Department of Health & Children Pension Policy Unit Q&A

Transcription

1 Department of Health & Children Pension Policy Unit Q&A Now Revised Q.05 S&C liability for D-I-S of Part-time employees. Q.09 Service after age 65. Q.22 Reckoning of prior P-T service by whole-time employees Circular 23/2005 Part-time Access to Public Health Sector Superannuation Schemes. Table of Contents Part A - Pro-Rata Integration... 2 Part B - Access to the Schemes... 3 Part C - Reckoning of Prior Part-time Service under the Scheme... 6 Part D - General Issues... 7 Brief Overview... 9 Template for requesting service verification Template for Requesting Estimate of Membership Template for Agency Issuing Estimates in Advance of Option Options Form Revision Date - 02 June 2006 This document has been prepared by the Pension Policy Unit of the Department of Health & Children to assist Superannuation Officers and potential members in dealing with issues arising from circular 23/2005. This document does not supersede 23 / 2005 and where there is any divergence the circular holds primacy. This document will be updated and ed to superannuation officers in agencies / organisations where the LGSS (HSE Model Scheme), NHASS and VHSS schemes are available. Queries in relation to superannuation should be directed to the employing agency s / organisation s superannuation officer. Superannuation officers should queries to Pensions@health.irlgov.ie. Queries will be examined and responded to by the Unit. Check the last updated date on this document for the most recent version. The document is available electronically and the table of contents will direct users to relevant queries. Circular (Revision of )1.doc Page 1 of 13 lg

2 Part A - Pro-Rata Integration 1. Should part-time members of the scheme have their contributions reassessed? Where Part-Time employees who joined prior to the issue of 23/2005 have paid contributions on a full integration basis the contribution liability will have to be re assessed on a pro rata basis. (As per circular 64/2002 employees were advised to make deductions on a pro-rata basis and thereby no revision should be required). 2. Does full integration apply where part-time employees retire prior to 20 December 2001? Full integration only applies to members who retired before 20 December If a member retired before 20 December 2001 their pension was based on full integration up to 19 December However such pensions are now to be re-calculated on pro-rata integration basis on the date of retirement and any increase paid with effect from 20 December (Pro-rata contributions will be payable in respect of some or all of the period of service on which the pension is based). 3. How are part-time and whole-time employees treated in relation to superannuation? Superannuation contributions and benefits are based on the whole-time equivalent service and notional whole-time pensionable remuneration regardless of an individual employee s work pattern. Therefore part-time and whole-time employees are treated equally, as per the Protection of Employees (Part-Time Work) Act 2001 and the Protection of Employees (Fixed Term Work Act), (Paragraphs 36 and 38 of the circular refer). 4. How will contracts where number of hours worked vary over the period of employment be assessed for the purpose of determining retirement benefits? All service being reckoned for superannuation purposes must be verified. Employers are required to maintain adequate records of service for each employee. In estimating retirement benefits service is reckoned at WTE rates, i.e. in one year a whole-time employee accrues year s service, whereas an employee working 19½ hours each week of a WTE of 39 hours will accrue year s service in a 12 month period. 5. What are the ill health additions and death in service provisions for part-time employees? Initially Pension Policy Unit requested scheme administrators to bring individual cases to the attention of The Pension Policy Unit for consultation with the Department of Finance. The Department of Finance are still examining this issue but now advise the following in relation to how service is to be projected forward for the purposes of S&C contributions in the case of a part-time employee who worked variable hours. This will involve projecting forward on the basis of the employee s working pattern on the last day of service i.e. if a person is working 20% on their last week of service, then their potential service is calculated on the basis of them working 20%, if they are working 50% on the last week, then it is based on 50%. (Paragraph 15 refers). Pension Policy Unit will implement this methodology from this point forward. However, we still require information on relevant LGSS cases. Circular (Revision of )1.doc Page 2 of 13 lg

3 Part B - Access to the Schemes 6. What is the situation regarding if and when required or relief staff? If and when required staff will now be given the same terms and conditions as other Part- Time employees. 7. What is the effective date of membership? The effective dates for membership of the relevant schemes are the later of the date of appointment or: 01 April 1996 for NHASS members and Non-Officers in LGSS and VHSS. 20 December 2001 for Officers of LGSS and VHSS. (The effective date for Pro-rata integration is 20 December 2001). 8. What employees / employments are covered? Preceding the issue of this circular access to public sector superannuation schemes was restricted for part-time employees. Circular 23 / 2005 makes certain part-time public service reckonable (subject to the provisions, including thresholds and dates, set out in the circular). (All other service is treated as per the rules of the relevant scheme). 9. What about service after age 65? Appendix 8 sets out the position in relation to retirement and superannuation of part-time employees. In the case of employees identified as 'new entrants' under Section 2 of the Public Service Superannuation (Miscellaneous Provisions) Act 2004 a minimum pension age of 65, with no compulsory retirement age applies. The NHASS (Section 3) and VHSS (Paragraph 5 of 1977 revision) sets age 65 as the maximum age for employees to remain as members of their relevant scheme. Accordingly, non new entrant employees cannot have access to the scheme after age 65. Service given after age 65 (where employment beyond this age is allowed by the contract of employment) by part-time employees who are not new entrants for the purposes of the Public Service Superannuation (Miscellaneous Provisions) Act 2004 will not be pensionable. However, any such service may reckon for the purposes of a gratuity under K148/181 (dated 03 May 1983) (NHASS & VHSS) or the Local Government (Superannuation) (Gratuities) Regulations 1984, as amended, subject to the conditions set out in those Regulations ([LGSS] /HSE Model Superannuation Scheme). 10. When do employees join the scheme? Current and relevant eligible former part-time employees must be given the option to join from the later of; effective date (01 April 1996 or 21 December 2001 (as appropriate)) or, date of appointment. Circular (Revision of )1.doc Page 3 of 13 lg

4 Subject to existing contractual arrangements, new appointees should be admitted with effect from the date of issue of the circular (22 December 2005). 11. Who are former employees? Former employees refers to part-time employees serving on a part-time basis on or after the effective date who have resigned or retired. Agencies should provide former employees with the circular and contact details for managing queries and returning options. Where former employees are deceased agencies should assess the position in relation to ex-gratia and scheme membership and notify the individual s estate of potential benefit from scheme membership. 12. How much service does a former part-time employee need to qualify for benefits under the scheme? For employees who left employment, before 02 June 2002 a minimum of five (calendar) years service is required for preservation of superannuation entitlements. An employee with less than such service is not eligible for benefits from the scheme but is entitled to a refund of their contributions. Two calendar years service applies for employees leaving after 02 June Whole-time and previous part-time service in other public sector employment may be taken into consideration under the public sector transfer arrangements. 13. What information are staff members to receive? Agencies are to inform serving and former employees of the provisions of 23 / Employees are to be informed of their estimated entitlement under ex-gratia arrangements (where appropriate) and/or scheme membership conditions. Employees should be informed of the cost of back contributions and estimate of benefits. Correct costings and estimates are dependent upon verification of reckonable service and pensionable earnings for such service. (Paragraph 23 of the circular refers). 14. Are all Part-time employees covered? From 22 December 2005 all new employees will automatically be entered into the scheme (subject to existing contractual arrangements). Serving current and former part-time employees are to be given an option to join the scheme. 15. Should former part-time employees who received an ex-gratia payment be given an option to join? Yes, if they left after the effective date. They must repay any retirement benefits already paid to them in accordance with existing rules and pay appropriate back contributions on the reckonable service. (Paragraph 23 refers). 16. Can a part-time employee with more than one public health service job be a member of two separate occupational pension schemes? Yes, serving employees working multiple contracts are required to pay contributions on all hours worked. Benefits available under a scheme are restricted to the WTE for a given period of employment. Accordingly, service over a period of calendar years cannot exceed the WTE of for that year. 17. If a former employee, in receipt of a pension returns to work, are superannuation contributions to be deducted? Membership of superannuation schemes is mandatory for all employees. Employees should be put into the relevant scheme, as provided for by the rules of that scheme. Normal re- Circular (Revision of )1.doc Page 4 of 13 lg

