Your responsibilities when staff leave at or after pension age

Content

7.1 Introduction

Scheme pension age
Your responsibilities to classic, classic plus, premium and nuvos members
Tax relief on pension contributions
WPS Refunds
Unauthorised payments
Members retiring after 75
Members with partnership pension accounts
Your responsibilities to partnership members

7.2 Special cases

Recovery of debts from pensions
Forfeiting benefits

Introduction

Scheme pension age

7.1.1 The scheme pension age for nuvos members is currently 65.  For classic, classic plus, premium members, it is currently 60.  In alpha a members Normal Pension Age (NPA) is the later of their State Pension age (SPA) or age 65. This means if their SPA changes, their NPA may change too. Members can choose to continue to work past their scheme pension age.  The pensioner payroll pays the pension and associated benefits to members on behalf of the scheme when they leave.

7.1.2 The ‘Thinking about retirement’ booklet gives members a brief overview of what to expect when retiring. This is available to download from the Civil Service Pensions website under ‘Publications’. You can order hard copies for pre-retirement presentations directly from our printers using the order form on the ‘Guidance for employers’ section of the CSP website under ‘Forms’. Members of alpha should be directed to the alpha scheme guide.

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Your responsibilities to classic, classic plus, premium, nuvos and alpha members

7.1.3 Members who leave on or after their NPA must receive payment of their benefits as soon as possible after their last day of service. The scheme Service Standards are set out in Schedule C to the Participation Agreement (see Section 2 of this guide).

Where possible give MyCSP at least 3 months’ notice before the member’s retirement date so that they can take the appropriate action to pay the pension on time. The table below tells you what action to take when a member is approaching the scheme pension age and/or is thinking of retiring.

7.1.4 Action to take when a classic, classic plus, premium, nuvos or alpha member tells you that they are retiring.

Action

Pension payments:

If possible, give MyCSP at least 3 months’ notice of the expected retirement date so that they can take appropriate action to pay the pension on time.

Records:

You must keep any records that can affect the members’ pensions. (See Section 5.2 for details).

Data Quality:

It is your responsibility to ensure that member data provided to MyCSP is accurate and up to date to ensure that pension payments will be correct.

You must make sure that you give MyCSP sufficient information to take the necessary pensions actions to make the payment on time.

Communications with scheme members:

You must agree with MyCSP arrangements to invite members who are within 2 years of their scheme pension age to attend a pre-retirement course.

The course must include:

  • a presentation on pension matters; and
  • an opportunity for those attending to have individual discussions about their pension position.

You must arrange with MyCSP to send a benefit statement to the member in advance of attending the course.

MyCSP will give the member:

  • written information on the following as applicable:
    • arrangements for transferring their benefits to another pension scheme. (It is very important that this option is given in good time as the right to transfer is lost when pension benefits are paid)
    • a WPS refund for classic members only (including alpha members with banked classic service)
    • pension payment procedures, options for giving up all or part of the lump sum for an increase in pension;
    • taxation of pension benefits; and
    • allocation arrangements;
  • a pension application form;
  • a scheme booklet;
  • an enquiries address; and
  • a reminder to the person leaving to provide any requested documents and return the application form promptly so that benefits can be paid promptly.

7.1.5 MyCSP offers a pre-retirement engagement seminar for those members within 5 years of their intended retirement date. To find out more information regarding these sessions, including costs, please contact the MyCSP Training Team at training@mycsp.co.uk or alternatively your Service Delivery Manager.

7.1.6 Providing that they have received the necessary valid information on time, MyCSP will at least 3 weeks before the expected date of retirement give the member the following information in writing:

  • confirmation of pension benefits and the date they become payable;
  • any conditions that apply to the benefits;
  • information about the pensions increase arrangements

7.1.7 The information that MyCSP provides is based on the data you provide. Final pay figures may be different and this could affect the benefits that are actually paid.

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Tax relief on pension contributions

7.1.8 Pension contributions are subject to tax relief and these are limited. For details see the HM Revenue and Customs website www.hmrc.gov.uk

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WPS Refunds

7.1.9 All classic members contribute 1.5% of their salary towards a pension for their spouse in the possible event of their (the member’s) death. If the member never married and remains single until the point of retiring, they may be eligible to receive a refund of these contributions. (a small amount is held back in the event of the member marrying after retirement). This also applies to alpha members who have banked classic serice.

7.1.10 classic members will not receive a refund of the additional scheme contributions payable from 1 April 2012.

7.1.11 Former members who opted out of the CSP arrangements will already have had any pensions action taken at the time of opting out. Any further action will be for MyCSP.

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Unauthorised payments

Late lump sum payments

7.1.12 A pension commencement lump sum (PCLS), which could include a Widows Pension Scheme (WPS) refund and/or an additional service payment (ASP), paid 12 months after the pension is paid, is classed as an unauthorised payment.

7.1.13 An unauthorised lump sum payment will be commuted to pension or attract a tax charge. MyCSP will be responsible for calculating the pension or tax charge.

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Members retiring after 75

7.1.14 You will need to agree with MyCSP how these members will be identified and have a robust communications route agreed so that your payroll is informed at the appropriate stage. Any lump sum payment made to a member who is age 75 or over will be considered as an unauthorised payment. MyCSP will invite the member to draw their pension immediately before their 75th birthday so that they do not lose the tax free lump sum. You must stop deducting employee contributions from the member’s salary and stop paying ASLCs. There is no requirement for alpha members to claim their pension at 75.

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Members with partnership pension accounts

7.1.15 There is no scheme pension age for partnership members. And they do not have to retire to take their pension. They can take their pension at any time between their 55th and 75th birthdays.

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Your responsibilities to partnership members

7.1.16 When the member decides to leave you must tell your payroll to complete the partnership pension account ‘change of circumstances’ form and forward it to the member’s pension provider, within 1 month of the member leaving. The ‘change of circumstances’ form can be found on the Employer Forms page.

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7.2 Special cases

Recovery of debts from pensions

7.2.1 In certain circumstances, you can use retirement benefits to recover a debt that the member owes you. You should take legal advice and explore all other routes to recover the debt before approaching the Cabinet Office, The Pension Schemes Executive for authorisation. Please see Section 6 for further details.

7.2.2 You must receive authorisation from Cabinet Office, The Pension Schemes Executive to take this action.

Email your submission to: TPSEreferrals@cabinetoffice.gov.uk

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Forfeiting benefits

7.2.3 Please see Section 6, paragraph 6.1.28 onwards.

You must receive authorisation from Cabinet Office, The Pension Schemes Executive to apply forfeiture.

Email your submission to: TPSEreferrals@cabinetoffice.gov.uk

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