hours in each week for a period of not less than 12 each week for a period of not less than 12 months. months.

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Reasonable periodReasonable period Three yearsThree years

ObtainingObtaining Looking at capacity of individual, taking into Looking at capacity of individual, taking into

account the medical effects of the condition account the medical effects of the condition that gave rise to the ill health retirement. Non that gave rise to the ill health retirement. Non medical factors such as the general medical factors such as the general availability of gainful employment should not availability of gainful employment should not be consideredbe considered

1919


Reduced likelihoodReduced likelihood Policy objective to incentivise a return to work. Policy objective to incentivise a return to work.

Therefore no ill health retirement benefit who Therefore no ill health retirement benefit who those who have been judged to be capable those who have been judged to be capable immediately of obtaining employment. Ill immediately of obtaining employment. Ill health retirement benefit (all tiers) only health retirement benefit (all tiers) only available to those whose likelihood of available to those whose likelihood of obtaining gainful employment, because obtaining gainful employment, because permanent incapacity, is reduced permanent incapacity, is reduced

2020


The First Tier – 100% prospective service The First Tier – 100% prospective service enhancement, payable for life, no reviewenhancement, payable for life, no review Qualifying period of at least 3 monthsQualifying period of at least 3 months Based on certificate, employer decides to Based on certificate, employer decides to

terminate employment on grounds of terminate employment on grounds of permanent incapacity and because of that permanent incapacity and because of that condition, they have a reduced likelihood of condition, they have a reduced likelihood of obtaining any gainful employmentobtaining any gainful employment

No reasonable prospect of member obtaining No reasonable prospect of member obtaining any gainful employment before NRAany gainful employment before NRA

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The Second Tier – 25% prospective service The Second Tier – 25% prospective service enhancement, payable for life, no reviewenhancement, payable for life, no review Qualifying period of at least 3 monthsQualifying period of at least 3 months Based on certificate, employer decides to terminate Based on certificate, employer decides to terminate

employment on grounds of permanent incapacity and employment on grounds of permanent incapacity and because of that condition, they have a reduced because of that condition, they have a reduced likelihood of obtaining any gainful employmentlikelihood of obtaining any gainful employment

Likely that member will be capable of obtaining gainful Likely that member will be capable of obtaining gainful employment before NRA but there is no reasonable employment before NRA but there is no reasonable prospect of this happening within three years of prospect of this happening within three years of leaving.leaving.

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2007 Regulations2007 Regulations The Third Tier – accrued service only, The Third Tier – accrued service only,

payable for maximum of 3 years, subject payable for maximum of 3 years, subject to review.to review. Qualifying period of at least 3 monthsQualifying period of at least 3 months Based on certificate, employer decides to Based on certificate, employer decides to

terminate employment on grounds of terminate employment on grounds of permanent incapacity and because of that permanent incapacity and because of that condition, they have a reduced likelihood of condition, they have a reduced likelihood of obtaining any gainful employmentobtaining any gainful employment

Is capable of obtaining gainful employment Is capable of obtaining gainful employment within three years of leavingwithin three years of leaving

2323


The Third TierThe Third Tier Member must inform employing authority if he Member must inform employing authority if he

obtains employmentobtains employment 18 month review18 month review

Employing authority make inquiries on current Employing authority make inquiries on current employment statusemployment status

Benefits discontinued if now in gainful Benefits discontinued if now in gainful employment employment

Employing authority may recover payments Employing authority may recover payments made for any period in which member had made for any period in which member had been in gainful employmentbeen in gainful employment

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If not in gainful employment, authority shall If not in gainful employment, authority shall obtain a further certificate from an IRMPobtain a further certificate from an IRMP• Still incapable of gainful employment – benefits Still incapable of gainful employment – benefits

continue continue • Move member to tier 2. Based on initial medical Move member to tier 2. Based on initial medical

condition and new benefits start on date of this condition and new benefits start on date of this second determinationsecond determination

• Member now capable of gainful employment – Member now capable of gainful employment – benefits discontinue.benefits discontinue.

In all third tier cases, benefits payable for In all third tier cases, benefits payable for maximum of 3 years.maximum of 3 years.

