Pensions Policy. The Local Government Pension Scheme

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1 Effective from June 2015 Pensions Policy The Local Government Pension Scheme 1. Policy Statement 1.1 From 1 April 2014 the Local Government Pension Scheme (LGPS) is a statutory career average (defined benefit) pension scheme. The pension scheme forms a valuable part of the Council s employment package. 1.2 The LGSS Pensions website gives comprehensive information on the LGPS including details of: the benefits of the pension scheme the process for opting in and opting out of the pension scheme transferring benefits into the LGPS normal retirement age how to report changes in personal circumstances 1.3 Details of the scheme membership and the Council s auto enrolment requirements are given in Appendix There are a number of areas where the Council may exercise discretion under the legislation governing the LGPS. Appendix 2 details the Council s policy position in relation to these discretions. 2. Assessing Employee Contribution Rates 2.1 Employee contribution rate is the percentage of pay, which an employee pays into the LGPS - this is deducted from pay each month. From 1 April 2014 pension contributions will be payable on all non-contractual overtime and additional hours payments. Pension contributions are not payable on travel and subsistence payments, pay in lieu of notice or payment in relation to reserve forces leave. 2.2 There are 9 employee contribution bands. The contribution bands that apply from 1 April 2015 are: Band Actual pay Contribution rate , % 2 13,601 and up to 21, % 3 21,201 and up to 34, % 4 34,401 and up to 43, % 5 43,501 and up to 60, % 6 60,701 and up to 86, % 7 86,001 and up to 101, % 8 101,201 and up to 151, % 9 More than 151, %

2 The bands will be reviewed every 3 years to maintain an average employee contribution rate of 6.5%. 2.3 On the 1 April each year the Council will assess which contribution band an employee will be assigned to. Employees will be assigned to a contribution band based on their base salary and any fixed allowances that are received (i.e. a fixed annual amount or a % of salary). 2.4 Additional payments that are claimed for (e.g. on call and call out payments, enhancements and sleep-ins) and other one-off payments (e.g. honoraria) are not considered when assessing the employee contribution band. 2.5 Where additional payments claimed for exceed 20% of basic salary, then the Council will reserve the right to include these when assessing the employee s contribution rate. 2.6 The contribution band for part time employees will be assessed based on their pro rata salary, for example: Full time employee salary 30,000 pa 6.5% Part time salary of 15,000 pa (working half time) 5.8% The contribution band for term time only employees will be assessed based on their actual salary plus any fixed allowances this approach reflects the number of weeks per year that are actually paid for. 2.7 All zero hours employees will be assigned to band 1 (5.5%). The Council reserve the right to review a zero employee s contribution band where a significant number of hours are undertaken. 2.8 Employees who join the scheme part way through a year will be assigned to the appropriate contribution band based on their annual salary plus any fixed allowances at the point of joining the scheme. 2.9 An employee s contribution band will remain constant throughout the scheme year. In exceptional circumstances, where significant change occurs within the scheme year the Council may choose to recalculate an employee s contribution band when the change occurs. An employee will be notified if this has taken place Where an employee has multiple pensionable employments, each one will be assessed separately; it is possible that different jobs could fall into different contribution bands. If the Council determines that a single employment relationship exists then the pay from each job will be combined to determine a single contribution rate.

3 3. Contribution Flexibility 3.1 Employees have an option to opt to join the 50/50 section of the LGPS. During a period in the 50/50 section an employee will pay half the normal contribution rate and build up half the normal pension (the employee will still get full life and ill health benefits). See the LGSS Pensions website for further information and to obtain the required form. 3.2 Applications to move to the 50/50 section should be sent to payroll by 12 noon on 5th of the month, these will be processed for the next pay period. Applications received after this date will not be processed until the following month. ( E.g. a form received by deadline on 5th April, will be processed to take effect on 1st May and the changes will show on the May payslip). 3.3 The council is required to re-enrol employees back into the main section at certain points to comply with the automatic enrolment provisions of the Pensions Act Employees will be required to make another election to remain in the 50/50 section. 3.4 There are a number of ways employees can improve their retirement benefits, LGSS Pensions have further details. 4. Employer Contributions 4.1 The Council makes significant employer contributions for each LGPS scheme member. The employer continues to pay the full employer contribution rate for employees in the 50/50 section. Every three years, an independent actuary calculates how much the Council should contribute to the scheme. The rate of employer contributions will vary, but generally employees contribute approximately one third of the scheme's costs and the employer contributes the rest. 5. Breaks In Service 5.1 All policies that relate to authorised unpaid leave (e.g. unpaid maternity, paternity, adoption leave, additional annual leave, unpaid sick leave) give full details of the impact on pension contributions. 6. Transferring benefits into the LGPS and combining previous LGPS benefits 6.1 Employees have the option of transferring benefits into LGPS and combining previous LGPS. Employees who wish to do this should contact LGSS Pensions directly within one year of commencement.

