A newsletter for lpfa Employers. New LGPS 2014

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1 lpfa Pensions Update A newsletter for lpfa Employers - December 2012 Issue Highlights: New LGPS Update Contact Us Automatic Enrolment High Earners Valuation Employer Forum Feedback Value of the Fund Pensions Administration Strategy Update Dexter House 2 Royal Mint Court London EC3N 4LP New LGPS 2014 In late December the draft regulations on membership, contributions and benefits were released, a consultation is now being held. The draft regulations which have been received are in line the the previously discussed proposals. This consultation seeks responses from interested parties on the draft regulations for the new LGPS to come into force in April This consultation only covers the core elements of the new scheme, in particular, the provisions relating to membership, contributions and benefits. A second consultation exercise covering the remainder of the new scheme will follow shortly. The closing date for receipt of responses to the consultation is the 8 th February All interested parties are encouraged to respond. LPFA will be submitting a response to the consultation in the New Year, this will be circulated to LPFA Employers along with the key changes that are included. Should you wish to respond to the consultation please visit our website for more information: LPFA will be distributing an campaign mid-january regarding the key elements of the Draft Regulations. This is aimed to assist employers in developing their response to the consultation. LPFA will also make their response available on the 4 th February 2013.

2 Automatic Enrolment has arrived as our first client has now reached their staging date. With the success of this phase LPFA have established a number of valuable lessons including aspects such as communications and resources from both an employer and pension administrator s point of view. All employers with a staging date within six months have now received a written reminder from the LPFA that Automatic Enrolment is on the horizon. LPFA have provided crucial information along with the support available from our organisation. An offer of a site visit to discuss both Automatic Enrolment and the New Scheme 2014 has been included as a part of the support obtainable by the LPFA. This would provide an opportunity for your staff to engage with the Pension Fund and answer any concerns that your staff maybe experiencing during this period of change. Ideally this should be arranged in line with your staging date for Automatic Enrolment; however this will be subject to availability. For more information on how LPFA can assist you with the transition to Automatic Enrolment please visit our website: Annual Allowance The amount of your pension savings that benefits from tax relief is limited to an annual allowance. An announcement from the Chancellor of the Exchequer has been released stating that from the 2014/15 tax year that the tax free annual allowance will be reduced from 50,000 per annum to 40,000 per annum. Therefore if the value of your pension pot grows by greater than 40,000 in any single tax year you could be liable for a tax charge, however you can carry forward any unused allowance from the previous 3 tax years. The first year this reduction will incur a direct affect will be the first year of the Career Average Scheme, therefore no excess will be identified until April A modeller can be accessed via our website at please note that this references the current allowances and an updated model incorporating these changes will be provided in due course. Lifetime Allowance You can save as much as you like towards your pension but there is a limit on the amount of tax relief you can get. The lifetime allowance is the maximum amount of pension saving you can build up over your life that benefits from tax relief. If you build up pension savings worth more than the lifetime allowance you ll pay a tax charge on the excess. In regards to the Lifetime Allowance the Chancellor also announced that the Lifetime Allowance is to be reduced from 1.5m to 1.25m with effect from 1 st April However protection for members who have already built up benefits exceeding 1.5m at the 1 st April 2014 has been incorporated and further details will be released in due course. The LPFA will continue to write to all members who are close to these allowances on an annual basis but if individual employees have concerns they should contact the technical team for further explanation. Please Note: That pension benefits covered by arrangements outside the LGPS would also count towards the member s lifetime allowance therefore we might not be aware of all members who will exceed the Lifetime Allowance. Automatic Enrolment High Earners

3 Valuation As promised in last month s edition, please find outlined below a valuation timetable providing some of the key dates in the valuation process for 2013/14: Key EVENT FINAL DELIVERY DATE End of year files to be received by LPFA (earlier if possible). 30/04/2013 Resolution of end of year queries by employers that affect valuation process (e.g. missing joiners/leavers/change of hours/salary queries) or similar queries from our administration team. 07/06/2013 LPFA valuation submission date to our actuaries. 28/06/2013 Resolution of any further actuarial data queries by employers following submission of data to our actuary. Barnett Waddingham (Actuary) sign off LPFA data as accurate and complete. 31/07/ /08/2013 Board agree final valuation assumptions to be used. 03/10/2013 Employer Forum ~ actuary to supply indicative employer results. Funding strategy, draft Valuation report and LPFA Valuation results agreed by LPFA board. November 2013 (date to be agreed) 12/12/2013 Valuation results issued to LPFA employers. 15/01/2014 Meetings held with employers to finalise LPFA valuation results. 28/02/2014 Actuary advised of final LPFA valuation results. 07/03/2014 Final LPFA rates, adjustment certificates and valuation report issued to employers. 31/03/2014 Valuation report issued to Communities Local Government (CLG). 31/03/2014 New LPFA contribution rates commence. 01/04/2014 The key to this process is the earlier we receive the end of year returns the more time we have to correct any errors prior to submitting data to our actuary on 28 th June To ensure the quality of your data, why not utilise out data matching facility. More information on this can be found at: As always we are happy to answer any queries you or your colleagues may have on the valuation process. Tony Williams Employer Services Manager tony.williams@lpfa.org.uk