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ProtectionsProtections 20 (15) – determinations made before 120 (15) – determinations made before 1stst

October 2008, member’s get the better of October 2008, member’s get the better of the old/new service enhancementsthe old/new service enhancements

20 (13) – existing 1997 members aged 45 20 (13) – existing 1997 members aged 45 or over on 31/03/2008, who fall into tier 1 or over on 31/03/2008, who fall into tier 1 or 2 only, get the better of the old/new or 2 only, get the better of the old/new service enhancementsservice enhancements

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Deferred membersDeferred members

When did they leave?When did they leave? Pre April 1998Pre April 1998

• Entitlement to unreduced benefits (no Entitlement to unreduced benefits (no enhancements) if permanently incapable of enhancements) if permanently incapable of discharging duties of that employment and discharging duties of that employment and ‘any employment’. IRMP to determine date ‘any employment’. IRMP to determine date of incapacity, benefits payable from this of incapacity, benefits payable from this date. Can commute on serious ill health.date. Can commute on serious ill health.

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Between April 1998 – April 2008Between April 1998 – April 2008• Entitled to unreduced benefits (no Entitled to unreduced benefits (no

enhancements) if permanently incapable of enhancements) if permanently incapable of discharging duties of that employment and discharging duties of that employment and also ‘any employment’. Payable from date also ‘any employment’. Payable from date of certificate. Can commute on serious ill of certificate. Can commute on serious ill health.health.

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From 1From 1stst April 2008 April 2008• Entitled to unreduced benefits (no Entitled to unreduced benefits (no

enhancements) if permanently incapable of enhancements) if permanently incapable of discharging the duties of that employment discharging the duties of that employment and condition likely to prevent member and condition likely to prevent member obtaining employment before 65 or for at obtaining employment before 65 or for at least 3 years (i.e. tier 1 & 2). Payable from least 3 years (i.e. tier 1 & 2). Payable from date of certificate. Cannot commute on date of certificate. Cannot commute on serious ill healthserious ill health

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Employer processEmployer process

Send member to IRMPSend member to IRMP Obtain certification of permanent Obtain certification of permanent

incapacity and reduced likelihood of incapacity and reduced likelihood of obtaining gainful employmentobtaining gainful employment

Terminate employmentTerminate employment Ill health pension commencesIll health pension commences Tier 1 & 2 payable for lifeTier 1 & 2 payable for life Tier 3 requires reviewTier 3 requires review

3030

Employer processEmployer process 18 months – ascertain if member in gainful 18 months – ascertain if member in gainful

employment employment Yes – stop pension and recovery any overpaymentsYes – stop pension and recovery any overpayments No – send member to IRMPNo – send member to IRMP

IRMP reportIRMP report Now capable of gainful employment – stop pensionNow capable of gainful employment – stop pension Still incapable – continue paying benefitsStill incapable – continue paying benefits Now deemed tier 2 – pension increased and now Now deemed tier 2 – pension increased and now

payable for lifepayable for life

3 years – stop pension3 years – stop pension

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What’s changedWhat’s changed

Comparable employment – now ‘reduced Comparable employment – now ‘reduced likelihood of obtaining gainful employment’likelihood of obtaining gainful employment’

Enhancements based on ‘reduced likelihood…’ Enhancements based on ‘reduced likelihood…’ instead of service based enhancementsinstead of service based enhancements

Enhancements paid to eligible members with Enhancements paid to eligible members with more than 3 months (was 5 years)more than 3 months (was 5 years)

Benefits subject to review (third tier)Benefits subject to review (third tier) Serious ill health commutation removed, no Serious ill health commutation removed, no

longer need to establish if member has less than longer need to establish if member has less than 1 year to live1 year to live

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Devon Pension ServicesDevon Pension Services

Estuary HouseEstuary HousePeninsular ParkPeninsular ParkRydon LaneRydon LaneEXETEREXETERwww.devon.gov.ukwww.devon.gov.uk/pensions/pensionsEmail – Email – [email protected]@devon.gov.ukViv Ray – 01392 688211Viv Ray – 01392 688211Charlotte Thompson – 01392 688228Charlotte Thompson – 01392 688228Shirley Cuthbert – 01392 688218Shirley Cuthbert – 01392 688218

pension liaison officers group 8 th july 2008

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