Employer administration guide

Active members

Index


Leave of absence & assumed pensionable pay (APP)

Employer fact sheet – Leave of absence

Employer fact sheet – Pay

Members pay contributions on any pensionable pay they actually receive but if a member starts a period of reduced contractual pay or nil pay as a result of sickness or injury or starts child related leave (i.e. ordinary maternity, paternity or adoption leave and any paid additional maternity, paternity or adoption leave or whilst on reserve forces service leave) assumed pensionable pay needs to be applied.

Note – contributions: employers will pay contributions on the assumed pensionable pay calculated but members pay contributions on the actual pay received (if any).

You will need to calculate APP for the member and substitute APP for the actual pay on the monthly return and when you are providing cumulative pensionable pay (CPP) to calculate benefits.

General

APP does not apply during any period of unpaid additional maternity, paternity or adoption leave, treat this as unpaid leave of absence. If the member was in the 50/50 section before dropping to nil contractual pay because of sickness, move them back to the main section from the start of the next pay period (if they are still on no pay at that point).

For members with authorised unpaid leave of absence, don’t add APP to the pensionable pay cumulative for that absence. But if they decide to pay an APC to buy back the lost pension for the absence, they will need to know the APP to calculate the lost pension – don’t add it into the pensionable pay.

APP replaces notional pay for members with reduced contractual pay or nil pay as a result of sickness or injury or during relevant child related leave (i.e. ordinary maternity, paternity or adoption leave and any paid additional maternity, paternity or adoption leave) or whilst on reserve forces service leave.

Note – ordinary maternity leave: if a member is only entitled to ordinary maternity leave (first 26 weeks) and you are not paying them SMP, you still need to calculate APP for the first 26 weeks and put this on the monthly return. The member will not be entitled to additional maternity leave and will go onto no pay after the first 26 weeks until they return to work and can pay an APC to buy back the lost pension.

Calculate APP as an annual rate then apply it to the relevant period as a proportion of that rate. The relevant period starts on the date the member drops to reduced contractual pay or no pay due to sickness or injury or when the relevant child related leave or reserve forces service leave starts. The relevant period does not include the unpaid additional maternity, paternity or adoption leave.

Note – reduction in pay: any reduction in pay as a result of strike or authorised absence during the 12 weeks or 3 months period prior to the member going on to reduced contractual pay or no pay as a result of sickness, injury, child related leave or reserve forces leave should be ignored when using the pay received during the 12 weeks/3 months to calculate the assumed pensionable pay for the member.

Note – APP ceases: APP ceases to accrue when a member ceases to be absent on reduced contractual pay or nil pay as a result of sickness or injury or on ceasing relevant child related leave or on ceasing reserve forces service leave.

Example – calculating APP for a monthly-paid member

A monthly-paid member has received the following pensionable pay in the three complete months before the start of the relevant period, and you expect that APP will apply for the next six months.

  • Month 1 – £1,400
  • Month 2 – £2,500 including a £1,000 regular bonus and £100 overtime
  • Month 3 – £1,400

The annual rate of APP is (£1,400 + £1,500 + £1,400 ÷ 3) x 12 = £17,200

Remove the bonus before averaging and grossing up the calculation or it will artificially inflate the APP figure.

If (when the APP starts) you think it’s likely the member will again receive (during the

relevant period when APP will apply) the regular lump sum payment they received in the previous 12 months, add it back into the annual rate of APP after you uprate it to an annual figure.

When you decide whether the lump sum should be added back into the APP annual rate, consider if the member will be still be on APP when they next get the lump sum.

In the example, if you decide the period of APP will extend to 11 months or more and the £1,000 bonus would have been paid again within the period of APP, the amount could be added back into the assumed annual pensionable pay rate.

The calculation is (£1,400 + £1,500 + £1,400 / 3) x 12 = £17,200 + £1,000 = £18,200

Proportioning

Decide what proportion of the annual APP that you calculated needs to be added in to CPP – this will be the length of the relevant period. If the relevant period is not in complete months or weeks, proportion it for the part pay period.

