The examples provided in sections of this guide are for illustration only and do not override any regulatory or statutory requirements.

Transcription

1 LGPS 2015 HR Guide This guide sets ut the requirements fr HR sectins 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 emplyers f the minimum infrmatin needed t effectively manage the 2015 Scheme (and its interactin with the 2009 Scheme see sectin 16). Wherever pssible, we ask that users cntact their Pensin Fund 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 t 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. Wh can jin 2A. New Starters 2B. Existing emplyees n 31st March Opting ut 4. Rejining 5. Autmatic enrlment 6. Pensinable pay 6A. Pensinable pay and salary sacrifice 7. Recrds t be maintained 8. The tw sectins t the 2014 Scheme 9. Impact n additinal pensin and AVC cntracts, etc f mving between the main and 50/50 sectins 10. Mvements between cntributin rates 11. Assumed Pensinable Pay (APP) 11A. Certificate f Prtectin 12. Buying extra pensin 13. Terminatin 14. Retirements 15. Payments made after leaving 16. Existing scheme prcesses Versin 1.8 June

2 16A. Absences spanning 31st March 2015 / 1st April Discretins plicy 18. Payment f sums t the pensin fund 19. Glssary f acrnyms 20. Appendix Appendix 2 1. Wh can jin There is n change t the range f emplyees (under age 75) wh will have access t the LGPS. They are Emplyees f Scheduled Bdies; and Emplyees f Admissin Bdies whse emplyer has designated them, r a class f emplyees t which they belng, as being eligible fr membership f the Scheme under the terms f the Admissin Agreement the emplyer has with the Pensin Fund administering authrity. The nly bars t membership relate t emplyees aged 75 r abve, retained and vluntary firefighters wh are r may be required t engage in firefighting, thse emplyed by an Admissin Bdy wh are members f anther ccupatinal pensin scheme in the emplyment, and emplyees eligible fr membership f anther public sectr pensin scheme (althugh there are sme with dual eligibility fr the LGPS and NHSPS and thse eligible fr membership f the Armed Frces Pensin Scheme whilst n reserve frces service leave can elect t their Scheme emplyer t remain in the LGPS). As in the 2009 Scheme, if a persn is eligible fr membership f the LGPS, that persn is cntractually enrlled int the LGPS frm the first day f emplyment r the first date they becme eligible, if later, prviding they have a cntract f emplyment fr at least 3 mnths. A persn wh is eligible fr membership f the LGPS and wh is emplyed under a cntract f emplyment f less than 3 mnths is, under the terms f the LGPS, t be enrlled n their autmatic enrlment date. This means that an eligible jbhlder with a cntract f less than 3 mnths wuld jin the LGPS n the first day f emplyment unless the emplyer issues a pstpnement ntice delaying the autmatic enrlment date. Nn-eligible jbhlders and entitled wrkers with a cntract f less than 3 mnths wuld nt be cntractually enrlled n cmmencement but if they subsequently became an eligible jbhlder under that cntract and are eligible fr membership f the LGPS they wuld be enrlled frm the first day f the pay reference perid in which they first became an eligible jbhlder by reasn f their earnings, r frm age 22 if they first became an eligible jbhlder n attaining that age, (althugh, nce again, an emplyer culd issue a pstpnement ntice delaying the autmatic enrlment date ). By issuing a pstpnement ntice emplyers can, if they wish, effectively exclude such emplyees frm the LGPS, althugh any emplyee wh is nt in the Scheme but is eligible fr membership f the LGPS has the right t pt int the LGPS at any time and, if the emplyee des s, wuld be brught int the Scheme n the first day f the payment perid fllwing the electin t jin. Versin 1.8 June

