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TEESSIDE PENSION FUND

TEESSIDE PENSION FUND. Pensionable Pay Vanessa Barker Training Co-ordinator February 2015. Pensionable Pay. Pre 2014 final salary pensionable pay Post 2014 career average pensionable pay. Pensionable Pay. Pre 2014 final salary pensionable pay Pensionable or not

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TEESSIDE PENSION FUND

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  1. TEESSIDE PENSION FUND

  2. Pensionable PayVanessa BarkerTraining Co-ordinator February 2015

  3. Pensionable Pay • Pre 2014 final salary pensionable pay • Post 2014 career average pensionable pay

  4. Pensionable Pay • Pre 2014 final salary pensionable pay • Pensionable or not • Full time or part time • Reductions/restrictions • Certificates of protection • 13 year pay calculation

  5. Pensionable Pay • Post 2014 career average pensionable pay • Pensionable or not • Lump sum payments • Contractual & non-contractual overtime • Enhanced hours • Assumed pensionable pay • Cumulative pensionable pay

  6. Pensionable Pay • Actual calculation of pay • Calculation of final pay pre2014 • Calculation of final pay post 2014

  7. Pensionable Pay • Effects of periods of leave • Paid leave • Unpaid leave • Maternity leave • Additional maternity leave • Strike leave • Jury service • Reserve forces leave

  8. Pensionable Pay • Effects of periods of leave • Additional Pensions Contributions (APC) • calculator

  9. Pensionable Pay • Refunds • Under 3 months • Over 3 months • Under two years • National Insurance earnings

  10. Pensionable Pay • Pension unit forms • Starter • Variation • Estimate • early retirement/redundancy costs • purchase order box • Leaver to pension • Leaver not to pension • Strike • Maternity • Ill health

  11. Pensionable Pay • Pre 2014 final salary pensionable pay • Post 2014 career average pensionable pay • What’s pensionable? • Actual calculation of pay

  12. Pensionable Pay • Pre 2014 final salary pensionable pay • Pensionable or not • £2,500.00 Salary Yes £ 250.00 Performance-related Pay Yes £1,000.00 Cash equivalent of lease car No • £ 500.00 Contractual Overtime Yes • £ 296.75 Travelling Expenses No £ 428.75 Subsistence expenses No • £ 14.00 First Aid Allowance Yes • £ 154.25 Enhancement for weekend working Yes • £ 850.00 Non-contractual overtime No • £5,993.75

  13. Pensionable Pay (Pre 2014)

  14. Pensionable Pay • Post 2014 career average pensionable pay • Pensionable or not • £2,500.00 Salary Yes £ 250.00 Performance-related Pay Yes £1,000.00 Cash equivalent of lease car No • £ 500.00 Contractual Overtime Yes • £ 296.75 Travelling Expenses No £ 428.75 Subsistence expenses No • £ 14.00 First Aid Allowance Yes • £ 154.25 Enhancement for weekend working Yes • £ 850.00 Non-contractual overtime Yes • £5,993.75

  15. Pensionable Pay (Post 2014)

  16. Pensionable Pay

  17. Pensionable Pay (pre 2014) • Pre 2014 final salary pensionable pay • Actual calculation of pay/final pay • If the pay rates are as follows: 01/04/2014 to 31/03/2015 = £26067.00 • 01/04/2015 to 30/11/2015 = £26835.00 • 01/12/2014 to 31/03/2015 gives a number of days of 121 days • 01/04/2015 to 30/11/2015 gives a number of days of 244 days • 365 days • 01/12/2014 to 31/03/2015is121 / 365 x £26067.00 = £ 8641.39 • 01/04/2015 to 30/11/2015is 244 / 365 x £26835.00 = £17939.01 • Final salary pensionable pay£26580.40

  18. Pensionable Pay (pre 2014) • Pre 2014 final salary pensionable pay • Part time • 01/12/2014 to 31/03/2015 = £21135.41 • 01/04/2015 to 31/03/2015 = £21758.11 • shown as 30/37 • 01/12/2014 to 31/03/2015 = £26067.00 (£21135.41 / 30 hours x 37 hours) • 01/04/2015 to 30/11/2015 =£ 26835.00 (£21758.11 / 30 hours x 37 hours) • 01/12/2014 to 31/03/2015is121 / 365 x £26067.00 = £ 8641.39 • 01/04/2015 to 30/11/2015is 244 / 365 x £26835.00 = £17939.01 • Final salary pensionable pay£26580.40