4 7. Internal dispute resolution procedures 7.1 An internal appeals procedure exists where individuals can raise their concerns over any employer decisions made (or not made) in respect of their pension rights. For example, this could include concerns regarding the; Assessment of employee contribution rate (have they been allocated to the right contribution band) Have the rules been applied correctly 7.2 The procedure to be followed for raising concerns is: Informal Stage Formal Stage 1 Formal Stage 2 Individuals should raise their concerns via their line manager/supervisor e.g. to establish how the employee contribution band has been assessed Individuals should contact the Head of People to discuss their concern and their particular circumstances. Where individuals are still not satisfied that the rules have been applied correctly, they should put their appeal in writing to the Director of Legal Services or their nominated deputy. On receipt of an appeal the relevant person will consider the individual s appeal and seek the advice and involvement of others as appropriate. 7.3 If the Pensions Fund makes a decision, you will always be given details of the appeals process that is applicable Employing Authority and Administering Authority Discretions Within the pension regulations, Northamptonshire County Council is both the Employing Authority, and the Administering Authority, and has to make decisions in respect of certain discretions available The Employing Authority discretions and the policies on how they will be exercised by Northamptonshire County Council are detailed in appendix Policy monitoring 9.1 This policy will be monitored and reviewed from time to time to ensure it reflects the provisions of the Local Government Pension Scheme and remains current. Changes to the Scheme will be notified to members by the Administering Authority. 10. Contact Information 10.1 Contact Information You can contact LGSS Pension Service at telephone: or pensions@northamptonshire.gov.uk or LGSS Pensions, PO Box 202, John Dryden House, 8-10 The Lakes, Northamptonshire, NN4 7YD.

5 Appendix 1 Membership of the LGPS and auto enrolment The LGPS is available to all eligible local government employees under the age of 75. Employees who are eligible to join another statutory scheme are not eligible to join the LGPS (this includes fire fighters and most teachers). Employees with contracts for 3 months or more will be brought into the scheme automatically from commencement. Employees with contracts for less than 3 months will not be brought into the scheme automatically unless they meet the Automatic Enrolment criteria below. However, they may join the pension scheme at any time by opting in. Automatic Enrolment is Government legislation that requires the Council to enrol certain people into a pension scheme automatically. If an employee has a contract of less that three months, the action taken depends on the category an individual falls into, the categories are: Category Definition Action Eligible jobholders Non-eligible jobholders Entitled workers Aged 22 - state pension age earning above the PAYE threshold. Aged or state pension age 74 and earning above the PAYE threshold OR, aged earning above the National Insurance contributions lower earnings limit but below the national insurance contributions lower earnings limit. Aged earning below the National Insurance contributions lower earnings limit Will be automatically enrolled Can opt in (will not be automatically enrolled). Can opt in (will not be automatically enrolled). If an employee has more than one job with the Council, each job is treated separately and they can choose for which jobs they wish to be a member of the scheme. Members can choose to leave the scheme at any time by opting out, and have the right to opt to re-join from the beginning of the next available pay period after electing to re-join (subject to the normal eligibility requirements). There are no restrictions on the number of times this right can be exercised. Employees that choose to opt out of the pension scheme, and meet the above criteria, will be automatically re-enrolled into the scheme on the Council s re-enrolment date unless they had opted out within the previous 12 months. Re-enrolment will next take place in February 2016 and every three years thereafter.

6 Appendix 2 Discretions (LGPS) Within the pension regulations, Northamptonshire County Council (the Council), as the Employing Authority has to make decisions in respect of certain discretions available. The following details the main discretions and on how they will be exercised as decided by the Council as the Employing Authority. Northamptonshire Pension Fund Board publish the Administering Authority discretions on their website These discretions only apply at the time of application and are subject to change. Regulation Discretion Reference 1 R31 Granting Additional Pension Whether to grant additional pension to an active member or within 6 months of ceasing to be an active member by reason of redundancy or business efficiency (by up to 6,500 p.a.) The Council does not award additional pension. 2 R16(2)(e) R16(4)(d) R16(16) 3 R30(6),TP11(2) & R30(8) Shared Cost Additional Pension Contributions Whether, where an active Scheme member wishes to purchase extra annual pension of up to 6,500 (figure at 1 April 2014 ) by making Additional Pension Contributions (APCs), to (voluntarily) contribute towards the cost of purchasing that extra pension via a Shared Cost Additional Pension Contribution (SCAPC). The Council does not make such voluntary contributions. Whether to extend 30 day deadline for member to elect for a shared cost APC upon return from a period of absence from work with permission with no pensionable pay (otherwise than because of illness or injury, relevant childrelated leave or reserve force service leave). The Council will only extend the 30 day deadline in specific circumstances (e.g. purchasing of additional leave) and on a case by case basis where there are considered to be reasonable grounds for allowing a member to have more time to make an election. Flexible Retirement Whether all or some benefits can be paid if an active member aged 55 or over and with at least 2 years qualifying service reduces their hours or grade (flexible retirement). The Council will consider flexible retirement requests on a case by case basis, only in circumstances where the Council invites employees to make an application due to workforce transition requirements. No uninvited applications from employees will be considered. Whether to waive, in whole or in part, actuarial reduction to benefits paid on flexible retirement. The Council will consider each case on its merits.

