Transcript Guaranteed Minimum Pensions

TEESSIDE PENSION FUND
Pensionable Pay
2
Pensionable Pay
Meaning of pensionable pay
Pensionable or not
Final pay - general
Full time & part time employees
Final pay – BIS Last 365 days
Reductions & restrictions
Certificate of Protections
Pre 2008 & post 2008
Final pay - fees
Unusual calculations
3
Pensionable Pay
Meaning of pensionable pay
salary
wages
fees & other payments
for members own use in respect of their employment
- pensionable emoluments
specified in their contract of employment
4
Pensionable Pay
Pensionable Pay does not include
- Payments for non-contractual overtime
any travelling, subsistence or other allowance in respect of
expenses incurred in relation to the employment
any payment in consideration of loss of holidays
any payment in lieu of notice to terminate their contract of
employment
any payment as an inducement not to terminate his employment
before the payment is made
the amount of any supplement paid by the Environment Agency in
recognition of the difference in contribution rates between
members of the principal civil service pension scheme and the
Scheme
- Any payment by way of compensation for the purposes of
achieving equal pay in relation to other employees
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Pensionable Pay
Workshop 1
6
Pensionable Pay
Pensionable or not?
Mr Workaholic commences employment with you and his first pay
packet is comprised of many elements.
£2,500.00
£ 250.00
£1,000.00
£ 500.00
£ 296.75
£ 428.75
£ 14.00
£ 154.25
£ 850.00
£5,993.75
Salary
Performance-related Pay
Cash equivalent of lease car
Contractual Overtime
Travelling Expenses
Subsistence expenses
First Aid Allowance
Enhancement for weekend working
Non-contractual overtime
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Pensionable Pay
Pensionable or not?
Mr Workaholic commences employment with you and his first pay
packet is comprised of many elements.
£2,500.00
£ 250.00
£1,000.00
£ 500.00
£ 296.75
£ 428.75
£ 14.00
£ 154.25
£ 850.00
£5,993.75
Salary
Performance-related Pay
Cash equivalent of lease car
Contractual Overtime
Travelling Expenses
Subsistence expenses
First Aid Allowance
Enhancement for weekend working
Non-contractual overtime
Yes
Yes
No
Yes
No
No
Yes
Yes
No
8
Pensionable Pay
Next month he receives a similar pay packet but with an
extra £1,000.00 ‘honoraria’ payment.
Is the honoraria pensionable?
9
Pensionable Pay
Next month he receives a similar pay packet but with an
extra £1,000.00 ‘honoraria’ payment.
Is the honoraria pensionable?
Depends on what the honoraria is in respect of:
Lieu of duties
Yes
Anything in the exceptions list No
(i.e. extra hours that couldn’t put through)
10
Pensionable Pay
In a number of months time his final pay packet includes
£2,500.00 payment in lieu of notice and £1,000.00
payment in lieu of holidays not taken.
Are either of these payments pensionable?
11
Pensionable Pay
In a number of months time his final pay packet includes
£2,500.00 payment in lieu of notice and £1,000.00
payment in lieu of holidays not taken.
Are either of these payments pensionable?
NO
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Pensionable Pay
Final Pay
- year ending on day member ceases to be an active member
- best of the last three years
- part time – use a single comparable whole time employment
- disregard any absences due to illness or injury
Pensionable Pay
- calculated as final pay, where a year is 365 days
- leap year 366 days only if date of leaving is 29th February
- less than one year’s service, convert to 365 days
i.e. Member employed from 1st March to 21st September
on a salary of £18,000.00
so if pay for period (205 days) was £10,109.59,
the pensionable pay would be
£10,109.59/205 x 365 = £18,000.00
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Pensionable Pay
If the pay rates are as follows: 01/12/2007 to 31/03/2008 = £ 26,067.00
01/04/2008 to 30/11/2008 = £ 26,835.00
You need to calculate the period 01/12/07 to 31/03/2008 at the rate of
£26,067 and the period 01/04/2008 to 30/11/2008 at the rate of £26,835
01/12/2007 to 31/03/2008 gives a number of days of 121 days
01/04/2008 to 30/11/2008 gives a number of days of 244 days
365 days
Pensionable pay
01/12/07 to 31/03/08 is 121 / 365 x £26,067.00 = £ 8641.39
01/04/08 to 30/11/08 is 244 / 365 x £26,835.00 = £17,939.01
Pensionable Pay
£26,580.40
The pensionable pay you calculate will always fall
between the first and last salaries.
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Pensionable Pay
Final Pay/Pensionable Pay – Why 365 days?
Strictly speaking the final pay should done in accordance with the
way in which a person is paid.
- employers pay a salary/wage
- paid monthly i.e. 1/12th
- paid lunar i.e. every 28 days
- 52 weeks
- 1/260th of the annual salary for each working day
Allows many variations
i.e. leaving on the 12th of a month
- September would be 12/30ths, October would be
12/31sts
- or 12/28ths
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Pensionable Pay
Mrs Hutton
Retires at age 60 on 29 September 2010. She is monthly paid and her
rates of pay over the last year were: 01 April 2009 £ 16,440.00 p.a.
01 April 2010 £ 17,400.00 p.a.
Final/Pensionable pay
30 September 2009 to 31 March 2010
£16,440.00 x 6/12
= £8,220.00
£16,440.00/12 x 01/30 = £ 45.67
1 April 2010 to 29 September 2010
£17,400.00 x 5/12
£17,400.00/12 x 29/30
= £7,250.00
= £1,401.67
Pensionable Pay
= £16,917.34
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Pensionable Pay
Mrs Hutton
Retires at age 60 on 29 September 2010. She is monthly paid and her
rates of pay over the last year were:
01 April 2009 £ 16,440.00 p.a
01 April 2010 £ 17,400.00 p.a.
Worked on days rather than months gives the following
Final/Pensionable pay
30 September 2009 to 31 March 2010
1 April 2010 to 29 September 2010
Pensionable Pay
£16,440 x 183/365 = £ 8,242.52
£17,400 x 182/365 = £ 8,676.16
= £16,918.68
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Pensionable Pay
Workshop 2
Full Time Employee
Salary Details
Leaving Date 31 December 2003
01.01.2003
01.04.2003
£13,884.00
£14,391.00
Calculate the annual pensionable pay:
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Pensionable Pay
Workshop 2
Full Time Employee
Salary Details
Leaving Date 31 December 2003
01.01.2003
01.04.2003
£13,884.00
£14,391.00
Calculate the annual pensionable pay:
01.01.03 - 31.03.03
01.04.03 - 31.12.03
90/365 x 13,884.00
275/365 x 14,391.00
= £ 3,423.45
= £10,842.53
= £14,265.98
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Pensionable Pay
Workshop 2
Full Time Employee
Salary Details
Leaving Date 03 March 2004
04.03.2003
01.04.2003
22.09.2003
£15,264.00
£16,194.00
£16,718.00
Calculate the annual pensionable pay:
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Pensionable Pay
Workshop 2
Full Time Employee
Salary Details
Leaving Date 03 March 2004
04.03.2003
01.04.2003
22.09.2003
£15,264.00
£16,194.00
£16,718.00
Calculate the annual pensionable pay:
04.03.03 - 31.03.03
01.04.03 - 21.09.03
22.09.03 - 03.03.04
28/365 x 15,264.00
174/365 x 16,194.00
163/365 x 16,718.00
= £ 1,170.94
= £ 7,719.88
= £ 7,465.85
= £16,356.67
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Pensionable Pay
Workshop 2
Full Time Employee
Salary Details
Leaving Date 15 January 2004
16.01.2003 £13,884.00 plus £100 First Aid Allowance
01.04.2003 £14,391.00 plus £100 First Aid Allowance
Calculate the annual pensionable pay:
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Pensionable Pay
Workshop 2
Full Time Employee
Salary Details
Leaving Date 15 January 2004
16.01.2003 £13,884.00 plus £100 First Aid Allowance
01.04.2003 £14,391.00 plus £100 First Aid Allowance
Calculate the annual pensionable pay:
16.01.03 - 31.03.03
01.04.03 - 15.01.04
75/365 x (13,884.00+100)
290/365 x (14,391.00+100)
= £ 2,873.42
= £11,513.40
= £14,386.82
OR
16.01.03 - 31.03.03 75/365 x 13,884.00 = £ 2,852.88
01.04.03 - 15.01.04 290/365 x 14,391.00 = £11,433.94
= £14,286.82 + 100 = £14,386.82
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Pensionable Pay
Full time & Part time employees
Benefit regulation 1 defines a whole time employee as
‘an employee whose contract of employment provides’
(a) That he is such an employee for the scheme
(b) that his contractual hours are not less than the number of
contractual hours for a person employed in that employment on a
whole time basis
Benefit regulation 7(3) part-time members accrue membership as an
appropriate fraction of the duration of membership they have.
Benefit regulation 7(4) states ‘the numerator of that fraction is the
number of contractual hours during the part-time service and its
denominator is the number of contractual hours of that
employment if it were on a whole-time basis’
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Pensionable Pay
Straight forward, simple definition
School crossing patroller’s whole-time equivalent hours are 7.5 per
week
Therefore a part timer working 5 hours per week for 6 years at a rate
of £6.00 per hour would have a pensionable pay of 6 x 7.5 x 52.14
= £2,346.30 and pensionable service of 6 x 5/7.5 = 4 years.
This would give a pension of 4/60 x 2,346.30 = £156.42 p.a.
Transferred to a cleaning post of 5 hours per week where the wholetime equivalent hours are 37 at a rate of £6.00 per hour.
Pensionable pay becomes 6 x 37 x 52.14 =£11,575.08.
The same service already accrued would give a pension of
4/60 x 11,575.08 = £771.67 p.a.
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Pensionable Pay
Straight forward, simple definition
Therefore for administrative purposes the whole-time equivalent
of all part-time employment is 37hours.
The service is therefore recorded as ??.??/37.00
The pensionable pay is calculated as £? X 37 x 52.14.
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Pensionable Pay
Hours & Pay proportionality
Mrs Red works whole-time on a salary of £10,000.00 plus
£2,000.00 enhancement for weekend working.
In one year she would contribute £660.00 (5.5% of £12,000.00)
After 10 years membership, Mrs Red would receive a benefit of
10 x 1/60 x12000 = £2,000.00 p.p. pension
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Pensionable Pay
Now if we take Mrs White & Mrs Blue who work the same job as Mrs Red
but on a part-time basis. Both work 18.5 hours per week, but Mrs Blue
does all the weekend work and receives all of the weekend enhancement.
In one year, Mrs White would contribute £275.00 (5.5% of £5,000.00)
In one year, Mrs Blue would contribute £385.00 (5.5% of £7,000.00)
Regulation 8 states ‘In the case of part-time employment, the final pay is
the pay which would have been paid for a single comparable whole-time
employment.’
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Pensionable Pay
If we take this statement literally, the whole-time equivalent pay would be
£12,000.00
So after 10 years Mrs White would get a benefit of
5 x 1/60 x £12,000 = £1,000.00 p.a.
Similarly,
After 10 years Mrs Blue would get a benefit of
5 x 1/60 x £12,000 = £1,000.00 p.a.
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Pensionable Pay
Is this fair?
Mrs White would have paid £2,750.00 in contributions over the 10 yrs
Yet Mrs Blue would have paid £3,850.00 in contributions over the 10 yrs
I.e. Mrs Blue paid in 40% more
More Logical
If Mrs White’s whole-time equivalent pay was £10,000.00 (a 37 hour
working week without weekend enhancement.
Mrs White’s benefit would be 5 x 1/60 x £10,000 = £833.33 p.a.
Is Mrs Blue’s whole-time equivalent pay still £12,000.00? ( a whole-time
post with weekend enhancements),
Mrs Blue’s benefit would be 5 x 1/60 x £12,000 = £1,000 p.a.
Is this fair?
Mrs Blue is receiving 20% more in benefit,
but has paid 40% more in contributions.
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Pensionable Pay
Would it be fairer to say that the whole-time equivalent for a half-timer
with one weekend enhancement is one whole-timer with two.
Mrs Blue’s whole-time equivalent pay would be £14,000.00.
