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EPN519 – Revisiting past exit case decisions

Audience

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

Summary

  • This EPN follows EPN 513 and provides guidance for employers to review past Voluntary Exit schemes.
  • The EPN also sets out the position the Scheme Manager is taking to the remaining policy questions relating to individuals who exited under 2016 terms but are due a payment under 2010 terms, including the position on overpayments.

Action

  • To review any Voluntary Exit scheme that took place on 2016 terms in light of the guidance at Annex A and notify both Cabinet Office and MyCSP of the outcome of that review using the contact details at the bottom of this EPN. Responses should be sent by Wednesday 20th December
  • To note the position set out on overpayments in respect of VE, VR and CR (where no departmental action is required) and efficiency compensation (where departmental Accounting Officers will need to make a decision in due course).

Timing

  • To provide a response by Wednesday 20 December 2017

Detail 

1.1 Reviewing past Voluntary Exit schemes

1.The position for Voluntary Exits is materially different than a redundancy situation in that schemes are discretionary and as part of the 2010 terms employers can offer anything between the equivalent statutory minimum and the maximum tariff. This means that any Voluntary Exits schemes under 2016 terms would fall within the framework of the 2010 terms. This flexibility inherent in Voluntary Exits terms has guided our approach to “making good” payments on 2010 terms following the Judicial Review.

2. EPN 513 asked employers that had Voluntary Exits schemes in train on 2016 terms to review these schemes and decide whether they would have offered a different scheme had the 2010 terms been in place at that time.  We are now asking you to review any past Voluntary Exit schemes made under the 2016 terms to determine whether you would have offered a different scheme had the 2010 terms been in place at the time.

3. This is a decision that each employer will need to take themselves, after considering the guidance set out at Annex A. Once you have reached your decision please notify Cabinet Office and MyCSP using the contact details at the bottom of this EPN.

4. You should note that where this reconsideration and subsequent recalculation on new terms means a Voluntary Exit now exceeds £95,000, this will be subject to scrutiny and approval by the Minister for Government Resilience and Efficiency in the same way as they would have been when the exit scheme was first approved.

1.2 Voluntary Redundancy

5. For many of the Voluntary Redundancies that previously took place on 2016 terms MyCSP are already recalculating on 2010 terms and making additional payments. The position is more complicated for those in the 50-54 age group. We have reached the following policy positions:

(a) Staff who used the whole of their lump sum by way of partial pension top up.  We will pay an additional amount into their pension on their behalf such that they will receive an unreduced pension backdated to the date of first payment.

(b) Staff who opted for a partial top up with their own funds.  We will pay the full top-up amount into their pension and repay them their partial top up contribution.

(c) Staff who took a lump sum but did not apply it to the partial pension top up. We will pay them a cash lump sum equivalent to the amount that would have been paid into their pension scheme in scenario (1). Accordingly, they will receive a total exit payment of an equal value to the amount they would have received if they had opted for a pension top-up. Alternatively, where individuals wish to receive an unreduced pension and are able to repay the initial compensation amount, this can be facilitated on an individual basis and they should contact MyCSP.

6. MyCSP are contacting members who were exited under 2016 terms to inform them of this position and to begin making the necessary payments. Once the additional payments have been made to members, MyCSP will invoice employers in the usual way for the cost of the payments.

7. There is no need to seek additional clearance from the Cabinet Office where a revised Voluntary Redundancy payment takes the total amount above £95k.

1.3 Compulsory Redundancy

8. As previously set out, in order to ensure that staff do not suffer any loss they will be given 2010 Voluntary Redundancy terms. This applies to both past exits and those which are currently in train where the employees have not been offered Voluntary Redundancy on 2010 terms.

9. There is no need to seek additional clearance from the Cabinet Office where a revised Compulsory Redundancy payment takes the total amount above £95k.

1.4 Efficiency exits

10. As the 2016 efficiency terms are no longer in place, any payments previously made under 2016 terms will be recalculated under the pre-2016 terms. If additional payments are due to alpha or nuvos members as a result of the recalculation they will need to be made as ex-gratia payments by employers. HM Treasury have confirmed a blanket approval for such payments, and MyCSP will advise you of the amount due to members. You should ensure these payments are appropriately reported in your accounts.

1.5 Overpayments

11. There are situations where individuals have received a higher exit payment under 2016 terms than that to which they will now be entitled under the 2010 terms. This could arise as a result of various reasons – including the increase to the level of the lower paid underpin in certain circumstances, partial top-up, or as a result of changes to the terms for efficiency compensation.

12. We will not seek to recover overpayments in respect of VR, VE or CR and – because the Minister has discretion over the level of the lower paid underpin – departments do not need to take any action.

13. However, the position of overpayments in efficiency compensation is different. HM Treasury have confirmed that the decision in respect of individual efficiency compensation overpayments is one that has to be made by Accounting Officers for the departments that made the payments. The scheme will write to affected departments on this point shortly.

1.6 2016 Protocol and changes to efficiency compensation policy

14. The Judicial Review verdict was clear that the 2016 changes to the Protocol on Civil Service Redundancy Principles and the changes made to efficiency compensation scheme policy through the management code and associated guidance were not affected by the Judicial Review verdict and remain in place.

1.7 Timing of payments to members

15. The majority of affected individuals have already had their payment made good. We expect that most members will have their payment made good by the end of 2017 and the small number of remaining individuals will have their payments corrected very early in 2018.

16. Any member who will not receive a corrected payment by the end of 2017 will be written to in December 2017 to provide them with an update.

1.8 Contacts

17. Set out below are the relevant contact details:

Annex A: Guidance

Other information

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.