Welcome to the Peninsula Pensions Employer Meeting (PLOG)

1. Welcome to the Peninsula Pensions Employer Meeting (PLOG) Help yourself to refreshments and take a seat Presentations to start at 10:30am Today’s Presenters are: Emma Davies, Rachel Lamb & Shirley Cuthbert

2. Agenda • Emma - Welcome and introduction • Rachel - The Pensions Regulator, Performance and Administration Strategies • Emma - Employer Obligations Refreshment Break at 11.30am • Shirley - Shared Cost AVC’s, Public Sector Update and IDRP • Emma - Ill Health Retirement, Employer Self Service and Admin round-up Lunch at 1pm 1:30/2pm Booked 1-2-1 sessions

3. Staff Changes Some internal staff changes within the Administration team to cover maternity and tackle workloads – shouldn’t experience any difference in service Catherine Pearce has left her role as Deputy Head of Pensions (Benefits) to join AON Hewitt Shirley Cuthbert formerly Deputy Head of Pensions (Technical) now Deputy Head of Pensions (Benefits) Rachel Lamb formerly Team Manager of Police & Fire Team now Deputy Head of Pensions (Technical) Rob May has replaced Rachel as Team Manager for Police & Fire Schemes Duncan Kohn has decided to retire from his role as Pensions Benefits Manager. His replacement will be……

4. The Pensions Regulator, Performance and Administration Strategies Rachel Lamb Deputy Head of Pensions (Technical)

5. Key areas The Pensions Regulator Code of practice - Member data Performance (both Peninsula Pensions & Employers) Administration Strategy

6. The Pensions Regulator (TPR) is the UK regulator of work-based pension schemes work to ensure that pension schemes are adequately funded and run in the best interests of retirement savers – and that employers meet their obligations by enrolling staff into a pension scheme and making contributions aim to prevent problems developing in the first place by being clear about expectations in communications to trustees, administrators, employers and other parties. TPR aim to succeed in achieving the desired outcome by educating and engaging with their audiences, but will not hesitate to enforce by invoking regulatory powers where it is the right thing to do.

7. The Pensions Regulator Code of Practice Maintaining accurate member data (one key area) the legal requirements for record-keeping what records must be kept the importance of reviewing and improving data

8. What are the legal requirements? The Public Service Pensions (Record Keeping and Miscellaneous Amendments) Regulations 2014 set out what records must be kept Records of member and beneficiary information (a) the name of each member and of each beneficiary; (b) the date of birth of each member and of each beneficiary; (c) the gender of each member and of each beneficiary; (d) the last known postal address of each member and of each beneficiary; (e) each member’s identification number in respect of the scheme; (f) the national insurance number of each member who has been allocated such a number; and (g) in respect of each active member, deferred member and pensioner member— (i) the dates on which such member joins and leaves the scheme; (ii) details of such member’s employment with any employer participating in the scheme including— (aa) the period of pensionable service in that employment; and (bb) the amount of pensionable earnings in each year of that employment.

9. Employer’s Duties (Registration and Compliance) Regulations 2010 (SI 2010/772) Period of preservation of records: Generally states that records must be preserved for a period of 6 years, starting on the day on which the record must first be kept. The Registered Pension Schemes (Provision of Information) Regulations 2006 – Regulation 18 Documents must be preserved for the tax year to which they relate and for a period of 6 years following that year.

10. However …. What records must be kept? Member data Member records must be kept across all membership types to ensure a member can be uniquely identified and their benefits calculated correctly. This is particularly important for career average revalued earnings (CARE) schemes. Retention of scheme records The Pension Regulator advises: Schemes should retain records for as long as is relevant for the purposes for which they are needed. It is likely data will need to be held for long periods of time. Schemes will need to keep some records for a member even after they have retired, ensuring that pension benefits can be settled for as long as they need to be paid. It is also important that schemes have in place systems and processes so they can keep records for the necessary amount of time.