Her benefit would be 5 x 1/60 x £14,000 = £1,166.67 p.a.
From a fund’s point of view
They paid Mrs White £833.33 and Mrs Blue £1,166.67, a total of
£2,000.00 (equal to Mrs Red’s benefits)
in return for contributions of £2,750.00 from Mrs White and
£3,850.00 from Mrs Blue, a total of £6,600.00 (equal to Mrs Red’s
contributions)
From the member’s point of view
Mrs Blue has paid 40% more in contributions than Mrs White and
has received 40% more in benefits than Mrs White
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Pensionable Pay
Summary
Service
Contributions
Paid
Pension
Paid
Pensionable
Pay
Mrs Red
10 yrs
£6,600.00
£2,000.00
£12,000.00
Mrs White
5 yrs
£2,750.00
£1,000.00
£12,000.00
Mrs Blue
5 yrs
£3,850.00
£1,000.00
£12,000.00
Mrs White 5 yrs
£2,750.00
£833.33
£10,000.00
Mrs Blue
£3,850.00
£1,166.67
£14,000.00
5 yrs
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Pensionable Pay
However
Could it then be claimed that the whole time equivalent for Mrs Blue is
£14,000.00, thereby moving her into the next contribution band.
Mrs Blue would therefore pay 5.8% of £7,000.00 being £406.00.
An extra £210.00 over 10 years in the fund’s coffers.
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Pensionable Pay
Consider another conundrum
Mrs Green worked along side Mrs Red until the last year, when she
reduced to exactly half time working the weekends. She receives a
salary of £5,000.00 plus the weekend enhancement of £2,000.00.
Should her pension be: (a) 9.5 x 1/60 x £14,000.00 = £2,216.67 or
(b) 9.5 x 1/60 x £12,000.00 = £1,900.00
If (a) Mrs Green would receive more pension than Mrs Red! –
effectively the first 9 yrs have been increased in value by 16%
(i.e. based on £14,000 instead of £12,000)
Is (b) mathematically correct! – effectively Mrs Green’s benefits are
9.5/10ths of Mrs Red’s.
However, Mrs Green has paid a contribution in her final year that is
nearly 60% of Mrs Red’s.
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Pensionable Pay
Benefit regulation 8 (3), in describing final pay states:
‘in the case of part-time employment, the final pay is the pay which would
have been paid for a single comparable whole-time employment’.
To calculate the final pay for a part-timer working 30 hours per week would be
relatively simple, using the actual pay received in the final year and
multiplying by 37/30.
So an example for a person working 30 hours per week and receiving the
following pay: 01/12/2007 to 31/03/2008 = £21,135.41
01/04/2008 to 31/03/2008 = £21,758.11
You would use the whole time equivalent
01/12/2007 to 31/03/2008 = £26,067.00 (£21,135.41 / 30 hours x 37 hours)
01/04/2008 to 30/11/2008 =£ 26,835.00 (£21,758.11 / 30 hours x 37 hours)
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Pensionable Pay
Hourly Rates:
01/12/2007 to 31/03/2008 = £ 9.56 per hour
01/04/2008 to 30/11/2008 = £ 10.28 per hour
The annual salaries would be
9.56 x 37 x 52.14 = £18,442.96
10.28 x 37 x 52.14 = £19,831.97
The pensionable pay would therefore be
01/12/07 to 31/03/08 is 121 / 365 x £18,442.96 = £ 6113.97
01/04/08 to 30/11/08 is 244 / 365 x £19,831.97 = £13,257.54
Pensionable Pay
£19,371.51
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Pensionable Pay
Workshop 3
Calculate the whole-time and part-time Pensionable Pay details for the
following part time employee:
Leaving Date 15.2.2004
hours worked are 10 per week
Salary Details
16.02.2003 Part-time annual pay £3,322.70
01.04.2003 Part-time annual pay £3,422.43
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Pensionable Pay
Workshop 3
Calculate the whole-time and part-time Pensionable Pay details for the following
part time employee:
Leaving Date 15.2.2004 hours worked are 10 per week
