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LGPS Bulletin - April 2018

10 April 2018

We are pleased to introduce you to the first of our monthly LGPS newsletter that aims to help you to understand more about what is happening in the pensions industry. It includes issues that are impacting local government, as well as the ongoing changes to regulations and legislation being considered and introduced by the Government and industry regulators that affects pensions.

To read more, please select from the titles below to expand further:

Additional Voluntary Contributions (AVC) Risk Warnings

Equitable Life have advised that they will no longer disinvest member AVC funds unless a risk warning has been given (when appropriate?)

What is the impact?

The requirement is in the Disclosure of Information Regulations 2013. The duty falls to the managers of the scheme (Administering Authority) when a member is provided or has been provided with certain information about how they can access their AVC, in addition to an application form or another method of access, which enables the member to take payment of their AVC. The duty does not fall to the AVC provider.

The Secretariat are working with the Communications Working Group (CWG) on a new Freedom and Choice AVC Guide. Template letters and risk warnings were published in March.

What are the next steps?

None, information only.

Any changes required by Equiniti?

None we already issue risk warnings.

What is the impact on administration delivery?

None.

 

 

Contracted-Out reconciliations exercise – February 2018

The Secretariat issued a survey to administering authorities, this survey was to determine what stage administering authorities were with contracted-out reconciliation.

What is the impact?

Results of survey shows the administering authorities are at different stages in respect of their different types of members (e.g. active, deferred and pensioners) 

The survey results are shown on the table below. This shows the ‘worst’ and ‘best’ case scenarios. If an administering authority is at stage 4 for pensioners and 2 for actives and deferred, then the worst case is stage 2 and best is stage 4.

As shown in the table, many administering authorities are somewhat in between, as they may have completed their pensioner reconciliation but only just begun their active and deferred member reconciliation.  

What are the next steps?

Information only.

Any changes required by Equiniti?

None.

What is the impact on administration delivery?

None.

Stage

Description of stage

No. of administering authorities at this stage

Worst case

Best Case

0

Administering authority yet to start exercise

8

4

1

Compare data with HMRC data

20

13

2

Review data Inconsistencies, raise with HMRC, agree outcome

51

42

3

Rectification

9

25

4

Reconciliation complete

0

4

 

At the Technical group over and underpayments were discussed. Some authorities had already made payment of underpayments. A decision has been made by some public service schemes not reclaim any overpayments; in fact The Scottish Public Pensions Agency (SPPA) have decided the identified Guaranteed Minimum Pension (GMP) related overpayment should be converted into an ‘increased pension entitlement’ (IPE) allowing the pension to continue at its existing level. 

LGA consider there should be a central decision covering all public service schemes. There should also be a standard communication for members.

Contribution bands for 2018/2019

Pensions increased from 9 April 2018 by 3%, in line with the annual increase in CPI up to September 2017. Accordingly the draft contribution bands have been set out.

What is the impact?

The table below sets out the draft contribution bands, which came into effect on 1 April 2018. These are based on the pay bands for 2017/18 as increased by CPI figure of 3%, with the result rounded down to the nearest £100.

What are the next steps?

To make sure employers are complying with these changes.

Any changes required by Equiniti?

None.

What is the impact on administration delivery?

None.

Draft Contribution table 2018/19

Band

Actual pensionable pay for an employment

Contribution rate for that employment

 

 

Main section

50/50 section

1

Up to £14,100

5.5%

2.75%

2

£14,101 to £22,000

5.8%

2.9%

3

£22,001 to £35,700

6.5%

3.25%

4

£35,701 to £45,200

6.8%

3.4%

5

£45,201 to £63,100

8.5%

4.25%

6

£63,101 to £89,400

9.9%

4.95%

7

£89,401 to £105,200

10.5%

5.25%

8

£105,201 to £157,800

11.4%

5.7%

9

£157,801 or more

12.5%

6.25%

High Court judgement in the case of Elmes v Essex - update

In previous bulletin 166 there was an update on the Nicola Elmes versus Essex County Council.

What is the impact?

