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LGPS 2011 Employer Training. Objectives Understand what changes are being made Know what you have to do to implement them.

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Presentation on theme: "LGPS 2011 Employer Training. Objectives Understand what changes are being made Know what you have to do to implement them."— Presentation transcript:

1 LGPS 2011 Employer Training

2 Objectives Understand what changes are being made Know what you have to do to implement them

3 Areas to be covered New contribution rates What counts as pensionable pay Eligibility to join the scheme Casual employees Buying additional benefits

4 Areas to be covered Employer awards Unpaid leave Multiple employments Ill-health retirements Minimum retirement age

5 Contribution Rates Everyone’s rate changed from Rate to be applied dependent on pensionable pay For part-timers, use full–time equivalent pay to determine rate For term-timers, use full-time, term-time pay to determine rate

6 Contribution Rates April 2011 Salary RangeContribution Rate <£12,9005.5% >£12,900-£15,1005.8% >£15,100-£19,4005.9% >£19,400-£32,4006.5% >£32,400-£43,3006.8% >£43,300-£81,1007.2% More than £81,1007.5%

7 Contribution Rates Final decision on band belongs to employer Example:Member has basic pay of £17,500 and no pensionable extras – rate is 5.9% Member has basic pay of £17,500 and £3,000 bonus – rate is 6.5% Member has basic pay of £17,500 and variable bonus – rate is employer’s decision

8 Contribution Rates Member works 18 hours per week out of 36, part-time pay is £12,000 pa, rate to use is 6.5% (full-time pay is £24,000), membership is recorded as 50% Member works full time week (36 hours) but only 48 weeks per year. Pay received is £17,000, rate to use is 5.9%, membership recorded as 92.31% Member works 18 hours per week out of 36 and 48 weeks per year. Pay received is £8,500, rate to use is 5.9% (full-time, term-time pay is £17,000), membership recorded as 46.15%

9 Contribution Rates Bands increased each year in line with Orders made under Pensions (Increase) Act 1971 Employer’s decision on if and when to review members’ rates Options include: each time pay changes (i.e. promotion during the year), each 1 st April (or when cost of living increase applied), never

10 Contributions: Protected rate Protected 5% rate abolished Phased contribution rates until member matches normal rate Contributions from in accordance with normal rate

11 Contributions: Protected rate Year commencingContribution Rate % % %

12 Pensionable Pay Includes:basic salary Contractual overtime Honoraria/bonus Anything specified in contract as pensionable Not included:non-contractual overtime Travelling allowance or expenses Payment in lieu of holidays Payment in lieu of notice Payment as inducement not to terminate employment

13 Eligibility Last day in scheme must be no later than 2 days before 75 th birthday Must have contract of at least 3 months Effectively excludes some casual employees Contributions can be backdated if contract extended beyond 3 months

14 Casual Employees Mutuality of obligation: if you have work to offer it must be offered to that employee, who must accept New casuals must have 3 month mutual obligation contract to be eligible Current casuals must have mutuality of obligation to remain in scheme

15 Casual Employees 31/0301/04 Member on 01/04? M.O. on  No M.O., worked on  No M.O. worked on

16 Additional Benefits All AVCs and current added years contracts to continue as normal Added years abolished Replaced by additional pension Can buy up to £5,000 p.a. in multiples of £250 Paid for by additional pension contributions To be deducted in same way as added years contributions

17 Employer awards Ability to award up to 10 years extra membership remains New ability to award additional pension Can award up to £5,000 pa in multiples of £250 Paid by lump sum, or additional employer contributions

18 Unpaid leave Regulations have been clarified Contributions for first 30 days of unpaid leave must be paid

19 Multiple Employments Must be treated separately for contribution rates Do not have to be member in all employments

20 Ill-health Retirements 3 tiers of ill-health Dependent on possible recovery to be capable of undertaking “gainful employment” Gainful employment = any job of at least 30 hours per week, for at least 12 months 1 st tier = Very improbable to recover, 100% membership enhancement 2 nd tier = may recover, 25% membership enhancement 3 rd tier = will be capable within 3 years, no enhancement

21 Ill-health Examples Mr Smith, retires aged 44 with no real likelihood of recovery. Enhancement 21 years (100% potential membership between LDS and 65 th birthday) Mrs Jones, retires aged 35 with reduced likelihood of recovery. Enhancement 7 1/2 years (25% potential membership between LDS and 65 th birthday) Mr Alas, retires aged 50 (over 45 on ) with 20 years membership and reduced likelihood of recovery. Enhancement 6 2/3 years because of protections

22 Earliest Retirement Date Increased from age 50 to 55 Ill-health benefits still payable from any age


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