Calculate this just as you would to pay somebody for a part month.

If APP applies for the period 1 May 2014 to 3 August 2014 use three complete months and three days from August.

Example – proportioning three days’ pay

For three days in August this could be:

  1. Annual rate/365 x 3
  2. Annual rate/365 x 3/31
  3. Annual rate/12 x 3/22


Absence reasons

Authorised unpaid absence

If a member goes on authorised unpaid absence they can – within 30 days of returning to work – choose to pay an APC to buy any or all of the pension lost during the absence. This is a shared cost APC – they pay one third and you pay two thirds of the cost.

If they don’t choose to pay within 30 days of returning to work, they pay the full cost of the APC contract unless you choose to contribute.

The member will contact you to request the pay lost for the period of unpaid absence. You will need to complete form absence with the pay lost and send this to the member.

The member will use the LGPS2014 modeller on the LGPS website to find out how much it will cost them to buy back the lost pension. If they decide to buy back the lost pension they will print off the application form and send it back to you with a signed copy of the absence form. You then need to arrange for the APC deductions to start or deduct a lump sum.

Members can pay an APC contract by regular payment but if they choose to pay by regular payment the amount must be more than £10 per month or £2.50 per week if it is less than this they will need to pay it as a lump sum.

Note: if a member elects to pay by lump sum this should be paid in one payment and not paid over several months.

Complete the back of the absence form and send it to us with a copy of the members application form.

You will also need to complete the Record Maintenance on the employer portalto confirm the dates covered by assumed pensionable pay and the dates not covered by assumed pensionable pay (as applicable) within 6 weeks of the date of their election.

The amount of lost pension is 1/49th of the APP for the period of unpaid leave if the member was in the main section of the scheme during this period, or 1/98th of the APP if the member was in the 50/50 section.

Any pre-existing APC/SCAPC contracts members took out after 31 March 2014 remain payable unless they end the contract.

Members can continue paying any AVC/SCAVC contract they entered into after 31 March 2014.

In LGPS2014 it’s not compulsory for members and employers to pay for the first 30 days of authorised unpaid absence.

Maternity/adoption/paternity leave

When a member is on ordinary maternity/adoption/paternity leave they pay pension contributions on the pay they get. If they’re on unpaid additional maternity/adoption/paternity leave they can – within 30 days of returning to work – choose to pay an APC to cover some or all of the lost pension. This is again a shared cost APC – they pay one third and you pay two thirds of the cost.

If they don’t choose to pay within 30 days of returning to work, they pay the full cost of the APC contract unless you choose to contribute.

The member will contact you to request the pay lost for the period of unpaid absence. You will need to complete form absence with the pay lost and send this to the member.

The member will use the LGPS2014 modeller on the LGPS website to find out how much it will cost them to buy back the lost pension. If they decide to buy back the lost pension they will print off the application form and send it back to you with a signed copy of the absence form. You then need to arrange for the APC deductions to start or deduct a lump sum.

Members can pay an APC contract by regular payment but if they choose to pay by regular payment the amount must be more than £10 per month or £2.50 per week if it is less than this they will need to pay it as a lump sum.

Note: if a member elects to pay by lump sum this should be paid in one payment and not paid over several months.

Complete the back of the absence form and send it to us with a copy of the members application form.

You will also need to complete the Record Maintenance on the employer portalto confirm the dates covered by assumed pensionable pay and the dates not covered by assumed pensionable pay (as applicable) within 6 weeks of the date of their election.

The amount of lost pension is 1/49th of the APP for the period of unpaid leave if the member was in the main section during this period, or 1/98th of the APP if the member was in the 50/50 section.

Any pre-existing APC/SCAPC contracts members entered into after 31 March 2014 remain payable unless they end the contract.

Any pre-existing AVC / SCAVC contracts entered into after 31 March 2014 remain payable unless the member – or the employer for an SCAVC – chooses to end the contract.

Members can keep paying an AVC/SCAVC contract they began after 31 March 2014 for any period of unpaid additional maternity leave.