5 employment provisions (including application of abatement) will apply. (Additional benefits will be determined by the rules of the scheme). Agencies should be aware of the distinction between retirement age and pension age. Employees are bound by compulsory retirement age unless they are a new entrant. 18. Should an employee with a pattern of working 5 hours in one week, no work for subsequent months, 28 hours in a week, no work for a number of subsequent months be entered into the scheme for the hours they work? Yes, all service is reckonable for superannuation purposes from the relevant applicable dates. Under the Pensions Amendment Act 2002 where service is less than two calendar years, contributions must be refunded on cessation of employment. Where part-time employment, exceeding 20% of the WTE, commenced after the issue of the 2002 circular membership of the scheme is compulsory. 19. What is the position for employees who declined to join their scheme under the 2002 option? Relevant employees who declined to join a scheme under the 2002 option should be given the option under circular 23 / If a serving part-time member decides not to join the scheme now, can they join at a future date if working hours are increased? Every effort should be made to explain to serving part-time employees the implications of not joining the scheme. Where the option to join the relevant scheme is declined; no future opportunity to join the scheme will be open to current or relevant eligible former employees. However, should an employee s status change the rules of scheme membership will be implemented. Membership of a scheme is compulsory if there is a change from part-time to whole-time employment, or if employment has ceased a new appointment is taken up The opportunity to reckon prior part-time service under the preferential rates afforded by circular 23 / 2005 must be completed before 30 June Thereafter, part-time service may be reckoned under the prevailing rules of the scheme. 21. If employment ceased before the effective date do employees have access to the scheme? No, membership for current and former part-time employees is from the effective date. Therefore, employees must have served in a part-time capacity on or after that date to be given an option to join the relevant scheme. Part-time service preceding the effective date can be reckoned according to the provisions of circular 23 / Circular (Revision of )1.doc Page 5 of 13 lg

6 Part C - Reckoning of Prior Part-time Service under the Scheme 22. Can the circular be applied to those who are currently employed on a whole- time or flexible working contract who would have had previous part-time service? The position in relation to reckoning of prior part-time service by whole-time employees has been addressed by circular 09 / 2006 (issued 26 May 2006). The circular provides for the reckoning of part-time service, which was not previously reckonable, given by whole-time scheme members. The provisions set out in circular 23 / 2005 can apply to whole-time members. 23. What about previous thresholds which applied in the past? All previous thresholds are superseded by those in 23 / 2005 which are: Part-time service in excess of 18 hours, given before 27 May 1977 to reckon as half WTE. Part-time service in excess of 10 hours, given between 27 May 1977 and the effective date to reckon in proportion to WTE. Part-time service with zero threshold given after effective date to reckon in proportion to WTE. 24. If employees work extra hours in addition to their contracted hours should these extra hours be reckonable? Current and former part-time employees are permitted to reckon all hours worked (with the exception of overtime) up to the whole time equivalent hours for the post. This only applies where employees are paid the normal hourly rate for the extra hours worked i.e. they are not paid an overtime rate. Membership is subject to repayment of any additional remuneration or other benefits (at current rates) received in lieu of pensionability. (Paragraph 26 refers) 25. What if back contributions are not completed by 30 June 2008? Circular 23 / 2005 offers an opportunity to reckon previous part-time service at preferential rates. Where payment for the reckoning of such service is not completed before 30 June 2008 it will be re-costed in accordance with the rules of the scheme at the time of re-costing. 26. What if records do not exist to verify previous part-time service? It is a requirement of 23 / 2005 that all previous service be verified by the relevant employer before it can be reckoned. Normal verification rules will apply. Where employment records are not available Tax and Social Welfare records may indicate service. Final determination of reckonability of service rests with the Trustees. 27. Is it compulsory to reckon (all) previous part-time service? Members join from the effective date and must pay appropriate back contributions. (Paragraph 26 applies). Part-time service preceding the effective date must be reckoned by LGSS members in line with existing rules for the reckoning of prior part-time service under the LGSS. Any contributions due in respect of service to be reckoned at retirement will be offset against the superannuation benefits payable on retirement. (Paragraph 27). Circular (Revision of )1.doc Page 6 of 13 lg

