Appendix 3 Ealing Council Pay Policy Statement for the financial year 1 st April 2015 to 31 st March 2016 Ealing Council Policy Statement A. Local Government (Early Termination of Employment) (Discretionary Compensation) (England and Wales) Regulations 2006 B. Local Government Pension Scheme Discretionary Decisions A. Local Government (Early Termination of Employment) (Discretionary Compensation) (England and Wales) Regulations 2006 1. Introduction & Scope The regulations quoted above require each local authority to formulate, publish and keep under review their policies on compensation. This part of the policy statement will apply to all Ealing Council employees eligible for membership of the Local Government Pension Scheme (LGPS) other than schools based staff. 2. Rate of Redundancy Pay The Council will calculate redundancy pay using the Government statutory entitlement table (see Appendix 1) to assess the number of weeks of redundancy pay. The payment will be then calculated using the actual weekly rate of pay for the individual as opposed to the statutory maximum weekly rate. For employees at or below spinal column point 17, a payment based on: a) the rate at spinal column point 17 or the employee s actual remuneration whichever is higher; or; b) the maximum allowed by the regulations if lower than the amount in (a). 3. Eligibility Criteria for Compensation To be eligible for compensation under this policy, employment must be terminated- (i) By reason of redundancy 1
(ii) (iii) In the interests of the efficient exercise of the authority s functions, or In the case of a joint appointment, because the other holder of the appointment has left it An employee who has received additional pension scheme membership under regulation 52 (augmentation) is not entitled to discretionary compensation under the regulations. The maximum payment that can be awarded under the regulations is 104 weeks pay. Any payment authorised includes (and is not in addition to) any entitlement to a redundancy payment. At its sole discretion, the Council may decide that a payment is conditional upon the employee s entering into a compromise agreement on the Councils standard terms. 3.1 Exceptional Circumstances The Council will not normally make any payment of discretionary compensation. At its sole discretion, and subject to the eligibility criteria set out above, it may authorise a payment provided the circumstances are truly exceptional and that a robust business case has been made demonstrating that the proposal is in the Council s best financial interests. Where an employee is not entitled to a redundancy payment, then any discretionary compensation awarded will not usually exceed 50% of the amount of redundancy payment that they would have received had they been entitled. Where an employee is entitled to a redundancy payment, then any discretionary compensation awarded will not usually exceed 150% of the amount of redundancy payment that they would have received but for the award of discretionary compensation. 4. Augmentation of Membership There is no longer a facility to grant compensatory added years to members accessing their pension benefits. There remains a facility to award additional pension scheme membership under regulation 52 of the LGPS The Council will not award augmentation save in exceptional circumstances (see part B below) 2
In addition, before termination of employment and in circumstances where the employee would otherwise be eligible for consideration for discretionary compensation under 3 above, the Council may agree to award augmentation instead, provided that the cost to the Council of augmentation is no greater than the cost of any discretionary payment which would be permitted by 3 (as the case may be). This discretion can only be exercised prior to the termination of employment, and so long as the employee meets the statutory eligibility criteria. 5. Decision Maker Any decision to award a payment made under this policy will be authorised by: 1. For the Head of Paid Service, Chief Officers and Deputy Chief Officers (as defined in the Local Government and Housing Act 1989), the Chief Officer Panel (to make decisions in accordance with its normal voting arrangements). The power to make an award can only be exercised after consideration of a report prepared for this purpose by the Director of Human Resources and the Chief Finance Officer. In all cases for Chief Officers, the views of the Council s appointed auditors will be sought in advance of any decision and their reply will be reported to the Chief Officer panel. 2. For officers below Deputy Chief Officer level, the Director of Human Resources in consultation with the Chief Finance Officer and the relevant service Director. Before reaching a decision, the decision maker must be satisfied that the employee has had a reasonable opportunity to supply written representations and relevant documents. The decision maker must also consider any relevant contractual or statutory provisions. Where consideration is given to exercise this power the decision maker will seek legal advice prior to entering into any commitment on behalf of the Council. 3
Statutory Redundancy Pay Table APPENDIX 1 To calculate the number of weeks redundancy pay, cross reference the person's age and years of service and then multiply that number by the weekly salary (maximum weekly salary is 310 ). E.g. a person with a salary of 200 aged 22 with 4 years of service will be entitled to two weeks salary e.g. a total redundancy of 400. 17* - The table starts at age 17, as it is possible for a 17 year old to have 2 years service. Compulsory school leaving age can be 15 3/4 or 15 4/5 where a child is 16 before 1 September. Particular care should be taken when calculating an individual s redundancy pay when they joined as an employee below the age of 16. 61* - The table stops at age 61 because for employees age 61 and over, the payment remains the same as for age 61. The table has been changed to reflect the Employment Equality (Age Regulations) October 2006. Statutory redundancy pay table Service (Years) Age 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 17* 1 18 1 1½ 19 1 1½ 2 20 1 1½ 2 2½ - 21 1 1½ 2 2½ 3-22 1 1½ 2 2½ 3 3½ - 23 1½ 2 2½ 3 3½ 4 4½ - 24 2 2½ 3 3½ 4 4½ 5 5½ - 25 2 3 3½ 4 4½ 5 5½ 6 6½ - 26 2 3 4 4½ 5 5½ 6 6½ 7 7½ - 27 2 3 4 5 5½ 6 6½ 7 7½ 8 8½ - 28 2 3 4 5 6 6½ 7 7½ 8 8½ 9 9½ - 29 2 3 4 5 6 7 7½ 8 8½ 9 9½ 10 10½ - 30 2 3 4 5 6 7 8 8½ 9 9½ 10 10½ 11 11½ - 31 2 3 4 5 6 7 8 9 9½ 10 10½ 11 11½ 12 12½ - 32 2 3 4 5 6 7 8 9 10 10½ 11 11½ 12 12½ 13 13½ - 33 2 3 4 5 6 7 8 9 10 11 11½ 12 12½ 13 13½ 14 14½ - 34 2 3 4 5 6 7 8 9 10 11 12 12½ 13 13½ 14 14½ 15 15½ - 35 2 3 4 5 6 7 8 9 10 11 12 13 13½ 14 14½ 15 15½ 16 16½ 36 2 3 4 5 6 7 8 9 10 11 12 13 14 14½ 15 15½ 16 16½ 17 37 2 3 4 5 6 7 8 9 10 11 12 13 14 15 15½ 16 16½ 17 17½ 38 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 16½ 17 17½ 18 39 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 17½ 18 18½ 40 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 18½ 19 41 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 19½ 42 2½ 3½ 4½ 5½ 6½ 7½ 8½ 9½ 10½ 11½ 12½ 13½ 14½ 15½ 16½ 17½ 18½ 19½ 20½ 43 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 44 3 4½ 5½ 6½ 7½ 8½ 9½ 10½ 11½ 12½ 13½ 14½ 15½ 16½ 17½ 18½ 19½ 20½ 21½ 45 3 4½ 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 46 3 4½ 6 7½ 8½ 9½ 10½ 11½ 12½ 13½ 14½ 15½ 16½ 17½ 18½ 19½ 20½ 21½ 22½ 47 3 4½ 6 7½ 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 48 3 4½ 6 7½ 9 10½ 11½ 12½ 13½ 14½ 15½ 16½ 17½ 18½ 19½ 20½ 21½ 22½ 23½ 49 3 4½ 6 7½ 9 10½ 12 13 14 15 16 17 18 19 20 21 22 23 24 50 3 4½ 6 7½ 9 10½ 12 13½ 14½ 15½ 16½ 17½ 18½ 19½ 20½ 21½ 22½ 23½ 24½ 51 3 4½ 6 7½ 9 10½ 12 13½ 15 16 17 18 19 20 21 22 23 24 25 52 3 4½ 6 7½ 9 10½ 12 13½ 15 16½ 17½ 18½ 19½ 20½ 21½ 22½ 23½ 24½ 25½ 53 3 4½ 6 7½ 9 10½ 12 13½ 15 16½ 18 19 20 21 22 23 24 25 26 54 3 4½ 6 7½ 9 10½ 12 13½ 15 16½ 18 19½ 20½ 21½ 22½ 23½ 24½ 25½ 26½ 55 3 4½ 6 7½ 9 10½ 12 13½ 15 16½ 18 19½ 21 22 23 24 25 26 27 56 3 4½ 6 7½ 9 10½ 12 13½ 15 16½ 18 19½ 21 22½ 23½ 24½ 25½ 26½ 27½ 57 3 4½ 6 7½ 9 10½ 12 13½ 15 16½ 18 19½ 21 22½ 24 25 26 27 28 58 3 4½ 6 7½ 9 10½ 12 13½ 15 16½ 18 19½ 21 22½ 24 25½ 26½ 27½ 28½ 59 3 4½ 6 7½ 9 10½ 12 13½ 15 16½ 18 19½ 21 22½ 24 25½ 27 28 29 60 3 4½ 6 7½ 9 10½ 12 13½ 15 16½ 18 19½ 21 22½ 24 25½ 27 28½ 29½ 61+ 3 4½ 6 7½ 9 10½ 12 13½ 15 16½ 18 19½ 21 22½ 24 25½ 27 28½ 30 4
B. Local Government Pension Scheme Discretionary Payments 1. Introduction and Scope This part of the policy statement will apply to all Ealing Council employees with Local Government Pension Scheme membership, other than schools based staff. The Local Government Pension Scheme Regulations provide for various discretionary powers, which Ealing Council, as an administering and employing authority, can decide how to apply. 