Strike

You need to tell us of all the members that have been off on strike. You should use the strike spreadsheet

If a member is absent because they were on strike they can buy extra pension at full cost to replace the lost pension. The lost pension is 1/49th of the lost pay during the strike period if the member was in the main section or 1/98th if they were in the 50/50 section.

Note – strike APCs: members can choose to pay an APC for strike periods at any time while they are an active member. They don’t have to do it within 30 days of returning to work.

The member will contact you to request the pay lost for the period of unpaid absence. You will need to complete form absence with the pay lost and send this to the member.

The member will use the LGPS2014 modeller on the LGPS website to find out how much it will cost them to buy back the lost pension. If they decide to buy back the lost pension they will print off the application form and send it back to you with a signed copy of the absence form. You then need to arrange for the APC deductions to start or deduct a lump sum.

Members can pay an APC contract by regular payment but if they choose to pay by regular payment the amount must be more than £10 per month or £2.50 per week if it is less than this they will need to pay it as a lump sum.

Note: if a member elects to pay by lump sum this should be paid in one payment and not paid over several months.

Complete the back of the absence form and send it to us with a copy of the members application form.

Pre-existing APC/SCAPC contracts that were taken out after 31 March 2014 remain payable unless the member ends the contract.

Members can keep paying AVC/SCAVC contracts they began after 31 March 2014.

Reserve Forces Service leave (RFSL)

If a member is on RFSL the Ministry of Defence (MoD) takes employee contributions from their reservist pay. But you must calculate the APP while a reservist is on leave, and you must tell both the reservist and the MoD what the APP is and what employee and employer contribution rate to use. The MoD will then deduct employee and employer contributions and pay them directly to us.

If you continue to pay a reservist some pay when they are on RFSL there won’t be any employee or employer contributions payable on that pay, because it’s non-pensionable and contributions are payable only on the APP.

Any pre-existing APC/SCAPC/AVC/SCAVC contracts these members entered into after 31 March 2014 remain payable during any period of RFSL. You should send relevant details to the reservist to pass on to the MoD who will make deductions from their reservist pay and pay the APC/SCAPC amounts to us, and the AVC/SCAVC amounts to Scottish Widows or Prudential as appropriate.

Jury service

Treat jury service on no pay like authorised unpaid leave. Members can – within 30 days of returning to work after jury service – choose to pay an APC to buy some or all of the pension they lost while they were absent. This is a shared cost APC – they pay one third and you pay two thirds of the cost. Members can pay an age-related APC contract over time or pay a one-off lump sum.

If they don’t choose to pay within 30 days of returning to work, they pay the full cost of the APC contract unless you choose to contribute.

The member will contact you to request the pay lost for the period of unpaid absence. You will need to complete form absence with the pay lost and send this to the member.

The member will use the LGPS2014 modeller on the LGPS website to find out how much it will cost them to buy back the lost pension. If they decide to buy back the lost pension they will print off the application form and send it back to you with a signed copy of the absence form. You then need to arrange for the APC deductions to start or deduct a lump sum.

Members can pay an APC contract by regular payment but if they choose to pay by regular payment the amount must be more than £10 per month or £2.50 per week if it is less than this they will need to pay it as a lump sum.

Note: if a member elects to pay by lump sum this should be paid in one payment and not paid over several months.

Complete the back of the absence form and send it to us with a copy of the members application form.

You will also need to complete the Record Maintenance on the employer portalon the employer portal on the employer portal to confirm the dates covered by assumed pensionable pay and the dates not covered by assumed pensionable pay (as applicable) within 6 weeks of the date of their election.

The amount of lost pension is 1/49th of the APP for the period of unpaid leave if the member was in the main section of the scheme during this period, or 1/98th of the APP if the member was in the 50/50 section.

Any pre-existing APC/SCAPC contracts the member took out after 31 March 2014 remain payable unless the member ends them. The member can keep paying an AVC/SCAVC contract they began after 31 March 2014.

