Pension Liaison Officers Group 8 th July 2008

1. Pension Liaison Officers Group8th July 2008 Presented by Viv Ray, Charlotte Thompson and Shirley Cuthbert

2. Agenda • New Employers Manual • Additional Regular Contributions (ARCs) • Stage 1 of Internal Dispute Resolution Procedure (IDRP) appointed person • Change to calculation of pensionable remuneration with unpaid leave • Ill-health Retirement Procedures

3. DEVON PENSION SERVICES EMPLOYER’S GUIDE

4. DEVON PENSION SERVICES • Index • Introduction • Joining the Pension Scheme 1.1 Eligibility to join the Pension Scheme 1.2 Appointment of Staff • Option Forms • Nominated Cohabiting Partner’s 1.3 Contributions and Pay • Pensionable Pay • Pension Contributions • Revising contribution bands 1.4 Re-employed members • Deferred Beneficiaries • Pensioners • Previous redundant/efficiency pensioners 1.5 Administering and Employing Authority responsibilities

5. DEVON PENSION SERVICES • Changes during employment 2.1 Changes in employment • Hour changes • Reduced pay due to sickness • Unpaid leave • Maternity/Paternity/Adoption leave • Other absences • Change of name • Change of pension contribution percentage • Opting Out of Pension Scheme 2.2 Purchase of Additional Benefits • Additional Regular Contributions (ARCs) • Additional Voluntary Contributions (AVCs) • Employer Options

6. DEVON PENSION SERVICES • Leaving Employment 3.1 Rule of 85 3.2 Early Leaver Options • Deferred Benefit • Transfer out of Pension rights 3.3 Retirements • Estimates • Strain cost • Award of additional membership and/or pension 3.4 Outsourcing 3.5 Death in Service 3.6 Pensionable pay for benefit calculations

7. DEVON PENSION SERVICES • Additional Information 4.1 Divorce 4.2 Pension Contribution returns • Monthly • Annually 4.3 Valuation and Investments 4.4 Employer Discretions 4.5 Internal Resolution Dispute Procedure • Stage 1 (Appointed person) • Stage 2 5 Available Forms

8. DEVON PENSION SERVICES EMPLOYER’S GUIDE Presented by Viv Ray Deputy Pensions Manager Tel. No: (01392) 688211 Email: viv.ray@devon.gov.uk

9. Ill Health • Reminder of the 1997 regulations • 2007 regs – what employer’s have to determine…… • Tier one • Tier two • Tier three • Deferred members • Overview of process • What’s changed

10. 1997 Regulations • Employer had to determine… Is the member leaving employment by reason of being permanently incapable of discharging efficiently the duties of that employment or any other comparable employment with his employing authority because of ill health or infirmity of mind or body?’

11. 1997 Regulations • Comparable employment • Contractual provisions as to capacity are same or differ only to the extent of being reasonable. Place of work /remuneration /terms etc do not differ substantially • Permanently incapable • member will, more likely than not, be incapable, until, at the earliest, his 65th birthday

12. 1997 Regulations

13. 2007 Regulations Employers to determine…. • Is the length of total membership at least three months (Regulation 5 (1)(a) and 20(1); • Will the employment be terminated on the grounds that the member’s ill-health or infirmity of mind or body renders him permanently incapable of discharging efficiently the duties of his current employment (Regulation 20(1)(a))

14. 2007 Regulations • Does the member have a reduced likelihood of obtaining gainful employment (whether in local government or elsewhere) before his normal retirement age (Regulation 20(1)(b)). If the answers to all three questions is ‘Yes’, member entitled to ill health pension

15. 2007 Regulations • Employer must now decide… • Is there no reasonable prospect of the member obtaining gainful employment before reaching his normal retirement age? • Is the member incapable of obtaining gainful employment within three years, but is likely to be able to do so before reaching his NRA?

16. 2007 Regulations • Is the member capable of recovering sufficiently from his incapacity to enable him to be capable of obtaining gainful employment within three years of leaving local government employment?

17. 2007 Regulations • Permanently incapable • Member will, more likely that not, be incapable until, at the earliest, his 65th birthday • Gainful employment • Paid employment for not less than 30 hours in each week for a period of not less than 12 months.

