Welcome to the Peninsula Pensions Employer Meeting (PLOG) Please help yourself to refreshments

1. Welcome to the Peninsula Pensions Employer Meeting (PLOG) Please help yourself to refreshments and take a seat Overview of the LGPS Session to start at 10am

2. Overview of the Local Government Pension Scheme Rachel Lamb Deputy Head of Peninsula Pensions (Technical) Te

3. What is the Local Government Pension Scheme (LGPS)? Benefits of joining the scheme Increasing benefits How much will it cost? What happens on leaving? Member Self Service Overview of the Scheme

4. Nationwide scheme for all local government employees under age 75 – occupational funded scheme (90 local pension funds) Operates under government legislation – one of several Public Services Pension Schemes Defined Benefit (DB) scheme – Benefits set out in law The Pension Fund is separate from the council’s budget Post 2014 Career Average Revalued Earnings (CARE) scheme Pre 2014 Final Salary Pension Scheme What is the LGPS?

5. LGPS 2014 - current scheme commenced on 1st April 2014 following public sector pension reform report issued by Lord Hutton in 2011 recommending schemes should be: Affordable/Sustainable/Fair On review, the LGPS changed from Final Salary to Career Average Revaluation Earnings scheme (CARE) Employees are contractually automatically enrolled into the LGPS from day one of eligible membership - Casual’s contract less than 3 months not automatic but do have option to join* *May be automatic if government led auto-enrolment thresholds met LGPS 2014 Overview

6. Benefits of joining the scheme Guaranteed defined benefit funded scheme Individual Pension Accounts – pension benefits calculated on a yearly basis with accrual rate of 1/49th of ACTUAL pensionable pay Tax free member contributions with a reduced 50/50 option to pay half contributions and accrue half pension – Employer pays contributions too Option to take tax free cash lump sum Index-linked pensions based on Consumer Price Index (CPI) Built in Ill-health benefits / life cover Pension for dependants Normal retirement age is the state pension age for both men and women - Able to retire from Age 55 without employers consent.

7. How does LGPS CARE work? • Each year the member builds up a slice of pension (1/49th) based on their pensionable salary in that year • Each slice is revalued in line with the revaluation rate until retirement • At retirement, the slices built up each year are added together to calculate the total pension • Early retirement reductions are applied as appropriate

8. Example (CARE) • Calculated on 1/49ths of actual pay for each year in the scheme • Contribution year is April to March • Accruing pension is revalued each year in line with Consumer Price Index

9. Tax Free Lump Sum • At retirement you can exchange some of your annual pension for a tax free lump sum at the rate of £1 pension for £12 lump sum e.g Retirement Pension = £20,000 pa, and you elect to give up £1,000pa pension, you will receive a £19,000 pension and a tax free lump sum of £12,000 • There are Maximum lump sum limits set by HMRC.

10. In LGPS before April 2014? PROTECTIONS for benefits built up before April 2014: • All pension built up before changes = fully protected • Membership up to 31 March 2014 based on final pay when you leave • Protected Normal Pension Age - 65 (for almost all members) • Final Pay protection for reduction or restriction in pay …Remember all pension is drawn at the same time (pre and post 2014)

11. The 3 Tranches

12. Your retirement benefits • Include: • CARE Scheme pension • Previous Final Salary pension • Any transferred in / topped up • membership • Any lump sum

13. How much will it cost? Your contributions will be based on your actual pay As contributions are taken before you are taxed, you receive tax relief on the contributions you pay 50/50 option – Pay half contributions, receive half benefits - Employer’s Contributions remain at 100%

14. 50/50 Scheme One scheme, two sections Since April 2014, the new Local Government Pension Scheme (LGPS) regulations introduced two sections of the scheme: • the main 100/100 section, and • the 50/50 section. Pay half normal contributions and get half normal pension (Employers remain at 100%) – Pension accrues at 1/98th instead of 1/49th Same level of life and ill-health cover as in the main section Short term option (maximum 3 years) Any member can join this section – Election form on our website No limit to the number of times can move between each section of the scheme. If multiple employments, can elect for the 50/50 option in one, some or all employments. Will go back into Main section after nil pay period and Auto-enrolment re-enrolment date but can elect again for 50/50 Section

