Pensions Update LPFA. Apr - Jun Published by INSIDE

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1 Pensions Update Apr - Jun 2018 INSIDE LPFA LPFA Fund Members Forum Contribution Table 2018/19 Salary Sacrifice (SSSCAVC) Auto Enrolment New Contact Details Published by

2 Fund Member Forum 2018 The London Pensions Fund Authority (LPFA) is pleased to announce that we will be returning to the Southbank Centre for this year s Fund Member Forum, the event will be held on Thursday, 13 September 2018 in the Purcell Room, Southbank Centre, Belvedere Road, London, SE1 8XX. This is an excellent opportunity for your employees to find out more about how we are managing their pension and hear directly from our Board Members and Managing Director first-hand about the plans for the future. It is a free event and all LPFA Fund Members are invited. Doors and information desks open at 10am and presentations begin at 11am. If any of your employees would like to register attendance at the forum, they can complete the online registration or us at: communications@localpensionspartnership.org.uk, providing their name, address, details of any guests and any special requirements they may have. Further information on the event, including speakers, will be available on the website later in the year. 2

3 Contribution Table 2018/19 Under the LGPS regulations the contribution bands increase in line with inflation, the 2018 increase has been confirmed by the Government as 3% and therefore the bands have been adjusted to take this increase into account (the bands are rounded down to the nearest 100). Band Employee Contribution Table 2018/19 Contribution rate for that employment Actual pensionable pay for an employment Main section 50/50 section 1 Up to 14, % 2.75% 2 14,101 to 22, % 2.9% 3 22,001 to 35, % 3.25% 4 35,701 to 45, % 3.4% 5 45,201 to 63, % 4.25% 6 63,101 to 89, % 4.95% 7 89,401 to 105, % 5.25% 8 105,201 to 157, % 5.7% 9 157,801 or more 12.5% 6.25% 3

4 Salary Sacrifice Shared Cost Additional Voluntary Contributions (SSSCAVC s) I would like to remind employers of the above new facility available through the LPFA and Prudential. You will be aware of the existing option available to staff to improve their pension benefits through additional voluntary contributions (AVC's) administered by Prudential. The advantages of implementing this new arrangement over the current scheme is that in addition to the tax relief that is currently received, the employee will pay lower national insurance contributions. In addition the employer will benefit from a reduction in the employer national insurance contributions. To ensure that the arrangement is compliant with the LGPS regulations, the SSAVC has to be set up as a shared cost scheme which means that both the employee and employer has to contribute to the SSAVC. Although this suggests that the employer has to actually pay its own contribution into the shared cost SSAVC plan, in reality this is not the case. It actually works in practice with the employee agreeing to take a contractual reduction in salary, equivalent to the amount of SSAVC's they would like to contribute and the employer then pays this amount into the shared cost SSAVC plan on their behalf. Some salary sacrifice schemes reduce pensionable pay and ultimately reduce the scheme member's main pension benefits on retirement. This does not apply however to shared cost SSAVCs as long as appropriate amendments to the contract of employment are made. Staff who contribute to a LGPS shared cost SSAVC scheme will see a reduction in national insurance contributions (NICs). For most staff this will result in a 12% reduction in their NIC contributions on the SSAVC amount and this will act as an important incentive to help save towards pension provision for both existing and new SSAVC contributors. There will be a reduction in employer NICs of approximately 13.8% on the total value of the SSAVCs. I am currently in the process of setting up the new arrangement at London Metropolitan University and aim to go live in the summer. If you have any queries please do not hesitate to contact me and I can provide you with contact details. E: S.Brosnan@londonmet.ac.uk Sean Brosnan Employer Representative LPB LPFA 4

5 Auto Enrolment The lower threshold has increased with effect from 9 April 2018 and employees subject to Auto Enrolment earning between 6,032 and 10,000 are treated as non-eligible job holders, however anyone earning more than 10,000 per annum should be brought into the pension scheme from your re-enrolment date if they are aged between 22 and state pension age. 2018/19 Age Earnings <SPA SPA - <75 Lower level of qualifying earnings ( 6,032) Between 6,032 and 10,000 Earnings trigger for automatic enrolment ( 10,000) Entitled worker Non-eligible jobholder Non-eligible jobholder Eligible jobholder Non-eligible jobholder Statutory Redundancy The pay Statutory Redundancy has increased from 489 a week to 504 a week. This figure would be required by any employer who is making staff redundant. We have not received any further update on the proposed introduction of the exit cap, however this is still anticipated. LGPS Training Survey The Local Government Association have produced a survey designed for employers within the Local Government Pension Scheme. You can access the survey by clicking the link below. Please complete the survey following the instructions and then press submit. Your answers will be automatically saved and collated. Please only complete one response for your employer. Complete the LGPS Employers Training survey Neil Lewins Technical Officer 5

6 Contacting Us LPP now has a new contact address, from 1 April 2018 all communications should be addressed to: LPP Your Pension Service PO Box 1383 Preston PR2 0WR 6