Academy Pension Liaison Officer’s Group

1. Academy Pension Liaison Officer’s Group Presented by: Viv Ray (Deputy Pensions Manager) Shirley Cuthbert (Employer Liaison Officer)

2. AGENDA Overview of LGPS Discretions & Strain Payments Ill-Health Retirement IDRP Pensionable Pay Final Pensionable Pay Completion of Forms AOB

3. THE LGPS Contracted-out 1/60th Final Salary Scheme Normal retirement Age 65 Option to convert part pension to tax free lump sum on retirement Increased in line with Consumer Price Index Payable for life Death Benefits – Dependent pensions (if applicable & death grant

4. Employee Contribution Rates Band Range (2011/12) Contribution rate 1 £0 to £12,900 5.5% 2 £12,901 to £15,100 5.8% 3 £15,101 to £19,400 5.9% 4 £19,401 to £32,400 6.5% 5 £32,401 to £43,300 6.8% 6 £43,301 to £81,100 7.2% 7 More than £81,100 7.5%

5. Employer’s Discretions Policy • All LGPS employer’s must formulate pensions discretions. • Discretions must be published • Discretions must be regularly reviewed • Copy of discretions to be sent to Devon Pension Services • Two types of discretions: • 4 that must have written policy • Others that can be dealt with as and when they are required. • Notes and template available on Pensions website

6. What employer’s should consider • Cost – Usually a cost to employer • Fettering Discretions – Wording must not fetter the employer’s discretion • Age discrimination – Policy must not have age related criteria. • Always create own policy, not good practice to copy another employer’s wording.

7. Required written policy of 4 discretions • Awarding Additional Pension (ARC) • Awarding Augmented Service • Flexible Retirement • Early Retirement

8. Employer ARCs and Augmented Service • What are they? • When are they awarded? • What is the cost to employer? • What is the benefit to the member? • Comparing the 2 choices

9. Employer Additional Regular Contributions (ARCs) • Employer must have a policy on awarding ARCs • Employer can award a maximum additional pension of £5,000 • Employer can make the award anytime during member’s employment. • GAD tables available to calculate cost depending on age of member. • Cost must paid to pension fund within one month of award • Additional pension awarded does not provide for additional dependants pension. • If member leaves before age 65, pension awarded will be actuarially reduced.

10. Augmented Service • Employer must have a policy on awarding augmented service • Employer can award a maximum of 10 years service. • Employer can make the award anytime during member’s employment or up to 6 months after the member has retired on redundancy or efficiency grounds or member held a joint appointment. • Augmented Service does not effect 85 year rule date • Cost of augmented scheme to employer can be calculated by Devon Pension Services. • Cost must paid to pension fund within one month of award. • If member leaves before normal pension age then benefits derived from augmented service award will produce an employer ‘Strain Cost’. (Axis does not calculate this amount)

11. ARCs Provides pension No dependants benefits Employer pays now Tables available Pension reduced if retires early Need employer policy Augmented Service Provides service Dependants benefits Employer pays now Actuary to provide cost Strain Cost if retires early Need employer policy Comparison

12. Flexible Retirement • Employer can agree to member taking flexible retirement from age 55. • Member must have reduced hours or grade to be eligible • Employer can stipulate certain criteria in policy i.e. • Reduction in hours must be at least 20% • Can’t revert back to previous hours within certain timescale • There must be a business need to agree • New pay and pension mustn’t exceed previous pay • Whether to waive any actuarial reduction or not (Strain Cost to employer)

13. Early Retirement • Employer can agree to member taking early retirement from age 55. • Employer can agree to waive any actuarial reduction but would have to pay Strain Cost • Compassionate grounds maybe a consideration • Also applies to deferred beneficiaries

14. What is a ‘Strain Cost’? • A ‘Strain Cost’ is what an employer has to pay to the Pension Fund when agreeing to early release of benefits • Circumstances where a ‘Strain Cost’ would apply: • Redundancy/Efficiency retirement • Flexible Retirement • Early Retirement (Current or Deferred member) • Waiving of actuarial reduction would increase ‘Strain Cost’ • ‘Strain Cost’ can be paid immediately as one off payment or over 3 years (1st payment following April)

15. Ill-Health Retirement • Need to employ an approved Independent Registered Medical Practitioner (IRMP) • Ill-health forms can be found on our website • Employer is required to make decision on ill-health in conjunction with IRMP opinion • There are 3 tiers depending on severity of ill-health • Submit Form EAS6 to get pension estimate once IRMP has signed certificate. • The LGE Guide called ‘The prevention and management of sickness absence (2007) is currently being updated. • Ill-health guidance can be found on our website in the Employers Manual which also gives useful links to CLG documents.