4 Employer Forum Feedback The 2012 Employer Forum took place on the 27 th of November 2012 at City Hall. Strong representations of our employers were present, with around 110 employer bodies participating in the day s events. At the completion of the seminar employers were asked to complete evaluation forms on the seminar and the day to day operations of the LPFA to establish where a good quality of service is being delivered and where a higher standard can be implemented in order to meet out employer s needs. Overall employers were happy with the day s proceedings and recommendations included: Providing a stronger emphasis on plain English in the Valuation segment, would help those who come from a non- accounting background. The majority of participants stated that the demonstration stands were extremely helpful, as it allowed employers to receive training in areas such as data matching and online forms while providing and opportunity for any questions to be answered. Helpful LPFA Staff at hand to assist with individual employer queries. Event professionally organised. Employers also shared some insight into information and articles which they would like to see in upcoming Pension Updates and established ideas which will be considered in the day to day running of the LPFA. Some of these included: Incorporate more online functionality; and Increase the amount of information which can be provided over . LPFA would like to thank all the employers who attended this year s event and for all the constructive feedback and ideas. Should you wish to provide any further feedback please don t hesitate to contact the Communications Team. The events presentation slides are now available on the website at: Emily Sanders Communications Advisor emily.sanders@lpfa.org.uk Value of the Pension Fund at Month End Value of the Fund The table below shows the value of the LPFA Pension Fund over the last few months. Month end Active Sub Fund Pensioner Sub Fund Total August bn 1.530bn 4.217bn September bn 1.527bn 4.252bn October bn 1.528bn 4.251bn We receive our reconciled fund valuations in the fourth week of the following month, so there is always likely to be a delay in the dissemination of the information. Roona Ellis Investments Manager - Pensioner Sub Fund roona.ellis@lpfa.org.uk

5 Pensions Administration Strategy - Update The Pensions Administration Strategy has now been in place for almost three years. With this anniversary upon us we thought an update on how well employers are performing was in order. Period 1st April 2012 to 31st December No. of actively contributing employers. 159 No. of employers signed up to the strategy. 86 % of active members the signup represents. 75% Invoices raised for late payment of capital sums. 13 across 12 employers Invoices raised for late / incorrect payment of monthly contributions (this includes late submission of the online LG221 form). No. employers charged for year end queries in excess of 10% tolerance. 25 No. of employers invoiced for submission of paper forms across 51 employers It really does make a difference to service delivery, particularly in the eyes of the scheme member, if data and information flow is coming through correctly and on time. Overall elapse times of our top 10 case types continue to reduce as a result of cleaner data, and I would like to thank you all on behalf of my team and LPFA. In line with suggestions and feedback from employers, we are looking to further improve the strategy, and in February, we will be reviewing the Pensions Administration Strategy documentation and making amendments where appropriate. The review will include changes to our charging structure. A consultation process will take place prior to any of the changes being implemented. John Crowhurst Pensions Administration Manager john.crowhurst@lpfa.org.uk Employee Address Collection We are currently in the process of obtaining addresses for all of our membership, including active, deferred and pensioner members. This is taking place through a number of different channels and LPFA are hoping for your assistance. We are looking to increase our communication with members, this will be extremely important when communicating all of the changes to the New Scheme In light of this, we are hoping that you are in a position to provide us with a list of work addresses for your employees who contribute to the LGPS within the LPFA Fund. All we would need is the member s full name, work address and national insurance number. The data can then be sent to us via your secure login at: and submitted through the general file upload section. Five of our larger employers in the Fund have already been contacted with regards to this and have generously sent through this information which has now been updated to each member record. In order for your members to benefit from the electronic updates on the New Scheme it would be greatly appreciated if you could send this information through via our secure system. Should you have any questions please don t hesitate to contact me. John Crowhurst Pensions Administration Manager john.crowhurst@lpfa.org.uk