7 4 TPSch2, paras 1(1)(c),1(2) and 2(2) 85 Year Rule Whether to switch on the 85 year rule for a member voluntarily drawing benefits at or after age 55 and before age 60. The Council will not "switch on" the 85 year rule. 5 TP3(1), TPSch2, paras2(1) and2(2), B30(5), B30A(5) R30(8) & Waive Reduction Whether to waive, on compassionate grounds, any actuarial reduction on pre and/or post April 2014 benefits The Council will consider waiving on a case be case basis any actuarial reduction for active members who wish to retire from age 55 onwards on compassionate grounds. The Council will not waive any actuarial reduction for deferred members on compassionate grounds. Whether to waive, in whole or in part, actuarial reduction on benefits which a member voluntarily draws before normal pension age The Council will waive in whole any actuarial reduction for active members who wish to retire from age 55 onwards. Compassionate grounds are defined as where an active employee or deferred beneficiary needs to care full time for a close relative, spouse, partner or other dependant who, through illness, requires full time care for the rest of their life expectancy which is anticipated to be in excess of 12 months from the date of the agreed medical advice. 6 R100(6) Transferring in non LGPS pension rights Whether to extend normal time limit for acceptance of a transfer value beyond 12 months from joining the LGPS. The Council does not extend the normal time limits. 7 R22(8)(b) R22(7)(b) Joining LGPS Membership 1. Whether to extend the 12 month option period for a member to elect that deferred benefits should not be aggregated with a new employment 2. Whether to extend the 12 month option period for a member to elect that deferred benefits should not be aggregated with an ongoing concurrent employment The Council does not extend the normal time limits. 8 R17(1) & definition of SCAVC in RSch 1 TP15(1)(d) & A25(3) Shared Cost Additional Voluntary Contributions (AVCs) 1. Whether, how much, and in what circumstances to contribute to shared cost AVC arrangements entered into on or after 1/4/14 2. Whether, how much, and in what circumstances to continue to contribute to a shared cost AVC arrangement entered into before 1/4/14 The Council will not contribute to any shared cost AVC. 9 R21(5) Assumed Pensionable Pay In determining Assumed Pensionable Pay, whether a lump sum payment made in the previous 12 months is a regular lump sum The Council does not include any "regular lump sum" to determine assumed pensionable pay for periods of absence, except when determining calculations for ill health retirement or death in service when the Council will consider each case on its merits. In such cases, the primary criteria will be whether it could reasonably be expected that the

8 member would have been likely to receive that regular payment for the forseeable future. 10 B30(2) Employer Consent Retirement Whether to grant application for early payment of deferred benefits on or after age 55 and before age 60 The Council will not allow any applications. 11 B30A(3) Employer consent retirement following Tier 3 Ill Health award Whether to grant an application for early payment of a suspended tier 3 ill health pension on or after age 55 and before age 60 The Council will not allow any applications. 12 Discretions under the Local Government (Discretionary Payments) (Injury Allowances) Regulations 2011 Injury Allowances 1. Whether to grant an injury allowance following reduction in remuneration as a result of sustaining an injury or contracting a disease in the course of carrying out duties of the job. 2. Whether to grant an injury allowance following cessation of employment as a result of permanent incapacity caused by sustaining an injury or contracting a disease in the course of carrying out duties of the job. 3. Whether to grant an injury allowance following cessation of employment with entitlement to immediate LGPS pension where a reg 3 payment was being made at date of cessation of employment but reg 4 does not apply. 4. Whether to grant an injury allowance to the spouse, civil partner, nominated co-habiting partner or dependent of an employee who dies as a result of sustaining an injury or contracting a disease in the course of carrying out duties of the job. Decision for above discretions: The Council does not grant any injury allowance.