  19. Pensionable Pay (pre 2014) • Pre 2014 final salary pensionable pay • Part time/term time • 01/12/2014 to 31/03/2015 = £17838.28 • 01/04/2015 to 31/03/2015 = £18363.84 • 30 hours per week for 44 weeks per year = 30 x 44/52.14 = 25.32 • shown as 25.32/37.00 • 01/12/2014 to 31/03/2015 = £26067.00 (£17838.28 /25.32 x 37) • 01/04/2015 to 30/11/2015 =£ 26835.00 (£18363.84 / 25.32 x 37) • 01/12/2014 to 31/03/2015is121 / 365 x £26067.00 = £ 8641.39 • 01/04/2015 to 30/11/2015is 244 / 365 x £26835.00 = £17939.01 • Final salary pensionable pay£26580.40

  20. Pensionable Pay • Reductions • Restrictions • Certificates of Protection • 13 year Pay Calculation

  21. Pensionable Pay (pre 2014) • Pensions built up prior to 2014 are protected • Pre 2008 protection • Protection applies if, otherwise than by virtue of a member’s own circumstances- • his/her rate of pay is reduced, or • the rate at which it may be increased is restricted in such a way that it is likely that the rate of their retirement pension will be adversely affected, AND • a certificate of protection of pensionable pay has been issued. • (A certificate could only have been issued where the reduction or restriction in pay is enforced)

  22. Pensionable Pay (pre 2014) • Pre 2008 protection • Protection did not apply where – • a member takes a voluntary or temporary reduction in pay; or • they are returning to their normal post after a temporary promotion; or • they are simply reducing their working hours or weeks (and the whole time equivalent pay remains unchanged).

  23. Pensionable Pay (pre 2014) • Pre 2008 protection • Must leave within 10 years of date of reduction/restriction • Pay can be- • Best single year in the last 5, OR • Annual average of any consecutive 3 year period in the last 13 years • Always ending with anniversary of date of leaving • After allowing for PI – spreadsheet • Certificate is transferable across employments where membership is aggregated

  24. Pensionable Pay (pre 2014) • Post 2008 protection • Protection applies where a member’s pay in a *continuous period of employment is reduced or restricted- • because the memberchooses to be employed by the same employer at a lower grade or with less responsibility; • for the purposes of achieving equal pay in relation to other employees of that employer; • as a result of a job evaluation exercise; • because a change in the member’scontract of employment resulting in the cessation or restriction of, or reduction in, payments or benefits specified in the member’s contract of employment as being pensionable emoluments; or • because the rate at which the member’s rate of pay may be increased is restricted in such a way that it is likely that the rate of the member’s retirement pension will be adversely affected. • *unless a person has changed employers in the last 10 years in circumstances where TUPE or the move is treated as a TUPE move applies, e.g. in a machinery of government change or contracting out exercise

  25. Pensionable Pay (pre 2014) • Post 2008 protection • Protection does not apply where- • the reduction/restriction immediately follows a period in which the member occupies a post on a temporary basis at a higher rate of pay; or • the member chooses to reduce his or her hours of work or to be employed at a lower grade, for the purposes of flexible retirement; or • they are simply reducing their working hours or weeks (and the whole time equivalent pay remains unchanged).

  26. Pensionable Pay (pre 2014) • Post 2008 protection • Must leave within 10 years of reduction/restriction • Pay can be- • Annual average of any 3 consecutive years in the last 13 years • Year ending 31st March • Not transferable – current employer only unless TUPE applies

  27. Pensionable Pay (pre 2014) • Pre 2008 & post 2008 protections • Spreadsheet • Password protected - penpay • Remember: • rights continue to apply even where the pay cut or restriction occurs after March 2014

  28. Pensionable Pay (post 2014) • Post 2014 career average pensionable pay • Calculation of pensionable pay is basically the same • But introduced in the CARE scheme is the ‘Career average pensionable pay’ (which is specific to a scheme year) • i.e. the member’s pay from 01/04/20?? to 31/03/20?? or the date of leaving whichever is sooner.

  29. Pensionable Pay (post 2014) • Post 2014 career average pensionable pay • 01/04/2014 = £26067.00 • 01/04/2015 = £26835.00 • Career average pensionable pay would be: • £26067.00 for 01/04/2014 to 31/03/2015 • £26835.00 for 01/04/2015 to 31/03/2016 • *career average pensionable pay is specific to a scheme year

  30. Pensionable Pay (post 2014) • Post 2014 career average pensionable pay • 01/04/2014 = £26067.00 • 01/07/2014 = £26835.00 • 01/04/2015 = £26835.00 • Career average pensionable pay would be: • 01/04/2014 to 31/03/2015 = £26643.00 • (3/12 x 26067.00 + 9/12 x 26835.00) • 01/04/2015 to 31/03/2016 = £26835.00 • *career average pensionable pay is specific to a scheme year