2. Eligibility Criteria At the time of any decision made under this part of the policy statement, the decision maker must be satisfied that the following criteria are met: That the employee meets the minimum age and service criteria within the LGPS Regulations as in force at that time That a robust business case, demonstrating that the proposal is in the Council s best business and financial interests has been made 3. Early Access to Pension Benefits Redundancy/Efficiency If an employee who is aged 50 (from 1 st April 2010 substitute age 55 for age 50) or more retires from employment and the reason for retirement is redundancy, the employee is entitled to a pension and retirement grant which are payable immediately (unless the employee waives this in accordance with regulation 15 of the Local Government (Compensation for Redundancy) Regulations 1994 about compensation due because regulation 9 of those Regulations applies to the retirement). For these purposes "redundancy" includes retirement in the interests of efficiency, or because the member held a joint appointment which has been ended because the other holder has left it. In these circumstances the pension and retirement grant are paid without reduction. Ill Health Where an employee leaves employment by reason of being permanently incapable of discharging efficiently the duties of their employment or any other comparable employment with Ealing because of ill-health or infirmity of mind or body, they are entitled to an ill-health pension and grant. The pension and grant are payable immediately. In these circumstances the pension and retirement grant are paid in accordance with regulation 28. 5
Other Early Leavers The regulations (regulation 31) also provide for a current pensionable employee aged 50 (from 1 st April 2010 substitute age 55 for age 50) and over with at least three months membership of the Local Government Pension Scheme who wishes to leave employment the opportunity to apply to their employer for voluntary early retirement and for the immediate payment of their pension benefits. It is at the discretion of the employer to decide whether or not to give consent to the retirement and the early release of pension benefits. If the request for early payment of the benefits is not granted the members benefits would be deferred on leaving and the earliest payment date would be the members 60 th birthday. Once the employee reaches age 60 the consent of the employer is not required for the benefits to be paid. Where the employee is permitted to retire early and agreement to the immediate payment of benefits on leaving is received under the Council s discretionary powers the resulting cost to the authority would be dependant on the overall age and membership of the member as detailed below: Where an employee joins the Local Government Pension Scheme after 30 th September 2006 their normal retirement age is 65 therefore their pension benefits will always be subject to an early payment reduction. In these cases the total cost of the early payment of benefits would be covered by the actuarial reduction suffered by the employee and there would be no cost to the Council. Where the employee s combined years of service in the scheme and age (in whole years only) total 85 or more at the date of leaving the benefit payable would be paid in full and not subject to any early payment reduction. In these cases the total cost of paying the pension entitlement early would fall on the Council. All pension scheme members who joined before 1 st October 2006 have some protection under the rule of 85. Those who wish to retire when they have satisfied the rule of 85 will have no reduction to their pension benefits if they reach the age of 60 by March 2016. An active member prior 1st October 2006 who will be age 60 after 31 March 2016, but before 1 April 2020 and can satisfy the 85 year rule (Where the employee s combined whole years of service in the scheme and age in whole years only total 85 or over at the date when their employment ends) before 1 April 2020 will have a tapered reduction to benefits earned from 1 April 2008 instead of the full reduction. For all other active members who were born after 31 March 1960 and who joined the scheme prior to 1 October 2006 the 85 year rule applies to all service up to 31 March 2008 with a full reduction to later service. 6
The amount of reduction to the pension and lump sum is determined by an actuarial calculation based on a formula determined by the Government Actuary s Department. Where agreement to immediate payment of the member s benefits is approved the Council also has the discretion to waive the potential actuarial reduction. In all but exceptional cases this discretion will not be exercised Early Payment of Deferred Benefits on Compassionate Grounds Pre 1 st April 1998 pension scheme leavers Prior to the regulation changes in 1998 the employer had the discretion to allow early payment of benefits on compassionate grounds, in all cases if the deferred member left prior to 1 st April 1998 and the release of benefits is agreed the benefits are paid on an unreduced basis. Post 31 st March 1998 pension scheme leavers For members who left the pension scheme after the 31 