The case was heard before High Court on Tuesday 18 January 2018.  It was declared that “The requirement to nominate a person under regulations 24 and 25 of the LGPS (Benefits, Membership and Contributions) Regulations 2007 is incompatible with Article 1 of the first Protocol to, and Art 14 of, the European Convention on Human Rights and must therefore be dis-applied”.

The Ministry of Housing, Communities and Local Government (MHCLG) have confirmed they are waiting for the Judge’s reasoning to be issued, before deciding if it has an impact on LGPS regulations. Once reasoning issued, MHCLG will take a legal view on implications. 

At the technical group, It was identified that most authorities have not done anything pending receipt of MHCLG guidance. A few have identified cases that may be affected and could require further investigation and consideration.

What are the next steps?

Consider whether to await MHCLG guidance or start investigating any possible cases that may need revisiting.

Any changes required by Equiniti?

Await MHCLG guidance.

What is the impact on administration delivery?

None.

Insolvency regime for further education and sixth form colleges: technical consultation – LGA response

Bulletin 166 and 147, the LGA responded to the consultation regarding Insolvency regime for further education and sixth form colleges 

What is the impact?

LGA made the point that If an employer becomes insolvent and the fund is unable to recover the deficit the employer owed at the point of their insolvency, the liability for picking up that employer’s pension liabilities falls on other employers in the fund. As the LGPS is a public sector pension scheme whose largest employers are local authorities that will often mean that ultimately the burden falls on the local taxpayer. 

LGA want to ensure all steps are taken to prevent risk arising that pension liability of a college falls on to other employers and ultimately the tax payer. LGA would propose that the appointed education administrator has a stated responsibility to carry out their function in a way that achieves the best interests for the taxpayer. That would include doing everything possible to avoid the pensions liability falling onto other public sector employers.

What are the next steps?

None.

Any changes required by Equiniti?

Await MHCLG guidance.

What is the impact on administration delivery?

None.

The Sub-national Transport Body (transport for the North) Regulations 2018

The regulations were made on 22 January 2018 and came into force on 1 April 2018.

What is the impact?

Please see below a link to the regulations.

http://www.legislation.gov.uk/uksi/2018/103/contents/made 

Regulations establish Transport for the North as a new designating scheme employer. 

What are the next steps?

None information only.

Any changes required by Equiniti?

None.

What is the impact on administration delivery?

None.

Her Majesty's Revenue and Customs (HMRC) Countdown bulletin 32

Published on 23 February 2018 includes articles on; Termination and transfer notices, CEP and LRP refunds, Matched members not showing on SRS refreshed output, Secondary type 5 queries and Data limit for query templates for an automated solution.

What is the impact?

Please see below the link for countdown bulletin 32:

https://www.gov.uk/government/publications/countdown-bulletin-32-february-2018  

With introduction of the new state pension from 6 April 2016, pension scheme administrators no longer need to submit termination and transfer notices where the contracted out period ends or transfers after 5 April 2016.

CEP or LRP refunds due to post 5 April 2016: Transfers – HMRC are introducing a process to allow pension scheme administrators to claim a CEP or LRP refund where a post 5 April 2016 transfer of membership or liability has taken place.

What are the next steps?

None information only.

Any changes required by Equiniti?

Not submitting   termination and transfer notices where period of contracted out ends or transfers after 5 April 2016 – new process noted and implemented.

CEP or LRP refunds – new process noted and implemented. 

What is the impact on administration delivery?

None.

New Pensions Online service – User research

16 February 2018, the Secretariat forwarded an email to all administering authorities from HMRC regarding the new pension online service.

What is the impact?

HMRC explained from April 2018, they will move pension scheme registration and administration onto a new digital platform. The move to the digital platform- the ‘Pensions Online Digital Service’ is to improve service for Pension scheme administrators. 

The researcher Cay Green is looking to speak to pension scheme administrators and practitioners to help with their research. 

Please email cay.green@hmrc.gsi.gov.uk if anyone is interested.

What are the next steps?

None.

Any changes required by Equiniti?

None. 

What is the impact on administration delivery?