15. Transfer previous pension rights into the LGPS from any other arrangement Additional Pension Contributions (APCs) Purchase additional pension via one off lump sum or pay additional monthly contributions. Maximum is an additional £6755 pension pa (increases each year). Additional Voluntary Contributions (AVCs) Pay additional contributions into an AVC fund run through Prudential - runs alongside main LGPS scheme. No limit to how much can be paid in (100% after statutory deductions) On retirement this fund is used to purchase an annuity – member has option of Tax Free Cash or can purchase LGPS pension on retirement. No additional contributions payable by employer unless Shared Cost arrangement Shared Cost APC onlyif member opts to pay for periods of unpaid authorised leave or unpaid additional relevant child related leave within 30 days returning to work (*or longer period as employer allows), then employer must pay 2/3rd of Additional Pension Contribution (APC) costs with employee paying the remaining 1/3rd. Increasing your benefits

16. If you have been in the scheme less than 2 years you may be entitled to a refund If you have been in the scheme more than 2 years, you can - - Defer your pension, or -Transfer it to another pension provider two (2 safeguards: – Members with pots of £30k or more must get Independent Financial Advice from FCA authorised adviser – Defined Benefit Schemes to be permitted to reduce TVs if necessary) What happens on leaving?

17. Opt-Outs Members automatically contractually enrolled into LGPS at start date Can opt out at any time during career and opt back in as many times as they wish Member downloads opting out form from our website and sends completed form to their payroll department – Employers MUST NOT issue opt out forms to employee’s. Payroll department will action for next available pay period Entitlement to benefits Less than 3 months membership = Refund of contributions via payroll More than 3 months & less than 2 years = Refund paid by Pensions subject to tax deductions More than 2 years membership = Preserved Benefit awarded Members have the right to opt out and opt back in as often as they wish

18. Early Retirement - Scheme members have the option to retire from age 55 but there will be a reduction applied for early retirement. Flexible Retirement –If a member reduces their grade or take a drop in hours from age 55 with their employers consent the pension can be brought into payment early. Redundancy from age 55 - Payable immediately with no reduction applied. Ill health retirement – The pension could be brought into payment immediately and may also be enhanced depending on the member’s ability to undertake future employment What happens on leaving?

19. Spouse’s pension • based on service/160ths • Continues after remarriage Civil Partners and co habiting partners – based on post April 1988 service only • Co habiting partners – we will need evidence of living together/financially dependant Children’s Pension – payable up to 18 (or max 23 if full time education) or for life if permanently disabled or dependent Death Grant (Death in Service) 3 x actual pensionable salary Death Grant (Death on pension) 10 Years of pension - less pension already paid if member has post April 2008 pension service (Payable in accordance with the will, or if no will, to the estate) Benefits also payable on death before retirement Death Benefits

20. Secure Annual Pension A Tax free lump sum The option to draw your pension from age 55 to 75 The 50/50 option on member contributions Ill Health cover Death benefits cover for your loved ones Summary of benefits

21. What is the LGPS Self Service Facility? The self service allows all members which covers, active, deferred and pensioners to view information we hold on them. Once signed up to the self service you can:- • Calculate your own estimates/projections • View annual statements • Update your contact details • View your pay advice, P60s and update your bank details once you have retired

22. Where can I sign up to the self service? The self Service facility can be found on our website at www.peninsulapensions.org.uk and you can access by clicking on the below Icon Once you have joined the pension scheme we will send you an activation key to login Please note all communication we send out at Peninsula Pensions is electronic, so you need to sign up to receive your annual statements from us. If you do not sign up you will not receive any statements from us.

23. Welcome to the Peninsula Pensions Employer Meeting (PLOG) Please help yourself to refreshments and find a seat Presentations to start at 11am Today’s Presenters are: Emma Davies, Rachel Lamb & Shirley Cuthbert

24. Agenda • Emma - Guidance Updates - Discretion Policies • Shirley - Performance & Disclosure Regulations Break for Lunch at 12:30 – 1:15pm • Rachel - Data Protection • Shirley - Admin & Regulations Roundup 2:30pm Finish Workshops to commence at 3:00pm

26. Guidance Updates Clarification regarding Ill Health process Local Government Pensions Committee (LGPC) Bulletin 164 The Pensions Ombudsman (TPOS) identified issues whilst dealing with LGPS ill health retirement complaints: Member awarded Tier 3 pension – not happy so decides to appeal under Internal Dispute Resolution Procedure (IDRP) • Fresh medical opinion needs to be obtained from the Independent Registered Medical Practitioner (IRMP) • Appeal coincides with the Tier 3 18 month review and the employer has wrapped the two processes together - one opinion sought from the IRMP to cover both

