LGPS SCHEME YEAR-END RETURN GUIDE

Transcription

1 LGPS SCHEME YEAR-END RETURN GUIDE

2 Table of Contents Introduction... 3 Legal responsibilities and deadlines... 3 Provision of information and why we need it... 3 Glossary... 5 Absence periods on reduced and nil pay... 7 Child related leave... 7 Ordinary maternity, adoption and paternity:... 7 Shared parental, additional maternity and adoption... 7 Child related end of year... 7 Sickness... 8 Reduced pay... 8 Nil pay... 8 Sickness end of year... 8 Some worked examples... 9 Backdated pay awards The year-end return LGPS 2018 year-end template notes LGPS Year-End Template Guide 2018 Version 1.2 February 2018 Page 2 of 22

3 Introduction The purpose of this guide is help you through the year-end process and to try and make what can be quite a laborious process as simple as possible. In brief it includes: Legal responsibilities and deadlines Provision of information and why we need it Data format Field specification and terminology Absence periods and their effects Example calculations Legal responsibilities and deadlines Teesside Pension Fund has a legal responsibility to issue Annual Benefit Statements (ABS) and, where required, Pension Savings Statements (PSS) to your employees who are members of the Local Government Pension Scheme (LGPS). The provision of these documents is subject to strict deadlines. Not meeting these deadlines could mean financial penalties being imposed upon the Fund by the Pensions Regulator which could in turn be passed to you where you were the cause of the delay. To produce the ABS and PSS we require certain information from you by our internal deadlines to give us sufficient time to produce the documents within the statutory deadline: Document Statutory date for issue Annual Benefit Statement Pensions Saving Statement Data required to Kier Data required 31 st August th May 2018 Scheme Year-end Return th October th June 2018 Financial Year-end Return Provision of information and why we need it To be able to issue accurate and timely statements, we require you to provide information about all members pay, contributions, and service over the last scheme year. We use this year-end information you provide to update each of your members pension records before we issue them with the necessary statements. So, it is essential that the data we use and you supply is accurate. The updated membership data will be used by the Fund s actuary in the next valuation to set your employer contribution rate. This membership data is also used for statistical and actuarial analysis of the LGPS at a national level to be able to control future costs and ensure the viability of the scheme. Therefore, data accuracy is essential because this can materially affect the cost of the provision of the LGPS. The advent of the General Data Protection Requirements and the more robust data requirements of the Pensions Regulator also enforce the requirement to supply accurate data. LGPS Year-End Template Guide 2018 Version 1.2 February 2018 Page 3 of 22

4 Data format Please note: We do not carry out a comprehensive review of submitted data. However, before uploading to member records we will spot check the data on a small sample of members. If the data looks reasonable it will be uploaded and used to prepare the statutory ABS and PSS documentation and award a pension based on that information. A pension is awarded year-on-year from your CARE returns and is index linked at the start of each scheme year. Incorrect returns mean incorrect pensions from that point unlike final salary benefits, it is not something that is assessed only at retirement. Therefore, it is essential you provide us with all information that we ask for and that it is accurate. We have provided you with our year-end spreadsheet which identifies the information fields we need completing and the format in which they are required. You will notice a few changes to the format this year, including that all required fields are now contained in a single spreadsheet which we hope will make your task easier. Also, we have reduced the data requirements for leavers during the year to contribution based information, included indicators for part-time status and reduced pay as well as a comments column for where there are anomalous results that need an explanatory narrative. There is a table in this guide with a description of what each field means (where not totally selfexplanatory!) and why they are important. The table also includes suggestions for self-checks you should perform before submitting any data to Kier. This guide also provides a glossary of various terms we use and an explanation of the impact of periods of nil and reduced pay - an area which has been the source of some confusion in the past. We have also included some example calculations for pensionable pay in various scenarios and a link to the employer website pensionable pay area that is there to help you where the member isn t a straightforward case. There is also a table with explanatory notes for each of the year-end spreadsheet entries we require you to supply. Although the Annual Benefit Statements (ABS) are issued based on standard year-end (31 st March) information, Pension Input Periods (the period HMRC use to measure members pension growth and annual allowance) now fall in line with the tax year (5 th April) and it is this period on which Pension Saving Statements (PSS) are based. The LGPS scheme year does not quite align with the tax year and so to provide accurate data in our PSS, we cannot use the scheme year-end for this purpose it has to be the tax year figures. Therefore, in addition to providing 31 st March pay details, we also require 5 th April pay details for all members whose salary is 70,000 or more the separate financial year-end return (based on the period 6 April 2017 to 5 April 2018) which we have also provided. Please be aware that the Public Service Pensions Act 2013 requires that scheme members are issued an annual benefit statement by 31 st August each year. Therefore, your year-end file must be provided by 11 th May 2018 at the latest to allow us sufficient time to produce the statements. Your completed return should be submitted FAO System Support on the Secure File Transfer Portal (SFTP) should you require access to this facility please your request to pensystems@kier.co.uk Please note: We will not accept multiple or split submissions if, for example, you have utilised more than one payroll provider during the year. It is your responsibility to submit a single return for the entire period for which you were the relevant employing authority. LGPS Year-End Template Guide 2018 Version 1.2 February 2018 Page 4 of 22

