1. LGPS 2014 for Employers Terry Edwards Senior Pensions Adviser, LGA and
Delivered today under
licence by:
LGPS 2014 for Employers
Terry Edwards
Senior Pensions Adviser, LGA and
Director, PENtag Ltd
January 2014

2. Ownership and Copyright Notice:
Training delivered by PENtag Limited (a company specialising in pensions training and guidance) using training materials under licence from Local Government Association (LGA).
Materials © 2014 Local Government Association (LGA).
Adapted and reproduced with the kind permission of Local Government Association (LGA).
All rights reserved.
Disclaimer:
These slides are based on the LGPC Secretariat’s understanding of the information available at the time of compilation including the relevant Statutory Instruments governing the Local Government Pension Scheme and associated overriding legislation. They represent the views of the Secretariat and should not be treated as a complete and authoritative statement of the law. You may wish, or will need, to take your own legal advice on the interpretation of any particular piece of legislation. No responsibility whatsoever will be assumed by LGA/PENtag for any direct or consequential loss, financial or otherwise, damage or inconvenience, or any other obligation or liability incurred by anyone relying on information contained herein.

3. TODAY’S AGENDA
Scheme overview
Impact on employers

6. LGPS 2014 – Scheme Overview
CARE scheme
1/49th accrual
CPI revaluation

7. But run like an account:
Year 1 £20000/ = £
Year 2 £20,800/49 = £ (£ x 1.04) = £
Year 3 £21,632/49 = £ (£ x 1.04) = £1,324.41
Year 4 £22,497/49 = £ (£1, x 1.04) = £1,836.51
Year 5 £23,397/49 = £ (£1, x 1.04) = £2,387.46
Each year “actual” pensionable pay is divided by 49 (or 98 if in 50/50 section)
That’s it! (although there is some nitty-gritty later……..)

8. LGPS 2014 – Scheme Overview More employee contribution bands / rates
- P/T worker contribution rates assessed on actual
pensionable pay (not FTE) – so many will pay less
- Higher paid F/T pay more
50/50 option
Pay half, get half (employer contributions payable in full)
Death benefits retained in full
Short-term option
Can purchase additional pension via APC or AVC

9. LGPS 2014 – Scheme Overview
Pension age linked to State Pen Age (min 65)
Scheme open to age 75 (actuarial increase)
85 year rule retained (automatically at 60+)
2 year vesting period
Flexible retirement, redundancy, efficiency from 55
Ill health – slight change in wording – new IH certs
Voluntary retirement from age 55

10. LGPS 2014 – Scheme Overview Voluntary retirement from 55+
Member’s choice – no employer consent needed
85 year rule applies if draw benefits at 60+
85 year rule doesn’t apply if draw before 60 BUT
- employer can agree to apply 85 year rule to the pre 1/4/14
benefits (subject to min red’n to age 60)
- no 85 year rule on the post 31/3/14 benefits
- employer could agree to waive reduction on the pre 1/4/14
benefits on compassionate grounds (at cost to employer)
- and / or waive all, some or none of the reduction on post
31/3/14 benefits (at cost to employer)

11. LGPS 2014 – Scheme Overview Protection
Protection for pre 2014 service – still final salary and old NPA – regs 8 and 10 apply regardless of when pay cut occurs
Active members get
Past service based on final pay
Future service based on CARE
Final salary protection can be lost if break in active membership of public sector scheme of more than 5 years and aggregates
Note: Existing pensioner and deferred members - no change

12. LGPS 2014 – Scheme Overview Underpin Active 31/3/12
Within 10 years of old NRA on 1/4/12
No break of more than 5 years in active membership of public service pension scheme
Underpin kicks in at date of cessation or old NRA, if earlier (actuarial increase after new NRA)
Compare pension would have built up in 2008 Scheme post 31/3/14 with pension would have had in full section of 2014 Scheme

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

14. Employers – 2014 other considerations
Look at:
Supplying final pay and details of breaks, etc
End of year data / data on leaving
Discretions
Outstanding issues
Communications and support

15. Employers – 2014 key requirements
Who can join
New starters, opting in / out, automatic enrolment – no change from 2008 Scheme, except <3 contract becomes member
- On automatic enrolment date if eligible jobholder
- On opting in
- On first day of pay period following extension of contract to
3+ months
LGPS is auto-enrolment scheme for eligible jobholders entitled to membership of LGPS
Opt out within 3 months = refund via payroll

16. Employers – 2014 key requirements
Separate records per job
Same as for auto enrolment
2 jobs = employee rates separately assessed
Except for single employment relationships
Unique ID per job
Important - separate cumulative pensionable pay (incl. APP) and employee / employer contributions per job - accuracy of pension build up dependant on correct cumulative pensionable pay
Care need with employees paid via timesheet claim