27. Guidance Updates Should not be done this way as the two opinions are looking at two separate things: Same IRMP can be used but both issues need to be considered separately Difference between obtaining a second opinion for appeal and obtaining an opinion for the 18 month review of a tier 3 pension. (TPOS determination can be found here: PO-13071). • Opinion 1 relates to the appeal and looks at: • whether an error was made by the IRMP in considering the case initially; or • whether new evidence has come to light since initial decision which suggests a higher tier could have been awarded originally • Opinion obtained at the 18 month review is to: • consider whether, at the date of the review, the member remains incapable of undertaking gainful employment, and • if they are, will they ever be capable of undertaking gainful employment again in the future

28. Guidance Updates Ill health retirements and obtaining narrative reports from IRMPs Local Government Pensions Committee (LGPC) Bulletin 164 Narrative reports help employers to understand the reasoning behind the medical opinion of the IRMP Employers decision to award an ill health retirement so full understanding is important – minimises risk of the flawed decision being made. DCLG’s ill-health retirement statutory guidance confirms a report is recommended Request narrative report at the time of commissioning the IRMP - If IRMP refuses, employer can appoint a different IRMP to avoid any risks of a poorly informed decision. TPOS determination can be found here: PO-14747

29. Guidance Updates Automatic Enrolment Review 2017 Local Government Pensions Committee (LGPC) Bulletin 165 DWP published: Automatic enrolment review 2017: Maintaining the momentum Report on how workplace pensions will meet the needs of individuals and employers while remaining fair, affordable and sustainable for future generations. Proposals include: • reducing the lower age limit for auto enrolment from 22 to age 18. • changing the framework for auto enrolment so that pension contributions would be calculated from the first pound earned, rather than from the lower earnings limit, • the earnings trigger for automatic enrolment will remain at £10,000 in 2018/19, subject to annual review. Ambition to implement the changes mid-2020s

30. Guidance Updates Review of Automatic Enrolment Earnings Triggers and Qualifying Earnings Local Government Pensions Committee (LGPC) Bulletin 165 DWP published its review of the earnings trigger and qualifying earnings band for automatic enrolment: Confirmed: • existing threshold of £10,000 will not change for 2018/19 • lower earnings limit will be going up from £5,876 to £6,032 • the upper earnings limit will be going up from £45,000 to £46,350 for the 2018/19 year. New Brief Guide for LGPS employers: http://lgpslibrary.org/assets/gas/uk/AEBv8.0c.pdf

31. Guidance Updates Assistant Coroners & Eligibility for LGPS Local Government Pensions Committee (LGPC) Bulletins 163 (Oct 2017) & 164 (Nov 2017) LGPS Regulations 2013 confirms that coroners are eligible for membership and that the employer for a coroner is the local authority which appointed them (Part 4 of Schedule 2) Term ‘coroner’ is not defined in the regulations so what type is covered? LGPC Secretariat obtained Counsel’s view: The use of the term ‘coroner’ with a small ‘c’ in the 2013 Regulations along with the fact that the 2013 Regulations do not attempt to define the term means, that the Regulations cover ALL classes of coroner as covered by the Coroners and Justice Act 2009 Decision also means that senior coroners and area coroners are both eligible for the LGPS too (LGPC’s Legal opinion is available on their website)

32. To Note….. Flexible Retirement Reminder the new post is auto-enrolled into LGPS – member has the right to opt out End of Year Queries Team working through queries as a result – used as a tidy up exercise so beneficial to employers as well as Pensions Employer Self Service (ESS) Update Starter form now available to use via ESS - Reporting facility still work in progress Local Government Association (LGA) will be launching new training programme Need help with queries or deadlines? Please let us know

33. Employer Discretions

34. Employer Discretions The LGPS is regulated and operates under government legislation Employers can exercise certain discretions to enhance members’ benefits. Required by law to formulate, publish and keep under review a pension policy confirming your decisions (Publish via staff intranet/notice board) Copy should be sent to Pensions within 3 months of becoming a new employer within DCC or SCC Funds - within 1 month of any subsequent changes. May wish to consult employees/unions before making or changing your policy Academies need their own policy – can use LA’s Policy Can use one policy for Multi-Academy Trust to cover all Academies

35. Handful of discretions where you are required to have a written policy statement: • Shared cost additional pension (Reg 16(2)(e) & 16(4)(d))*Employer can choose to pay for APC in whole or part • Shared Cost Additional Voluntary Contribution (Reg R17 (1) and TP15 (1) (d) and A25 (3)) Employer can choose to pay for AVC in whole or part • Flexible Retirement (Reg 30(6)) Employers decision to offer as a retirement option • Waiving of actuarial reduction (Reg 30(8)) Flexible Retirement and Early retirement (55-60) • Award of additional pension (Reg 31)**Employer APC for active member or member leaving on redundancy/efficiency • Power to ‘switch on’ the 85 year rule Employers decision to apply the protection Employer Discretions Redundancy/Efficiency Retirements: * Pension awarded under Regulation 16 is reduced and full cost to be paid to Fund while member is still active. ** Pension bought by employer under Regulation 31 is not reduced so incurs additional strain cost (can apply within 6 months of leaving)