Salary Details: 16.02.2003 Part-time annual pay £3,322.70/10 x 37 = 12,294.00
01.04.2003 Part-time annual pay £3,422.43/10 x 37 = 12,663.00
16.02.03 – 31.03.03 = 44/365 x 12,294.00 = 1,482.02
01.04.03 – 15.02.04 = 321/365 x 12,663.00 = 11,136.50
Whole-time pensionable pay
= £12,618.52
16.02.03 – 31.03.03 = 44/365 x 3,322.70 = 400.54
01.04.03 – 15.02.04 = 321/365 x 3,422.43 = 3,009.86
Part-time pensionable pay
= £3,410.40
Check: £12,618.52/37 x 10 = £3,410.41
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Pensionable Pay
Workshop 3
Calculate the Pensionable Pay details for the following employee:
Leaving Date
18.7.2003
Salary Details
19.07.2002 £221.50 per week plus £42.80 bonus per week
01.04.2003 £232.75 per week plus £46.50 bonus per week
N.B. FOR WEEKLY PAID STAFF THE ANNUAL RATE IS CALCULATED BY
MULTILPYING THE WEEKS BY 52.14
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Pensionable Pay
Workshop 3
Calculate the Pensionable Pay details for the following employee:
Leaving Date
18.7.2003
Salary Details
19.07.2002 £221.50 per week plus £42.80 bonus per week
01.04.2003 £232.75 per week plus £46.50 bonus per week
19.07.02 – 31.03.03 = 256/365 x (221.50 + 42.80 x 52.14 = 13,780.60) = 9,665.30
01.04.03 – 18.07.03 = 109/365 x (232.75 + 46.50 x 52.14 = 14,560.10) = 4,348.08
Pensionable Pay
= £14,013.38
40
Pensionable Pay
Term-time members
The original intention of the new look LGPS was that membership and
final pay calculations for term-time employees should be pro-rated
Part-timers service is recorded as ??.??/37.00
To keep uniformity with part-timers, a term-time employee also has the
service adjusted, so that the whole time equivalent pay is then used in
the calculation of the pensionable pay.
An employee working 37 hours per week for 44 weeks per year would
have their membership recorded as 31.22/37.00 ( i.e. 37 x44/52.14)
If the employee’s actual pay was £20,000.00, the final pay for this
term-time employee would be grossed-up for benefit calculations
i.e. £20,000.00 x 52.14/44 = £23,700.00
41
Pensionable Pay
Part-time, term-time members
A part-time, term-time employee working 20 hours per week for 44
weeks per year would have their membership recorded as
16.88/37.00 (i.e. 20 x 44/52.14)
If the employees actual pay was £10,810.81, the final pay for this
part-time, term-time employee would be grossed-up for benefit
calculations
i.e. £10,810.81 x 37/20 x 52.14/44 = £23,700.00
42
Pensionable Pay
Part-time & term-time members
For ease of administering and calculating benefits,
Administering authorities should pro-rata the membership
and use the whole-time equivalent pensionable pay
43
Pensionable Pay
Workshop 4
Calculate the pensionable pay for the following employee:
Leaving Date 18.3.2004
Pay Details
Date
19.03.2003
01.04.2003
weekly
wage
£187.76
£194.75
hours
worked
37
37
weekly
bonus
£16.50
£21.25
contractual
overtime
5 hours
5 hours
44
Pensionable Pay
Workshop 4
Calculate the pensionable pay for the following employee:
Leaving Date 18.3.2004
Pay Details
Date
19.03.2003
01.04.2003
weekly
wage
£187.76
£194.75
hours
worked
37
37
Hourly rate: 187.76/37 = 5.0746,
weekly
bonus
£16.50
£21.25
contractual
overtime
5 hours
5 hours
194.75/37 = 5.2635
19.03.03 – 31.03.03 = 13/365 x (187.76 + [5 x 5.0746] + 16.50 x 52.14) =
426.44
01.04.03 – 18.03.04 = 352/365 x (194.75 + [5 x 5.2635] + 21.25 x 52.14) = 12,184.44
Pensionable pay = £12,610.88
45
Pensionable Pay
Worked hours & paid hours
Hours/weeks worked are used in the calculation of membership
Hours/weeks paid are used in the calculation of the pensionable pay
Grossed/scaled up to whole time equivalent
Not as straight forward as it might appear!
