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EPN520 - Approval of future Voluntary Exit schemes

Audience

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

Summary

  • This EPN provides an update on the current Civil Service Compensation Scheme consultation and potential timing for a reform scheme;
  • The EPN also sets out the approach that the Minister for Government Resilience and Efficiency will take going forward with regard to scrutinising new bulk and high value Voluntary Exit schemes.

Action

  • To note the new timeframe for the current consultation and that we are now able to guarantee that exits signed up to by end Jan 2018 and taking place to a reasonable timescale (ie normal notice periods) after that will be on 2010 terms. Please get in touch with Cabinet Office if you have any queries about exit schemes taking place after this date.
  • To note the scrutiny that will now be applied on new Voluntary Exit schemes and ensure that you are applying appropriate consideration to the flexibility available in Voluntary Exit terms for new schemes. 

Timing

  • Immediate

Detail 

1.1 Update on CSCS Consultation

1. A consultation into further CSCS reform was issued on 25 September and requested written responses by 6 November.

2. As we have previously advised, until such time as any new scheme is implemented the 2010 terms are the lawful ones. Given the likely timeframe for consultation and the potential introduction of a new compensation scheme, employers considering new exit schemes should carefully consider the timing of their scheme and planned exits.

3. Exits can take place on 2010 terms provided they are signed up to by end January 2018 and the exit takes place to a reasonable timescale (i.e. within normal notice periods).  We will continue to consider the detail of any further transitional arrangements and review the case for any further extensions of the above deadline.

4. If you have a scheme where you are expecting people to agree terms after 31 January 2018, can you please speak to the Cabinet Office.

1.2 Approval and scrutiny of new Voluntary Exit schemes

5. Exit payments are currently subject to scrutiny from the Cabinet Office. In addition, Ministerial approval is needed for exit schemes for more 100 employees or for any exits with a cost of more than £95k.

6. This scrutiny process helps to ensure that employers have carefully considered the terms of the scheme (including flexibility available in Voluntary Exit schemes) as well as the criteria for running the scheme, including value for money, and that these are embedded in the decision making process.

7. Employers should continue to make full use of the flexibility inherent in Voluntary Exit terms when designing new Voluntary Exit schemes. To this end, in addition to the normal value for money considerations employers should explicitly consider for all Voluntary Exit schemes whether it is necessary to use the full tariff or to offer employer funded pension tops ups, which have always been discretionary in the scheme.

8. Cabinet Office will consider these factors as part of their approval of Voluntary Exit schemes and expect employers to supply a robust justification of the use of full terms and/or pension top ups before any scheme containing these will be approved.

9. In addition, the threshold for Ministerial approval of bulk schemes will revert to those for 20 or more exits. The normal Ministerial approval process for Voluntary Exit exits of more than £95,000 will also continue to remain in place.

10. The above guidance does not preclude the use of standard 2010 Voluntary Exit terms where there is justification for this, it is intended to encourage employers to ensure that they have fully considered the scope for flexibility when designing new Voluntary Exit schemes.

1.3 Inefficiency

11. A point which has caused some confusion is how members who exit through inefficiency and are over Normal Pension age should now be treated. The pre-2016 inefficiency terms now in effect do not entitle these members to an inefficiency payment. As such, these members cannot receive an inefficiency award and if you wish to make a payment it needs to be an ex gratia payment which will require approval.

1.4 Contacts

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

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

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.