Derbyshire Constabulary FLEXIBLE RETIREMENT PROCEDURE POLICE STAFF POLICY REFERENCE 10/280. This procedure is suitable for Public Disclosure
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1 Derbyshire Constabulary FLEXIBLE RETIREMENT PROCEDURE POLICE STAFF POLICY REFERENCE 10/280 This procedure is suitable for Public Disclosure Owner of Doc: Head of Department, Human Resources Date Approved: January 2010 Review Date: September
2 INDEX Heading Page No 1. Procedure Identification Page Legislative Compliance Introduction Guidance Flexible Retirement Process Consideration of Application Appeals Appendices
3 1. Procedure Identification Page Policy title: Flexible Retirement Procedure Police Staff Registry Reference number: 10/280 Procedure implementation date: January 2010 Procedure review date: September 2018 Department / Division responsible: Procedure owner: Human Resources Head of Department Last reviewed by: Ace Williams Date last reviewed: September 2016 Impacts on other policies / guidance / documents (list): None Security Classification: Disclosable under FOI Act: YES Procedure to be published on Intranet YES Procedure to be published on Force Website YES 3
4 2. Legislative Compliance This document has been drafted to comply with the principles of the Human Rights Act. Proportionality has been identified as the key to Human Rights compliance, this means striking a fair balance between the rights of the individual and those of the rest of the community. There must be a reasonable relationship between the aim to be achieved and the means used. Equality and Diversity issues have also been considered to ensure compliance with the Equality Act 2010 and meet our legal obligation in relation to the equality duty. In addition, Data Protection, Freedom of Information and Health and Safety Issues have been considered. Adherence to this policy or procedure will therefore ensure compliance with all relevant legislation and internal policies. 3. Introduction 3.1 The procedure provides guidance on flexible retirement and how to make a request. This is in accordance with the changes made to the Local Government Pension Scheme from April Objectives For the Force: - It enables retention of valuable experience and knowledge which would otherwise be lost if the employee where to retire or leave. It offers an effective means to realign staffing requirements and increase opportunity for succession planning. For the Employee: - It enables a step down towards retirement and for gradual adjustment. Any benefits paid as a result of flexible retirement are not subject to abatement (i.e. liable to reduction or suspension if the new pay plus pension exceed the earnings at retirement) during such time as the person remains with the same Employer. 4. Guidance 4.1 Employees may apply for flexible retirement under the scheme if aged 55 or over and a member of the Local Government Pension Scheme. Flexible retirement is where an employee can continue in their job but reduce the hours worked and draw pension benefits whilst continuing in employment. Flexible retirement can only occur with the Force s consent. To take advantage of flexible retirement an employee is expected to reduce their current contractual working hours by at least half. 4.2 For a reduction in grade the current policy does not provide for flexible retirement in this situation. Further guidance will be formulated if the policy needs to be extended to include this. 4
5 4.3 An employee who has reduced their hours and taken flexible retirement must only be allowed to work additional hours or overtime at the same level that applied prior to the reduction in contractual hours. The aim is to prevent employees compensating for a reduction in contractual hours by working additional hours and overtime. The Senior HR Business Partner must approve requests for temporary increases in additional hours and overtime in advance. 4.4 A request for flexible retirement may be made by any member of the Local Government Pension Scheme (LGPS) who has attained the age of 55 and has either 3 or more months membership or has transferred other pension rights into the LGPS (refer to Appendix B for more information). 4.5 If payment of pension benefits under the flexible retirement provisions are authorised before the employee has reached the 65 th birthday, then the pension benefits paid may be reduced in accordance with guidance, details of which will be included in the pension quotation, from the LGPS Administrators, Derbyshire County Council. 4.6 If payment of pension benefits under the flexible retirement provisions are authorised for an employee who attains age 60 by 31 March 2020 but who does meet the 85 rule (see Appendix A for clarification), then the pension benefits paid may be reduced in accordance with guidance. The 85 year rule is being withdrawn gradually and on a transitional basis and by 2020 this issue will no longer apply. 4.7 Whilst the regulations allow the employer to waive a reduction in benefits, there is a financial cost to the pension fund. In view of this, the force will not waive the reduction, except in exceptional circumstances and only by the Head of HR, in consultation with the Director of Finance and Business Services. 4.8 An approved request for flexible retirement constitutes a variation to the contract of employment when implemented and would result in a permanent change to the terms and conditions of the individual. 4.9 Retirement benefits will be paid immediately from the agreed date of reduction in hours. 5. Flexible Retirement Process 5.1 A member of staff who is interested in making a request for flexible retirement, in the first instance should complete the appropriate provisional quote estimate request form (Form E1). This can be found on the pension administrator s web page Derbyshire County Council s Pension. Once completed Form E1 should be forwarded to the respective HR Officer who will process the request and contact the Force Payroll granting authority for the provision of pensionable pay details which will enable the Force s Pension Administrators to provide the below information: - Whether there would be any actuarial reduction. A determination of whether there would be any costs to the Force (shortfall figures). An estimate of pension benefits which would be paid to the employee if the request was approved, using the completed estimate request form. 5.2 The pension administrators will then write to the HR Officer and confirm whether there is a pension fund shortfall. If there is a financial cost to the pension fund, which is a cost 5
