local government pension scheme 27 th march 2014 & 2 nd april 2014 lgps2014 - employer...

Local Government Pension Scheme

27th March 2014 & 2nd April 2014

LGPS2014- Employer Presentation

in greater detailAndy Cunningham

Employer Relationship & Fund Development ManagerWiltshire Pension Fund


Agenda

1). Introduction2). Recent Updates since the presentations in Jan 20143). Normal Actual/Assumed Pensionable Pay 4). Annualised Assumed Pensionable Pay5). Pension Remuneration6). New Monthly and Yearly Returns7). Absences8). Questions


1. Introduction

This presentation follows on from the two presentations heldin January, which gave an overview of the main LGPS2014changes.

Aim of this presentation: To provide a bit more detail and explanation on the areasof employer administration which are likely to cause themost difficulty and to enhance employers’ understanding.


2. Recent Updates since the presentations in Jan 2014

• New Employer’s guide, forms and spreadsheets are now online – please use them for all ‘events’ occurring from 1st April 2014.Note: the previous forms are on their for pre-April 2014 events so take care that you select the correct one.

• Final part of the LGPS Regulations arrived on 10/03/14 –

this (and other clarification) has resulted in some changes to the information already provided e.g.- Assumed Pensionable Pay (covered later)- Absences (covered later)- Discretions Policy templates (updated on the website)


3. Normal Actual/ Assumed Pensionable Pay

When do we ask for this?On estimate, leaver and retirement forms

It looks and is explained like this on the form: (the link takes you to the employer’s guide)



What is the idea here?• We regularly need to update our system with actual pay

figures in order to calculate post-April 2014

• We will do this annually but for leavers during the year, we will need to know the figures since the most recent April.

• If the person has been on full pay throughout -> should be straightforward, as we just need to know the actual pay earned since the most recent April

• If they have been on reduced or nil pay Assumed Pensionable Pay may apply.



When does assumed pensionable pay apply?In the following circumstances (only)

• The member is on leave due to sickness or injury and is on reduced contractual pay or no pay;

• The member is on relevant child-related leave (i.e. ordinary maternity, paternity or adoption leave and any paid additional maternity, paternity or adoption leave but NOT unpaid additional maternity leave); or

• The member is absent on reserve forces services leave.


3. Normal Actual/ Assumed Pensionable PayHow do I calculate it?To calculate the Assumed Pensionable Pay for a period of reduced pay,

you need to:1). Calculate the total pensionable pay the person received in the 3

monthly pay periods immediately preceding the period of reduced or nil pay.

2). Determine the average daily pay for the 3 month period (after removing any one-off or non-standard additional payments). The easiest way to do this is to multiple the figure from 1 by 4 and then divide by 365.

3). Multiple up the figure from 2 so that it covers the entire period the member was on reduced or nil pay.

Then add this figure to the normal pay for the year.Or use the Assumed Pensionable Pay calculator



How do I calculate it?



You then need to enter £7410.96 in this field on the form

Note: If there has been no relevant reduction in pay, you don’tneed the calculator and you just enter their actual pay for theperiod


4. Annualised Assumed Pensionable Pay

When do we ask for this?On the death in service form and on the retirement form for illhealth tiers 1 & 2 only.

It looks and is explained like this on the retirement form(slightly different for death in service) The link takes youto the employer’s guide)



How is it calculated?

Example 1:A member dies on 15th August 2014. He is employed asnormal up to the date of death on full pay. His pensionableearnings in the 3 months leading up to 15th August 2014totals £1500.

To calculate the annualised figure: £1500 x 4 = £6000




Example 2:A member dies on 10th November 2015. Due to illness, sheis on reduced pay in the 3 months leading up to 10th

November 2015 with total pensionable earnings of £800 (3mths).Her earnings over the period leading up to the reduction inpay were £1000 per month

Apply normal assumed pensionable pay and then multiply up

Hence £3000 is the last 3 months assumed figure£3000 x 4 = £12000 - the annualised figure




Example 3:A member is dismissed on ill-health tier 2 on the 31st December2014. The member was on half pay in the 4 monthsleading up to the dismissal and on full-time hours before then.The amount of pay before the reduction in pay was £3000 permonth.

Hence, the assumed pensionable pay for the 3 months leadingup to the reduction £9 000

Annualised pensionable pay = £9000 x 4 = £36 000


4. Annualised Assumed Pensionable PayHow is it calculated?

Example 4:A member is dismissed on ill-health tier 1 on the 31st August2014. Due to member’s condition, her part-time percentagechanged from 100% to 50% before the dismissal. Her fulltime pay was £2000 per month on the 3 months leading upcut in hours and £1000 per month thereafter.

Hence, the assumed pensionable pay for the 3 monthsLeading up to the reduction £6 000

Annualised pensionable pay = £6000 x 4 = £24 000

Note: For ill health you ignore relevant reduction in hours, fordeath in service you don’t.


5. Pension Remuneration

When is it required?

On estimate forms, death in service, leaver and retirementforms (if the member has LGPS service before 31st March2014)

Note: it should be calculated on using the pre-April 2014definition of pensionable pay (e.g. excluding non-contractualover-time)


5. Pension RemunerationHow is it calculated?

The general idea is to calculate the average full-timeequivalent pay that applied in the 12 months up until they leftthe Scheme.

However, additional pensionable payments need to be takeninto account and if either of the two preceding 12 monthperiods produce a higher figure, then the highest should beused.

There is also other protections possible covered bycertificates of protection or the average of three years fromthe last 13. We recommend you use our on-line calculator in all caseswhen there is a change of pay during the year


5. Pension Remuneration

Example 1:

Example 1: BasicMember leaves 31st August 2014. In their final year, their FTE Salary history is:

1st Sept 2013 to 31st March 2014 = £350001st April 2014 to 31st August 2014 = £36000

Comment: If the member’s pay decreased in the 3 years leading up to 31st August 2014, you will need to repeat the above calculation for the periods 1st Sept 2011 to 31st August 2012 AND 1st Sept 2012 to 31st August 2013


5. Pension RemunerationExample 2:

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Example 2: With plussageMember leaves 31st August 2014. In their final year, their FTE Salary history is:

1st Sept 2013 to 31st March 2014 = £35000 + 10% plussage = £38 5001st April 2014 to 31st August 2014 = £36000 + 10% plussage = £39 600

Comment: For plussages or other percentage enhancements, it doesn’t matter whether the member is part-time or full-time.



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Example 3: Less than a yearMember leaves 31st December 2014, they worked less than a year. In their final year,

their FTE Salary history is:

1st May 2014 to 31st August = £35 0001st Sept 2014 to 31st December 2014 = £36000

Comment: The calculator will multiply the figure up for you.



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Example 4: Part-time & with a bonusMember leaves 31st August 2014, in their final year, their FTE Salary history is1st Sept 2013 to 31st March 2014 = £350001st April 2014 to 31st August 2014 = £36000They work 50% of full-time and they are paid a bonus (or honorarium) of £1000.The bonus was £2 000 for equivalent full-time staff.

Comment: You need to calculate this as beforeand then add on the full-time equivalent bonus. It could bethat the bonus would be £1000 regardless of the hours inwhich case £1000 would be added instead of £2000

+£2000=£37 419.18


6. New Monthly and Annual ReturnsMonthly Contribution Return

Hopefully, this should be easier to complete as these should be held on the payroll system and

they don’t need to be calculated.


6. New Monthly and Annual ReturnsEnd of Year Return – for first use in 2015

Please provide a unique payroll number per a job As per part 3 of this

presentation! – this will determine the value of benefits

This is required for benefit statements (for pre-April 2014

service)


7. Absences

For trade disputes and other types of unpaid leave such ascareer breaks and unpaid additional maternity leave,members’ have the option of paying Additional PensionContributions.

If they elect to do this with 30 days of returning to work, thiswill be 1/3 funded by the member and 2/3 funded by theemployer.

If they don’t elect to do this within 30 days of returning towork then this would be solely funded by the employee.

Additional Pension Contributions (APCs) – ‘Lost Pension’

Unfortunately, we don’t not have the factors to calculate these at present.


7. Absences

We are yet to finalise the process in this area but our intention is to have the process as follows:

a). If the member does not pay anything back, you don’t need to do anything unless they are born before April 1957 in which case you need to need to complete an unpaid leave notification form.

b). If the member does take out APC, you will need to make the appropriate deductions and complete a form

Again, we don’t know what the deductions should be yet but we will once we do.

What do employers need to do?


Any Questions?

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