Policies, Procedures, Guidelines and Protocols

Transcription

1 Policies, Procedures, Guidelines and Protocols Document Details Title Retirement Policy and Procedure Trust Ref No Local Ref (optional) N/A Main points the document covers The policy sets out the arrangements for retirement and purchase of retirement gifts in recognition of long service. Who is the document All staff aimed at? Owner HR Manager Approval process Approved by Quality & Safety Group (Committee/Director) Approval Date July 2015 Initial Equality Impact Yes Screening Full Equality Impact No Assessment Lead Director Director of Corporate Affairs Category Human Resources Sub Category None Review date July 2018 Distribution Who the policy will be All staff distributed to Method Via Trust website and Datix Alert Document Links Required by CQC Required by NHLSA Other Amendments History No Date Amendment 1 December 2013 Replaces previous policies transferred into the Trust from PCTs 2 January 2015 Updated to include further information regarding the pension schemes 3 March 2015 Updated following advice from the pension manager. Inclusion of new 2015 pension and signposting to Ill-health Retirement. 4 August 2016 Update following advice from the pensions manager. Clarification of protection for members of previous pension schemes. (5.1.8, , , 5.2.5, 5.2.6). Inclusion of access for individuals to annual benefit statements via Total Reward System (ESR) and government portal. (6.2). Clarification on ill-health benefits commutation (8.3) Insertion of 9.3 to clarify entitlement to retirement gift. 5

2 Contents 1 Introduction Purpose Responsibilities Retirement Age Retirement Pension Options The Procedure Flexible Retirement Options Retirement due to ill health Retirement Gifts Monitoring Associated Documents Advice...13 Appendix 1 Template Letter...14 Appendix 2 Application for Staff Retirement Gift...15 Appendix 3 Retirement Approval Process...16 Page 2 of 16

3 1 Introduction 1.1 The Trust values the loyalty and commitment given to the NHS by members of its staff. 1.2 This policy provides guidance for both managers and employees on retirement and aims to promote the principles of the work life balance and ensure the Trust is compliant with employment legislation. 2 Purpose 2.1 The purpose of this policy is to enable staff to make the transition from work to retirement and to recognise the contribution that they have made to the Trust and the NHS. 2.2 This policy applies to all staff who are directly employed by the Trust, whether full-time or part-time, permanent or temporary and including bank staff. 2.3 This policy sets out the Trust s arrangements for retirement and also covers the arrangements for the purchase of retirement gifts in recognition of long service. 2.4 It also provides information on ill health retirement. 3 Responsibilities 3.1 Please note that job titles may change from time to time; in which case roles and responsibilities will relate to the most appropriate existing, new or amended job title. 3.2 Employees are responsible for giving written notice of their intention to retire, which must be at least the minimum notice period set out in their contract of employment. They are also responsible for any decisions they make in relation to their employment and the effect of such decisions on their salary, terms and conditions of employment, pension options and future benefits. 3.3 It is the employee s responsibility to check their pension arrangements and seek advice before making any decisions. 3.4 If employees do not understand their responsibilities or any terms or requirements set out in this policy, they should seek clarification from their line manager. 3.5 Line Managers are responsible for ensuring that all relevant parties within the Trust are advised of the impending retirement, e.g. timely submission of termination form. They are also responsible for meeting with individuals to discuss their retirement and to plan for the service. 3.6 Important note: Whilst Line Managers and the HR and Workforce Team members are able to advise employees on the retirement process and give Page 3 of 16