46
Pensionable Pay
47
Pensionable Pay
SICK LEAVE
If a member is absent on sick leave he/she is treated for pension purposes
as having received full normal pay.
Where the member works non-cyclical fluctuating hours an average from a
previous period can used or a comparison made with another member
employed in a comparable employment.
Basic roster hours reduce the level of pension benefits and will not be
accepted.
48
Pensionable Pay
Authorised leave
Reserved forces
Maternity, paternity or adoption leave
Sickness leave
Final pay based on what would have been paid if not been
absent
Authorised Leave
Period of leave without pay after first 30 days
Regulation 9 (4) – scaled up pay
49
Pensionable Pay
Authorised leave
Mr Fickle chooses not to pay contributions for the period 1/10/2008
to 30/11/2008 and leaves on 30/04/2009. Whilst the employee is a
member throughout the whole of the final year, they are only entitled
to count as active membership 304 days of the last year. So as per
regulation 9 (4) the final pay must be scaled-up.
Pay 01/05/2008 £16,500.00 no changes
01/05/2008 to 30/09/2008 153/365 x 16,500.00 = £ 6,916.44
01/10/2008 to 30/11/2008 (61 days for which no contributions were
paid)
01/12/2008 to 30/04/2009 151/365 x 16,500.00 = £ 6,826.03
= £13,742.47
Pay = £13,742.47 x 365/304 = £16,500.00
50
Pensionable Pay
Authorised leave
Same scenario, but Mr Fickle’s rates of pay were:
Pay 01/05/2008 £14,100.00
01/12/2008 £15,500.00
01/01/2009 £16,500.00
01/05/2008 to 30/09/2008 153/365 x 14,100.00 = £ 5,910.41
01/10/2008 to 30/11/2008 (61 days for which no contributions were paid)
01/12/2008 to 31/12/2008 31/365 x 15,500.00 = £ 1,316.44
01/01/2009 to 30/04/2009 120/365 x 16,500.00 = £ 5,424.66
= £12,651.51
Pay = £12,651.51 x 365/304 = £15,190.14
51
Pensionable Pay
Authorised leave – maternity leave
Mrs Fickle goes on maternity leave, doesn’t return to work or pay the
contributions for the period of unpaid additional maternity leave (unpaid
leave commenced 30/01/2009 and her date of leaving was 30/04/2009
Pay 01/05/2008 £14,100.00
01/10/2008 £15,500.00
01/01/2009 £16,500.00
01/05/2008 to 30/09/2008 153/365 x 14,100.00 = £ 5,910.41
01/10/2008 to 31/12/2008 92/365 x 15,500.00 = £ 3,906.85
01/01/2009 to 29/01/2009 29/365 x 16,500.00 = £ 1,310.95
= £11,128.21
Pay = £11,128.21 x 365/274 = £14,824.08
52
Pensionable Pay
Authorised leave – strike break
Mr Prentis goes on strike and doesn’t elect to pay the contributions on
16 and 17 July 2009, then leaves on 30/09/2009
Pay
01/10/2008 £20,000.00
01/04/2009 £22,000.00
01/10/2008 to 31/03/2009 182/365 x 20,000.00 = £ 9,972.60
01/04/2009 to 30/09/2009 183/365 x 22,000.00 = £11,030.14
Less pay lost on strike 2/260 x 22,000.00
= £ 169.23
= £20,833.51
Pay = £20,833.51 x 365/363 = £20,948.30
Grossing-up the pay by 365 when the pay that is lost through the strike
53
is calculated on 260ths will always cause an anomaly.
