Welcome to the Employer Forum May 14 2013 Oaklands Hotel, Norwich
Agenda Welcome and Nicola Mark, Head of the Norfolk Pension Fund Introduction Mark Alexander, Pensions Manager, Norfolk Pension LGPS 2014 update Fund Changes to Employer Alex Younger, Investment and Actuarial Services Manager, Norfolk Pension Fund National Insurance 2013 Valuation Gemma Sefton, Hymans Robertson Introduction Questions and A.O.B. Nicola Mark, Head of the Norfolk Pension Fund Coffee will be a ‘moveable feast’!
The LGPS nationally National scheme, locally administered � Local accountability � Great diversity of membership � Great diversity of employers Quarter of largest � 100 Pension Funds in UK are LGPS The LGPS in England: � 89 Funds � 1 in 5 of the working £ 148 bn*^ � population is in the 4.3m Members* � public sector � 1.6m Active Members � � 1.3m Deferred Members � � 1.4m receiving benefits *March 2012 SF3 data; ^ Increase of 52% from March 2009 NB, Wales, Scotland and Northern Ireland data not included here
The Norfolk Pension Fund At March 2013: £2.5 billion � 173 Employers (up from 117 in March 2011; +5 � since March 2013) Membership 31 March 2012 31 March 2013 Movement Active 25,991 26,337 +346 Deferred 22,773 24,360 +1,587 Pensioners 18,796 19,843 +1,047 Totals 67,560 70,540 +2980 Norfolk Pension Fund membership equates to 1 in 10 of adult Norfolk population
The Norfolk Pension Fund Membership Average Pensions in payment: Norfolk Pension Fund - Membership January 2013: average annual pensions No. of Members in payment were: 30,000 Pension in own right: 25,000 •£5,032 (£419 per month) 20,000 15,000 Dependants pension: 10,000 •£2,667 (£222 per month) 5,000 0 31st Mar 2008 31st Mar 2009 31st Mar 2010 31st Mar 2011 31st Mar 2012 31st Mar 2013 Average pension: •£4,709 (£392 per month) Active Deferred Pensioners
The Norfolk Pension Fund Own budget � Top quartile in all � No cross subsidy performance measures � Savings remain in Fund Cost per member (CIPFA � Benchmarking Club 2012) � £18.31 Norfolk Pension Fund Contributions and Benefits 2012-13 Administration overhead � Income from contributions: � 0.086% of the value of £ 113 m the Fund (£86m employers / £27m employees) � 1.45% of benefit Investment income payments c. £100m Benefits paid: £ 112 m
LGPS2014 Update Mark Alexander Pensions Manger Norfolk Pension Fund
May 2012 – LGA and Unions Proposals for New Benefit Structure
May 2012 – LGA and Unions Proposals for New Benefit Structure
May 2012 – LGA and Unions Proposals for New Benefit Structure
Protections … Final Salary AND Career Average Underpin – for those within10 years of Final Pay ( Normal Pension Age at April 2012 20 08 definition) Actual pay Pre 2014 – Final “Salary” (2008 definition) 2014 Joining scheme Leaving/Retirement
The Long and Winding Road to Regulations 2 July/August 2012 7 M a r c h 2 0 1 3 D Initial consultations r a f t “ B e n e f i t ” a n d with employers and “ T r a n s i t i o n a l unions receive P r o v i s i o n s ” R e g u overwhelming l a t i o n s i s s u e d f o r c o support n s u l t a t i o n C l o s e s 3 / 2 4 M a y 2 0 1 3 21 December 2012 First Statutory Consultation 25 April 2013 Closed 8 February Public Service 2013 Pensions Bill became an Act
What next? Not necessarily in this order…. • Consultation on “Governance” Regulations • Final issue of “Benefits” and “Transitional” Provisions legislation • Issue of “Governance” Regulations • Results of 31 March 2013 Valuation • setting of Employer Contribution Rates from April 2014 • Communications with Scheme members and Employers • Update systems and documentation • 1 April 2014 !
What can Employers be doing now? Watch out for news about the changes www.lgps2014.org www.norfolkpensionfund.org
What can Employers be doing now? Talk to your Payroll/HR provider. Your systems will need to be able to: • Account for each job an employee has separately • Operate the scheme based on new definition of pensionable pay (e.g. including overtime) • Change contribution rates monthly • Operate the 50/50 Scheme • Provide “final pay” on the 2008 definition for leavers and at year end • Provide “assumed” pay during periods of reduced pay due to sickness etc
LGPS2014 Just 321 days to go…. Mark Alexander 01603 495781 mark.r.alexander@norfolk.gov.uk
Changes to Employer National Insurance Alex Younger Investment and Actuarial Services Manager, Norfolk Pension Fund
Changes to National Insurance and the Impact on Employer Costs � The introduction of the Single Tier State Pension (STSP) will mean the end of “contracting out” for defined benefit pension schemes (including the LGPS) � The introduction of STSP has been brought forward to 6 April 2016 � Contracting Out arrangements will therefore cease at 5 April 2016. � Additional cost pressure for employers (and employees) from 2016-17 onwards.
What is ( was ) Contracting Out? Employers pay a lower net rate of national � insurance if their employees accrue benefit in the employers own scheme rather than the State Second Pension (S2P) Achieved through a rebate mechanism � The employers rebate is 3.4% of “relevant � earnings” (RE) RE currently earnings between approximately � £5,500 and £40,000 The employees rebate is currently 1.4% of RE � Current rebate worth around £1,200 to employer � if employee earnings in excess of the upper limit on relevant earnings (around £500 to employee).
What is the impact? Negative impact for employers and employees across all � final salary public sector schemes Private defined benefit schemes are able to flex benefits � to achieve cost neutrality to employer and reflect theoretical higher level of state scheme benefits. At the current time this option has not been given to any � of the public sector schemes (including the LGPS) Very sensitive given the extended negotiations with public � sector unions over all the major schemes (not yet concluded outside LGPS) Employers need to budget for this change � from 2016-17 onwards. Increasing cost to employees may � lead to further opt out????
Questions and ‘A.o.B.’
Thank you for coming Safe journey home www.norfolkpensionfund.org
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