11. What do we need to achieve? To maintain accurate data so that schemes can pay the right person, the right benefits at the right time. If records are only kept for 6 years, will this be achievable?

12. The Pensions Regulator Code of Practice Reporting breaches (one key area) Both Scheme Managers and employers must report breaches of the law when they have reasonable cause to believe that: • a legal duty relevant to the administration of the scheme has not been, or is not being, complied with • the failure to comply is likely to be of material significance to the regulator If accurate data is not available, the scheme will not be able to pay the right person, the right benefits at the right time and a breach will need to be recorded, with the potential of a fine from the Pensions Regulator.

13. The importance of reviewing and improving data Performance Conduct a review of internal Key Performance Indicators – in order to provide a more efficient and accurate service to scheme members Areas of improvement to be considered - could either be internal with Peninsula Pensions or external with employers Review of realistic timescales bearing in mind Disclosure Regulations Monitor performance and investigate reasons for delays / provide additional training as required / consider revised procedures Consequences of poor performance – potential fines – involvement of The Pensions Regulator / Pension Ombudsman / Local Pension Board

14. Administration Strategy – April 2015 (In accordance with LGPS (administration) regulations 2013 – defines the roles and responsibilities of the Administering Authority and the employing authorities under the LGPS regulations) As part of the Key Performance Indicator review, update and reissue of Administration Strategy to take place over next 6 month period particularly in relation to sections 5, 6 and 7: Level of performance – Employers Level of performance – Peninsula Pensions Financial Implications / consequences of poor performance

15. We need to work together for best interest of scheme members by improving performance on both sides Priority being: To maintain accurate data so that schemes can pay the right person, the right benefits at the right time.

16. Employer Obligations Emma Davies Employer Liaison Officer

17. Employer Obligations Statutory requirement for all employers participating within the LGPS to provide their administrators with the information they require in order to carry out the necessary administration Regulation 80 within the LGPS 2013 Scheme Regulations states: ‘Exchange of information 80. —(1) A Scheme employer must— (a) inform the appropriate administering authority of all decisions made by the employer under regulation 72 (first instance decisions) or by an adjudicator appointed by the Scheme employer under regulation 74 (applications for adjudication of disagreements) concerning members; and (b) give that authority such other information as it requires for discharging its Scheme Functions’ HMRC rules state need to keep records for 6 years plus current – bear in mind pay details may be needed for 13 years plus current TPR states data to be kept for as long as Pensions need it

18. Employer Obligations It is an employer’s responsibility to provide the information NOT their payroll provider. If something goes wrong the employer is held responsible in the eyes of the Pensions Regulator and Pensions Ombudsman PP Admin Strategy Standards of Performance – Section 5 relating to expected employers performance: ‘In the event of the pension fund being levied by The Pensions Regulator, the charge will be passed on to the relevant employer where that employer's action or inaction (such as the failure to notify a retirement within the time limits described above, for example) cause the levy. Where additional costs have been incurred by the pension fund because of the employing authority's level of performance in carrying out its functions under the LGPS, the additional costs will be recovered from that employing authority.’

19. Employer Obligations Delegated Services Do not have to deal directly with payroll providers - employers responsibility to ensure all the data we receive is correct Nature of pensions administration today means more Local Authorities and private payroll providers are taking on the full administration on behalf of their clients Delegation forms introduced – employers can delegate day to day administration to their payroll providers Forms will be not accepted unless signatory is confirmed delegate Delegation form available on request NOTE: Under Statutory Legislation, ALL responsibility for the timely and accurate provision of data and contributions remains with employer. Any issues, employer is accountable under the LGPS Regulations not the delegated authority.

