Employer Focus - October 2018
This bulletin from the Staffordshire Pension Fund, focuses on current issues that you should be aware of relating to the Local Government Pension Scheme (LGPS).
In this edition we look at the importance of clean and accurate pension data and preparing for the Fund's actuarial valuation which will be based on the membership data we hold on 31 March 2019.
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Fund's actuarial valuation 2019 Back to top
Completing an actuarial valuation every three year is one of the most important functions we undertake in administering the Fund. It is a statutory obligation and measures the financial position of the Fund and individual employers in terms of assets relative to its liabilities.
One of the main outputs is the individual employer contribution rates for the following 3 years.
The formal valuation will be based on the membership data at 31 March 2019. Employers need to ensure that the information the Fund holds is up to date for their own employees.
Annual employer returns 2017-2018 Back to top
The Fund has recently issued the annual benefit statements (ABS) to members of the Local Government Pension Scheme (LGPS). Crucial to the success of this legal requirement is for Fund employers to provide accurate and up to date pension returns. The information provided by the employers is then subject to a robust validation before uploading to the Fund's administration system.
As part of the validation we identify members who have left the scheme or new starters joining the scheme. However, in many cases scheme employers have not provided the leaver or new starter information previously.
If left unaddressed, as well as the member not receiving appropriate notification, it will lead to an incorrect value being placed on the employer assets and liabilities.
Consequently, we are in the process of contacting employers for additional information which will enable us to process the pension benefits. We would therefore be grateful if employers could treat this request as urgent and provide the details required. Failure to do so will result in employers being in breach of The Pension Regulator's requirements which may lead to sanctions being imposed.
In January 2019 as in previous years we will provide employers with detailed guidance notes and an annual employer return template 2018-19 to return by the third week in April.
In the meantime, to ensure the accuracy of your data and calculate your pension liabilities it is imperative that you complete the leaver and new starter forms for all cases during 2018-19 and return them to the Fund.
Why is clean and accurate data important?
Because:
- reliable and accurate data is the cornerstone of the Fund's valuation
- any error in the annual employer returns will lead to an incorrect value being placed on an employer’s assets and liabilities which ultimately feeds into your employer pension contribution rate
- Any error in the information provided for an individual would result in the members' annual benefit statements and records being permanently incorrect
- increased scrutiny from the scheme's advisory board means clean data has taken on increased significance
- the Pensions Regulator introduced code of practice 14 in April 2015. This has key requirements in relation to record-keeping that administering authorities and employers have a duty to comply with the code
- ultimately this information will be used to ensure that the right pension is paid to the right person at the right time
i-Connect is our solution to assist you with providing the Fund with timely and accurate data.
Employers submit a monthly data file and i-Connect processes the file and identifies the data to be uploaded to the pension administration system. To assist with making timely submissions, i-Connect also posts reminders to the employer ensuring returns are submitted each month.
So what are the benefits of i-Connect?
- no year-end return to complete
- reduced need to complete pension forms
- reduction in errors, therefore a reduced number of queries from the Pension Team
- reduced transfer time
- greater security of data
- better quality data - real time
- could result in a reduction in your employer contribution rate
- reduced risk of fines for non-compliance of statutory duties
- better member experience
Have you outsourced your payroll or HR function? Back to top
It is best practice to have internal controls in place to ensure that the data you submit is accurate. Where you have outsourced your payroll or HR function to a third party, the responsibility of ensuring data is sent to Staffordshire Pension Fund still lies with the LGPS employer and not the third-party provider.
If you have recently converted from an LEA school to an academy, it is important that you understand which data handling responsibilities are being transferred to you from the local authority so there are no gaps. In particular if you outsource your payroll you need to consider how your pensions administration duties with respect to the LGPS are delegated.
Unfortunately, many of our employers do not monitor their payroll and HR providers adequately and therefore not fully aware that the data is not being supplied in an accurate or timely manner.
There are also occasions where either the LGPS legislation or the administration strategy directly requires an employer to perform certain duties. Failure of the employer to meet any of these requirements constitutes a breach. This includes notification to the Fund of starters and leavers within prescribed timescales.
Persistent failure to do this and other sorts of data to the Fund may lead your organisation being reported directly to the Pensions Regulator.
If you have any queries related to data please email:
Proposed changes to the LGPS Back to top
Ministry of Housing, Communities and Local Government (MHCLG) have opened an eight-week policy consultation called LGPS: technical amendments to benefits.
The consultation document is available on the 2018 section of the consultations page on the LGPS web site.
The consultation looks at three areas:
Survivor benefits
Introducing changes to provide that pensions provided to survivors of civil partners or same sex marriages will be equal to those provided to widows or male members. The changes will be backdated to the date civil partners and same sex partners were implemented. This means that the LGPS administering authorities will need to revisit all awards made under the current rules to civil or same sex partners and pay any additional sums that are due.
Introducing a general power
This is for MHCLG to issue statutory guidance to Fund'sthat administer the LGPS locally.
Correcting an unintended error in the LGPS (amendment) regulations 2018
This is to provide for deferred members who left under the 1995 regulations to be able to take payment of their LGPS pension without the need for their former employer's consent from age 55, with the appropriate actuarial reduction.
The consultation closed at 11.45pm on 29 November 2018.
Staffordshire County Council in its capacity as the administering authority of the Staffordshire Pension Fund will consider the proposed changes. Employers may also wish to consider the changes and respond to the government's consultation.
If you require any further information or clarification, please do not hesitate to get in touch: