LGPS 2015 Payroll Guide

Transcription

1 LGPS 2015 Payrll Guide This guide sets ut the requirements fr payrlls in respect f the Lcal Gvernment Pensin Scheme (Sctland) 2015 (LGPS), effective frm 1st April The guide nly applies t the LGPS relating t emplyees and cuncillrs in Sctland. It des nt cver emplyees r cuncillrs in England r Wales. Please nte this guide is in additin t, and des nt replace, any requirements agreed with the Pensin Fund administering authrity in respect f infrmatin t be prvided t them t enable them t administer the 2009 Scheme. It is intended t infrm payrll prviders and emplyers f the minimum infrmatin needed t effectively manage the 2015 Scheme (and its interactin with the 2009 Scheme see sectin 6). Wherever pssible, we ask that users cntact their administering authrity with any queries they have regarding the new Scheme befre getting in tuch with a member f the Scttish Public Pensins Agency. The examples prvided in sectins f this guide are fr illustratin nly and d nt verride any regulatry r statutry requirements. The infrmatin in this guide applies equally t emplyees and cuncillrs except where the LGPS Regulatins require cuncillrs t be treated differently fr certain purpses. Where that is the case, the guide sets ut what the different treatment fr cuncillrs is. References t emplyee in this guide include cuncillrs unless stated therwise. This guide will cntinue t be updated t reflect any legislative changes as and when they ccur. Cntents 1. Data 2. Recrds 3. Sectins 4. Cumulative Pensinable Pay (CPP1 and 2) 4.1 Pensinable Pay 4.2 Assumed Pensinable Pay (APP) 4.3 Certificates f Prtectin 5. Cumulative Cntributins 5.1 Cumulative Emplyee Cntributins (CEC1 and 2) 5.2 Cumulative Emplyer Cntributins (CRC) 5.3 Cumulative Additinal Cntributins (CAC, CARC) - per jb 6. Scheme Data 6.1 Final Pay 6.2 Changes in Cntractual Part Time Hurs and/ r Cntractual Weeks/ Cntractual Days per year 6.3 Breaks in membership 6.4 Existing additinal pensin cntracts 7. Payments in respect f a perid prir t 1st April 2015 which are made after 31st March Absences spanning 31st March 2015/ 1st April Mnthly payver f cntributins 10. End f year template reprt 11. Glssary f acrnyms 12. Appendix Versin 1.8 June

2 1. Data The fllwing data must be held s that it can be made available t pensin administratrs within 3 mnths f the end f each Scheme year (the Scheme year runs frm 1st April t 31st March), r n terminatin f Scheme membership, in respect f each jb. If further pensinable payments are made after terminatin f Scheme membership in a jb and after data has already been submitted t the Pensin Fund administering authrity, the revised data (if the payment is made in the year f leaving) r new data (if the payment is made in a year after leaving) shuld be submitted t the Pensin Fund administering authrity tgether with the date the additinal payment was made. Nte that terminatin f Scheme membership in a jb ccurs when either the emplyer ntifies payrll that the emplyee has pted ut f the Scheme (in that jb), r has ceased emplyment in that jb, r has attained age 75. Terminatin des nt ccur when an emplyee mves between jbs in the same emplyment (see definitin f single emplyment relatinships in the recrds sectin). It shuld be stressed, as nted in sectin 2, that where an emplyee hlds mre than ne jb with the emplyer, each f the fields in the table belw are t be held per jb, including where the additinal jb is that f returning fficer at lcal gvernment electins r electins fr the Scttish Parliament, r acting returning fficer (including as a reginal r lcal returning fficer at a Eurpean Parliamentary electin). The emplyee can be in the main sectin in ne jb and the 50/50 sectin in anther jb. New Scheme Data Main sectin Cumulative Pensinable Pay (CPP1) Main sectin Cumulative Emplyee s Cntributins (CEC1) 50/50 sectin Cumulative Pensinable Pay (CPP2) 50/50 sectin Cumulative Emplyee s Cntributins (CEC2) Cumulative Additinal Emplyee s Cntributins (CAC) per type i.e.: - additinal pensin cntributin (EAPC) - additinal vluntary cntributin (EAVC) The ttal Pensinable Pay* (PP) and/r Assumed Pensinable Pay (APP) in the main sectin fr the Scheme year (1 April 31 March) The ttal emplyee s cntributins in the main sectin fr the Scheme year The ttal Pensinable Pay* (PP) and/r Assumed Pensinable Pay (APP) in the 50/50 sectin fr the Scheme year The ttal emplyee s cntributins in the 50/50 sectin fr the Scheme year The ttal additinal emplyee s cntributins (per type) fr the Scheme year i.e.: - additinal pensin cntributin (EAPC) bth where the whle cst is t the emplyee and als the emplyee element f a shared cst APC - additinal vluntary cntributin (EAVC) inclusive f nn life assurance (whle cst t emplyee), life assurance (whle cst t emplyee), and emplyee element f a shared cst AVC fr life assurance, pensin salary sacrifice, r ther part cst t the emplyee Versin 1.8 June

3 Cumulative Emplyer s Cntributins (CRC) Cumulative Additinal Emplyer s Cntributins (CARC) per type i.e.: - additinal pensin cntributin (RAPC) - shared cst additinal vluntary cntributin (RAVC) The ttal emplyer s cntributins in bth sectins fr the Scheme year The ttal additinal emplyer s cntributins (per type) fr the scheme year i.e.: - additinal pensin cntributin (RAPC) bth where the whle cst is t the emplyer and als the emplyer element f a shared cst APC - shared cst additinal vluntary cntributin (RAVC) emplyer element f a shared cst AVC fr life assurance, pensin salary sacrifice, r ther part cst t the emplyer Either: - the date f the beginning f the Scheme year, r Dates f active membership during the Scheme year** - the date became an active member f the Scheme in the emplyment during the Scheme year (if later) Plus - the date f the end f the Scheme year, r Additinal Data (per emplyment)** Sectin f the Scheme*** 2009 Scheme Data FTE Final Pay (FFP) - the date ceased t be an active member f the Scheme in the emplyment during the Scheme year (if later) Sectin f the Scheme the emplyee was a member f in the emplyment at the end f the Scheme year r at the date f cessatin f active membership in the emplyment. Full time equivalent pensinable pay in respect f the emplyment fr the scheme year *Including the value f emluments specified in the cntract f emplyment as being pensinable emluments (including the pensinable emlument value f salary sacrificed fr such items as child care vuchers, and fr pensin cntributin salary sacrifice via a shared cst AVC arrangement). **See explanatin at sectin 10. ***The LGPC Secretariat believe that this infrmatin shuld be prvided t the Pensin Fund administering authrity as it is required t ensure the member s pensin recrd is crrect and up t date and because the infrmatin may be needed t prduce prjectins fr Annual Benefit Statements. Again it shuld be nted that the abve specificatin shws the infrmatin required as a result f the 2015 Scheme, effective frm 1st April It des nt replace r remve the Versin 1.8 June

