Transcript Pensionable Pay Presentation - Teesside Pension Fund Employer

TEESSIDE PENSION FUND
Pensionable Pay
Vanessa Barker
Training Co-ordinator
February 2015
2
Pensionable Pay
Pre 2014 final salary pensionable pay
Post 2014 career average pensionable pay
3
Pensionable Pay
Pre 2014 final salary pensionable pay
Pensionable or not
Full time or part time
Reductions/restrictions
Certificates of protection
13 year pay calculation
4
Pensionable Pay
Post 2014 career average pensionable pay
Pensionable or not
Lump sum payments
Contractual & non-contractual overtime
Enhanced hours
Assumed pensionable pay
Cumulative pensionable pay
5
Pensionable Pay
Actual calculation of pay
Calculation of final pay pre2014
Calculation of final pay post 2014
6
Pensionable Pay
Effects of periods of leave
Paid leave
Unpaid leave
Maternity leave
Additional maternity leave
Strike leave
Jury service
Reserve forces leave
7
Pensionable Pay
Effects of periods of leave
Additional Pensions Contributions (APC)
calculator
8
Pensionable Pay
Refunds
Under 3 months
Over 3 months
Under two years
National Insurance earnings
9
Pensionable Pay
Pension unit forms
Starter
Variation
Estimate
early retirement/redundancy costs
purchase order box
Leaver to pension
Leaver not to pension
Strike
Maternity
Ill health
10
Pensionable Pay
Pre 2014 final salary pensionable pay
Post 2014 career average pensionable pay
What’s pensionable?
Actual calculation of pay
11
Pensionable Pay
Pre 2014 final salary pensionable pay
Pensionable or not
£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
12
Pensionable Pay (Pre 2014)
Pay
Basic Salary
Performance related pay
Cash equivalent of a lease car
Contractual overtime
Non-contractual overtime
Travelling expenses
First aid allowance
Enhancement for weekend working
Enhancement for working nights
Sleep ins
Subsistence or allowance paid in respect of expenses incurred
Pensionable?
Yes
Yes – if contractual
No
Yes
No
No
Yes
Yes – if contractual
Yes – if contractual
Yes – if contractual
No
Payment for loss of holidays
Payment in lieu of notice to terminate contract of employment
No
No
Any award of compensation (excluding any sum representing
arrears of pay) for the purposes of achieving equal pay in
relation to other employees.
No
Detriment payment
Bonus
Honoraria payment
??
Yes – if contractual
Yes – if in lieu of duties
No - if instead of overtime
Acting up pay
Market Pay Supplement
Salary Sacrifice
CPD (Continual Professional Development)
Yes
Yes
Yes – unless for a car
Yes
13
Pensionable Pay
Post 2014 career average pensionable pay
Pensionable or not
£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
Yes
14
Pensionable Pay (Post 2014)
Pay
Basic Salary
Performance related pay
Cash equivalent of a lease car
Contractual overtime
Non-contractual overtime
Travelling expenses
First aid allowance
Enhancement for weekend working
Enhancement for working nights
Sleep ins
Subsistence or allowance paid in respect of expenses incurred
Pensionable?
Yes
Yes
No
Yes
Yes
No
Yes
Yes
Yes
Yes
No
Payment for loss of holidays
Payment in lieu of notice to terminate contract of employment
No
No
Any award of compensation (excluding any sum representing
arrears of pay) for the purposes of achieving equal pay in
relation to other employees.
No
Detriment payment
Bonus
Honoraria payment
Acting up pay
Market Pay Supplement
Salary Sacrifice
CPD (Continual Professional Development)
Yes
Yes
Yes
Yes
Yes
Yes – unless for a car
Yes
15
Pensionable Pay
2008
2014
(1) An employee's pensionable pay is the total of-
(1) Subject to regulation 21 (assumed pensionable pay), an employee's
pensionable pay is the total of-
(a) all the salary, wages, fees and other payments paid to him for his own use in
respect of his employment; and
(a) all the salary, wages, fees and other payments paid to the employee, and
(b) any other payment or benefit specified in his contract of employment as
being a pensionable emolument.
(b) any benefit specified in the employee's contract of employment as being a
pensionable emolument.
