TEESSIDE PENSION FUND. 222 Pensionable Pay Vanessa Barker Training Co-ordinator February 2015.

TEESSIDE PENSION FUND

222

Pensionable Pay

Vanessa Barker

Training Co-ordinator February 2015

333

Pensionable Pay

Pre 2014 final salary pensionable pay

Post 2014 career average pensionable pay

444

Pensionable Pay


Pensionable or not

Full time or part time

Reductions/restrictions

Certificates of protection

13 year pay calculation

555

Pensionable Pay

Post 2014 career average pensionable payPensionable or notLump sum paymentsContractual & non-contractual overtimeEnhanced hoursAssumed pensionable payCumulative pensionable pay

666

Pensionable Pay

Actual calculation of pay

Calculation of final pay pre2014

Calculation of final pay post 2014

777

Pensionable Pay

Effects of periods of leave Paid leave Unpaid leave Maternity leave Additional maternity leave Strike leave Jury service Reserve forces leave

888

Pensionable Pay

Effects of periods of leave

Additional Pensions Contributions (APC)

calculator

999

Pensionable Pay

Refunds

Under 3 months

Over 3 months

Under two years

National Insurance earnings

101010

Pensionable Pay

Pension unit forms Starter Variation Estimate early retirement/redundancy costs purchase order box Leaver to pension Leaver not to pension Strike Maternity Ill health

111111

Pensionable Pay



What’s pensionable?

Actual calculation of pay

121212

Pensionable PayPre 2014 final salary pensionable pay

Pensionable or not

£2,500.00 Salary Yes £ 250.00 Performance-related Pay Yes £1,000.00 Cash equivalent of lease car No

£ 500.00 Contractual Overtime Yes

£ 296.75 Travelling Expenses No £ 428.75 Subsistence expenses No

£ 14.00 First Aid Allowance Yes

£ 154.25 Enhancement for weekend working Yes

£ 850.00 Non-contractual overtime No

£5,993.75

131313

Pensionable Pay (Pre 2014)Pay Pensionable?Basic Salary YesPerformance related pay Yes – if contractualCash equivalent of a lease car NoContractual overtime YesNon-contractual overtime NoTravelling expenses NoFirst aid allowance YesEnhancement for weekend working Yes – if contractualEnhancement for working nights Yes – if contractualSleep ins Yes – if contractualSubsistence or allowance paid in respect of expenses incurred

No

Payment for loss of holidays NoPayment in lieu of notice to terminate contract of employment No

Any award of compensation (excluding any sum representing arrears of pay) for the purposes of achieving equal pay in relation to other employees.

No

Detriment payment ??Bonus Yes – if contractualHonoraria payment Yes – if in lieu of duties

No - if instead of overtime

Acting up pay YesMarket Pay Supplement YesSalary Sacrifice Yes – unless for a carCPD (Continual Professional Development) Yes

141414

Pensionable PayPost 2014 career average pensionable pay

Pensionable or not

£2,500.00 Salary Yes £ 250.00 Performance-related Pay Yes £1,000.00 Cash equivalent of lease car No

£ 500.00 Contractual Overtime Yes

£ 296.75 Travelling Expenses No £ 428.75 Subsistence expenses No

£ 14.00 First Aid Allowance Yes

£ 154.25 Enhancement for weekend working Yes

£ 850.00 Non-contractual overtime Yes

£5,993.75

151515

Pensionable Pay (Post 2014)Pay Pensionable?Basic Salary YesPerformance related pay YesCash equivalent of a lease car NoContractual overtime YesNon-contractual overtime YesTravelling expenses NoFirst aid allowance YesEnhancement for weekend working YesEnhancement for working nights Yes Sleep ins YesSubsistence or allowance paid in respect of expenses incurred

No

Payment for loss of holidays NoPayment in lieu of notice to terminate contract of employment No

Any award of compensation (excluding any sum representing arrears of pay) for the purposes of achieving equal pay in relation to other employees.

No

Detriment payment YesBonus YesHonoraria payment Yes

Acting up pay YesMarket Pay Supplement YesSalary Sacrifice Yes – unless for a carCPD (Continual Professional Development) Yes

161616

Pensionable Pay2008 2014

(1) An employee's pensionable pay is the total of- (1) Subject to regulation 21 (assumed pensionable pay), an employee's pensionable pay is the total of-

(a) all the salary, wages, fees and other payments paid to him for his own use in respect of his employment; and

(a) all the salary, wages, fees and other payments paid to the employee, and

(b) any other payment or benefit specified in his contract of employment as being a pensionable emolument.