  31. Pensionable Pay (post 2014) • Post 2014 career average pensionable pay • 01/04/2014 = £26067.00 • 01/07/2014 = £26835.00 • 01/04/2015 = £26835.00 • member received non-contractual overtime payments of the following: • February 2015 £98.00 • March 2015 £53.00 • June 2015 £37.00 • October 2015 £74.00 • November 2015 £72.00 • Career average pensionable pay would be: • 01/04/2014 to 31/03/2015 = £26794.00 • (3/12 x £26067.00 + 9/12 x £26835.00 + £98.00 + £53.00) • 01/04/2015 to 31/03/2016 = £27018.00 • (£26835.00 + £37.00, £74.00 and £72.00)

  32. Pensionable Pay (post 2014) • Post 2014 career average pensionable pay • Career average pensionable pay for a member leaving 30/11/2015 • Career average for scheme year 1 April 2014 to 31/03/2015= £26067.00 • Plus overtime payments for the period = £ 151.00 • Career average pensionable pay for year 1/4/2014 to 31/3/2015 = £26218.00 • *Pension will have already been calculated & credited to the member’s pension account for year • Career average for scheme year 1 April 2015 to 30/11/2015 (date of leaving) • 01/04/2015 to 30/06/2015 = 3/12 x 26067.00 = 6516.75 • 01/07/2015to 30/11/2015 = 5/12 x £26835.00 = £11181.25 • Plus overtime payments for the period = £ 183.00 (37 + 74 + 72) • = £17881.00 • Career average pensionable pay for the year 1/4/2015 to 30/11/2015 = £17881.00 • If you are completing monthly returns, you should be able to just lift these figures • directly from your payrolls if the member has not had leave periods/nil/reduced pay

  33. Pensionable Pay (post 2014) • Post 2014 Assumed pensionable pay • 01/04/2014 = £26067.00 • 01/07/2014 = £26835.00 • 01/04/2015 = £26835.00 • member received non-contractual overtime payments of the following: • February 2015 = £98.00, March 2015 = £53.00, June 2015 = £37.00 • At 01/09/2015 member’s APP calculated due to pay drop for sickness • Use previous three months June 2015 = £2273.25 (1/12 x 26835.00 = 2236.25 + 37.00) • July 2015 = £2236.25 (1/12 x 26835.00) • August 2015 = £2236.25 (1/12 x 26835.00) • Total for previous three months = £6745.75 • Assumed pensionable pay = 6745.75/3 x 12 = £26983.00

  34. Pensionable Pay (post 2014) • Post 2014 Assumed pensionable pay • ** Note: member would only pay a contribution on the pay that they receive from 01/09/2015 • employer would pay a contribution on the APP they had just calculated • Weekly, fortnightly, lunar, quarterly, half yearly • Irregular pay frequencies • Calculate the average pensionable pay for the 12 complete weeks prior to the relevant period • Relevant period start date is the day the pay reduces or drops to nil • This figure is then grossed up to an annual figure • If 12 complete pay periods do not exist, an employer should use whatever number of complete periods are available and gross up to an annual figure • ** Remove any payments that are not payable every pay period (referred to as lump sums)

  35. Pensionable Pay (post 2014) • Lump Sum Payments/contractual& non-contractual overtime/enhanced hours • Month 1 = £1,400.00 • Month 2 = £2,400.00 • Month 3 = £1,400.00 • £1,400.00 + £2,400.00 + £1,400.00 = £5,200.00/3 x 12 = £20,800.00 • Annual Pay • £1,400.00 x 12 + £1,000.00 annual bonus = £17,800.00 • £1,400.00 + £1,400.00 + £1,400.00 = £4,200.00/3 x 12 = £16,800.00

  36. Pensionable Pay (post 2014) • Lump Sum Payments/contractual & non-contractual overtime/enhanced hours • Month 1 = £1,604.00 (£150.00 contractual overtime and £54.00 non- contractual) • Month 2 = £2,648.00 (£150.00 contractual overtime and £98.00 non- contractual and £1,000.00 annual bonus) • Month 3 = £1,400.00 (£150.00 contractual overtime and £32.00 non- contractual) • £1,604.00 + £1,648.00 + £1,582.00 = £4,834.00/3 x 12 = £19,336.00 • Note: Pre-2014 pensionable pay would not include the non-contractual overtime

  37. Pensionable Pay (post 2014) • Lump Sum Payments/contractual & non-contractual overtime/enhanced hours • Employee’s salary = £19317.00 plus regular enhancements of 1.83 hours per week (£370.48 per week + £18.32 enhancement) • £370.48 + £18.32 = £388.80 x 12 = £4665.60/12 x 52.14 = £20272.03 • Use actual last twelve weeks if the enhancements are irregular payments

