On this page you will find recent Employer Bulletins
Tiered Contribution Guidance
The Scottish Public Pensions Agency have issued a final version of tiered contribution guidance for 2022/23.
Remember that each year you must assess the pay of each of your employees who is a member of the scheme against the Guidance to allocate the appropriate percentage to be deducted in respect of contributions from 1 April. You must also tell each employee in writing what their rate will be and how to appeal if they disagree with your decision.
We’ve had a number of queries from employers regarding potential strike action and would confirm the actions to be taken in the event of strike action taking place. Strike action is classed as an unpaid unauthorised absence, so pension contributions should not be deducted for any period of strike action. Members do have the option to pay for the lost pension, and this should be done by way of an additional pension contribution (APC). No employer contributions are payable, so the member will bear the full cost of the APC.
For the purposes of this exercise only, you don’t need to return a completed APC form for each member. A spreadsheet (‘Strike Break template’) is now available in the ‘Guides and Forms’ section of Go Anywhere which can be used to tell us about members on strike and confirm whether or not they have paid for the lost pension. If the strike action covers a period of less than 10 working days, the APC must be paid as a lump sum – if the strike action lasts for longer than this, then the APC can be paid over a longer period. You should return the form at the end of the strike action.
Please get in touch if you need any further information.
We’d like to remind employers that AVC deductions must cease a month before a member’s retiral date – no contributions should be deducted in the final payment made to the member. This is to make sure that there is enough time for us to ask the AVC provider to disinvest the members AVC fund and make payment of benefits in time for the member’s retirement date. Delays in disinvesting the AVC fund can hold up payment of other benefits as we need to know the value of the member’s AVC fund so we can check the member’s annual and lifetime allowance and amount of tax-free cash that can be paid. Any AVC payments made after the member has retired will be returned to the employer.
In addition, we would remind employers that AVCs are only payable on pensionable pay. Members cannot use redundancy or other early retirement payments to make AVCs.
The Pensions Committee met on 29 September 2021. Reports presented to Committee included an update on the Fund’s Operating plan and Risk Management. You can review the Committee reports here.
Revised Funding Strategy Statement
Pensions Committee also approved two minor amendments to the Funding Strategy Statement:
• In section 5.6 ‘Contributions’ a date of 31 March was originally stated as the date to be used when assessing a member’s contributions. This has now been amended to 1 April as per Scheme regulations.
• In section 7.2 ‘Investment Strategy’, details of the Fund’s policy on employers who are deemed to be closed to new entrants was omitted from the March 2021 version of the Funding Strategy Statement in error. The Fund’s policy is unchanged and the relevant wording has now been reinstated in the section regarding the Primary Investment Strategy:
‘Any employer who does not admit any new entrants within a reasonable period is deemed to be closed to new entrants. For the purposes of this statement, a reasonable period is an inter-valuation period (i.e. three years between formal valuations of the Fund). Where an employer is deemed close, they will move to the Medium Risk strategy or Lower Risk strategy as appropriate. Any employer classed as deemed closed which takes on new staff who join the Fund will revert to the Primary Strategy with immediate effect.’
The revised version of the Funding Strategy Statement is available on our website: Funding Strategy Statement Sept 2021.
We’d remind all employers of the Special Bulletin issued on 4 October introducing the revised ill-health retirement certificate. If you have any questions please contact us.
Keep your contact details up to date
We send a newsletter to each year to the home address provided by your employer to let you know your annual pension forecast is available online. The newsletter includes information on changes to the LGPS, topical pension issues and a summary of the accounts.
To ensure that we hold the correct address for you please advise your employer of any changes to your address.
We also provide an online facility to allow you to update your details, change your nomination and model retirement benefits. You can sign or register here.
Data security: i-Connect and Go Anywhere
We’d like to take this opportunity to remind all employers that passwords for our secure portals (i-Connect and Go Anywhere) should not be shared. If you or one of your team needs access to either portal, please contact us and we will set this up for you. We regularly monitor usage of both i-Connect and Go Anywhere and we will suspend access if necessary.
We’d like to thank you for taking appropriate steps to maintain data security during periods of home-working. If you do notice anything that looks out of the ordinary when accessing the portals, please contact us and we will investigate.
Address data for new members
So that we can provide new members with important information about their membership of the Scheme, we send out a welcome letter which directs members to our online service where they can register and find other important forms for completion (such as requests to transfer previous pension rights).
To do this, and to comply with the Pension Regulator’s data quality standards, it’s important that we are provided with address data for new members when they join. For employers using the i-Connect online return or payroll extract to provide monthly contribution returns, address data is required information for new starts so no further action is required.
For employer who are currently using the conversion file, we would now ask that you provide an address file for new entrants at the same time you submit your file. A template address file is available in the ‘Guides and Forms’ section of Go Anywhere for you to use. If you have any queries about this, please contact us.
Our deadline for Year End submission was 19 April 2021. The Pensions Regulator stipulates that we must issue all active members with a benefit statement by 31 August therefore it is important that we get employer data quickly. This year all employers submitted their return by the deadline and we are now running checks on the data. Many thanks to all who supplied information and to those who are working with us to resolve any year end queries.
As part of our Year-End Process, we will shortly be calculating illustrative pension savings for scheme members for 2020/2021. For any members who are close to or have exceeded the 2020/2021 Annual Allowance threshold, to offset any unused Annual Allowance from the previous three years, we will shortly be requesting Full Time Equivalent pensionable pay information for these members. It is important that this information is provided promptly to allow us to meet our statutory deadline and for members to meet HMRC deadlines. We will upload a list of affected members to Go Anywhere and email you to advise when the list is available.
March Annual Accounting Exercise
The Fund actuary has provided FRS102 and IAS19 reports for employers who requested reports based on estimated investment returns. These have been e-mailed to your designated contact and you should contact us if you have any queries or have not received your report.
The reports based on actual investment returns are due to be issued at the end of May/start of June.
Ill-health retirement guidance
We are aware that some appeal cases have been rejected by the SPPA as the steps outlined in the ill-health guidance haven’t been followed. The SPPA intends to provide training on the ill-health guidance later this year. This will also consider how the guidance could be improved, addressing reservations and making changes as required.
In the meantime please ensure that all decision makers are aware of their responsibilities. You can find the relevant ill-health guidance here.
Contacting Lothian Pension Fund
Lothian Pension Fund staff continue to work from home and our offices are closed to visitors. Our email and online service continue to operate normally. Our online service allows you to view your pension record, run benefit estimates, upload documents, make changes to your contact and bank details as well as sending us secure messages. You can login or register for our online service, see general member information and further updates at www.lpf.org.uk. You can email us at firstname.lastname@example.org or alternatively, if you call us, please hold to leave a message including brief details of your enquiry and your telephone number and we’ll call you back within 1 working day. Please note that we will return your call from a mobile telephone number.
A new ill-health certificate has been produced in order to:
• Reflect recent regulatory changes
• Incorporate the statutory guide from the Scottish Public Pensions Agency (SPPA): ‘A Guide to ill-health retirement and early payment of deferred benefits’.
The new certificate is now available in the ‘Guides and Forms’ (‘Ill-health certificate 2021’) and you should pass a copy to your medical adviser and let them know that this document will now be used in all future cases. You can find the SPPA guide here:
LGPS(S) IHR Guide_0.pdf (pensions.gov.scot)
For each case you deal with, you should ensure that all parts of the certificate are completed – this will be helpful should you need to deal with an appeal.
If a decision is taken to retire a member on ill-health grounds, for GDPR purposes, you should only share the following parts of the document with us:
• Part A (Part A – Introductory Information only)
• Part B (IRMP’s Opinion)
• Part E (IRMP’s Certifications)
You should retain all parts of document with the member’s personal file.
Please get in touch if you need any further information.
Welcome to a special edition of our Employers’ Bulletin. In this bulletin, we’re letting you know about a change to i-connect launching early January 2022. This bulletin is being sent to all current i-connect/Go Anywhere users. Please forward to anyone else in your organisation if required.
Currently employers use Go Anywhere to upload all documents that need to be sent to the fund. From Monday 10th January 2022, all forms concerning individual employees will be uploaded via i-connect instead.
You may be familiar with i-connect already if you complete the monthly contribution return for your organisation. If you aren’t already an i-connect user and require access, please use the voting button above to let us know. We’ll set up an account for you and you’ll receive an email directly from i-connect to set up your password. We’ll contact you again after the Christmas holidays to make sure that all staff who need an account have access.
A step by step guide of the new process is attached. In summary, this new process will see you being able to search for a specific employee on the i-connect database and unlike the current process you’ll be able to see all the active pension records we hold for that individual. From there, you can select the pension record you wish to upload a document to. One immediate benefit you’ll find with the new upload process is that i-connect will show you a history of all documents uploaded to each record including the user who uploaded it and when the document was uploaded therefore giving you a much easier audit trail than the current process.