4 requirement fr any ther data being supplied t yur Pensin Fund administering authrity t enable them t administer the 2009 Scheme (e.g. persnal details, date jined fund, AVCs, etc. - see sectin 6 fr mre infrmatin n infrmatin required fr pre 2015 members). In diagrammatical frm, the payrll data t be held fr each Scheme year (1st April t 31st March) t prduce the mnthly and end f year / leaving data shwn in sectins 9 and 10 is as shwn in the chart lcated here. 2. Recrds Separate recrds f cumulative amunts must be maintained fr each jb the emplyee hlds unless the emplyer determines that a single emplyment relatinship exists. This is the same requirement as under autmatic enrlment legislatin and althugh nt a change frm current requirements the need t calculate pensins n a year by year basis means that separate recrds are vital t the task and therefre wrth re-emphasising. Examples f where the emplyer may determine a single emplyment relatinship exists are: Tw cncurrent emplyments where, if ne is terminated, the ther must be terminated at the same time Tw sequential emplyments withut a break (e.g. a prmtin) Where a single relatinship des nt exist separate recrds will be required fr each jb in rder t calculate and hld the data needed t crrectly determine the amunt f pensin accrued in each year fr each jb. Example 1 An emplyee has tw cncurrent part time jbs with the same emplyer wh has nt infrmed payrll that a single emplyment relatinship exists. Tw recrds shuld be held fr this emplyee and the data shuld be supplied t the Pensin Fund administering authrity as tw lines f data bth identifiable as the emplyee (e.g. NI Number) but each uniquely identified as different jbs (e.g. pst/payrll number). If ne f the jbs ceases this shuld be treated as a leaver fr pensin purpses (with the data in respect f that leaver available fr reprting t the Pensin Fund administering authrity at the date f leaving). Example 2 An emplyee is prmted t a new jb and n terminatin f emplyment ntice has been received by payrll. The data shuld be supplied t the Pensin Fund administering authrity as a single set f cumulatives which include amunts frm bth jbs. Where separate emplyment relatinships exist and where the persn is being paid n timesheet claim, it is imperative that timesheet design (and instructins fr cmpletin frm HR) includes infrmatin that identifies which hurs are in relatin t which jb. 3. Sectins The LGPS 2015 cntains tw sectins the main r 100/100 sectin and the 50/50 sectin. The data requirements fr bth sectins are the same apart frm the emplyee cntributin calculatin which in the 50/50 sectin is half that which wuld be due in the main sectin Versin 1.8 June

5 (see sectin 5 - cumulative cntributins). Nte that the emplyer cntributin is still the nrmal full cntributin rate (nt half). In the absence f a 50/50 electin befre the payrll has been clsed (please nte that an emplyee cannt cmplete a 50/50 electin befre cmmencing emplyment) a new emplyee, r an existing emplyee cmmencing a new emplyment fr which a separate recrd is required (see sectin 2) r an ptant ut electing t jin the Scheme r being aut-enrlled r re-enrlled shuld be put int the main sectin n cmmencement f that emplyment / pting int membership f the Scheme / being autmatically enrlled r autmatically re-enrlled, after which the fllwing circumstances may lead t a change f sectin during the Scheme year. Ntificatin that the emplyee has elected t mve frm the main sectin t the 50/50 sectin (r vice versa) frm the beginning f the next available pay perid fllwing the electin. If the emplyee is in the 50/50 sectin and ges nt n pay due t lng-term sickness r injury, the emplyee must be mved back int the main sectin frm the beginning f the next pay perid if they are still n nil pay at that time. The persn will, f curse, have the right t make a further 50/50 electin when they return t wrk. If the emplyee is in the 50/50 sectin and ges nt n pay during rdinary maternity, rdinary adptin leave r paternity leave, the emplyee must be mved back int the main sectin frm the beginning f the next pay perid. If the emplyee is in the 50/50 sectin they must be mved back t the main sectin frm the beginning f the pay perid fllwing the emplyers autmatic re-enrlment date. This wuld happen irrespective f what categry f wrker they are fr the purpses f the Pensins Act Nte that the initial staging date fr thse emplyers wh meet their staging date after 31st March 2015 has n implicatin n existing 50/50 electins. The persn will, f curse, have the right t make a further 50/50 electin which, if made befre the payrll is clsed, wuld mean the member wuld have cntinuus 50/50 membership. Please nte that the bth the main sectin and the 50/50 sectin f the LGPS are a qualifying scheme fr autmatic enrlment purpses frm April NB: Thse terms highlighted in qutatins marks in the text abve are t be cnstrued in accrdance with the Pensins Act Fr mre infrmatin n Autmatic Enrlment and the LGPS please read the LGPC's Autmatic Enrlment Guide. The dates an emplyee jined and ceased membership f a sectin must be held (per jb), as specified in the table in sectin 1. Separate cumulative amunts fr pensinable pay and emplyee cntributins shuld be maintained fr each sectin (as specified in the table in sectin 1). Hwever, it is nt necessary t maintain separate cumulative amunts fr emplyer s cntributins per sectin (ther than as specified in the table in sectin 1). It shuld be nted that if a member mves t the 50/50 sectin: any existing additinal pensin cntributin (EAPC) cntract which is at whle cst t emplyee must cease (unless it is t purchase an amunt f pensin lst due t a trade dispute r due t a perid f authrised leave f absence r perid f unpaid Versin 1.8 June

