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Local Government Pension Scheme Employer Pensions Forum 5 th December 2013. Admissions to the Pension Fund. Steven Tagg Treasury & Investments. Steven Tagg Senior Accountant – Pension Fund Business Strategy and Support. Email: steve.tagg@kent.gov.uk.
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Local Government Pension SchemeEmployer Pensions Forum5th December 2013
Steven TaggTreasury & Investments Steven Tagg Senior Accountant – Pension Fund Business Strategy and Support Email: steve.tagg@kent.gov.uk
Local Government Pension Scheme (LGPS) - preserving pension provision when transferring employees from a LGPS employer to the private sector.
This must be considered at the absolute outset and included in any procurement process. • Employees must not be transferred until either of the following two options have been fully completed – Two main messages
Need a Certificate of Broad Comparability from an Actuary. • Employees leave the LGPS and join the pension scheme of the private company. • Our actuary and the actuary of the private company agree ‘bulk transfer’ terms • This option may be withdrawn from 1 April 2014. Waiting announcement from DCLG. 1) Use a broadly comparable pension scheme
LGPS Regulations 2013 (SI 2013/2356) laid before Parliament on the 19 September 2013. • Further LGPS transitional regulations are to be introduced and are yet to be laid before Parliament. • Government Actuary’s Department announcement 27 November 2013. 1) Use a broadly comparable pension scheme
2) Admission of the private company to the LGPS Allows time to scrutinise the application and minimise risk to the Pension Fund. Delegation of Authority
2) Admission of the private company to the LGPS • Data Capture – our actuary then calculates the employer contribution rate and Bond, for the private company to pay and provide.
Based on fully funded at the start but the new company is responsible for any future deficit. • New questionnaire – electronic and hard copy 2) Admission of the private company to the LGPS
Pension regulations re Question 4 • Answer any queries from the Questionnaire by email, not by completing a new Questionnaire. • Supporting documents no longer necessary to submit. • Precedent admission agreement and Bond. 2) Admission of the private company to the LGPS
Financial Health check. • Bond reviewed annually. • Employer contribution rate revised every three years – next valuation as at 31 March with any new rates from 1 April 2014 2) Admission of the private company to the LGPS
Reviewing underlying contract • Name Changes • Second generation transfers • Recovery of Pension Fund costs from Letting Authority 2) Admission of the private company to the LGPS
Admission not necessary for: • - Schools converting to Academies • - New Parish Councils • - New Scheduled Bodies 2) Admission of the private company to the LGPS
This must be considered at the absolute outset and included in any procurement process. • Employees must not be transferred until either of the above two options have been fully completed Two main messages
Changes To Local Government Pension Scheme from April 2014 Barbara Cheatle Deputy Pensions Manager
Annual Pension Account • 1/49th accrual • CPI revaluation • Pension age linked to State Pen Age (min 65) • Voluntary retirement from 55 • Rule of 85 retained (60+) • Protection for pre 2014 service and underpin for those within 10 years of NRA at April 2012 LGPS 2014 – Overview
P/T worker contribution rates assessed on actual pensionable pay (not FTE) – so many will pay less • 50/50 option • Can purchase additional pension via APC or AVC • Note: • Existing pensioner and deferred members - no change LGPS 2014 – Overview
Look at: • Separate records per job • 2 sections to the scheme (main & 50/50) • Pensionable Pay • Assumed Pensionable Pay • Employee contributions • Buying extra pension Employers – 2014 key requirements
Separate records per job • Same as for auto enrolment • 2 jobs = employee rates separately assessed • Except for single employment relationships • Separate cumulative pensionable pay (incl. APP) and employee contributions per job - accuracy of pension build up dependant on correct cumulative pensionable pay Employers – 2014 key requirements
2 sections to the scheme (main & 50/50) • Automatically back in main section from next available pay period: • if goes to nil pay due to sickness and still on nil pay for that reason at beginning of next pay period (watch out for nil pay s/t sickness) • after re-enrolment date unless member elects otherwise Employers – 2014 key requirements
Pensionable Pay • Same definition as now except that non-contractual overtime and additional hours are now pensionable • Benefit accrues each Scheme year based on pensionable pay received* in that year (not pensionable pay due for the Scheme year) • * See next slide re APP Employers – 2014 key requirements
Assumed Pensionable Pay • Accrues during sickness on reduced or no pay (incl. s/t periods), child related leave (ordinary and paid add’l), reserve forces service leave – (rationale) • Based on last complete 3 months or 12 weeks pensionable pay (excluding all lump sums) • Regular pensionable lump sum payments may be added to APP by employers • APP increased by CPI if goes over 2 scheme years • Watch out for – KIT and Stringer days Employers – 2014 key requirements