5 Glossary ACTREM AMOUNT This is the actual rate of pay at the pensionable pay date (i.e. a spot pay figure). It includes the members salary and any other pensionable elements and is NOT reduced where receiving reduced or nil pay due to sickness, injury or child related leave. The amount is NOT scaled up to a full-time equivalent for part-time members. ADDED YEARS Members of the LGPS can still continue their existing purchase of additional service. The return entry should be the actual monetary amount of contributions paid in the scheme year. ADDITIONAL PENSION CONTRIBUTIONS (APCs) Members can elect to use APCs to purchase Additional Pension within the Scheme for themselves or for themselves and spouse. APCS can also be paid to cover the pension "lost" during a period of unpaid absence (including any period of unpaid additional maternity, paternity or adoption leave or unpaid shared parental leave following a period of relevant child related leave i.e. following a period of ordinary maternity, paternity or adoption leave or paid shared parental leave or paid shared parental leave and any paid additional maternity or adoption leave). APCs can also be paid to buy pension "lost" during a period of unpaid absence due to industrial action. ADDITIONAL REGULAR CONTRIBUTIONS (ARCs) Members of the scheme prior to April 2014 could elect to purchase additional amounts of pension within the scheme. Where this election is still in place, you should separately enter the actual monetary amount of contributions deducted. Existing contracts continue, but for new arrangements this has been replaced from April 2014 by APCs. ASSUMED PENSIONABLE PAY (APP) Assumed pensionable pay provides a notional career average pensionable pay figure to make sure that a member s pension is not affected by any reduction in pensionable pay due to a period of sickness or injury on reduced contractual pay or no pay, or relevant child related leave (for example, maternity, paternity or adoption leave) or reserve forces service leave. Assumed pensionable pay does not accrue during any unpaid leave (unless within a period of ordinary maternity, paternity or adoption leave) the unpaid leave is treated as unpaid leave of absence. However, an employer must still calculate the APP as it may be required if the member wishes to purchase APCs or the employer wishes to purchase APCs on the member s behalf. CARE PAY This is the cumulative pensionable earnings paid in the Scheme year (either in the MAIN or 50:50 section) including any Assumed Pensionable Pay during the period. It is NOT converted to a fulltime equivalent for part-time members. LGPS Year-End Template Guide 2018 Version 1.2 February 2018 Page 5 of 22

6 FULL-TIME EQUIVALENT (FTE) This is the amount of pay a part-time member would have received had they been working on a fulltime basis. E.g. a part-time member with pensionable earnings of 15,000 who works for only 18.5 hours of a standard 37 hour week would have a full-time equivalent pay of 30,000 ( 15,000 x 37/18.5 = 30,000). IN-HOUSE ADDITIONAL VOLUNTARY CONTRIBUTIONS (AVCs) PAID Where members are continuing to make contributions to their AVC scheme, the return entry should be the actual monetary amount of contributions paid in the scheme year. PENSIONABLE REMUNERATION (FTE PENSIONABLE PAY) Pension benefits for pre April 2014 service are calculated based on a member s pensionable pay for their final 12 months of service (although an earlier year can be used if better). This figure is always taken to be full-time pay, even if an officer works part-time, i.e. a full-time equivalent (FTE). The pay must be based upon the definition of pensionable pay in effect prior to April This means for example that any non-contractual overtime is excluded. Pensionable remuneration relates to the period in which the pay was earned, whereas CARE PAY relates to when monies are actually paid. So, you will need to exclude any arrears of pay from FTE PENSIONABLE PAY, e.g. backdated pay award, that was earned in 2016/17 even where it was paid in 2017/18 and include it in CARE PAY for the period actually paid to member. This is expanded upon here. As it is always a full year, full-time equivalent amount, any figure provided which is lower than the basic grade for the officer should be investigated. Examples of FTE PENSIONABLE PAY and CARE PAY calculations, including for members who have periods of reduced or nil pay can be found here. LGPS Year-End Template Guide 2018 Version 1.2 February 2018 Page 6 of 22