20. Member’s Experience Problems in cycle Pensions Ombudsman The Pensions Regulator Fine issued to Fund Fine passed to Employer

21. Questions?

22. Time for a break Back in 15 minutes please

23. Shared Cost AVC’s, Public Sector Update and IDRP Shirley Cuthbert Deputy Head of Pensions (Benefits)

25. Reg 17 of the LGPS Regs 2013 allows member to opt to pay Additional Voluntary Contributions (AVCs), an employer can decide to also contribute to that employee’s AVC arrangement. This is known as a shared cost AVC (SCAVC). This can be done as salary sacrifice arrangement But remember your pension discretions will need updating first and on display for a month before use How will it work…….? Salary Sacrifice - Shared Cost AVC

26. Scheme member is paid salary of £20000 pa Under Salary Sacrifice gives up £1000 pa Employer pays £1000 pa into SCAVC Employee has to pay minimum of £1 pm Employee still saves on tax Both Employee & Employer save on National Insurance No loss in pension benefit IF Employer specifies in contract their contribution to SCAVC is pensionable emolument (Reg 20 (1)(b) LGPS Regs 2013) enable pre salary sacrifice pensionable pay for scheme contributions. How & Why?

27. Proposals going forward to HM Treasury Example 1 A. Unreduced Pension Strain Cost = £70K B. Statutory redundancy payment = £5K C. Additional Severance Payment = £15k Additional severance not payable as lower than strain cost Scheme member will receive unreduced pension plus statutory redundancy. Not subject to HMT cap as under £95K Public Sector Exit Payments

28. Example 2 A. Unreduced Pension Strain Cost = £10K B. Statutory redundancy payment = £5K C. Additional Severance Payment = £15k As strain cost lower than the additional severance balance payable (C – A = balance due) (£15k - £10k = £5k payable) Scheme member will receive unreduced pension plus statutory redundancy and Additional severance balance payable Not subject to HMT cap as under £95K Public Sector Exit Payments cont.d

29. Example 3 A. Unreduced Pension Strain Cost = £110K B. Statutory redundancy payment = £10K C. Additional Severance Payment = £20k Additional Severance not payable as lower than strain cost Unreduced pension plus statutory redundancy over HMT cap of £95K Statutory Redundancy has to be paid so max strain cost is £95k – £10k (B) = £85K Scheme member will receive partially reduced pension with reference to £85K strain plus statutory redundancy Public Sector Exit Payments cont.d

30. Example 3 continued The scheme member has an option to pay all or part of the remaining strain cost shortfall of £25k, or alternatively can Receive a Statutory redundancy payment £10k plus additional severance payment £20k plus a fully reduced pension [B + C with Pension fully reduced] or Receive statutory redundancy payment £10k plus additional severance payment £20k with an entitlement to a deferred pension Public Sector Exit Payments cont.d

31. Employer makes, or fails to make, a decision which affects a member and that member is unhappy about the situation Employer and member undertake an informal discussion to see if situation can be resolved Member not satisfied with outcome invokes Stage 1 of Formal process Employer has a set time limit to investigate and respond to member Member still not satisfied moves to Stage 2 – Admin Authority has a time limit to investigate and respond to member If Member still unsatisfied goes to the Pensions Ombudsman Internal Dispute Resolution Procedure (IDRP)

32. Pension Ombudsman investigates and makes final determination. If member still unsatisfied Ombudsman decision can only be challenged on a point of Law in the High Court NBPlease note that if the case goes to the Ombudsman, there is possibility of additional compensation and/or fines payable by the employer, even if the Ombudsman doesn't determine in favour of the member. Internal Dispute Resolution Procedure (IDRP) Cont.d

33. To help you through the process A guide is available https://www.peninsulapensions.org.uk/wp-content/uploads/2016/07/IDRP-Guidance.pdf it includes details of the timeframe example letters which show information that needs to be included. Provide copy of stage 1 determination to Peninsula Pensions. All employers need to complete form confirming who their IDRP Officer is. Internal Dispute Resolution Procedure (IDRP) cont’d

