1 / 79

TEESSIDE PENSION FUND

TEESSIDE PENSION FUND. Pensionable Pay. Pensionable Pay. Meaning of pensionable pay Pensionable or not Final pay - general Full time & part time employees Final pay – BIS Last 365 days Reductions & restrictions Certificate of Protections Pre 2008 & post 2008 Final pay - fees

lilal
Télécharger la présentation

TEESSIDE PENSION FUND

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. TEESSIDE PENSION FUND

  2. Pensionable Pay

  3. Pensionable Pay • Meaning of pensionable pay • Pensionable or not • Final pay - general • Full time & part time employees • Final pay – BIS Last 365 days • Reductions & restrictions • Certificate of Protections • Pre 2008 & post 2008 • Final pay - fees • Unusual calculations

  4. Pensionable Pay • Meaning of pensionable pay • salary • wages • fees & other payments • for members own use in respect of their employment • - pensionable emoluments • specified in their contract of employment

  5. Pensionable Pay • Pensionable Pay does not include • - Payments for non-contractual overtime • any travelling, subsistence or other allowance in respect of expenses incurred in relation to the employment • any payment in consideration of loss of holidays • any payment in lieu of notice to terminate their contract of employment • any payment as an inducement not to terminate his employment before the payment is made • the amount of any supplement paid by the Environment Agency in recognition of the difference in contribution rates between members of the principal civil service pension scheme and the Scheme • - Any payment by way of compensation for the purposes of achieving equal pay in relation to other employees

  6. Pensionable Pay • Workshop 1

  7. Pensionable Pay • Pensionable or not? • Mr Workaholic commences employment with you and his first pay packet is comprised of many elements. • £2,500.00 Salary • £ 250.00 Performance-related Pay • £1,000.00 Cash equivalent of lease car • £ 500.00 Contractual Overtime • £ 296.75 Travelling Expenses • £ 428.75 Subsistence expenses • £ 14.00 First Aid Allowance • £ 154.25 Enhancement for weekend working • £ 850.00 Non-contractual overtime • £5,993.75

  8. Pensionable Pay • Pensionable or not? • Mr Workaholic commences employment with you and his first pay packet is comprised of many elements. • £2,500.00 Salary Yes £ 250.00 Performance-related Pay Yes £1,000.00 Cash equivalent of lease car No • £ 500.00 Contractual Overtime Yes • £ 296.75 Travelling Expenses No • £ 428.75 Subsistence expenses No • £ 14.00 First Aid Allowance Yes • £ 154.25 Enhancement for weekend working Yes • £ 850.00 Non-contractual overtime No • £5,993.75

  9. Pensionable Pay • Next month he receives a similar pay packet but with an extra £1,000.00 ‘honoraria’ payment. • Is the honoraria pensionable?

  10. Pensionable Pay • Next month he receives a similar pay packet but with an extra £1,000.00 ‘honoraria’ payment. • Is the honoraria pensionable? • Depends on what the honoraria is in respect of: • Lieu of duties Yes • Anything in the exceptions list No • (i.e. extra hours that couldn’t put through)

  11. Pensionable Pay • In a number of months time his final pay packet includes £2,500.00 payment in lieu of notice and £1,000.00 payment in lieu of holidays not taken. • Are either of these payments pensionable?

  12. Pensionable Pay • In a number of months time his final pay packet includes £2,500.00 payment in lieu of notice and £1,000.00 payment in lieu of holidays not taken. • Are either of these payments pensionable? • NO

  13. Pensionable Pay • Final Pay • - year ending on day member ceases to be an active member • - best of the last three years • - part time – use a single comparable whole time employment • - disregard any absences due to illness or injury • Pensionable Pay • - calculated as final pay, where a year is 365 days • - leap year 366 days only if date of leaving is 29th February • - less than one year’s service, convert to 365 days • i.e. Member employed from 1st March to 21st September • on a salary of £18,000.00 • so if pay for period (205 days) was £10,109.59, • the pensionable pay would be • £10,109.59/205 x 365 = £18,000.00

  14. Pensionable Pay • If the pay rates are as follows: 01/12/2007 to 31/03/2008 = £ 26,067.00 • 01/04/2008 to 30/11/2008 = £ 26,835.00 • You need to calculate the period 01/12/07 to 31/03/2008 at the rate of £26,067 and the period 01/04/2008 to 30/11/2008 at the rate of £26,835 • 01/12/2007 to 31/03/2008 gives a number of days of 121 days • 01/04/2008 to 30/11/2008 gives a number of days of 244 days • 365 days • Pensionable pay • 01/12/07 to 31/03/08 is 121 / 365 x £26,067.00 = £ 8641.39 • 01/04/08 to 30/11/08 is 244 / 365 x £26,835.00 = £17,939.01 • Pensionable Pay £26,580.40 • The pensionable pay you calculate will always fall • between the first and last salaries.