3 If a persn emplyed under a cntract f less than 3 mnths has that cntract extended t be fr 3 mnths r mre and they have nt already jined the LGPS they shuld be brught int the Scheme n the first day f the payment perid fllwing the extensin t the cntract f emplyment. 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. 2A. New Starters On cmmencement f emplyment all new emplyees wh are cntractually eligible fr membership f the Scheme and wh have a cntract f emplyment f 3 mnths r mre shuld be made members f the main sectin f the 2015 Scheme. The rules fr thse with a cntract f emplyment f less than 3 mnths are set ut in sectin 1. A persn cannt elect t jin the 50/50 sectin f the Scheme prir t becming a member f the main sectin f the 2015 Scheme. S, fr example, a new starter with a cntract f emplyment f 3 mnths r mre culd nt pt fr the 50/50 sectin befre cmmencement f emplyment; but they culd elect n r after starting and, if they d s befre the first payrll is clsed, can be brught int the 50/50 sectin frm the first day f emplyment. Ntificatin f the new member shuld be sent t bth the payrll administratr (tgether with the cnfirmatin f the relevant sectin main r 50/50 - and the apprpriate emplyee cntributin rate unless allcatin t a rate has been autmated n the payrll) and t the Pensin Fund administering authrity (tgether with a cpy f the electin t jin the 50/50 sectin where relevant). Under Disclsure f Infrmatin legislatin, basic infrmatin abut the Scheme has t be prvided by the Pensin Fund administering authrity: a. autmatically t prspective members (i.e. thse peple wh are abut t take up emplyment), if it is practicable t d s, and b. autmatically t new members if nt already prvided under (a), and c. n request t existing members (if they have nt already been given the infrmatin in the last 12 mnths). Fr thse falling within (a) r (b) the infrmatin has t be prvided within 2 mnths f jining the LGPS and fr thse falling within (c) by n later than 2 mnths f the request being made. It shuld be nted that if a persn has becme a member as a result f verriding autmatic enrlment prvisins (under the Pensins Act 2008), this time limit is amended t 6 weeks frm the date the Pensin Fund administering authrity receives the jbhlder infrmatin frm the emplyer. The emplyer has t prvide the jbhlder infrmatin t the Pensin Fund administering authrity within 6 weeks f a persn Versin 1.8 June

4 becming a member under the autmatic enrlment prvisins f the Pensins Act There are nt insignificant fines fr nn-cmpliance. The bands f cntributin rates are as shwn belw fr cntributins taken in respect f pensinable pay received frm 1st April The emplyee pays cntributins at the apprpriate average rate (derived frm Lk up Table 2 in Annex C f Appendix 1) n all pensinable pay received in respect f that jb (r at half that rate if the emplyee is in the 50/50 sectin). Nte that if a persn hlds mre than ne emplyment and these are treated as separate jbs, each jb (and the pensinable pay frm that jb) is assessed separately when determining the cntributin rate fr each jb. Cnversely, if the emplyer determines that a single emplyment relatinship exists (see sectin 7) then the pay frm each jb shuld be cmbined t determine the cntributin rate. 2017/18 Band Range fr an emplyment 1 On earnings up t and including 20, % On earnings abve 20,701 and up t 25,300 On earnings abve 25,301 and up t 34,700 On earnings abve 34,701 and up t 46,300 Cntributin rate fr that emplyment 7.25% 8.5% 9.5% 5 On earnings abve 46, % The figures in the secnd clumn (Range) f the table abve are t be increased by any increase applied t pensins under the Pensins (Increase) Act 1971 currently applied each April n the first Mnday falling n r after 6th April using a pensins increase date f 1st April 2014 and runding the resulting figure dwn t the nearest 100. The next increase will be applied in April The apprpriate cntributin rate is t be determined by the emplyer estimating the annual equivalent f the actual (NOT FTE) pay t be received in a full Scheme year (1st April t 31st March). This can be dne in a number f ways fr example: The annual rate f cntractual pay The annual rate f cntractual pay plus an estimatin f the additinal hurs wrked in excess f the cntractual hurs (up t a maximum f the hurs f the standard fulltime wrking week fr the emplyee in that emplyment) which might be wrked in a full year The hurly cntractual rate multiplied by an estimate f the number f hurs t be wrked in a full year (excluding nn-cntractual vertime wrked in excess f the standard full-time wrking week fr the emplyee in that emplyment) Versin 1.8 June