17. Employers – 2014 key requirements
2 sections to the scheme (main & 50/50)
New starters + optants in + auto-enrolled join main section
Can elect for 50/50 (and back to main) per job – no limit
50/50 – Ee conts halved, Er conts in full
Applies from next available pay period
Employer to give info about effect on benefits
Cumulative pensionable pay and employee conts for each section (employer conts can be aggregated)

18. 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 at beginning of next pay period (watch out for nil pay short-term sickness)
After employer’s automatic re-enrolment date (regardless of category and even if opted for 50/50 in last 12 months)
unless member elects otherwise

19. Employers – 2014 key requirements
2 sections to the scheme (main & 50/50)
On move to 50/50 section:
Employee whole cost APCs must stop (unless paid to cover strike)
Shared cost APCs must stop (unless paid to cover absence)
No impact on any AVC / SCAVC

20. 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, not FTE
- Review each April and on material change in pay
- Could do.....? New starters?
Employer must notify employee of rate from April 2014 and upon any change to rate (plus date from which rate will be applied)

21. Employers – 2014 key requirements
indicative
Current
Actual Pensionable Pay
Gross rate
FTE Pensionable Pay
Up to £13,500
5.5%
Up to £13,700
£13,501 - £21,000
5.8%
£13,701 - £16,100
£21,001 - £34,000
6.5%
£16,101 - £20,800
5.9%
£34,001 - £43,000
6.8%
£20,801 - £34,700
£43,001 - £60,000
8.5%
£34,701- £46,500
£60,001 - £85,000
9.9%
£46,501- £87,100
7.2%
£85,001- £100,000
10.5%
More than £87,100
7.5%
£100,001 - £150,000
11.4%
More than £150,000
12.5%
Although the Regulations currently say the bands are to be increased each April by PI, the plan is to amend the Regulations to provide that the bands will be reviewed following each triennial valuation to maintain an average contribution from employees of 6.5%

22. Employers – 2014 key requirements
Pensionable Pay
Same definition as now except
- non-contractual overtime (incl. excess hours) is pensionable
- any pay paid by employer whilst on reserve forces service
leave is not pensionable
- any pay paid by employer as consideration for loss of future
pensionable pay is not pensionable

23. Employers – 2014 key requirements
Pensionable Pay
Benefit accrues each Scheme year based on pensionable pay received in that year (other than pay received whilst on reserve forces service leave, or on relevant child related leave (ordinary and paid add’l), or on sick leave on reduced pay), plus APP, not pensionable pay due for the Scheme year
Payments due for period pre April 2014 paid after March 2014 – apply 2008 Scheme employee contribution rate to 2008 Scheme pensionable pay BUT don’t drop pensionable pay into post 2014 cumulatives

24. Employers – 2014 key requirements
Assumed Pensionable Pay
Accrues during sickness on reduced contractual or no pay (incl. s/t periods), reduced/no pay during relevant child related leave (ordinary and paid add’l), reserve forces service leave
Based on last complete 3 months or 12 weeks pensionable pay including any APP in that period
(but excluding all lump sums)
Can add back any regular lump sum paid in last 12 months if think will still be on APP when lump sum next due

25. Employers – 2014 key requirements
Assumed Pensionable Pay
APP increased / decreased by Treasury Order revaluation (CPI) if goes over 2 scheme years
No need to recalculate APP after KIT or Stringer days
APP drops into pensionable pay cumulatives (not any pay received – unless actual pay is higher e.g. on a KIT day)

26. Employers – 2014 key requirements
Assumed Pensionable Pay
APP and 50/50
Monthly paid employee on half pay sick drops to no pay in mid-August
Move to main section from 1 September
APP does not change but in August APP drops in 50/50 cumlatives, from September APP drops into main cumulatives
APP to be calculated for Tier 1 and Tier 2 ill health retirements and death in service

27. Employers – 2014 key requirements
Employee contributions
Employee pays contributions on any pensionable pay received
- except any pay paid by the employer to an employee on
reserve forces service leave
Employee does not pay contributions on APP
- except during reserve forces service leave (MoD deduct
from APP figure and remit contributions to Fund)

28. Employers – 2014 key requirements
Employer contributions (in full, even if Ee is in 50/50)
Employer pays contributions on any pensionable pay paid by the employer except any pay paid by an employer to an employee
- on reserve forces service leave, or
- on relevant child related leave (ordinary and paid add’l), or
- on sick leave on reduced pay
Employer pays contributions on APP during relevant child related leave and sick leave on reduced/no pay
MoD pays contributions on APP during reserve forces service leave and remit to Fund

29. Employers – 2014 key requirements
Buying extra pension – APCs/SCAPCs
Full and shared cost APC (£6,500)
Whole cost to employee – like 2008 Scheme ARCs
Whole cost to employer – like 2008 Scheme granting extra pension
Shared cost
One of payment or regular contributions (unless AA says impracticable)
Always cash amounts (not %)

30. Employers – 2014 key requirements
Buying extra pension – APCs/SCAPCs
APCs used to buy pension ‘lost’ due to:
- Unpaid leave (including unpaid additional child related leave)
shared cost (1/3rd employee, 2/3rds employer)
no compulsory first 30 days, but option to be made within 30 days of return, otherwise full cost to member
- Strike Note: SCAPC + strike APC:
at full cost to member final pay + 85 year rule
APC election to Er and to AA
Not allowed if in 50/50 (unless to buy ‘lost’ pension)

31. Employers – 2014 key requirements
Buying extra pension – new AVCs/SCAVCs
No change to 200 Scheme facility
Cash amount or % AVC/SCAVC
But no 50% of pay limit for AVCs – 25% limit on tax free cash

32. Employers – 2014 key requirements
Buying extra pension – existing contracts
Existing ARC, AVC/SCAVC, added years, ASBC and part-time buy back contributions continue
added years % of 2008 definition of pensionable pay
ASBCs % of 2008 FTE definition of pensionable pay
AVCs retain 50% of pay contribution limit, but no 25% limit on tax free cash

33. Employers – 2014 key requirements
Effect on APC, AVC etc contracts during absences
Different rules depending on
Who is contracted to pay the contributions (Ee or Er)
Type of contract
Whether contract is pre or post 2014 contract
Full details in payroll and HR guides at

34. Employers – 2014 key requirements
Supplying final pay
Supply Final Pay (2008 Scheme definition) at:
- each 31 March for pre 2014 benefits on ABS* (including
underpin)
- date of leaving for pre 2014 membership
- date of leaving or old NPA if earlier for underpin
Calculate Final Pay as now (but looking to simplify?)
* Fund can’t simply gross up from contributions: need cont rates during the year, conts paid per rate, average hours (in addition to contractual hours)

35. Employers – 2014 key requirements
Supplying details of breaks, etc
Supply contractual hours/weeks changes for:
Added years cases
Underpin cases
Benefits reg 20(13) cases (ill health underpin)
Supply details of absence periods (not fully covered by SCAPC ) or strike (not fully covered by APC) for:
85 year rule cases
[Employer also needs to take account of such breaks when calculating final pay]
Timing of supply to be agreed with admin. authority

36. Employers – 2014 key requirements
End of year data / data on leaving / monthly contribution payover
Minimum requirements defined in Regulations
Details are in payroll specification document at

37. Payroll System “Requirements”
It’s worth putting the effort in now (automation)
LGPS 2014 E&W built with the help of the “Payroll Software Suppliers Engagement Group”
See payroll specification at 37

38. Employers – other considerations
Discretions
New discretions policy by 30th June 2014
- Voluntary SCAPC
- Flexible retirement
- Waiving all / part of actuarial reduction
- Awarding additional pension at whole cost to employer
- Switching on 85 year rule (ish) for voluntary retirements 55- 60
Note : augmentation gone, need policy for 2008 to 2014 leavers e.g. agreeing to early release of benefits from 55

39. Employers – main outstanding issues
Councillors’ pensions?

40. LGA – communications and support

41. On-line resources for employers
Dedicated website for employers/practitioners
Will eventually have
The Regulations (including drafts and Consultations)
Statutory Guidance (DCLG and GAD)
Guides and Publications
HR Guide to the 2014 Scheme
Payroll Guide to the 2014 Scheme
Administration Guide to the 2014 Scheme
A powerpoint presentation for employers and practitioners to use for Scheme members is also expected for early 2014 at
Also on that site is the “LGPS2014 Terminology Document” and “Communications plan”

42. On-line resources for scheme members
Dedicated website for scheme members
regularly updated in line with draft regulations
contains agreed wording for leaflets etc. to avoid confusion
Short video on LGPS2014 available since June
Also issued in November:
Contributions and the flexibility to pay more or less
When can I take my pension?
How is my pension worked out?
To follow:
If you joined before April 2014
Promotional – new scheme only

43. Employee educational leaflets
Short leaflet issued in June 2013 covering the main changes
Comprehensive set of leaflets in the pipeline
Look out on
Expected Autumn 2013 are:
Main changes
When can I take my pension?
How is my pension worked out?
Member contribution and flexibility
Myth Buster
To follow:
If you joined before April 2014
Promotional – new scheme only

44. Benefit modellers Visually engaging modeller expected for early 2014
Will be on and code will be available if Funds want it on their own websites
Gives the user
Cost of LGPS2014
Annual pension amount
Total pension amount
Visually demonstrating how accounts work, showing revaluation
Links to info re State Pension Age
50/50 – option to see reduction in cost and benefits
Links to info on early retirement reductions, late retirement increases and also protections
APC modeller

45. Thank you for listening.
Any questions?