6 additinal maternity, paternity r adptin leave r unpaid shared parental leave where the member is paying the full cst f the APC*, in which case it cntinues, unless the member elects t terminate the cntract) any shared cst additinal pensin cntributin (EAPC/ RAPC) cntract must cease (unless it is t purchase an amunt f pensin lst during a perid f authrised leave f absence r during a perid f unpaid additinal maternity, paternity r adptin leave r unpaid shared parental leave, in which case it cntinues, unless the member elects t terminate the cntract) any AVC (EAVC) r Shared Cst AVC (EAVC/RAVC) cntract cntinues unless the member elects t terminate the cntract. [*i.e. the member made an APC electin mre than 30 days (r such lnger perid as the emplyer may allw) after returning frm a perid f authrised leave f absence r perid f unpaid additinal maternity, paternity r adptin leave r unpaid shared parental leave, thereby missing the deadline fr the emplyer t cmpulsrily cntribute t a shared cst APC r the APC is t cver a perid f absence beynd 36 mnths.] It shuld als be nted that n mvement t the 50/50 sectin any existing cntributins t: an AVC/SCAVC an APC t purchase an amunt f pensin lst due t a trade dispute r due t a perid f authrised leave f absence r perid f unpaid additinal maternity, paternity r adptin leave r unpaid shared parental leave where the member is paying the full cst f the APC a SCAPC t purchase an amunt f pensin lst during a perid f authrised unpaid leave f absence r during a perid f unpaid additinal maternity, paternity r adptin leave r unpaid shared parental leave, r an additinal regular cntributin (ARC), added years, Prestn part-time buy-back, r additinal survivr benefit cntributin (ASBC) cntract / arrangement in frce prir t 1st April 2015 see sectin 6.4 are nt reduced t half rate. The cntributins under such cntracts / arrangements cntinue t be paid in full i.e. the full percentage rate r flat rate sum due under the relevant cntract / arrangement). A member in the 50/50 sectin cannt cmmence payment f an additinal pensin cntributin (EAPC) cntract which is at whle cst t the emplyee (unless it is t purchase an amunt f pensin lst due t a trade dispute r due t a perid f authrised leave f absence r perid f unpaid additinal maternity, paternity r adptin leave r unpaid shared parental leave where the member is paying the full cst f the APC). A member in the 50/50 sectin can nly cmmence payment f a shared cst additinal pensin cntributin (EAPC/ RAPC) cntract if such a cntributin is t purchase an amunt f pensin lst during a perid f authrised unpaid leave f absence r during a perid f unpaid additinal maternity, paternity r adptin leave r unpaid shared parental leave. A member in the 50/50 sectin can cmmence payment f an AVC (EAVC) r Shared Cst AVC (EAVC/RAVC) cntract. A member in the 50/50 sectin can cmmence payment f Prestn part-time buy-back cntributins. Versin 1.8 June

7 It shuld be nted that if a member mves t the main sectin: any existing additinal pensin cntributin (EAPC) must cntinue, unless the member elects t terminate the cntract. any shared cst additinal pensin cntributin (EAPC/ RAPC) cntract must cntinue, unless the member elects t terminate the cntract. any AVC (EAVC) r Shared Cst AVC (EAVC/RAVC) cntract cntinues unless the member elects t terminate the cntract. any additinal regular cntributins (ARC) cntract must cntinue unless the member elects t terminate the cntract. any added years cntract must cntinue unless the member elects t terminate the cntract. any additinal survivr benefit cntributins (ASBC) cntract must cntinue unless the member elects t terminate the cntract. any Prestn part-time buy-back cntributins must cntinue. A member in the main sectin can cmmence payment f an additinal pensin cntributin (EAPC) cntract which is at whle cst t the emplyee. A member in the main sectin can cmmence payment f a shared cst additinal pensin cntributin (EAPC/ RAPC) cntract. A member in the main sectin can cmmence payment f an AVC (EAVC) r Shared Cst AVC (EAVC/RAVC) cntract. A member in the main sectin can cmmence payment f Prestn part-time buy-back cntributins. Example 3 A mnthly paid emplyee pts fr the 50/50 sectin n 29th June (after the June payrll had clsed). The payrll shuld be amended t shw the emplyee in the 50/50 sectin frm the July pay perid. Mvements between sectins are unique t each jb unless a single emplyment relatinship exists in which case mvements will apply acrss all f the jbs in that relatinship. Example 4 An emplyee with tw cncurrent jbs pts fr the 50/50 sectin. If n single emplyment relatinship exists the emplyee may pt t be in the 50/50 sectin in either r bth jbs. If a single emplyment relatinship des exist the ptin applies t bth jbs. Example 5 An emplyee finishes ne jb and starts anther withut any ntificatin that emplyment has ceased (e.g. they are prmted with the same emplyer). If the emplyee had pted fr the 50/50 sectin in the first jb that ptin shuld be carried frward t the secnd jb. If a ntificatin was received frm the emplyer that emplyment has ceased then the jbs shuld be treated as a terminatin and a new starter and the emplyee put int the main sectin in the new jb. Emplyers will need t prvide the dates f mvements between sectins t the Pensin Fund administering authrity when they ccur and, at year end (r date f leaving if earlier), cnfirm t the administering authrity which sectin the member was in at that time. Each Versin 1.8 June