Pensionable Pay
Workshop 5
Calculate the pensionable pay for the following employee:
Leaving Date 30.4.2011 Member had unpaid strike periods of 16 &
17 July 2010 and 16 & 17 October 2010
Pay Details: 01.05.2010
£15,723.00
01.06.2010
£16,194.00
01.09.2010
£16,719.00
54
Pensionable Pay
Workshop 5
Calculate the pensionable pay for the following employee: Leaving Date 30.4.2011
Member had unpaid strike periods of 16 & 17 July 2010 and 16 & 17 October 2010
Pay Details: 01.05.2010 £15,723.00
01.06.2010
£16,194.00
01.09.2010
£16,719.00
01.05.2010-31.05.2010 = 31/365 x 15,723.00 = 1,335.38
01.06.2010-31.08.2010 = 92/365 x 16,194.00 = 4,081.78
01.09.2010-30.04.2011 = 242/365 x 16,719.00 = 11,084.93
16,502.09
Less pay lost on strike 2/260 x 16,194.00
=
124.57
Less pay lost on strike 2/260 x 16,719.00
=
128.61
253.18
Total
= 16,248.91
Pensionable pay = 16,248.91 x 365/361 = 16,428.95
55
Pensionable Pay
Workshop 5
Do Not Do:
31/361 x 15,723.00 = 1,350.17
90/361 x 16,194.00 = 4,037.29
240/361 x 16,719.00 = 11,115.12
= 16,502.58
or
31/365 x 15,723.00 = 1,335.38
90/365 x 15,723.00 = 3,993.04
240/365 x 16,719.00 = 10,993.32
= 16,321.74
56
What happens if?
57
Final Pay
On or before 31/03/08
On or after 1/4/08
Best of the last 3 years
rule ending with the
anniversary ceases
Best of the last 3 years
rule ending with the
anniversary ceases
3 year period covers all
local government
employment
3 year period covers
current employer only
(unless the member
has aggregated their
membership)
58
Final Pay reductions Pre 08
Protection applies if, otherwise than by virtue of a member’s own
circumstances• his/her rate of pay is reduced, or
• the rate at which it may be increased is restricted in such a way
that it is likely that the rate of their retirement pension will be
adversely affected, AND
• a certificate of protection of pensionable pay has been issued.
(A certificate can only be issued where the reduction or restriction in
pay is enforced)
59
Final Pay reductions Pre 08
Protection does not apply where –
• a member takes a voluntary or temporary reduction in pay; or
• they are returning to their normal post after a temporary promotion;
or
• they are simply reducing their working hours or weeks (and the
whole time equivalent pay remains unchanged).
60
Final Pay reductions Pre 08
•
Must leave within 10 years of date of reduction/restriction
•
Pay can beBest single year in the last 5, OR
Annual average of any consecutive 3 year period in the last 13 years
•
Always ending with anniversary of date of leaving
•
After allowing for PI – spreadsheet
•
Certificate is transferable across employments where membership is
aggregated
61
Final Pay reductions – Post 08
Protection applies where a member’s pay in a *continuous period of employment is
reduced or restricted• because the member chooses to be employed by the same employer at a lower
grade or with less responsibility;
• for the purposes of achieving equal pay in relation to other employees of that
employer;
• as a result of a job evaluation exercise;
• because a change in the member’s contract of employment resulting in the
cessation or restriction of, or reduction in, payments or benefits specified in the
member’s contract of employment as being pensionable emoluments; or
• because the rate at which the member’s rate of pay may be increased is restricted in
such a way that it is likely that the rate of the member’s retirement pension will be
adversely affected.
*unless a person has changed employers in the last 10 years in circumstances where TUPE or
the move is treated as a TUPE move applies, e.g. in a machinery of government change or
contracting out exercise
62
Final Pay reductions – Post 08
Protection does not apply where•
the reduction/restriction immediately follows a period in which the member occupies
a post on a temporary basis at a higher rate of pay; or
•
the member chooses to reduce his or her hours of work or to be employed at a lower
grade, for the purposes of flexible retirement; or
•
they are simply reducing their working hours or weeks (and the whole time
equivalent pay remains unchanged).
63
Final Pay reductions – Post 08
•
Must leave within 10 years of reduction/restriction
•
Pay can beAnnual average of any 3 consecutive years in the last
13 years
Year ending 31st March
•
Not transferable – current employer only unless TUPE
applies
64
What is the Effective Date of reduction/restriction?
• The date of the contractual change
• Even where pay is restricted or detriment is paid? YES
• Entitlement to protection - PERMANENT change to substantive
post
• Detriment (whether at 100% or on a sliding scale) is a temporary
payment
65
Deferred Benefits?