6 incurred by the Derbyshire Constabulary, only in exceptional circumstances would the Force consider to bear the cost of leaving the pension early. Without approval to incur such costs the Flexible Retirement Application will not be supported. 5.3 If there is no cost to Derbyshire Constabulary, authorisation will be given for the release of the confidential pension estimate to the applicant. Once the employee receives their confidential pension estimate they should meet with their line manager to discuss the request. The employee s attendance record, PDR and any live disciplinary or conduct issues should also be considered at the meeting. Failure to meet the Force s attendance criteria will not automatically prevent members of staff from being granted Flexible Retirement but will be considered. Performance and disciplinary issues will also be taken into consideration. If, after the meeting, the employee still wishes to pursue flexible retirement, the Flexible Retirement Application Form should be completed and forwarded to the line manager for consideration. 6. Consideration of Application 6.1 The following general points should also be considered in each case: - The cost if any, to the Force of implementing the request. The effect the request would have upon the provision of Divisional/Departmental services. Any benefits which may arise from the implementation of the request. The need and ability to recruit or obtain another person to cover the duties and functions that would not be carried out by the individual should the request be approved. Any impact which the request may have upon service delivery. Is there a direct financial benefit to the Force if the reduced hours remain unfilled? When considering a request to reduce hours, the normal considerations under the flexible working procedures should be made. Each flexible retirement request should be considered on its merits and only agreed if it is the employer s economic and/or operational interests to do so. The Force has a responsibility to act in a prudent manner and the public perception of staff receiving benefits whilst continuing to receive close to full salary must be taken into account. The attendance record and discipline/conduct record of the individual. 6.2 If the line manager, is satisfied that the request can be accommodated they should endorse the application form and outline the business case for submission to the Divisional Commander/Head of Department. The line manager must inform the individual of the decision. Managers are reminded that a timely response to the decision to support or reject the application is required. 6
7 6.3 The Divisional Commander/Head of Department may wish to discuss the application with the HR Officer. 6.4 Once a final decision has been made, it should be forwarded to the Shared HR Service Centre who will ensure the employee is notified of the decision and (if approved) that it constitutes a variation to their contract of employment and will confirm the decision, in writing, to the individual. The employee will sign and agree a date from which the flexible retirement will commence, taking into account the timescales needed for processing he pension. The Force will then send all the information to the Pension Administrators to deal with the actual retirement. 6.5 The employee, can if they wish, pay pension contributions from their amended or new contract and this should be indicated on the pro-forma. 6.6 The Shared HR Services Centre will complete the transactional requirements for the release of the pension and forward to the Payroll provider for the flexible retirement and change in hours or grade to be instigated. 7. Appeals Process 7.1 If an employee s request for flexible retirement is not successful, they may appeal against the decision in writing to the Head of HR within 14 calendar days of the date of the letter informing them of the decision. 7.2 If there is a query on pension benefit the appeal should be under Local Government Pension Scheme (LGPS) Regulations Appendices Appendix A 85 Year Rule Appendix B Flexible Retirement (Routine Cases) 7
8 Appendix A 85 YEAR RULE Currently unreduced benefits can be paid from age 60 provided what is known as the 85 year rule is satisfied age and scheme membership in whole years total at least 85. Members of the LGPS on 30 September 2006 may have protected rights regarding the early payment of benefits. For employees age 60 or over by 31 March 2016 who retire before age 65 and satisfy the 85 year rule, benefits built up to 31 March 2016 will not be reduced. For employees under age 60 by 31 March 2016 who retire before age 65 and satisfy the 85 year rule, benefits built up to 31 March 2008 will not be reduced. For those aged 60 between 1 April 2016 and 31 March 2020 and meet the 85 year rule by 31 March 2020, some or all of the benefits built up from 1 April 2008 will not have a full reduction. 8
9 Appendix B Flexible Retirement (Routine Cases) For the purpose of this policy, requests for flexible retirement can be categorised as follows:- Category one Employee is age 60 or over there is no cost to the force as the employee is at or past their earliest retirement date. If they do not meet the Rule of 85 their pension benefits will be reduced to reflect early payment. Category two Employee is age 55 or over but less than 60 and does not meet the Rule of 85 until on or after their 60 th birthday. In this case the regulations allow for the cost of the early payment of pension benefits to be borne by the employee so as to avoid a pension fund shortfall. The benefits are actuarially reduced to reflect the fact that they are paid early. Category three Employee is age 55 or over but less than 60 and does meet the Rule of 85 either at the date of flexible retirement or at a later date that is before their 60 th birthday. In this case the force would have to meet the Pension Fund shortfall arising from the early payment of pension benefits from the date when the Rule of 85 is met. For those cases that fall within categories one and two above, our general policy is to consent to the payment of benefits from the Local Government Pension Scheme subject to a reduction or half of the employee s contractual hours. A reduction of less than half of the employee s contractual hours may be considered in exceptional circumstances. Where the benefits payable are reduced to reflect early payment the employer can agree to waive in whole or in part the reduction, and pay the cost to the pension fund. It is the Force s policy, as a general rule, not to agree to this. However, the Head of HR, in consultation with the Director of Finance and Business Services will consider applications where it is considered that it would be in our interests to meet this cost. For Category two cases the employee bears the reduction in benefits. For Category three cases, as there would be a cost to the Force, the general policy is not to agree to the early release of pension benefits. However, where it is considered to be in our interests, taking into account all the relevant factors including the cost, the Head of HR will consider applications for flexible retirement. 9
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