7 It is not compulsory to reckon all prior part-time service in the NHASS or VHSS. However, employees should be aware that superannuation benefits will be based on the period for which contributions have been made. Part D - General Issues 28. Why are the provisions for part-time employees in the LGSS, NHASS and VHSS contained in the one circular? The Department has responsibility for the pension policy for the three schemes. To reduce the number of circulars issued it was decided that one circular is sufficient in this case. The schemes are very similar and the differences between them are highlighted in the circular. 29. Is there a summary of the circular? The revised (appended) addendum to 23 / 2005 provides a quick guide. 30. What are the main dates applying to 23 / 2005? All relevant serving and former employees must be made aware of the circular. Staff wishing to join the scheme under the circular must be made aware of the implications; i.e. estimate of ex-gratia (where applicable), back contributions and estimate of benefits. Employees must complete and return the options form by 31 October A costing for back contributions will be determined on verification of reckonable service. Benefits, under the superannuation scheme, cannot be paid until payment of back contributions is completed. (Paragraph 27 and 33 refers). Current and relevant eligible former employees are to be given estimates of back contributions to reckon previous part-time public service. Such service may be reckoned by making appropriate back contributions at the preferential rates afforded by the circular before 30 June Payment of back contributions reckons service in a chronological order, with the most recent service being reckoned ahead of earlier service. However, new employees joining a relevant scheme do so and commence contributions with effect from 22 December 2005 (subject to contractual arrangements). 31. How are employees to be advised of options under circular 23 / 2005? All relevant current and former employees must complete an option form. The processing of option forms under 23 / 2005 must be monitored by agencies and options must be placed on each individuals file. Agencies should keep adequate records of notification of and efforts to attain options from all employees. Options must be exercised before 31 October A template document (appended) can be used to assist employees compile previous part-time service histories including number of hours worked, changes in grade or rate of pay and unpaid leave. On completion employees can be given an estimate of back contributions and estimated benefits (based on reckoned service) arising from membership. An estimate of exgratia benefits can also be calculated. (Calculation of ex-gratia entitlements are unaffected by 23 / 2005). Estimates of benefits are provided on current salary only. The estimates will be based on the employee s submission and current /(previous public sector) employment records. Service should be verified if employees opt to join the scheme. Circular (Revision of )1.doc Page 7 of 13 lg

8 32. What is the "vesting" period? The minimum period of time in calendar years a member of the scheme must accrue in order to have an entitlement to a preserved benefit. The minimum vesting period is 2 calendar years. Members with less than 2 calendar years service on cessation of employment must receive a refund of contributions. (A reduction in the vesting period was enacted in the Pensions Amendment Act, 2002 with the effect of lowering from five to two years the period of service required to preserve pension benefits. It is based on calendar years, not whole-time service). 33. Are ex-gratia entitlements affected? The circular does not impact on the ex-gratia entitlements available under existing arrangements. However, scheme membership involves forfeiture of ex-gratia entitlements. Where former employees opt to join the scheme previous payments in lieu of superannuation entitlements must be repaid before the service can be reckoned in the superannuation scheme. Superannuation benefits will be based on service which has been reckoned What are the implications of exercising the option? Every relevant and eligible current and former employee must be given a copy of the circular and is required to exercise the option therein. The option confirms an individual s decision to (a) retain existing ex-gratia entitlements, or (b) forfeit existing ex-gratia entitlements, join superannuation scheme and pay appropriate back contributions. In order to process options agencies must inform current and former employees of 23 / Circular (Revision of )1.doc Page 8 of 13 lg

