Employer Focus - October 2020
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).
Printable version
If you wish to print out this information, please select the document below:
My Pension Portal (MPP) - update Back to top
As mentioned in previous editions of the newsletter, this year's annual benefit statement (ABS) has not be sent to members' home addresses but is available to view via our secure online facility My Pension Portal.
During July and August, we wrote to all active members of the Staffordshire Pension Fund providing them with instructions on how they can register for My Pension Portal. Following this communication, we are very pleased to say that a significant number of pension fund members have now successfully registered to use the service.
However, we are still very keen to increase the number of pension scheme members using MPP, which allows them to view their pension details, update their records as well as producing estimates on their own pension benefits.
If you haven’t already done so, we would be grateful if employers could download the promotional material below and either place it on your notice boards, use it on your intranet site or simply cascade the e-posters through your internal email system.
Draft email
We have also provided a draft email that you may wish to cascade through your internal email system to your employees:
Following a mailshot to all members of the Local Government Pension Scheme, many members have now successfully registered to use My Pension Portal (MPP).
If you have not yet registered, you can still apply on our website for an activation code to be sent to your home address.
MPP gives you direct access to your pension record. You can update some personal details and use the in-built benefit projector to find out how much you might get when you retire. If you joined the Pension Fund before April 2020, your 2020 annual benefit statement will also be available to view on MPP.
Keep up to date with your valuable pension benefits and register for MPP, by logging on today.
The £95,000 exit payment cap - effective from 4 November 2020 Back to top
Please note: the exit cap applies to all public sector employees and employers including councils (metropolitan, county, district, borough) police and fire authorities and academies.
The legislation implementing the £95k cap on exit payments (external link to a PDF document) has now been signed and comes into force on 4 November 2020.
We understand the guidance and directions to accompany the regulations will be issued shortly. This will set out the discretionary waiver process and the position of exits agreed before 4 November 2020, where the date of leaving is after.
You will be aware that the Ministry of Housing, Communities and Local Government (MHCLG) have opened a consultation seeking views on proposals for further reforming exit payment terms. The consultation proposes changes to the LGPS regulations in order to accommodate the £95k exit payment cap. It also proposes a limit on cash severance payments and for the strain cost to be reduced by the value of any statutory redundancy payment made.
Clearly the amendments to the LGPS regulations will not be in place when the £95k exit payment cap comes into force and both HM Treasury and MHCLG are aware of the predicament this puts local government employers and LGPS administering authorities in. Again, we understand that MHCLG will be issuing a statement on this shortly. In the meantime, the scheme advisory board (SAB) is seeking legal advice, concerning the risk of challenge to LGPS administering authorities during this period.
Please note: in the period between 4 November 2020 and the date the LGPS regulations are amended:
- only exits where the cost exceeds the £95k exit payment cap will be impacted
- the statutory guidance on standard strain cost will not be effective i.e. Staffordshire Pension Fund will continue to calculate strain cost on a local basis
- the proposals in the MHCLG consultation around limiting cash severance payments, and the strain cost being reduced by the value of any statutory redundancy pay will not apply
MHCLG consultation on further reform of exit payments
In addition to the £95k exit payment cap, MHCLG has launched a consultation on changes to the Local Government Pension Scheme (LGPS) and Discretionary Compensation Regulations (external link to a PDF document). The consultation covers the required changes to compensation and pension regulations to implement both the £95k exit payment cap and the public sector exit payments further reform proposals (external link to a PDF document) issued by HMT in 2016.
The latter proposals were left to individual departments to implement rather than being via central HMT direction. At this stage there have been no proposals to implement an exit payment recovery process, which was also consulted on in 2015. The MHCLG consultation closes on 9 November 2020. Currently no other part of the public sector has any 'live' proposals to enact the further reform proposals.
Further information
To further assist employers, see the scheme advisory board's website for all the latest information on public sector exit payment cap.
Local Government Association (LGA) - employer role training Back to top
LGA have been running virtual employer role training since March. Due to the high demand, they have added three additional dates. You can book these by using the links below:
These workshops are aimed primarily at staff working for scheme employers in England and Wales who have operational responsibilities under the Local Government Pension Scheme (LGPS). Delegates do not necessarily need a thorough working knowledge of the LGPS, but some experience of the scheme and its provisions would be useful. The cost for attending is £270 plus VAT.
Please note: these are restricted to 15 delegates at each course and places will be awarded on a first come, first serve basis.
In previous communications we have kept you informed about the McCloud case and the implications for the Local Government Pension Scheme (LGPS) and additional requirement this will place on employers and the Pension Fund.
Reminder - what is the McCloud case?
When the LGPS changed from a final salary to a career average pension scheme in 2014, protections for older scheme members were introduced. Similar protections were provided in other public sector pension schemes.
However, the Court of Appeal ruled that younger members of the judges' and firefighters' pension schemes have been discriminated against because the protections do not apply to them.
Following this judgement, the government has confirmed that there will be changes to all main public sector schemes, including the LGPS, to remove this age discrimination. This ruling is often called the 'McCloud judgment'.
Employer actions
As previously advised, we require all employers to retain hour changes and salary details for all employees, past and present who were members of the LGPS on the 1 April 2014. This must include the contractual hours per week, the effective date and the pensionable earnings during that period. Employers will also be required to record breaks in service due to authorised unpaid absence.
At this stage we do not require employers to submit the additional information to the Fund. However, in the meantime you should identify where you will be able to obtain the required data going back to 1 April 2014, especially if your organisation has changed payroll providers during this period. If so, you should contact your former payroll provider about obtaining this data if you don’t currently hold it.
Next steps
Both employers and the LGPS Funds should not underestimate the considerable work involved to rectify members records and the administration burden this will place on resources.
Key to a successful outcome of this exercise is that the Fund and employers work together closely and in partnership. The first step in this project is to establish key employer contacts for Fund officers to liaise with. This person would ideally be in position of responsibility from within your HR or Internal Payroll Team.
Please note: this is an employer responsibility and whilst you may delegate the collection of data to a third-party payroll provider. The key employer contact who we liaise with must be employed from within your organisation.
We would be grateful if you could nominate a person from within your organisation and provide the following details to pensions.comms@staffordshire.gov.uk
- phone number and/or works mobile
Important - data uploading
We are currently working with our software provider to establish a solution to load the missing historic data to the Fund's administration system. We will therefore contact you again setting out details of how the data should be uploaded once these are available.
As mentioned earlier at this stage we do not require employers to submit this additional information to the Fund. However, it is vitally important all employers maintain the employee contractual hours history which will be required by the Fund in the very near future.
Further information
To further assist employers the following link takes you to the scheme advisory board website which contains all the latest information on the McCloud judgement including questions and answers outlining the possible outcomes as well as the consultation document.
We look forward to receiving the contact details of the representative from within your organisation. In the meantime, should you have any queries you can contact us.
Government confirms intention to increase minimum pension age Back to top
In an answer to a parliamentary question on 3 September 2020, the government confirmed that it still plans to increase the minimum pension age from 55 to 57 in 2028 and will legislate in due course.
The government confirmed in 2014 in its response to the consultation 'Freedom and Choice in Pensions' that it intends to increase the minimum age from 55 to 57 in 2028 and that the change will apply to all schemes, besides those in the public sector that do not link their normal pension age to the state pension age, namely firefighters, police and the armed forces.
If you require any further information or clarification, please do not hesitate to get in touch: