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EPN366 - 2014 Increase in Pensions Contributions, Fair Deal, Annual Benefit Statements, Changes to taxation - MyCSP support & Accruing Superannuation Liability Charges (ASLC's)

Audience: This Notice will be of particular interest to:

  • HR Managers and Shared Services providers

Action

  • To note the consultation on the 2014 increases to pension contributions
  • To note the information on fair deal and to contact the Schemes Executive if you are aware of any transfers in or out of staff
  • To note the support provided by MyCSP on impending tax changes
  • To arrange for the wording in annex A about annual benefit
  • statements to be put on employer intranets or circulated using other established methods.
  • To note ASLC rates

Timing: Routine

  1. 2014 Increase in Pensions Contributions
    The Cabinet Office has launched a consultation with Trades Unions on the contribution rates for April 2014/15, which will close on 29th November 2013. Whilst we are not proposing
    to consult with members directly, we have published the consultation documents on the website.
  2. We will not be making an announcement but this will allow members the opportunity to comment through the existing pensionreform@cabinet-office.gsi.gov.uk inbox.
  3. Fair Deal
    The Principal Civil Service Pension Scheme rules were amended on the 9th October to allow independent employers to participate in the pension scheme when employees experience a compulsory transfer from the Civil Service or Schedule 1 employer to employers outside the public sector. This will allow transferred staff to remain in the pension scheme following the transfer.
  4. All future compulsory transfers of staff in the Principal Civil Service Pension Scheme to employers outside the public sector should include protection of employees’ pensions by using the new Fair Deal arrangements, unless there is a compelling reason to use alternative arrangements (for example, if an outsourcing using the previous broadly comparable pension arrangements is significantly advanced). If you have any plans to outsource staff to a nonpublic sector employer which do not include plans to use new Fair Deal, you should review these transfers to ensure that the justification for not using the new Fair Deal arrangements remains strong.
  5. Further details on the HM Treasury Fair Deal guidance and consultation response can be found at https://www.gov.uk/government/publications/fair-deal-guidance. The consultation response can be found at https://www.gov.uk/government/consultations/further-consultationon- the-fair-deal-policy.
  6. If you are currently considering the transfer out of any employees where new Fair Deal may apply, please notify Cabinet Office at scheme.managementexecutive@cabinetoffice.gsi.gov.uk at the earliest opportunity, and in any case no later than 6 months before the transfer is due to take place.
  7. Further information about the scheme amendments and the Admission Agreement independent employers will have to sign to participate in the scheme. If you have any questions, please contact scheme.ManagementExecutive@cabinet-office.gsi.gov.uk
  8. Changes to pension taxation (Annual Allowance and Lifetime Allowance) – Support for Employees
    EPN 364 described how members who had pension accruals in the PCSPS which were more than the Annual Allowance in either 2011/12 or 2012/13 would receive savings statements between the 30th September and 6th October informing them they may have a tax charge to pay. A potential new service from MyCSP was described, which would offer employers a way to provide further assistance and information (though not advice) to some or
    all employees affected by changes made by HMRC to the Annual Allowance and the Lifetime Allowance. It is now confirmed that this service is going ahead.
  9. Attached to this EPN are details of the service being offered by MyCSP, including prices (as this is an additional optional service) and how to make a booking. If you are interested, or would like to know more, please contact training@mycsp.co.uk or on 01903 385717
  10. Annual Benefit Statements
    Each year MyCSP send Principal Civil Service Pension (PCSPS) members an Annual Benefit Statement telling them the value of their pension rights. ABSs currently also tell members what pension they are likely to build up if they remain in the PCSPs until ages 55, 60 and 65.
  11. The new pension scheme that is being introduced on 1 April 2015 means pension rights will be built up in a different way so the current ABS projection are not based on the correct assumptions. MyCSP is working to switch off the ABS projections but in the meantime we need to tell scheme members not to make any important decisions based on them. You need to arrange for the wording in Annex A to be circulated to your staff by your established communication method. The format of the wording can be changed but you must not amend the wording in any way.
  12. Accruing Superannuation Liability Charges (ASLC’s)
    Accruing Superannuation Liability Charges (ASLCs) are the employer contributions you pay to us, Finance Estate Management Pensions Team, every month which are credited to
    Cabinet Office: Civil Superannuation. The contributions represent the cost of the pensions building up for your employees who are members of the Civil Service pension arrangements.
  13. The table below shows the annual full-time salary used to determine the appropriate ASLC charge that you will pay for each member of the Principal Civil Service Pension Scheme. The revised salary bands take effect from 1 April 2014.
  14. You must pay us the full and correct ASLC, by the 19th calendar day of the month following the payroll date, for each scheme member. You must also send us, at the same time, a breakdown of the pension contributions that you have deducted from your employees’ salaries. An example of the breakdown of the payment that is required to be sent can be found in EPN167 and it should be emailed to csvote@cabinetoffice.x.gsi.gov.uk. Please ensure in all cases, that the total of the contributions set out in your return matches the payment made to us. The breakdown should be sent to us so we have the details by the time we receive your payment.
    Revised Salary Band (£)ASLC rate from 1 April 2014
    Band 1 22,000 and under 16.7%
    Band 2 22,001 to 44,500 18.8%
    Band 3 44,501 to 74,500 21.8%
    Band 4 74,501 and over 24.3%
    Prison Officers with reserved rights (pre-Fresh Start) 25.8%
  15. The ASLC rates themselves remain unchanged, and the mini-ASLC for the provision of risk benefits to those opting for partnership pension arrangements remains at 0.8%.
  16. There will be changes to employee contributions from April 2014, and further advice will be issued shortly.

Contacts

Enquiries regarding content please refer to Scheme Management Executive SMEemployers@cabinet-office.gsi.gov.uk