Employee contribution rates • New bands with some increases in rates • Table may change before April • Which band? – up to employers but... • Part time staff in band based on actual pay • Review on material change in pay Employers – 2014 key requirements
Employee / Employer contributions • Employee pays contributions on pensionable pay received (not on APP – except reserve forces service leave) • Employer pays contributions on pensionable pay received but • Employer pays contributions on APP during child related leave and sick leave whilst on reduced or no pay Employers – 2014 key requirements
Buying extra pension • Full and shared cost APC replaces ... - ARCs - Augmentation • And used to buy pension ‘lost’ due to: - Strike – at full cost to member - Child related leave (unpaid add’l) – shared cost - Unpaid leave – shared cost (no compulsory first 30 days) • AVCs Employers – 2014 key requirements
Payments due for period pre April 2014 paid after March 2014 – contribution rates as at ?old or new rate and old definition? BUT don’t drop pensionable pay into post 2014 cumulatives • Requirement for hour changes going forward for underpin cases & those purchasing old style added yrs • Requirement for breaks in service • Pre 2014 definition of Final Pay at date of leaving for pre 2014 membership and underpin cases – calculate as now (but looking to simplify) Employers – 2014 key requirements
Pre 2014 definition of Final Pay at each Scheme year end for pre 2014 membership and underpin cases – employer to supply FTE? (but looking to simplify) • Existing added years, ARC and ASBC contracts? • Councillors’ pensions? • TUPE transfers - retain membership of the LGPS – scope and mechanism still to be worked out Employers – other consideration
New option from April 2014 -members can choose to voluntarily draw their benefits on or after age 55 without employer’s consent • Rule of 85 protections will not apply if they choose to take their pension on of after age 55 but before 60 but some employer discretion may be provided LGPS 2014
Consider budget implication of additional hours being pensionable • Consider budget implications for those on reduced or no pay for whom you will need to pay full employer contributions • Employer policies for post 1/4/2014 • Nominated co-habiting partners change to co-habiting partners • Consider those on ‘casual’ or zero hour contracts Employer points to note
Any Questions? Thank you for listening
Local Government Pension Scheme 2014 - Roadshows Additional forums have been arranged to provide information on the new scheme, new procedures, new forms and what records you need to keep. These have been arranged for: Ashford Borough Council - 14 January 2014 Sessions House, Maidstone – 16 January 2014 The Coniston Hotel, Sittingbourne – 21 January 2014 Dartford Borough Council – 23 January 2014 Charlton Place, Canterbury – 4 February 2014 Tunbridge Wells Borough Council – 6 February 2014 Tea and Coffee will be provided from 9:30 with the forum starting at 10.00 to be finished by 13:00 at the very latest. You can book these via the website and I attach a link to our website which includes the booking form for these training sessions - http://www.kentpensionfund.co.uk/i_am_an_employer/forums,_training_and_courses/employer_training.aspx.
Steven TaggTreasury & Investments Steven Tagg Senior Accountant – Pension Fund Business Strategy and Support Email: steve.tagg@kent.gov.uk
Treasury & Investments Team Alison Mings Treasury & Investments Manager Business Strategy and Support Geoff Hall Principal Accountant (Treasury) Business Strategy and Support Sangeeta Surana Senior Accountant- Treasury and Investments Business Strategy and Support Ann Selby Finance Assistant Business Strategy and Support Joseph McKay Kent Accountancy Trainee Business Strategy and Support Anya Gelman Kent Accountancy Trainee Business Strategy and Support
Number of Employers in the Kent Pension Fund 31 March 1989 = 76
Number of Employers in the Kent Pension Fund 31 March 2013= 496
Graph Increase in Employers since 1989
Different types of Employers • Local Authorities • Scheduled Bodies • Academies • Schools • Admitted Bodies • Colleges • Parish Councils • Housing Associations
The Devil is in the detail!Please help us to help you • Ensure any change to your employer contribution rate is made from 1 April 2014.
Quote your Oracle employer number in • The subject line of any email to us Quote your Oracle employer number in subject line of any email
Quote your Oracle employer number on the Pen 4/1 form Quote your Oracle employer number here
Quote your Oracle employer number • In the narrative of your electronic payments • When sending any cheques (only acceptable with our prior agreement)
Quote your Employer number, our invoice number and the amount of the invoice in the subject line of any email to us. £10.00 Quote our invoice number and the amount of the invoice in the subject line
Ensure your pension contributions reach us by the 19th of the following month to which they relate Interest may be applicable in the late payment of contributions 19th of the month!