  15. Pensionable Pay • Final Pay/Pensionable Pay – Why 365 days? • Strictly speaking the final pay should done in accordance with the way in which a person is paid. • - employers pay a salary/wage • - paid monthly i.e. 1/12th • - paid lunar i.e. every 28 days • - 52 weeks • - 1/260th of the annual salary for each working day • Allows many variations • i.e. leaving on the 12th of a month • - September would be 12/30ths, October would be 12/31sts • - or 12/28ths

  16. Pensionable Pay • Mrs Hutton • Retires at age 60 on 29 September 2010. She is monthly paid and her rates of pay over the last year were: 01 April 2009 £ 16,440.00 p.a. • 01 April 2010 £ 17,400.00 p.a. • Final/Pensionable pay • 30 September 2009 to 31 March 2010 • £16,440.00 x 6/12 = £8,220.00 • £16,440.00/12 x 01/30 = £ 45.67 • 1 April 2010 to 29 September 2010 • £17,400.00 x 5/12 = £7,250.00 • £17,400.00/12 x 29/30 = £1,401.67 • Pensionable Pay = £16,917.34

  17. Pensionable Pay • Mrs Hutton • Retires at age 60 on 29 September 2010. She is monthly paid and her rates of pay over the last year were: • 01 April 2009 £ 16,440.00 p.a • 01 April 2010 £ 17,400.00 p.a. • Worked on days rather than months gives the following • Final/Pensionable pay • 30 September 2009 to 31 March 2010 £16,440 x 183/365 = £ 8,242.52 • 1 April 2010 to 29 September 2010 £17,400 x 182/365 = £ 8,676.16 • Pensionable Pay = £16,918.68

  18. Pensionable Pay • Workshop 2 • Full Time Employee Leaving Date 31 December 2003 • Salary Details 01.01.2003 £13,884.00 • 01.04.2003 £14,391.00 • Calculate the annual pensionable pay:

  19. Pensionable Pay • Workshop 2 • Full Time Employee Leaving Date 31 December 2003 • Salary Details 01.01.2003 £13,884.00 • 01.04.2003 £14,391.00 • Calculate the annual pensionable pay: • 01.01.03 - 31.03.03 90/365 x 13,884.00 = £ 3,423.45 • 01.04.03 - 31.12.03 275/365 x 14,391.00 = £10,842.53 • = £14,265.98

  20. Pensionable Pay • Workshop 2 • Full Time Employee Leaving Date 03 March 2004 • Salary Details 04.03.2003 £15,264.00 • 01.04.2003 £16,194.00 • 22.09.2003 £16,718.00 • Calculate the annual pensionable pay:

  21. Pensionable Pay • Workshop 2 • Full Time Employee Leaving Date 03 March 2004 • Salary Details 04.03.2003 £15,264.00 • 01.04.2003 £16,194.00 • 22.09.2003 £16,718.00 • Calculate the annual pensionable pay: • 04.03.03 - 31.03.03 28/365 x 15,264.00 = £ 1,170.94 • 01.04.03 - 21.09.03 174/365 x 16,194.00 = £ 7,719.88 • 22.09.03 - 03.03.04 163/365 x 16,718.00 = £ 7,465.85 • = £16,356.67

  22. Pensionable Pay • Workshop 2 • Full Time Employee Leaving Date 15 January 2004 • Salary Details 16.01.2003 £13,884.00 plus £100 First Aid Allowance • 01.04.2003 £14,391.00 plus £100 First Aid Allowance • Calculate the annual pensionable pay:

  23. Pensionable Pay • Workshop 2 • Full Time Employee Leaving Date 15 January 2004 • Salary Details 16.01.2003 £13,884.00 plus £100 First Aid Allowance • 01.04.2003 £14,391.00 plus £100 First Aid Allowance • Calculate the annual pensionable pay: • 16.01.03 - 31.03.03 75/365 x (13,884.00+100) = £ 2,873.42 • 01.04.03 - 15.01.04 290/365 x (14,391.00+100) = £11,513.40 • = £14,386.82 • OR • 16.01.03 - 31.03.03 75/365 x 13,884.00 = £ 2,852.88 • 01.04.03 - 15.01.04 290/365 x 14,391.00 = £11,433.94 • = £14,286.82 + 100 = £14,386.82

