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Understanding the 2014 LGPS Regulations and Transitional Guidelines for Members

This document outlines the essential regulations for members joining the Local Government Pension Scheme (LGPS) since April 1, 2014. It includes draft transitional regulations addressing existing members, details on pensionable pay, contribution rates, and updates on new member benefits. Key modifications in LGPS 2014 are discussed, such as pension contributions on overtime, employee options for voluntarily drawing benefits, and implications for part-time staff. The document emphasizes the need for precise record-keeping and highlights the impact of employee classifications on pension rights.

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Understanding the 2014 LGPS Regulations and Transitional Guidelines for Members

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  1. Where are we? • - We have the actual regulations for members joining the scheme from 1st April 2014 • - We have draft transitional regulations – this tells us how we deal with existing members • - But we do not have the Government Actuaries Department (GAD) guidance which gives us all the factors for any reductions or costs • So…… LGPS 2014

  2. That is why we are: - Unable to calculate any estimates – we are hoping to be able to resume this mid February if all our testing proves successful - Unable to provide full answers to questions you have raised concerning a members pension entitlement - Mainly concentrating on information you will need to keep and provide us with LGPS 2014

  3. Main Changes to LGPS 2014

  4. Main Changes to LGPS 2014

  5. Main Changes to LGPS 2014

  6. Still require separate records per job • Same as for auto enrolment • more than one job = employee rates separately assessed • Separate cumulative pensionable pay (incl. APP) and employee contributions per job – needs to be accurate LGPS 2014

  7. Definition of Pensionable Pay • Definition as now, except that non-contractual overtime and additional hours are now pensionable • Loss of Earnings Compensation/marked time payment/Protected pay is no longer pensionable in any circumstance • 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 LGPS 2014

  8. Assumed Pensionable Pay (APP) Similar to notional, but calculated using a different method • Accrues during sickness on reduced or no pay (incl. short term periods), child related leave (ordinary and paid additional) and reserve forces service leave • Used for the calculation of Death in Service and Ill health (Tier 1 & 2) enhancements LGPS 2014

  9. Employee contribution rates • New bands, there are now 9 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 LGPS 2014

  10. Contributions • Employee pays contributions on pensionable pay received (not on APP) • Employer pays contributions on pensionable pay received or on the APP during child related leave and sick leave whilst on reduced or no pay LGPS 2014

  11. Buying extra pension • Full and shared cost Additional Pension Contributions (APC) replace ... - 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 (not compulsory first 30 days) • AVCs – can pay 100% for new contracts LGPS 2014

  12. 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 or after age 55 but before 60 but some employer policy discretion may be provided • To be entitled to any immediate payment of a benefit must be aged 55 and over and have two years service. LGPS 2014

  13. Payments due for period pre April 2014 paid after March 2014 – pre 2014 contribution rates and definition applies BUT don’t drop pensionable pay into post 2014 cumulatives • Requirement for hour changes going forward for some members of the scheme • 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 LGPS 2014 – Points to consider

  14. Pre 2014 definition of Final Pay at each Scheme year end - employer to supply WTE • Existing added years, ARC contracts are to continue. • TUPE transfers – retain membership of the LGPS – scope and mechanism still to be worked out • Councillors’ pensions? • Reserved Forces service leave LGPS 2014 – Points to consider

  15. 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 employer contributions on APP • Employer policies for post 1/4/2014 • Nominated co-habiting partners change to co-habiting partners • Consider those on ‘casual’ or zero hour contracts LGPS 2014 – Points to consider

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