Pension Liaison Officer Group 2 nd July 2013

1. Pension Liaison Officer Group2nd July 2013 Presented by Emma Shand – Employer Liaison Officer Shirley Cuthbert – Deputy Pensions Manager Viv Ray – Deputy Pensions Manager

2. Agenda • Auto-enrolment – Update • LGPS 2014 • What the new scheme means for employers • Looking to the Future

3. Auto-Enrolment Speaker: Viv Ray (Deputy Pensions Manager)

4. Auto-Enrolment – Agenda • Experience • Reminder

5. Auto-Enrolment Experience • Do not underestimate the time needed to set up new processes to comply with AE. • You need to talk to your payroll provider at least 12 months before your staging date to establish what service they will be providing. • Do not accept any opt out forms if: • Member has completed old opt form. New form available since January 2013 on Devon Pension Services website or by contacting pension section • Dated before employee has joined LGPS. Can only opt out once joined pension scheme. • Member has only completed one form for multiple post. Each post the member wishes to opt out of must have separate opt out form. • Employer must send starters data and opt out data on spread sheets within one month of employee joining LGPS and/or opting out. • Employer must include ALL starters even if they have opted out before deduction of pension contributions. DPS are required to hold this information. • Ensure you fully understand what you are required to do to comply with Auto Enrolment rules.

6. Auto-Enrolment REMINDERS • Do you know when your Staging Date is? • Have you made a decision whether to use the Transitional Period and/or Postponement? • Is everything in place for sending out letters to ALL your employees at your Staging Date? • Do you have in place, processes for assess your employees each month to check their auto enrolment eligibility? • Have you got monthly procedures in place for notifying Devon Pension Services of new starters and those that have opted out?

7. AE NEWS GOOD NEWS! Will Auto Enrolment rules be abandoned for Defined Benefit schemes such as the LGPS? Maybe! (see DWP consultation ended 7th May 2013)

8. Auto-Enrolment Any Questions?

9. Auto-Enrolment Useful website addresses Pensions Regulator: www.thepensionsregulator.gov.uk Department of Work and Pensions: www.dwp.gov.uk/policy/pensions-reform/workplace-pension-reforms/ Devon Pension Services www.devon.gov.uk/pensions

10. LGPS 2014 Speaker Shirley Cuthbert (Deputy Pensions Manager)

11. LGPS 2014 Video http://lgps2014.org/content/video-overview-lgps-2014

12. LGPS 2014 Proposals

13. LGPS 2014 Proposals

14. LGPS 2014 Proposals

15. Contributions

16. CARE

17. 50/50 option • Pay 50% contribution for 50% of pension • Only affects the amount of pension you build up – other benefits remain • Encourage members to join/stay in • Could be useful for high earners to avoid annual allowance/lifetime allowance charges • Will be automatically enrolled back into 100% scheme for Auto Enrolment

18. 50/50 Example

19. Linking NPA to SPA LGPS 2014 Normal Pension Age (NPA) linked to State Pension Age (SPA) - minimum of 65 If retire before NPA pension will be reduced. If retire after NPA pension will be increased SPA is increasing to 66 with future increases to 67 and beyond Office for Budget Responsibility to set future link between SPA and life expectancy www.local.gov.uk

20. Protections • Benefits before April 2014 will be unaffected for all members • Keep normal retirement age 65 • Keep 85 year rule protections • Continue to be linked to final salary on leaving • Members aged 55+ at 06/04/2012 will get the greater of 2008/2014 scheme • Will 50/50 option affect protections? • Continue in LGPS if outsourced

21. Examples • Please visit www.LGPS2014.org

22. What the new scheme means for employers Presented by Emma Shand Employer Liaison Officer

23. Introduction The reform of LGPS in 2014 will have implications for Payroll systems Changes as a result of changes to pensionable pay and move to Career Average Revalued Earnings Scheme (CARE) Legislation yet to be laid but payroll requirements are expected to remain same Further developments may impact on information provided

24. Key Requirements • Payroll records for each job • Separate sections of the scheme • Employee Contribution Rates • Employer Contribution Rates • Additional Contributions • New Definition of Pensionable Pay • Assumed Pensionable Pay • Pay received spanning 31/3/2014 and 1/4/2014

25. Payroll Records • Multiple employments - Each job must be held separately • Ability to deduct appropriate contribution rate for each job • Potentially change employee contribution rates each pay period due to variations of pensionable pay • Ensure employee contribution rates determined by pensionable pay received not full-time equivalent pay • Ability to hold separate cumulative pensionable pay and employee contributions for each job

26. Payroll Records continued… • Report changes in contractual hours • Report periods of absence • Ability to hold pensionable pay accumulations to date of any protections member has • Ability to hold pensionable pay accumulations at age 65 for members aged 55 and over at 1/4/2012 • Deduct employee and employer contributions on any pensionable emoluments and include in cumulative pensionable pay

27. Separate Sections of the Scheme 2 Sections: Full section (100/100) and 50/50 section Payroll systems must: • Be able to operate the 50/50 Section on any or all of the jobs • Have ability to deal with movement between full section and 50/50 section and back (and vice versa) within one financial year • Hold cumulative contributions paid and pensionable pay for each section AND each job per Scheme year. • Ensure cumulative figures for any periods in each section are totalled • Report start and end dates for each period in full and 50/50 sections