None.

 

HMRC Pension Schemes Newsletter 95

HMRC Published Pension Schemes Newsletter 95

What is the impact?

Administering authorities need to confirm that their details are correct and up to date on the existing pension’s online service. HMRC have started to look at pension scheme accounting and have identified some outstanding AFT charges on the existing service. Consequently, they will soon be writing to scheme administrators setting out any outstanding AFT charges.

Reporting of non-taxable benefits - HMRC are working to resolve the problem of P6 tax coding notices being issued in error for death benefit payments that are entirely non-taxable. Continue to follow the guidance given in pension schemes newsletter 78 and future newsletters will provide updates.

Postal address for Pension Schemes Services has changed. To avoid any delays, write to, or submit any forms to:

Pension Schemes Services
HM Revenue and Customs
BX9 1GH

What are the next steps?

Make sure details are correct on pension online service.

Any changes required by Equiniti?

Send HMRC forms to new address

What is the impact on administration delivery?

None.

Communications working group

Minutes of the communications working group meeting held on 30 January 2018 have now been uploaded to www.lgpsregs.org on the communications working group page.

What is the impact?

The minutes include details of what the group are currently working on including the production of a member guide to AVCs and a member FAQ on GDPR – both documents are due to be published shortly.

The FAQ on GDPR has now been released.

What are the next steps?

None.

Any changes required by Equiniti?

None

What is the impact on administration delivery?

None.

LGPS technical queries – central email address

To stop emailing LGPS team members directly and to email the central email address.

What is the impact?

Since September 2015, the Secretariat has operated a central technical query email address that stakeholders can use to raise technical queries. Users raising technical queries, are increasingly emailing LGPS team members directly. The central email address is monitored by members of the LGPS pension’s team. When members of the team are engaged in other areas of LGPS work, other team members can pick up any technical queries. Refrain from emailing team members directly with technical queries and instead use the central email address of query.lgps@local.gov.uk

What are the next steps?

Use email address provided.

Any changes required by Equiniti?

Use email address provided

What is the impact on administration delivery?

None.

Pensions Dashboard Update

On 13 February 2018, the LGPC Secretariat attended an informal discussion with The Department for Work and Pensions (DWP) and other public service pension schemes about the Pensions Dashboard.

What is the impact?

DWP conducting project to explore the options for delivering the pensions dashboard. They are seeking input and views from stakeholders. 

User research show a consensus around there being a preference for a single dashboard with single point access along with a preference for the dashboard to be government led. 

Results were published at the end of March 2018.

What are the next steps?

Await results.

Any changes required by Equiniti?

None

What is the impact on administration delivery?

None.

Public service pensions indexation and CARE revaluation 2018 – written statement

Public Service pensions increased from 9 April 2018 by 3%, CARE accrual in the new public service pension schemes that increase in line with prices, will increase in line with the annual increase in CPI up to September 2017 by 3%.

What is the impact?

21 February 2018 a written statement by the Chief Secretary to the Treasury to the House of Commons, confirmed that: 

  • Public Service pensions increased from 9 April 2018 by 3%, in line with CPI up to September 2017. Public service pensions that have been in payment for less than a year will receive a pro-rata increase. PI multiplier have been published on HMT’s website.
  • CARE accrual in the new public service pension schemes that increase in line with prices, will increase in line with the annual increase in CPI up to September 2017 by 3%, plus any increase to the index rate adjustment specified in scheme regulations from 1 April 2018. 

What are the next steps?

Await results.

Any changes required by Equiniti?

PI in process of being updated on Compendia.

What is the impact on administration delivery?

Can’t produce retirement quotes with retirement date after April 2018 until PI been completed.

GMP adjustment addendums

Indexation of GMP elements for members of public service pension schemes who will reach State Pension age (SPa) on and after 6 December 2018.

What is the impact?

Her Majesty's Treasury (HMT) confirmed the  “interim solution” implemented by the government between 6 April 2016 and 5 December 2018 will be extended to cover members of public service schemes with a GMP who reach Spa on or after 6 December 2018 and before April 2021.