(b) any benefit specified in the employee's contract of employment as being a pensionable emolument.

(2) But an employee's pensionable pay does not include- (2) But an employee's pensionable pay does not include-

(a) payments for non-contractual overtime; (a) any sum which has not had income tax liability determined on it;

(b) any travelling, subsistence or other allowance paid in respect of expenses incurred in relation to the employment;

(b) any travelling, subsistence or other allowance paid in respect of expenses incurred in relation to the employment;

(c) any payment in consideration of loss of holidays; (c) any payment in consideration of loss of holidays;(d) any payment in lieu of notice to terminate his contract of employment; (d) any payment in lieu of notice to terminate a contract of employment;

(e) any payment as an inducement not to terminate his employment before the payment is made.

(e) any payment as an inducement not to terminate employment before the payment is made;

(f) the amount of any supplement paid-

(i) by the Environment Agency; or

(ii) to an employee whose employment is transferred on 1st April 2010, under a staff transfer scheme, from the Learning and Skills Council for England to a local authority or to London Councils Limited,

in recognition of the difference in contribution rates between members of the principal civil service pension scheme and the Scheme; or

(f) any amount treated as the money value to the employee of the provision of a motor vehicle or any amount paid in lieu of such provision;

(g) any award of compensation (excluding any sum representing arrears of pay) for the purposes of achieving equal pay in relation to other employees.

(g) any payment in consideration of loss of future pensionable payments or benefits;

(3) No sum may be taken into account in calculating pensionable pay unless income tax liability has been determined on it.

(h) any award of compensation (excluding any sum representing arrears of pay) for the purpose of achieving equal pay in relation to other employees;

(4) In this regulation "local authority" has the same meaning as in regulation 16A. (i) any payment made by the Scheme employer to a member on reserve forces service leave;

(j) returning officer, or acting returning officer fees other than fees paid

171717

Pensionable Pay (pre 2014)


Actual calculation of pay/final payIf the pay rates are as follows: 01/04/2014 to 31/03/2015 = £26067.00

01/04/2015 to 30/11/2015 = £26835.00

01/12/2014 to 31/03/2015 gives a number of days of 121 days

01/04/2015 to 30/11/2015 gives a number of days of 244 days

365 days

01/12/2014 to 31/03/2015 is 121 / 365 x £26067.00 = £ 8641.39

01/04/2015 to 30/11/2015 is 244 / 365 x £26835.00 = £17939.01

Final salary pensionable pay £26580.40

181818



Part time01/12/2014 to 31/03/2015 = £21135.41

01/04/2015 to 31/03/2015 = £21758.11

shown as 30/37

01/12/2014 to 31/03/2015 = £26067.00 (£21135.41 / 30 hours x 37 hours)

01/04/2015 to 30/11/2015 =£ 26835.00 (£21758.11 / 30 hours x 37 hours)

01/12/2014 to 31/03/2015 is 121 / 365 x £26067.00 = £ 8641.39

01/04/2015 to 30/11/2015 is 244 / 365 x £26835.00 = £17939.01


191919



Part time/term time01/12/2014 to 31/03/2015 = £17838.28

01/04/2015 to 31/03/2015 = £18363.84

30 hours per week for 44 weeks per year = 30 x 44/52.14 = 25.32

shown as 25.32/37.00

01/12/2014 to 31/03/2015 = £26067.00 (£17838.28 /25.32 x 37)

01/04/2015 to 30/11/2015 =£ 26835.00 (£18363.84 / 25.32 x 37)

01/12/2014 to 31/03/2015 is 121 / 365 x £26067.00 = £ 8641.39

01/04/2015 to 30/11/2015 is 244 / 365 x £26835.00 = £17939.01


202020

Pensionable Pay

Reductions

Restrictions

Certificates of Protection

13 year Pay Calculation

212121

Pensionable Pay (pre 2014)Pensions built up prior to 2014 are protected

Pre 2008 protection

Protection applies if, otherwise than by virtue of a member’s own circumstances-

• his/her rate of pay is reduced, or• the rate at which it may be increased is restricted in such a way

that it is likely that the rate of their retirement pension will be adversely affected, AND

• a certificate of protection of pensionable pay has been issued.

