Local Government Pension Scheme November 2013 Auto-enrolment & the Local Government Pension Scheme...

Local Government Pension Scheme

November 2013

Auto-enrolment & the Local Government

Pension Scheme

Presented by Andy Cunningham


What am I going to cover?

1. Basic Overview of Auto-enrolment

2. More Detailed Look at Auto-enrolment

3. Other things to remember about Auto-enrolment

4. General HR matters (not specifically auto-enrolment)

5. LGPS 2014 (not specifically auto-enrolment)


1). Basic Overview

a). Background• Introduced through the Pensions Act 2008

• Impact on every UK employer (Public & Private sector)

• Government intention is to significantly increase the number of people paying into a pension scheme.

• Legislation starting applying to the largest organisations in October 2012


1). Basic Overview

b). Main Requirement

To auto-enrol eligible jobholders into a qualifying pension

scheme with effect from and following the employer’s staging

date (this includes all future staff and all staff who become

eligible jobholders)


Where:

Eligible Jobholders: An employee aged 22 –> State Pension Age with qualifying earnings above the earnings trigger (currently about £9400p/a)

Qualifying pension scheme: This is defined by the Pension

Regulator, but for simplicity both the LGPS & TPS are qualifying

schemes.

Staging Dates: Depending on largest PAYE size, staging dates

range between Oct 2012 and Oct 2017 (largest employers went

first)

1). Basic Overview (cont.)


In addition to this, there are two principle complications:• A number of fairly prescriptive and complex monitoring and

communication requirements.

• For LGPS employers, to understand the dual responsibility to meet auto-enrolment legislation and the LGPS Regulations (and TPS Regulations where relevant)



c). Compliance & Legislation

The Pension Regulator is responsible for monitoring compliance

with the auto-enrolment legislation. In cases, of non-compliance

the Pension Regulator has the power to issue significant fines to

employers.

d). Useful point to remember

Excluding the time of the staging date and when another

employee starts, the only people you need to worry about are

those who are not in a Pension Scheme.



2). Auto-enrolment in more detail


a). Interaction of the LGPS/Auto-enrolment

Contractual enrolment (LGPS)

LGPS – staff with a contract of 3 months of more are ‘contractually’

enrolled (regardless of age and income)

TPS – if some teaching staff are not eligible for the TPS, they will

eligible for the LGPS instead.

Automatic enrolment

Requirement to continually monitor their workforce and take certain

actions (including automatic enrolment) at specified times – again

this is mainly relevant to those who are not in a pension scheme.

2). Auto-enrolment in more detail


b). Safeguarding

From 1 July 2012 employers can’t encourage employees to opt

out of a pension scheme or to take any account of employee

decisions regarding staying in the pension scheme as part of the

recruitment process.

2). Auto-enrolment in more detail (cont.)


c). Opt Outs• i). Employers cannot give a member an opt out form(these are

no longer in our starter packs) although the Pension Fund can. However, you can tell them where to find one (i.e. on the Pension Fund’s website)

• ii). An employee cannot opt out before their date of starting (any

form signed before this date must be disregarded)



c). Opt Outs (continued)

iii). Employers must keep a record of completed opt out forms.

iv). With effect from your staging date, we need to know the details of all employees who opted out on starting as we are required to keep this information (starter information would be sufficient)



d). Casuals

• With effect from Oct 2012, all casuals and staff with a contract of three months or less are eligible for the LGPS but they are not contractually enrolled

• A problem exists if they are Eligible Jobholder but also a casual (or short-term contract) as the member cannot be auto-enrolled.

• Proposed solutions to this are either repeated postponement (problem is that you need to send a letter each time) or to enter some wording on the timesheet as an alternative to repeated letters.



e). ‘Postponement’ of employer responsibilities

Bearing in the mind the LGPS Regulations requirements, this can

only be used:• To delay enrolling someone who opted out before you start date

(only relevant if you are not using transitional delay)• In relation to casuals (as described in d)



f). Transitional Delay (till Sept 2017)

Option to not enrol w/e from the staging date all eligible jobholders

who joined their employer before the employer’s staging date, with

a contract of three months or more who has opted out.

However, this only applies to staff who were eligible

jobholders on the staging date. Therefore for all staff who

have opted out who are under 22 or whose earnings were

below the limit, once they become eligible jobholders they will

still need to be re-enrolled (and sent a letter)



h). The different categories of worker


i). Monitoring from your staging date • If someone becomes an eligible jobholders for the first time, auto-enrol

them from the next pay period.

• If someone becomes a non-eligible jobholder or entitled worker for the first time since the employer’s staging date then send them a letter within 1 month telling them that they have the right to opt into the LGPS or TPS.

• If an employee has been in the LGPS or TPS whilst an eligible jobholder

but then opts out there is no further requirement to monitor them but action may need to be taken at the employer’s re-enrolment date (see next page).



j). Re-enrolment • Every three years from your staging date, all eligible jobholders who are not in the

scheme should be re-enrolled (unless they opted-out within a year of the relevant date)



k). Brief Summary of Communication Requirements (template letters can be found in the LGE full guide)

Transitional Delay- Must write to all eligible employers who are affected telling them they can

still opt-in.

- Issue postponement notices to casuals (reminding them that they can still opt in) who become eligible jobholders (casuals that are already eligible jobholders don’t need monitoring)

(continued)




Transitional Delay (continued)- Non-eligible jobholders and entitled workers with a contract for 3 months

or more – write to them notifying them of their right to join the LGPS.

- Non-eligible jobholders and entitled workers with a contract of less than 3 months duration – issue a 3 month postponement notice but inform them they have the right to opt into the LGPS if they wish to do so.




Without transitional delay

- Tell eligible jobholders that they have been automatically enrolled (where applicable) and that they have the right to opt out

- Non-eligible jobholders and entitled workers with a contract for 3 months or more – write to them notifying them of their right to join the LGPS.

- Non-eligible jobholders and entitled workers with a contract of less than 3 months duration – issue a 3 month postponement notice but inform them they have the right to opt into the LGPS if they wish to do so.



3). Other things to remember

Register • Employers must register with the Pensions Regulator within 4 months of

their staging date and of their subsequent re-enrolment dates.

Record Keeping • Employers must keep comprehensive records about their employees and

the scheme they have used to meet their automatic enrolment obligations. Records must be kept for 6 years. Employers must keep opt out forms for 4 year.


4. HR Responsibilities

i). Ill Health – a LGPS member should not be dismissed on Ill Health grounds without first being assessed against the 3 tiers.

ii). Redundancy – any LGPS member who is made redundant an aged 55 or over is entitled to early receipt of their pension (without reductions) – this may create a ‘strain’ on the employer involved; we re-charge for this cost at the time.

(cont.)


4. HR Responsibilities

(continued)

iii). Employers’ Discretions Policy - Academies are required to

create their own policy in relation to matters such as:

Early Retirement, flexible retirement and agreeing to increase

members pensions.


5. LGPS 2014

Some Key Points

(Specific presentations will be available in December/January)

• Career Average Scheme using 1/49ths• Main Scheme/50-50 Scheme• Employee Contributions – new bands and based on actual pay• Earliest Retirement age = 55• Normal Pension Age linked to State Pension Age• Refunds possible up to a period of 2 years

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