5 The weekly cntractual rate multiplied by (r whatever multiplier an emplyer deems apprpriate) The weekly cntractual rate multiplied by (r whatever multiplier an emplyer deems apprpriate) plus an estimate f ther pensinable payments t be made in a full year (excluding nn-cntractual vertime wrked in excess f the standard full-time wrking week fr the emplyee in that emplyment) Each emplyer shuld make an assessment in a reasnable and cnsistent manner. Allcating emplyees t an apprpriate rate is relatively straight frward where the emplyee is nt expected t undertake any additinal hurs in excess f the cntractual hurs (up t a maximum f the hurs f the standard full-time wrking week fr the emplyee in that emplyment). Hwever, it is less straight frward where the number f hurs an emplyee may wrk in a year is nt knwn. Where an emplyee with part-time cntractual hurs is likely t undertake a number f additinal hurs in excess f their cntractual hurs (up t a maximum f the hurs f the standard full-time wrking week fr the emplyee in that emplyment), the emplyer culd: a. use ne f the methds in the first and furth bullet pints abve i.e. determine the apprpriate rate by reference t their cntractual hurs nly and subsequently review the rate allcatin at an apprpriate time (see sectin 10), r b. use ne f the methds set ut in the secnd, third r fifth bullet pints abve, perhaps taking accunt f the hurs wrked by the previus hlder (if any) f the pst, and subsequently review the rate allcatin at an apprpriate time (see sectin 10). The advantage f ptin (a) is that it is less likely t lead t an appeal by the emplyee against the rate t which they have been allcated and the emplyer can, in any case, review the rate allcatin at a later date and reallcate t a new rate, as apprpriate (see sectin 10). The disadvantage f ptin (a) is that it can initially result in a lesser cntributin being cllected frm an emplyee s pay fr a perid f time than the actual hurs eventually wrked might have warranted. The advantage f ptin (b) is that it results in a cntributin rate that the emplyer deems reasnable based n the emplyer s expectatin f the number f hurs t be wrked by the emplyee. It culd result in a higher r lwer cntributin rate than the actual hurs eventually wrked might have warranted (depending n hw many hurs the emplyee actually wrks) and this culd, respectively, result in an appeal by the emplyee against the rate t which they have been allcated r result in a lss t the Pensin Fund (which, in turn, wuld becme a cst t the emplyer). The emplyer culd reallcate t the crrect rate fllwing a successful appeal. Equally, the emplyer culd undertake a review f the cntributin rate at an apprpriate time (see sectin 10) regardless f whether r nt there had been an appeal. Matters becme mre cmplicated with emplyees wh have n cntractual hurs f emplyment e.g. casual emplyees, r emplyees n zer hurs cntracts. In these cases emplyers will need t either: a. make a reasnable initial assessment f the number f hurs (up t a maximum f the hurs f the standard full-time wrking week fr the emplyee in that emplyment) which the persn is likely t wrk n an annual basis, perhaps taking accunt f the Versin 1.8 June