st March 1998 the LGPS allows the employer who agrees to make premature payment upon compassionate grounds, to be paid actuarially reduced if applicable. In these cases the following criteria will be taken into account in determining the entitlement and value of the payment. (a) Full Payment of the Accrued Preserved benefits where: i. The former employee is not otherwise eligible to receive their accrued LGPS benefits, and ii. The former employee is now prevented from following any employment as a consequence of being able to personally deliver full-time home care to a dependant, and iii. The Council s Medical Advisor has confirmed both a current need for full-time care and that there is no reasonable prospects of the need materially diminishing before the employee s 65 th birthday iv. There is no reasonable prospect that the required level of home care can be provided other than by the former employee and before that employee obtains 65 years, or (b) Payment of Accrued Preserved Benefits on actuarial reduced grounds i. The employee left LGPS employment on or after 31 st March 1998 and apart from compassionate considerations, the member s benefits would, if paid still be actuarially reduced, and ii. The former employee is not otherwise eligible to receive their accrued LGPS benefits, and 7
iii. The former employee is now prevented from following any employment as a consequence of being able to personally deliver full-time home care to a dependant, and iv. The Council s Medical Advisor has confirmed the need for full time home care for at least the next 5 years, and v. There is no reasonable prospect that the necessary level of care can be provided other than by the former employee for the next 5 years. For the purposes of items a and b above the assumptions are as follows: Dependant means the spouse, partner, offspring or parent of the former member or any other person that Ealing Council may accept of similar status in this context. Full time means usually for at least 35 hours per week excluding weekends Home care means the relevant care is provided in the former employee s or dependant s home If discretion to release benefits is exercised, payment of the benefit will be effected from the date of the member s application. Early Payment of Deferred Benefits for members leaving employment since 31 st March 1998 A request from a former member aged between 50 (from 1 st April 2010 substitute age 55 for age 50) and 59 for the early payment of their deferred benefits other than on the compassionate grounds or by the reason of permanent ill health, will only be accepted where there is no cost or other financial disadvantage to the Council If discretion to release benefits is exercised, payment of the benefit will be effected from the date of the member s application. 4. Augmentation (Reg 52) The Council has discretion to augment scheme membership. The discretion to increase scheme membership under this regulation can be used at any time during an active member s employment but is not permissible following a member s termination of employment. The amount of augmented membership must not exceed or 10 years (incl additional membership in respect of different employments) 8
the period by which the member s total membership falls short of the total membership the member will have if they continue as an active member until age 65 whichever is the shortest Augmentation will not be considered by the Council save in the following exceptional circumstances: As a measure to recruit/retain key staff where a robust business case demonstrates that it would be beneficial to the organization On loss of service following a TUPE transfer As described in paragraph 4 of Section A of this policy. Decision Maker Any decision to award a payment made under this policy will be authorised by: (a) For the Head of Paid Service, Chief Officers and Deputy Chief Officers (as defined in the Local Government and Housing Act 1989), the Chief Officer Panel (to make decisions in accordance with its normal voting arrangements). The power to make an award can only be exercised after consideration of a report prepared for this purpose by the Director of Human Resources and the Chief Finance Officer. In all cases for Chief Officers, the views of the Council s appointed auditors will be sought in advance of any decision and their reply will be reported to the Chief Officer panel. (b) For officers below Deputy Chief Officer level, the Director of Human Resources in consultation with the Chief Finance Officer and the relevant service Director. Before reaching a decision, the decision maker must be satisfied that the employee has had a reasonable opportunity to supply written representations and relevant documents. The decision maker must also consider any relevant contractual or statutory provisions. Where consideration is given to exercise this power the decision maker will seek legal advice prior to entering into any commitment on behalf of the Council. 5. Other Discretions Ealing Council will apply its discretion in relation to other areas as follows: 9