18. 2007 Regulations • Reasonable period • Three years • Obtaining • Looking at capacity of individual, taking into account the medical effects of the condition that gave rise to the ill health retirement. Non medical factors such as the general availability of gainful employment should not be considered

19. 2007 Regulations • Reduced likelihood • Policy objective to incentivise a return to work. Therefore no ill health retirement benefit who those who have been judged to be capable immediately of obtaining employment. Ill health retirement benefit (all tiers) only available to those whose likelihood of obtaining gainful employment, because permanent incapacity, is reduced

20. 2007 Regulations • The First Tier – 100% prospective service enhancement, payable for life, no review • Qualifying period of at least 3 months • Based on certificate, employer decides to terminate employment on grounds of permanent incapacity and because of that condition, they have a reduced likelihood of obtaining any gainful employment • No reasonable prospect of member obtaining any gainful employment before NRA

21. 2007 Regulations • The Second Tier – 25% prospective service enhancement, payable for life, no review • Qualifying period of at least 3 months • Based on certificate, employer decides to terminate employment on grounds of permanent incapacity and because of that condition, they have a reduced likelihood of obtaining any gainful employment • Likely that member will be capable of obtaining gainful employment before NRA but there is no reasonable prospect of this happening within three years of leaving.

22. 2007 Regulations • The Third Tier – accrued service only, payable for maximum of 3 years, subject to review. • Qualifying period of at least 3 months • Based on certificate, employer decides to terminate employment on grounds of permanent incapacity and because of that condition, they have a reduced likelihood of obtaining any gainful employment • Is capable of obtaining gainful employment within three years of leaving

23. 2007 Regulations • The Third Tier • Member must inform employing authority if he obtains employment • 18 month review • Employing authority make inquiries on current employment status • Benefits discontinued if now in gainful employment • Employing authority may recover payments made for any period in which member had been in gainful employment

24. 2007 Regulations • If not in gainful employment, authority shall obtain a further certificate from an IRMP • Still incapable of gainful employment – benefits continue • Move member to tier 2. Based on initial medical condition and new benefits start on date of this second determination • Member now capable of gainful employment – benefits discontinue. • In all third tier cases, benefits payable for maximum of 3 years.

25. 2007 Regulations Protections • 20 (15) – determinations made before 1st October 2008, member’s get the better of the old/new service enhancements • 20 (13) – existing 1997 members aged 45 or over on 31/03/2008, who fall into tier 1 or 2 only, get the better of the old/new service enhancements

26. Deferred members • When did they leave? • Pre April 1998 • Entitlement to unreduced benefits (no enhancements) if permanently incapable of discharging duties of that employment and ‘any employment’. IRMP to determine date of incapacity, benefits payable from this date. Can commute on serious ill health.

27. Deferred members • Between April 1998 – April 2008 • Entitled to unreduced benefits (no enhancements) if permanently incapable of discharging duties of that employment and also ‘any employment’. Payable from date of certificate. Can commute on serious ill health.

28. Deferred members • From 1st April 2008 • Entitled to unreduced benefits (no enhancements) if permanently incapable of discharging the duties of that employment and condition likely to prevent member obtaining employment before 65 or for at least 3 years (i.e. tier 1 & 2). Payable from date of certificate. Cannot commute on serious ill health

29. Employer process • Send member to IRMP • Obtain certification of permanent incapacity and reduced likelihood of obtaining gainful employment • Terminate employment • Ill health pension commences • Tier 1 & 2 payable for life • Tier 3 requires review

30. Employer process • 18 months – ascertain if member in gainful employment • Yes – stop pension and recovery any overpayments • No – send member to IRMP • IRMP report • Now capable of gainful employment – stop pension • Still incapable – continue paying benefits • Now deemed tier 2 – pension increased and now payable for life • 3 years – stop pension

31. What’s changed • Comparable employment – now ‘reduced likelihood of obtaining gainful employment’ • Enhancements based on ‘reduced likelihood…’ instead of service based enhancements • Enhancements paid to eligible members with more than 3 months (was 5 years) • Benefits subject to review (third tier) • Serious ill health commutation removed, no longer need to establish if member has less than 1 year to live

32. Devon Pension Services Estuary House Peninsular Park Rydon Lane EXETER www.devon.gov.uk/pensions Email – pensions@devon.gov.uk Viv Ray – 01392 688211 Charlotte Thompson – 01392 688228 Shirley Cuthbert – 01392 688218