1. Local Government Pension Scheme 27 th March 2014 & 2 nd April 2014 LGPS2014 - Employer Presentation in greater detail Andy Cunningham Employer Relationship & Fund Development Manager Wiltshire Pension Fund

2. Local Government Pension Scheme Agenda 1). Introduction 2). Recent Updates since the presentations in Jan 2014 3). Normal Actual/Assumed Pensionable Pay 4). Annualised Assumed Pensionable Pay 5). Pension Remuneration 6). New Monthly and Yearly Returns 7). Absences 8). Questions

3. Local Government Pension Scheme 1. Introduction This presentation follows on from the two presentations held in January, which gave an overview of the main LGPS2014 changes. Aim of this presentation: To provide a bit more detail and explanation on the areas of employer administration which are likely to cause the most difficulty and to enhance employers’ understanding.

4. Local Government Pension Scheme 2. Recent Updates since the presentations in Jan 2014 New Employer’s guide, forms and spreadsheets are now online – please use them for all ‘events’ occurring from 1 st April 2014. Note: the previous forms are on their for pre-April 2014 events so take care that you select the correct one. Final part of the LGPS Regulations arrived on 10/03/14 – this (and other clarification) has resulted in some changes to the information already provided e.g. - Assumed Pensionable Pay (covered later) - Absences (covered later) - Discretions Policy templates (updated on the website)

5. Local Government Pension Scheme 3. Normal Actual/ Assumed Pensionable Pay When do we ask for this? On estimate, leaver and retirement forms It looks and is explained like this on the form: (the link takes you to the employer’s guide)

6. Local Government Pension Scheme 3. Normal Actual/ Assumed Pensionable Pay What is the idea here? We regularly need to update our system with actual pay figures in order to calculate post-April 2014 We will do this annually but for leavers during the year, we will need to know the figures since the most recent April. If the person has been on full pay throughout -> should be straightforward, as we just need to know the actual pay earned since the most recent April If they have been on reduced or nil pay  Assumed Pensionable Pay may apply.

7. Local Government Pension Scheme 3. Normal Actual/ Assumed Pensionable Pay 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.

8. Local Government Pension Scheme 3. Normal Actual/ Assumed Pensionable Pay How do I calculate it? To calculate the Assumed Pensionable Pay for a period of reduced pay, you need to: 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. Then add this figure to the normal pay for the year. Or use the Assumed Pensionable Pay calculator

9. Local Government Pension Scheme 3. Normal Actual/ Assumed Pensionable Pay How do I calculate it?

10. Local Government Pension Scheme 3. Normal Actual/ Assumed Pensionable Pay You then need to enter £7410.96 in this field on the form Note: If there has been no relevant reduction in pay, you don’t need the calculator and you just enter their actual pay for the period

11. Local Government Pension Scheme 4. Annualised Assumed Pensionable Pay When do we ask for this? On the death in service form and on the retirement form for ill health tiers 1 & 2 only. It looks and is explained like this on the retirement form (slightly different for death in service) The link takes you to the employer’s guide)

12. Local Government Pension Scheme 4. Annualised Assumed Pensionable Pay How is it calculated? Example 1: A member dies on 15 th August 2014. He is employed as normal up to the date of death on full pay. His pensionable earnings in the 3 months leading up to 15 th August 2014 totals £1500. To calculate the annualised figure: £1500 x 4 = £6000

13. Local Government Pension Scheme 4. Annualised Assumed Pensionable Pay How is it calculated? Example 2: A member dies on 10 th November 2015. Due to illness, she is on reduced pay in the 3 months leading up to 10 th November 2015 with total pensionable earnings of £800 (3mths). Her earnings over the period leading up to the reduction in pay were £1000 per month Apply normal assumed pensionable pay and then multiply up Hence £3000 is the last 3 months assumed figure £3000 x 4 = £12000 - the annualised figure

14. Local Government Pension Scheme 4. Annualised Assumed Pensionable Pay How is it calculated? Example 3: A member is dismissed on ill-health tier 2 on the 31 st December 2014. The member was on half pay in the 4 months leading up to the dismissal and on full-time hours before then. The amount of pay before the reduction in pay was £3000 per month. Hence, the assumed pensionable pay for the 3 months leading up to the reduction £9 000 Annualised pensionable pay = £9000 x 4 = £36 000

15. Local Government Pension Scheme 4. Annualised Assumed Pensionable Pay How is it calculated? Example 4: A member is dismissed on ill-health tier 1 on the 31 st August 2014. Due to member’s condition, her part-time percentage changed from 100% to 50% before the dismissal. Her full time pay was £2000 per month on the 3 months leading up cut in hours and £1000 per month thereafter. Hence, the assumed pensionable pay for the 3 months Leading up to the reduction £6 000 Annualised pensionable pay = £6000 x 4 = £24 000 Note: For ill health you ignore relevant reduction in hours, for death in service you don’t.