(2) But an employee's pensionable pay does not include-
(2) But an employee's pensionable pay does not include-
(a) payments for non-contractual overtime;
(a) any sum which has not had income tax liability determined on it;
(b) any travelling, subsistence or other allowance paid in respect of expenses
incurred in relation to the employment;
(b) any travelling, subsistence or other allowance paid in respect of expenses
incurred in relation to the employment;
(c) any payment in consideration of loss of holidays;
(d) any payment in lieu of notice to terminate his contract of employment;
(c) any payment in consideration of loss of holidays;
(d) any payment in lieu of notice to terminate a contract of employment;
(e) any payment as an inducement not to terminate his employment before the
payment is made.
(e) any payment as an inducement not to terminate employment before the
payment is made;
(f) the amount of any supplement paid-
(f) any amount treated as the money value to the employee of the provision of a
motor vehicle or any amount paid in lieu of such provision;
(i) by the Environment Agency; or
(ii) to an employee whose employment is transferred on 1st April 2010, under a
staff transfer scheme, from the Learning and Skills Council for England to a
local authority or to London Councils Limited,
in recognition of the difference in contribution rates between members of the
principal civil service pension scheme and the Scheme; or
(g) any award of compensation (excluding any sum representing arrears of pay)
for the purposes of achieving equal pay in relation to other employees.
(g) any payment in consideration of loss of future pensionable payments or
benefits;
(3) No sum may be taken into account in calculating pensionable pay unless
income tax liability has been determined on it.
(h) any award of compensation (excluding any sum representing arrears of pay)
for the purpose of achieving equal pay in relation to other employees;
(4) In this regulation "local authority" has the same meaning as in regulation
16A.
(i) any payment made by the Scheme employer to a member on reserve forces
service leave;
(j) returning officer, or acting returning officer fees other than fees paid
16
Pensionable Pay (pre 2014)
Pre 2014 final salary pensionable pay
Actual calculation of pay/final pay
If the pay rates are as follows: 01/04/2014 to 31/03/2015 = £26067.00
01/04/2015 to 30/11/2015 = £26835.00
01/12/2014 to 31/03/2015 gives a number of days of 121 days
01/04/2015 to 30/11/2015 gives a number of days of 244 days
365 days
01/12/2014 to 31/03/2015 is 121 / 365 x £26067.00 = £ 8641.39
01/04/2015 to 30/11/2015 is 244 / 365 x £26835.00 = £17939.01
Final salary pensionable pay
£26580.40
17
Pensionable Pay (pre 2014)
Pre 2014 final salary pensionable pay
Part time
01/12/2014 to 31/03/2015 = £21135.41
01/04/2015 to 31/03/2015 = £21758.11
shown as 30/37
01/12/2014 to 31/03/2015 = £26067.00 (£21135.41 / 30 hours x 37 hours)
01/04/2015 to 30/11/2015 =£ 26835.00 (£21758.11 / 30 hours x 37 hours)
01/12/2014 to 31/03/2015 is 121 / 365 x £26067.00 = £ 8641.39
01/04/2015 to 30/11/2015 is 244 / 365 x £26835.00 = £17939.01
Final salary pensionable pay
£26580.40
18
Pensionable Pay (pre 2014)
Pre 2014 final salary pensionable pay
Part time/term time
01/12/2014 to 31/03/2015 = £17838.28
01/04/2015 to 31/03/2015 = £18363.84
30 hours per week for 44 weeks per year = 30 x 44/52.14 = 25.32
shown as 25.32/37.00
01/12/2014 to 31/03/2015 = £26067.00 (£17838.28 /25.32 x 37)
01/04/2015 to 30/11/2015 =£ 26835.00 (£18363.84 / 25.32 x 37)
01/12/2014 to 31/03/2015 is 121 / 365 x £26067.00 = £ 8641.39
01/04/2015 to 30/11/2015 is 244 / 365 x £26835.00 = £17939.01
Final salary pensionable pay
£26580.40
19
Pensionable Pay
Reductions
Restrictions
Certificates of Protection
13 year Pay Calculation
20
Pensionable Pay (pre 2014)
Pensions built up prior to 2014 are protected
Pre 2008 protection
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 could only have been issued where the reduction or
restriction in pay is enforced)
21
Pensionable Pay (pre 2014)
Pre 2008 protection
Protection did 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).
22
Pensionable Pay (pre 2014)
Pre 2008 protection
•
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
23
Pensionable Pay (pre 2014)
Post 2008 protection
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
24
Pensionable Pay (pre 2014)
Post 2008 protection
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).
25
Pensionable Pay (pre 2014)
Post 2008 protection
•
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
26
Pensionable Pay (pre 2014)
Pre 2008 & post 2008 protections
•
Spreadsheet
•
Password protected - penpay
Remember:
rights continue to apply even where the pay cut or
restriction occurs after March 2014
27
Pensionable Pay (post 2014)
Post 2014 career average pensionable pay
Calculation of pensionable pay is basically the
same
But introduced in the CARE scheme is the
‘Career average pensionable pay’ (which is
specific to a scheme year)
i.e. the member’s pay from 01/04/20?? to
31/03/20?? or the date of leaving whichever is
sooner.
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Pensionable Pay (post 2014)
Post 2014 career average pensionable pay
01/04/2014 = £26067.00
01/04/2015 = £26835.00
Career average pensionable pay would be:
£26067.00 for 01/04/2014 to 31/03/2015
£26835.00 for 01/04/2015 to 31/03/2016
*career average pensionable pay is specific to a scheme year
29
Pensionable Pay (post 2014)
Post 2014 career average pensionable pay
01/04/2014 = £26067.00
01/07/2014 = £26835.00
01/04/2015 = £26835.00
Career average pensionable pay would be:
01/04/2014 to 31/03/2015 = £26643.00
(3/12 x 26067.00 + 9/12 x 26835.00)
01/04/2015 to 31/03/2016 = £26835.00
*career average pensionable pay is specific to a scheme year
30
Pensionable Pay (post 2014)
Post 2014 career average pensionable pay
01/04/2014 = £26067.00
01/07/2014 = £26835.00
01/04/2015 = £26835.00
member received non-contractual overtime payments of the following:
February 2015
£98.00
March 2015
£53.00
June 2015
£37.00
October 2015
£74.00
November 2015
£72.00
Career average pensionable pay would be:
01/04/2014 to 31/03/2015 = £26794.00
(3/12 x £26067.00 + 9/12 x £26835.00 + £98.00 + £53.00)
01/04/2015 to 31/03/2016 = £27018.00
(£26835.00 + £37.00, £74.00 and £72.00)
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Pensionable Pay (post 2014)
Post 2014 career average pensionable pay
Career average pensionable pay for a member leaving 30/11/2015
Career average for scheme year 1 April 2014 to 31/03/2015
= £26067.00
Plus overtime payments for the period
= £ 151.00
Career average pensionable pay for year 1/4/2014 to 31/3/2015 = £26218.00
*Pension will have already been calculated & credited to the member’s pension
account for year
Career average for scheme year 1 April 2015 to 30/11/2015 (date of leaving)
01/04/2015 to 30/06/2015 = 3/12 x 26067.00 = 6516.75
01/07/2015 to 30/11/2015 = 5/12 x £26835.00 = £11181.25
Plus overtime payments for the period
= £ 183.00 (37 + 74 + 72)
= £17881.00
Career average pensionable pay for the year 1/4/2015 to 30/11/2015 = £17881.00
If you are completing monthly returns, you should be able to just lift these figures
directly from your payrolls if the member has not had leave periods/nil/reduced pay
32
Pensionable Pay (post 2014)
Post 2014 Assumed pensionable pay
01/04/2014 = £26067.00
01/07/2014 = £26835.00
01/04/2015 = £26835.00
member received non-contractual overtime payments of the following:
February 2015 = £98.00, March 2015 = £53.00, June 2015 = £37.00
At 01/09/2015 member’s APP calculated due to pay drop for sickness
Use previous three months June 2015 = £2273.25 (1/12 x 26835.00 = 2236.25 + 37.00)
July 2015
= £2236.25 (1/12 x 26835.00)
August 2015 = £2236.25 (1/12 x 26835.00)
Total for previous three months
= £6745.75
Assumed pensionable pay = 6745.75/3 x 12 = £26983.00
33
Pensionable Pay (post 2014)
Post 2014 Assumed pensionable pay