What are the next steps?

None.

Any changes required by Equiniti?

None at this stage

What is the impact on administration delivery?

None.

Tell Us About a Death service

DWP are doing some work to explore how they can develop the new service ‘Tell Us About a Death’

What is the impact?

DWP are trying to explore ways to develop the new service ‘Tell Us About a Death’ (TUAAD) which will enable citizens to report a death more quickly and easily than the existing method ‘Tell Us Once’ (TUO). 

DWP are envisioning the new service TUAAD will be able to log a death on the day itself. This will allow services/payments to be suspended earlier with an informal death notification. It will ask for minimum information about the deceased to match to data already held, so the user will need to enter a lot less data and allowing only the necessary departments to receive a notification. It will provide feedback to the user, this will reduce the need to contact departments and duplicate death notifications. 

DWP are currently exploring ways to achieve this, by contacting stakeholders and current TUO users, to identify and quantify the benefits of our proposed service

What are the next steps?

None.

Any changes required by Equiniti?

None at this stage

What is the impact on administration delivery?

None.

The Finance Act 2004 (Standard Lifetime Allowance) Regulations 2018

LTA increase to £1,000,000.00.

What is the impact?

The regulations were made and came into force on 20 February 2018. The regulations increase the standard lifetime allowance from £1,000,000 to £1,030,000 for 2018/19.

What are the next steps?

None.

Any changes required by Equiniti?

Already noted and implemented.

What is the impact on administration delivery?

None.

The Pensions Regulator (TPR) – Managing service providers

22 February 2018 – TPR published a statement covering the management of service providers.

What is the impact?

The statement was published due to recent attention on companies providing outsourced services to government and industry, including pension schemes. 

The report summarises the Pension Regulator’s expectation of good practice by trustees and scheme managers on the management of service Providers, and planning for events, which could have major consequences for pension schemes, including failure of service providers.

What are the next steps?

Be aware.

Any changes required by Equiniti?

None.

What is the impact on administration delivery?

None.

 

Training

In Bulletin 166, it was mentioned that The Local Government Authority (LGA) would be issuing two short training surveys for administering authorities and employers.

What is the impact?

The two surveys are being finalised and will be sent out shortly. LGA would grateful for responses to help inform the programme going forward. 

Any training requests for the year are to be sent to training.lgps@local.gov.uk.

What are the next steps?

Complete the survey.

Any changes required by Equiniti?

None.

What is the impact on administration delivery?

None.

The wider landscape - The Occupational Pension Schemes (Employer Debt and Miscellaneous Amendments) Regulations 2018 [SI 2018/237]

On 26 February 2018, the government published its response to the consultation on the ‘Employer Debt and miscellaneous Amendments’ Regulations 2018

What is the impact?

The regulations were due to come into effect on 6 April 2018, a new option will enable employers in multi-employer pension schemes to defer the requirement to pay an employer debt on ceasing to employ an active member. 

The deferred debt arrangement will be subject to a condition that the employer retains all their previous responsibilities to the scheme.

What are the next steps?

Be aware of implications.

Any changes required by Equiniti?

None.

What is the impact on administration delivery?

None.

 

Additional Voluntary Contributions (AVC) Guide

Risk warnings for AVC guide to be published.

What is the impact?

Risk warning forms for AVC guide should now be published and available. This will include AVC auto aggregation. These relate to where AVC funds are taken under freedom of choice.

What are the next steps?

None.

Any changes required by Equiniti?

Review existing warnings to ensure they comply.

What is the impact on administration delivery?

None.

GDPR documents

As mentioned in last month’s headline document LGA requested Squire Patton Boggs to provide 3 documents.

What is the impact?

These 3 documents have been received by the LGA but they are not too happy with the notices. Queries have not yet been answered. LGA aimed for the end of March for the privacy notices and memorandum of understanding. 

What are the next steps?

Await LGA issue of documents.

Any changes required by Equiniti?

None.

What is the impact on administration delivery?

None.

GMP Increase queries

LGA are to issue guidance on GMP increases in payment.