  38. Pensionable Pay (post 2014) • Cumulative pensionable pay • total of career average pensionable pay and • assumed pensionable pay if applicable

  39. Pensionable Pay (post 2014) • Cumulative pensionable pay • 01/04/2012 = £25920.00 • 01/04/2013 = £26067.00 • 01/04/2014 = £26067.00 • 01/07/2014 = £26835.00 • 01/04/2015 = £26835.00 • member received non-contractual overtime payments of the following: • February 2015 £98.00 • March 2015 £53.00 • June 2015 £37.00 • October 2015 £74.00 • November 2015 £72.00

  40. Pensionable Pay (post 2014) • Cumulative pensionable pay • Career average pensionable pay • Current scheme year 01/04/2015 to 31/12/2015 • £26835.00/12 x 9 = 20126.25 + 37.00 + 74.00 + 72.00 = £20309.25 • Previous scheme year 01/04/2014 to 31/03/2015 • £26067.00/12 x 3 = 6516.75 • £26835.00/12 x 9 = 20126.25 + 98.00 + 53.00 = £26794.00 • Direct from payroll.

  41. Pensionable Pay (post 2014) • Cumulative pensionable pay – sick leave • 01/04/2012 = £25920.00 • 01/04/2013 = £26067.00 • 01/04/2014 = £26067.00 • 01/07/2014 = £26835.00 • 01/04/2015 = £26835.00 • member received non-contractual overtime payments of the following: • February 2015 £98.00 • March 2015 £53.00 • June 2015 £37.00

  42. Pensionable Pay (post 2014) • Cumulative pensionable pay – sick leave • At 01/09/2015 the APP is calculated • Take previous three months • June 2015 = £2273.25 (1/12 x 26835.00 = 2236.25 + 37.00) • July 2015 = £2236.25 (1/12 x 26835.00) • August 2015 = £2236.25 (1/12 x 26835.00) • Total for previous three months = £6745.75 • Assumed pensionable pay = 6745.75/3 x 12 = £26983.00

  43. Pensionable Pay (post 2014) • Cumulative pensionable pay – sick leave • Total of career average pensionable pay & APP • Current scheme year 01/04/2015 to 31/12/2015 • CAPP 01/04/2015 – 31/08/2015 26835.00/12 x 5 + 37.00 = 11218.25 • APP 01/09/2015 – 31/12/2015 26983.00/12 x 4 = 8994.33 • =£20212.58 • Previous scheme year 01/04/2014 to 31/03/2015 • £26067.00/12 x 3 = 6516.75 • £26835.00/12 x 9 = 20126.25 + 98.00 + 53.00 = £26794.00 • Direct from payroll.

  44. Pensionable Pay (post 2014) • Assumed Pensionable Pay • Nil Pay & ill health enhancements

  45. Pensionable Pay (post 2014) • Effects of periods of leave • Sick leave • Child related leave • Maternity, paternity & adoption leave • Additional paid maternity, paternity & adoption leave • Additional unpaid maternity, paternity & adoptions leave • Strike leave • Jury service • Reserve forces leave

  46. Pensionable Pay (post 2014) • Effects of periods of leave • Sick leave • Member pays on pay received • Employer pays on APP • Member will receive full pension benefits for the relevant period

  47. Pensionable Pay (post 2014) • Effects of periods of leave • Child related leave • Maternity, paternity & adoption leave • Additional paid maternity, paternity & adoption leave • Additional unpaid maternity, paternity & adoptions leave • Member pays on pay received • Employer pay on APP for paid leave • Member accrues full pension benefits for the relevant period (paid leave) • Member can purchase via APC any lost pension • 1/3rd cost to member & 2/3rds cost to employer if form returned to employer within 30 days of return to work

  48. Pensionable Pay (post 2014) • Effects of periods of leave • Strike leave • Member pays no contribution • Employer pays no contribution • Member can purchase lost pension via APC • full cost to the member

  49. Pensionable Pay (post 2014) • Effects of periods of leave • Jury service • If paid by employer during jury service, contributions paid & benefits accrue as normal • If member receives no pay from employer, member can purchase lost pension via APC

  50. Pensionable Pay (post 2014) • Effects of periods of leave • Reserve forces leave • APP calculated & dropped into the cumulative figure • No contributions deducted even if reservist is paid by the employer • APP advised to reservist & MOD, who deduct contributions from reservist & pay with their contribution direct to Teesside Pension Fund.

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