Unauthorised absence

If a member has a period of unauthorised leave of absence they can’t buy-back the lost pension and no employer contributions are payable. You will need to complete the Record Maintenance on the employer portal on the employer portal to confirm the day(s) absent without pay.

Sickness or injury

Members who are absent because of sickness or injury will pay contributions on the pensionable pay they get during the absence. If their contractual pay goes down, they’ll still have to pay any pre-existing APC/SCAPC contracts they entered into after 31 March 2014 unless they end the contract.

But during a period of sickness or injury on no pay, member contributions to an APC/SCAPC are deemed to have been paid.

During a period of sickness or injury on reduced contractual pay or no pay, pre-existing AVC/SCAVC contracts entered into after 31 March 2014 remain payable unless the member (or employer for a SCAVC) ends the contract.


Moving between the 50/50 and main section

Use the monthly return to tell us when members move between the main section and the 50/50 section. Tell us within six weeks of the date they choose to move.

For members in the 50/50 section deduct the contributions at half the normal rate. They’ll build up half the regular pension for those contributions.

The 50/50 option isn’t intended to replace long-term membership of the main section. Membership of the 50/50 section stops from the start of the pay period following your automatic re-enrolment date and you should move 50/50 members back to the main section, no matter what category of worker they are for the purposes of automatic enrolment.

However, members who get moved to the main section can choose to go straight back into the 50/50 section, and if they do this before you close your payroll, they can in effect have continuous 50/50 membership.

Note - employer contributions for the 50/50 section: while a member is in the 50/50 section you continue to pay the full employer contribution. Only the member pays half contributions.

Members can move between the main and 50/50 sections as often as they like but each change can only take effect from the next available pay period.

Note - concurrent employments for the 50/50 section: for concurrent employments, members can move between sections for any or all of their jobs.

You must tell members who move to the 50/50 section how the move will affect their pension benefits.

Employer factsheet – The two sections

Member factsheet – The 50/50 section

Always start new members in the main section. Once an employee is a member of the scheme they can choose to move to the 50/50 section.

You must move a 50/50 member who goes onto no pay because of sickness or injury back into the main section from the start of the next pay period if they are still on nil pay at that time.

Leave of absence and 50/50

If a member moves to the 50/50 section

  • an existing APC at full cost to the member must stop unless it’s to buy lost pension for a period of strike
  • an SCAPC contract must stop unless it’s to buy lost pension for a period of authorised unpaid leave of absence or a period of unpaid additional maternity, paternity or adoption leave in which case it continues, unless the member ends the contract.

Members pay the full rate on their additional contributions when they move to the 50/50 section and have

  • an APC to buy lost pension for a period of strike, or
  • an SCAPC to buy lost pension for authorised unpaid leave of absence or unpaid additional maternity, paternity or adoption leave.

Members in the 50/50 section can’t start paying an APC contract that’s at full cost to them unless it’s to buy lost pension for a period of strike.

They can only start paying an SCAPC contract if it’s to buy lost pension for authorised unpaid leave of absence or unpaid additional maternity, paternity or adoption leave, but they can start paying an AVC or SCAVC contract.

When members move back to the main section their existing APC contracts must continue. SCAPC contracts continue too, unless the member ends them. AVC or SCAVC contracts continue unless the member ends them.

Members in the main section can start paying

  • an APC contract at full cost to them
  • an SCAPC contract, and
  • an AVC or SCAVC contract


Paying additional pension contributions (APCs)

Employer fact sheet – Paying extra

APCs

Members can buy extra pension up to a maximum of £7,352 with an additional pension contribution, or APC, contract with or without a contribution from you. They can make a one-off payment, or pay regular extra contributions. How much it costs, and it’s a cash amount not a percentage of pay, depends on their age and how much they want to buy.

You can meet some or all of this cost if you want to.

Additional pension

You can award active members additional annual pension of up to £7,352 (less any additional annual pension you have already contributed towards or are contributing towards under an SCAPC). The maximum of £7,352 will increase each April in line with pensions increase. You can also award this to members who left because of redundancy or business efficiency, within six months of them leaving.

