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LGPS 2011

LGPS 2011. Employer Training. Objectives. Understand what changes are being made Know what you have to do to implement them. Areas to be covered. New contribution rates What counts as pensionable pay Eligibility to join the scheme Casual employees Buying additional benefits.

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LGPS 2011

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  1. LGPS 2011 Employer Training

  2. Objectives • Understand what changes are being made • Know what you have to do to implement them

  3. Areas to be covered • New contribution rates • What counts as pensionable pay • Eligibility to join the scheme • Casual employees • Buying additional benefits

  4. Areas to be covered • Employer awards • Unpaid leave • Multiple employments • Ill-health retirements • Minimum retirement age

  5. Contribution Rates • Everyone’s rate changed from 01.04.08 • Rate to be applied dependent on pensionable pay • For part-timers, use full–time equivalent pay to determine rate • For term-timers, use full-time, term-time pay to determine rate

  6. Contribution Rates April 2011

  7. Contribution Rates • Final decision on band belongs to employer • Example: Member has basic pay of £17,500 and no pensionable extras – rate is 5.9% Member has basic pay of £17,500 and £3,000 bonus – rate is 6.5% Member has basic pay of £17,500 and variable bonus – rate is employer’s decision

  8. Contribution Rates • Member works 18 hours per week out of 36, part-time pay is £12,000 pa, rate to use is 6.5% (full-time pay is £24,000), membership is recorded as 50% • Member works full time week (36 hours) but only 48 weeks per year. Pay received is £17,000, rate to use is 5.9%, membership recorded as 92.31% • Member works 18 hours per week out of 36 and 48 weeks per year. Pay received is £8,500, rate to use is 5.9% (full-time, term-time pay is £17,000), membership recorded as 46.15%

  9. Contribution Rates • Bands increased each year in line with Orders made under Pensions (Increase) Act 1971 • Employer’s decision on if and when to review members’ rates • Options include: each time pay changes (i.e. promotion during the year), each 1st April (or when cost of living increase applied), never

  10. Contributions: Protected rate • Protected 5% rate abolished • Phased contribution rates until member matches normal rate • Contributions from 01.04.2011 in accordance with normal rate

  11. Contributions: Protected rate

  12. Pensionable Pay • Includes: basic salary Contractual overtime Honoraria/bonus Anything specified in contract as pensionable • Not included: non-contractual overtime Travelling allowance or expenses Payment in lieu of holidays Payment in lieu of notice Payment as inducement not to terminate employment

  13. Eligibility • Last day in scheme must be no later than 2 days before 75th birthday • Must have contract of at least 3 months • Effectively excludes some casual employees • Contributions can be backdated if contract extended beyond 3 months

  14. Casual Employees • Mutuality of obligation: if you have work to offer it must be offered to that employee, who must accept • New casuals must have 3 month mutual obligation contract to be eligible • Current casuals must have mutuality of obligation to remain in scheme

  15. Casual Employees

  16. Additional Benefits • All AVCs and current added years contracts to continue as normal • Added years abolished • Replaced by additional pension • Can buy up to £5,000 p.a. in multiples of £250 • Paid for by additional pension contributions • To be deducted in same way as added years contributions

  17. Employer awards • Ability to award up to 10 years extra membership remains • New ability to award additional pension • Can award up to £5,000 pa in multiples of £250 • Paid by lump sum, or additional employer contributions

  18. Unpaid leave • Regulations have been clarified • Contributions for first 30 days of unpaid leave must be paid

  19. Multiple Employments • Must be treated separately for contribution rates • Do not have to be member in all employments

  20. Ill-health Retirements • 3 tiers of ill-health • Dependent on possible recovery to be capable of undertaking “gainful employment” • Gainful employment = any job of at least 30 hours per week, for at least 12 months • 1st tier = Very improbable to recover, 100% membership enhancement • 2nd tier = may recover, 25% membership enhancement • 3rd tier = will be capable within 3 years, no enhancement

  21. Ill-health Examples • Mr Smith, retires aged 44 with no real likelihood of recovery. Enhancement 21 years (100% potential membership between LDS and 65th birthday) • Mrs Jones, retires aged 35 with reduced likelihood of recovery. Enhancement 71/2 years (25% potential membership between LDS and 65th birthday) • Mr Alas, retires aged 50 (over 45 on 31.03.08) with 20 years membership and reduced likelihood of recovery. Enhancement 62/3 years because of protections

  22. Earliest Retirement Date • Increased from age 50 to 55 • Ill-health benefits still payable from any age

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