4 basic information regarding the NHS Pension Scheme; they are not able to advise on individual pension matters or comment on the financial or personal impact of any changes to an employee s working arrangements. 4 Retirement Age 4.1 In line with the Equality Act 2010, the Trust does not operate a mandatory retirement age, therefore, the decision about whether to retire is a matter for each individual employee. 5 Retirement Pension Options 5.1 This section is intended to give brief details about the NHS pension schemes. The schemes are subject to change, therefore, the information provided here may alter managers and employees should refer to the Pensions Team or the NHS Pensions web-site for more information at This section applies to those employees who belong to the NHS Pension Schemes and are subject to the rules of the Schemes. It is a summarised version of the terms and does not take precedence over those terms. It is important that employees understand which of the NHS Pension Schemes they are a member of, and if in doubt, the Pensions Team, will be able to advise. 5.1 Updated 1995 NHS Pension Scheme (Amended 2008) Employees who: were a contributing member of the NHS Pension Scheme prior to the 1st April 2008; or returned to NHS employment before the 1st October 2008 with the entitlement to preserved benefits or after transferring NHS benefits to another pension arrangement; or, returned to NHS employment on or after the 1st October 2008 following a break in pensionable employment of less than 5 years and having preserved benefits or having transferred NHS benefits to another pension arrangement; may be a member of the updated 1995 NHS Pension Scheme (Amended 2008) which is a defined benefit occupational pension scheme with 1/80 accrual rate and the following rules will apply All Protected members of the updated 1995 scheme will have a normal retirement age of 60 and pension benefits of an annual pension plus three times the pension as a tax free lump sum. The lump sum may be increased to a maximum of 25% of the notional pension fund at the rate of 1 of pension for 12 of additional lump sum. Benefits are based on the best pensionable pay (notional whole time for part time members) in the last three years prior to retirement and the length of service. Page 4 of 16

5 5.1.3 In addition, female nurses, midwives and physiotherapists who were members of the scheme prior to 6 th March 1995, and have not had a break of service of more than 5 years may be entitled to retire with full benefits from 55 under Special Class rules, provided the last 5 years membership has been in one of these jobs and they qualify for Full Protection. Members should be aware that abatement will apply if they return to work in the NHS, which means that their pension plus post retirement earnings must not exceed the pensionable pay prior to retirement or their NHS Pension benefits could be suspended Male nurses, male midwives and male physiotherapists who were members of the NHS pension scheme prior to 6 th March 1995 may receive early benefits for membership from 17 th March Full benefits for membership prior to this will not be paid until age 60, however, reduced benefits, as for voluntary early retirement, may be claimed as an option. Again, abatement rules as in could apply All members may take actuarially reduced voluntary early retirement and receive pension benefits from age 50, subject to approval from the NHS Pensions Agency. Benefits will be worked out in the normal way, but will be reduced on a sliding scale dependent upon age (this is called the actuarial reduction ). If employees wish to retire early under the terms of the NHS Pension Scheme (i.e. before age 60 for most employees or before age 55 for the special classes detailed above) then individuals should contact the Pensions Team for further information before giving formal notice. In such cases the individual: - will have to leave all their NHS jobs and will not be able to rejoin the Scheme if they return to NHS work and must have sufficient Pension Scheme membership to qualify for a reduced pension equivalent to the statutory Guaranteed Minimum Pension The Pensions Team may provide an estimate of the pension benefits due, which will be reduced in accordance with the terms of the NHS Pension Scheme. Further details may be obtained from the Pensions Team or from the NHS Pensions website at Members may apply to Step Down to a less demanding post and make a request to voluntarily protect their higher pay. The member must be over the minimum pension age of 50 and be accepting a reduction in pay of at least 10% (this does not include going from whole time to part time). The reduction in pay must be as a result of the member taking up a post that is less demanding and with less responsibilities and must be supported by their Manager as an active Step Down to retirement and is subject to a suitable vacancy being available and the normal recruitment process followed. In addition, the reduction of pay in the new post must be for a minimum of 12 months and the request to protect the higher pensionable pay must be made within 15 months of their pay reducing Members of staff must take a break of at least two weeks before the member of staff returns to work. Following the break for the remainder of the first calendar Page 5 of 16