6 hurs wrked by the previus hlder (if any) f the pst, and subsequently review the cntributin rate at an apprpriate time (see sectin 10), r b. allcate the emplyee t the lwest rate (5.5%) and subsequently review the cntributin rate at an apprpriate time (see sectin 10), r c. allcate the emplyee a 6.3% rate (n the basis that this is the expected average cntributin rate fr Scheme members) and subsequently review the cntributin rate at an apprpriate time (see sectin 10). The advantage f ptin (a) is that it results in a cntributin rate that the emplyer deems reasnable based n the emplyer s expectatin f the number f hurs t be wrked by the emplyee (up t a maximum f the hurs f the standard full-time wrking week fr the emplyee in that emplyment). It culd result in a higher r lwer cntributin rate than the actual hurs eventually wrked might have warranted (depending n hw many hurs the emplyee actually wrks) and this culd, respectively, result in an appeal by the emplyee against the rate t which they have been allcated r result in a lss t the Pensin Fund (which, in turn, wuld becme a cst t the emplyer). The emplyer culd reallcate t the crrect rate fllwing a successful appeal. Equally, the emplyer culd undertake a review f the cntributin rate at an apprpriate time (see sectin 10) regardless f whether r nt there had been an appeal. The advantage f ptin (b) is that it is less likely t lead t an appeal by the emplyee against the rate t which they have been allcated and the emplyer can, in any case, review the rate allcatin at a later date (e.g. at each April and if the emplyee mves frm a casual pst t ne with cntractual hurs) and reallcate t a new rate, as apprpriate (see sectin 10). The disadvantage f ptin (b) is that it can initially result in a lesser cntributin being cllected frm an emplyee s pay fr a perid f time than the actual hurs eventually wrked might have warranted. The advantage f ptin (c) is that it delivers the expected average cntributin rate fr Scheme members (upn which the LGPS 2015 has been csted). The disadvantage is that it is perhaps mre likely t lead t an appeal by the emplyee against the rate t which they have been allcated if the member believes their pay des nt justify that rate. Cnversely, allcating the member t the 6.3% rate culd initially result in a lesser cntributin being cllected frm an emplyee s pay fr a perid f time than the actual hurs eventually wrked might have warranted (if the emplyee s pay turns ut t be higher than assumed). In any case (regardless f whether r nt there has been an appeal frm the Scheme member), the emplyer can undertake a review f the cntributin rate at an apprpriate time (see sectin 10). In rder t seek cnsistency f apprach acrss emplyers participating in the scheme it is recmmended (with the recmmendatin being supprted by COSLA) that ptin (b) shuld be adpted. Further guidance n the peratin f cntributin assessment is shwn in Appendix 1. Having determined an apprpriate cntributin rate (whether individually r by an autmated prcess n payrll), the emplyer must (as sn as is reasnably practicable) ntify the emplyee f the cntributin rate t be deducted frm the emplyee s pensinable pay and the date frm which the rate is payable. It is fr the emplyer t determine the methd by which the ntificatin is given t the emplyee but the ntificatin must cntain a cnspicuus statement giving the address frm which further infrmatin Versin 1.8 June

7 abut the decisin may be btained; must ntify the emplyee f the right t appeal t an adjudicatr against the decisin (which must be ldged within 6 mnths f being ntified f the initial decisin, r such lnger perid as the adjudicatr may allw); must set ut the jb title and address f the adjudicatr (i.e. the persn wh has been appinted t cnsider appeals); and must ntify the emplyee that, if they are unhappy with the adjudicatr s decisin, they wuld have the right t ask the Scttish Ministers, within 6 mnths f the adjudicatr s decisin, t undertake a further review f the decisin. On cmmencement the emplyee shuld be asked t declare any previus pensin rights. The prcess fr this shuld be agreed with the Pensin Fund administering authrity. It is imprtant that the emplyee prvides the relevant infrmatin as failure t d s culd jepardise certain pensin prtectins they may have under the Public Service Pensins Act 2013 and / r the rules f the LGPS. 2B. Existing emplyees n 31 st March 2015 Thse emplyees wh were emplyed n 31st March 2015 and wh were active members f the Scheme autmatically becme active members f the main sectin f the 2015 Scheme n 1 st April 2015 see sectin 8 unless they pted ut, pted t jin the 50/50 sectin, r they happened t cease t be eligible fr membership n that date (fr example, they attain age 75 n that date). Unless the prcess fr allcating the apprpriate cntributin rate was autmated n the payrll system, the emplyer must have determined the apprpriate emplyee cntributin rate fr each emplyee mving int the 2015 Scheme n 1st April 2015 and ntified this t payrll. Any reductins in pensinable pay at that time due t sickness, child related leave, reserve frces service leave r ther absence frm wrk shuld have been disregarded when determining the apprpriate cntributin rate. In many cases the cntributin rate frm 1st April 2015 will have been different t the rate that applied prir t that date because, frm 1st April 2015, a member s cntributin rate is determined by reference t the actual pensinable pay received (nt the full-time equivalent rate f pay) and pensinable pay, frm 1st April 2015, includes additinal hurs wrked in excess f the cntractual hurs (up t a maximum f the hurs f the standard full-time wrking week fr the emplyee in that emplyment). Having determined the apprpriate cntributin rate (whether individually r by an autmated prcess n payrll), the emplyer must (as sn as was reasnably practicable, but preferably befre 1st April 2015 t avid cmplaints frm thse whse cntributin rate increases, leading t a reductin in net pay and, ptentially, difficulties fr sme members in meeting direct debit / standing rder payments r leading t bank charges) have ntified the emplyee f the cntributin rate t be deducted frm the emplyee s pensinable pay and the date frm which the rate is payable (i.e. 1st April 2015). It was fr the emplyer t determine the methd by which the ntificatin shuld have been given t the emplyee but the ntificatin must have cntained a cnspicuus statement giving the address frm which further infrmatin abut the decisin may be btained; must have ntified the emplyee f the right t appeal t an adjudicatr against the decisin (which must have been ldged within 6 mnths f being ntified f the initial decisin, r such lnger perid as the adjudicatr may have allwed); must have set ut the jb title and address f the adjudicatr (i.e. the persn wh has been appinted t cnsider appeals); and must have ntified the emplyee that, if they were unhappy with the adjudicatr s decisin, they wuld have the right t ask the Scttish Versin 1.8 June

