Local Government Pension Scheme February 2015 Pension Liaison Officers Group (PLOG) Employer Presentation Andy Cunningham Employer Relationship & Fund

Local Government Pension Scheme

February 2015

Pension Liaison Officers Group (PLOG)

Employer Presentation

Andy Cunningham Employer Relationship & Fund Development Manager

Wiltshire Pension Fund


Agenda

1). End of year return

2). Normal Actual/Assumed Pensionable Pay

3). Pension Remuneration

4). Employee and employer contributions

5). Refunds

6). Questions


1. End of year - introduction

• First year that CARE figures are required

• CARE figures will directly determine part of the value of a member’s pension – we rely on employers for accuracy

• Will be more time-consuming this year for employers and us

• Benefit statements deadline of 31 August 2015 (1 month earlier)


1. End of year return brief overview

To be covered separately

To help us estimate if

CARE figures seem

reasonable

To be covered separately



(the following text can be found in full on the spreadsheet)



What do we do with the information return?

We do some basic checks against the data provided to checkthe following:

1). If pay figures significantly differ from expectations

2). If there are members/jobs on the return for whom we have no pension record.

3). If there are members not present on the return who we believe is still part of the fund.

We will then come back with queries where relevant.


2. Normal Actual/ Assumed Pensionable Pay

How to complete this field?A). If the person has been on full pay throughout -> should be

straightforward, as we just need to know the actual pensionable pay for 2014/2015 (or to date left)

B). If they have been on reduced or nil pay Assumed Pensionable Pay (APP) may apply. If it does, remove the reduced pay and replace by a calculation of APP and add to full pay for the rest of the period.

C). If they have been on reduced/nil pay but APP doesn’t apply -> do A.

Tip: If you have a large number of members, identify those who have been on reduced pay and deal with those manually. The rest should be able to completed by running a report.



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.



How do I calculate it? (these notes are on our website)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.

4). Then add this figure to the normal full pay for the year.Note: The total figure should be similarly to what their actual pay wouldhave been if their pay had not been reduced.


3. ‘Pension Remuneration’ for end of year return

What is it used for?

For the purposes of the end of year return, we calculate allmembers’ pre-April 2014 benefits based on the figure youprovide and insert this pension amount into a member’s benefitstatement.

The most accurate figure to provide is by doing a pensionremuneration calculation. However, for the purposes of the endof year return (NOT leavers), you could base it on a member’sgrade figure but in some cases, accuracy will be lost and couldlead to more members querying this.

Note: In all cases, figures, should be based on the pre-April2014 definition of pensionable pay (e.g. excluding noncontractual over-time)


3. Pension Remuneration

How is it calculated? (accurately) - e.g. for leaver information

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

However (for leavers), if either of the two preceding yearsproduce a higher figure than the highest figure should be used.

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


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.



sdfsdf

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


5. Employee and employer contributions

• Provisional contribution rates have been released. • Final ones to be sent around shortly (once confirmed)• Basis will be the same but earnings thresholds will change.

Employee contributions

• A reminder of these will be sent shortly.

• The agreed rates for 2015/2016 and 2016/2017 can be found in the employer’s guide (except for employers who have joined since April 2013, where there will be no change from the current rates)

Employer contributions


Under the 2014 Regs the situation is:

A). Opt-outs within 3 months of joining the schemei). Refund all pension contributions through payroll and re-instate any tax and the full amount of NI contributions

ii). Please notify us over email that you have refunded contributions to the member. We do not need a leaver form in these cases.

…

6. Refunds


B). Opt outs between 3 months and 2years; ANDC). All leavers within 2 years of startingi). Do not refund through payroll.i). Send us a leaver form, ensuring all the relevant details are completed.Note: The member may be entitled to a refund if they meet a number of conditions but we will need to check this first. If a refund is due, we will process the refund

D). Opt outs and leaver, 2 years plusSend us a leaver or retirement form as normal.The member is ineligible to receive a refund.

6. Refunds (cont.)


Any questions?

Documents

Local Government Pension Scheme February 2015 Pension Liaison Officers Group (PLOG) Employer Presentation Andy Cunningham Employer Relationship & Fund