(A certificate could only have been issued where the reduction or restriction in pay is enforced)

222222


Pre 2008 protection

Protection did not apply where –

• a member takes a voluntary or temporary reduction in pay; or• they are returning to their normal post after a temporary promotion;

or• they are simply reducing their working hours or weeks (and the

whole time equivalent pay remains unchanged).

232323


Pre 2008 protection

•Must leave within 10 years of date of reduction/restriction

•Pay can be-Best single year in the last 5, ORAnnual average of any consecutive 3 year period in the last 13 years

•Always ending with anniversary of date of leaving•After allowing for PI – spreadsheet•Certificate is transferable across employments where membership is aggregated

242424


Post 2008 protection

Protection applies where a member’s pay in a *continuous period of employment is reduced or restricted-

• because the member chooses to be employed by the same employer at a lower grade or with less responsibility;

• for the purposes of achieving equal pay in relation to other employees of that employer;

• as a result of a job evaluation exercise;• because a change in the member’s contract of employment resulting in the

cessation or restriction of, or reduction in, payments or benefits specified in the member’s contract of employment as being pensionable emoluments; or

• because the rate at which the member’s rate of pay may be increased is restricted in such a way that it is likely that the rate of the member’s retirement pension will be adversely affected.

*unless a person has changed employers in the last 10 years in circumstances where TUPE or the move is treated as a TUPE move applies, e.g. in a machinery of government change or contracting out exercise

252525



Protection does not apply where-

• the reduction/restriction immediately follows a period in which the member occupies a post on a temporary basis at a higher rate of pay; or

• the member chooses to reduce his or her hours of work or to be employed at a lower grade, for the purposes of flexible retirement; or

• they are simply reducing their working hours or weeks (and the whole time equivalent pay remains unchanged).

262626



•Must leave within 10 years of reduction/restriction

•Pay can be-

Annual average of any 3 consecutive years in the last 13 years

Year ending 31st March

•Not transferable – current employer only unless TUPE applies

272727


Pre 2008 & post 2008 protections

•Spreadsheet

•Password protected - penpay

Remember:

rights continue to apply even where the pay cut or restriction occurs after March 2014

282828

Pensionable Pay (post 2014)


Calculation of pensionable pay is basically the same

But introduced in the CARE scheme is the ‘Career average pensionable pay’ (which is specific to a scheme year)

i.e. the member’s pay from 01/04/20?? to 31/03/20?? or the date of leaving whichever is sooner.

292929



01/04/2014 = £26067.00

01/04/2015 = £26835.00

Career average pensionable pay would be:

£26067.00 for 01/04/2014 to 31/03/2015

£26835.00 for 01/04/2015 to 31/03/2016

*career average pensionable pay is specific to a scheme year

303030



01/04/2014 = £26067.00

01/07/2014 = £26835.00

01/04/2015 = £26835.00


01/04/2014 to 31/03/2015 = £26643.00

(3/12 x 26067.00 + 9/12 x 26835.00)

01/04/2015 to 31/03/2016 = £26835.00

*career average pensionable pay is specific to a scheme year

313131

Pensionable Pay (post 2014)Post 2014 career average pensionable pay

01/04/2014 = £26067.00

01/07/2014 = £26835.00

01/04/2015 = £26835.00

member received non-contractual overtime payments of the following:

February 2015 £98.00

March 2015 £53.00

June 2015 £37.00

October 2015 £74.00

November 2015 £72.00


01/04/2014 to 31/03/2015 = £26794.00

(3/12 x £26067.00 + 9/12 x £26835.00 + £98.00 + £53.00)

01/04/2015 to 31/03/2016 = £27018.00

(£26835.00 + £37.00, £74.00 and £72.00)

323232

Pensionable Pay (post 2014)Post 2014 career average pensionable payCareer average pensionable pay for a member leaving 30/11/2015

Career average for scheme year 1 April 2014 to 31/03/2015 = £26067.00

Plus overtime payments for the period = £ 151.00

Career average pensionable pay for year 1/4/2014 to 31/3/2015 = £26218.00

*Pension will have already been calculated & credited to the member’s pension account for year

