Table 1 below gives guidance on the actions that need to be taken when carrying out an Exit Scheme. There is a ready reckoner at Annex 6G which shows the estimated costs of Voluntary Exit, Voluntary Redundancy and Compulsory Redundancy, both the compensation lump sum and the cost of buying out the reduction for earlier payment.

Table 1 CSCS – Step by step for Employers

In all cases:

  • Employers need to consider the terms they wish to offer their staff. There is an employer calculator to help you to estimate costs (Annex 6H - Standard Tariff). You also need to determine the sift criteria to use and ensure that all member data is current and correct.
  • Obtain Scheme Manager approval to run an Early Exit Scheme (see ‘Form and guidance for CSCS applications’ at Annex 6C for the appropriate application form). You should send your requests to redundancyschemes@cabinetoffice.gov.uk
  • If your scheme is approved, you will be given a Scheme Identifier which you will need to give to your Scheme Commissioner (at the Scheme Administrator).
  • Contact your Scheme Commissioner to advise them you have authority to run an Early Exit Scheme and arrange to discuss numbers involved and agree timelines and handling arrangements. Once agreed you will be asked to complete an F1 (Statement of Work) form so that the deliverables can be agreed. 

The Scheme Commissioner can be contacted at exit.schemes@mycsp.co.uk

Voluntary Exit and Voluntary Redundancy

1. You will need to obtain the relevant scheme guidance and information from the Civil Service Pensions website.

2. There is a Step-by-Step guide for members which you can use as the basis for your own guidance. This can be found at Annex 6E.

3. Ask for expressions of interest from your employees. You must:

  • tell them how to apply, and how the process will work (see Annex 6E - Civil Service Compensation Scheme - Step by   step process) with return and contact details; 
  • give them a deadline date;
  • and  make available:
    • the appropriate employee compensation calculator for the scheme you are offering;
    • Compensation Scheme Information Form (CSCS1 (Annex 6K));
    • Voluntary Exit / Voluntary Redundancy Scheme guide (as appropriate);
    • Other materials as required from the Civil Service Pensions website.

4. You must make the appropriate employee compensation calculator available for your staff to use. Employees will need to have details of their current service and pay. In most cases, pension scheme members will be able to identify their current service from their Annual Benefit Statement (ABS). If an ABS has not been issued, you may have to deal with enquiries from the employees.

5. Note: the ABS service figure will not be relevant if the scheme member has transferred in, aggregated any service, or if they are buying added years or added pension. The ABS includes all service qualifying for a pension, but the compensation payment is based only on current service as defined in section 5.d of Annex 6F (‘Civil Service Compensation Scheme 2010 Guidance for employers’).

6. If the employee is interested they must complete a Compensation Scheme Information Form (CSCS1 – Annex 6K) which supports their expression of interest in the scheme and asks them for pension information. This information will enable the Scheme Administrator to include appropriate information in their quote.

7. Employees must return the CSCS1 forms to you (the employer) by the required deadline.

8. After the deadline you will need to consider all the applications and decide who meets your sift criteria as appropriate.

9. Send the CSCS1 forms that have passed your sift to the Scheme Administrator with details of any employees you would like to receive a quote recorded on the control sheet provided by the Scheme Administrator. You should have agreed with the Scheme Commissioner how this is to be done, and the timescales for processing.

10. You will need to tell any applicants who have not been selected they will not receive a quote.

11. You will receive quotes and costs from the Scheme Administrator for all the employees detailed on the control sheet.

12. The quotes will include a covering letter, information to support the employee’s circumstances, a statement of the compensation benefits and any relevant pension information. Information will be provided for those who have reached minimum pension age regarding taking reduced pension benefits or buying out the reduction. The employee will have some choices to make, on how they wish their benefits to be paid by completing a Compensation Declaration Form (CDF).

13. You must send the quotation and CDF to the employees concerned. Again employees must return the completed forms to you (the employer) by the required deadline.

14. Once all the forms have been received from the employees, you may need to do another sift if your offer is oversubscribed. You also need to remove those that have declined or those that you cannot afford. You must tell these employees that they have not been successful and destroy all paperwork when the exercise is complete.

15. You must send the remaining CDFs to the Scheme Administrator by the agreed deadline with a revised control sheet, for processing - again using the method agreed with the Scheme Commissioner.