We have enhanced the templates of some of the most frequently used forms, including retiral and early leaver, so that the best of the last 3 years/certificate of protection spreadsheets are now attached to the back of the form. Blank copies of the forms can be found in the Guides and Forms folder in Go Anywhere. We recommend that you download a blank copy of any forms you need to your own drive for ease of uploading to i-connect. We will notify you if any of the forms are amended so that you can download a fresh copy.
No, there is no change to the information you currently send through i-connect every month. It’s particularly important that you still provide dates of leaving on your monthly return to ensure leavers are removed from i-connect and don’t become omitted members on your i-connect dashboard.
Depending on the type of information you send to the fund, you may need to continue to use Go Anywhere for certain documents. The new facility in i-connect is currently only for individual employee uploads so non-member specific uploads, including AB1 forms and bulk spreadsheets will still need to be uploaded to Go Anywhere. A more comprehensive list of what needs to be uploaded to Go Anywhere can be found in the Go Anywhere guide.
If you need any further information please contact us at email@example.com
Lothian Pension Fund checks members’ pension savings against the annual allowance limits every year. If pension savings exceeds the annual allowance and there is no carry-forward allowance from the previous three years, then the member will be liable to pay tax on the excess savings over the annual allowance. We must inform members who have exceeded the annual allowance by 6 October each year in line with HMRC legislation.
If a member has a tax charge because they have exceeded the standard allowance they can make a ‘Mandatory Scheme Pays Election’. The Fund and the employer have no discretion over this i.e. we must accept the member’s election and pay the tax charge in exchange for a debit to the members pension. The debit is applied when the member retires or leaves the Fund.
However, members who earn more than £200,000 (‘threshold income’) have to assess their tax liability to see if they are also affected by the additional tapered annual allowance – Lothian Pension do not carry out these calculations. The ‘taper’ reduces the Standard Annual Allowance to a minimum of £10,000.
There is discretion for administering authorities to pay some or all of an annual allowance charge on a member’s behalf in circumstances where their pension savings are not in excess of the standard Annual Allowance but are in excess of the tapered Annual Allowance. This is known as ‘Voluntary Scheme Pays’. Pensions Committee has previously agreed that ‘Voluntary Scheme Pays’ can be an option for members, on the condition that the member’s employer agrees to this.
Use of the voluntary scheme pays option does present some risk to both the employer and the Fund. This is because the tax charge payable is paid in full by the Fund and a debit is applied to the member’s pension. This means that the member’s pension will be permanently reduced. The risk arises if the member dies before the tax charge paid is recouped - the debit would not be applied to any survivor’s pension payable in the event of the member’s death.
Under the current regime, given the scheme has no discretion over the mandatory scheme pays, for any member who is affected by the taper the maximum annual risk for an employer would be a member’s additional tax charge of £13,800 based on someone in the 46% tax bracket.
For example, if a member has a pension input of £100,000 (and assuming they have no carry forward to offset this), they are over the standard annual allowance by £60,000 and this is the taxable amount. Say they were on a 46% tax rate they would have a tax charge of £27,600.
If they were subject to the Tapered Allowance, and their allowance has been reduced by the maximum to £10,000, their chargeable amount would be £90,000. The tax charge at 46% would be £41,400. As we would have to accept a mandatory scheme pays for the £27,600 charge, the amount relating to the taper is an additional £13,800 (£27,600 + £13,800 = £41,400).
If the election goes ahead, the scheme would pay the £41,400 and the members annual pension would have a debit applied. The debit amount is calculated based on factors by the Government Actuary’s Department and depends on how far away the member is from State Pension Age. For example, for a member aged 50 whose normal pension age is 67, the current actuarial factor to be used would be 10.96.
Using the above example, the scheme debit would be £41,4000 / 10.96 which is £3777.37. This would be deducted from the members annual pension amount when they retire. The reduced pension amount is payable for life. The member could decide however to settle the tax charge directly with HMRC and it would not affect their pension.
If you agree to the ‘Voluntary Scheme Pays’ option to be allowed in respect of your members, please confirm this to us in writing.
The time limit for the Fund to pay the voluntary scheme pays charge is 31 January 2022. Therefore, we need you to reply by no later than 30 September 2021 to allow us confirm to carry out the required calculations and advise members. Your response should be on headed paper and signed by a Director/other authorised signatory. Your decision on voluntary scheme pays can be amended at any time and as an employer you can decide whether to apply this to some or all members affected. Please send your response to firstname.lastname@example.org.