8 emplyer will need t determine the mst effective methd t achieve this which may r may nt invlve the payrll system hlding these dates. 4. Cumulative Pensinable Pay (CPP1 and 2) This is the cumulative Pensinable Pay (PP) and/r Assumed Pensinable Pay (APP) in either sectin f the Scheme in the Scheme year, including the value f emluments specified in the cntract f emplyment as being pensinable emluments (including the pensinable emlument value f salary sacrificed fr such items as child care vuchers, and fr pensin cntributin salary sacrifice via a shared cst AVC arrangement). The cumulative pensinable pay must be prvided separately fr each sectin (and per jb) as different accrual rates will apply when calculating the pensin in each sectin. If the emplyee mves between sectins mre than nce in a Scheme year there is n requirement t differentiate cumulatives between different perids in the same sectins (althugh the dates the member was in each sectin need t be prvided t the pensin fund administering authrity). The cumulative amunts shuld cntain all f the PP and/r APP in each sectin during the year. Nte that any pensinable pay received after 31st March 2015 which relates t a perid prir t 1st April 2015 shuld nt be included in CPP1 r CPP2. Example 6 Emplyee pts fr the 50/50 sectin 3 mnths int the Scheme year at which pint the accrued CPP1 is 3,000. The emplyee spends 6 mnths in the 50/50 sectin accruing 6,000 in CPP2 then pts back int the main sectin fr the final three mnths f the year accruing a further 3,300 in CPP1. The cumulatives at the end f the Scheme year are CPP1 6,300 and CPP2 6, Pensinable Pay The definitin f pensinable pay in the 2015 Scheme is, basically, the same as in the 2009 Scheme i.e. all payments in respect f the jb apart frm thse listed in regulatins as exclusins, but there are fur main differences. The first significant change is that hurs wrked in excess f cntracted hurs are, frm 1st April 2015, pensinable up t the hurs f the standard full-time wrking week fr the emplyee in that emplyment. Hurs wrked in excess f the standard full-time wrking week fr the emplyee in that emplyment will, apart frm cntractual vertime, be nnpensinable. The secnd change is that a payment in cnsideratin f lss f future pensinable payments r benefits is, frm 1st April 2015, nt pensinable. Sme f examples f what this means in practice includes: Where emplyer changes an emplyee s cntract t remve pensinable payments, including a reductin in cntractual pay, and gives a lump sum payment in cnsideratin fr the future lss, that lump sum wuld be nn-pensinable. If the lump sum is t be paid each pay perid fr a perid f X mnths in cnsideratin f the lss f these future pensinable payments, then this tp-up payment is nnpensinable. Versin 1.8 June

9 Where an emplyee cntinues t receive their whle preserved substantive salary and cnditins during the perid f prtectin, that salary wuld be pensinable. When cnsidering pay prtectin arrangements, emplyers shuld cnsider if they wish t make pay prtectin arrangements pensinable. The prtectin arrangements shuld reflect the regulatins n pensinable pay as abve and the intentin shuld be recrded in any lcal agreement. The third change is that, frm 1st April 2015, any actual pay paid by the Scheme emplyer t a reservist during Reserve Frces Service Leave is nt pensinable. Nte that whilst n reserve frces service leave the emplyee and the Ministry f Defence pay cntributins n the amunt f Assumed Pensinable Pay (see sectin 4.2). The furth change is that the regulatins nw cnfirm that any award f cmpensatin (excluding any sum representing arrears f pay) fr the purpse f achieving equal pay in relatin t ther emplyees is nn-pensinable. In Octber 2016, SPPA issued a circular (6/2016) clarifying that the payment f arrears f pay, made in respect f an equal pay claim, shuld be treated as pensinable. The circular ntes that exclusin (h) in the list belw makes a clear distinctin between: a) The award f cmpensatin fr the purpse f achieving equal pay, which is nnpensinable, and b) A payment made in settlement f an equal pay claim where the payment represents arrears f pay, which is pensinable. The circular als cnfirms that where such arrears are paid members wuld nt have the chice t nt pay cntributins n the arrears because it wuld be required under the LGPS Regulatins 2014, but that emplyers and administering authrities shuld agree an apprpriately flexible apprach fr the repayment f the member cntributins. The LGPS Regulatins define pensinable pay as fllws: Meaning f pensinable pay 20. (1) Subject t regulatin 21 (assumed pensinable pay), an emplyee s pensinable pay is the ttal f (a) all the salary, wages, fees and ther payments paid t the emplyee, and (b) any benefit specified in the emplyee s cntract f emplyment as being a pensinable emlument. (2) But an emplyee s pensinable pay des nt include (a) (b) (c) (d) any sum which has nt had incme tax liability determined n it; any travelling, subsistence r ther allwance paid in respect f expenses incurred in relatin t the emplyment; any payment in cnsideratin f lss f hlidays; any payment in lieu f ntice t terminate a cntract f emplyment; Versin 1.8 June

10 (e) (f) (g) (h) (i) (j)* (k) (l) (m) (n) () (i) any payment as an inducement nt t terminate emplyment befre the payment is made; any amunt treated as the mney value t the emplyee f the prvisin f a mtr vehicle r any amunt paid in lieu f such prvisin; any payment in cnsideratin f lss f future pensinable payments r benefits; any award f cmpensatin (excluding any sum representing arrears f pay) fr the purpse f achieving equal pay in relatin t ther emplyees; any payment made by the Scheme emplyer t a member n reserve frces service leave; payments fr nn-cntractual vertime; the amunt f any supplement paid t an emplyee whse emplyment was transferred n 1st April 2010, under a staff transfer scheme, frm the Scttish Administratin t Learning and Teaching Sctland, in recgnitin f the difference in cntributin rates between members f the principal civil service pensin scheme and the Scheme; the amunt f any supplement paid t an emplyee whse entitlement t a pensin was transferred n 1st May 2010 frm the SDS Scheme t the Scheme, in recgnitin f the difference in cntributin rates between members f the SDS Scheme and the Scheme; the amunt f any supplement paid t an emplyee whse emplyment was transferred n 1st Octber 2008, under a staff transfer scheme, frm the Scttish Legal Services Ombudsman t the Scttish Legal Cmplaints Cmmissin in recgnitin f the difference in cntributin rates between members f the principal civil service pensin scheme and the Scheme; the amunt f any supplement paid t an emplyee whse emplyment was transferred n 1st April 2011, under a staff transfer scheme, frm the Scttish Administratin t Scial Care and Scial Wrk Imprvement Sctland, in recgnitin f the difference in cntributin rates between members f the principal civil service pensin scheme and the Scheme; returning fficer, r acting returning fficer fees ther than fees paid in respect f lcal gvernment electins, (ii) electins fr the Scttish Parliament, (iii) Parliamentary electins, r (iv) Eurpean Parliamentary electins. The LGPS (Transitinal Prvisins and Savings) (Sctland) Regulatins 2014 prvide that t the abve list shuld be added any supplement paid [t an emplyee] in recgnitin f the difference in cntributin rates between the principal civil service pensin scheme and the 2009 r 2015 LGPS Schemes. This wuld, fr example, cver such a supplement paid t a scheme member wh is emplyed by the Scttish Envirnment Prtectin Agency as a result f a relevant statutry transfer and wh, immediately, befre the transfer, was a pensinable civil servant. Versin 1.8 June