Career average for scheme year 1 April 2015 to 30/11/2015 (date of leaving)

01/04/2015 to 30/06/2015 = 3/12 x 26067.00 = 6516.75

01/07/2015 to 30/11/2015 = 5/12 x £26835.00 = £11181.25

Plus overtime payments for the period = £ 183.00 (37 + 74 + 72)

= £17881.00

Career average pensionable pay for the year 1/4/2015 to 30/11/2015 = £17881.00

If you are completing monthly returns, you should be able to just lift these figures

directly from your payrolls if the member has not had leave periods/nil/reduced pay

333333

Pensionable Pay (post 2014)Post 2014 Assumed pensionable pay

01/04/2014 = £26067.00

01/07/2014 = £26835.00

01/04/2015 = £26835.00


February 2015 = £98.00, March 2015 = £53.00, June 2015 = £37.00

At 01/09/2015 member’s APP calculated due to pay drop for sickness

Use previous three months June 2015 = £2273.25 (1/12 x 26835.00 = 2236.25 + 37.00)

July 2015 = £2236.25 (1/12 x 26835.00)

August 2015 = £2236.25 (1/12 x 26835.00)

Total for previous three months = £6745.75

Assumed pensionable pay = 6745.75/3 x 12 = £26983.00

343434

Pensionable Pay (post 2014)Post 2014 Assumed pensionable pay

** Note: member would only pay a contribution on the pay that they receive from 01/09/2015

employer would pay a contribution on the APP they had just calculated

Weekly, fortnightly, lunar, quarterly, half yearly

Irregular pay frequencies

Calculate the average pensionable pay for the 12 complete weeks prior to the relevant period

Relevant period start date is the day the pay reduces or drops to nil

This figure is then grossed up to an annual figure

If 12 complete pay periods do not exist, an employer should use whatever number of complete periods are available and gross up to an annual figure

** Remove any payments that are not payable every pay period (referred to as lump sums)

353535


Lump Sum Payments/contractual & non-contractual overtime/enhanced hours

Month 1 = £1,400.00Month 2 = £2,400.00Month 3 = £1,400.00

£1,400.00 + £2,400.00 + £1,400.00 = £5,200.00/3 x 12 = £20,800.00

Annual Pay£1,400.00 x 12 + £1,000.00 annual bonus = £17,800.00

£1,400.00 + £1,400.00 + £1,400.00 = £4,200.00/3 x 12 = £16,800.00

363636



Month 1 = £1,604.00 (£150.00 contractual overtime and £54.00 non- contractual)

Month 2 = £2,648.00 (£150.00 contractual overtime and £98.00 non- contractual and £1,000.00 annual bonus)

Month 3 = £1,400.00 (£150.00 contractual overtime and £32.00 non- contractual)

£1,604.00 + £1,648.00 + £1,582.00 = £4,834.00/3 x 12 = £19,336.00

Note: Pre-2014 pensionable pay would not include the non-contractual overtime

373737



Employee’s salary = £19317.00 plus regular enhancements of 1.83 hours per week (£370.48 per week + £18.32

enhancement)

£370.48 + £18.32 = £388.80 x 12 = £4665.60/12 x 52.14 = £20272.03

Use actual last twelve weeks if the enhancements are irregular payments

383838


Cumulative pensionable pay

total of career average pensionable pay and assumed pensionable pay if applicable

393939



01/04/2012 = £25920.00

01/04/2013 = £26067.00

01/04/2014 = £26067.00

01/07/2014 = £26835.00

01/04/2015 = £26835.00



March 2015 £53.00

June 2015 £37.00

October 2015 £74.00

November 2015 £72.00

404040



Career average pensionable payCurrent scheme year 01/04/2015 to 31/12/2015

£26835.00/12 x 9 = 20126.25 + 37.00 + 74.00 + 72.00 = £20309.25

Previous scheme year 01/04/2014 to 31/03/2015

£26067.00/12 x 3 = 6516.75

£26835.00/12 x 9 = 20126.25 + 98.00 + 53.00 = £26794.00

Direct from payroll.