7 Absence periods on reduced and nil pay These have caused some confusion in the past as to how they are treated for year-end purposes. Hopefully, the following breakdown will make things clear. Child related leave Ordinary maternity, adoption and paternity: Contributions based on Member pay received Pension rights accrued Cumulative pensionable pay in relevant section (including any assumed pensionable pay) Employer pay member would have received but for absence Shared parental, additional maternity and adoption Contributions based on Member pay received Employer Assumed Pensionable Pay for any paid period, none for unpaid Pension rights accrued Cumulative pensionable pay in relevant section (including any assumed pensionable pay Child related end of year MAIN or 50:50 return is total of: received pay whilst not on leave Assumed Pensionable Pay for ordinary leave Assumed Pensionable Pay for any paid period of additional/shared leave. FTE PENSIONABLE PAY return is Pensionable pay (full-time equivalent, full year basis) based on notional pay in days to last year end. LGPS Year-End Template Guide 2018 Version 1.2 February 2018 Page 7 of 22

8 Sickness Reduced pay Contributions based on Member pay received Employer Assumed Pensionable Pay Pension rights accrued CARE - Assumed Pensionable Pay Nil pay Contributions based on Member none Employer Assumed Pensionable Pay Pension rights accrued CARE - Assumed Pensionable Pay Sickness end of year MAIN or 50:50 return is total of: received pay whilst not on leave Assumed Pensionable Pay for period of sickness FTE PENSIONABLE PAY return is FTE PENSIONABLE PAY (FTE, full year basis) based on notional pay in days to year end. LGPS Year-End Template Guide 2018 Version 1.2 February 2018 Page 8 of 22

9 Some worked examples The following pages provide some worked examples which may help to illustrate some of the scenarios we have covered in the guide so far. In all examples here, all of the members pay is pensionable and they are all at the same pay rates and all members of the MAIN section. The relevant date is 31 st March 2018 unless specified. Annual pay rate at: 1 st April ,500 [This has been in place since the preceding September.] 1 st September , Whole time member ACTREM = 28,000 i.e. the annual rate of pay at 31 st March 2018 CALCULATE THE FTE PENSIONABLE PAY Pensionable pay received 1 st April 2017 to 31 st August 2017= 153 days ,500 = 11, Plus 1 st September 2017 to 31 st March ,000 = 16, FTE PENSIONABLE PAY = 27, CARE PAY Pensionable pay received 1 st April 2017 to 31 st August 2017= 153 days ,500 = 11, Plus 1 st September 2017 to 31 st March CARE PAY = 27, ,000 = 16, LGPS Year-End Template Guide 2018 Version 1.2 February 2018 Page 9 of 22

10 2. Part-time time member, works hours per week ACTREM = 21,000 i.e. the pro rata (27.75/37.00 hours a week) annual rate of pay of 28,000 at 31 st March 2018 CALCULATE THE FTE PENSIONABLE PAY Pensionable pay received 1 st April 2017 to 31 st August 2017 = 153 days , = 11, Plus 1 st September 2017 to 31 st March 2018 = 212 days , = 16, FTE PENSIONABLE PAY = 27, (i.e. Full Time Equivalent (FTE) figure) CARE PAY Pensionable pay received 1 st April 2017 to 31 st August 2017 = 153 days ,625 = 8, Plus 1 st September 2017 to 31 st March 2018 = 212 days 212 CAREPAY = 20, ,000 = 12, LGPS Year-End Template Guide 2018 Version 1.2 February 2018 Page 10 of 22