11 The LGPS (Transitinal Prvisins and Savings) (Sctland) Regulatins 2014 als prvide that, despite the entry at (f) abve, if an emplyee s pensinable pay at bth 31st December 1992 and 31st March 1998 included an amunt treated as the mney value t the emplyee f the prvisin f a mtr vehicle it, r any amunt paid in lieu f such prvisin, remains pensinable until such time as the member leaves emplyment with the emplyer wh was emplying him / her n 31st December 1992 (therwise than as a result f a transfer t anther Scheme emplyer which is beynd the emplyee s cntrl) r ceases t be prvided with a mtr vehicle r an amunt representing the mney value t him / her f the prvisin f such a vehicle. Fr a cuncillr, pensinable pay is the ttal f any payments f remuneratin t the cuncillr by the lcal authrity under the Lcal Gvernment (Sctland) Act 2004 (Remuneratin) Regulatins 2007, including any payments made in respect f a cuncillr s functins as a cnvenr r vice-cnvenr f a jint bard. Nte that unlike in the 2009 Scheme, where benefits are based n the pensinable pay due fr a perid, nt pensinable pay received in that perid, benefits in the 2015 career average Scheme will be calculated based n the pensinable pay that is received in the Scheme year (1 April t 31 March) and nt the pay due during that perid. There is therefre n need t adjust pensinable pay n payment f arrears r ther payments which are paid in the current pay perid but nt related t the current pay perid. Please nte, hwever, that any pensinable pay received after 31st March 2015 that relates t a perid prir t 1st April 2015 shuld nt be included in CPP1 r CPP2 see sectin 7. Als, any payments made after an emplyee elects t jin the LGPS r is autmatically enrlled r re-enrlled int the LGPS that relate t a perid prir t the emplyee jining the LGPS shuld nt be pensinable and s shuld nt be included in CPP1 r CPP2. * The reference in entry (j) in the table abve t payments fr nn-cntractual vertime relates t nn-cntractual hurs wrked in excess f the standard full-time wrking week fr the emplyee in that emplyment. Such hurs will be nn-pensinable. Hwever, hurs wrked in excess f cntracted hurs up t the hurs f the standard full-time wrking week fr the emplyee in that emplyment will be pensinable, as will cntractual vertime wrked in excess f the standard full-time wrking week fr the emplyee in that emplyment. Pensinable pay and salary sacrifice HMRC apprved salary sacrifice arrangements where an emplyee has their cntractual pay reduced by an agreed amunt (supprted by a variatin t their cntract) in return fr a tax assessable benefit in kind frm which incme tax liability is then remved will remain pensinable under the 2015 Scheme (where the benefit in kind is specified in the emplyee s cntract f emplyment as being a pensinable emlument). Thus, the psitin remains the same as in the 2009 Scheme. Hwever, it shuld be nted that frm 6th April 2017 significant refrms t salary sacrifice arrangements were intrduced by the Gvernment which have markedly restricted the types f benefits in kind which can benefit frm incme tax and Natinal Insurance cntributin advantages when prvided t emplyees via a salary sacrifice arrangement. Where hliday entitlement is sld in return fr additinal remuneratin, the extra pay will (as in the 2009 Scheme) be nn-pensinable, because it is a payment in cnsideratin f lss f hliday. Versin 1.8 June

12 Where an emplyee frges remuneratin in return fr additinal days f hliday this is, in effect, authrised unpaid leave f absence. Many emplyers have intrduced such cst saving arrangements as a mechanism t help deal with budget cnstraints. If such authrised unpaid leave f absence reduces a persn's incme prir t tax and NIC deductins, the value f this cannt be added back in t a member's pensinable pay as a pensinable emlument because there has been n incme tax liability determined n that amunt. Hwever, if instead a net deductin is made in respect f the value f the additinal leave and incme tax and NICs are deducted frm the member's full pay, the member's pensinable pay wuld als be the full amunt. This is set ut in mre detail in the third ptin described belw. Where a member des freg remuneratin in return fr additinal days f hliday, the purchased annual leave is nly pensinable where incme tax liability has been determined n the value f that annual leave. In the 2009 Scheme the emplyer and emplyee were required t pay their respective cntributins n the first 30 days f authrised unpaid leave f absence, with the cntributins being based n the amunt f remuneratin the emplyee wuld have received but fr the absence. Hwever, in the 2015 Scheme, there is n requirement fr cntributins t be paid fr the first 30 days f authrised unpaid leave f absence. Instead, it is the emplyee s chice as t whether r nt t cver the perid f absence fr pensin purpses. If the emplyee chses t d s this will be by paying an age-related Additinal Pensin Cntributin (APC) t cver the amunt f pensin lst during the perid f authrised unpaid leave f absence see sectin 5.3 fr further details. It shuld be nted that an emplyer might take a different apprach t that set ut abve. Instead f intrducing a system whereby an emplyee frges remuneratin in return fr additinal days f hliday, the emplyer might make a change t the emplyee s cntract f emplyment whereby the emplyee is nly required t wrk fr, say 360 days a year (in the same way that a term-time emplyee may cntractually nly be required t wrk term-time). In the first apprach, if the member is n, say, 20,001 a year and takes 5 days authrised unpaid leave f absence (fr which a deductin will be made frm pay) the emplyee cntributin rate wuld be determined n a salary f 20,001 and the emplyee culd purchase the pensin lst during thse 5 days leave f absence by electing t pay an APC. If the member makes the APC electin within 30 days f returning frm the absence (r such lnger perid as the emplyer allws), it wuld be a shared cst APC i.e. the emplyer wuld cmpulsrily have t cntribute 2/3rds f the cst f that APC see sectin 5.3 fr further details. Hwever, under the secnd apprach, the member s salary wuld be 19,727 and if the member wanted t purchase the equivalent f the pensin that wuld have been earned fr anther 5 days wrks they culd d s via an APC. Hwever, this wuld be at whle cst t the member (unless the emplyer vluntarily agreed t cntribute twards the cst f that APC) see sectin 5.3 fr further details. A third apprach is where the emplyer cntinues t pay the emplyees in full (s each mnth s pay wuld attract full tax, Natinal Insurance and pensin cntributins) but has the agreement f the emplyee t deduct a net sum n the deductins side f the payslip (i.e. the net sum the emplyee wuld have received fr the day s leave after deductin f tax, NI and pensin cntributins). This vercmes the prblem f having, in the first apprach, t treat the leave as unpaid leave f absence and means there wuld be n effect n the emplyee s pensin and n need fr them t elect t purchase the perid via an APC; and it vercmes the prblem in the secnd apprach f reducing the emplyee s pensinable pay. Versin 1.8 June

