Mo Jones, the Borough’s Pension Officer to attend.
Minutes:
The Forum received a presentation from Mo Jones, Pensions Officer on the changes to the Local Government Pension Scheme from 1 April 2014. It was thought that similar changes would follow for teaching staff at a later date but this had not been announced.
The following formed the basis of the changes to the scheme.
• Moving to CARE (Career Average Revalued Earnings) – pensions no longer based on years and days membership
• Definition of Pensionable pay is changing
• New salary bandings for contributions, extended to 9 levels,
• Part timers will pay on their actual pay.
• 50/50 section with full employers’ contributions payable
• Retirement date aligned with State Pension age
• All benefits earned up to 31 March 2014 protected including the link to final salary and the current retirement age of 65 for pre 2014 benefits
• Vesting period reverting to 2 years from 3 months
• Able to take benefits from age 55 without employers permission – at a cost
Care Scheme
It was noted that from April 2014, pension accounts would “build” each
year as follows:-
• Pensionable salary X 1/49 = pension bought and each year on 31 March, the pension account is revalued
• Pensionable pay would now include all additional hours (for part timers) and all overtime including non-contractual overtime. Employers’ contributions would therefore be paid an ALL pay.
Salary bandings had now been extended to 9 levels so high earners would pay a higher percentage although most teachers would remain at 22%. The pivotal salary was around £43K where earners would be paying more. Part timers would pay on ACTUAL earnings rather than the full time equivalent as previously and it would be the employers’ decision as to which band staff fell into.
50/50 Section
• A scheme member could now elect to be in the 50/50 section and pay half the normal % contribution
• They would get half the pension but all other benefits would remain the same as if they were in the main section
• Employers would still pay the full % they would normally pay – even though this has caused “questions to be asked in the house”.
Retirement Age
• Retirement age would now be aligned with state pension age
• The link to final salary still existed for all those scheme members with pre 2014 membership
• The right to have a refund of contributions would be increased to 2 years from 3 months, however employers’ contributions would only be refunded if the member opted out within the first 3 months.
Taking benefits before retirement age
Scheme members had the right to take reducedbenefits from age 55 without their Employers’ consent. Reduction factors were still being looked at as protections in place could be lost if the member retired under the age of 60.
Authorised leave without pay
• Mandatory payment of contributions for the first 30 days of any such leave had now gone and was no longer the contributions “that would have been paid”
• It was being replaced with the right of the scheme member to elect to pay for the lost pension
• The cost would be based on “assumed pensionable pay” X 1/49 X factors based on age
• Jury service would come under the same banner as above if the member goes on to “no pay” if on a lengthy court case
Paying for lost pension contributions
Once the cost of buying a lost pension has been calculated, the scheme member then has 30 days to choose to pay the contributions and have the cost shared with the employer. If he/she decides to go ahead with the purchase, the cost is split 1:2 employee/employer. If the scheme member decides to purchase the lost pension outside of the 30 days, they must pay the whole cost themselves. A person could no longer choose to pay such contributions after they have left employment
Sickness with no pay
Employer’s contributions were now payable for any period where staff were off sick and out of sick pay. This was not an option. Contributions would be calculated using “assumed pensionable pay” (APP). APP would be the figure to be used going forward to base employers’ payment of contributions for any periods of reduced or “no pay” including child related leave, reserve forces leave and authorised unpaid leave. APP would be calculated as an average of the 3 months’ pay in the 3 preceding months to the monthly pay reduced to zero pay.
Industrial Action
The scheme member would have an open ended time limit now in which to decide to pay for the “lost pension”. The pension would be bought by paying in the same way as any other “lost pension” scenario. It was noted that the employer would not pay towards this even if the member had made the decision within 30 days of receiving the cost information.
What the employer pays for
• All scheme members who are active and receiving pay
• Any member on “relevant” child related leave such as ordinary maternity, paternity or adoption leave
• Any active scheme member off sick receiving no pay
• 2/3rds of the cost of any period of authorised unpaid leave (including maternity, paternity, adoption and jury leave) where the member had elected within 30 days to buy the lost pension
What the employer does not pay for
• Any period of authorised unpaid leave (including maternity, paternity and adoption leave) where the member had NOT elected within 30 days to buy the lost pension
• Any period of industrial action even if the member wants to buy the lost pension
• During the period any active member is on reserve forces leave – even if the employer does continue to pay “some pay” – this is because the Ministry of Defence pays the employers contribution
It was noted that the following should be reported to the pension team:
• All new joiners to the scheme
• Scheme members electing to pay in 50/50 section
• Scheme members going onto reduced or zero sick pay
• Scheme members going on maternity, paternity, adoption or authorised unpaid leave including career breaks etc.
• Scheme members going on reserve forces leave
• Scheme members returning from any of the items above
• Any one taking part in industrial action and when they ceased
• Any one returning from jury service
• Any change of contractual hours
• For leavers, a pensionable pay figure for post 2014 membership, and if applicable, a “pen rem” for pre 2014 membership
Members of the Forum were advised that, upon request, an officer from the pension’s team would visit and speak to non-teaching staff at their respective schools. Members were further advised that the Authority had set up a pension’s website and that information packs were also available.
The Chairman thanked the officer for the report and commented that all non-teaching staff should have the necessary information prior to any meetings being arranged. It was agreed that meetings should be organised around school hours and within localities.
The Forum was asked to note the 2.3% (from 14.1% to 16.4%) increase in teachers’ pensions for employers’ contributions from September 2015. Schools had already been advised of this. Salary calculators were being adjusted to account for the increase.