9 Revised Addendum NOT PART OF CIRCULAR 23/2005 Brief Overview Department of Health & Children Pension Policy Unit Circular 23/2005 Pension Policy Unit Revised Arrangements for Part-time Public Health Service Employees What do I do? Decide Options by 31 October Decline; Retain existing Ex-gratia entitlements Join; Identify and verify relevant periods service Join from the later of date of appointment or effective date 01 April 1996 (NHASS and Non-Officers) 20 December 2001 (Officers) Pay back contributions by 30 June 2008 or date of retirement if earlier. (O/S liabilities deducted from superannuation entitlements). Superannuation Implications Forfeit Ex-gratia benefit and receive lump sum at retirement and pension based on WTE service and notional whole-time Pensionable Remuneration Lump sum 3 / 80 th * Notional wholetime PR * WTE Service Pension the higher of - 1 / 80 th * Notional whole-time Net PR * WTE Service (if Gross PR is >3 1 /3 * OACP). - Notional whole-time PR / 200 th * WTE Service (if Gross PR is <3 1 /3 * OACP). Spouses & Children s Pension Access for serving/former employees Who does 23 / 2005 apply to? Applies to serving and former parttime employees in public health sector. Superannuation Scheme membership; compulsory since 2002, where you meet threshold. NEW option to avail of superannuation benefits dependent upon forfeiture of ex-gratia entitlements AND payment of back contributions Contributions Based on Notional Whole-time Pensionable Earnings (PE) 3½% of Net PE * (P-T fraction). Lump 1½% of Gross PE * (P-T fraction). Spouses & Children s Scheme 1½% of Gross PE * (P-T fraction). Non-Officers & 1½% of Net PE * (P-T fraction). Net PE is Gross PE reduced by twice the rate of Social Welfare OACP ( 18,712 per annum at date of issue of 23 / ,173 per annum with effect from 06 January 2006) What Now? Read circular Contact Superannuation Section in your agency for further details. Indicate relevant part-time service, get estimate of back contributions and potential superannuation benefits. Complete and return Options form by 31 October 2006 (Regardless of decision). Circular (Revision of )1.doc Page 9 of 13 lg

10 Template for requesting service verification dd Month 2006 Name & Address Details Of former Public Sector Employer PPS No. Personnnel No. This template can be used to query relevant service with another public sector employer. For transfer of reckonable service from other public sector agencies please use existing PSTN forms. Re: Verification of Previous (Part-time) Service Public Sector Superannuation Dear, I refer to s circular 23 / 2005; revised arrangements for part-time public health service employees. I am in the process of verifying previous part-time public sector service. For the purposes of reckoning service verification of previous part-time service is required by the Trustees of the (LGSS, NHASS, VHSS). I set out the estimated dates of part-time employment in your organisation and hours worked in the period. I will appreciate if you can verify that this service is correct and provide confirmation of the actual part-time service as per the public sector transfer network protocols. Access to the scheme under the arrangements of 23/2005 must be completed by 31 October Accordingly I will appreciate if you can return the confirmation to me at the address below as soon as possible. Yours Sincerely [Forename Surname] [Contact Address Details] [Date of birth] [PPS number] [Phone number] Prospective employees wishing to join the scheme must return completed options form by 31 October 2006 To be completed by employee. From To Hours worked per week (Average / Total). Circular (Revision of )1.doc Page 10 of 13 lg

11 dd Month 2006 Name & Address Details Of Current Public Sector Employer Template for Requesting Estimate of Membership This template can be used to request an estimate of ex-gratia (entitlements), back contributions and potential benefits under public health sector superannuation scheme. PPS No.... Personnel No... Date of Birth... Contact Phone... Agency... Grade... Place of Employment... Re: Estimate of Public Sector Employment for Superannuation Purposes Dear Personnel Officer, I refer to s circular 23 / 2005; revised arrangements for part-time public health service employees. Please find appended details / estimates of relevant public sector service. I set out the history of service to the best of my knowledge. I wish to determine an estimate of ex-gratia entitlements, back contributions and potential benefits available under the relevant public sector superannuation scheme. I set out the estimated dates of employment in each organisation and hours worked in the period. Yours Sincerely [Forename Surname] From To Hours worked per week (Total). Hours (per week) of Whole-time Equivalent Pensionable Earnings for Whole-time Equivalent Agency Name & Address Please continue on a separate sheet if necessary. Queries on any aspect of the circular should be addressed to the Superannuation Officer in the employing agency. Circular (Revision of )1.doc Page 11 of 13 lg