16. The Scheme Administrator will process the CDFs based on the chosen options, and notify you of the final compensation lump sum for payment through your payroll.

17. If buy-out or added pension is applicable to the member’s case, the Scheme Administrator will finalise the pension benefits on the chosen basis and send you a bill when the payments have been processed. In this scenario the Scheme Administrator will detail any residual compensation to be paid via payroll where applicable.

18. If there are changes to the benefits, for example, due to a retrospective pay award or new data being received, the Scheme Administrator will recalculate the value of the benefits. Any additional compensation will be paid via payroll. If the change results in an overpayment of compensation, you must seek recovery from the employee. The Scheme Administrator will notify the employee of any changes to their pension benefits.

Compulsory Redundancy

1. You cannot give notice of Compulsory Redundancy unless you have already offered the person Voluntary Redundancy.

2. Depending on the numbers involved, you may wish to arrange with the Scheme Commissioner to check those employees’ data to make sure that it is as accurate as possible. You should then   arrange to issue quotes with the notice of Compulsory Redundancy so that staff have the information immediately.

3. If there are issues with your data, or if the numbers involved are too great, you will need to tell the staff who are to leave and ask them to complete the Compensation Scheme Information Form (CSCS1). This will enable the Scheme Administrator to produce the compensation payment quote.

4. You will need to obtain the Compulsory Redundancy scheme guidance. There is also a step–by-step guide (at Annex 6E) which is customised to reflect your own arrangements, contact points and deadlines (the Step–by-Step is only appropriate if you are not issuing immediate quotes which explain the process to the employee).

5. You must:

  • tell them how the process will work (see Annex 6E - Civil Service Compensation Scheme - Step by step process)   with return and contact details;
  • give them a deadline date;
  • and make available:
    • the Compulsory compensation scheme employee calculator (for information) (optional depending on agreed arrangements);
    • Compensation Scheme Information Form (CSCS1 (Annex 6K));
    • Compulsory Redundancy Scheme guide;
    • Other materials as required from the Civil Service Pensions website.

6. If you are unable to issue quotes immediately with the notice of Compulsory Redundancy, you could make the Compulsory Redundancy employee calculator available for your staff to use. Employees will need to have details of their current service and pay. In most cases, pension scheme members will be able to identify their current service from their Annual Benefit Statement (ABS). If an ABS has not been issued, you may have to deal with enquiries from the employees.

7. Note: the ABS service figure will not be relevant if the scheme member has transferred in, aggregated any service, or if they are buying added years or added pension. The ABS includes all service qualifying for a pension, but the compensation payment is based only on current service.

8. If immediate quotes are not issued, the employees must complete the CSCS1 form and return them to you (the employer). If you do not receive them, you should continue with the redundancy.

9. When all CSCS1 forms have been returned you will need to forward them to the Scheme Administrator with details of any employees you would like to receive a quote recorded on the control sheet provided by the Scheme Administrator. You should have already agreed how these are to be sent with your Scheme Commissioner.

10. You will then receive quotes, Compensation Declaration Forms (CDFs), option forms and costs from the Scheme Administrator.

11. You must then send the quote and CDF to the employees. Again the employee must send the completed forms to you (the employer) by the agreed deadline. If they refuse, you should continue with the process and pay a lump sum compensation payment with a preserved award.

12. Once you have received all the forms from the employees, you must send the CDFs and a revised control sheet to the Scheme Administrator for processing, again using the method agreed with the Scheme Commissioner.

13. The Scheme Administrator will process the CDFs based on the chosen options, and notify you of the final compensation lump sum for payment through your payroll.

14. If buy-out or added pension is applicable to the member’s case, the Scheme Administrator will finalise the pension benefits on the chosen basis and send you a bill when the payments have been processed. In this scenario, the Scheme Administrator will detail any residual compensation to be paid via payroll where applicable.

15. If there are changes to the benefits, for example, due to a retrospective pay award or new data being received, the Scheme Administrator will recalculate the value of the benefits. Any additional compensation will be paid via payroll. If the change results in an overpayment of compensation, you must seek recovery from the employee. The Scheme Administrator will notify the employee of any changes to their pension benefits.

Published:
4 January 2022
Last updated:
27 January 2022