8 Ministers, within 6 mnths f the adjudicatr s decisin, t undertake a further review f the decisin. 3. Opting ut A persn ceases t be an active member in an emplyment frm the date they specify in a written ntice given t their emplyer that they wish t leave the Scheme (using an pt-ut frm). If they specify n date, r a date earlier than the date the ntice is given, they cease t be an active member in that emplyment at the end f the payment perid during which the ntice is given (i.e. at the end f the week, end f the mnth and s n). If they pt ut within 3 mnths f jining, that persn will be treated as nt having been a member f the LGPS n that ccasin and will be entitled t a refund via the payrll. Because the persn is treated as nt having been a member f the LGPS, n emplyee and emplyer cntributins shuld have been paid t the fund in respect f that perid f membership and, when the emplyer next pays its mnthly cntributins t the fund, the ttal cntributins paid shuld be reduced by the emplyee and emplyer cntributins relating t that persn s membership which were, effectively, verpaid. This differs frm the situatin where a persn ceases t be an active member within three mnths because they have left their emplyment (rather than because they have pted ut). In such a case the refund f emplyee cntributins wuld be paid by the fund and the member s cntributins shuld therefre nt be refunded via the emplyer s payrll. Additinally, n refund f emplyer cntributins wuld be due. If they pt ut having been in the scheme fr 3 mnths r mre they shuld be treated as a nrmal leaver. If they pt ut after 3 mnths but befre 2 years, they wuld be entitled t claim a refund via the Pensin Fund administering authrity unless they are disqualified frm receiving a refund e.g. they already have, in an LGPS Fund in Sctland, a deferred pensin r a pensin in payment (in which case they wuld be entitled t a deferred benefit); r they culd pt fr a cash equivalent transfer value. If the pt-ut was after 2 years, they wuld be entitled t a deferred benefit (i.e. they wuld be a deferred member). Once an emplyer has reached its staging date (fr the purpses f the Pensins Act 2008) it shuld nt issue an pt-ut frm t its emplyees. Instead, the pt ut frm must be btained by the emplyee direct frm the Pensin Fund administering authrity. Indeed, many administering authrities have changed their prcedures already s that pting ut frms can nly be btained directly frm them, irrespective f whether the emplyer's staging date has been reached r nt. A persn cannt cmplete an pting ut frm befre cmmencing emplyment. Emplyers shuld agree with their Pensin Fund administering authrity the infrmatin t be sent t the administering authrity in respect f an ptant ut and the prcess fr retentin f the pt ut ntice cmpleted by the emplyee. 4. Rejining Versin 1.8 June