13 A net deductin can be made prvided it is: authrised by the emplyee s cntract - prvided the emplyee has been given a written cpy f the relevant terms r a written explanatin f them befre it is made, r cnsented t by the emplyee in writing befre it is made. Lcal authrity emplyers are recmmended (with the recmmendatin being supprted by COSLA) t adpt the first apprach set ut abve whenever pssible t ensure cnsistent applicatin. 4.2 Assumed Pensinable Pay (APP) This replaces the cncept f ntinal r as was pay in cases f reduced cntractual pay r nil pay as a result f sickness r injury; r during relevant child related leave (i.e. rdinary maternity, paternity r adptin leave r paid shared parental leave and any paid additinal maternity r adptin leave) ther than any part f that relevant child related leave perid where the pensinable pay received is greater than the assumed pensinable pay fr that part f the leave perid; r whilst n reserve frces service leave (if the emplyee, althugh eligible t be in the Armed Frces Pensin Scheme during that perid, has elected t remain a member f the LGPS). In these circumstances (and nly in these circumstances) the amunt added t the CPP shuld be the APP and nt any PP received, unless the PP received fr any given day in that perid is greater than the APP (e.g. pay frm KIT day(s), SPLIT day(s) r Stringer day(s)), in which case PP is added t CPP fr that day and APP is added fr the ther days. Nte that the APP figure calculated prir t the KIT, SPLIT r Stringer day(s) is nt recalculated fllwing the KIT, SPLIT r Stringer day(s) i.e. the same APP figure cntinues t apply during the remainder f the relevant child related leave. Please nte that APP des nt apply t cuncillr members. It is understd that this is because cuncillrs will cntinue t receive full cuncillr allwances whilst sick r n relevant child related leave. Calculatin APP is calculated as an annual rate then applied t the relevant perid as a prprtin f that rate. The annual rate f APP is calculated as fllws fr any emplyee whse pay peridicity is ther than mnthly (e.g. weekly, frtnightly, lunar, quarterly, half yearly). Pay peridicity ther than mnthly - calculate the average f the pensinable pay fr the 12 cmplete weeks prir t the relevant event after remving any pensinable lump sum payments, but including any APP previusly credited in and relating t thse pay perids. If arrears f pay are paid in the 12 week perid, sme r all f which relates t a perid prir t the cmmencement f the 12 week perid, the back pay relating t the perid prir t the cmmencement f the 12 week perid can be treated as a nn-regular lump sum payment and, thus, remved frm the calculatin. Grss up t an annual figure. If 12 cmplete weeks pay des nt exist use whatever number f cmplete perids are available. The relevant event is the date n which the emplyee drps t reduced cntractual pay r nil pay due t lng-term sickness r injury, r cmmences child related leave (i.e. rdinary maternity, paternity r adptin leave r paid shared parental leave), r the date the member cmmenced reserve frces service leave. Versin 1.8 June

14 Nte that APP des NOT accrue during any perid f unpaid additinal maternity, paternity r adptin leave r unpaid shared parental leave available at the end f relevant child related leave; this is t be treated as unpaid leave f absence. Mnthly paid - Fr a mnthly paid emplyee three cmplete pay perids shuld be used instead f 12 weeks but the calculatin is the same as utlined abve (replacing references t 12 cmplete weeks with a reference t 3 mnths ). Nte: the calculatin f APP can include pensinable pay prir t 1st April 2015 (i.e. where the 12 weeks / 3 mnths ges back beynd 1st April 2015). This caters, fr example, fr members wh wuld be n APP frm day ne f the 2015 Scheme (because n 1st April 2015 they are already n reduced cntractual pay r n pay due t sickness r injury). If pensinable pay prir t 1st April 2015 is included it is the pensinable pay as defined under the 2009 Scheme that is included (nt what the pre 1st April 2015 pensinable pay wuld have been if it had been determined under the definitin f pensinable pay in the 2015 Scheme). It shuld als be nted that the LGPS (Sctland) Regulatins 2014 d nt specify hw the grssing up t an annual equivalent pay figure shuld be perfrmed. Fr mnthly paid emplyees the calculatin is straight frward (see Examples 7A and 7B). Hwever, fr emplyees paid ther than mnthly, there is n standard prcedure. Hwever, whatever multiplier is used shuld frm the basis fr the divisr (see the sectin n 'Prprtining' belw). Example 7A A mnthly paid emplyee has received the fllwing pensinable pay in the three cmplete mnths prir t the relevant event. Mnth 1 1,400, Mnth 2 2,500 (including a 1,000 regular bnus and 100 vertime) Mnth 3 1,400. The calculatin f APP is as fllws: Annual rate f APP = ( 1, , ,400)/3 *12) = 17,200 Nte that the 1,000 bnus is remved prir t the averaging and grssing up calculatin. Lump sums APP may be increased at the time f calculatin where the emplyer, at their sle discretin, decides t add back int the APP any regular lump sum payment paid in the last 12 mnths befre the relevant event. The emplyer must determine, at the pint APP cmmences, whether there is a reasnable expectatin that a regular lump sum payment received in the previus 12 mnths wuld be paid again during the perid where APP applies and, if s, whether that lump sum already paid shuld be added back int the APP annual rate figure. Example 7B In example 7A, the member received a regular annual bnus f 1,000 in the perid befre ging n t APP. In calculating the flat rate average APP the lump sum was remved. In deciding whether r nt the lump sum shuld be added back int the APP annual rate the emplyer shuld reasnably assess if in their view the emplyee will still be n APP the next time the lump sum is due t be paid. Therefre, if in the emplyer's reasnable assessment the perid f APP will extend t 11 mnths r mre and the 1,000 bnus wuld have been paid again within the perid f APP then the amunt culd be added back Versin 1.8 June