  24. Pensionable Pay • Full time & Part time employees • Benefit regulation 1 defines a whole time employee as • ‘an employee whose contract of employment provides’ • That he is such an employee for the scheme • that his contractual hours are not less than the number of contractual hours for a person employed in that employment on a whole time basis • Benefit regulation 7(3) part-time members accrue membership as an appropriate fraction of the duration of membership they have. • Benefit regulation 7(4) states ‘the numerator of that fraction is the number of contractual hours during the part-time service and its denominator is the number of contractual hours of that employment if it were on a whole-time basis’

  25. Pensionable Pay • Straight forward, simple definition • School crossing patroller’s whole-time equivalent hours are 7.5 per week • Therefore a part timer working 5 hours per week for 6 years at a rate of £6.00 per hour would have a pensionable pay of 6 x 7.5 x 52.14 = £2,346.30 and pensionable service of 6 x 5/7.5 = 4 years. • This would give a pension of 4/60 x 2,346.30 = £156.42 p.a. • Transferred to a cleaning post of 5 hours per week where the whole-time equivalent hours are 37 at a rate of £6.00 per hour. Pensionable pay becomes 6 x 37 x 52.14 =£11,575.08. • The same service already accrued would give a pension of • 4/60 x 11,575.08 = £771.67 p.a.

  26. Pensionable Pay • Straight forward, simple definition • Therefore for administrative purposes the whole-time equivalent of all part-time employment is 37hours. • The service is therefore recorded as ??.??/37.00 • The pensionable pay is calculated as £? X 37 x 52.14.

  27. Pensionable Pay • Hours & Pay proportionality • Mrs Red works whole-time on a salary of £10,000.00 plus £2,000.00 enhancement for weekend working. • In one year she would contribute £660.00 (5.5% of £12,000.00) • After 10 years membership, Mrs Red would receive a benefit of • 10 x 1/60 x12000 = £2,000.00 p.p. pension

  28. Pensionable Pay • Now if we take Mrs White & Mrs Blue who work the same job as Mrs Red but on a part-time basis. Both work 18.5 hours per week, but Mrs Blue does all the weekend work and receives all of the weekend enhancement. • In one year, Mrs White would contribute £275.00 (5.5% of £5,000.00) • In one year, Mrs Blue would contribute £385.00 (5.5% of £7,000.00) • Regulation 8 states ‘In the case of part-time employment, the final pay is the pay which would have been paid for a single comparable whole-time employment.’

  29. Pensionable Pay • If we take this statement literally, the whole-time equivalent pay would be £12,000.00 • So after 10 years Mrs White would get a benefit of • 5 x 1/60 x £12,000 = £1,000.00 p.a. • Similarly, • After 10 years Mrs Blue would get a benefit of • 5 x 1/60 x £12,000 = £1,000.00 p.a.

  30. Pensionable Pay • Is this fair? • Mrs White would have paid £2,750.00 in contributions over the 10 yrs • Yet Mrs Blue would have paid £3,850.00 in contributions over the 10 yrs • I.e. Mrs Blue paid in 40% more • More Logical • If Mrs White’s whole-time equivalent pay was £10,000.00 (a 37 hour working week without weekend enhancement. • Mrs White’s benefit would be 5 x 1/60 x £10,000 = £833.33 p.a. • Is Mrs Blue’s whole-time equivalent pay still £12,000.00? ( a whole-time post with weekend enhancements), • Mrs Blue’s benefit would be 5 x 1/60 x £12,000 = £1,000 p.a. • Is this fair? • Mrs Blue is receiving 20% more in benefit, • but has paid 40% more in contributions.

  31. Pensionable Pay • Would it be fairer to say that the whole-time equivalent for a half-timer with one weekend enhancement is one whole-timer with two. • Mrs Blue’s whole-time equivalent pay would be £14,000.00. • Her benefit would be 5 x 1/60 x £14,000 = £1,166.67 p.a. • From a fund’s point of view • They paid Mrs White £833.33 and Mrs Blue £1,166.67, a total of £2,000.00 (equal to Mrs Red’s benefits) • in return for contributions of £2,750.00 from Mrs White and £3,850.00 from Mrs Blue, a total of £6,600.00 (equal to Mrs Red’s contributions) • From the member’s point of view • Mrs Blue has paid 40% more in contributions than Mrs White and has received 40% more in benefits than Mrs White

  32. Pensionable Pay • Summary

  33. Pensionable Pay • However • Could it then be claimed that the whole time equivalent for Mrs Blue is £14,000.00, thereby moving her into the next contribution band. • Mrs Blue would therefore pay 5.8% of £7,000.00 being £406.00. • An extra £210.00 over 10 years in the fund’s coffers.