What is the impact?

An updated ministerial direction is awaited; currently there are 2 queries with the Treasury. Once resolved there will be comprehensive guidance on how GMP’s should be increased with examples.

What are the next steps?

None.

Any changes required by Equiniti?

None.

What is the impact on administration delivery?

None.

Amendment regulations

These relate to issues identified in the 2013 regulations.

What is the impact?

The regulations are imminent; they are currently waiting ministerial review. However the exit payment aspect has been omitted. MHCLG have not confirmed exactly what will be included but it is expected that they will be almost the same as the draft copy that was on the LGA website.

What are the next steps?

Await revised Regulations.

Any changes required by Equiniti?

None.

What is the impact on administration delivery?

None.

Non club and Interfund transfers

As advised in last month’s bulletin HM Treasury has extended the period for which public service GMP will increase in line with pension increase orders for those who reached SPa between 6th December 2018 and 5th April 2021. Equalisation is expected to follow.

What is the impact?

At the technical group it was mentioned that as a result the factors for members who attain SPa after 5 December 2018 need to be revised by the Government Actuary Department (GAD) in respect of GMP. Funds should continue to use the existing factors in the interim. 

Treasury are setting up a group in 2019 to consider equalisation. 

Revised factors received 13/03/2018.

What are the next steps?

None.

Any changes required by Equiniti?

Implement revised factors.

What is the impact on administration delivery?

None.

AC >= or < GMP

HMRC used to issue forms to indicate where AC<GMP and once AC>=GMP. However since April 2016 they have advised these will no longer be issued.

What is the impact?

At the technical group it was asked what funds are doing in this regard. It was confirmed that HMRC are continuing to issue forms for those cases where they have previously done so. However not all previous cases will have had forms. The group had no real answer at this stage.

What are the next steps?

None.

Any changes required by Equiniti?

None.

What is the impact on administration delivery?

None.

Re-use of Public sector information request

A request from an American company had been received by Powys Pension Fund seeking the right to re-use all documents and information that is publically available through their website.

What is the impact?

At the technical group it was confirmed that these requests tend to be relating to investment. It was suggested that funds can say yes, but only information that is on its current website. 

In Scotland they treat as freedom of information request and pass to their legal team. 

It was advised that SI 2015/1415 gives information, but this is more to do with the council rather than the scheme.

What are the next steps?

None.

Any changes required by Equiniti?

None.

What is the impact on administration delivery?

None.

Local Pension Board request for performance statistics

What should be provided?

What is the impact?

At the technical group it was mentioned that requests are being made. In discussion it was identified that there are 2 different types of measure. The first would be on SLA’s and the second would be on statutory requirements (disclosure). 

Care should be taken as to which measure is used/required.

What are the next steps?

None.

Any changes required by Equiniti?

None.

What is the impact on administration delivery?

None.

LGA meeting with TPR

LGA met with TPR and other public service schemes.

What is the impact?

At the technical group it was mentioned that at a recent meeting, they went through draft TPR admin survey. 

It was identified that whilst data scores for other public service schemes had improved LGPS had not. 

Now TPR are doing their deep dive into LGPS to examine data, they are looking for volunteers. If they do not get sufficient they may pick on particular funds. 

It is recognised that TPR have now become far more aggressive in their approach and are not frightened to fine, name and shame. 

What are the next steps?

None.

Any changes required by Equiniti?

None.

What is the impact on administration delivery?

None.

 

The Local Government Pension Scheme Advisory Board (SAB) looking at data for General Data Protection Regulation (GDPR)

LGA met with TPR and other public service schemes.

What is the impact?

At the technical group it was confirmed that the SAB are looking to agree common and conditional data items. They are linking with the academy project to form a common data requirement. The timescale for completion is to be advised.

What are the next steps?

Await SAB decision.

Any changes required by Equiniti?

None.

What is the impact on administration delivery?

None.

For further information or to contact us:

John Kakatsos, Equiniti Relationship Manager
T +44 (0) 7436 561 610| E
john.kakatsos@equiniti.com | W equiniti.com

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