15 int the annual APP rate i.e. Annual rate f APP = ( 1, , ,400)/3 *12) = 17, ,000 (future bnus) = 18,200 It is recgnised that the 1,000 has already been included in the CPP prir t ging n t APP and s, if added back int APP, this will result in an element f duble cunting. Emplyers will wish t take this int cnsideratin when making their decisin. The number f cases is likely t be small. APP and Separate Emplyments The calculatin f APP uses the 3 cmplete mnths r 12 cmplete weeks pensinable pay the member receives relating t that emplyment befre the perid f reduced cntractual pay r nil pay due t sickness r injury, r relevant child related leave cmmenced r the date the member cmmenced reserve frces leave. If during the perid f 3 mnths r 12 weeks pensinable pay used t calculate the APP the member ceases ne emplyment and is reemplyed n a new cntract f emplyment the calculatin f the value f the APP is based n the pensinable pay received in the new emplyment nly using the number f cmplete weeks r cmplete mnths available in that emplyment t calculate the APP. Prprtining When determining the prprtin f the annual APP rate t be added t the CPP the same methd used fr determining part perids fr ther reasns shuld be maintained. Therefre, if it is necessary t calculate ne day s APP use whatever methd is nrmally used t calculate ne day s pay frm an annual rate. Hwever, it is imprtant that the methd reflects the methdlgy used t calculate the annualised APP figure. Thus, fr example: if 12 weeks pay have been grssed up t an annual rate using the frmula 52/12 then the divisr fr wrking ut a week s pay wuld then be annual pay/52 (and fr a frtnightly paid emplyee the divisr wuld be 26 and fr a lunar paid emplyee it wuld be 13), r if 12 weeks pay have been grssed up t an annual rate using the frmula /12 then the divisr fr wrking ut a week s pay wuld then be annual pay/ (and fr a frtnightly paid emplyee the divisr wuld be and fr a lunar paid emplyee it wuld be ), r if 12 weeks pay have been grssed up t an annual rate using the frmula 53/12 then the divisr fr wrking ut a week s pay wuld then be annual pay/53 (and fr a frtnightly paid emplyee the divisr wuld be 26.5 and fr a lunar paid emplyee it wuld be 13.25). Nte, hwever, that using a frmula f 53/12 is nt recmmended as it prduces an incrrect utcme when calculating an annualised Assumed Pensinable Pay figure fr use in calculating the ill health pensin enhancement fr an emplyee retiring with a Tier 1 r Tier 2 ill health pensin, r in calculating the lump sum death grant fr a member wh dies in service in a year with 53 weeks (cmpared t the figure that wuld have been calculated if the persn had retired r died in a year with 52 weeks). Whichever methdlgy is adpted the weekly pay figure shuld always cme ut as the same figure. Thus, if a weekly paid emplyee is n leave fr 3 weeks, the amunt f APP is 3 x the calculated weekly APP figure. If a weekly paid emplyee is absent fr 40 weeks, Versin 1.8 June

16 then the amunt f APP is 40 x the calculated APP figure (and it is immaterial whether there was a week 53 n payrll falling within that 40 week perid the ttal APP is still 40 x the calculated APP figure). Thus, if the 40 weeks span a year end in a 52 week year then, fr example, 20 f the weeks might fall befre the year end and 20 in the fllwing year; but if the year was a 53 week year, 21 wuld fall befre the year end and 19 in the fllwing year. Example 8 A mnthly paid emplyee ges n lng-term sick leave and drps t reduced pay n 15th June and stays n that until 4th September when they return t nrmal wrking. The emplyee is in the main sectin thrughut. CPP1 is therefre accrued as fllws: June 14 days f Pensinable Pay plus 16 days at the APP rate July APP August APP September 3 days APP plus 27 days f pensinable pay Nte that in cases f emplyees n relevant child related leave (i.e. rdinary maternity, paternity r adptin leave r paid shared parental leave and any paid additinal maternity r adptin leave) wh return fr KIT days, SPLIT days r Stringer days the pensinable pay (and nt APP) fr thse days shuld be added t the CPP if the pensinable pay received fr that day is higher than the APP daily rate. The APP applying after the KIT day, SPLIT day r Stringer day will be the same as that applying befre the KIT day, SPLIT day r Stringer day (i.e. there is n need t recalculate APP simply because the emplyee has undertaken a KIT day, SPLIT day r Stringer day during the perid f relevant child related leave). Please see example 18 t see hw this wrks fr bth the CPP and CEC cumulatives. Adjusting the APP figure The APP, as calculated abve, is adjusted where the APP figure cntinues fr a perid that crsses tw 31st March dates. Where an emplyee is, fr example, n lng term sick leave, APP is adjusted at midnight n the secnd 31st March fllwing the date APP cmmenced. The adjustment is the percentage adjustment specified in the Treasury Revaluatin Order fr that (secnd) Scheme year ending n that 31st March. If the APP cntinues fr a further year it will be revalued at midnight n the third 31st March fllwing the date APP cmmenced. The adjustment is the percentage adjustment specified in the Treasury Revaluatin rder fr that (third) Scheme year ending n that 31st March (and s n thereafter). Example 9 A mnthly paid emplyee ges n sick leave n reduced pay frm 15th June. The annual APP figure is calculated as shwn in example 7B and is 18,200. At the fllwing 31st March the member is still n sick leave (and, by that time, is n n pay). The annual APP figure f 18,200 is nt increased at that 31st March and cntinues t be used frm 1st April. If the emplyee is still n sick leave (with n pay) at the subsequent 31st March the figure f 18,200 will be adjusted by the annual percentage figure specified in the HM Treasury Revaluatin Order. If this is 2%, then the annual APP figure frm the secnd 1st April fllwing the pint when the persn went nt sick leave n reduced / n pay will be Versin 1.8 June