11 3. Whole time member on sick leave from 1 st September 2017 ACTREM = 28,000 i.e. the annual rate of pay at 31 st March 2018 NOTIONAL PAY 1 st April 2017 to 31 st August 2017= 153 days ,500 = 11, Plus 1 st September 2017 to 31 st March ,000 = 16, FTE PENSIONABLE PAY = 27, APP was calculated at date absence began as 27,500 (3 months prior to leaving of 6875 scaled up to 12 months) CAREPAY Pensionable pay received 1 st April 2017 to 31 st August 2017= 153 days ,500 = 11, Plus APP for 1 st September 2017 to 31 st March ,500 = 15, CAREPAY= 27,500 PLEASE NOTE: There is a dedicated pensionable pay area on the Teesside Pension Fund employer website which has a full guide to pensionable pay and many more worked examples. LGPS Year-End Template Guide 2018 Version 1.2 February 2018 Page 11 of 22

12 Backdated pay awards Backdated pay awards need correctly apportioning between FTE PENSIONABLE PAY and CARE PAY. This is due to the fact that FTE PENSIONABLE PAY relates to the period in which the pay was earned and CARE pay relates to when actually paid. We have provided some examples below to illustrate how this would work. Example 1. Backdated pay award of 3k paid 1 st March 2018 relating to scheme years 2015/16, 2016/17 and 2017/18-1k relating to each scheme year. Without award, FTE PENSIONABLE PAY* for 2017/18 would have been 26,500. FTE PENSIONABLE PAY year-end return should include the amount relating to the period 1 st April 2017 to 31st March 2018 only, i.e. FTE PENSIONABLE PAY is 27,500 ( 26, ,000 for 2017/18 period). Remaining 2k is ignored for the FTE PENSIONABLE PAY as not part of his pay for the year-end return period. CARE PAY was 26,500 but whole award paid in 2017/18 so CARE PAY year end return is 29,500. Example 2 Same member is awarded 2k on 1 st March 2017 this time, the award relates to service during the scheme years 2015/16 and 2016/17 only. None of the 2k award relates to service in the 2017/18 year, therefore the FTE PENSIONABLE PAY* on the 2017/18 year-end return would be 26,500. The whole amount was paid in the 2017/18 year, so the CARE PAY entry for the year needs to reflect the additional 2k paid (with no adjustment if the member is part-time i.e. 26, k = 28,500. * This figure will need to be adjusted to a full-time equivalent figure if the member was part-time during the 2017/18 scheme year. LGPS Year-End Template Guide 2018 Version 1.2 February 2018 Page 12 of 22

13 The year-end return The following table is designed to help you understand what we require in the various fields on the year-end submission and to provide some suggested basic checks against the data with which you have populated the spreadsheet. Please do scrutinise your data before submission. As we have mentioned elsewhere, not only does inaccurate data mean more work in clearing errors it now means that incorrect pensions are actually awarded year on year. LGPS 2018 year-end template notes Important note on leavers during the year: If a member has left their employment or has opted out during the year we only require member identifying details and contributions details to be completed on the year-end return for that employment - you will have already provided us with leaving pay figures upon which we have calculated their benefits. You should indicate their having left by completing the Date of Leaving column (column F) and then only fill in columns A to E and I to K (in all cases) and P to U if applicable. COLUMN FIELD NAME DESCRIPTION DATA CHECK A NI NUMBER National Insurance number self - explanatory Format: XX111111X B PAY REF Payroll Reference Number populated C UNIQUE ID This is a reference to distinguish between each post for multiple employments. populated D SURNAME Self explanatory Alpha only E FORENAMES Self explanatory Alpha only F DATE OF LEAVING This should only be populated where the member either left opted out of LGPS membership in this employment. The date is their last day of active membership in relation to that employment. only populated for those who have left this employment or opted out of the scheme during the year. Pay details are not required for these members. LGPS Year-End Template Guide 2018 Version 1.2 February 2018 Page 13 of 22

