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EPN513 - Civil Service Compensation Scheme judicial review: action for employers.

Audience

  • Pension Leads
  • HR Managers
  • Exit / Redundancy Leads
  • Finance Directors and Managers
  • Payroll Managers
  • All Employers

Summary 

  • The Government lost a judicial review on the Civil Service Compensation Scheme (CSCS) on 18 July 2017.
  • As a result, the 2010 CSCS terms are now the lawful terms in place.
  • Employers will now need to use the 2010 terms. They will soon also need to repay any difference for staff that have already exited on Voluntary or Compulsory Redundancy 2016 terms and may have to repay any difference for staff that have exited under Voluntary Exit 2016 terms. We will be providing further guidance about this shortly.
  • The Government launched a new consultation on 25 September proposing further reforms to the CSCS.
  • The Government has now informed the Court of Appeal that it no longer wishes to pursue the appeal it previously lodged.

Action

  • You should note the changes to the CSCS following the recent judicial review.
  • You should consider the financial consequences on your organisation of the verdict of the judicial review.
  • You should immediately contact the Cabinet Office if you are running any live exit schemes and have not already been in contact. You will need to review VE schemes in line with guidance at Annex B. Please inform Cabinet Office of your decision regarding which terms to apply by 16 October using the form in Annex C. 

Timing

  • Immediate

Detail 

This EPN sets out the action employers should now take in response to the judicial review.

  1. For each of the Voluntary Exits, Voluntary Redundancies and Compulsory Redundancies, the scenarios can be summarised into the four categories below:
    1. Category One: staff who have already left under 2016 terms
    2. Category Two: staff who have agreed an offer under 2016 terms but not yet exited the organisation.
    3. Category Three: exit schemes “in train”, where quotes have been issued but there has been no formal acceptance of an offer.
    4. Category Four: schemes about to be launched or just launched but member quotes are yet to be issued.

The tables in Annex A set out in more detail the position and action needed for the different exit types (for example, Voluntary Exit, Voluntary Redundancy, Compulsory Redundancy (VE/VR/CR)).

1.1 Completed schemes under 2016 terms

For VE schemes, you will shortly need to review the scheme you offered. We will provide information and guidance on this shortly.

For VR and CR schemes there will be no need to review or re-apply, payments will be re-calculated using 2010 terms and the difference paid to the member. Again, we will shortly provide further information and guidance.

1.2 Schemes underway

You should immediately contact the Cabinet Office if you are running any live exit schemes (schemes in Category two or three) and have not already been in contact.

For VE schemes, you will need to review the scheme in line with guidance in Annex B. Please inform Cabinet Office of your decision regarding which terms to apply by 16 October using the form in Annex C, whatever decision you reach.

Cabinet Office would like to receive details of your decision by no later than 16 October but preferably sooner. Please note that approval from Cabinet Office will be required if any of the terms from the original application are changed and the Scheme Administrator will require Cabinet Office approval to produce quotes.

If your scheme requires re-quotes to be issued, you will need to confirm with the Scheme Administrator which members need to be requoted and consider whether any changes to Last Day of Service are required.

VR and CR schemes in category three and four will need to be run on standard 2010 terms.

1.3 Future exit schemes

Future VE exits will be under the 2010 CSCS terms, which include the flexibility not to offer the maximum tariff. As currently, all VE schemes will need Cabinet Office approval and bulk schemes will need Ministerial approval. We will provide further information on approvals and scrutiny for future VE schemes shortly.

VR and CR exits will be under standard 2010 terms.

1.4 Timeline for processing of existing quotes and awards

All members that have received an exit payment under the 2016 scheme will be contacted by early October to inform them of the judicial review verdict and that their award may be revised.

Members will then be contacted by the end of 2017 to confirm their position.

By the end of October 2017 we intend to have worked through all schemes in-train at the time of the verdict and those scheduled shortly afterwards, and be operating business-as-usual service for exits. Further information will be provided about revisiting past cases once policy decisions are taken about the detail of how to revisit these cases.

We plan to have revisited all cases where members have left and received a payment that needs revising by the end of 2017.

1.5 Exit calculators

Calculators based on 2010 terms have replaced the calculators with 2016 terms, and are available at www.civilservicepensionscheme.org.uk/employers/civil-service-compensation-scheme-for-employers/cscs-calculators/

1.6 Approval of high-cost exits

The Cabinet Office requirement for approval of awards exceeding £95,000 (including any pension top-up) continues in all cases.

1.7 Efficiency Departures

Employees who leave via an efficiency departure and have not yet been informed of their award are being processed under pre-2016 terms going forward. Members who received an award under the post-2016 terms will be revisited once policy decisions are taken about the detail of how to revisit these cases, and it is expected these cases will be reviewed by the end of 2017.

2. Financial considerations

There is no additional funding available for changes to compensation arrangements and as exit schemes are run on a department by department basis, any funding needs to come from departmental budgets.  Employers will therefore be invoiced for the cost of revised awards.

Members have a right to a notice period of 3 months after they agree a voluntary exit and 6 months for compulsory redundancies. It may be necessary to extend Last Day of Service in some cases. Please note that changing Last Day of Service is a change to scheme terms and so requires Cabinet Office approval, and you should ensure the Scheme Administrator is also aware of any changes as soon as possible.

A small group of members are entitled to higher Civil Service Compensation Scheme exit payments under standard 2016 terms than they are entitled to under standard 2010 terms. This group are those aged over Normal Pension age, entitled to up to 6 months of salary under both schemes and earning under £24,500. The Minister for Government Resilience and Efficiency has given a retrospective Ministerial instruction that the deemed minimum salary (often referred to as the “Underpin”) should be varied for this group. This means that these members have not been overpaid and no recovery is necessary.

You can find more information about the judicial review on the dedicated Civil Service Pension Compensation Scheme pages on our website: www.civilservicepensionsscheme.org.uk.

Employees can contact the dedicated email address set up for any queries: redundancyqueries@mycsp.co.uk  and call the Scheme Administrator directly regarding any individual circumstances on 0300 123 9864.

3. Attachments and Annexes

Annex A – Actions schemes must take

Annex B – Cabinet Office guidance about reviewing VE schemes

Annex C – Voluntary exit form for completion

4. Contacts

For all live or imminent schemes, please contact: Debra Biggs at debra.biggs@csep.gov.uk  / (07808884959) or Marcia Morrison at marcia.morrison@csep.gov.uk  / (07802721856).

For advice about reviewing VE schemes, please contact Adam Blissett at adam.blissett@cabinetoffice.gov.uk .

For Cabinet Office approval of new or revised VE schemes, in the usual way please contact redundancyschemes@cabinetoffice.gov.uk .

If you need to speak to MyCSP about your exit scheme please contact exit.schemes@mycsp.co.uk .

If you have any further questions or concerns, please contact recruitment.exits@csep.gov.uk  in the first instance.  

Other information

If you require further assistance regarding the content of this EPN, please contact starterpacks@mycsp.co.uk.

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

This notice is for employers and should not be issued to scheme members.