6 month following the date of retirement the member must not exceed 16 hours work per week, or their NHS pension will be suspended. After this timeframe, employees can increase their hours (with agreement from their line manager) and subject to the hours being available. Please note that the date of retirement will be extended for any outstanding annual leave paid in lieu at termination of employment and this must be taken into account before a commencement date is agreed for the new post Staff who retire, take their pension benefits and return to work cannot normally rejoin the NHS Pension Scheme to earn additional pension benefits with the exception of individuals who retired on the grounds of Ill-health and were reemployed before the age of If a member s pay is reduced through no fault of their own, the member can apply for the higher rate of pay to be protected for pension purposes. This must be done within three months of the pay reducing and does not have to be reduced more than 10% nor does the member need to be over the minimum retirement age. As the reduction is through no fault of the member, for pension purposes a protection of pay can be applied for more than once Some members of the 1995 Pension Scheme may find they have been transferred to the New 2015 Scheme from 1st April, 2016, if they did not qualify for Full Protection (see 2015 Scheme section) Some members of the 1995 Pension Scheme may find that they will be transferred to the New 2015 Scheme at a future date known as Tapered Protection (see 2015 Scheme section) NHS Pension Scheme Employees who joined the NHS Pension Scheme on or after the 1 st April 2008 or have exercised the choice option to transfer, or have returned to the NHS following a break of more than 5 years may be a member of the New 2008 NHS Pension Scheme which is a defined benefit pension scheme with an accrual rate of 1/60 and their normal retirement age is 65. Benefits at retirement will be a pension only with the option given for members to buy a tax free lump sum at the rate of 1 pension for 12 of lump sum. Benefits are based on the consecutive highest three in the last ten years, averaged Special class status (the opportunity to retire at age 55 with no loss of benefits) is not available to New 2008 Scheme members, even for those exercising the choice option, and the voluntary early retirement age increases to 55, after which benefits will be reduced on a sliding scale depending upon age at the chosen date of retirement Members who retire from the New 2008 scheme and return to work in the NHS may be able to rejoin the 2008 scheme and build up further benefits provided they are not already in receipt of benefits based on maximum 45 years pensionable service or are over age A key feature of the 2008 section of the NHS Pensions Scheme is the Page 6 of 16

7 provision for partial retirement, or draw down. On reaching age 55 members become eligible to take some of their pension (without retiring) if they reduce their pay by switching to a lower paid job or reducing their hours of work. A break in employment is not required to take advantage of this provision to draw down some of their pension. To be eligible for draw down members must: be age 55 or older; be reducing actual pensionable pay by at least 10% (or a 10% reduction in commitment for GPs); have had the previous level of pensionable pay for at least 12 months; expect the new level of pensionable pay to last at least 12 months; not have already drawn down twice. Subject to overall limits, members can draw down a minimum of 20% and up to a maximum of 80% of their pension entitlement earned to date, whilst continuing to build up further membership. Members can exercise Draw down twice and on the third request would have to take the remaining benefits from the scheme. Detailed information about the schemes and relevant forms may be found at Some members of 2008 Pension Scheme may find they have been transferred to the New 2015 Scheme from 1st April, 2016, if they did not qualify for Full Protection (see 2015 Scheme section) Some members of 2008 Pension Scheme may find that they will be transferred to the New 2015 Scheme at a future date known as Tapered Protection (see 2015 Scheme section) NHS Pension Scheme From 1 April 2015 there will be a new pension scheme for NHS workers. This is all workers except those who are allowed to remain in the 1995/2008 Sections of the NHS Pension Scheme due to the Protection arrangements outlined below: Members of the 1995/2008 Scheme who, as at 1 April 2012, were either already over their Normal Pension Age (NPA) or 10 years or less from their NPA and in active membership on both 1 April 2012 and 31 March 2015 are entitled to Full Protection. Members of the 1995/2008 Scheme who, as at 1 April 2012, were more than 10 years, but less than 13 years and 5 months from their NPA and in active membership on both 1 April 2012 and 31 March 2015 are eligible for limited protection; this is Tapered Protection. Those not in active membership of the 1995/2008 Scheme on both 1 April 2012 and 31 March 2015 may still qualify for Protection provided they rejoin the Scheme after a break of less than 5 years. New joiners to the NHS will join the New 2015 Scheme from their commencement date Page 7 of 16