  34. Pensionable Pay • Consider another conundrum • Mrs Green worked along side Mrs Red until the last year, when she reduced to exactly half time working the weekends. She receives a salary of £5,000.00 plus the weekend enhancement of £2,000.00. • Should her pension be: (a) 9.5 x 1/60 x £14,000.00 = £2,216.67 or • (b) 9.5 x 1/60 x £12,000.00 = £1,900.00 • If (a) Mrs Green would receive more pension than Mrs Red! – effectively the first 9 yrs have been increased in value by 16% • (i.e. based on £14,000 instead of £12,000) • Is (b) mathematically correct! – effectively Mrs Green’s benefits are 9.5/10ths of Mrs Red’s. • However, Mrs Green has paid a contribution in her final year that is nearly 60% of Mrs Red’s.

  35. Pensionable Pay • Benefit regulation 8 (3), in describing final pay states: • ‘in the case of part-time employment, the final pay is the pay which would have been paid for a single comparable whole-time employment’. • To calculate the final pay for a part-timer working 30 hours per week would be relatively simple, using the actual pay received in the final year and multiplying by 37/30. • So an example for a person working 30 hours per week and receiving the following pay: 01/12/2007 to 31/03/2008 = £21,135.41 • 01/04/2008 to 31/03/2008 = £21,758.11 • You would use the whole time equivalent • 01/12/2007 to 31/03/2008 = £26,067.00 (£21,135.41 / 30 hours x 37 hours) • 01/04/2008 to 30/11/2008 =£ 26,835.00 (£21,758.11 / 30 hours x 37 hours)

  36. Pensionable Pay • Hourly Rates: • 01/12/2007 to 31/03/2008 = £ 9.56 per hour • 01/04/2008 to 30/11/2008 = £ 10.28 per hour • The annual salaries would be • 9.56 x 37 x 52.14 = £18,442.96 • 10.28 x 37 x 52.14 = £19,831.97 • The pensionable pay would therefore be • 01/12/07 to 31/03/08is121 / 365 x £18,442.96 = £ 6113.97 • 01/04/08 to 30/11/08is244 / 365 x £19,831.97 = £13,257.54 • Pensionable Pay£19,371.51

  37. Pensionable Pay • Workshop 3 • Calculate the whole-time and part-time Pensionable Pay details for the following part time employee: • Leaving Date 15.2.2004 hours worked are 10 per week • Salary Details • 16.02.2003 Part-time annual pay £3,322.70 • 01.04.2003 Part-time annual pay £3,422.43

  38. Pensionable Pay • Workshop 3 • Calculate the whole-time and part-time Pensionable Pay details for the following part time employee: • Leaving Date 15.2.2004 hours worked are 10 per week • Salary Details: 16.02.2003 Part-time annual pay £3,322.70/10 x 37 = 12,294.00 • 01.04.2003 Part-time annual pay £3,422.43/10 x 37 = 12,663.00 • 16.02.03 – 31.03.03 = 44/365 x 12,294.00 = 1,482.02 • 01.04.03 – 15.02.04 = 321/365 x 12,663.00 = 11,136.50 • Whole-time pensionable pay = £12,618.52 • 16.02.03 – 31.03.03 = 44/365 x 3,322.70 = 400.54 • 01.04.03 – 15.02.04 = 321/365 x 3,422.43 = 3,009.86 • Part-time pensionable pay = £3,410.40 • Check: £12,618.52/37 x 10 = £3,410.41

  39. Pensionable Pay • Workshop 3 • Calculate the Pensionable Pay details for the following employee: • Leaving Date 18.7.2003 • Salary Details 19.07.2002 £221.50 per week plus £42.80 bonus per week 01.04.2003 £232.75 per week plus £46.50 bonus per week • N.B. FOR WEEKLY PAID STAFF THE ANNUAL RATE IS CALCULATED BY MULTILPYING THE WEEKS BY 52.14