Flexible Retirement (Reg 35) The Council will consider applications for flexible retirement on an individual basis taking account of all relevant considerations including the likely costs and benefits. Actuarial reductions will be made to pensions in line with the relevant regulation. Applications will be made in accordance with the process established for this purpose. Shared Cost AVC (Reg 67) The Council does not provide a shared cost additional voluntary contribution scheme Rejoining Scheme after Opting Out More than Once (Reg 7(9)) The Council will permit a member who has opted out more than once to rejoin the scheme except where the member is being considered for redundancy, ill health or other early retirement Reduction in Pay Certificates (Reg 23 (4)) The Council will automatically issue certificates of protection in all relevant cases (e.g in cases where the employer permanently reduces, freezes or restricts increases on pay) Abating Pensions for Re-employed Pensioners (Reg 109) The Council will continue to abate pensions in all cases*, on the basis of the 1995 LGPS regulations. * Except those employees who are granted flexible retirement Selection of Final pay period for Deceased Members (Reg 22 (7)) The Council will take appropriate action to maximize benefits Payment of Death Grants (Reg 38) The member s nominated beneficiary shall in all but exceptional cases be the recipient of the death grant Child Continuing Education (Reg 44(3)) 10
The Council will not regard a break of less than 12 complete months as a break in the period of education nor training Split of Children s Pension (Reg 47) Payment to be made in accordance with the LGPS regulations. Were there are more than 2 eligible children payment to be made to the 2 eldest beneficiaries. As a beneficiary ceases to be entitled to payment, pension entitlement to revert to next eligible child, to maximize the period of payment. Payment to be made to an account set up for the sole benefit of the child. Commutation of Small Pensions (Reg 49) Small pensions to be commuted in all but exceptional cases, subject to any limits specified in the regulations and in accordance with HMRC restrictions Commutation: Exceptional Ill Health (Reg 50) The Council will respond sensitively and positively to any wishes of an employee who meets the requirements of this regulation and wishes to receive a lump sum payment in accordance with its provisions. Where an election cannot be made, commutation will be made if it is likely to be to the members overall advantage Medical Requirement for Added Years Purchase (Reg 55) The Council will reserve its right to require, when it deems necessary, an employee to undergo a medical examination (at the employees expense) to establish that the employee is in good health Elections to Pay AVC (Reg 60) The Council will require the minimum rate of AVCs to be at least the specified minimum set out in the regulations Interest from other Employers (Reg 82) The Council will require interest to be charged on amounts overdue in accordance with the regulations Administration Charges for provision of Statements (Reg 86) The Council will make charges in circumstances permitted by the relevant regulation 11
6. Decision Maker Discretionary pension decisions will be authorised by: a. For the Head of Paid Service, Chief Officers and Deputy Chief Officers (as defined in the Local Government and Housing Act 1989), the Chief Officer Panel (to make decisions in accordance with its normal voting arrangements). The power to make an award can only be exercised after consideration of a report prepared for this purpose by the Director of Human Resources and the Chief Finance Officer. In all cases for Chief Officers, the views of the Council s appointed auditors will be sought in advance of any decision and their reply will be reported to the Chief Officer panel. b. For officers below Chief Officers level, the Director of Human Resources in consultation with the Chief Finance Officer and the relevant service Director. Before reaching a decision, the decision maker must be satisfied that the employee has had a reasonable opportunity to supply written representations and relevant documents. The decision maker must also consider any relevant contractual or statutory provisions. 12