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EPN454 - Change in actuarial factors

Effect on:

1. Timetable for production of remuneration reports

2. Calculation of Compensation In Lieu of Notice (CILON)

3. Transfer value calculations for staff


Audience:

This notice will be of particular interest to:

  • Pension Leads and HR Managers
  • Finance Directors and Managers

Action:

  • Note the implications of the change in factors, particularly on the timetable for MyCSP to provide employers with pensions information on their senior staff for their remuneration reports and for the CILON calculator.

Timing:

  • Immediate

Detail

1. The Chancellor’s Budget announcement on 16 March 2016 changed the pension discount rate. Most pension calculations will not be immediately affected by this change. However, as the discount rate determines the way in which Compensation In Lieu of Notice (CILON) and transfer values are calculated, it may delay the timetable for MyCSP to provide you with information for your remuneration reports and there will be an impact on the CILON calculator. It will also impact individuals who are looking to transfer their pension or who need this information for divorce purposes.

Timetable for production of remuneration report

2. EPN 452 provided guidance on information required on senior officials for remuneration reports, including salary, pension and compensation information, and explained how you should request the pension information from MyCSP. It stated that MyCSP will provide you with the information within 25 days of your interface being processed, unless you have agreed an alternative date with MyCSP.

3. The change in actuarial factors announced at Budget means that the calculator that MyCSP use to produce this information will have to be updated. We expect this to take around four weeks, which unfortunately may delay the production of the remuneration report information in some cases.

4. We appreciate that many of you have tight accounting deadlines, and MyCSP will do all they can to provide you with information as close to your requirements as they can.

5. Where MyCSP have agreed a date with you for providing pension information, they will be in touch with you in around two weeks to agree a new date. However, to enable them to do this, please wait for updates and try to avoid contacting them at this stage to ask when your information will be available. The NAO are aware of the need to change the factors and the impact this will have on timetables.

Compensation In Lieu of Notice (CILON)

6. The general expectation is that staff who leave on Voluntary Exit, Voluntary Redundancy or Compulsory Redundancy, will serve their notice. In cases where staff are entitled to notice and an exit date before the end of that period is agreed, CILON is payable by employers. Employers use the CILON calculator on the Civil Service Pensions website to determine the amount payable and they then make the payment to the employee.

7. The change in actuarial factors means that CILON calculations for staff with a last day of service on or after 16 March 2016 will be affected. The CILON calculator has been removed from the website whilst the factors and calculator are updated, and we expect this to take around four weeks. We will tell you when it is available again, so you can then calculate/recalculate any CILON payments for staff leaving on or after 16 March, and pay what is due.

Transfer value calculations for staff

8. The change in actuarial factors will impact on individual active and deferred members of the scheme who are looking to transfer their pension or who need this information for divorce purposes. MyCSP have suspended calculations until the new calculations are available and, again, we expect this to take around four weeks. A message has been put on the Civil Service Pensions website advising members who are affected by this what they should do.

Contacts

If you have a question about the distribution of EPNs contact employerpensionnotice@cabinetoffice.gov.uk.

You can find electronic copies of the Employer Pension Guide, all current EPNs and forms on our website.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.