This notice will be of particular interest to:
- Pension leads
- HR Managers;
- Finance Managers; and
- Any staff connected with paying employer pension contributions to the external partnership pension providers.
Ensure that your payroll provider is prepared for the planned employer pension contribution increases from October 2015. In particular, you need to:
- ensure your payroll provider is prepared for expanded eligibility
- ensure your financial forecasts take account of the contribution increases
- prepare for a possible increase in switching requests, due to the expanded eligibility.
- Changes to partnership
Cabinet Office has recently published a response to the consultation held in 2014 about the future of defined contribution Civil Service Pensions arrangements. The consultation response is available here.
- There are two main changes that employers need to be aware of. These are:
- higher employer contribution rates, and
- expanded eligibility to join partnership.
- Higher employer contribution rates
The table below shows the current employer contribution rates and the contribution rates which will apply from 1 October 2015. Note the existing arrangement that employers will match up to 3% of member contributions will continue.
Table 1: Employer and employee contribution rates, current and from 1st October 2015
Age band Current employer contributions (no mandatory employee contributions) Employer contributions from October 2015 (no mandatory employee contributions) Voluntary employee contributions (matched by employer) 20 and under 3.0% 8.0% Unlimited, up to 3.0% matched by employer 21-25 4.5% 8.0% Unlimited, up to 3.0% matched by employer 26-30 6.5% 8.0% Unlimited, up to 3.0% matched by employer 31-35 8.0% 9.0% Unlimited, up to 3.0% matched by employer 36-40 10.0% 11.0% Unlimited, up to 3.0% matched by employer 41-45 11.5% 13.5% Unlimited, up to 3.0% matched by employer 46 and over 12.5% 14.75% Unlimited, up to 3.0% matched by employer
From 1 October eligibility will be expanded. Currently only those who joined on or after 1 October 2002 are eligible to participate. Eligibility will be expanded to include those who joined on or after October 1 2002, or any members who are eligible to participate in alpha.
This will mean only those with protection to remain in their existing pension scheme after 1 April 2015, and who also joined prior to October 2002, will not be eligible. The vast majority of those not eligible to participate in partnership after October 2015 will be protected classic members.
The other change you may need to prepare for is the removal of the earnings cap, although this will affect few (if any) of your partnership members.
We suggest you review the consultation response, particularly the summary of policy changes, to see if there are any other changes that you may need to make in advance of October 2015.
If you have a question about the distribution of EPNs contact email@example.com.
This notice is for employers and should not be issued to scheme members.
If members have a question about their pension they can find information on this website or by contacting MyCSP.