34. Ill Health Retirement Employer Services and Admin Round Up Emma Davies Employer Liaison Officer

35. Active members at any age with more than 2 years service who’s employment is terminated due to ill health maybe eligible for ill health retirement if they are deemed to be permanently unable to do their job and are not immediately capable of undertaking gainful employment Three Tier system depending on severity of illness Deferred members – can apply for early release of benefits Need to look at when deferred member left – slightly different rules apply and different certificates needed • Before 1st April 1998 • 1st April 1998 – 31st March 2008 • 1st April 2008 – 31st March 2014 • Post 1st April 2014 Ill Health Retirement

36. Ill Health Retirement

37. Employer decides to terminate employment due to ill health or ex employee applies for early release of benefits Employer completes the correct relevant form to their appointed Independent Registered Medical Practitioner (approved IRMP with the fund) IRMP reviews case and completes form with their opinion – don’t be afraid to go back with questions (likelihood of treatment working for example) Employer makes a decision on whether to award ill health pension and which tier/early release of benefits Employer notifies member of decision and reasons behind decision including right of appeal Employer notifies Peninsula Pensions via Leavers form and relevant ill health certificate and employer decision notice Ill Health Retirement Process

38. Has the IRMP applied the correct test? Is the certification complete or is there anything missing or incorrect? Has the employer made a decision or simply adopted IRMP opinion without question? Insufficient information or uncertainty? Did the employer seek clarification from IRMP? Has the question on untried treatments been addressed properly? IRMP must be asked to give their view on the likely affect and whether on the balance of probabilities the condition renders the member permanently incapable. The same applies to undiagnosed conditions Have all the procedures been followed correctly? Ill health guidance on our website Ill Health Retirement - What can go wrong?

39. Free to use via our database Altair Allows employers access to their employees pension records over a secure web connection Employers can: Make changes to the records depending on access level – reduces paperwork and emails Produce own estimates if you wish – redundancy exercise avoid Pensions turnaround times for strain costs Approx. 88 employers signed up – Some here today Employer choice but with developments for submission of data/forms means ESS will be preferred route in the future – mandatory?.... Employers using spreadsheet interfaces – working on forms first Employer Self Service (ESS)

40. All comments have passed on to developers ESS Feedback

41. https://employers.peninsulapensions.org.uk/employerservicesweb/loginhttps://employers.peninsulapensions.org.uk/employerservicesweb/login

43. https://employers.peninsulapensions.org.uk/employerservicesweb/loginhttps://employers.peninsulapensions.org.uk/employerservicesweb/login

47. Benefit Calculation

48. Refund of contributions Paid if member has under 2 years service Member can’t have refund if has another continuing concurrent employment Members with more than 3 months and less than 2 years service have choice of refund or deferred benefit Opt-Outs Less than 3 months membership = Employer refunds through payroll More than 3 months & less than 2 years = Pensions will calculate refund - MUST NOT be refunded via payroll ** Only refund via payroll if member opts out within 3 months NOT for leavers** Still need copy of opt out form - See procedure guides on our website Admin Round-up

49. Automatic enrolment thresholds for 2017/18 The Government has published its review of the 2017/18 bands and thresholds for automatic enrolment. The proposed rates for 2017/18 are as follows, compared to 2016/17: The proposed rates will need to be set out in secondary legislation in order to come into effect from 6 April 2017 PP Website has been updated including link to review Admin Round-up

50. Devon Fund Academy 2017-2020 Employer Contribution Rates From 1st April 2017 Devon Fund academy organisations not offered option of notional total percentage employer rate for pensionable payroll purposes.   Academy pool rates for payroll purposes will be: Devon 15.4% Plymouth 15.3% Torbay 15.8% There will be no alternative rate option Multi Academy Trusts with the ability to operate across former LEA boundaries - care needs to be taken with their component employers Investment team notified all academies of future service % rate and annual monetary deficit contribution to be paid direct to the Fund Not sure of Somerset Fund’s approach as yet… Both DCC & SCC fund employers rates will be notified by Investment Teams Admin Round-up