** Note: member would only pay a contribution on the pay that they receive from 01/09/2015
employer would pay a contribution on the APP they had just calculated
Weekly, fortnightly, lunar, quarterly, half yearly
Irregular pay frequencies
Calculate the average pensionable pay for the 12 complete weeks prior to the relevant
period
Relevant period start date is the day the pay reduces or drops to nil
This figure is then grossed up to an annual figure
If 12 complete pay periods do not exist, an employer should use whatever number of
complete periods are available and gross up to an annual figure
** Remove any payments that are not payable every pay period (referred to as lump sums)
34
Pensionable Pay (post 2014)
Lump Sum Payments/contractual & non-contractual overtime/enhanced hours
Month 1 = £1,400.00
Month 2 = £2,400.00
Month 3 = £1,400.00
£1,400.00 + £2,400.00 + £1,400.00 = £5,200.00/3 x 12 = £20,800.00
Annual Pay
£1,400.00 x 12 + £1,000.00 annual bonus = £17,800.00
£1,400.00 + £1,400.00 + £1,400.00 = £4,200.00/3 x 12 = £16,800.00
35
Pensionable Pay (post 2014)
Lump Sum Payments/contractual & non-contractual overtime/enhanced hours
Month 1 = £1,604.00 (£150.00 contractual overtime and £54.00 noncontractual)
Month 2 = £2,648.00 (£150.00 contractual overtime and £98.00 noncontractual and £1,000.00 annual bonus)
Month 3 = £1,400.00 (£150.00 contractual overtime and £32.00 noncontractual)
£1,604.00 + £1,648.00 + £1,582.00 = £4,834.00/3 x 12 = £19,336.00
Note: Pre-2014 pensionable pay would not include the non-contractual overtime
36
Pensionable Pay (post 2014)
Lump Sum Payments/contractual & non-contractual overtime/enhanced hours
Employee’s salary = £19317.00 plus regular enhancements of 1.83 hours
per week (£370.48 per week + £18.32 enhancement)
£370.48 + £18.32 = £388.80 x 12 = £4665.60/12 x 52.14 = £20272.03
Use actual last twelve weeks if the enhancements are irregular payments
37
Pensionable Pay (post 2014)
Cumulative pensionable pay
total of career average pensionable pay and
assumed pensionable pay if applicable
38
Pensionable Pay (post 2014)
Cumulative pensionable pay
01/04/2012 = £25920.00
01/04/2013 = £26067.00
01/04/2014 = £26067.00
01/07/2014 = £26835.00
01/04/2015 = £26835.00
member received non-contractual overtime payments of the following:
February 2015
£98.00
March 2015
£53.00
June 2015
£37.00
October 2015
£74.00
November 2015
£72.00
39
Pensionable Pay (post 2014)
Cumulative pensionable pay
Career average pensionable pay
Current scheme year 01/04/2015 to 31/12/2015
£26835.00/12 x 9 = 20126.25 + 37.00 + 74.00 + 72.00 = £20309.25
Previous scheme year 01/04/2014 to 31/03/2015
£26067.00/12 x 3 = 6516.75
£26835.00/12 x 9 = 20126.25 + 98.00 + 53.00 = £26794.00
Direct from payroll.
40
Pensionable Pay (post 2014)
Cumulative pensionable pay – sick leave
01/04/2012 = £25920.00
01/04/2013 = £26067.00
01/04/2014 = £26067.00
01/07/2014 = £26835.00
01/04/2015 = £26835.00
member received non-contractual overtime payments of the following:
February 2015
£98.00
March 2015
£53.00
June 2015
£37.00
41
Pensionable Pay (post 2014)
Cumulative pensionable pay – sick leave
At 01/09/2015 the APP is calculated
Take previous three months
June 2015 = £2273.25 (1/12 x 26835.00 = 2236.25 + 37.00)
July 2015
= £2236.25 (1/12 x 26835.00)
August 2015 = £2236.25 (1/12 x 26835.00)
Total for previous three months
= £6745.75
Assumed pensionable pay
= 6745.75/3 x 12 = £26983.00
42
Pensionable Pay (post 2014)
Cumulative pensionable pay – sick leave
Total of career average pensionable pay & APP
Current scheme year 01/04/2015 to 31/12/2015
CAPP 01/04/2015 – 31/08/2015 26835.00/12 x 5 + 37.00 = 11218.25
APP 01/09/2015 – 31/12/2015 26983.00/12 x 4
= 8994.33
=£20212.58
Previous scheme year 01/04/2014 to 31/03/2015
£26067.00/12 x 3 = 6516.75
£26835.00/12 x 9 = 20126.25 + 98.00 + 53.00 = £26794.00
Direct from payroll.