  40. Pensionable Pay • Workshop 3 • Calculate the Pensionable Pay details for the following employee: • Leaving Date 18.7.2003 • Salary Details 19.07.2002 £221.50 per week plus £42.80 bonus per week 01.04.2003 £232.75 per week plus £46.50 bonus per week • 19.07.02 – 31.03.03 = 256/365 x (221.50 + 42.80 x 52.14 = 13,780.60) = 9,665.30 • 01.04.03 – 18.07.03 = 109/365 x (232.75 + 46.50 x 52.14 = 14,560.10) = 4,348.08 • Pensionable Pay = £14,013.38

  41. Pensionable Pay • Term-time members • The original intention of the new look LGPS was that membership and final pay calculations for term-time employees should be pro-rated • Part-timers service is recorded as ??.??/37.00 • To keep uniformity with part-timers, a term-time employee also has the service adjusted, so that the whole time equivalent pay is then used in the calculation of the pensionable pay. • An employee working 37 hours per week for 44 weeks per year would have their membership recorded as 31.22/37.00 ( i.e. 37 x44/52.14) • If the employee’s actual pay was £20,000.00, the final pay for this term-time employee would be grossed-up for benefitcalculations • i.e. £20,000.00 x 52.14/44 = £23,700.00

  42. Pensionable Pay • Part-time, term-time members • A part-time, term-time employee working 20 hours per week for 44 weeks per year would have their membership recorded as 16.88/37.00 (i.e. 20 x 44/52.14) • If the employees actual pay was £10,810.81, the final pay for this part-time, term-time employee would be grossed-up for benefit calculations • i.e. £10,810.81 x 37/20 x 52.14/44 = £23,700.00

  43. Pensionable Pay • Part-time & term-time members • For ease of administering and calculating benefits, Administering authorities should pro-rata the membership and use the whole-time equivalent pensionable pay

  44. Pensionable Pay • Workshop 4 • Calculate the pensionable pay for the following employee: • Leaving Date 18.3.2004 Pay Details • weekly hours weekly contractual • Date wage worked bonus overtime • 19.03.2003 £187.76 37 £16.50 5 hours • 01.04.2003 £194.75 37 £21.25 5 hours

  45. Pensionable Pay • Workshop 4 • Calculate the pensionable pay for the following employee: • Leaving Date 18.3.2004 Pay Details • weekly hours weekly contractual • Date wage worked bonus overtime • 19.03.2003 £187.76 37 £16.50 5 hours • 01.04.2003 £194.75 37 £21.25 5 hours • Hourly rate: 187.76/37 = 5.0746, 194.75/37 = 5.2635 • 19.03.03 – 31.03.03 = 13/365 x (187.76 + [5 x 5.0746] + 16.50 x 52.14) = 426.44 • 01.04.03 – 18.03.04 = 352/365 x (194.75 + [5 x 5.2635] + 21.25 x 52.14) = 12,184.44 • Pensionable pay = £12,610.88

  46. Pensionable Pay • Worked hours & paid hours • Hours/weeks worked are used in the calculation of membership • Hours/weeks paid are used in the calculation of the pensionable pay • Grossed/scaled up to whole time equivalent • Not as straight forward as it might appear!

  47. Pensionable Pay

  48. Pensionable Pay • SICK LEAVE • If a member is absent on sick leave he/she is treated for pension purposes as having received full normal pay. • Where the member works non-cyclical fluctuating hours an average from a previous period can used or a comparison made with another member employed in a comparable employment. • Basic roster hours reduce the level of pension benefits and will not be accepted.

  49. Pensionable Pay • Authorised leave • Reserved forces • Maternity, paternity or adoption leave • Sickness leave • Final pay based on what would have been paid if not been absent • Authorised Leave • Period of leave without pay after first 30 days • Regulation 9 (4) – scaled up pay

  50. Pensionable Pay • Authorised leave • Mr Fickle chooses not to pay contributions for the period 1/10/2008 to 30/11/2008 and leaves on 30/04/2009. Whilst the employee is a member throughout the whole of the final year, they are only entitled to count as active membership 304 days of the last year. So as per regulation 9 (4) the final pay must be scaled-up. • Pay 01/05/2008 £16,500.00 no changes • 01/05/2008 to 30/09/2008 153/365 x 16,500.00 = £ 6,916.44 • 01/10/2008 to 30/11/2008 (61 days for which no contributions were paid) • 01/12/2008 to 30/04/2009 151/365 x 16,500.00 = £ 6,826.03 • = £13,742.47 • Pay = £13,742.47 x 365/304 = £16,500.00

More Related