14 G PART TIME INDICATOR If the member has worked less than fulltime hours for any period during the year, this needs to be recorded here. Enter Y for those who have been parttime during the year, and N for those who have not. IMPORTANT: Please check that you have notified the Pensions Unit of any change to pensionable hours via the appropriate variation form as this essential when running calculations. Ensure this column is correctly populated for non-leavers Ensure hours changes have been notified to the Pensions Unit H REDUCED PAY INDICATOR If the member has been subject to a reduction in pay across the whole year or from any point in the year, this needs to be recorded here. Enter Y for those who have been in receipt of reduced pay during the year, and N for those who have not. IMPORTANT: Please check that you have notified the Pensions Unit of any change to pensionable hours via the appropriate variation form as this essential when running calculations. Ensure this column is correctly populated for non-leavers Ensure pay changes have been notified to the Pensions Unit I PENSION CONTRIBUTION RATE Enter rate of basic contribution paid by the member at the end of the Scheme year. populated Format: xx.xx Is the rate appropriate for the pay/grade? LGPS Year-End Template Guide 2018 Version 1.2 February 2018 Page 14 of 22

15 J PENSION CONTRIBUTION DATE This date should be the year end date (31/03/2018) unless the member has left/opted out part way through the year. In this case please provide the date of leaving/opting out. populated Either leave/opt out date or 31/03/2018 K PENSION CONTRIBUTIONS PAID The total Scheme contributions paid by the member EXCLUDING: AVCs, and additional contributions paid to purchase added years or additional pension. The contributions provided will be balanced against the income received for accounting purposes. populated Contributions relate to normal employment contributions ONLY These should not include any contributions for added pension, etc. Format: xx.xx Is the amount paid in the expected range? if not have the reasons why been identified/notified to the pensions unit? e.g. p/t, opt-out L ACTUAL REMUNERATION DATE This will be 31/03/2018. This is not required for part year leavers and opt outs. M ACTUAL REMUNERATION The actual annual rate of pensionable pay as at the 31/03/2018. This must include all annual pensionable elements e.g. bonuses and ALL overtime (i.e. contractual and non-contractual overtime). populated LGPS Year-End Template Guide 2018 Version 1.2 February 2018 Page 15 of 22

16 Please do not reduce this figure if the member is on reduced/nil pay due to a relevant child related leave, sickness or injury. Format x.xx Unless member acting up during previous 12 months or no pay increase this is likely to be higher than FTE PENSIONABLE PAY for whole time members. If p/t ensure it is actual pay rate, not fte basis N FTE PENSIONABLE PAY DATE This will be 31/03/2018. We do not require this if the member has left or opted out part way through the year. populated O FTE PENSIONABLE PAY Enter the full-time equivalent pensionable pay for the Scheme year ending 31/03/2018. The pay must be based upon the pre April 2014 definition of pensionable pay. This means, for example, that non-contractual overtime must be excluded even if contributions have been paid on it and a CARE benefit granted. IMPORTANT: 2017/18 Annual Benefit Statement - The members final salary benefits (pension & lump sum) for pre membership will be based on the FTE pensionable pay provided populated Ensure the figure provided is a FTE and not actual pay. Check for basic reasonableness; e.g. is LGPS Year-End Template Guide 2018 Version 1.2 February 2018 Page 16 of 22

17 Further information of the calculation of Pay can be found in the pensionable pay training manual available on our employer website the FTE below minimum wage or greater than the chief executive s, then against grade i.e... Is it within the expected pay range? Are any backdated award included in the days figure? The pre-2014 definition of pensionable pay differs from CARE pay in that it relates to the period in which the pay was earned i.e. including backdated awards and CARE pay relates to when actually paid. So, if member of 2 schemes need to apportion the backdated to the relevant period and include in care pay for period actually paid to member. P ADDED YEARS The total contributions paid by the member to purchase additional service (added years). populated if applicable Format: x.xx Q ARCs The total Additional Regular Contributions (ARCs) paid by the member to purchase additional pension. (ARCs were replaced by APCs with the introduction of the CARE scheme in April populated if applicable Format: x.xx LGPS Year-End Template Guide 2018 Version 1.2 February 2018 Page 17 of 22