43
Pensionable Pay (post 2014)
Assumed Pensionable Pay
Nil Pay & ill health enhancements
44
Pensionable Pay (post 2014)
Effects of periods of leave
Sick leave
Child related leave
Maternity, paternity & adoption leave
Additional paid maternity, paternity & adoption leave
Additional unpaid maternity, paternity & adoptions leave
Strike leave
Jury service
Reserve forces leave
45
Pensionable Pay (post 2014)
Effects of periods of leave
Sick leave
Member pays on pay received
Employer pays on APP
Member will receive full pension benefits for the
relevant period
46
Pensionable Pay (post 2014)
Effects of periods of leave
Child related leave
Maternity, paternity & adoption leave
Additional paid maternity, paternity & adoption leave
Additional unpaid maternity, paternity & adoptions leave
Member pays on pay received
Employer pay on APP for paid leave
Member accrues full pension benefits for the relevant
period (paid leave)
Member can purchase via APC any lost pension
1/3rd cost to member & 2/3rds cost to employer if form
returned to employer within 30 days of return to work
47
Pensionable Pay (post 2014)
Effects of periods of leave
Strike leave
Member pays no contribution
Employer pays no contribution
Member can purchase lost pension via APC
full cost to the member
48
Pensionable Pay (post 2014)
Effects of periods of leave
Jury service
If paid by employer during jury service, contributions
paid & benefits accrue as normal
If member receives no pay from employer, member
can purchase lost pension via APC
49
Pensionable Pay (post 2014)
Effects of periods of leave
Reserve forces leave
APP calculated & dropped into the cumulative figure
No contributions deducted even if reservist is paid by
the employer
APP advised to reservist & MOD, who deduct
contributions from reservist & pay with their
contribution direct to Teesside Pension Fund.
50
Pensionable Pay
Effects of periods of leave
Additional Pensions Contributions (APC)
calculator
https://apc.lgps2014.org/
51
Pensionable Pay
Refunds
Under 3 months
still in employment – refund through the payroll
ceased employment – refund by TPF
Over 3 months
refund by TPF
Contracted Out National Insurance earnings
52
Pensionable Pay
Refunds
Contracted Out National Insurance earnings
Earnings between the
‘lower earnings limit’ (LEL) and the ‘upper earnings limit’ (UEL)
on which contributions have been paid.
Lower Earnings Limit (LEL) – The minimum amount set at the beginning of
each tax year which must be earned in a pay period to qualify for a basic
retirement pension
Upper Earnings Limit (UEL) – NICs do not have to be paid by employees on
earnings over a certain amount. This maximum amount is set at the
beginning of each tax year and is about seven times the amount of the LEL.
There is no UEL for employers.
53
Pensionable Pay
Refunds
Contracted Out National Insurance earnings
UEL – Upper Earnings Limit
1c
Earnings Threshold
1b
LEL – Lower Earnings Limit
1a
1b
+
1c
Contracted Out Earnings above the LEL, up to and including the Earnings Threshold
(column 1b – P11)
Contracted Out Earnings above the Earnings Threshold, up to and including the UEL
(column 1c – P11)
You are totalling all Contracted Out Earnings from the LEL to the UEL.
54
Pensionable Pay
Pension unit forms
Reviewing
Leavers splitting into two
authorising
pay details
Completion notes will mirror training notes
55
FINALLY
Questions
Technical & Training Manager Heather Currie
Local Government Technical Co-ordinator Craig Allison
Technical & Training Section
Tel: 01642 727 030
E-mail: [email protected]
Evaluation Forms
THANKYOU
Vanessa Barker
Training Co-ordinator
February 2015
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TEESSIDE PENSION FUND
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