28. Employee Contribution Rates • Contribution rates determined by and calculated on actual pensionable pay received • Deducted on pensionable pay received • If Assumed Pensionable Pay (APP) used contributions deducted from pensionable pay received not APP • Rates remain same unless employer changes rate due to change in employment or pensionable pay • Payroll must hold cumulative contribution amounts for each job per section of scheme

29. Employer Contribution Rates Payable on pensionable pay received except during: • Ordinary or paid maternity leave • Ordinary or paid paternity leave • Ordinary or paid adoption leave Employer contributions payable on Assumed Pensionable Pay (APP) for above Employer contributions are not halved for 50/50 section

30. Additional Contributions No change here Still need facility to deduct additional pension contributions as percentage of pensionable pay or a flat rate Still need facility to deduct Additional Voluntary Contributions (AVCs)

31. Pensionable Pay New Definition From 1/4/2014: • Non-contractual overtime will be pensionable • Excess hours for part-time staff will be pensionable • Exclusions will be listed in scheme regulations – if not listed its included for pensionable pay

32. Pensionable Pay New Definition Payroll systems must: • Operate 2014 scheme definition of pensionable pay • Hold seperately, per job, pensionable pay cumulative each year in line with 2007 pay definition

33. Final Pensionable Pay Final pay for pre 2014 benefits (2007 regs) = based on FTE pensionable pay due for last 365 days Post 1/4/2014 CARE scheme benefits accrue year by year = based on actual pay or APP received in scheme year (ending 31st March) Though basis of scheme changes from 1/4/2014, final pay will still be at date of leaving

34. Final Pensionable Pay Anyone with pre 1/4/2014 service two remuneration calculations needed: Final pensionable remuneration for last 365 days to date of leaving and previous years if applicable (without non-contractual overtime) PLUS Actual pensionable pay 1st April to date of leaving (including non-contractual overtime)

35. Assumed Pensionable Pay (APP) APP only applies to the relevant employment when a member goes onto reduced contractual pay or no pay: • Sickness or injury • Ordinary or paid additional maternity, paternity or adoption leave • Relevant child-related leave • Absent on reserve forces leave

36. APP continued Payroll system must: • Calculate APP for each job • Calculate APP for period of ordinary and additional maternity, paternity or adoption leave for each job • Ensure cumulative figures for pensionable pay include APP for relevant periods for each job • Ensure the actual pensionable pay for periods of reduced pay is not included in the cumulative pensionable pay figure for each job • Ability to deduct appropriate contributions on actual pensionable pay received during reduced pay period and hold APP in the accumulations for each job

37. Pay relating to pre 31/3/2014 Pay or back-pay received after 31/3/2014 relating to period before 1/4/2014 is excluded from cumulative pay figure for the year NOT included in calculation of CARE pension (post 2014)

38. Next Steps Provisions for pre 2014 membership and final pay are being agreed and will be shared shortly Local Government Association (LGA) website links to Briefing Note for Employers Payroll specification document is to be developed aiming to provide more details – expected August/September 2013 LGA will provide training for employers August/September 2013

40. Looking to the future Speaker Shirley Cuthbert (Deputy Pensions Manager)

41. Looking to the future

42. We are moving • New location - Great Moor House, Exeter • New phone number 01392 383000 • With effect from 16th September 2013 • Letters to employers August 2013 • Letters to all members August 2013 • Shared service

43. Improved database • Web based platform - Altair • Employer Self Service (ESS) currently being trialled • Member Self Service to follow (MSS) - allow members to update certain fields eg change of address - calculate own estimates Password Protected

44. Communication • Employers – Pensions Line main source of providing information • Employees – Pensions Post, keeping employees up to date with developments • Electronic communication – sending updates straight to email addresses • Annual Benefit Statement

45. The Personal Touch • Employer meetings and training • Member presentations • Drop in sessions • Prudential & us

46. State Pension Reform 2017 • Contracting out to cease - scheme members & employers will pay more National Insurance - no affect on Scheme benefits - no affect to income received into Fund

47. Any questions

48. Further Information • LGA website: http://www.local.gov.uk/web/lgaworkforcepensions/home. LGA latest news containing information on scheme reform • LGPS website: http://www.lgps.org.uk/lge/core/page.do?pageId=97977. Information on the agreement reached between employers, trade unions and government on the benefit structure of the scheme – see ‘Reform of the LGPS – The New LGPS 2014 Project’. • LGPS 2014 member website: www.lgps2014.org. A dedicated website for information for scheme members about the reforms to the LGPS from 1 April 2014 • DCLG: https://www.gov.uk/government/consultations/local-government-pension-scheme-2014-and-2008-scheme-amending-regulations. Most recent DCLG consultation

49. Contact Info • Email addresses: • pensions@devon.gov.uk • pensionssecure-mailbox@devon.gcsx.gov.uk • emma.shand@devon.gov.uk • shirley.cuthbert@devon.gov.uk • viv.ray@devon.gov.uk