• Young members / more than 10 years away from retirement
• Changes job – issued with a new contract
• 12 months to aggregate
66
Duplication of forms – Change of job
•
•
•
•
Certificate / Notification – record on post affected by
reduction / restriction
Leavers form – calculate benefit entitlement (usually
deferred)
Starter form – create new pension record
If member chooses to aggregate (within 12mths) follow
re-employed deferred procedure.
Deferred record is reopened
The new post becomes a status 2
•
A member who keeps benefits separate my transfer any
or all benefits to another LGPS fund at a later date and
still benefit from protection
67
Axis
•
Upon receipt of certificate/notification
•
Doc Id REDINPAY
•
Enter effective date (date of reduction/restriction) on
Page1 of scheme contributions screen
•
Record any changes to hours / weeks
68
Axis Calculations
•
Benefit calculations (X/Y)
•
Final Pay – actual pay
•
Previous years pay - Use pay from spreadsheet before
PI then enter effective date (end of relevant pay period
used)
69
Scheme Documentation
•
Certification of Protection of Pensionable Pay
•
Notification of Protection of Pensionable Pay
•
Leaver / Starter forms
•
Spreadsheet
•
Employer guidance / training
70
71
Pensionable Pay
Workshop 6
Calculate the pensionable pay for the following employee:
Leaving Date 30.4.2011
Pay Details: 01.05.2008
£16,815.00
01.04.2009
£17,319.00
01.09.2009
£15,723.00
01.04.2010
£16,194.00
01.06.2010
£16,719.00
72
Pensionable Pay
Workshop 6
Calculate the pensionable pay for the following employee:
Leaving Date 30.4.2011
Pay Details: 01.05.2008
£16,815.00
01.04.2009
£17,319.00
01.09.2009
£15,723.00
01.04.2010
£16,194.00
01.06.2010
£16,719.00
2008/2009
01.05.2008 - 31.03.2009
335/365 x 16,815.00 = 15,432.95
01.04.2009 - 30.04.2009
30/365 x 17,319.00 = 1,423.48
Pensionable pay for 2008/2009
= £16,856.43
73
Pensionable Pay
Workshop 6
Calculate the pensionable pay for the following employee:
Leaving Date 30.4.2011
Pay Details: 01.05.2008
£16,815.00
01.04.2009
£17,319.00
01.09.2009
£15,723.00
01.04.2010
£16,194.00
01.06.2010
£16,719.00
2009/2010
01.05.2009 - 31.08.2009
01.09.2009 - 31.03.2010
01.04.2010 - 30.04.2010
123/365 x 17,319.00 =
212/365 x 15,723.00 =
30/365 x 16,194.00 =
Pensionable pay for 2009/2010
5,836.27
9,132.26
1,331.01
= £16,299.54
74
Pensionable Pay
Workshop 6
Calculate the pensionable pay for the following employee:
Leaving Date 30.4.2011
Pay Details: 01.05.2008
£16,815.00
01.04.2009
£17,319.00
01.09.2009
£15,723.00
01.04.2010
£16,194.00
01.06.2010
£16,719.00
2010/2011
01.05.2010 - 31.05.2010
01.06.2010 - 30.04.2011
31/365 x 16,194.00 = 1,475.38
334/365 x 16,719.00 = 15,299.03
Pensionable pay for 2010/2011
= £16,674.41
75
And finally WHAT IF?
Pay Scenarios
76
Pensionable Pay
Regulation 11 Final Pay (fees)
Average of all such fees for 3 consecutive years
Ending with the final pay period
Any sums other than fees that are for the final pay period
An employer may allow the average of such fees for any 3
consecutive years ending 31st March within the ten years
ending on the last day of membership
Returning Officers are the only employees whose
pensionable pay is calculated using fees
77
FINALLY
Evaluation Forms
G:\PensionsUnit\Training\Controls\TRAINING EVALUATION.doc
Save in
G:\PensionsUnit\Training\LG Manual\Pensionable Pay\Evaluation forms
THANKYOU
78
TEESSIDE PENSION FUND
79