16. Internal Dispute Resolution Procedure (IDRP) • All members have the right to complain using the IDRP and need to complete the appropriate forms. • Guidance on IDRP can be found on our website • Each employer must appoint a senior officer to deal with possible stage 1 IDRPs (See form) • Employers need to deal with Stage 1 IDRP where original decision was made by employer i.e Ill-health • Employer’s IDRP officer needs to follow procedure in guidance • Provide Devon Pension Services with copies of decisions made by employer.

17. Pensionable Pay • Definition: An employee’s pensionable pay is the total of all the salary , wages, fees and other payments paid to him for his own use in respect of his employment; and any other payment or benefit specified in his contract of employment as being a pensionable emolument.

18. Exceptions • Non contractual overtime, • Travelling, subsistence or other allowance paid relating to expenses incurred, • Pay in lieu of holiday/notice, • Any payment as an inducement not to leave prior to receiving the payment, • Any payment of compensation in relation to equal pay claims. • Money value or pay in lieu of vehicle • Payment made relating to School Achievement Award Scheme

19. Ones to watch • Honorarium Payments • all included apart from where payment relates to unpaid overtime • First Aid Allowance • only to be included if in contract.

20. Final Pay Calculation • Generally, the last 365 days of that employment or, one of the subsequent 2 years if full time equivalent higher. • Whole time equivalent pensionable pay always used • TUPE transfers are deemed to be one employment to allow monies earned with both employers to be included.

21. Example 1 – F/T member leaves 06/07/08 Final year’s pay period = 07/07/07 to 06/07/08 Annual Salary from 01/04/07 = £12,345.00 Annual Salary from 01/04/08 = £12,750.00 Final year's pay = 07/07/2007 – 31/03/2008 = £12,345.00 ÷12 x 8mths 25/31days = 9,059.64 01/04/2008 - 06/07/2008 = £12,750.00 ÷12 x 3mths 6/31days = 3,393.15 Final Year’s Pay =£12,452.79

22. Example 2 P/T Member leaves 06/07/8 Final year’s pay period = 07/07/07 to 06/07/08 P/t Hours = 850/1700pa Annual Salary from 01/04/07 = £6172.50 P/T Hrs = 1000/1700pa Annual Salary from 01/04/08 = £7500.00 Final year's pay = 07/07/2007 – 31/03/2008 = £6172.50 / 12 x 8mths 25/31days = 4529.82 / 850 x 1700 = £9059.64 01/04/2008 - 06/07/2008 = £7500 / 12 x 3mths 6/31days = 1995.97 / 1000 x 1700 = £3393.15 W/t Equivalent Final Year’s Pay =£12,452.79

23. Pre April 2008 Certificate of Protection • Member’s pay has been detrimentally affected following an employer driven reduction in grade or additions no longer paid eg weekend enhancement • Employer issues a Certificate to member and Pension Administrator

24. Post April 2008 Reduction in last 10 years • Where member’s full time equivalent pensionable pay drops in last 10 years of employment they can choose to use best average of 3 consecutive years within the last 13 financial years as at 31st March. • Member needs to state their interest in writing no later than 1 month before they leave.

25. EAS2

26. EAS2

27. Contact Info Viv Ray, Deputy Pensions Manager Email: viv.ray@devon.gov.uk Tel: 01392 688211 Shirley Cuthbert, Employer Liaison Officer Email: shirley.cuthbert@devon.gov.uk Tel: 01392 688218 Web address www.devon.gov.uk/pensions Pensions Shared mailbox pensions@devon.gov.uk