1. Local Government Pension Scheme Employer Pensions Forum 5th December 2013

2. Admissions to the Pension Fund

3. Steven Tagg Treasury & Investments
Senior Accountant –
Pension Fund
Business Strategy and Support

4. Local Government Pension Scheme (LGPS) - preserving pension provision when transferring employees from a LGPS employer to the private sector.

5. Two main messages
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 –

6. 1) Use a broadly comparable pension scheme
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This option may be withdrawn from 1 April Waiting announcement from DCLG.

7. 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.

8. 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

9. 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.

10. 2) Admission of the private company to the LGPS
Based on fully funded at the start but the new company is responsible for any future deficit.
New questionnaire – electronic and hard copy

11. 2) Admission of the private company to the LGPS
Pension regulations re Question 4
Answer any queries from the Questionnaire by , not by completing a new Questionnaire.
Supporting documents no longer necessary to submit.
Precedent admission agreement and Bond.

12. 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

13. 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

14. 2) Admission of the private company to the LGPS
Admission not necessary for:
- Schools converting to Academies
- New Parish Councils
- New Scheduled Bodies

15. Two main messages
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

16. Any Questions?

17. Changes To Local Government Pension Scheme from April 2014
Barbara Cheatle
Deputy Pensions Manager

18. LGPS 2014 – Overview 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

19. 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

20. Employers – 2014 key requirements
Look at:
Separate records per job
2 sections to the scheme (main & 50/50)
Pensionable Pay
Assumed Pensionable Pay
Employee contributions
Buying extra pension

21. 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

22. 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

23. 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

24. 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

25. 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

26. Current rates and Bands
Full Time Equivalent Pensionable Pay
Headline/Gross Contribution
Contribution after tax relief*
Up to £13700
5.5%
4.40%
£ £16100
5.8%
4.64%
£16101-£20800
5.9%
4.72%
£ £34700
6.5%
5.20%
£ £46500
6.8%
5.44%
£ £87100
7.2%
4.32%
More than £87100
7.5%
4.50% or 4.13%
* The net contribution rates are approximate and depend on individual circumstances

27. New bands and rates Pensionable Pay Headline /Gross Contribution
Contribution after tax relief
Up to £13500
5.5%
4.40%
£ £21000
5.8%
4.64%
£ £34000
6.5%
5.20%
£ £43000
6.8%
5.44%
£ £60000
8.5%
5.10%
£ £85000
9.9%
5.94%
£ £100000
10.5%
6.30%
£ £150000
11.4%
6.84%
£ or more
12.5%
6.88%
* The net contribution rates are approximate and depend on individual circumstances

28. 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

29. 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

30. 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)

31. Employers – other consideration
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

32. LGPS 2014
New option from April 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

33. Example of Basic Calculation
Pensionable Pay
Pension
Year 1
£10,000
£204.08
Year 2
Year 3
Year 4
Year 5
Total
£ per year
However, pay does normally rise over time and there is inflation to consider, so we will see how revaluation is needed to ensure the pension does not lose its value

34. Example of Revaluation
Pensionable Pay
Pension
Revalued Pension
Year 1
£10,000
£204.08
£229.70
Year 2
£223.01
Year 3
£216.51
Year 4
£210.20
Year 5
Total
£ per year
Compared with the basic calculation the first 4 years of pension built up have been increased to take account of inflation (assumed 3% each year)

35. Example of pay rises before Revaluation
Pensionable Pay
Pension
Revalued Pension
Year 1
£10,000
£204.08
£229.70
Year 2
£10,500
£214.29
£234.16
Year 3
£11,000
£224.49
£238.16
Year 4
£11,500
£234.69
£241.73
Year 5
£12,000
£244.90
Total
£ per year
In this example both increases in pensionable pay and inflation have been built into the calculation of the member's pension.

36. Employer points to note
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

37. Thank you for listening
Any Questions?
Thank you for listening

38. 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 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 -

39. Steven Tagg Treasury & Investments
Senior Accountant –
Pension Fund
Business Strategy and Support

40. 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

41. Number of Employers in the Kent Pension Fund
31 March 1989 = 76

42. Number of Employers in the Kent Pension Fund
31 March 2013= 496

43. Graph
Increase in Employers since 1989

44. Different types of Employers
Local Authorities
Scheduled Bodies
Academies
Schools
Admitted Bodies
Colleges
Parish Councils
Housing Associations

45. 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.

46. Quote your Oracle employer number in
The subject line of any to us
Quote your Oracle employer number in subject line of any

47. Quote your Oracle employer number on the Pen 4/1 form
Quote your Oracle employer number here

48. Quote your Oracle employer number
In the narrative of your electronic payments
When sending any cheques (only acceptable with our prior agreement)

49. Quote your Employer number, our invoice number and the amount of the invoice in the subject line of any to us.
£10.00
Quote our invoice number and the amount of the invoice in the subject line

50. Interest may be applicable in the late payment of contributions
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!

51. Update us when your contact details alterBy
By telephone

52. Treasury & Investment Developments
Suggestions welcome

53. Sharepoint

54. New contribution process

55. Any Questions?

56. Early Payment of Deferred Benefits

57. Early payment of Deferred Benefits
When a member leaves the pension scheme and is not entitled to a refund or immediate payment of benefits they are awarded a Deferred Benefit
The Pensions Section send a Deferred Benefit Statement each year to the member until either the benefit is transferred to another scheme or the benefit is in payment.
Both the award letter and the statement explain when the member is entitled to take the benefit but there are two circumstances when the pension can be brought into payment early. These are:
- Early Payment - Employers Consent (aged 55+)
- Early Payment - Ill Health

58. Early payment of Deferred Benefits
The process has changed to bring it in line with that for other benefits
Former members continue to request early payment in writing to the Pensions Section
The request continues to be forwarded to the Employer for a decision
In the letter to the Employer there is less information regarding the decision making but there is a link to more information on our website
The actual decision making process for the Employer has not changed
The next stage of the process is the biggest change…

59. Early payment of Deferred Benefits
If the member is successful in their request the employer will now follow a process similar to that of any other retirement.
- They will a send a letter to the former member, an estimate of benefits and forms to be completed and returned to them
- A complete package of information will then be forwarded by the employer to the Pensions Section
If the member is unsuccessful in their request
- The employer will now send a ‘Decline’ letter to the former member explaining the situation and including a paragraph regarding the IDRP process
- A copy of the decline letter along with a DB Early Payment notification form must then be forwarded to the Pensions Section.
We hope this new process will standardise the procedure for all employers

60. Any Questions?

61. Pension Website Employers Employees
To access this you need
user name – your 5 digit employer number
password – as notified by the pension section.
If you are unsure what this is then please contact your liaison officer.
In order to comply with the requirements of the Data Protection Act 1998, it is now our policy to password protect any documents that are sent electronically and may contain personal information. 
The password that we will be using for each employer will be the same as your 8 digit PIN/Website password.
Ensure that all persons who need to know, are aware how to log onto the website.
Employees

62. Home Page

63. News Page

64. Going Forward Looking to complete forms via a webpage
Website will be kept up to date with changes in procedures/forms.
Looking to complete forms via a webpage
This is under development
Any suggestions for information that you would like to see on the website then let me know.

65. Any Questions?