18 R AVCs The total In House AVCs paid to the Prudential and/or Phoenix Life during the Scheme year. You MUST NOT include contributions paid to provide additional death in service cover. S TO U APCs The total Additional Pension Contributions paid by the employee and employer in 2017/18. populated if applicable Format: x.xx populated if applicable Members can pay APCs to purchase Additional Pension. Format: x.xx APCS can also be paid to cover the pension "lost" during a period of unpaid absence (including any period of unpaid additional maternity, paternity or adoption leave or unpaid shared parental leave following a period of relevant child related leave i.e. following a period of ordinary maternity, paternity or adoption leave or paid shared parental leave or paid shared parental leave and any paid additional maternity or adoption leave). APCs can also be paid to buy pension "lost" during a period of unpaid absence due to industrial action. Please note each additional APC must be shown separately e.g. APC for maternity leave and APC for strike action must be shown separately. There are 3 columns for the input of separate APCs. If you have a member with more than 3 APCs please pensystems@kier.co.uk V CARE (MAIN) START LGPSMAIN period start date. For most members this will be 01/04/2017. Exceptions to this include members who start their employment or new post, opt into the scheme, or move from the 50:50 section part way through the Scheme year. In these scenarios the MAINSTART should be the date the member joined the main section of the LGPS in that post. LGPS Year-End Template Guide 2018 Version 1.2 February 2018 Page 18 of 22

19 populated where the member has been contributing to the main section of the scheme during the year. Should be blank if the member has been in the 50:50 section throughout the year. Format: dd/mm/yyyy W CARE (MAIN) END LGPSMAIN period end date. For most members this will be 31/03/2018. Exceptions to this include members who leave this employment, opt out or move to the 50:50 section of the LGPS. populated where the member has been contributing to the main section of the scheme during the year. Should be blank if the member has been in the 50:50 section throughout the year. Format: dd/mm/yyyy X CARE PAY (MAIN) Actual pensionable pay received in the Scheme year for those members in the LGPSMAIN scheme. e.g. if the period start date is 01/04/2017 and the period end date is 30/06/2017, then the pay should include all pay received from 01/04/ /06/2017. Cumulative pensionable pay received in the employment during the Scheme year populated where the LGPS Year-End Template Guide 2018 Version 1.2 February 2018 Page 19 of 22

20 whilst in main section must include the Assumed Pensionable Pay (APP) where appropriate. member has been contributing to the main section of the scheme during the year. Should be blank if the member has been in the 50:50 section throughout the year. Ensure the figure provided is actual cumulative pensionable pay for the period and not an FTE figure. Check for basic reasonableness; e.g. below minimum wage or above chief exec, (taking into account period in CARE and whether p/t)? Y CARE (50:50) START 5050 period start date.this is the date the member joined the 5050 section of the LGPS.This will be 01/04/2017 or later if the member joined the 50:50 section part way through the Scheme year. Is any backdated award included in the days figure? populated where the member has been contributing to the 50:50 section of the scheme during the year. Should be blank if the member has been in LGPS Year-End Template Guide 2018 Version 1.2 February 2018 Page 20 of 22

21 Z CARE (50:50) END 5050 period end date. For most members this will be 31/03/2018. Exceptions to this include members who leave this employment, opt out or move to the MAIN section of the LGPS before 31/03/2018. the main section throughout the year. Format: dd/mm/yyyy populated where the member has been contributing to the 50:50 section of the scheme during the year. Should be blank if the member has been in the main section throughout the year. Format: dd/mm/yyyy AA CARE PAY (50:50) Actual pensionable pay received in the employment during the Scheme year whilst in 5050 section. e.g. if the period start date is 01/04/2017 and the period end date is 30/06/2017, then the pay should include all pay received from 01/04/ /06/2017. Cumulative pensionable pay received in the employment during the Scheme year whilst in 50:50 section including the Assumed Pensionable Pay (APP) where appropriate. populated where the member has been contributing to the 50:50 section of the scheme during the year. Remember: member should have moved to Main section from pay period following pay dropping to nil. Should be blank if the member has been in the main section throughout the year. LGPS Year-End Template Guide 2018 Version 1.2 February 2018 Page 21 of 22

22 Ensure the figure provided is actual cumulative pensionable pay for the period and not an FTE figure. Check for basic reasonableness; e.g. below minimum wage or above chief exec, (taking into account period in CARE and whether p/t)? Is any backdated award included in the days figure? employment, column S on the LGPS 2018 tab AB COMMENTS Use this column to provide a narrative for any unusual circumstances or cases where nil entries are included in mandatory requirement fields LGPS Year-End Template Guide 2018 Version 1.2 February 2018 Page 22 of 22