8 Members who transferred to the New 2015 scheme automatically because they did not qualify for either full or tapered protection will have benefits in multiple schemes. The benefits built up in 1995 scheme or 2008 scheme before moving to 2015 scheme can be taken unreduced at your normal pension age for 1995/2008 schemes and will remain salary linked provided the member does not leave the NHS for more than 5 years. However, members will have to retire to take these benefits and 1995 scheme members are unable to build up any further benefits in the 2015 scheme if they return to the NHS after retirement. However, members of the 2008 scheme can build up further 2015 scheme benefits if they return to work in the NHS after retirement provided they are under age 75 and not in receipt of 1995 scheme benefits The 2015 Scheme is a Career Average Revalued Earnings (CARE) scheme. This is a form of defined benefit pension scheme, which means a guaranteed level of benefit at retirement payable according to a fixed formula. Pension benefits for all members are calculated using the same method and revaluation rate. In a CARE scheme your pension is based on your pensionable pay throughout your career. The pension earned each year is based on actual pensionable pay in that Scheme year and is increased by a set rate linked to inflation, known as revaluation, each year up to retirement or leaving. A Scheme year runs from 1 April of one year to 31 March of the following year. The final pension payable is calculated by adding together the revalued pensions earned in each year of membership The New 2015 scheme has an accrual rate of 1/54 and a retirement age equal to the individual s State Retirement Age (or 65 if greater). Members can build up pension rights in the 2015 scheme until age 75 with no limit to the number of years earnings that can be taken into account The CARE Scheme is completely different to the two concurrent occupational pension schemes already in operation in the NHS. At the end of each financial year 1/54 of your pensionable pay for the previous twelve months will be banked into the CARE scheme. Each year this amount is then uplifted by CPI + 1.5%. At State Retirement Age all of these pots are then added together to calculate the annual pension due for retirement. Members are able to buy a tax free lump sum by giving up some of their pension at a rate of 1 pension for 12 of tax free lump sum Reduced Voluntary early retirement is available from age 55 with benefits reduced by 5% per annum for each year taken early The new scheme offers an annual pension only with the opportunity to purchase a tax free lump sum by giving up some of your pension at the rate of 1.00 pension for tax free lump sum Each year of your pensionable pay counts separately towards the build up of your final pension benefits. Therefore entering into or continuing with any salary sacrifice arrangement (e.g. Childcare Vouchers) that reduces your gross pensionable pay will have a negative effect on the amount of pension you are able to build up in that year. The overall effect from participating in any salary Page 8 of 16

9 sacrifice scheme would be to reduce the amount of final benefits you build At retirement a member of the New 2015 scheme may rejoin the 2015 scheme and build up further benefits up to age 75 if they return to work in the NHS. 6 The Procedure 6.1 If you have decided that you wish to retire, you should inform your line manager in writing as far in advance as possible and, in any event, in accordance with your notice period as set out in your contract of employment. 6.2 On request from the employee, the Pensions Team may give an estimate of probable benefits receivable. No estimates will be available for 2015 Scheme members but an annual Benefit Statement will be available on TRS which will be updated to the end of the previous tax year (i.e. 31 st March) which members can access personally via ESR Employee Self Service or the Government portal. Lump sums are due on the first day of pensionable retirement (although NHS Pensions Agency have the right to adhere to Statutory Targets at busy periods which is within 30 days of retirement date), and the first payment of pension is normally made in the month after the month of retirement provided papers are submitted at the appropriate time. Any queries regarding these payments should be addressed to the Paymaster and not the Trust Pension Team. All outstanding monies, including any accrued holiday pay will be paid shortly after the leaving date, usually the next pay day; Pay Services will notify the NHS Pensions Agency where these will affect the employee s NHS pension. To process an NHS Pension Award the Trust pensions team requires a minimum of 4-5 months notice prior to the date of retirement. 6.3 Your line manager will write to you acknowledging your notice to retire and inviting you to a meeting to discuss arrangements. 6.4 The meeting will cover arrangements for retirement, including the intended retirement date, succession and handover plans, pension details and phased retirement, if applicable. 6.5 For all retirements the NHS Pensions Agency require the completed application form to be received at the NHS Pensions Agency at least 3 months prior to the date of when pension payments will be received, which is why it is recommended that the relevant forms are requested from the Pensions Manager at least 4-5 months prior to the proposed retirement date. 6.6 The Pensions Team will send the application forms to the individual. On completion (of parts 7 14 inclusive) these forms are to be returned to the Pensions Department along with original copies of the relevant certificates. If preferred, to prevent potential loss in the post, the certificates can be copied and verified by Line Managers by writing clearly on the copies; I have seen the original document and this is true copy of the original, signing and printing their name and position, together with the Trust address and the date. Alternatively, members may personally take certificates to Pay Services for verification. Page 9 of 16