9 A persn wh is eligible fr membership, but wh is nt an active member in that emplyment, can apply at any time t their emplyer t jin the Scheme. If they d, they becme an active member in that emplyment in the main sectin f the Scheme n the first day f the payment perid fllwing the applicatin. A persn is free t pt ut f the Scheme and rejin. A persn cannt elect t jin the 50/50 sectin f the Scheme prir t becming a member f the main sectin f the 2015 Scheme. S, an emplyee pting t jin the Scheme wuld have t initially jin the main sectin but they culd elect, n r after jining the main sectin, t jin the 50/50 sectin. If they d s befre the first payrll is clsed (after they pt int the Scheme), they can, in effect, be brught int the 50/50 sectin frm the first day f jining the Scheme. Ntificatin f the new member shuld be sent t bth the payrll administratr (tgether with the cnfirmatin f the relevant sectin main r 50/50 - and the apprpriate cntributin rate unless allcatin t a rate has been autmated n the payrll) and t the Pensin Fund administering authrity (tgether with a cpy f the electin t jin the Scheme and, if relevant, the electin t jin the 50/50 sectin). Nte that any reductins in pensinable pay due t sickness, child related leave, reserve frces service leave r ther absence frm wrk at the pint when the persn pts int the 2015 Scheme are t be disregarded when determining the apprpriate cntributin rate. Having determined the apprpriate cntributin rate (whether individually r by an autmated prcess n payrll), the emplyer must (as sn as is reasnably practicable) ntify the emplyee f the cntributin rate t be deducted frm the emplyee s pensinable pay and the date frm which the rate is payable. It is fr the emplyer t determine the methd by which the ntificatin is given t the emplyee but the ntificatin must cntain a cnspicuus statement giving the address frm which further infrmatin abut the decisin may be btained; must ntify the emplyee f the right t appeal t an adjudicatr against the decisin (which must be ldged within 6 mnths f being ntified f the initial decisin, r such lnger perid as the adjudicatr may allw); must set ut the jb title and address f the adjudicatr (i.e. the persn wh has been appinted t cnsider appeals); and must ntify the emplyee that, if they are unhappy with the adjudicatr s decisin, they wuld have the right t ask the Scttish Ministers, within 6 mnths f the adjudicatr s decisin, t undertake a further review f the decisin. 5. Autmatic enrlment An eligible jbhlder wh is eligible fr membership f the Scheme, but wh is nt an active member in that emplyment and wh desn t apply t their emplyer t jin the Scheme, nevertheless becmes an active member f the main sectin n the autmatic enrlment date r autmatic re-enrlment date relating t that emplyment (but an emplyer can delay autmatic enrlment fr up t 3 mnths by issuing a pstpnement ntice r can, at the emplyer s staging date, delay autmatic enrlment until 1 Octber 2017 fr thse wh are eligible jbhlders n the emplyer s staging date and wh are nt members f the LGPS n the staging date ). Althugh emplyees wh are autmatically enrlled r autmatically re-enrlled wuld initially be brught int the main sectin they culd elect, n r after jining the main sectin, t jin the 50/50 sectin. If they d s befre the first payrll is clsed (after they are enrlled int the Scheme), they can, in effect, be brught int the 50/50 sectin frm the first day f jining the Scheme. Versin 1.8 June