To award additional pension, you make a one-off contribution, which is based on the member’s age and the amount you buy.


Paying additional voluntary contributions (AVCs)

Employer fact sheet – Paying extra

AVCs

Members can pay additional voluntary contributions, or AVCs, themselves, or you can share the cost with them in a shared cost AVC, or SCAVC. The contributions will be either a cash amount or a percentage of pensionable pay. The split between employee and employer additional contributions for an SCAVC can be any proportion you agree but you can’t pay the full cost.


Change of hours

If a member changes their hours, tell us about it on the monthly return.

We’ll send a PT Hour mismatch report to the employer portal and ask you to tell us the date of the change within 10 working days. Use the Record Maintenance on the employer portal to tell us the date the hours changed or complete the PT Hour mismatch report with the date of change and send it back to us via a secure e-mail.

If they change to no fixed pattern of employment or they’re a casual member, tell us what hours they worked in the year up to 31 March.

We’ll also ask you for these details after the financial year-end on a spreadsheet.


Change of personal details (name, payroll number, job title & address)

If a member changes their name, payroll number, job title or address, tell us about it on the monthly return or you can complete the Record Maintenance on the employer portal.


Reduction in pay

From 1 April 2008, members who have their pay cut, or in certain circumstances restricted, have 10 years to choose the best average of any consecutive three years in their last 13 years of membership. This applies even for pay cuts or restrictions after 31 March 2014.

All 13 year periods end on 31 March.

Tell us about this on the reduction in pay notification form ripnot This is only for members with membership before 1 April 2014.


Reassessing contribution bands

You must reassess your members’ pay bands and contribution rates every year, in the pay period 1 April falls in.

You can review a member’s pay band and rate at any time if they have a material change in pay i.e. promotion or pay award.

If you base any of your members’ contribution rates on estimated pay figures, you may wish to regularly review their actual pensionable pay to make sure you are still using the correct rate.

When you assess or review pay bands and contribution rates, ignore reduced pensionable pay when it’s because of:

  • sickness
  • child related leave
  • RFSL, or
  • other absences.

Whenever you decide to change a band to which a member is allocated, you must as soon as is reasonably practicable notify the member of the new contribution rate that is payable and the date from which it is to be applied.

It’s your decision how you notify the member i.e. on their pay slip, but the notification must contain a statement giving the address from which further information about the decision may be obtained and you must tell the member of the right to appeal to an adjudicator (i.e. the person you have appointed to consider appeals) against the decision.

The member must do this within six months of being notified of the initial decision or longer if the adjudicator allows. You must give the member the job title and address of the adjudicator and you must also tell the member that if they are unhappy with the adjudicator’s decision they have the right to ask the pension fund within six months of the adjudicator’s decision to undertake a further review of the decision.


Automatic enrolment

An eligible jobholder, who can join the scheme but hasn’t joined, automatically becomes a member of the main section on the automatic enrolment date or automatic re-enrolment date for that employment.

These types of member can join the 50/50 section once they have been auto enrolled, and if they do it before you close your first payroll they can in effect join the 50/50 section from the start.

Tell us about these types of new members in the usual way.

When you set the contribution rate for auto-enrolled members, ignore reducedpensionable pay when it’s because of

  • sickness
  • child related leave
  • RFSL, or
  • other absences.

Once you have determined the contribution rate you must notify the member of the contribution rate to be deducted from their pensionable pay and the date from which the rate is payable.

It is your decision how you notify the member i.e. on their pay slip, but the notification must contain a statement giving the address from which further information about the decision may be obtained and you must tell the member of the right to appeal to an adjudicator (i.e. the person you have appointed to consider appeals) against the decision.

The member must do this within six months of being notified of the initial decision or longer if the adjudicator allows. You must give the member the job title and address of the adjudicator and you must also tell the member that if they are unhappy with the adjudicator’s decision they have the right to ask the pension fund within six months of the adjudicator’s decision to undertake a further review of the decision.