16. Local Government Pension Scheme 5. Pension Remuneration When is it required? On estimate forms, death in service, leaver and retirement forms (if the member has LGPS service before 31 st March 2014) Note: it should be calculated on using the pre-April 2014 definition of pensionable pay (e.g. excluding non-contractual over-time)

17. Local Government Pension Scheme 5. Pension Remuneration How is it calculated? The general idea is to calculate the average full-time equivalent pay that applied in the 12 months up until they left the Scheme. However, additional pensionable payments need to be taken into account and if either of the two preceding 12 month periods produce a higher figure, then the highest should be used. There is also other protections possible covered by certificates of protection or the average of three years from the last 13. We recommend you use our on-line calculator in all cases when there is a change of pay during the year

18. Local Government Pension Scheme 5. Pension Remuneration Example 1: Example 1: Basic Member leaves 31 st August 2014. In their final year, their FTE Salary history is: 1 st Sept 2013 to 31 st March 2014 = £35000 1 st April 2014 to 31 st August 2014 = £36000 Comment: If the member’s pay decreased in the 3 years leading up to 31 st August 2014, you will need to repeat the above calculation for the periods 1 st Sept 2011 to 31 st August 2012 AND 1 st Sept 2012 to 31 st August 2013

19. Local Government Pension Scheme 5. Pension Remuneration Example 2: sdfsdf Example 2: With plussage Member leaves 31 st August 2014. In their final year, their FTE Salary history is: 1 st Sept 2013 to 31 st March 2014 = £35000 + 10% plussage = £38 500 1 st April 2014 to 31 st 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.

20. Local Government Pension Scheme 5. Pension Remuneration Example 3: sdfsdf Example 3: Less than a year Member leaves 31 st December 2014, they worked less than a year. In their final year, their FTE Salary history is: 1 st May 2014 to 31 st August = £35 000 1 st Sept 2014 to 31 st December 2014 = £36000 Comment: The calculator will multiply the figure up for you.

21. Local Government Pension Scheme 5. Pension Remuneration Example 3: sdfsdf Example 4: Part-time & with a bonus Member leaves 31 st August 2014, in their final year, their FTE Salary history is 1 st Sept 2013 to 31 st March 2014 = £35000 1 st April 2014 to 31 st August 2014 = £36000 They 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 before and then add on the full-time equivalent bonus. It could be that the bonus would be £1000 regardless of the hours in which case £1000 would be added instead of £2000 +£2000 =£37 419.18

22. Local Government Pension Scheme 6. New Monthly and Annual Returns Monthly Contribution Return Hopefully, this should be easier to complete as these should be held on the payroll system and they don’t need to be calculated.

23. Local Government Pension Scheme 6. New Monthly and Annual Returns End of Year Return – for first use in 2015 Please provide a unique payroll number per a job As per part 3 of this presentation! – this will determine the value of benefits This is required for benefit statements (for pre-April 2014 service)

24. Local Government Pension Scheme 7. Absences For trade disputes and other types of unpaid leave such as career breaks and unpaid additional maternity leave, members’ have the option of paying Additional Pension Contributions. If they elect to do this with 30 days of returning to work, this will be 1/3 funded by the member and 2/3 funded by the employer. If they don’t elect to do this within 30 days of returning to work then this would be solely funded by the employee. Additional Pension Contributions (APCs) – ‘Lost Pension’ Unfortunately, we don’t not have the factors to calculate these at present.

25. Local Government Pension Scheme 7. Absences We are yet to finalise the process in this area but our intention is to have the process as follows: a). If the member does not pay anything back, you don’t need to do anything unless they are born before April 1957 in which case you need to need to complete an unpaid leave notification form. b). If the member does take out APC, you will need to make the appropriate deductions and complete a form Again, we don’t know what the deductions should be yet but we will once we do. What do employers need to do?

26. Local Government Pension Scheme Any Questions?