414141


Cumulative pensionable pay – sick leave

01/04/2012 = £25920.00

01/04/2013 = £26067.00

01/04/2014 = £26067.00

01/07/2014 = £26835.00

01/04/2015 = £26835.00



March 2015 £53.00

June 2015 £37.00

424242


434343

Pensionable Pay (post 2014)Cumulative pensionable pay – sick leave

Total of career average pensionable pay & APPCurrent scheme year 01/04/2015 to 31/12/2015

CAPP 01/04/2015 – 31/08/2015 26835.00/12 x 5 + 37.00 = 11218.25

APP 01/09/2015 – 31/12/2015 26983.00/12 x 4 = 8994.33

=£20212.58

Previous scheme year 01/04/2014 to 31/03/2015

£26067.00/12 x 3 = 6516.75

£26835.00/12 x 9 = 20126.25 + 98.00 + 53.00 = £26794.00

Direct from payroll.

444444


Assumed Pensionable Pay

Nil Pay & ill health enhancements

454545


Effects of periods of leave Sick leave Child related leave Maternity, paternity & adoption leave Additional paid maternity, paternity & adoption leave Additional unpaid maternity, paternity & adoptions leave Strike leave Jury service Reserve forces leave

464646


Effects of periods of leave Sick leave

Member pays on pay receivedEmployer pays on APP

Member will receive full pension benefits for the relevant period

474747


Effects of periods of leaveChild related leave

Maternity, paternity & adoption leave Additional paid maternity, paternity & adoption leave Additional unpaid maternity, paternity & adoptions leave

Member pays on pay receivedEmployer pay on APP for paid leaveMember accrues full pension benefits for the relevant period (paid leave)

Member can purchase via APC any lost pension1/3rd cost to member & 2/3rds cost to employer if form returned to employer within 30 days of return to work

484848


Effects of periods of leaveStrike leave

Member pays no contributionEmployer pays no contribution

Member can purchase lost pension via APCfull cost to the member

494949



Jury service If paid by employer during jury service,

contributions paid & benefits accrue as normal If member receives no pay from employer,

member can purchase lost pension via APC

505050



Reserve forces leave

APP calculated & dropped into the cumulative figure

No contributions deducted even if reservist is paid by the employer

APP advised to reservist & MOD, who deduct contributions from reservist & pay with their contribution direct to Teesside Pension Fund.

515151

Pensionable Pay


Additional Pensions Contributions (APC)

calculator

https://apc.lgps2014.org/

525252

Pensionable Pay

Refunds

Under 3 months

still in employment – refund through the payroll

ceased employment – refund by TPF

Over 3 months

refund by TPF

Contracted Out National Insurance earnings

535353

Pensionable Pay

Refunds

Contracted Out National Insurance earnings Earnings between the

‘lower earnings limit’ (LEL) and the ‘upper earnings limit’ (UEL)

on which contributions have been paid.

Lower Earnings Limit (LEL) – The minimum amount set at the beginning of each tax year which must be earned in a pay period to qualify for a basic retirement pension

Upper Earnings Limit (UEL) – NICs do not have to be paid by employees on earnings over a certain amount. This maximum amount is set at the beginning of each tax year and is about seven times the amount of the LEL. There is no UEL for employers.

545454

Pensionable PayRefunds

Contracted Out National Insurance earnings

1b Contracted Out Earnings above the LEL, up to and including the Earnings Threshold

(column 1b – P11)

+

1c Contracted Out Earnings above the Earnings Threshold, up to and including the UEL

(column 1c – P11)

You are totalling all Contracted Out Earnings from the LEL to the UEL.

UEL – Upper Earnings Limit

Earnings Threshold

LEL – Lower Earnings Limit

1c

1b 1a

555555

Pensionable Pay

Pension unit forms

ReviewingLeavers splitting into two

authorisingpay details

Completion notes will mirror training notes

565656

FINALLYQuestionsTechnical & Training Manager Heather CurrieLocal Government Technical Co-ordinator Craig Allison

Technical & Training Section Tel: 01642 727 030 E-mail: [email protected]

Evaluation Forms

THANKYOU Vanessa Barker

Training Co-ordinatorFebruary 2015

575757

TEESSIDE PENSION FUND

TEESSIDE PENSION FUND. 222 Pensionable Pay Vanessa Barker Training Co-ordinator February 2015.

Documents

Transcript of TEESSIDE PENSION FUND. 222 Pensionable Pay Vanessa Barker Training Co-ordinator February 2015.