10 Ntificatin f the new member shuld be sent t bth the payrll administratr (tgether with the cnfirmatin f the relevant sectin main r 50/50 - and the apprpriate cntributin rate unless allcatin t a rate has been autmated n the payrll) and t the Pensin Fund administering authrity (tgether with, if relevant, a cpy f the electin t jin the 50/50 sectin). Nte that any reductins in pensinable pay due t sickness, child related leave, reserve frces service leave r ther absence frm wrk at the pint when the persn is enrlled int the 2015 Scheme are t be disregarded when determining the apprpriate cntributin rate. Having determined the apprpriate cntributin rate (whether individually r by an autmated prcess n payrll), the emplyer must (as sn as is reasnably practicable) ntify the emplyee f the cntributin rate t be deducted frm the emplyee s pensinable pay and the date frm which the rate is payable. It is fr the emplyer t determine the methd by which the ntificatin is given t the emplyee but the ntificatin must cntain a cnspicuus statement giving the address frm which further infrmatin abut the decisin may be btained; must ntify the emplyee f the right t appeal t an adjudicatr against the decisin (which must be ldged within 6 mnths f being ntified f the initial decisin, r such lnger perid as the adjudicatr may allw); must set ut the jb title and address f the adjudicatr (i.e. the persn wh has been appinted t cnsider appeals); and must ntify the emplyee that, if they are unhappy with the adjudicatr s decisin, they wuld have the right t ask the Scttish Ministers, within 6 mnths f the adjudicatr s decisin, t undertake a further review f the decisin. Where an emplyer has an eligible jbhlder wh, althugh eligible fr membership f the LGPS, has pted ut f the Scheme and the emplyer has enrlled them int anther qualifying scheme befre what wuld have been the eligible jbhlder s autmatic enrlment date r autmatic re-enrlment date, that persn will nt have an autmatic enrlment date r autmatic re-enrlment date because they are already in a qualifying scheme. Cnsequently, they wuld nt be autmatically enrlled int the LGPS. That persn, and any nn-eligible jbhlder r entitled wrker wh is eligible fr membership f the LGPS but wh has pted ut f membership and wh the emplyer has enrlled int anther qualifying scheme (fr example NEST) will, hwever, retain the right t jin the LGPS at any time up t age 75. It shuld be nted that the LGPS emplyers listed in part 1 f schedule 2 f the LGPS Regulatins 2014 must use the LGPS fr the purpses f fulfilling their autmatic enrlment and re-enrlment duties. Please nte that 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. 6. Pensinable pay The definitin f Pensinable Pay in the 2014 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. Versin 1.8 June

11 The first significant change is that hurs wrked in excess f cntracted hurs will, frm 1st April 2015, be pensinable up t the hurs f the standard full-time wrking week fr the emplyee in that emplyment. This can have majr financial implicatins fr emplyers and budget hlders will need t factr this additinal cst int budgets. Hurs wrked in excess f the hurs fr the standard full-time wrking week fr the emplyee in that emplyment will, apart frm cntractual vertime, be nn-pensinable. 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 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. 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. In the situatin where an emplyer changes an emplyee s cntract t remve pensinable payments, including a reductin in cntractual pay, a Certificate f Prtectin wuld be issued because the base pensinable pay rate had been reduced. This has the advantage f clearly defining the pint at which the rate f pensinable pay is reduced, and the date frm which the 10 year prtectin under the Certificate f Prtectin cmmences. If the tpup payment was pensinable it wuld leave pen the debate abut when a certificate shuld first be issued i.e. where there is a pensinable tp-up payment the first actual reductin in the rate f pay will nt ccur until, say, the fllwing April when an increment and / r pay award is due meaning that it can be argued the 10 year prtectin starts then, rather than frm the date the tp-up payment cmmenced. Furthermre, at each subsequent April during the perid in which tp-up payments were payable it culd be argued that there had been a further reductin / restrictin in the rate f pay and s a further Certificate f Prtectin shuld be issued at each April within the prtected perid, resulting in multiple Certificates f Prtectin. Making the tp-up payments nn-pensinable avids these issues. 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 11). Versin 1.8 June

12 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 full list f exclusins frm Pensinable Pay is shwn belw: (a) (b) (c) (d) (e) (f) (g) (h) 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; 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; (i) any payment made by the Scheme emplyer t a member n reserve frces service leave; (j)* payments fr nn-cntractual vertime; (k) (l) 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 Versin 1.8 June

13 Scheme; (m) (n) () 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 (i) lcal gvernment electins, (ii) electins fr the Scttish Parliament, (ii) 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. 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. * 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 Versin 1.8 June

14 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. 6A. 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 hlidays. 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 12 fr further details. 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- Versin 1.8 June

15 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 12 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 12 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. A net reductin 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. 7. Recrds t be maintained A separate recrd 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 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. Versin 1.8 June