10 6.7 The Pensions Team will then complete the relevant section on the form and process electronically to the Pensions Agency, where the individual s pension is calculated. 6.8 The manager will be responsible for notifying via completion of an ESR termination form, of the date of termination and confirm any outstanding annual leave (a copy must be sent to the Pensions Department). 6.9 The ESR team will process all the necessary paperwork for terminating the employee s employment and, in conjunction with the Payroll Department, will terminate employment and arrange to make any outstanding payments. 6.1 Non-NHS Pension members retiring Employees should inform their manager of their intention to retire at the earliest opportunity. The minimum notice period required is their contractual notice period which is shown in their Statement of Employment Particulars Upon receipt of the resignation letter, the manager will write to the employee acknowledging their wish to retire. The manager will also be responsible for completion of the ESR Termination form and confirm any outstanding annual leave The ESR team will process all the necessary paperwork for terminating the employee s employment and, in conjunction with the Payroll Department, will terminate employment and arrange to make any outstanding payments. 7 Flexible Retirement Options 7.1 There are a number of benefits to offering flexible working patterns to those staff nearing retirement. 7.2 For the Trust it is a way of extending the contribution of experienced and skilled staff pre and post-retirement, assisting with vacancy problems and reducing pressure on staffing levels at critical times of the year such as winter months. For staff it is an opportunity to gradually progress from working to not working; a way to wind down gradually or to return at particular times of the year. 7.3 Winding down is a change in working arrangements, for example, a gradual reduction in working hours or a move to part-time working prior to retirement. The organisation will consider all requests for changes to working arrangements in accordance with Trust s Flexible Working Policy. 7.4 If you wish to be considered for a phased retirement you should discuss this with your line manager and submit a Flexible Working Request. (It should be noted that preferential consideration cannot be given on the grounds of age or retirement). Page 10 of 16

11 7.6 Step down (only updated 1995 scheme members see 5.1.7): Alternatively, employees nearing retirement may wish to apply for a less demanding role to help them adjust to, and prepare for, retirement. This will be dependent upon there being suitable available opportunities and will require them to apply for position(s) through the normal recruitment procedure. 7.7 It is important to note that if an employee chooses to take a role with less responsibility and a lower salary, or where they reduce their working hours, this may result in a reduction in salary, pension and/or pension contributions. All job opportunities are subject to a vacant post being available and compliance with the recruitment process. 8 Retirement due to ill health 8.1 Employees may wish to make an application for ill health retirement where ill health is affecting their ability to work and this should be managed in line with the Policy and Procedure on Managing Attendance at Work. 8.2 The decision as to whether the employee satisfies the conditions for ill health retirement will only be made by OH Assist independently on behalf of the NHS Pensions Agency. Due to the time it takes to process such a request it may be the case that dismissal occurs before a decision on ill health is reached. 8.3 If successful, to be awarded ill health retirement under the terms of the NHS Pension Scheme, the member must retire from pensionable employment because of physical or mental infirmity. There are two levels of ill-health retirement:- Tier 1 The employee is permanently incapable of efficiently discharging the duties of their current employment Tier 2 The employee is permanently incapable of regular employment of like duration in addition to meeting Tier 1 conditions Commutation of Tier 2 Ill Health benefits under terminal illness where life expectancy is confirmed as less than 12 months 8.4 Explanation of the Terms: retire from pensionable employment - means the employment contract must cease because of ill health rather than any other reason; permanently - means until the member s normal retirement age under the terms of the NHS Pension Scheme (60 in most cases, 55 for some special classes); efficiently - means producing the result required, competently; current employment - means precisely what its says it does not extend to a job of a similar nature/standard outside the Trust; 8.5 Please refer to the Trust s Managing Attendance at Work Policy for details of the process. Page 11 of 16