12 Template for Agency Issuing Estimates in Advance of Option dd Month 2006 This template can be used by agencies to indicate an estimate of ex-gratia (entitlements), back Name & Address Details contributions and potential benefits under public Of Employee health sector superannuation scheme based on information available to employer or submitted by individual. PPS No.... Personnel No... Date of Birth... Contact Phone... Agency... Grade... Place of Employment... Re: Estimate of Benefits (23 / 2005) Dear [Employee name], I refer to your previous part-time service as per appended schedule. Please find estimate of benefits under s circular 23 / 2005; revised arrangements for part-time public health service employees. Please note that the estimate is based on your part-time service as notified by you. If you opt to join the scheme all service must be verified. Please notify this office if this requires revision. Please complete the Options form appended and indicate your decision to join the [LGSS, NHASS or VHSS] or retain existing arrangements. You may join the scheme with effect from [effective date]. You may purchase previous service at a cost of (i) 0,000 if purchasing xx.xxxx years service from [initial date], or (ii) 0,000 if purchasing xx.xxxx years service from [effective date]. Circular 23 / 2005 offers a once-off opportunity to reckon previous service at concessionary rates. Purchasing previous service must be completed before 30 June 2008 in order to qualify for the concessionary rates. Contributions will be allowed for tax purposes (subject to Revenue conditions). The Options form must be completed, signed by you and returned to the undersigned no later than 31 October If you have any queries on this matter please contact me by phone on xx-xxxxxxx. Yours Sincerely [Forename Surname] Circular (Revision of )1.doc Page 12 of 13 lg

13 Options Form Circular 23/2005 Options Form Revised Arrangements for Part-time Public Health Service Employees Form to be completed by all part-time employees before 31 October Organisations to retain form on employees personnel file. Name Grade Organisation PPS Number Personnel Number Date of Birth Agency Stamp & Signature 1. If employee opted NOT to join relevant scheme under circular S.4/2002 or 64/2002 (Indicate Yes to only one or other under option 1) I opt to join the relevant scheme and I forfeit any / all entitlements under the Local Government (Superannuation) (Gratuities) Regulations 1984 (LGSS) or K148/181 (dated 03 May 1983) (NHASS & VHSS) [LGSS (HSE Model Superannuation Scheme), NHASS, VHSS] OR I opt not to join the relevant scheme and retain existing ex-gratia entitlements under the Local Government (Superannuation) (Gratuities) Regulations 1984 (LGSS) or K148/181 (dated 03 May 1983) (NHASS & VHSS) [LGSS (HSE Model Superannuation Scheme), NHASS, VHSS] 2. Irrevocability of Exercise of Option I accept that once an option has been exercised it cannot be amended or revoked. Yes Signed: Date: If an employee is not a member, failure to complete and sign this Options Form will be taken as an option NOT to join the relevant scheme and to instead retain existing arrangements. As a consequence of joining the relevant scheme, an employee must comply with all Scheme rules as well as all the conditions set out in circular 23/2005, including the requirement to pay appropriate back contributions and repay any additional remuneration or other benefits received in lieu of pensionability (at current rates). Relevant employees are required, at a minimum, to acknowledge receipt of circular 23 / 2005 Option Form even if they do not express preferred option(s). I acknowledge receipt of Circular 23/2005 Option Form Signed: Date: Y:\NHRS\WORKSTREAM S\INFORMATION REPOSITORY\superannuation data\to publish\2005 Circulars\DoH&C P-T QA Circular (Revision of )1.doc Page 13 of 13 lg