16 Example An emplyee cmmences a new jb and already hlds a jb with the same emplyer which the emplyee cntinues t hld. Unless a single emplyment relatinship exists the emplyee is t be treated as a new starter fr pensin purpses in the new jb with the payrll instructed t hld a separate recrd and the Pensin Fund administering authrity ntified f a new member. 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. 8. The tw sectins t the 2015 Scheme The LGPS 2015 cntains tw sectins the main r 100/100 sectin and the 50/50 sectin. Apart frm the ptential impact n additinal pensin, etc f mving between the main and 50/50 sectins (see sectin 9) the nly difference between the tw sectins is that in the 50/50 sectin the amunt f cntributins t be deducted frm the emplyee is half that due under the main sectin (and, therefre, the member accrues half the nrmal pensin whilst in the 50/50 sectin). Hwever, if the member dies in service r retires with a Tier 1 r Tier 2 ill health pensin whilst in the 50/50 sectin, the lump sum death grant (in the case f death in service) and the amunt f ill health enhancement granted (in the case f ill health retirement) will be calculated as if the member was in the main sectin f the Scheme. Any survivr benefits payable fllwing the member s death are als nt affected by the member being in the 50/50 sectin. Nte that whilst an emplyee is in the 50/50 sectin the emplyer cntributin is still the nrmal full cntributin rate (nt half). The emplyee may elect t mve between the main and 50/50 sectins f the Scheme any number f times but each electin nly takes effect frm the next available pay perid. Nte that fr cncurrent emplyments the emplyee may elect t mve between sectins fr any r all f the jbs they hld. An emplyer must give an emplyee wh elects fr the 50/50 sectin infrmatin n the effect n that persn s likely benefits frm the 2015 Scheme. Althugh scheme regulatins d nt require a frm t be cmpleted t mve between sectins ne may be advisable as the emplyer will be required t ntify bth the payrll administratr and the Pensin Fund administering authrity f the date f the mve t a different sectin and t maintain a recrd f electins. A sample 50/50 electin frm (which includes the infrmatin an emplyer must give an emplyee wh elects fr the 50/50 sectin abut the effect n that persn s likely benefits frm the 2015 Scheme) and ntes fr emplyers are available here. Hwever, emplyers shuld check with their Pensin Fund administering authrity whether they can use the sample frm r whether the administering authrity has its wn frm it wuld wish emplyers in its Fund t use. At year end (r date f leaving if earlier), emplyers shuld cnfirm t the administering authrity which sectin the member was in at that time. Each emplyer will need t determine the mst effective methd f hlding the abve infrmatin which may r may nt invlve the payrll system hlding the relevant data. As Versin 1.8 June

17 stated in sectin 2A emplyees shuld always be put int the main sectin n being brught int, r upn electing t jin, the Scheme in an emplyment 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 n t 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 upn returning 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. 9. Impact n additinal pensin and AVC cntracts, etc f mving between the main and 50/50 sectins If a member elects t mve t the 50/50 sectin: any existing additinal pensin cntributin (APC) 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 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 (SCAPC) cntract must cease (unless it 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 in which case it cntinues, unless the member elects t terminate the cntract); and any AVC r Shared Cst AVC cntract cntinues, unless the member elects t terminate the cntract. Versin 1.8 June

18 [*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 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, and the APC is nt t cver a perid f absence beynd 36 mnths.] It shuld 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 16 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 APC 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 cmmence payment f a SCAPC cntract nly 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, and can cmmence payment f an AVC r Shared Cst AVC cntract. A member in the 50/50 sectin can cmmence payment f Prestn part-time buy-back cntributins. It shuld be nted that if a member mves t the main sectin any existing APC, SCAPC, additinal regular cntributin (ARC), added years, additinal survivr benefit cntributin (ASBC), AVC r Shared Cst AVC cntract /arrangement must cntinue, unless the member elects t terminate the cntract / arrangement. Any Prestn part-time buy-back cntributins must cntinue. A member in the main sectin can cmmence payment f an APC cntract which is at whle cst t the emplyee, cmmence payment f a SCAPC cntract, and cmmence payment f an AVC r Shared Cst AVC cntract. Versin 1.8 June