36. Employer Discretions The 85 Year Rule Does not automatically apply for members voluntarily retiring on or after age 55 and before age 60. Transitional 2014 Regs allows employers to switch on the protection Must have a written policy on whether to agree to apply the 85 Year rule for those scheme members If you agree, you will need to meet any additional strain cost If you do not agree, member meets the strain via an actuarial reduction to their benefits Also has the discretion to waiver any reductions applied to members benefits – will incur a Strain Cost

37. Employer Discretions Flexible Retirement Requirement for a separate policy on flexible retirement should they decide to offer this option to their scheme members Needs to fit in with any other flexible working policies you may have. Factors to consider when devising a flexible retirement policy - flexible retirement may for example: • assist staff to ease down into retirement • help to avoid redundancies (plus Strain & Redundancy payment costs) • facilitate and enable the transfer and retention of skills, knowledge and contacts • be an effective means to reduce capacity • help alleviate burn out and stress • improve morale

38. Employer Discretions Employers will need to consider: • whether or not there should be a minimum reduction in hours or grade • whether or not the employee should commit to a reduction in hours or grade for a minimum period of time • whether or not the employee should commit to remaining in employment with the employer for a minimum period of time Flexible Retirement drawdown option Recent Advice from LGA states the Employer’s policy should also state: whether, in addition to the benefits the member has accrued prior to 1 April 2008 (which the member must draw), to permit the member to choose to draw: • all, part or none of the pension benefits they accrued after 31 March 2008 and before 1 April 2014, and / or • all, part or none of the pension benefits they accrued after 31 March 2014, and • whether to waive, in whole or in part, any actuarial reduction which would otherwise be applied to the benefits taken on flexible retirement before Normal Pension Age (NPA) Please send us a copy of your Flexible Retirement Policy

39. Employer Discretions Other Policies Required: Local Government (Early Termination of Employment) (Discretionary Compensation) (England and Wales) Regulations Each employer (other than an Admitted Body) is required to formulate a policy in relation to discretionary compensation. Discretions for scheme members (excluding councillor members) who ceased active membership on or after 1.4.08 and before 1.4.14 Still have to publish a policy in respect of your discretions for these leavers Pre 1st April 2014 leavers can ask for employer consent to the early release of their deferred benefits. Full list of discretions on our website along with a example policy template and guidance notes

40. Employer Discretions Points to consider when setting policies Costs: • Exercising discretionary powers comes at a price • Policies must ensure no loss of confidence • Follows that policies should be affordable • Exercising major discretions may result in a cost (“Strain Cost”) Fettering discretions (restricting or limiting) Your pension policy should show the basis on which the employer would make its decisions on the various discretions.  The government has advised you should not ‘fetter their discretion’; i.e. policies should not be so rigid or restrictive as to prevent flexibility where a (possibly unanticipated) situation requires it.”

41. Employer Discretions Points to consider when setting policies: Anti-discrimination laws Care needs to be taken that there is no discrimination on grounds of: • Age – difficult one as legislation relates to age so be careful your wording is free of age influence • Gender • Race • Disability • Sexual orientation • Religion or belief ‘Follow the Leader’ not always sensible Membership demographics and funding levels not same for each employer – same policies may not be workable if following policies of a bigger employer

42. Employer Discretions Your policy needs to be: Workable – easy and definitive Affordable – fits in with your budget Reasonable – fair or ‘not unreasonable’ Foreseeable – affordable for the future budget (2/3 years)

44. Performance & Disclosure Regulations Shirley Cuthbert Deputy Head of Pensions (Benefits)

45. Internal Performance Statistics CIPFA Statistics Disclosure Regs Summary Performance & Disclosure Regulations

46. 2017/18 April – Nov 2017 Priority Procedures 74% 73% Non-Priority Procedures 75% 67% Combined 75% 68% Work completed within 10 working days of everything received Internal Performance – Headline figures

47. Staff changes Reduction in Backlog April 2017 tasks outstanding= 12550 (10961 + 10 days)                               Nov 2017 = 9653 (7547 + 10 days) Priority work above 74% since July 2017 Improved working practices Member Self Service Behind the Headline figures

48. participate in CIPFA Benchmarking Club, provides a yearly comparison of performance with approx 50 other LGPS administration services. CIPFA Statistics

50. Disclosure Regulations