12 9. Retirement Gifts 9.1 It is the policy of the Trust that employee s retiring after 20 or more aggregated years of service with the NHS will qualify for a retirement gift. 9.2 Staff who meet the criteria as in paragraph 10.1 who retire on the grounds of age, ill-health, or prematurely on the grounds of organisational change, are all eligible for this gift except where gross misconduct is the reason for termination. 9.3 A member of staff does not have to access their NHS Pensions benefits to qualify for a retirement gift 9.4 A gift selected by the retiring employee will be purchased by the retiring employee's Department and charged to their own budget. No award can be made in cash to a retiring employee. As many companies no longer accept cheque payments, one out of the two options can be chosen:- a) A cheque can be made out to a bona fide business to enable the employee to purchase their gift. b) The employee purchases their own gift and sends the receipt to their manager, who will then request reimbursement for the employee from the Finance Department by sending in the form in appendix 2 and the receipt. Payment will be direct to the employee s bank account via BACS. 9.5 All staff who meet the criteria in paragraph 9.1 are entitled to this amount which is 5.00 for each year of service. 9.6 Authorised absence will be included in the calculation of years of service. 9.7 Employees shall only be entitled to one such award. 9.8 The value of the gift will be calculated in the following way: Number of completed years service x Application for the above should be made on the attached form (see Appendix 2). 10 Monitoring 10.1 Application of the policy and procedure will be audited on a regular basis and the policy reviewed in line with legislation changes and good practice. 11 Associated Documents 11.1 The following documents can be found in the policies and procedures section of the Website and should be referred to for related information: Equality & Diversity Policy Page 12 of 16

13 Grievance & Concerns Policy Recruitment & Selection (Safer Recruitment) Policy Flexible Working Policy Managing Attendance at Work Policy 12 Advice 12.1 Further advice and information can be sought from the Trust s Pension team and can be found in the NHS Pension scheme guide: Other useful sources of information: NHS Employers for information and resources: Agenda for Change Terms and Conditions Handbook: eward/afc_tc_of_service_handbook_fb.pdf ACAS: Page 13 of 16

14 Appendix 1 Template Letter Letter informing Pay Services of employee s pending retirement Shropshire Community Health NHS Trust Pensions Manager, Pay Services Date Dear Re: (Specify type of retirement eg. early/voluntary).retirement Name of employee (insert) Payroll number (insert) I am writing to confirm that in five months time, (named person) has advised me that they are intending to retire on the (dd/mm/yyyy) (please specify reason as well). Please can you send the necessary forms to (named person) at their home address to complete. He/she will then return this with the necessary either original or certified copies of birth certificates and marriage certificates, together with other relevant documentary evidence, so that the pension arrangements can be made in good time for their retirement. I look forward to hearing from you in the near future. Yours sincerely Line Manager Location cc. Employee Personal File Page 14 of 16

15 Appendix 2 Application for Staff Retirement Gift Retiring Employee s Full Name: Retiring Employee s Personal Number: Address: address for Remittance: Date of Retirement: Number of aggregated completed years of service (see 9.1): Value of gift claimed (point 9.1 above * 5.00): Cost Code to be debited: Please complete A or B below:- A) Payment to Employee for Reimbursement - attach proof of purchase Sort Code: Account Number: Account Name: B) Cheque to a third party (Bona Fide Business Only) and please ensure that the business will accept a cheque as payment. Business Name: Date: Signed (Service Manager) Print Name: Payroll Co-ordinator: Page 15 of 16

16 Appendix 3 Retirement Approval Process Request for an Estimate of Benefits A TO BE COMPLETED BY THE MANAGER Surname: Employed as: Other name(s): in: (Dept/Directorate) Age at retirement: Proposed retirement date: / / Reason for Retirement (please tick) 1. Agreed Voluntary Early Retirement 4. Ill Health 2. Actuarially reduced Voluntarily Early Retirement 5. Normal retirement 3. Redundancy Signed by Senior Manager: Date: / / (Note: numbers 1 and 3 involves a cost to the Trust) (Please forward to the Trust s Pensions Officer to complete Section B) B. TO BE COMPLETED BY THE PENSIONS OFFICER Based on the proposed retirement date above Pension: Lump Sum retiring allowance:.. Total estimated cost to the Trust is:. (If a cost to the Trust is incurred the Senior Manager must forward this form to the Director for Approval at Section C) C. TO BE COMPLETED BY THE DIRECTOR I confirm the cost to the Trust is acceptable, can be met in-year from agreed funding and I give SPS Pensions authorisation to submit form AW8 as applicable. Signed:. Date: (Please return to the Senior Manager to forward a copy to the Trust s Pensions officer to action AW8 as applicable. Ensure a copy is retained on the employee s personal file). Page 16 of 16