17 increased t 18,564. The member returns t wrk n the fllwing 4th September. The emplyee is in the main sectin thrughut. CPP1 is therefre accrued as fllws: June 14 days f Pensinable Pay plus 16 days at the APP rate (annual rate f 18,200) July t March APP at the annual rate f 18,200 April t March - APP at the annual rate f 18,200 April t August APP at the annual rate f 18,564 September 3 days APP (at the annual rate f 18,564) plus 27 days f pensinable pay The 50/50 rule If the member was in the 50/50 sectin prir t drpping t nil cntractual pay because f lng-term sickness r injury r drpping t n pay during rdinary maternity, paternity r adptin leave they shuld be placed in the main sectin frm the beginning f the next pay perid (prvided, in the case f a member drpping t nil cntractual pay because f lngterm sickness r injury, they are still n n pay at that time) and the APP added t CPP1 rather than CPP2 as frm the beginning f that pay perid. Example 10 A mnthly paid emplyee drps t reduced cntractual pay due t sickness n 15th June then n 15th September they drp t nil pay. They return t nrmal wrking n 1st December. At the date f the relevant event they were in the 50/50 sectin f the Scheme. The CPP accrued thrughut is as fllws: June 14 days f pensinable pay plus 16 days f APP is added t CPP2 July APP is added t CPP2 Aug APP is added t CPP2 Sept APP is added t CPP2 Oct APP is added t CPP1 (next pay perid fllwing the drp t nil pay) Nv APP added t CPP1 Dec PP added t CPP1 Nte that the emplyee remains in the main sectin unless and until they make anther electin t return t the 50/50 sectin. Exceptins t 50/50 rule fr shrt perids f sickness The exceptin t the 50/50 rule abve is fr shrt perids f reductin where the emplyer has a plicy f nil pay fr the first X days f sickness. In these cases APP is applied in the pay perid f reductin even if this is later than the date f the relevant event. Adjustments d nt have t made in arrears. The emplyee des nt have t be placed back in the main sectin if they have elected fr the 50/50 sectin. They wuld have t be placed back in the main sectin if they eventually went nt n pay fllwing lng-term sickness r injury and were still n n pay at the beginning f the next pay perid after ging n t n pay as a result f the lng-term sickness r injury.. Example 11 Versin 1.8 June

18 A mnthly paid emplyee is ff sick fr tw days in the middle f June and the emplyer has a plicy f nil pay fr the first 3 days f sickness. The adjustment t pay is nt dne until July when tw day s pay are taken frm that mnth s payment. The CPP accrued is as fllws: June PP is added t CPP2 July PP (which has been reduced by tw days) plus 2 days f APP are added t CPP2 Nte that the APP figure is calculated by reference t the pensinable pay the member received in respect f that emplyment in the 3 cmplete mnths preceding the date n which entitlement t pay at a reduced r zer cntractual rate cmmenced. Thus, even thugh the deductin frm pay fr the tw days sickness did nt ccur until July, APP is calculated n the pensinable pay paid in the perid March, April and May nt April, May and June. It is immaterial whether the ntificatin f the tw days sickness is ntified t payrll in time fr the deductin t be made in the June payrll r the July payrll. In either case, the calculatin f the APP figure t be added t CPP2 is the same i.e. based n the pensinable pay the member received in respect f that emplyment in March, April and May. Cessatin f APP accrual APP ceases t accrue when a member ceases t be absent n reduced cntractual pay r nil pay fllwing sickness r injury; r n ceasing relevant child related leave (i.e. rdinary maternity, paternity r adptin leave r paid shared parental leave and any paid additinal maternity r adptin leave); r n ceasing reserve frces service leave. APP where a member retires with a Tier 1 r Tier 2 ill health pensin r dies in service APP will need t be calculated (by the emplyer - nt held n payrll) when an emplyer terminates an active member s emplyment n the grunds f permanent ill-health with a Tier 1 r Tier 2 ill health pensin r when an active member dies in service. Except in the case f returning fficers and acting returning fficers (see belw) the APP figure is calculated in the nrmal way but using the average f the pensinable pay fr the 12 (weekly) r 3 (mnthly) cmplete pay perids prir t the date f terminatin / death (including any APP credited in and relating t thse pay perids), t which any regular lump sums paid in the 12 mnths prir t the date r retirement / death which the emplyer determines there is a 'reasnable expectatin' wuld again have been paid t the member are added back int the annual rate f APP. This APP figure is needed t calculate the amunt f the enhancement t the benefits due under the LGPS. Where a scheme member hlds the pst f returning fficer at lcal gvernment electins r Parliamentary electins (including Scttish Parliamentary electins) r as an acting returning fficer (including as a reginal r lcal returning fficer at Eurpean Parliamentary electins), the APP figure is calculated as the annual average pensinable pay the member received relating t that emplyment in the three years preceding the cmmencement f the pay perid in which the ill-health retirement r death ccurred (r received in the perid f membership in that emplyment if less than three years). 4.3 Certificates f Prtectin Versin 1.8 June